Customer Attrition: Preventing Customer Loss

Marketing 18 minute read 11th September 2023

It might be tempting to thrust your head into the sand. However, your customer attrition rate is something you need to care about. Simply put, it is the number of current customers that you lose in a given period. There is nothing more disheartening than losing a customer. The good news is that it is far from a helpless situation.

You can learn about the psychology of loyalty and churn reduction strategies. There are tons of ways to reduce this and help prevent customer loss. And this is where customer attrition analysis comes in. You should always approach customer loss objectively and with the mindset of ‘let’s understand’. There’s no point getting defensive or upset - as natural as those feelings are. You must proactively approach this common business issue if you want to overcome it.

In this article, we will cover all you need to know about getting ready to battle customer loss. Get ready for hot tips, brilliant strategies, and practical info like calculating the customer loss stat. Attrition, who? After reading this guide, you can squish that scary stat to almost nil.

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What Is Customer Attrition?

First off, what is customer attrition? We have briefly defined it for you in our quick introduction. However, just to consolidate this, attrition in customers is your percentage of customer loss in a given period. Attrition is akin to your churn rate - e.g., the current customers who decide to abandon your business.

Attrition is relatively normal in some businesses. Attrition is also difficult to measure long-term in businesses that only provide ad hoc services. Just because one customer bought a Hoover last year and has yet to return it doesn’t mean a customer loss. Chances are they are just enjoying their Hoover, and next time they need products, you’ll be the first to know. Attrition is much more final. But you can already see how delicate it is to calculate. And also why you can’t beat yourself up too much over stats. It is much easier to measure with subscription-style services when you can see cancellations.

There are two types of attrition, too: active and passive. Active attrition is where people do things like canceling a subscription. Passive attrition is when customers don’t want to leave your business services, but circumstances demand it. For instance, customers lose their jobs, and payments bounce. Or if they’d like to buy from you but no product takes their fancy.

Nuances are vital when calculating attrition, and you’ve got to understand that every circumstance is different. If you understand and address the underlying issues, you can reduce attrition much better. This point leads us nicely onto our following section - why you should complete attrition analysis.

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Why Should You Complete Customer Attrition Analysis?

Customer attrition analysis is essential because it lets you see what’s happening. You can only reduce your attrition stats if you see what’s wrong. So, if you want to make a difference and improve your profit, start using analysis. Are you ready to embrace the process? These are some more benefits of completing attrition - in case that didn’t immediately persuade you.

  • Analysis encourages you to think more critically and objectively about your business.
  • Analysis lets you measure success more easily and celebrate your wins with concrete stats.
  • Analysis helps you to sell your business to investors.
  • Analysis gives you stats to use in marketing.
  • Analysis allows you to understand better and connect with your customers and staff.

As you can see, analyzing your attrition is one of the most important things you can do for your business. For some reason, analyzing is what always gets forgotten about. Strategizing and executing a quick ‘fix it’ plan is much easier than continually analyzing your business’ performance.

The best way to approach the situation is by setting specific days and times that you’ll commit to analyzing. This means you can better schedule your time and won’t let the days run away. You should also invest in some high-quality software. The less work you have to do, the more feasible analysis becomes. So get your critical cap on and keep it as objective as possible. With quality analysis, you’ll creatively maneuver your way out of high attrition in no time.

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10 Ways To Reduce Attrition: How To Reduce Customer Attrition

This section is important. In fact, it is the best section if you want to take immediate action. Here, we will teach you ten ways that you can reduce attrition. Knowing how to reduce customer attrition is a vital skill for success. Knowing the benefits of attrition analysis and understanding why you need it to be low is fantastic. However, those are totally different pieces of knowledge from actually learning how to reduce it.

If you are serious about your business and taking steps toward success, here’s what you need to know. These are the top ways that you can reduce the customer loss stats that your business experiences.

1. Train Your Staff in Customer Service To Avoid Customer Attrition

Number one is to train your staff in customer service. The reason that this has come first is because this is the most impactful area on attrition. Stats and analysis routinely show that poor customer service is a primary leading reason behind customer loss. You shouldn’t stand for it, and neither should your customers. Ensure staff provide a fabulous service and train all staff members to ensure quality standards are met.

2. Be Proactive in Asking for Reviews

Learning how to ask for reviews is an important skill to develop. Asking for reviews makes customers feel heard and like you understand and respect them. It also reduces the likelihood of them ranting elsewhere, like leaving bad reviews on Google. You could leave QR prompts or surveys on captive portals or ask customers verbally at checkout. Encourage them to channel any concerns and complaints so that you can direct and resolve anything.

3. Market, Market, and Market Some More

Marketing tips are essential when it comes to really attacking your marketing strategy. You need to market to attract new customers and keep current customers. It might seem like a never-ending cycle; if you’re struggling, outsource some. Marketing needs to be continuous to reduce and maintain attrition reductions long-term.

4. Offer Incentives To Quiet Customers

So, you’ve managed to spot a bunch of quiet customers, well done for monitoring your customer base and current customers so closely. The best way to hook them back in is through incentives. Offer one-off discounts and special deals. You need to prove to them that they should return, and by doing so, you’ll reduce your attrition.

5. Use WiFi Marketing To Reduce Customer Attrition

WiFi marketing really boosts customer engagement - whether you like it or not. WiFi marketing can prompt feedback, prompt social media engagement, or request contact details. Whichever you choose, you’ll be tackling attrition rate. The opposites of attrition are engagement and connection, so focus on building them with WiFi marketing.

6. Utilize Reputation Management

Small business reputation management is just as crucial as managing big businesses’ reputation management. You need to be proactive and professional in defending your brand’s reputation. Another giant killer when it comes to customer attrition is reputation. A bad reputation means a reduction in engagement and, therefore, a reduction in profit. So avoid that at all costs.

7. Show Appreciation To Reduce Customer Attrition

This links to loyalty programs and positive customer service. However, it is so essential that it is worth mentioning as a standalone way to reduce customer attrition. If customers are appreciated, they will value your business more. Ensure that staff take the time to learn the names of popular customers. And offer rewards like loyalty programs to incentivize your valuable customer base continually.

8. Preventing Customer Attrition by Communicating Changes With Customers

Another reason behind high attrition rates is usually a change that needs better communication with customers. You’ll have lower customer attrition rates if you can communicate changes effectively to customers. The way to do this? Always give notice - forget quick and snappy decisions that heavily impact customers, like 50% price increases. You should also be transparent about the reasons behind such changes.

9. Re-evaluate Exactly What Audience You Are Targeting

If you are constantly barking up the wrong tree, you won’t get results soon. You should know what audience you are targeting. So, take a pause and evaluate. Is this the audience you are actually attracting? And if not, how can you better attract your target audience?

10. Keep Up to Date

Whether following the latest trends or investing in product developments, you should always be up to date. Pay attention to competitors and know what makes your service so unique. You should be ahead of the curve to keep customer attrition low.

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How To Calculate Customer Attrition Rate

So, before you whizz off to start reducing your attrition, what actually is it? This is how to calculate customer attrition rate for your business. If you take one thing from this article, this is the most practical and necessary section. The rate measures the total customer loss in a given period. It does this by dividing customer loss by the initial number of customers. Here is a quick example.

There were ten customers lost in a month. At the beginning of the month, there were 32 customers. Therefore, the sum is:

Ten divided by 32 = 0.3125

To find a final answer, you then multiply the answer by 100 to create a percentage.

0.3125 x 100 = 31.25%

The answer for this business would be losing 31.25% of customers in a single month. As you can imagine, this hypothetical business owner won’t be happy. Based on their calculation, it is recommended to take action to reduce their attrition rate immediately.

When calculating your attrition rate, remember to compare it to industry standards. While the standard measure of good attrition is anything less than 25%, specific industries naturally have higher or lower rates. Knowing the industry averages lets you ascertain how you compare in your competitive field. Knowing whether you score above or below your industry average is one of the most essential attrition calculation stages.

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Final Thoughts: At What Business Stage Should You Implement Customer Attrition Analysis

You should implement customer attrition analysis as soon as you can. As soon as you have run your business for a month or more, you have the stats to begin analysis. And this forward-thinking, proactive approach can help you cut limiting factors before they cause real problems. Nip attrition in the bud. It is never too early in your business journey to start thinking about attrition. Even if you don’t have the stats to calculate yet, there’s something to consider. Customer service causes 71% of attrition, so a lot of the time, simple awareness of attrition can be preventative.

Are you ready to take the following steps in boosting your business? It’s excellent that you’ve been thinking about customer attrition, especially amidst all the other demands of being a business owner. Congratulations on being able to hone in on essential details like attrition. It sounds like you care about your business and have an eye for success. Customers are your secret sauce for the ideal business pot; every great business owner knows it.

Beambox has the best WiFi marketing platform for all business types - small or large, established or established. We use a mixed approach to tackle and maximize customer happiness, loyalty, and satisfaction. If you are ready to reach new heights with your business, we are ready to hear from you. Start your Beambox free trial today, and let us help reduce customer loss and demolish any high customer attrition rates.


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