Is your customer attrition rate costing your business profits and growth? Here’s some ways that your customer attrition rate costs:
Customer attrition stifles your business’ growth.
Itcosts almost seven times more to get a new customer than to reactivate a past customer.
A ten percent customer attrition rate requires 100,000 new prospects just to stay even.
I cover each of these costs in more detail below:
How To Calculate Your
Customer Attrition Rate
Calculating your customer attrition rate requires keeping track of your number of customers so you can compare numbers on different dates. With this data, you simply divide the later date by the earlier date to get your customer attrition rate.
The dates can range across a month, a year, or more. If you’ve got a customer attrition problem and want to retain more customers, I recommend using a short range like a month so you can test how different tactics affect your customer attrition rate.
Customer Attrition
Stifles Your Business’ Growth.
In a recent study, businesses with customer loyalty programs show decreased customer attrition rates. The 2009 study found that businesses with good customer loyalty programs decreased their customer attrition rates by five percent and had 53 percent higher business growth than those without customer loyalty programs.
Your customer attrition rate enables you to predict how many new customers you need just to keep up with your customer losses.
The Best Way To Reduce
Customer Attrition Rates
If you want to grow your business and become more profitable, you need to lower your customer attrition rate with a customer relationship program.
According to Target Marketing, a good customer relationship program includes six actions:
Deliver what you promise
Understand attrition
Understand retention
Create personalized communications streams
Get your hands around data
Pilot and test.
One way to lower your customer attrition rate is to establish a good customer service program. If you want to train yourself and your employees to provide better customer service, I recommend Laurie Brown’s Customer Service Training Toolkit. Laurie is a nationally-acclaimed speaker, author and trainer who helps business owners to improve sales and customer service. Her program will teach and entertain you.
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Posted 2-19-10:
What Customer Attrition Rate
Costs Your Business
Without good customer service skills and procedures, you’ll never build your business to its full potential.
If you don’t have customers, you don’t have a business, and the more customers you have, the more likely your business will succeed. So you need to develop good customer skills and procedures so you keep your existing customers.
Using Good Customer Service
Skills In A Bad Economy
In today’s bad economy, you have to use your marketing money wisely. You can’t just throw money at marketing and survive.
Of course that’s true in all economies, but when money is tight, small businesses are failing, and new taxes loom, every marketing dollar has to provide a good return.
Good Customer Service Skills
And Procedures Increase Sales
In this post, I want to get you thinking about how you can keep more of your customers by using good customer service skills and procedures. So you’ll make more sales with the same or smaller marketing budget that you’d use to get those sales by attracting new customers.
Money spent to attract new customers gets you more sales for the money if you:
Target only the people most likely to buy your product or service.
Get to know them well through market segmentation and other marketing research.
Then personalize and customize your marketing for just those people.
This is the most efficient way to make sales to new customers.
But money spent attracting new customers isn’t the most efficient way to sell more. Your budget will spread further if you use good customer service skills and procedures to keep your existing customers, rather than using all your marketing money to attract new customers.
Use Good Customer Service
Skills From This List
All but the first of the good customer service skills listed below came from Sunder Ramachandran post on the “Top 7 Key Skills For Customer Service Jobs.” You can read it by clicking on the title link in this sentence.
Interpersonal skills,
Communication skills,
Listening skills,
Problem solving skills,
Flexibility,
Initiative and proactiveness, and
Professionalism.
Use Good Customer Service
Procedures From This List
But having good customer service skills isn’t enough. You also need good customer service procedures that implement those skills. Below I list what I consider the most important good customer service procedures:
Providing good technical and customer support,
Putting customers first,
Responding to customers complaints and inquiries promptly,
Keeping track of each customer’s purchases,
Creating personalized and customized messages and offers,
Recognizing and demonstrating your appreciation for your customers,
Developing a customer loyalty program, building in exclusivity, social interaction, volunteerism, recreation, and rewards.
I’ve written several posts about these procedures. So you can read more about them by clicking on the following links.
Want to know how to find more new clients and sales prospects? This eBook covers many strategies, including referrals, cold calling, getting to decision makers, elevator pitches, Internet marketing, and more. Check it out.
You can get more marketing information like this by subscribing to my blog. I’ll send you weekly post summaries and a copy of my matrix Market Segmentation report. Just complete the form below:
Posted 2-17-10:
Use Good Customer Service Skills
And Procedures To Build Your Business
Part 1 of “Internet Gurus Lack Customer Service Competencies” revealed my experiences with Internet gurus failing to demonstrate customer service competencies in technical and customer support. If you missed that post you can access it through the link below:
Part 2 of this two-part series deals more with attitudes about customers. It covers valuing customers and dealing with them honestly.
Customer Service Competencies:
Do You Value Employees More Than Customers
I first realized one lack of customer service competencies when I read a blog by the owner of my first hosting company. He said flat out that his employees meant more to him than his customers.
In dealing with his employees, I experienced the effect of this attitude. His employees always gave the quick, easy answer to every problem and were often flippant with me, a customer. To put it nicely, their customer service was less than adequate, and I moved my two sites hosted there to another hosting company as soon as my first year’s contract expired.
The hosting company lost a customer because employees were allowed to treat customers as unimportant. The owner lacked one of the basic customer service competencies. He didn’t put customers first.
Customer Service Competencies:Do You Delay And Trick Customers?
Then I spent $200 for a list building service. I used it only about three times because every time I tried, I got a notice that messages to me were bouncing so I couldn’t email to the list. Yet I averaged getting 30 or more emails per day from others through the service. I communicated about it for three weeks and never received a satisfactory answer.
I logged onto their forum and learned that others were having similar problems. The business’s tech person posted that we were just too ignorant to realize that our spam filters were causing the problem. How’s that for customer service competencies? I checked. My spam filter was not causing the problem.
After a couple of emails to the owner, I finally got a reply that he was aware of the problem, was trying to fix it, and that I should just be patient. I responded back that I should get credit for the month that I hadn’t been able to email to a list. He never replied.
When I finally gave up and asked for a refund, he said I’d waited too long and wasn’t eligible. I’ve since clicked the unsubscribe button on several of his emails, but they keep coming. I now delete them without opening them.
The Internet guru delayed and tricked me. He put me off in order to deny his promised warranty. There’s no way I’ll ever do business with him again. The way that he treats customers goes beyond lacking customer service competencies. In my opinion, it’s unethical.
Customer Service Competencies: Conclusion
Just because we Internet business owners don’t do face-to-face business with our customers doesn’t mean that we don’t need customer service competencies. Internet gurus make money teaching you and me how to build a successful online business. They should model customer service competencies. Why do you think so many don’t, or has your experience been different? Let me know by leaving a comment.
If you like this post and want weekly summaries of my posts so you don’t miss one that relates to your business, you can subscribe to my blog and I’ll give you a copy of my report on my Matrix Market Segmentation Process. Just complete the form below:
Posted 1-6-10:
Internet Gurus Lack
Customer Service Competencies: Part 2
Linda holds a Doctorate in Education (Ed.D.) and is accredited in Public Relations (APR). She has practiced marketing, public relations and communication skills for over 30 years. She is President of Best Books Plus, Inc., an online and off line publishing company.
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