Identify the risks if you want to control customer attrition!

Early results from completed Revenue Growth Scorecards show a common challenge – the difficulty in retaining and growing customers. And this appears to be an issue for both immature and more mature businesses – and across a variety of industries.

Customers are the crown jewels of any organization. Keeping profitable for life, while growing business with them, is a major priority in sustaining B2B revenue growth. The impact of customer churn is well documented, while the acquisition of a new customer can be anything between 7-10 times the cost of retaining an existing one.

In fact, the practice of minimizing customer attrition should start before the customer has even been acquired. As an organisation we need to ensure that customers are delighted at every touchpoint in their journey with us – from the onboarding experience through to day to day engagements. But, realistically, we can expect to face disruptive events and experiences with our customers that will heighten the possibility of churn.

Too often, the assessment of the probability of customer churn is left to the subjective musings of account managers or customer success teams. Retention, or ‘attrition management’, needs to be treated as a science, not an art. We must have in place specific tools, processes and behaviours that formalise the way we retain customers – and these need to be pro-active, ‘assessing and anticipating’, rather than rear-view mirror orientated.

To get on the front foot we need to be able to anticipate potential risks – only then can we apply tactics to create stickiness. The advent of AI has supercharged our ability to foresee patterns of customer behaviour across large customer groups, for example by analyzing recurring buying patterns and periods of inactivity. However, in simple terms, and regardless of the level of digital gymnastics at our disposal, I believe that all risks of attrition can be summarized into four root sources:

1. Relationship

What is the overall health of our business relationship, i.e. the breadth and quality of our engagement, and the level of insulation we might enjoy from the ecosystem of our customer’s partner and suppliers?

2. Commercial

Is the customer receiving good value for money?

3. Competition

Are we perceived as having a unique and differentiated offering compared to other providers in our market?

4. Operational

Does our set of products and services deliver as promised?

Our challenge in understanding and controlling attrition is to remove as much subjectivity as possible, de-personalize the issues as they relate to in-house teams and remove any sense of blame. We want to create an honest picture of our back-book landscape so we can feel in control of our destiny. It’s disappointing to lose a valued client, but it’s a criminal offence to lose one by surprise! When striving for an objective picture of the attrition risk, we need to design specific questions relevant to our own industry and with ‘yes’ or ‘no’ answers. Here is an example set of questions (or triggers) to test the levels of risk within each area: