Part Two: Improving Customer Attrition Requires As Much Heart As Smart

customer attrition

In this two-part post, Ron Ackerman of Ackerman and Meyer Consulting will dive into the value of customer attrition and how organizations can turn an otherwise failing business into a revenue-generating machine.

In part one of this two-part blog series, I introduced four real-life examples of how management teams respond to customer attrition challenges. In part two, I will explain how organizations can [and should] define their customer attrition philosophy and how marketing technology and customer lifecycle should be utilized in the solution.

There is a three-step rubric to help you define your customer attrition philosophy. The first guideline recognizes the importance that customer history has on our success. Especially in these times it is insane to operate any business without the benefit of a marketing software solution. However, a history of critical incidents, sales call reports, webinar attendance, email communications, campaigns etc. is not as useful as actually living the customer’s reality. Until leaders find a way to make customer history personal customer attrition will always be nothing more than an intellectual exercise. If you are serious about solving a customer attrition problem your systems and procedures must be aligned in a way that aids in developing a deep knowledge of the customer as an individual. You must accept that there will be data that unifies your understanding as well as information that defines relevant degrees of variance. To make history personal you must be willing to accept and use these two qualities of nature to your advantage. By the way, creating this kind of history is not simply a matter of algorithms and customer surveys.

Second, sustainable customer attrition solutions also require virtue. For example, organizations can implement technology in either a virtuous or a dishonest way. Does your marketing software system enhance your ability to manage the customer lifecycle or does it only recognize the initial sale? Does your system encourage honest customer responses or inquiries or does it manipulate customer visits by directing customers to home pages of your design? Does the structure of this critical system essentially support how you intend to conduct the customer relationship over time? Why are these questions important? Within the context of customer attrition we know that a subjectivity bias is disastrous. As in most things virtue is in truth. So, the marketing software system must not only possess the right architecture to match your customer attrition philosophy it must enable you to conduct a truthful inquiry and analysis.

The final piece of the rubric is to implement a diagnostic framework that helps you perform a comprehensive analysis of the individual customer situation. Customer attrition is a dynamic challenge and as such is not something you solve today and then check off the list. Organizations that have an actionable customer attrition philosophy develop a common system for examining the health of each customer relationship. Their systems, whether automated or manual, recognize the interrelatedness of price, product and service quality, delivery system effectiveness, communications, ethics, and customer experience. In addition, the implementation of this framework will be consistent and routine providing a longitudinal analysis that aligns with the customer lifecycle.

At the end of the day there may yet be a few commercial enterprises in which customer attrition has little significance. However, most of us live in a competitive business environment and understand how difficult it is to win a new customer. So while keeping and growing customers may be considered somewhat less exciting than winning new customers I have argued that customer attrition performance is the center of sustainable business performance. It requires a greatness of heart and smart.