Customer attrition is a problem in many industries. Companies struggle to retain their customers, leading to a loss of revenue. That’s why it’s essential to understand customer attrition and how your company can prevent it.
Customer attrition, also known as B2B customer churn, is the loss of customers from a business. This occurs naturally over time as customers move on to other companies, but it can also happen when customers are dissatisfied and choose to leave.
While the ultimate goal of any business is to reduce customer attrition as much as possible, studies show that an average attrition rate for a SaaS business is between 3-5% monthly – though approximately two-thirds of companies experience churn rates of 5% or more.
The lower these numbers, the better for a business because it means that a company retains its customers longer, building a more extensive customer database over time.
If you’ve been struggling with high customer attrition rates, then it’s time to be proactive. Here’s what you need to know about customer attrition and how to prevent it.
- With 30% of SaaS companies (linked above) reporting that attrition rates have increased in the past year, it’s vital to get ahead of the problem.
- Customer attrition can result from poor onboarding to a lack of proper engagement with your audience.
- Prevention is the best way to reduce customer attrition. If you can identify the root cause of your customers leaving and address it, you have a much better chance of keeping them around.
What is Customer Attrition?
Customer attrition is the act of a customer ceasing their business relationship with a company. This process goes by several different names, including:
- The Rate of Attrition
- Customer Churn
- Customer Turnover
- Customer Defection
While this can be a natural part of the customer journey, it most often is caused by a dissatisfied customer that feels as if their needs have not been met or caused by a poor customer experience. Customer attrition is a crucial metric for any business, as it can significantly impact their bottom line.
Determining what your average customer attrition rate is relatively simple and can be done using this formula:
What Can Cause Customer Attrition to Occur?
Many factors contribute to customer attrition. Of course, one of the most common reasons for customer attrition is the natural conclusion of a business relationship. This means that the customer no longer needs your products or services.
While that is usually the best-case scenario, there are dozens of other reasons customers may choose to leave. The most common reasons for customer attrition include:
- Lack of proper customer onboarding and training – If your customers aren’t receiving the appropriate training, they will likely become dissatisfied and leave.
- Lack of customer support – If your customers aren’t receiving the support they need, they’re going to get frustrated and give up on your products/services.
- Negative customer experiences – If your customers have had a negative experience with your brand, they’re likely to go to a competitor instead.
- Poor product quality – If your customers aren’t receiving the quality of service they expect, then you aren’t delivering on your promise, and they’re going to walk away.
- Lack of value – If your customers don’t receive the value they expect, they will have no problem leaving and turning their attention elsewhere.
How Can Customer Attrition Impact Your Brand?
In today’s business landscape, customer attrition can be costly. When a customer stops purchasing your brand’s products or services, it’s a loss of business.
Depending on the reason behind your customer attrition, it could also lead to negative word-of-mouth, a lack of customer loyalty, and even a negative brand image that can impact your brand long-term.
3 Ways to Prevent Customer Attrition
When you’re working to retain your customers, it can be challenging to know where to start. So, how can you prevent customer attrition? Here are three things you can do to prevent this churn:
1. Prioritize the Customer Experience (CX)
The customer experience is one of the most important aspects of a brand today. It is the total of all the little moments a customer has with your brand, including:
- The conversations they have with your brand representatives
- The interactions they have with your products and services
- The experiences they have with your marketing and advertising
The customer experience is what will keep customers coming back, and it’s also what will keep them from turning to your competitors. By prioritizing CX, you’re ensuring that your customers are being taken care of properly and their needs are being met without having to turn their attention elsewhere.
2. Understand Who Your Ideal Customer Persona is Targeting
One of the best things you can do when reducing customer attrition is to identify and focus on your customer’s specific personas.
Personas are idealized versions of your customers, and they can be accommodating when trying to understand your customer’s needs and expectations. By understanding customer personas, you can better tailor your product and service offerings to customer needs and expectations. This ultimately leads to a better customer experience and customer loyalty, which helps to reduce overall customer attrition.
3. Track Customer Data and Respond Accordingly
When it comes to reducing customer attrition, you need to be carefully tracking customer data such as:
- Purchasing Behaviors
- Browsing Behaviors
- Customer Satisfaction Scores
- Customer Retention Rate, etc.
These KPIs are crucial to understanding your customer’s needs and expectations, and they can help you respond accordingly when trying to reduce your customer attrition rate.
For example, if you notice that customers have issues with your product or service, you could respond by improving your product quality or providing additional customer support. This helps to reduce customer attrition by showing your customers that you value them and continually improving your brand to meet their needs.
Minimize Your Customer Attrition with Televerde
Reducing your customer attrition takes a lot of work and dedication, but you could see a significant reduction in your customer attrition rate with the right strategies in place.
Televerde has the tools necessary to help your brand improve your customer experience and reduce your customer attrition, including top-of-the-line CX tools, sales qualification and development tools, as well as engagement insights and analysis tools.
Looking for more tips to help you improve your customer retention rates and minimize customer attrition? Then check out the Televerde Resources and Events Hub for more excellent resources!