Retaining customers is one of the prime concerns for most companies. A company needs to develop strategies to maintain the status quo, and avoid losing the customers to the competitors. However, without knowing about the attrition rate it can’t simple craft strategies to retain the customers.
Normally, attrition rate is applied to employee turnover, but in a broader sense, it can be used in the customer service segment. In this article we will shed light on the attrition rate and reveal some strategies that can help in improving the rate thereby retaining market share and sustaining the profit position.
Customer Attrition Rate: How It’s Calculated
Calculating attrition rate is easy. You can arrive at the figure by dividing number of customers lost during a period by the number of customers at the beginning of a period. The attrition rate is usually expressed on a monthly or annual basis and typically in percentage terms.
So, if a company had 500 customers at the beginning of a period and 450 at the end of the period, the number of customers lost during the period is 50. The attrition rate can be calculated as:
50 / 500 = 0.10 or 10 percent
In case the company had lost 100 customers, the attrition rate will be 20 percent. The higher the number of customers left during the period, more will be the attrition rate.
How to Reduce Customer Attrition Rate
A company must take measures to reduce the attrition rates. Higher attrition rates represent a defect in the products or the customer service strategy. The following tips will prove invaluable in case the high attrition rate is caused due to poor quality product or substandard customer service.
1. Understand the Weaknesses
The first step to reduce the customer attrition rate is by finding out the weaknesses in the customer service. Know why people don’t sign for the service. Is the product quality not up to par? Are the customers disgruntled about the customer service? Is the competitor’s product or customer service better?
Understanding the weaknesses is the first step to reducing the attrition rate. If you don’t know about the weaknesses, you won’t be able to retain the customers. You need to iron out the weaknesses if you want to make the customers loyal to the company.
2. Interact with the Customers
You won’t be able to understand the needs of the customers without interacting with them. Talk to the customers and find out their preferences. Enquire about the customer experience and find out how it can be improved. You can interact with the customers more cost effectively using the digital medium of communication through Live chat, social media integration, and messaging applications.
3. Create a Strategy to Solve the Issues
Once you have become aware of the weaknesses by interacting through multiple contact points, you will be in a better position to take actions to reduce the attrition rate.
Remember that any effort that you make to improve the customer experience will result in decreased attrition rates, and increased retention. Customers are and will always remain king for a company. It’s important that you treat them in a way that they deserve.