Blog | Customer Attrition: Recognising And Acting On The Warning Signs

Published July 30, 2015 by Alex Osbaldeston

Customer Insight
Customer Attrition: Recognising And Acting On The Warning Signs

Marketers generally agree on one thing – it costs a great deal more to acquire new customers than it does to retain existing ones. There’s no crystal ball to knowing when your customers are likely to leave, but there are a number of warning signs.

For instance Gartner estimates that 65% of a firm’s revenue comes from existing customers and that attracting new business costs five to eight times more than retaining old customers. Gartner also estimates that 80% of a firm’s future revenue will come from just 20% of its existing customers.

Clearly then whilst securing new customers is important, it’s equally vital to hold on to the ones you’ve got. That’s easier said than done. Customers, if they ever have been truly ‘loyal’ are much less so then ever before. In the US 61% of retailers cite customer retention as their ‘greatest obstacle’. They are right to be concerned - 62% of consumers believe that brands aren’t doing enough to reward them. Indeed if they do leave as many as 91% of customers will never come back. Here are 7 warning signs that you are about to lose your customers.

1. Customers are no longer incentivise

Many companies will reward new customers to win their business. But there’s a risk of going too far with this and annoying existing customers, who feel neglected and shortchanged. And as we know, it’s existing customers that add the most value to the bottom line. Therefore think about how existing customers can be rewarded – either via special offers, discounts or a formal loyalty rewards programme. Making customers feel valued, rather than taken for granted is likely to increase loyalty

2. Digital engagement has fallen off

Keep an eye on the digital channels. Things like newsletter and marketing email open rates dropping can indicate that customers are getting bored of your brand or offering. Twitter attrition or slow growth can indicate the same. Decreasing click through rates from digital advertising or newsletter links can similarly be associated with brand disengagement.

Before you panic and look to change things, take the time to ask your customers to find out what is behind the increased disengagement. Is it because they no longer have time to open newsletter or have moved off Twitter, or are there more serious reasons connected to your brand? Use feedback collected from across the customer journey to see what the issues are – and to give you the insight you need to fix them.

3. A scatter gun approach to offers

Offers must be as targeted as possible otherwise they won’t get you very far – either you’ll end up marketing to those that would buy anyway or try to sell the wrong products to the wrong people.

It’s only by surveying customers regularly that an organisation can gain an understanding of what they need and what is likely to motivate them to stay loyal. Collecting this feedback and incorporating the results into your decision-making will help promote satisfaction, engagement and loyalty over time.

4. Customer expectation is not being matched with reality

Customers expect different things from organisations they deal with. It’s not always about price. Often it can be factors such as customer service, product / service quality, location or the usability of a website that wins the day. Either way it’s important to know what customers want and expect and if your organisation is living up to that. What worked yesterday might not work today because customers’ lives, and therefore needs, change over time. So gathering real time customer insights can be a massive help to make sure your offerings and your marketing align with what your customers are actually looking for.

5. Employees are unhappy

Customers often have a sixth sense when dealing with firms and know when employees are not properly engaged or committed to making their experience with the firm a happy one. And if they don’t properly care then why should the customer? Rarely though is employee dissatisfaction an instant thing. Rather, it builds up over time and therefore can be nipped in the bud before it impacts on customers. Regular employee surveys can take the pulse of the company and help address any negative trends you see in the data. It could be as simple as addressing a training issue or providing more resources in certain areas. Use feedback to increase engagement and consequently improve the customer experience.

6. High rates of staff attrition

In a similar way to the point above, it’s dangerous to think that customers only buy from a company because they like certain products or services. Customers also remain loyal to your brand because they like your people.

Therefore if their point of contact suddenly changes or they have to call a different office for service it does impact the customer experience. If possible, have a transition plan in place that includes introducing customers to their new employee contacts formally – and back this up with systems that store customer details and preferences so that they don’t need to repeat themselves when talking to new staff.

7. Customer service is not up to scratch

A business can have the best (or cheapest) product or service on the market but if counts for little if customer service isn’t up to scratch. Bad experiences travel like wildfire over social media and internet forums and a poor reputation can be difficult to reverse. Therefore it’s important to ensure that your customer service is meeting their needs. As well as asking customers for their opinions gather employee feedback (anonymously if you need to) to find out where the gaps are and what their thoughts are on how things can be improved.

Failing to keep customers happy is vital to business success – potentially you could lose up to 80% of future revenue if the wrong 20% of your customer base is dissatisfied. However, most, if not all, issues are ‘fixable’ provided you know what they are in good time. Make sure you have your finger on the pulse by collecting and acting on regular and sustained feedback from both customers and employees.


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