No organisation is able to keep all of its customers all the time, but when a company starts to experience annual attrition rates in the double digits, alarm bells start sounding as customer attrition can itself threaten the very existence of an organisation.
While the nature of doing business has changed dramatically in the past 50 to 100 years, the fundamental business premise of attracting and keeping or retaining customers has for the most part remained unchanged. If a business, no matter its size or standing, cannot attract customers, there will be no business and conversely if it cannot keep its customers, business will be lost.
It is because of this that companies who face customer attrition problems almost always devise some tactical or strategic response to beating or curbing the issue. The problem is however that this response is often a kneejerk reaction that comes too late and is often ineffective to various degrees. Many of these steps are often radical and ineffective.
Strategies
Those companies who know their customers better and use that knowledge to serve them better, tend to have more loyal customers and smaller rates of attrition. Truly successful retention strategies always start with the first customer contact and continue throughout the entire lifetime of your relationship with them.
So, why is it then that all companies don't do the same in order to keep and retain their customers?
Well, to be able to know your customers and have a 'personal relationship' with them is not easy when you have thousands, or millions of customers. It is impossible to do so manually and without investing in technologies, such as business analytics to assist.
Technology has become the modern day brain of organisations, particularly those where historical information is collected, filtered out, stored and then analysed. This then allows you to start differentiating your customer based on their key business dimensions namely: value, behaviour, risks, as well as on their retention and or attrition propensities.
Built on this principle, analytically empowered retention strategies enable organisations to gain a better understanding of the variables that influence customer attrition quickly, allowing them to determine not only which customers are likely to leave, but also why, and sometimes when. By combining retention "likelihood" scores with customer profitability, companies can segment their existing customer base and effectively target the "valuable customers" preventing further attrition.
Success in minimising attrition tends to have direct impact to the bottom line, as the cost of acquiring new customers can be up to 10 times higher than the cost of retaining their existing ones. Even a small increase in retention rates can add millions of rands to premium revenue.
