The cost and causes of customer attrition

The cost and causes of customer attrition

Julie Pearl Published on January 21, 2015

When thinking of ways to build and retain a solid consumer base, it’s common for most businesses to turn to their marketing unit.

landline telephone with post it written Bye

Whether through traditional means or through an outsourced telemarketing campaign carried out by a call center in the Philippines, companies go all out with their marketing moves if it means doubling the buyers supporting their brands.

However, some overlook another business aspect that could create a far more significant impact on loyalty, and that is customer service. Presenting your brand as a trusted name through the slightest interactions you have with customers is essentially marketing, the most effective and cost-efficient form of image-building even. The most well-funded and cleverly concocted marketing campaign won’t likely get customers returning if you’re falling behind in the customer service department.

So, if you’re looking for the right place to focus on when keeping attrition at bay, look no further than your customer support team.

Sadly, customer retention is only next to customer acquisition in the list of primary goals that most businesses have, according to data gathered by Kissmetrics, a customer intelligence and web analytics firm. If you’re part of that population, you probably have a wrong idea of what causes people to abandon your brand and how much it is costing you.

What makes customers leave?

frustrated woman using laptop annoyed with customer support

Studies by Kissmetrics and help desk software developer Helpscout are one in saying that the main cause behind a customer’s decision to stop doing business with a brand is bad customer experience. Whether it’s incompetence on your staff’s part or unavailability of your communication channels, poor customer service is cancer that’s primarily killing your consumer base.

In the digital realm, misuse of social media is another factor that’s causing attrition. Using your business’ customer service accounts on Facebook or Twitter for promotional purposes defeats the purpose of taking your engagement efforts online. The same Kissmetrics study said that barraging your followers with too many tweets, especially self-promotional ones, will only annoy people and cause them to unfollow you. Customers on the Internet also expressed the need for balanced interactions from the businesses they follow—failing to respond at the right speed and following more people than your follower count are major turn-offs.

How much can you lose with every customer who leaves?

In the aforementioned study, it’s stated that globally, a business loses $243 per customer lost. The US rate, however, is higher at $289. American companies collectively drop an estimate of $32.4 billion per year when they lose customers to a competitor, and approximately $50.6 billion due to all forms of customer attrition. The total of course includes money spent on marketing and staffing initiatives needed to acquire new customers, which costs six times more than what is spent on retaining your consumer base.

More than the monetary loss, however, giving customers a reason to leave can incur a far greater impact on your business. It’s been said again and again that negative feedback get shared to more people than positive comments. So, when you lose customers, you also lose chances of making new ones because of the bad testimonies others may have heard about your company.

The causes of customer attrition, if not nipped in the bud, can cost you both your money and your image. So, next time you think of ways to retain customers, know which area to devote most of your attention to.

As one of Open Access BPO's content writers, Julie Pearl shares her BPO knowledge through her blog posts, research papers, and other resources. She writes about outsourcing news and call center management tips and insights.

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