What Is Customer Attrition?

There are many terms used to describe the loss of customers, which can occur due to a wide range of factors. One of the most commonly used terms is customer attrition, also called turnover or customer churn. While businesses often spend a good deal of their time working to acquire new customers, retaining current customers is critical as well. If a business cannot retain a significant percentage of its customers, it is unlikely to enjoy sustained success. For this reason, customer attrition rates are usually very important.

There are many factors that can affect customer attrition. One of the most common is dissatisfaction with the business. For example, customers may stop purchasing from a business because they feel unappreciated by the business owner or because of poor customer service. Sometimes they leave a business because the product or service no longer meets their needs. For example, if a business only sells small-sized clothing and a customer eventually comes to need larger sizes, the customer may move on to a business that is capable of serving his needs.

Sometimes customer attrition occurs because of issues related to customer service. For example, if a business has rude representatives, customers may stop patronizing it simply because they do not want to be treated poorly. In some cases, however, even pleasant customer service representatives can be the cause of high customer attrition rates. For instance, customers may leave a company because the representatives seem confused, ill informed, or disinterested. Additionally, customers might leave a business because its representatives fail to follow through with actions required for completing sales or providing acceptable service.

A company may also lose customers because of competition. For example, a customer may receive high-quality products and services from a company but decide to leave because of an attractive offer made by another company. This can happen when a lower price is involved or when the new company makes purchasing more convenient for the buyer. For instance, if company A and B both sell the same product but company B offers financing, customers may defect from company A to company B because of its convenient payment options.

Often, companies spend a great deal of time focusing on attracting new customers and clients. While this is an important goal, business experts agree it is a mistake for a company to focus too much on attracting customers and too little on retaining them. Effective customer retention strategies are key to the success of any business.