Activity Trumps Attrition

4 Solutions That Will Protect Your Business

It’s a fact, attrition is going to happen to your territory, your sales team, and your organization – always has, always will. In short attrition is inevitable. The key question is what are you doing about it?

Wikipedia refers to this KPI as customer attrition and defines it as follows…

Customer attrition, also known as customer churn, customer turnover, or customer defection, is a business term used to describe loss of clients or customers.

I have seen from an up close and very personal perspective how sales attrition wreaked havoc on my career, and later other businesses by not have a strategic plan in place. In doing so it affects everything- your quality of work, your career and your family. One day all is well, then a key customer makes a decision to leave, or you lose an RFP that you had counted on and everything changes. Sound familiar? Are you there now?

It doesn’t have to be that way. There is a solution.

Going forward let’s focus proactively on four proven principles on how your activity can trump your sales attrition every time. Will it go away? Nope, not all but by applying each of the four steps you can create significant sales synergies that will protect you and your team well into the future. But you have to begin now. There are no shortcuts!

Let’s set the stage with a real life experience. A few years back I was speaking with a member of the senior management team. He mentioned that he had gained market share with his top three customers but his top line sales were not reflecting this growth. The fact is that attrition was eating away at his base of business in small incremental ways that had gone unnoticed affecting the top line. One key cause was due to the fact that he was losing market share with many customers that were not in their top 10 tier. In short, the competitor was taking market share one bite at a time. This combined with no strategic or tactical ‘customer growth plan’ played a huge role. To make matters more exciting I learned that new business growth was not a real priority and as a result an active pipeline was not in place.

This is but one example that comes to mind. I am sure you could site several examples as well.

It doesn’t have to be that way – let’s take a look at four solutions that collectively can create solid, healthy activity that can trump attrition.

  • Existing customers:

1. Retain
2. Grow (organically)

  • Former customers:

3. Recover

  • New customers:

4. New Business Acquisition

Let’s take a closer look at each of these solutions.

  • Retain – these are defined as customers where organic growth is limited or non-existent. In short the customer is sending you the majority of their business. None the less, they must be protected, and nurtured with an active plan
  • Grow – these are defined as customers that offer organic growth opportunities that can lead to huge margins for your company.
    • In many cases businesses that create customer retention rates by 5% saw increases in their profits ranging from 5% up to a whopping 95% ref. Frederick Reicheld of Bain & Company
  • Recover – to focus on this segment there are typically two types. Those that have chosen to leave fully by pulling all of their business, or those have left partially and have only transitioned a portion of their business to a competitor.
  • New Business Acquisition – studies show that acquiring a new customer can cost 6-7 times more than retaining an existing customer. None the less new growth is the lifeblood of any business.

Each of the above solutions requires a different skill set and will take a significant level of time and commitment to set up. Dependent upon your organization they may be handled by different departments. For example ‘recover’ may be handled by a focused area of customer service. New business acquisition typically belongs to sales while customer retention is handled by marketing.

Regardless of your model, each of these are important to your survival and success.

Our goal is to offer proven solutions that will inspire you to create a road map and blue print that will encourage and strengthen your position in the market place by using Activity to Trump Attrition.

To your success,
Andy

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