Causes of Attrition

Attrition sounds like such a scary word—you know it impacts your customers and your bottom line, among other metrics—but do you really know what it means? According to Merriam Webster, attrition means “a reduction in numbers usually as a result of resignation, retirement, or death.” That sounds pretty dramatic, but makes a lot of sense when you put it in the context of your company: instead of resignation, think of customer frustration; instead of retirement, think of the loss of a champion; instead of death, think of customers canceling their memberships.

The key metrics that those three actions are measured by are customer churn, customer retention, and contact ratio1.

– Customer churn is how many of your customers leave or stop using your product, calculated either by dollar value or the number of customers

– Customer retention is the result of how many customers continue to use your product period over period, and

– Contact ratio is the number of conversations you receive over the span of a month, divided by the number of paying customers (or just users) that you have

Attrition directly affects each of these in different ways but can be combated by a few key focuses that we’ll cover in this blog post. Read on to learn how to protect your team from attrition, and your customers from poor experiences.

#1 Broken Trust

If the product fails, or customers are having trouble using it, they need to reach out to support. Once the issue reaches support, it is important that they get the issue resolved as quickly as possible. Unfortunately, sometimes there are faults in the response: maybe it’s too slow, or the information is incorrect. Those things and more can serve to further break the trust with your customer, who may already be feeling frustrated. Here are three ways you can break trust, and good ways to overcome them.

Long Response Times

Accenture revealed that 53% of U.S. consumers switched providers due to poor service, and 80% of these could have been avoided just by quicker resolution. Responding slowly when a customer is already in pain, or frustrated with your product exacerbates the emotions that they are experiencing. To lower response times, see what you can do about creating self-service documentation, using saved replies, or just noting that you’ve at least seen the customers tickets and are working on it, and see if that helps you gain back a little trust.

Incorrect or Outdated Information

Your team is meant to be the authority on your product—they are the ones that are the gatekeepers of knowledge, and should be able to answer anything and everything. If they can’t, or they do so incorrectly, the customer can start to wonder “If they don’t know…does anyone?” Don’t let them get to that point.

Invest in a knowledgeable team that you can trust. Give them autonomy and authority to make decisions quickly without getting stuck in your company’s bureaucracy. Look for potential pitfalls and proactively create solutions that steer the customer in the right direction. Ensure that you are updating documentation and ‘saved replies’ regularly to avoid outdated information sitting there for too long. Lastly, use quality assurance to ensure that everything is aligned with the same messaging and information. That way, one agent doesn’t say one thing while the next says something different.

Rude Responses

It should go without saying that you must not swear at customers or talk with a rude tone or voice, or convey anything that makes them sound stupid or silly. This results in losing cultivated-trust from your product and any other support interactions that they’ve had with your team. It is also incredibly unprofessional.

#2 Growth

Sometimes a company doesn’t stop using your service because of something that you’ve done, but something that they’ve done. If they are too large or too small for your target demographic, their team may begin to experience pain with the product, the pricing, or any number of things in-between. Here are some things that can happen with companies that hit those unlucky sweet spots.

Grew Too Big

If a company has grown too big to use your product, you’ll likely notice it before they do. They’ll start reaching out more frequently with requests or asking questions about scalability. The fact is larger companies have spent so much time and energy in embedding your product into their culture and hence, their churn sends out a much larger message. The truth is they don’t churn out, they quit. It takes more effort for a large company that already has the momentum behind product usage to opt out from using your product. As Jason Lemkin at SaaStr says, “Big companies take months and often years to make business process changes.  Big companies take months to train their employees on new processes and systems, and the last thing they want to do is re-train them every year.” They have to find a new product, go through all the testing to make sure it’s compatible, and then switch out all the backend work that they’ve done to make your product work. So, if you find a customer that is doing this or seems like they might churn, speak to them about what their issues and needs are, and see if you can rectify the situation before it happens.

Grew Too Small or is Going Out of Business

If a company loses a significant amount of business and is either too small to make use of your features, or too financially strapped to pay for it, they may likely also churn. A good way to work against this is to have payment options or a hidden plan that you can offer to long-term customers that run into this issue. It’s a great way to surprise and delight a customer that was thinking they were going to have to stop using a product that they love and may be going through a rough financial time.

That being said, people having their company close or go out of business, or just be too small to need to continue using your product, could be deemed attrition of natural causes. Unlike companies that are large and churn out because they are choosing to, small companies have to leave if they grow too small – and trying to keep them around could be more expensive than it’s worth.

#3 Product

While support bears much of the weight of keeping customer attrition low, the burden is also on the product: after all, if the product is not growing and shifting with customer needs, of course, they will leave to go use another product that suits them better. There are a few likely reasons why a customer would attrition due to a product-related issue:

Missing Features

Every company gets feature requests and, similarly, struggles to know how to deal with them. Do you deal with high pain, low-frequency issues first? Or is the burden of proof on the number of people that have asked for a feature? Rather than building all of the feature requests that come through, or even most of them, your product team should focus on the ones that are going to have the highest impact. If that means that if they are super painful, and primarily affect high-paying customers, that’s a priority; so is something that doesn’t hurt as much but does affect a much larger number of customers. Focusing on the high pain things helps ease the most vocal complainers, as well as the people most likely to churn.

Broken Features

If there is a bug that has persisted for a long time because it is low-priority for the company, but the very same bug is a high priority for the customer, this can be a source of attrition. Customers don’t care that what they’re asking for might be built when your infrastructure or other large-scale things that you’re working on are released. When you tell them that, all they hear is that they aren’t a priority.

When another company depends on your product, you only get so many chances.

Lack of Public Roadmap

Most companies are terrified of creating a public roadmap. They don’t want customers to come at them with pitchforks if something doesn’t go exactly according to plan, and their releases of popular feature requests are slightly delayed. Prodpad has found1, though, “that as long as we’re open and honest about our priorities, customers are actually very forgiving. We hold onto the feedback we get and reach back into it to guide the way we approach their problems – and our customers know that.”

This is impactful both for the company, because they get even more insights into what they could be doing better, and the customer, who has a bit more of a glimpse into what might be coming, rather than asking for something and feeling like they are gazing into an abyss when they’re not able to get a definitive answer from your support team.

Conclusion

Losing customers is scary, whether you are a big or a small company. We’ve listed some of the key causes of attrition, leading to churn, a higher contact ratio, and lower retention. Acknowledge what your company could be doing well and you’ll improve those measurements in no time.


Source:
1 – https://www.prodpad.com/blog/our-product-roadmap-is-public-and-people-love-it/