What Is Customer Attrition?

N. Madison
N. Madison

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.

Magazine publishers use attrition rates as a measure of success or failure.
Magazine publishers use attrition rates as a measure of success or failure.

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.

Customer attrition may occur because of issues related to customer service.
Customer attrition may occur because of issues related to customer service.

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.

Providing good customer service can help prevent customer attrition.
Providing good customer service can help prevent customer attrition.

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.

Dissatisfaction with a business may lead to high rates of customer attrition.
Dissatisfaction with a business may lead to high rates of customer attrition.

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.

Customers may leave a company because the representatives seem ill informed or disinterested.
Customers may leave a company because the representatives seem ill informed or disinterested.
N. Madison
N. Madison

Nicole’s thirst for knowledge inspired her to become a wiseGEEK writer, and she focuses primarily on topics such as homeschooling, parenting, health, science, and business. When not writing or spending time with her four children, Nicole enjoys reading, camping, and going to the beach.

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