Is there really an insidious habit you could have right now that is driving away your customers without you even knowing?
Well that's the thing about habits. Most tend to be things we do without having to consciously think about. Some habits actually work to our benefit (like writing goals down everyday) where as other habits work against us (biting fingernails).
Where a habit becomes an insidious one is when its something we do that harms us or our business in some way. Here is an example of what I mean...
Last January we started a project as a family.
The annual “take down the Christmas decoration” project.
Not exactly the most fun we’ve ever had, nor is it glamorous.
It was, however, necessary.
Otherwise the decorations stay up and it looks idiotic to have them up past a certain time period.
Like what happened to me when I was in my early 20’s.
I was living with a girlfriend at the time and we had a lot of Christmas decorations up all over our apartment.
But we got lazy.
The decorations stayed up until at least February.
And if it wasn’t for a comment my older brother made, I’m pretty sure they would have been up well into Spring.
What was his comment?
My brother said he’d be willing to bet our decorations were still going to be up on his birthday (which was Feb 2nd).
If you knew my girlfriend at the time you would know she liked a challenge and there was no way she was going to lose this bet.
So, on the night of Feb 1st the decorations were down and packed away.
Fast forward to today.
My laziness habit of not taking the decorations down back then has always haunted me but in a good way.
Every year it creeps into my awareness.
Reminding me not to be lazy and take down the decorations the first weekend in January.
In business I see a lot of owners who have a bad habit of being lazy about a lot of things in their company.
Like reducing their customer attrition rate.
Most companies I have worked with have no idea what customer attrition even is let alone what percentage they suffer from.
Simply put, customer attrition is the number of people who have for one reason or other stopped doing business with you in a given year.
It usually happens for one of three reasons.
- They have moved away and cannot avail themselves upon your company any longer. Or if you are in a B2B situation, the other company may have stopped some aspect of their business and cannot use your product/service any longer.
- They had a negative experience with your company that never got resolved and have decided to go elsewhere.
- There was some kind of interruption in their life and when things got back to normal they have forgotten to come back.
When you add up all three of these reasons they average to about 20% for most companies.
That means you are losing 20% of your customers every year.
And if you are in the habit of being lazy about reducing these numbers you suffer in a number of ways (which makes this an insidious habit).
You suffer in…
- The amount of time, money and energy spent in getting new customers to replace them.
- The lost opportunities to find out ways to improve your company
- Loss of profits.
Now look at what happens when you actively reduce your attrition rate.
If you cut it in half, it would be like adding 10% new customers every year (without having the added expense of advertising).
But there is an added benefit to not being lazy about reducing your attrition rate.
A 5% increase in customer retention = 25%-95% increase in future profits.
A 10% increase in customer retention levels results in a 30% increase in the value of the company.
So you have a choice.
You can be lazy like I was about my Christmas decorations and ignore your attrition rate.
You can put some systems in place and make a lot of easy money.
The kind of systems you’ll find can be done for you here.