Tuesday, 20 March 2001

Improving Customer Attrition Requires As Much Heart As Smart

Headline: Three years of misses on both the top and bottom lines, customer churn exceeding $56 million annually and continuous market share losses result in the break up and sale of another industry leader. Approximately 1,500 employees received their pink slips as the Company closed it doors today!

If a firm's revenue growth is unimpressive I recommend that leaders first look to how they manage current customers for clues to the solution. More often than not customer attrition is the canary in the mine, a harbinger of poor sales growth. Not surprisingly many leaders opt for the sex appeal of new sales to solve their growth problem. They often conceptualize that a focus on customer attrition is too defensive, too demoralizing for their "hunters". In this exciting technology led world we live in let me remind you that an idea always precedes action. Your idea or philosophy about where the customer fits in your business determines everything about you as a company and ultimately what strategies you decide to implement.

In no particular order of offense let me describe how customer attrition philosophy is often actualized in real life. When faced with customer attrition challenges one group of managers will take a deep dive into spreadsheet management. All in the name of accountability they start tracking everything imaginable. They will assign task forces for task forces and even measure the number of project teams working on the problem. Sometimes they schedule conference calls before they know why. Very often marketing functionaries are wrongly obsessed with measuring outbound emails, outbound phone calls, scheduled presentations, and face-to-face sales meetings. This group clamors incessantly about how effective managers track activity and measure everything. I so want this group to re-read Deming's book, "Out of the Crisis" to get a sense of what the father of quality had to say about this phenomenon.

A second group of managers is marginally more thoughtful and tends to use lean process, six-sigma, and continuous improvement initiatives to kick start customer attrition improvement believing that process drives everything. Their teams minimize the kinds of data previously mentioned in favor of critical service incidents, order form errors, call center wait times, and a host of other process variances. Unfortunately this faction often draws conclusions from an exclusively internal perspective. This unit's findings mistakenly become the customer's in a very "we know best" kind of way. Although this cluster usually extolls the virtue of the customer's voice very rarely do we hear that voice in the final analysis. This crowd still finds its growth strategies de-railed because their perspective about customers is too fragmented. These managers tend to see customer attrition issues as quantitative exercises and often miss the human side of the customer's decisions.

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