Attrition, arguably, is a somewhat nascent issue. But it is one that should be addressed.

Whether your company has an ongoing customer relationship, such as a bank or magazine publisher does, or your sales effort is based on single-unit sales and repeat purchasers, attrition affects us all.

Any positive impact that can be made on attrition will have an almost geometric impact on profitability. A study done by McKinsey & Company indicated that repeat customers generate over twice as much gross income as new customers. Also, according to Reichheld and Sasser (1990), a 25% increase in retention could yield a 125% increase in net present value profits.

So, it behooves us to better understand the what and why of attrition and exactly what, if anything, can be done about it.

The first question one should ask: "Is customer retention a problem in my company?"

On a company-by-company basis, maybe not. My hypothesis is that in most cases the issue is significant enough that a concerted effort should be made to minimize this outflow of future revenue.

Anecdotal research has yielded an alarming consistency across disparate industries. Industries reviewed had no product overlap, though attrition for all was in the 30-35% annual range. Apply a similar percentage to your company, and you would likely agree that the result represents a sizeable impact on revenue.

So what's to be done about it?

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ABOUT THE AUTHOR

James Chapman is founder of ARG Consulting, LLC (www.arg-consulting.com/), a consulting company. Reach him at james@arg-consulting.com.