The real cost of customer attrition?


Robert Harris, Managing Director

“The Attrition Busters”


Here’s the question of the day. “What is a satisfied customer?” Before you read on, please take a moment and think about your answer. Some people might have said, “A satisfied customer is one you never get a complaint from.” Others might answer it by saying they get exactly what they pay for; they give you referrals; they pay their bill; or they are happy with the service you provide. In reality, a “satisfied customer” is statistically eight-times more likely to dump you for a cheaper competitor than is a delighted customer! Having merely satisfied clients is not good for your business. How much does your company invest in training to establish and maintain longer lasting customer loyalty? When you look around, customer loyalty is sadly missing nearly every service industry today. Based on my experience working with a wide variety of related businesses, the background screening business is certainly not immune. In fact, without an intentional strategy to effectively differentiate your self from competitors and delight your clients, it really still boils down to price doesn’t it? Why should I go with you if those other guy’s are cheaper? You’re all the same aren’t you?


I can tell you that it costs approximately $8.00 to get back one single dollar of lost recurring business. I’m not writing about new business, I’m writing about replacing the business you already had. If you consider a “recurring revenue” model for this industry, we all have clients who pay us each and every month to do their background screening. In some cases we generate considerable recurring income from these clients who have a good amount of turn over or who are growing and are constantly in need of new people. When one of these clients jumps ship in favor of a competitor, we have to sell more just to replace what we have lost. Think about it, how much do we spend on marketing, sales commission, labor bourdons and overhead. Not to mention our direct out of pocket cost to establish a relationship and prepare information to secure a new client? What the actual cost is to replace a single dollar of lost recurring revenue depends on your individual company. I assure you that if you really analyze the cost in you company, you will find that the $8.00 figure is pretty close.


If this figure is anywhere near accurate, I would say it’s a pretty staggering number. Having to cough up eight times your recurring revenue to replace a lost client should certainly promote some careful attention to getting better at keeping what you have! So what can we do? When it boils down to the bottom line, many of our clients are really interested in paying the lowest price. If low price is our business model, how can we ever increase loyalty? Without a serious and tenacious effort to increase the perception of “added value” in doing business with our company, we will continue to lose customers to anyone else selling their services cheaper, just as fast as we can get new ones.


Perceived value in the service you provide helps to create longevity. I promise you, with some very simple gestures, you could assure yourself that your clients will not jump ship the first time some competitor comes along with a lower price without at least calling you to try and work out some kind of reasonable solution first. By selling the idea of “added value” to your entire team, and providing them with training on better ways to handle upset customers, improve communication, convey empathy and enthusiasm, resolve problems, and nurture relationships as well as give your clients a little something extra for their money, you will create a significant and measurable loyalty factor. This is exactly what many successful and growing companies do to become market leaders in any industry. Building personal relationships cost you little or nothing, and makes it next to impossible to lose your customer’s to competitors, while creating huge payoffs when it comes to referrals. The best part is that getting better at it will be at your competitor’s expense!


Today, many service consumers are thrilled just to be satisfied. When people return phone calls promptly, show up on time, or actually do what was promised, it has become the exception rather than the rule. The art of true customer service is just about gone in nearly every industry. Put yourself in your client’s shoes and imagine how delighted you would be if you had a relationship with someone at any vendor company and they always took the time to nurture that relationship and say thank you for your trust? Customers want a little something extra if they are going to pay a little more. There is never a traffic jam along the extra mile these days. This is an easy way to prove you really care about the trust your client has placed in you, and it costs you nothing to express gratitude. But this is just the start! How much larger will your company grow by keeping more of what you have and developing those relationships to the best of your ability? A little effort goes a very long way these days. Some of your competitors sponsor and host seminars and workshops for their clients to help them get better at growing their businesses and keeping more of their employees and clients! The payback they receive in terms of loyalty and long term business relationships is substantial. Even though that makes them money, it also costs money to provide. There are many other things that don’t cost a penny, which any company can incorporate to help reduce customer attrition.


Simple gestures along with improved communication create a foundation of trust and long term business relationships. For example, when was the last time a service provider of any kind called you just to say hello and check up? When was the last time someone in your organization called a client to let them know how grateful you are for their trust and patronage? Imagine a service provider sending you a birthday card, or inviting you out to lunch. Does anyone in your organization think about finding out a when it is a client’s birthday? These are just a couple of things you can do to literally “knock the socks off” your clients. Unavoidable attrition combined with others stealing your accounts by offering lowest price services takes a significant big bite out of your business. Just ask the call center industry! If ten percent of your inventory was being lost to theft, you would take immediate action to turn the tide. When ten percent of your customers are leaving you, no one might even notice! Don’t you think it’s time to consider some kind of professional customer retention program?


Any pre-employment screening company would do well to contact an industry customer retention specialist in an effort to determine the most beneficial and cost effective way to get training and initiate a program designed for your specific situation. Turning satisfied customers into delighted ones, will separate you from every single competitor, and add considerable value to doing business with you! The referrals you will get from clients who have finally found a company who truly delights them and where action speaks louder than words will lower your marketing expenditures, increase profits, and hand you a larger market share. No matter how good anyone is, we can always get better at raising the bar. Beginning from the top down, unless you intentionally implement a measurable loyalty strategy, it is simply not going to happen on its own.


Some helpful hints to try yourself:

·         Learn to exceed expectations.

·         Take an honest look at your service from the perspective of your customer.

·         Learn as much as you can about your customers and competitors, use & maintain that information.

·         Create an action plan with your top people, and filter it throughout your entire organization.

·         Less talking - more listening!

·         When you can’t say yes, learn how to say no correctly.

·         Provide your staff with training to delight your most difficult customers.

·         Give them a little something extra.

·         Consider a consultant who knows this industry and can give you the tools to do it effectively.


Robert Harris is managing director for The Attrition Busters seminars, consulting, and workshops. With over 30 years of customer relationship experience, he can be reached at 818-730-4690 or by email at Learn more about The Attrition Busters at