IT Glue

The cost of customer loss extends far beyond lost MRR. It causes a ripple effect throughout an organization, negatively impacting cash flow, time, and resource optimization. By understanding the four key pillars of effective customer retention, you can mitigate the significant impact customer turnover has on your business.

The Four Costs of Customer Loss

The true cost of customer loss is made up of four key cost factors: direct costs, acquisition costs, social costs, and operational costs.

Direct Costs

Direct costs encompass the impact a lost customer has on your revenue both now and in the future. It includes the often overlooked cost of lost potential account growth.

Acquisition Costs

Did you know that it costs up to 25X* more to acquire a new customer than to retain an existing one? Even if you replace each customer you lose, you significantly hinder your profit growth potential.

Social Costs

According to a Zendesk survey**, 95% of people share bad experiences with others, and 45% share those bad experiences over social media. Among those who share bad experiences, they tell an average of 5 people. So, a lost customer can quickly snowball into additional loss – both with your current and potential customer bases.

Operational Costs

When offboarding a lost customer, you need to ensure all property has been returned and client details are shared with the new provider. This operational cost comes after the point at which you’ll receive no additional revenue; it’s just a deadweight cost.

IT Glue & the Four Pillars

So what’s the answer for minimizing customer loss?
There are four crucial pillars for ensuring consistent customer satisfaction, and increased retention across your entire customer base.

Action

Information

Communication

Resolution

It’s important to take the right
action at the right time.

Document and
monitor information.

Be proactive, personal and
regular with your customer
communications.

Focus on issue resolution both
internally and for the customer.

1. Set expectations from
the start to ensure you
consistently deliver on
your commitments.
2. Take preventative
action to make sure
your customers know
the value you’ve delivered
to them.

1. Ensure all relevant
customer information
is up-to-date and
immediately accessible.
2. Establish processes for
updating information
checking for accuracy,
and tracking
amendments.

1. Verify and reiterate
your value.
2. Demonstrate the
work that is going on
‘behind the scenes’ with
summative, personalized
communication of
issues, risks and fixes.

1. Make sure the right
people are dealing with
the right issues and
every asset required
for a swift response is
readily available.
2. Enforce and practice
a solution vs. problem
oriented mindset.