{"id":3888,"date":"2023-03-02T16:01:11","date_gmt":"2023-03-02T21:01:11","guid":{"rendered":"https:\/\/distributionstrategy.com\/?p=3888"},"modified":"2023-03-02T16:01:11","modified_gmt":"2023-03-02T21:01:11","slug":"how-many-customers-did-you-lose-last-year","status":"publish","type":"post","link":"https:\/\/distributionstrategy.com\/2023\/03\/how-many-customers-did-you-lose-last-year\/","title":{"rendered":"How Many Customers Did You Lose Last Year?"},"content":{"rendered":"

Join us March 16 at 9 PT\/12 ET for a deeper look at how you can measure and improve Customer Experience for your company.<\/span><\/a>\u202f<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n

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Do you know how many customers you lost last year?\u00a0<\/span>\u00a0<\/span><\/p>\n

I\u2019m not looking for a precise answer, just a rough approximation. Is it hundreds, thousands, or tens of thousands? In my experience, it is surprising how many businesses have no idea \u2013 maybe have never even considered the concept of a lost customer.<\/span>\u00a0<\/span><\/p>\n

In my 40+ years as a management consultant, I have seen this situation many times.\u00a0<\/span>\u00a0<\/span><\/p>\n

One example comes to mind. This company was an industrial MRO business. The company was looking for growth, something more than the low single digit growth they had been experiencing for the past few years. Every manager I spoke with characterized the business as a stable business that, as evidenced by the flat top line, just didn\u2019t have the market to grow.\u00a0<\/span>\u00a0<\/span><\/p>\n

The data told us a different story.\u00a0<\/span>\u00a0<\/span><\/p>\n

Underneath that top-line veil of stability, there was a whole lot of churn going on. As we looked at year-over-year customer purchases, we could see that they were losing close to one-third of their customers each year (over 4,000 lost customers).\u00a0<\/span>\u00a0<\/span><\/p>\n

These lost customers represented about $14 million in annual sales. They were working hard to bring in enough new customers to keep top-line sales stable and even grow it a little, but this was a very inefficient and inadequate business model.<\/span>\u00a0<\/span><\/p>\n

When we applied analytics to the problem, it took the vague concept of lost customers and provided a quantitative and financial platform for the business. Losing customers has a compounding effect. The initial reaction is to assume that one loses that year of revenue from a lost customer. In our example, the $14 million from 4,000 customers.\u00a0<\/span>\u00a0<\/span><\/p>\n

But the reality is much more sobering \u2013 businesses lose the following when customers defect:<\/span>\u00a0<\/span><\/p>\n