Customer Defection Impact – So What is the Big Deal?
All businesses have customers that defect, but what is the customer defection impact to the business? The two BIG questions are,
- What percentage of your customers defect each year?
- How large is the cost of customer defection?
The news is alarming.
- A typical American business will lose 15 percent of its customers each year.
- 27 percent of small business owners estimate that 11-20 percent of first-time customers don’t return to their business.
- Following a negative customer interaction, 58% of Americans would never use that company again.
- 96 percent of unhappy customers won’t complain to you, but will tell 15 friends
(if you want more stats on the importance of customer service in the prevention of defection – read on here.)
Customer Defection – So How Does it Impact Profit?
There are at least four impacts to the financials for any business when customers elect to defect.
- The business loses revenue from those defecting customers
- And the business loses margin from those defecting customers
- The business has to spend more money on replacing those lost customers (the acquisition cost) – eg. Coupons
- Defecting customers who leave because they don’t like the business can complain – a huge brand exposure
Customer Defection – Free Excel Calculator
We think it is vital for a brick and mortar business to know the impact of defection and the financial improvement that could be made with a reduction in defection. So we built a customer defection calculator in Excel to help.
It does this by showing:
- The importance of loyal customers are in generating cash compared to occasional customers
- How expensive it is to lose customers
- And the cost to acquire new ones
- What the financial impact of an improvement in customer defection
- And compare it to the cost of advertising ie. customer acquisition
- Therefore the impact of a customer feedback tool like opiniator
Next Steps
- Go to our Customer Defection Calculator page, enter your details and download the Excel sheet.
- Fill in your own details
- Check out the defection cost
- Now look at the return on investment that occurs when defection improvement ie. retention is delivered
- Put another way – you can review the customer experience ROI
Retention is always more effective than acquisition. One major tool to improve retention is acting on real customer feedback when that feedback is delivered at the location. That’s why we developed opiniator. Check out the full feature list here, and use the calculator to confirm why the business must take action.
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