I was talking with a long-time industry friend of mine this week and he made a really interesting comment. He said, “For every new client we pick up, we’re losing one or two.” He called it their ‘churn rate.’
Yikes! With those kinds of odds, it won’t take long before they’re in really serious trouble.
It’s a good lesson for all of us… What’s your churn rate?
Not sure? Here’s quick way to check… Pull together your client lists from the past 5 years. Now, how many from the 2010 list also did business with you in 2011 (and how many did you lose)? How many from the 2011 list also did business with you in 2012 (and how many did you lose)? And so on. I’ll bet the numbers will surprise you… and not in a good way!
Losing clients is part of the natural cycle of business. The question you need to answer is, “WHY do you lose them?”
- Was it just a one-time project?
- Was your service/product below expectations? If so, why and how?
- Did they just switch suppliers? If so, to who?
- Were your costs out of line? Compared to what?
- Was the overall experience less than excellent? If so, why and how?
- Did your main contact leave and you’re left not knowing anyone there? (this is a big one!)
- Has their business (or business goals) changed?
You need to find out the answers to these kinds of questions. You can only get better by fixing what’s broke. Or as the saying goes, “You learn more from failing than from succeeding.”
So take a look at your client list from the past few years… determine who is no longer your client… divvy them up and start making some phone calls. No, not all of them will tell you ‘why,’ but enough will respond for you to start to draw some conclusions. And when that happens, you’re on your way to making positive changes.