Defining Attrition and Retention

When we ask Retailers what their biggest focus is one of the most common responses is “We want to reduce attrition and increase retention.” Most people think they are inverses but that is not the case.

Below is a lightly edited transcript of Episode 25 of the Inevitable Success Podcast. (Listen Here)

Transcript:

Damian: Today we’re going to talk about a question we get a lot. We get questions about attrition and retention. And specifically I want to ask you, are they the same thing?

Stephen: It’s a different spot in the same timeline because everybody goes through the life cycle of being a buyer. In fact, it starts at the point where you’re not even a buyer. We call them prospects and prospects becomes leads. In the B2B world you further qualify into qualified leads.

Damian: So maybe we’ll back it up a little bit. Specifically how would you define attrition versus retention.

Stephen: So well I’ll say attrition is farther down the timeline.

Basically when you’re going to stop being a customer, that is attrition and the action that a company takes at that moment is churn prevention.

Retention is more like “Okay I’m still building relationships. I want to sell more things maybe cross-sell/up-sell. I want to know more of the value based proposition because I don’t want to just share random things with customers.” So that’s retention. How do you make things interesting for the customers? So we hold them back..as long as possible and maximize the value.

Damian: You know it’s one thing that’s interesting we were kind of debating this internally too and I think when you hear that at first my first reaction was “Oh there are like two different sides of the same coin.” Like you know if you don’t retain people then you have high attrition.

Stephen: That’s right.

Damian: But you know in some ways I think if you’re a proactive and you’re taking action like you should always use the word retention and attrition is like a KPI that you don’t want to have.

Stephen: So actually the subject, the people who are on the side of the coin are different. Retention is the action by marketers or sellers.

Damian: Yeah.

Stephen: Attrition is what customers do. Yes it’s the same continuum but in a different position in terms of timeline. And one side is that something that marketers do and the other side is more that customers status if you will.

Damian: Right. So where do you want to start on this?

Stephen: Well let’s go back to the whole funnel concept here because in the beginning it’s just from the big bang. No you don’t want to go that far back.

Damian: That’s pretty early. It’s 14 billion years ago.

Stephen: Let’s go back to the beginning of your business. In the beginning you don’t have a customer. You have to prospect and bring in more customers whether you’re in new or whatever. I mean the thing is this, we all know and we talked about one time buyer  problem in the past. People leave.

The goal is bringing down the one time buyer, or the trialers if you will, but people do leave. That means acquisition and retention are continuous effort by the marketers. If you say you do just one thing. Well guess what? You’re going to go out of business.

Imagine a big barrel, which has a hole and the hole is people that are leaving your business and on top of a barrel you pour water in and that is acquisition but you’re pouring wat...