By Tony Rizzo
If you’re in marketing, you probably spend most of your time finding new and creative ways of acquiring clients and cross-selling existing relationships, and too little time on reducing client churn. Perhaps it’s because you don’t know how or where to begin. Or maybe you’ve fallen victim to that “too much other stuff to do” excuse. But it’s not a difficult marketing challenge and paying attention to member retention yields significant benefits.
In order to help focus your retention efforts, it’s worthwhile to confirm the depth and breadth of the “profit risk” associated with attrition. While many studies have been conducted, the most noteworthy is the Celent Communications study from a few years back. It states that the average financial institution loses 14.6% of their clients each year. Again, this percentage is only an average and we’ve seen institutional attrition rates exceed 20%.
Let’s put this into context. In order for your bank or credit union to grow by even one dollar with a 20% attrition rate, your sales must increase enough to first replace all of your lost clients—along with their profits—just to maintain status quo. That means you’re expending a great deal of effort just to get back to where you began. You’ll have to exert far greater effort to actually grow your business.