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Mitigating Customer Attrition/Churn in your Customer Base
Mitigating Customer Attrition/Churn in your Customer Base

This article explains the differences between transactional and relational customers, and how you can fix a leaky bucket!

Written by Khaula Ahmad
Updated over a week ago

Many businesses claim to have loyal, repeat customers who will buy from them time and time again. But often, the stats will say differently. Struggling with customer retention is a common issue that can drain profits from your business even faster than you can attract new customers.

The aim of customer retention is to keep your customers buying for as long as possible. But how do you know who’s at risk of being lost to competitors? And, once you have the data, how can you analyse and action this information quickly, so you don’t lose them for good?

What is a Transactional or Relational Customer?

For companies selling products B2B, repeat purchases are vital for long-term success. Transactional customers are one-time buyers or users, who only engage with your business briefly. Relational customers return repeatedly to buy from you.

Changing a transactional customer into a relational customer is important when repeat purchases are the crux of your business growth. Research has shown that a buyer transitions to a “relational” customer after their 4th purchase. Once the 4th order has been placed, businesses are more likely to become loyal, repeat customers. This is just one of our top 10 metrics for B2B Wholesalers and Distributors.

Spotting “Lost” Customers

The two key metrics that dictate buying patterns are:

  • Order Frequency – How regularly do customers place orders from you?

  • Order Value – How much are they spending on average for each order?

Measuring these values manually is extremely difficult, especially whilst juggling multiple customers, suppliers, and products. As the data constantly update, it’s impossible to keep track without this being automated for you. That's where RFM Analysis can help!

What's RFM Analysis?

Recency, Frequency, and Monetary Value Analysis is a well-known technique for segmenting customers by their spending patterns. Segments like “Needs Attention”, “At Risk”, “Hibernating” and “Don’t Lose Them” are the red flags you should look out for when identifying “lost” or potential churn risks. In the CRM, RFM Analysis is automated across your entire customer base, so you don't have to calculate it manually.

Quick Ways to Re-engage Customers

Once you know who your at-risk customers are, take some of these quick-win steps to start the retention process:

  • Speak to lost customers – Speak to your lost customers ("Hibernating" in the CRM RFM Analysis grid) to identify reasons for lost sales, so you don’t keep making the same mistakes.

  • Chase missing orders – Pick up the phone and to the list of customers who should have placed an order with you by now, but haven’t, to drum up some repeat orders ("Missing Orders" tile/Report on the Account Manager Dashboard in the CRM)

  • Optimise your quote-to-order workflow – Move from quote to order faster so you can take more orders in less time, whilst making it easier for customers to buy from you (start here)

Long-Term Steps for Retention

Once you’ve identified which customers are at-risk, start developing some content around the following topics to target them with:

  • Make limited time offers

  • Recommend products to them based on past purchases

  • Share valuable resources

  • Recommend popular products at a discount

  • Send emails from Account Managers to appear like personal 1-1 emails

  • Recreate brand value

Summary: 2 Key Takeaways

  1. You’re probably losing more customers than you think – no matter how good your products and services are, and...

  2. It can be fixed - you just need the right tools and systems to drive change!

By taking action early and using the right tools in the CRM, you can plug the holes in your leaky bucket and keep customers coming back for longer!

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