We can all agree that it's easier to fill a bucket when it’s not leaking from the bottom. Seems like a pretty good rule of thumb.
In the context of managing sales revenue and keeping that bucket completely full, things can become pretty difficult when you spring a leak! We need to spend more and more time dumping new business in just to keep a minimum level inside—and that is exhausting.
6 Ways to Reduce Sales Attrition
Although a certain amount of attrition in sales is to be expected, when it becomes problematic, even the best new business program in the world won't fix the problem. So, step one involves fixing the attrition problem that is causing you to miss your monthly, quarterly, and yearly budgets. Only after we have properly patched that leak in the bucket, will we have the opportunity to shift our attention to developing new business and filling that bucket up.
1. Calculate Your Current Attrition Rate
The best way to do this is to make a list of every client you had in the previous year and then note which ones are still with you. If you had 100 clients in the previous year and only 75 of them are still with you, then you had attrition of 25% and retention of 75%.
Regardless of the reason those clients are no longer with you—attrition is attrition, and they need to be counted. You may also be thinking about the fact that your total number of accounts rose year-over-year. That would mean that you did a great job developing new business, but the attrition still needs to be counted.
2. Determine How Much of the Leak You Can Fix
Look at the attrition that you incurred and determine how much of this was completely out of your control (they went out of business) versus in your control (they went with a competitor).
3. Pin-point Where to Focus Your Attention
Every business has clients that they would agree are their “key” or “best” accounts. This list of clients will include those that are likely to spend the most with you, pay you on time, and work with you in a true partnership. While you certainly don't want to see attrition anywhere on your account list, you need to make certain that you don’t lose your key accounts.
4. Find the Leak
Examine the list of accounts that you made in step #2—the ones that you determined were in your control—and compare that list to the list of key accounts that you made in step #3. Focus your attention on the accounts that appear on both lists and begin to assess why this business may have leaked out of your bucket.
- Was it lack of perceived value?
- Did they go with a different solution?
- Was it a change in personnel?
- Was it a relationship issue?
5. Roll Up Your Sleeves and Get to Work
Now, you’re ready to apply all of your time and attention to retaining and growing the accounts that you believe are your best accounts, and also in your control. Look at what has caused your clients to leave in the past and work hard to fix those problems. Understanding where the issues are is the most important step, but you will also need to take a look at your process, your offerings, and your strategy to make sure they are in line. You should have a very specific and actionable plan to keep and grow the partnership you have in place with every single account on this priority list.
6. Track Your Retention of These Key Accounts
Don't wait until the end of each year to do this exercise. We recommend that you look at the attrition of your best/key accounts either monthly or quarterly.
Always remember that your best customers are your competitors’ best prospects.
Now is the perfect time to focus on getting your plan in place to reduce attrition and grow your key accounts. Once you feel as though you are successfully keeping and growing you best customers, you will be able to focus on developing the type of new business that is critical for growth.
Editor's Note: This post was originally published on March 19, 2012 and has been updated.