Customer DefectionI strongly agree that customer defection is one of the most illuminating measures in business. However corporations do not measure customer defections or make little effort to prevent them. Customer defection contains nearly all the information a company needs to compete and make profits. It is a clear possible sign that customers see a deteriorating stream of value from the company and diminishing flow of cash from customers to the company. By searching for the root causes and acting on them can help business win back the customers and reestablish the relationship on firmer ground.
* Business doesn’t act on customer defections as many companies aren’t really alarmed by customer defections. Customer defection is often hard to define and is extremely hard to uncover the real root cause. Analyzing failures can be hazardous to careers and is an unpleasant study. Companies don’t understand the relationship between customer loyalty with the cash flow and profits.
* In general, the longer a customer stays with a company, the more that customer is worth. Long term customers have no start-up cost and are more profitable than new customers Business fail to focus on value creation which increases the defections from the loyal customers. A climbing defection rate is a predictor or a diminishing flow of cash from your customers. Executives focus heavily on customer satisfaction-surveys but these surveys have weakness and are imperfect. Instead they need to find how many satisfied and existing profitable customers they can keep.
* People in organizations need to focus on failure analysis. More can be gained by studying business failures rather than on business successes. Some customer defections can be easier to spot than others. Some defections can be partial. A customer can buy some equipment, some service from other suppliers, and these fractional defections have meaning. Corporations need to monitor if their share of wallet is going down from the...