Anticipate Loss, Plan for Growth

Anticipate Loss, Plan for Growth

You can’t grow your business unless you are first able to predict losses. That’s not done with guesswork. It means having a reliable system to accurately forecast when clients are going to leave, so you can take steps either to prevent that loss or to absorb it when you can’t prevent that loss from happening.

That’s why I created the Engage Early Warning System for my own clients. In one case study, working with a client in the business-product sector, it predicted over 85% of cases where customer loss occurred.

Since that’s typical of the results it produces, let me share with you how this powerful system works, and then I’ll show you how we applied it in our case study.

The evidence-gathering stage is one you can start doing right now in your own business.

Do a review of all customers you lost over the last two years. Look at behavior patterns in your relationship with each one. My system identifies more than two dozen specific traits. For simplicity here, I’ve clustered these into three groups of questions.

What were people doing?

Actions tell us plenty if we’re prepared to pay attention. Look carefully at sales rep activity: if even just one of them left the company, know the reasons why. Also, look at customer deployment of what they were buying from you: had it slowed down or stopped?

How engaged were they?

You can’t influence someone who isn’t listening. Have a look at the quality and quantity of communication between you and your former customer. Had they stopped returning your calls? Had there been a slowdown or no interaction at all with your help desk or customer support team? Has your main contact left the company all together?

What does your data say?

Numbers yield facts. And facts create deeper understanding. Look at customer purchase history and orders for the most current deployment of your product or service: were they down? Was the annual value of transactions with that customer increasing or decreasing? Open up your CRM: what were the key activities, contacts created and marketing opportunities engaged with that customer?

Crunching the numbers

The next stage in the Engage Early Warning System is analytical. We use mathematical tools to determine which factors are good signals of account risk and what the weights should be to apply to each.

Circling back to our case study, some of the factors we found to be most relevant for their business were:

  1. Decreasing annual customer value: theirs was steadily decreasing.
  2. Decreasing deployment of new sites.
  3. Reduction in the rate of support cases being opened
  4. Reduction in sales force activities (ex. inbound/outbound calls and appointments registered in the CRM).
  5. Reduction in new contacts created in the CRM for that customer.

With these factors identified and weighted, it is a very simple exercise to calculate a “score” for each account and the threshold that suggests a dangerously high risk of a customer leaving.

Armed with the Engage’s Early Warning System, you can assess your current customers and identify which ones are at risk of leaving – so you can take action.

In the next article in this series, we’ll look at a plan to fix the triggers identified in the case study -  insights that you can apply to your own organization today.

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Nonstop Sales Boom by Colleen Francis Make sure you check out Colleen's latest book, Nonstop Sales Boom for powerful strategies to drive consistent sales growth quarter after quarter, year after year.

Colleen Francis, Sales Expert, is Founder and President of Engage Selling Solutions (www.EngageSelling.com). Armed with skills developed from years of experience, Colleen helps clients realize immediate results, achieve lasting success and permanently raise their bottom line.

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