For about 15 years NPS has gained a global following mainly because it’s a measure for predicting client loyalty and growth.
The client churn rate, also known as the rate of attrition, is the rate at which customers stop doing business with you.
NPS was never designed to predict client churn and does not show a correlation to client retention. NPS is associated with growth and advocacy.
There are plenty of reasons why clients might stop doing business with your firm.
The Experience Journal whitepaper, shows that by categorising the major reasons for client attrition, you can continuously update these and predict churn rate.
For example, some of the reasons people may stop doing business with their accountant are low tax returns, excessive charges, outdated business knowledge, don’t understand client business, inconvenient business dealings, slow to complete documents, slow to respond to requests, outdated technology, not fun to deal with, change of contact person, merger or takeover, or poor communication skills. The “Other” option allows respondents to enter in their own reasons for giving their NPS.
If the Detractors provide the below major reasons, then you have a quantifiable churn rate to include in your market and operations plan to arrest client attrition.
The top two reasons are excessive charges 45% and slow to complete documents 30%. In this example the top reason of “excessive charges” may be as low value for fees or actual high dollar fees or both.
It is important to note that clients may not leave the accountancy practice because of habit, loyalty or perceived difficulties in changing to another accountant but the word-of-mouth advocacy may not be there for client growth.
- Excessive charges 45%
- Slow to complete documents 30%
- Slow to respond to requests 25%
- Outdated technology 20%
- Change of contact person 10%
When designing reasons for client churn rate the one-three primary reasons need to be identified from a predetermined list or respondents can enter a reason in “Other”.
More Information
Maria Charlton
maria@mapmarketing.com.au