Attrition part 2

Product Attrition

Who: Product managers, branch managers, segment managers, marketing
What: The number of lost products i.e. customer no longer has any accounts of the specific product in the period.

This metric is a powerful one, as it directly reflects relationship depth and therefore the likelihood of customer retention. A product will be defined uniquely in any Bank or Credit Union, which makes the solution for this metric necessarily customized. Lost products occur in two situations: when the entire relationship is lost or when the last account of a given product is lost Same issue applies with Account Attrition, but provides a different view.  This granularity of reporting is a building block to enable full advantage of any price optimization effort.

When the entire relationship is lost, we prefer to focus using a different metric, Customer Attrition, which we’ll explore in the next section. So, if we take Customer Attrition out of the equation, we get a working definition of Product Attrition as being Lost Products of Ongoing Customers during the period. In practice, we implement period Product Status as a dimension of our analyses to support exactly this kind of need.

Customer Attrition

Who: Segment managers, branch managers, marketing managers
What: Entirely lost customer relationships during a period

Many bankers will agree that customer attrition sounds like the easiest to define, but is not necessarily the easiest to measure. You’ll face the same issues as Account Attrition when defining wheneach Account is lost, and similarly the problem of retaining customer records in data until after tax reporting season is inevitable. Once defined and measured,however, the measurement of lost (and new) customers, we all agree is acritical part of understanding whether you’re winning or losing, in which product areas and how fast – all things like these banking metrics that should be top of mind for management at all levels.

Stay tuned for the next newsletter

In the next newsletter we will continue our in-depth discussion into attrition by comparing Account, Product and Customer Attrition metrics in the context of the most important goal that spans all three – lost money attrition. We’ll show how time series derived from small data can reveal true customer behavior trends in your financial institution.

NOTE - Data reflected in the graphs depicted in this newsletter are illustrative only and do not reflect any of our current customer’s data.



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