To run a business profitably, you will have to learn how to take care of different performance metrics. These performance metrics allow business owners to set goals and objectives for the company for which further strategies are created.
Today, in this post, we are going to discuss one such metric called the attrition rate. We will discuss the basics of attrition and help you implement it for your business. So, without any further ado, let’s get started!
What is Attrition Rate?
Attrition rate essentially refers to the number of customers lost or the employee turnover. The attrition rate is also sometimes called the churn rate. To stay on the safe side, you can call it the number of people that leave a company over a period of time. The term churn rate is usually used by human resource professionals trying to create strategies to improve a company’s employee retention rate.
What does Attrition mean in Business?
Most businesses are used to figure out their customer and employee retention using the attrition rate. It’s quite simple to understand. If the attrition rate is lower, the business is doing good. If the attrition rate is higher, businesses are bound to suffer losses.
Customers look at a company’s attrition rate to figure out if the company is worth doing business with. Similarly, a potential hire might want to know how well the company he has applied in is doing. He would want to know the attrition rate of the company to figure out if he has a good future in it or not. A higher attrition rate will definitely not make him work at the company.
Different Types of Attrition
There are different types of attrition. As we mentioned earlier, attrition is dependent on the number of customers and employees a company loses. Therefore, there are two types of attrition:
1. For Customers
When we talk about attrition rate taking the customers in mind, we try to find out the number of customers that have left the company. This metric is important to track so that the business owners know how loyal their customers are. Also, it is a light bulb moment for them to improve their customer service. Higher attrition rate can mean customer satisfaction at the company is quite low.
2. For Employees
The employee attrition rate is the number of employees leaving the organization over a period of time. Companies that have a low attrition rate usually have employees that are happy with the company and will like to continue working for it. A higher attrition rate will automatically show poor employee morale and a bad working environment.
There you have it. Attrition is an important concept you must know to make sure you are able to run your business properly. We hope all your questions were answered in this post. If not, you can ask us in the comments section. We’d love to hear from you!