2.2 Understanding Attrition

An enemy to managing your sales funnel is attrition.  Attrition is the number of contracts lost over time and mostly applies to EFTs and sessions.  Why is attrition such a factor in managing a sales funnel?  Well, here is a good analogy:

A frog jumped into a well and wanted out.  Each day he got the strength to jump 3-feet up the wall of the well.  However, because the wall was slippery, he slid back 2-feet each day.  The well was 15-feet deep, so it took the frog 15 days to get out of the well.  However, the frog actually had to jump a total of 45-feet in order to get out of the 15-foot well.

The same principle is true for you as a Program Director.  The more contracts you lose, the harder you have to work to replace them.  So, assuming you want to grow your EFT from 100 to 105 for a month, but you lose 10 EFT contracts within the same month, you actually have to sell 15 contracts in order to gain 5.  

With a higher attrition rate, you simply have to work a little harder – more calls, more evaluations, and more sales.  It is not feasible to expect a zero-attrition rate, so your goal should be about 5 – 7% monthly.  If you find that your attrition rate is greater than this, remember that two factors directly impacting attrition are the quality of the sessions and rapport with parents.  We will talk more about these factors later in this lesson.


Analyze Your Sales Funnel to Predict Increase and Decline

As mentioned previously, your sales funnel is also a type of crystal ball.  By analyzing the funnel on a regular basis, you will be able to predict increases in revenue before they happen.  More importantly, you will also be able to predict potential decreases in revenue (then react quickly to offset them!!!) before they occur.  So, how is this even possible?

Again, it goes back to a formula.  For example, say you have a goal of increasing your EFT contracts by eleven for a given month.  You will need thirty-two inquiries to reach your goal, which includes your 5% loss in attrition.  After reviewing your sales funnel at the end of the first week, you see that only four inquiries have been received.  At the current pace, you will not reach your goal.  Going back to the formulas; 4 inquiries each week for four weeks will be 12 inquiries for the month.  12 inquiries on average yield approximately 7 evaluations and 5 sales – 6 sales short of your goal.

The good news is that you have three more weeks to make up the difference!  You might decide to initiate some additional marketing efforts such as an email blast, increasing the number of daily marketing calls, creating a short-term promotion, etc. 

The point is this – if you are in control of your sales funnel, you are a proactive Program Director who has the power to influence your results