What is “attrition” and is it a good or bad thing? Simply put, attrition is a way of quantifying how many people are leaving your wine club. A healthy wine club will always have some attrition, balanced by new members joining, but as long as the general trend is that your club is getting bigger, that’s a good thing. Unless you are one of those lucky wineries that always sell out and have a wait-list for your wine club!
This balancing act - new people joining, versus existing members leaving - is quantified using four different metrics:
Attrition Rate: percentage of members leaving within a certain period of time (typically monthly or yearly)
Retention Rate: percentage of members staying in the club within a certain period of time
Acquisition Rate: percentage of new members joining the club within a certain period of time
Growth Rate: net growth in your club after taking into account attrition and acquisition.
Consider the following example scenario. It is January 1st and you have 1,000 members in your club. Let’s imagine that by Jan 31st, you have signed up 100 new club members in the tasting room, but 50 club members have decided to cancel. So at the end of the month you have increased club members by 50 so that you now have 1,050 club members (1000 starting + 100 new sign-ups - 50 cancelled members) and this is how your monthly metrics look:
Monthly Attrition Rate: 5% (50 cancelled members / 1000 starting members)
Monthly Retention Rate: 95% (950 retained members / 1000 starting members)
Monthly Acquisition Rate: 10% (100 new members / 1000 starting members)
Monthly Growth Rate: 5% (50 net new members / 1000 starting members)
In summary, it is important that your club stays current and so a healthy amount of attrition is good (clearing the dead wood for the new blood!) Average tenure (amount of time before a member cancels their club) in this industry is around 18 months, although this figure depends a lot on the region, type of club and age of your business. A monthly attrition of 2-3% is considered healthy, as long as you keep your acquisition rate higher than this number to ensure your club continues to grow.