Why attrition matters to a first-time founder
Attrition can describe employees leaving or customers ending their relationship with a business. Both affect growth, but the causes and calculations differ. Founders should state which group and period they are measuring, then investigate whether losses are expected, harmful or concentrated in a particular segment.
Examples of attrition
A support team starts the year with 40 employees. Six leave and two of those roles are not refilled. The company may discuss employee attrition, but its workforce reduction is not simply six because hiring and role closures matter. A subscription business would calculate customer attrition differently.
Common misunderstanding
Attrition is not always identical to employee turnover or customer churn. Some organisations reserve attrition for natural departures where roles are not replaced, while others use it for any loss. Rates also change depending on whether the starting headcount or an average headcount is used and whether internal transfers count.
When to use it
Use the term only with a label such as employee or customer attrition. State what counts as a loss, which group it is divided by and the period measured. Break the result down by role, length of service, product or customer type. Pair the rate with reasons and replacement activity before changing hiring or retention strategy.