The Friction Worksheet

The Friction Worksheet (IACS-TOOL-001): free, no sign-up. Figures stay in your browser unless you send them.Send your working paper

Illustration loaded. The worksheet opens on a constructed example journey so you can see the method working. These are not any organization's figures. Replace every one with your own before you use the total.

The journey

Pick one journey, not the whole business: billing queries, a switch, an onboarding, a claim. One journey, one year. The number is only defensible at this scale.

CurrencyAll money figures on every sheet are read in this unit.

Annual journey volumeHow many times customers start this journey in a year. This is the exposure every rate below is applied to.

Repeat contacts

The customer comes back because the first attempt did not resolve it. You paid twice for one problem.

First-contact failure rateShare of journeys not resolved at the first attempt.

Extra contacts per failureAverage additional contacts each failure generates.

Loaded cost per assisted contactSalary, overhead and systems, not just handle time.

Where these figures come from

Cost 010

Manual rework

Someone in the back office corrects by hand what the process should have done. It rarely appears in a contact centre budget, which is why it is rarely counted.

Manual correction rateShare of journeys needing off-line human correction.

Cost per correctionLoaded time of whoever fixes it, end to end.

Where these figures come from

Cost 020

Escalations

The second and third pair of hands: a supervisor, a specialist desk, a complaints team. Count only the extra handling, not the original contact, or you count it twice.

Escalation rateShare of journeys reaching a supervisor or specialist.

Extra cost per escalationLoaded cost of the escalated handling only.

Where these figures come from

Cost 030

Goodwill and credits

What you pay the customer to stay calm. Finance can already see this line, which makes it the useful place to start the conversation with them.

Credit or waiver rateShare of journeys ending in a credit, waiver or refund.

Average credit valueMean value given away per instance.

Where these figures come from

Cost 040

Attributable churn

Estimate

Margin lost when customers leave because of this friction. Customers leave for many reasons, so count only the extra churn: the churn rate of customers who hit the failure, minus the churn rate of a comparable group who did not. Count margin, never revenue.

Customers who hit the failureDistinct customers with at least one failed journey in the year.

Churn rate, customers who hit itShare of that group who left within twelve months.

Churn rate, comparison groupComparable customers (same segment, tenure, product) who did not hit it.

Annual margin per customerContribution margin, not revenue. Revenue overstates this badly.

Years of margin lostRemaining expected tenure. One to two years is defensible.

Where these figures come from

Cost 05, estimate0

Three rules that keep the number credible

RULE ONE

Count only avoidable cost

If the contact would still happen in a journey that worked perfectly, it is not friction cost. Including it inflates the figure in a way a sharp finance director catches in five minutes, and once one line is caught the whole estimate is discarded.

RULE TWO

Keep the estimate apart from the cash

Costs 01 to 04 are cash the organization already spends and can find in its ledgers. Cost 05 is an estimate against a comparison group. The working paper shows them on separate lines, and the low case leaves the estimate out entirely.

RULE THREE

Lead with the low figure

Present the range, not a point, and offer the bottom of it first. If the low figure is already material, you have made your case without defending a decimal place.

Working paper

01 Repeat contacts0
02 Manual rework0
03 Escalations0
04 Goodwill and credits0

Cash cost, 01 to 040

05 Attributable churn (est.)0

Annual total, incl. churn estimate0

Uncertainty allowance± 30%

Low case, quote this0 High case0

Low case: cash cost only, less the allowance. High case: cash plus churn estimate, plus the allowance.

Share you expect to recover (a forecast)45%

Recoverable, on the low case0

Every other input describes something that already happened. This one forecasts what an intervention will remove, and no system holds it. The default of 45% is a starting point, not a benchmark. Set your own and be ready to say where it came from.

Evidence behind the totalPartial

SHEET 2

Friction rate: failures per unit of exposure

Raw failure counts rise with usage: your busiest segment will always have the most failures. To find where friction actually lives, divide failures by exposure. Complaints are kept as a separate signal, because most failures never produce one.

Journey or segment	Journeys (exposure)	Failed journeys	Complaints	Failures per 1,000	Complaints per 1,000	Complaints per failure	Rank by count	Rank by rate

Rows are a constructed illustration until you replace them. A failed journey is one that needed a repeat contact, a manual correction or an escalation; define it once and keep the definition fixed between periods. The Institute's weighted Friction Index (Fi) is registered as informative only: its weights are assigned priors, not measurements, and it carries no threshold.

SHEET 3

Customer economics: APR, C-BEP and FA-LTV

Take one customer or one segment. Friction is a running cost against the margin that customer earns you. These three teaching formulas show whether that margin survives it.

Constructed customers from the Institute's worked library:

Monthly gross marginWhat this customer or segment earns you each month, after direct costs.

Annual operational burden ($OBx)What it costs a year to serve this customer's friction, reconciled to the ledger.

Valuation horizon (H)Months over which value is counted.

Survival at end of horizonProbability the customer is still active at month H, from your retention model.

APR, adjusted profitability ratio12 × monthly margin ÷ annual burden

C-BEP, churn break-even pointannual burden ÷ monthly margin

Stop-loss threshold1.2 × C-BEP (unrounded). A customer whose expected tenure is shorter than this is on alert.

Nominal LTV over Hmonthly margin × H

Burden over Hannual burden × H ÷ 12

FA-LTV, friction-adjusted LTV(nominal LTV − burden over H) × survival

Tier

Teaching formulas, not a valuation model. These formulas assume a constant gross margin, a burden spread evenly across the horizon, no discounting, and one survival figure at the end of the horizon standing for the whole period. Within those assumptions the arithmetic is exact. A production valuation, where margin, burden or survival change month by month, should be computed period by period: the sum over each month of survival to that month times that month's margin less its burden, discounted at the organization's approved rate. The tier bands are policy settings; the 0.80 floor is a policy buffer below the APR 1.00 sign change, not a calibrated value.

SHEET 4

What to do with the number

Free

This worksheet

Rerun it for each journey you care about. Copy or save the working paper and take it to finance as it is: every assumption is on the page.

No cost

Read

The books

The method in full, with worked cases. The Friction Economics Standard (Volume IV) and Volumes II and III of The Customer Value Trilogy are on Amazon now; Volume I follows in November 2026. Search "Ahmad Samir Friction Economics" on Amazon.

The Standard: Kindle $9.99 · Paperback $44.99 · Hardcover $64.99

Learn

Friction Analyst Foundation

Your team learns to build this number from its own systems, defend it to finance and rerun it every quarter. A two-day program that leads to the Friction Analyst (FA) credential, with an Institute assessment.

Dates and list prices on the Academy page

Prove

21-day Friction Audit

The Institute measures friction with you from your own data: the five costs, the comparison group for churn, and the friction rate, ending in a working paper you can take to your board. Founding Cohort: the audit is free for one business unit, in exchange for anonymized data and a case study. Five places, closing 31 December 2026.

Founding Cohort: free, five places · Otherwise fees on request

ahmad.samir@appliedcxscience.com

Send your working paper to the Institute with the form below, or copy a short enquiry with your figures in it and paste it into any email.

Send your working paper to the Institute

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