Happy customers will stay a lifetime. Keeping them happy is more important than ever and — consequently — now harder than ever. Today’s tech-savvy customers are more demanding because they have more choice. Clients know exactly what premium service looks like and whether or not they’re getting it. With a competing service just a click away, firms are doubling down on client retention.
What is client retention?
Client retention refers to how well you hold on to your clients. After you’ve courted and converted, client retention measures how you maintain the customer relationships that keep your clients returning to your product or service. Customer retention strategies can be the difference between a successful firm and a suffering one.
What is a healthy retention rate?
Your customer retention rate is measured by the number of customers you maintain over a given period of time. Customer retention is an important metric for any firm as it measures how successful your team is at signing new clients, as well as keeping existing ones happy. Firm retention rates vary depending on the size of the clients and the accompanying assets. Firms serving smaller clients will see a lower retention rate as these clients are naturally exposed to more risk, like running out of funds. Smaller firms should aim for a retention rate between 90% and 92%. While firms serving larger clients should aim for a retention rate of 92% and above. However, if your firm doesn’t hit this benchmark, you’re not alone, most professional services firms clock in a retention rate of 80%.
How do client retention rates impact revenue growth?
You’ve likely heard it before — keeping an existing client is easier (and cheaper) than chasing a new one. The saying holds true; customer acquisition is roughly 5 to 10 times more expensive than maintaining an existing customer long-term. While there is an exciting thrill with signing new clients, it’s important to dedicate just as many resources to nurturing your existing client relationships. Even minor changes in customer retention programs can have major impacts on revenue, profitability, and ROI.
Let’s compare two firms. Firm A has a client retention rate of 90%, while firm B has a retention rate of 80%. Over a span of 5 years, we’ll see profit fluctuate annually due to customer churn.
|Firm||Retention rate||Year 1||Year 2||Year 3||Year 4||Year 5||Total|
With only a 10% difference in retention rates, firm A generates 22% more revenue over a five-year span. Bottom line: client retention is major.
Why your firm is leaking clients.
Plain and simple, you’re not giving your clients the attention they deserve. As consumers, it only takes one bad customer service experience to motivate us to walk away from a brand. As a firm, you need to prioritize customer service and customer experience to keep your clients from walking out the door and into the arms of a competitor.
Customer retention strategies that work.
Improve customer retention and transform new clients into loyal customers with a strategic customer experience plan. Much like the best defense is a strong offense, a solid customer experience will proactively swat customer churn and keep your customers on board for the long haul.
To build the creme de la creme of customer experiences, start with a vision. Imagine the ideal experience your firm can provide. While mapping out your vision, think about the following facets of your client interactions:
Setting — What channels do you use to communicate with clients? In person? Email? Social Media? Map out your customer touch points and think about how the setting aligns with the expectations of the customer. Pinpoint the channels that are seamlessly used by your clients in their day-to-day lives, and meet them there.
Timing — How responsive is your firm? How consistent is your team when responding to clients? Consistent and reliable communication will build trust and credibility with your clients. Establish a standard operating procedure that outlines how and when to respond to clients. Even if you’re following up without a solution to their question, don’t leave your clients in the dark. Let them know you’re listening and you’re on it.
Quality Control — How do you know if your firm is responding on time? How do you know if your team is responding accurately? Your firm can’t fix what it can’t see. Ensure you have the right people, processes, and systems in place to fully understand what is happening on the client frontier.
Set expectations from the get-go.
No two clients are the same. When it comes to delivering the most valuable experience, you need to know what your client values. Upon onboarding, identify how your client measures value and how they expect to derive it from your services. Likewise, in order to meet and exceed your client’s expectations, you need a mutual understanding of what they expect from your firm.
About those reviews.
Once you’ve established your plan and trained your team, you’re ready for customer reviews. Survey feedback will give you valuable insight and a reality check on customer happiness.
Reviews, like a form, should be short and sweet. You’ll want new and retained customers to respond, so make it as easy and friction-free as possible. For seamless replies, set up answers on a sliding scale of 1–10. Any score you receive lower than a 6 indicates a retention risk. If this occurs, reach out immediately to touch base with your client. Alternatively, any score 9 or higher confirms your efforts are headed in the right direction.
Inevitably, some feedback will end up online. Whenever you’re confronted with a negative review, treat it as an opportunity to show off the quality of your customer support. A swift and empathetic response gives you the best chance at diffusing the heat of the review (or rant). Denial is the worst response, and will lead to an exodus. Acknowledge the issues honestly, with humility and as much transparency as possible.
Wrapping it all up.
Maintaining your existing customer relationships is a sure-fire way to grow your firm. However necessary, customer retention is often overshadowed by the thrill of chasing new clients. Establishing a sustainable, scalable, delightful customer experience will help your firm build relationships, foster trust, spawn advocates, and deliver exclusive value to your clients. Incorporating tools like Liscio, with secure communication and file management, will help your team provide the seamless customer experience that keeps your best clients returning year after year.