In any consulting business, client retention is extremely important. According to a Deltek survey on billing rates, 80%of AEC business is obtained from repeat clients. According to Marketing Metrics, it is 50% easier to retain current customers than acquire new ones and in a study by Harvard Business School, it was found that increasing customer retention by even 5% can increase profits between 25-95%.
The statistics don’t lie. Retention is where it’s at in the professional services industry. Without obtaining a single new client, many firms have incredible opportunities for growth simply by harvesting more work from current clients. The ability to service current clients well and cross-sell other services can provide sustainable revenue. Remember, client retention is only one aspect of a robust marketing and business development plan. Below are some points to consider that will lead to better client retention.
Perception of Business Development
Most people hold a perception of business development as acquiring new clients. In reality, business development is simply “developing business.” It doesn’t discriminate between new or existing clients. As the statistics above show, most business developed comes from existing clients, so business development can mean customer service and cross-selling as well. As an organization, consider the relationships you have with your current clients as a business development opportunity.
“Satisfied” Clients Are Not Acceptable
There is a fallacy that having satisfied customers is a good thing. Clients who are “satisfied” in surveys can be passive and, therefore, easily attracted by competitors. 80% of defecting customers describe themselves as “satisfied” or “very satisfied” just before they leave (surveys alone won’t tell you everything).¹ Create advocates, not just satisfied clients. Create clients so pleased by your customer service, communication, responsiveness, and problem-solving skills, they would not think of leaving. These clients are also not bashful about telling others. Word of mouth through referrals is one of the best means of advertising because of the value of third party endorsement. As a firm, work towards creating advocates through solid client service.
Convert Current Clients
It is much easier to increase the volume of work through a current client than convert a new prospect into a client. The probability of converting an existing client is 60-70%, whereas the probability of converting a new prospect is only 5-20%. That is why it is important to build trust and relationships with current clients. This requires consistent, intentional communication. Taking time to schedule your “touches” will assure you make the necessary contacts throughout the year. This practice will create a much better foundation for future work.
What Do Your Clients Want?
We all would like to know what our clients are thinking. Nothing hurts retention more than not understanding your client’s wants and needs. In order to insure you understand your client’s needs, it is important to always ASK QUESTIONS. Some simple open-ended questions about the project will allow for some open dialogue. Some clients will not feel comfortable answering your questions for various reasons. In those cases, it might be necessary to enlist a fellow staff member who is not involved in the project to engage the client to ask their opinion. It may even be necessary to use a third-party person unrelated to either organization to get honest feedback. If you find yourself in a situation like this, do not hesitate to ask for assistance and/or guidance from fellow associate or supervisor.
For help with your customer retention, reach out to us at WellBridge Solutions.
¹ Research conducted by Peppers & Rogers Group