Client Retention: Surpass the Minimum

In 1990, the consulting group Bain & Company and Earl Sasser of the Harvard Business School analyzed the costs and revenues derived from serving clients over their entire purchasing life cycle and found that regardless of the industry, the high cost of acquiring clients will render many business relationships unprofitable during their early years.

Acquiring a new client can cost up to five times more than it does to retain a current client.  It is only over time, when the cost of serving a long-term client falls as the volume of their purchases rises, that these relationships generate big returns.

The Bain-HBS review found that when the client retention rate increases by 5%, profits increase by 25% – 95%.  Also, long-term clients are more likely to refer new clients to the business and increase sales revenues and profits accordingly.

That said, an ongoing client retention strategy is a must-do for all Freelance consultants and business owners.  Read on and discover how your organization can embed client retention practices in nearly every step of your client interactions.

Context and expectations

When you propose a solution designed to help your client resolve a problem or achieve an objective, include in the conversation your rationale for presenting that particular path rather than another.  Make it possible for the client to better appreciate your decision-making process and divulge how you carefully considered his/her priorities, values, budget, staffing, or other factors that impacted your recommended solution.

We may infrequently discuss the behind-the-scenes thinking that guides the possibilities we envision for a client and his/her organization.  Revealing your big picture thinking demonstrates the depth of the value you attach to the client and his/her unique circumstances and that builds loyalty, trust and a good relationship.

Become an adviser

Don’t shy away from asking questions that will surface your client’s sometimes unexpressed expectations or concerns.  You may discover a solution that is ideally tailored to the clients’ needs when you employ the consultative approach to selling.  You and your client can collaborate on the development of the solution if s/he is comfortable with that process.  Buy-in is a given when the client is a co-author of the process.

Along the way, let your client know what to expect as the solution is implemented; it will also be helpful to review what success looks like.  Communicate often, so that the client understands where you are with the project, especially as regards milestones, Key Performance Indicators, the deadline and other agreed-upon metrics.

Moreover, depending on your product or service line, recommend services to your clients, based on their previous purchases.  According to a 2015 survey of marketers, this personalized touch generates a high ROI.  It shows that you’ve paid attention to client preferences and it is a compliment.

Finally, we are nearing Holiday time.  Make sure that you send cards to clients you’ve interacted with over the past five years.  Who among us does not appreciate a card at this time of year, when we reach out to those who matter?

Thanks for reading,

Kim

Photograph: Corine Vermuelen (2013)  Alicia and John George, owners of Motor City Java House in Detroit’s Brightmoor neighborhood

 

 

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Client Retention Means Exceeding Expectations

Client retention and referrals are the best ways to build a good client list. Earlier in the year,  one of my clients referred to me a colleague who is in a closely related business.  I was so happy!  While working with clients new and long-term,  my mission is to do an excellent job and exceed expectations, so that I will create the conditions for a long relationship and the receipt of referrals.

The two clients are friends,  yet very different in working style.  The first is laid back and easy to deal with.  The new client, to be honest, has not yet developed trust in my abilities. There is a tendency to be more hands-on than I would expect and to assume that things may not have been done correctly on my part.  I’m not sure of the source of the client’s anxiety, but I’ve decided to view the matter as a learning opportunity that will keep me in top form.  I will be pushed to do my best work and have the opportunity to go into trust and credibility building mode.

I started on the client retention path by first learning who had referred me and then sending a thank you email.  Prior to that,  the client had received December holiday cards, as it is my custom is to send holiday cards to all clients I’ve worked with in the previous five years.

Regarding the new client,  my objective is to help that individual relax and know that I’m in control and will make him/her look smart and capable in the eyes of superiors and peers.  I’ve written previously about how to establish a good relationship with difficult and demanding clients. https://freelancetheconsultantsdiary.wordpress.com/2015/12/08/how-to-manage-a-difficult-client/

Other tips include:

Be prepared

If you know that you’ll be asked to address a certain problem that the client must resolve, or you must make make recommendations about how the client might capitalize on an expected opportunity, do your homework and come to the meeting brimming with practical ideas and insightful questions.

Listen to the client

Listen and learn how the client views matters from his/her perspective, whether it’s how to implement the solution for the project you’re working on,  how to resolve a customer service glitch, or any other matter that is presented.  Show that you value the client’s opinions.

Respect the client’s ideas and suggestions

You may not have all the answers. The client’s lived experience matters.  Be open to incorporating the client’s ideas into your proposed solution.  Always agree with the client and validate his/her choices. Subtly adapt his/her suggested strategy into something that you know will be more effective, when necessary.  If the client mentions that another consultant has handled a similar project in a different way,  listen up and learn. You may receive valuable information on how to improve your business practices.

Communicate constantly

Misunderstandings cause relationships to fray and misunderstandings occur when communication is unclear and insufficient.  Meetings may be infrequent, but emails are a way to report on (in writing!) your many successes toward achieving the objectives and goals of the project.  I keep my clients apprised of what I’m doing.  This custom also helps when it’s time to send an invoice and billable hours must be justified.  What I don’t want is a client who questions why I’m claiming so many hours.  Moreover, if the client feels that some aspect of the project scope should be expanded or diminsihed,  adjustments can be made in a timely fashion.

Get it in writing

Take meeting notes and within 48 hours post-meeting, send an email to confirm what has been discussed and agreed-upon. Include project specs, the fee structure, the payment schedule, project milestones, the deliverables and the due dates.

Client retention is the foundation of every business.  It takes less time and effort to retain a client than to pursue and acquire a new one. Furthermore,  long-term clients are much more likely to bestow on you that ultimate affirmation, a referral.

Thanks for reading,

Kim