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