What does it take to grow your company?
Your first thought was probably along the lines of more and more and more clients. You think about generating more leads, networking more, and selling more.
But if you really want to grow, you might reconsider how you treat your current clients. Harvard Business Review found that an increase in customer retention by 5% results in an increase in profit by 25% to 95%. Engaged consumers spend more, are more profitable for the company, and have more growth potential.
In addition, it can be extremely expensive to win a new client. Consider the time and expenses incurred during the new business process -- from researching and writing a proposal to practicing and pitching to meetings to spec work.
Increasing your company’s retention rate and the loyalty of your clients can help your company become more stable and improve the profitability of your company. And even if your work is mainly project-based, there is still an opportunity to increase your client return rate or lifetime value with these tips.
Know Your Customer Retention Rate
Before you begin to even consider a retention strategy, you need to understand what your current retention rate is. (I wish I could save the math until the end, but that’s just not how this works.)
You’ll first need to define a period of time -- whether that’s quarterly or yearly. Then, follow this formula:
Customer Retention Rate = ((# Customers at End of Period - # Customers Acquired During Period)) / # Customers at Start of Period)) X 100
For example: You start the year with 20 clients, gain 5 new clients in the first quarter, and have one client churn.
((24-5)/20)) x 100 = 95% retention
Here’s another example: You have 44 clients, you gain 12 new clients, and 13 clients churn:
((43-12)/44) x 100 = 70% retention
Once you know your rate, you should consider doing an audit of your lost clients to determine similarities in reasons for leaving or types of clients that leave, say clients with an overall marketing budget of less than X amount always churn. Consider if you can add qualifying questions to your sales process or revise your ideal client profile to better reflect the attributes of loyal clients.
11 Tips for Increasing Customer Retention
Now, the most important part of client retention is the quality of your company’s work. Without great work that delivers ROI or meets the client’s goals, you will find yourself on the other side of the table hearing the words, “You’re fired.” But delivering great work isn't the only thing that matters. Here are a few tips for improving your retention rate:
1) Highlight case studies during the sales process.
A significant portion of the sales process should be focused on determining if your company and the prospect are the right fit -- from both a relationship standpoint and how you will work together.
Share previous case studies that reveal your company’s style of communication and collaboration, your processes for executing on and delivering work, and the results you achieved for clients. You could also share testimonials from current customers.
It's similar to researching purchasing any big buying decision. You want to know if and how it will work before you purchase. If the client truly understands this, they will be more likely to have properly set expectations and be happier with the experience once they sign on.
2) Set expectations early and often.
If you don’t set expectations and communicate these clearly, clients can easily become upset. They might believe you can deliver on X results, while in reality, those results are only seen in month six or with additional projects.
In addition, your clients are coming from very different businesses. One client might feel that your fees are high, and therefore, they expect an extremely high amount of expertise and "white glove" client service, while for another client, you might be one of many different company partners, and the client cares more about your ability to collaborate than care for their brand.
Understanding these points of view and communicating deadlines, progress toward goals, what’s included in a project, your process, your communication style, etc., is essential for making sure expectations are met. This, in turn, will keep clients happy with the relationship for longer.
3) Communicate results on a regular basis.
Clients are more likely to stay with your company if your firm is delivering results and ROI. If a client can point to the fact that your company has influenced or increased leads, MQLs, SQLs, lifetime value, retention, etc., then it will be much more difficult for the client to say goodbye.
That means you need a good system for tracking and reporting on the metrics that really matter to the client, which should relate to the SMART goals you established together. Be transparent about the activities you executed on last month, the results you saw, where you see opportunities for improvements, and what you will work on next month. In addition, use a project management tool so that the client can easily see how far along the team is in a project.
4) Create a roadmap for the future of the relationship.
Many people compare the client-company relationship to dating. This isn’t that far off. And it’s especially true when you consider the lifecycle of dating. At some point, one person in the relationship wants to know that this is “going somewhere.” He or she wants to know what the “plan” for the future looks like.
This desire to know that you are working toward a “next step” can also be applied to business relationships. It can be easy for the client-company relationship to fall victim to routine –--everything is going great, you know what type of work the client wants (and will approve), and you understand what works to reach their goals. That gets boring quickly though, and it’s easy for the client to wake up one day and realize how uninspired and unmotivated the company team is.
Your account executives should create and revise on a regular basis a relationship roadmap. Build in steps for new projects and levels of commitment. Both parties should be able to look forward and be excited about the current and next stage of the relationship.
You should also have a process for ending a client relationship -- this is inevitable. But when you end the relationship in the right way, you leave open the possibility that you might be called upon again.
5) Make memories around your shared successes.
According to research, people remember negative events more vividly than positive ones. Even if there are more positive events overall, the bad occurrences may be the longest lasting memories.
So agencies need to consider how they can create better, more memorable experiences around positives and successes. When something negative occurs -- a goal or deadline is missed for example -- the company team overly communicates, discusses plans for fixing the issue, apologizes, etc. But when something truly great happens, how much of an emphasis do you place on the event?
6) Ask for feedback and act on this information.
You can’t improve client retention without first understanding why clients leave your company. Once you know the reasons and the correlating signs, you can work to prevent client churn by proactively dealing with issues.
Ask for regular feedback from the entire client team, including the decision-maker. Use a client feedback tool, such as CLIENTpulse or Client Heartbeat to track trends by either the client, the individual, or the project. For example: By tracking by project, you could identify if client happiness drops after every website redesign project. If you identify this trend, you could work to improve processes or ask for more qualitative feedback on what exactly is contributing to the fall in satisfaction. You could also identify if a specific account manager's clients have all reduced their satisfaction scores. Maybe the person has become too overwhelmed and you need to reallocate work? Maybe a personal matter is affecting his or her work, and you should encourage the person to take a few days off work?
Being able to identify and address these issues as early as possible will help you to prevent clients from leaving you.
7) Map out a consistent client experience.
Consistency builds trust with clients. They know what to expect (See #2) and can rely on your team to get the work done and deliver the results they need.
Without this, most interactions are a surprise, and in reality, clients don’t like surprises -- even if they say they want to partner with a more “innovative, fun, risk-taking company.”
Build out processes for onboarding new clients and kickoff meetings. Have set agendas for meetings. Build workflows around projects and share these with clients. That doesn’t mean you have to become a factory of creative output; you can still customize according to the specific needs of the client. But let’s be realistic: Your company typically executes on similar project types. Having a process for each of these activities will make your team more efficient, and the client will have insight into what needs to be done and when. You can save the surprises for when you share the great results of the project.
8) Create a client relationship marketing strategy.
Have you considered what the communication from your company looks like once a client signs on? Yes, she emails and works with her account manager, but how often does she hear from the new business director who convinced her to work with your firm or your CEO/owner?
Consider creating a monthly newsletter sent from the company CEO. Have the new business director be involved in quarterly account check-ins. Consider if there are education or training needs of the client you should address. Come up with interesting, light touch ways to continue to build up the credibility of your company’s brand with the client.
9) Keep a record of communication and any past problems.
Your company’s culture, leadership, and business practices all contribute to retention, but another way to prevent disruption in changes in personnel is by adopting a CRM system where you can store notes from meetings and phone calls, ongoing issues, personal preferences of the clients, etc.
With detailed notes and a complete history of the relationship recorded, a new account manager will be ready to be a true business leader to the client much more quickly.
10) Use reciprocity to increase loyalty.
Reciprocity is a social construct that has been found to increase loyalty. Acts of kindness create a feeling of obligation in the person who instinctively wants to repay the kindness.
There are two kinds of reciprocity: surprise and trumpeted. Both of these can be used in client service to increase loyalty.
Surprise reciprocity is obviously a surprise gift or gesture. An example of this would be when your company sends over tickets for a game the day of or when a project is completed a day early without warning.
Trumpeted reciprocity is when the person giving or doing something beneficial does so in a way that reveals that they are going above and beyond. It doesn’t mean you document and put all the great things you do in a monthly report, but it is obvious to the client that what you are doing is outside the normal scope of the relationship. This could be as simple as taking behind the scenes photos at a video shoot and packaging them in a memorable way as a gift for the client team.
11) Make sure that the client has a relationship with the entire team.
Typically, clients mainly communicate with their account manager. These individuals form a bond during hundreds of meetings, phone calls, and emails. They know each other’s favorite restaurants, what sports their kids’ play, and other seemingly inconsequential details.
This becomes a problem for a few different reasons: 1) When the account manager leaves or is promoted, the relationship is at risk. If the relationship is extremely friendly, the client might not be happy with anyone else. 2) The account manager becomes too engrossed in the client’s needs and wants. This leads to the account person pitting herself against the company when something goes wrong so that the client feels understood. 3) The client’s sole connection to the company is based on one person.
This is a risky place to be in in terms of retention. Your company needs to make it a goal that clients build relationships with multiple members of the team. When the account manager talks to the client about a project, she should use the name of the person actually doing the work. Send the client pictures of the entire team working on the latest project, or whenever there is a client lunch, make sure there is another member of the team present.