Whether it’s with a bell or a high-five, every business celebrates winning a new client.
As for client retention, you typically don't see the same type of fireworks.
But that doesn't mean client retention is any less valuable than earning new logos. In reality, several client services businesses will say retaining clients is one of the most essential aspects of growth and profitability.
So, what makes up a good client retention rate?
The Mixpanel 2019 Product Benchmarks Report found an eight-week retention rate of 25% is considered above average for those in the media and finance industry. And when it comes to SaaS and e-commerce, a 35% retention rate is deemed "elite."
That’s shockingly low. And it reveals the massive opportunity here. Simply by improving your client retention rate, you can drive significant growth.
Why does it matter so much?
That’s what you’ll learn in this guide — along with nine client retention strategies that can easily boost your revenue by 25% or more.
Ready? Let’s dive in.
What is client retention?
Client retention is the art of keeping a client long-term and the ability to build a solid relationship with them.
Strong client relationships are absolutely crucial to client services businesses because they bond both parties with trust by providing a consistent value and overall great experience.
When you're clients are doing well, so are you.
Why client retention is so important to your business
Here's the bottom line – it costs you 5% to 25% more to acquire a new client than to keep an existing one.
Even if you aren’t advertising for new clients, the time and energy you invest in client acquisition will add up. The more people involved in your sales process and the longer it takes to close a deal, the more it’s costing you.
To offset those costs, you need to keep your clients on retainer or trust they'll hire you again and again. In other words, you need to be their go-to whenever they have a need.
The math is simple. The longer a client stays with you, the more valuable they become. Not only do they have a higher lifetime value, but loyal clients also tend to spend more on each transaction.
While revenue is the first reason to focus on client retention, it's not the only one. Client retention is also an indicator of how satisfied your clients are with your services. And client satisfaction is the key to long-term growth and success.
Do your clients enjoy working with you? Do they appreciate the outcomes you deliver? If so, they're likelier to renew contracts and refer other businesses to you.
Let’s be honest. Nothing beats word-of-mouth advertising from happy clients!
9 foolproof client retention strategies
Let’s look at some simple client retention strategies you can start using right away to keep your clients engaged long-term.
1. Make them want to come back
We know this seems obvious, but it’s easy to forget: the idea of ending services with you should cause your clients to have a mini panic attack. Your reliability should be sought after and cherished.
It might seem silly, but clients should want you more. And oftentimes, they do. To make this happen, you need to remember four things:
People buy from brands they know, like, and trust. You need at least one advocate inside the client organization who genuinely likes you, who goes to bat for you each time someone mentions another provider.
People often buy to fill a gap. If you provide something that your client values but can’t find anywhere else, it’s going to be easier to retain that client. We’re not talking about re-engineering your entire business, either. You're there to make their life easier, whether it saves a few minutes or a few layers of stress.
People buy from brands that make them look good. Anything you can do to make your client look like a rockstar will move you out of the friend zone and into the “I can’t live with you” zone. That’s why customer support and training are so important. More about this in a minute.
People buy from brands that have become integral to their daily routine. Starbucks is now the first stop on the way to work for many professionals. Miss your Starbucks, and it’s like waking up on the wrong side of the bed. In pre-digital days, the newspaper was part of people’s routine. They’d sit down with their coffee and catch up on the news.
Tip: A good client retention exercise is to brainstorm ways to become a “habit.”
2. Make it easy to renew
Remove anything in your renewal process that creates friction. Don't slow people down or makes it difficult for them to continue working with you.
The easiest way to do this is to put yourself in your customers’ shoes. What would make it a no-brainer to renew a contract with you or hire you again for a bigger, juicer project?
For agencies, it might be helpful to simply invite your clients to your process. With Teamwork, agencies can invite unlimited clients to the platform, which gives them a great experience that other agencies often don't use.
3. Focus on speed to success
Your clients develop a lasting impression of their experience with you – usually within the first few days of signing the contract. To retain them long-term, it’s vital that you give them a great first impression.
The best way to do that is to create an onboarding experience that includes some quick wins. A Customer Contact Council study debunked the notion that delighting your customers will win their loyalty. Instead, they discovered that the best way to build loyalty and decrease customer churn is to solve their problem.
In other words, client retention is really about decreasing their workload and solving their problems. To increase efficiency, try using Teamwork's Project Health Report.
With this report, you understand the health of a project immediately, so you can make any necessary changes or updates. Don't let a project fall apart and then break the news to the client.
Give them actual, update-to-date progress of the project, so they know you're on top of it.
4. Get regular client feedback
To know whether you’re nailing their expectations, you need ongoing feedback from your clients. There are a few ways to do that:
First, and easiest, just ask. You don’t always need a complex process for getting feedback. Set up a status meeting. Update them on the tasks you’ve completed so far. And ask if they’re happy with your progress.
Send a Net Promoter Score survey. Frederick Reichheld, the inventor of NPS, found that increasing customer retention rates by just 5% can increase profits by 25% to 95%. By sending an NPS survey, you can keep a pulse on how happy your clients are with your services and identify areas that need improvement.
Send a client satisfaction survey. This is an open-ended survey, with three or more questions. Ask things like if they're satisfied with the results, what makes them happy about your services, or what could be improved.
Don’t ignore negative feedback. It’s tempting to ignore the complaints coming in – especially because you know that most are not fair. But some complaints actually give you insight into areas that may not be working as well as you think. Listen carefully (and objectively) to negative feedback. Evaluate it for any truth. Then pass any insights to the right people in your organization.
Ask for testimonials. When you’ve delivered a big win and your clients are doing a happy dance, that’s the right time to ask for a testimonial. Ask for a video, or interview them for a case study. Then use their comments liberally as social proof to get new clients and retain existing ones long-term.
5. Know your metrics
Three numbers will help you understand whether you’re client retention efforts are working:
Client retention rate
Client churn rate
Customer lifetime value
If you’re losing clients, focus on watching and improving these numbers. Here’s how:
To calculate your client retention rate, you need to know three numbers:
The number of clients at the beginning of the time period you’re looking at (B)
The number of clients at the end of that time period (E)
The number of new clients you added during that period (N)
Here’s the client retention formula:
(E - N)/B
Subtract the #clients (new) from the #clients (end of time period). Divide that number by the #clients (beginning of time period). Then multiply by 100 to get your client retention percentage.
To calculate your client churn rate, you need to know two numbers:
The number of churned customers (C)
Your total number of customers (T)
Here’s the client churn rate formula:
Divide the #clients (churned) by the #clients (total). Then multiply by 100.
To calculate your client lifetime value, you need to know two more pieces of data:
Your client’s purchase frequency (F)
Their average order value (V)
The client value formula:
F * V
Multiply the purchase frequency by the average order value. Then multiply by 100.
6. Stay engaged with your clients
People buy (and buy again) from vendors they know, like, and trust. To achieve that favor, you’ve got to make them feel seen and heard.
That's why you have to build a collaborative culture with your clients.
5 tips for fostering collaboration with your clients
Let your clients know from day one that you care about their satisfaction and success. Create a space for you to easily communicate, collaborate, and work together.
Include your clients on your chat software so they can easily stay in touch and up to speed on everything. Teamwork Chat is perfect for helping improve collaboration with easy file sharing, 1-to-1 or team video calling features, and customizable channels to prevent endless email chains.
7. Improve customer service
Low retention rates or high churn rates tell you that your customer experience isn’t what it should be. Your clients have questions that aren’t being answered. They’re struggling to get value from your product or service.
Be proactive about helping them succeed with your products and services. You can do this by creating a support team that’s on-call for your clients.
Agencies get the best of both worlds with access to Teamwork's ticketing customer service tool, Desk. Teamwork Desk lets your team manage all client requests in one spot so you can provide the best customer experience.
Give your clients a way to talk to real humans or at the very least, a quick turnaround response so they get the help they need it. Doing so will build a lot of goodwill and make client retention that much easier.
8. Start a client retention program
No project succeeds if someone doesn’t own it. To keep client retention a top priority, consider creating a client retention program.
Develop a team whose first responsibility is to lead initiatives that encourage client loyalty. A few examples to help your first team get started, include:
Send engagement email campaigns on a regular basis
Offer incentives to unhappy clients if they renew
Send a gift or greeting cards, or gift baskets on customer anniversaries.
Create beta test groups for new programs or products
Build a client advisory group to get direct feedback on your ideas and processes
9. Be consistent(ly good)
A good client experience is actually a huge differentiator. This is especially true if your industry is known for its bad service.
Simply being there for your clients lets you build a reputation as the best in your industry. You can do this by always being honest and transparent about your successes and your mistakes.
Keeping your clients informed is the fastest way to ensure they're happy and satisfied with your services. It's also critical to say "you can" when you simply can't.
Use Teamwork's Utilization Report to understand your available resources for specific projects. Maybe a specific team already has too much on its plate to handle a new request from a client.
Instead, be sure of who has the resources available so you actually deliver what your client asked for without the need to have a bunch of fire drills and late nights to finish tasks.
Want to see Teamwork in action and how we can help you retain clients by inviting them into our platform? Sign up for a free 30-day trial today!