Business Development Focus:

It is definitely important for the business development activities of your practice.

You heard it before:

Acquiring a new client to your professional practice or firm is (much) more expensive than retaining an existing one.

Amongst other researchers, a research done by Frederick Reichheld of Bain & Company showed that increasing clients retention rates by 5% increases profits by 25% to 95%. 

It makes sense.

Existing client, already like and trust you. So you just have to keep them happy.

No need to spend time and resources to go out and try to find them, which is necessary when trying to find new clients.

I am not trying to say that you shouldn’t go out, as part of your business development activities, and get new clients to your practice.

But if you can keep a larger percentage of those clients to stay longer with your firm, you build on a revenue foundation that is more profitable and predictable.

That is an important goal for the business development of your practice.

But be careful not to assume. 

An assumption many professional mistakenly are doing.

They assume that every paying client is a happy client.

Not necessarily.

Just because your clients continue to stay your clients and pay your professional fees doesn’t mean they are:

1. happy with your services and

2. Willing to stay as your clients for many more years.

So you probably asking how can you make every client a long-haul client?

Or what can you do differently in your business development for your practice to keep the clients with you?

One of the obvious methods is keeping track of clients satisfaction.

Another way, in an ever-changing professional market, could be continuously innovating to stay aligned with customer needs.

However, there is another, a simpler avenue that is both overlooked and underrated.

That is the art of staying connected.

Nowadays, clients have so many different choices.

It’s no wonder why connections have been difficult to maintain in the past (both in business in personal life).

However, with advances in technology, there’s no longer any reason professionals and firms can’t have a personal, one-on-one relationship, as part of their business development, with every single client they serve.

You should also learn how to stay connected with your lost clients.

Since as I wrote a special blog before –  lost clients are not lost relationships.

[And we have even system who helps in maintaining these relationships and nurturing them. Get in touch HERE if you want to learn more.]

So…

Why Client Retention > Client Acquisition?

1. Save Costs

Focusing your business development efforts solely on attracting new clients may be rewarding, but it is definitely harder and more expensive.

The gap could be significant.

Many professional firms suggested that the cost of acquiring new clients can be as much as seven times more expensive.

Wow!

But what if you target existing clients in your business development activities?

No doubt your success rate will be much higher.

Connecting and attracting existing customers to continue work with you, not only offers a clear reduction in your costs, it also presents a chance to demonstrate your commitment to rewarding loyalty to your clients.

These are simple acts that do show your clients that you value their business and help you create and maintain strong, lasting and profitable relationships with them.

2. Save time

Again, it’s often much easier to give more services to existing clients than it is to acquire and refer it to a new one.

After all, existing clients already know you, like you and trust you.

You have already served them and offered them a pleasant business experience previously.

Existing clients are much more likely to consume your services again in the future.

They simply want a pleasant and consistent experience.

It is a shorter and faster decision for them.

Thus, positive ROI on your business development activities.

In comparison, persuading prospects into becoming clients, many times requires a lot of time and effort.

3. Brand positioning

By implementing the best possible clients retention plan for your professional practice, you can stand out and set yourself apart from your competitors.

Let’s be honest:

We all want to have a practice that is known for taking care of its clients.

Especially in the professional industry, It’s impossible to overstate the importance of this kind of brand profile.

One of the best things about high levels of clients retention, as part of your business development strategy. is that you’re able to identify and find your right clients.

But to ensure consistent growth of your practice and prevent failure of clients leaving, you should keep track of a few key business development metrics in that area.

But do you know which key metrics?

Are you aware that there is a way to measure and understand whether you or your firm are retaining your clients?

Did you hear before of “Churn rate??

So let me explain in short what exactly is that, and how do professionals use it to help retain more clients.

The “Churn Rate” Concept

In short, “Client churn rate” is a specific metric that measures the percentage of clients who end their relationship with a professional firm (or a company) in a particular period.

Typically the churn rate is measured by specific time period, be it a month, a quarter, or a year.

In the professional industry, an annual rate I assume should be the default for most professional firms, since most firms don’t add and remove clients each month.

So it’s best to keep track of this data over a longer period of time, like a year, in order for it to make sense for you

In particular, cases, when the professional firm is losing clients faster ­— it advisable to look at it on a monthly basis.

Let’s take a simple example.

Let’s assume in a particular month in your practice:

(1) You have 50 clients beginning of the month.

(2) You add 3 new clients during the month.

(3) You lost 5 clients during the month.

(4) You have 48 clients at end of the month

Your monthly client churn is 10% (i.e. 5 clients lost divided by 50 clients to start with).

What do we learn from it?

If that will be your firm’s churn rate in every month in the coming year, you’ll lose 5 clients each month.

Thus, you’re likely on a path to losing all your clients and closing your firm within a couple of years unless you do something about it.

The thumb rule is the higher the churn rate, the more you should question your professional practice viability.

You see, It all begins with data.

If you aren’t measuring client retention and happiness, then how can you improve it effectively?

How can you use it?

In principle, changes in the churn rate of your professional practice could be a signal that something is working well (if the number goes down) or needs addressing (if the number goes up).

What makes this metric so interesting is the fact that it helps to tell us a lot about when and how to interact with clients.

And as you know, interacting with your clients and nurturing the relationships in the heart of your business development activities for your practice.

If you want your client to stay with your firm and not to leave your competitors you need to understand:

First, how many clients leave.

And second, the underlying reasons why they are ending their relationship with you or your firm.

Looking at churn rates of your firm (by clients segment) will emphasize which types of clients are at risk of leaving you and which may require your intervention.

Thus, you can change your business development or your clients’ service approach within your firm.

How do you calculate it?

As in my above example, calculating the churn rate for your professional practice is a pretty straightforward process.

You take the total number of clients who left your firm during that period divided by total clients at the beginning of the period.

You need to know that often a high churn rate is the result of poor business development and client acquisition efforts.

Unfortunately, the churn rate is an indicator that only look at what’s happened within your practice in the last period.

If churn is your only measure of customer happiness in your professional practice, then you’re always few months too late to influence the future of your firm.

The most innovative professional firms should use churn rate analysis as an opportunity to get ahead of losing clients rather than just accept it.

Questions to Ask.

Start looking at “churn rate” as an indicator of the behavior of clients.

To keep your clients coming back to you and avoid losing them, start asking yourself questions like:

What are you as a professional doing to cause clients to leave?

What are your clients doing that’s contributing to their leaving your practice?

How can you better manage your clients’ relationships to make sure it doesn’t happen?

Dissecting what’s behind the number will help you determine which business development activities to take and what to do to change it.

Before you assume you have a clients retention problem within your firm, consider whether you have a business development and an acquisition problem instead.

It is all about thinking, in advance, about the clients you want to serve and retain in your practice.

Focusing on retaining the right clients.

The goal of your business development efforts should be to bring in and keep in your practice or business, clients who you can provide value to and who are valuable to you!

What is your Churn rare in your practice? What are you planning to do to retain more of your existing clients?