By Bruce Marcus, author of The Marcus Letter
The conventional wisdom is that it costs more to get a new client than to keep an old one. And for once, the conventional wisdom is correct.
Yet, many professionals too readily take clients for granted. Or don't look for opportunities to increase revenues from perfectly satisfied clients.
Then there's the classic story of the client who went to another firm for a particular service. "Why didn't you come to me for that service?"
"Because I didn't know you did it." It happens too often.
Some firms have full-scale client retention programs. Some firms simply have a philosophy about clients -- a point of view that says that new business is terrific, but “our business is built on our existing clients.”
And on the other hand, some firms don't seem to grasp the dynamic of client service. There's the story about the guy whose wife was suing him for divorce. "Judge, he never tells me that he loves me." And he answers, "I told you I love you when I married you. It holds good till I revoke it."
The reality is that this new world is competitive in ways that it's never been before. Ask your clients how many times they've been approached by your competitors, and pursued aggressively. And then ask yourself if you can continue to be sanguine about keeping your clients happy, on a day-by-day basis.
There are, of course, some things that are clearly necessary in client retention. Doing good work, obviously. Being responsive, obviously. Being timely in delivering promised reports and material. Being polite to clients.
But these are things that should be taken for granted – things inherent in the meaning of professional. It's what the client is paying for. You get no credit for doing them, but you lose clients for not doing them.
The larger picture of client retention, on the other hand, is predicated upon recognizing the competitive and changing nature of the marketplace.
Sophisticated marketers have a strong handle on who your client company is, what the company does, what its needs are, and how to address those needs in marketing approaches.
Which means that if you don't have that same knowledge, and the kind of relationship that means total involvement in the client's concerns, then you're in danger of losing that client.
Client retention, then, requires more than the obvious factors of doing good work and delivering it on time. And in fact, in a dynamic business world, it's often more than a personal relationship. It's at least . . .
Being immersed in a client's business and industry. While the professional has a stake in some aspects of arms length relationship, this doesn't preclude knowing enough about a client's business to anticipate problems in your professional area, and to seek new ways in which other of your services can help the client.
- Frequent contact points, beyond the engagement. You do, of course, what you've been hired to do. But you help both the client and yourself when you send a brochure on a subject of mutual interest. Or a copy of a clipping in which you've been quoted on a subject the client might care about. Or a simple newsletter, either your own or one of the excellent packaged ones, covering information of interest or concern to the client. The client should know you exist between contracts, between matters, between consultations.
- Maintaining personal relationships. Not just drinking and dining to keep the client happy, but establishing and reinforcing a sense of mutual understanding and trust. The degree to which the client calls on you for business advice is as much a matter of personal trust as it is professional trust.
- Visible quality control systems. You may have your internal quality control systems, but if the client doesn't know that, then the client has no reason to believe they exist. More importantly, the quality control systems should relate to the client's business, not yours.
Quality, a buzzword frequently used in business, relates to the client, not the professional firm. If the client doesn't perceive quality in terms of the client's needs, then your service can be the best there is, but not for that client.
The client-driven, rather than the practice-driven, firm is the only safe way to compete in today's market. Recently a major accounting firm took a highly conservative position on a matter pertaining to a client's matter. The problem was not the position, but that the position was taken for the law firm's protection, and not the client's -- and the client was made aware of this.
- Needs change. Your services change. By constantly reviewing the client's needs, you not only assure that you're giving the client the best service, and that you're maximizing the relationship, but you're also telling the client that you're concerned.
- Regular client surveys. New York's former Mayor Koch used to walk the streets of the city, asking people, "How'm I doing?" He didn't always like what he heard, but he always knew. Anybody who doesn't take active steps to keep aware of client attitudes toward the firm is somebody who likes surprises. A simple one-page survey, annually, goes a long way.
Successful professionals are those who've learned the difference between client relations and client service. Both are important, but one is not the substitute for the other. In client retention, you have to have both.
It's the peculiar nature of professional services that quality plays little or no role in getting new business, except perhaps in terms of reputation. It plays a crucial role in client retention, on the other hand, if you define quality as giving the client what the client needs, wants, and expects. Most frequently, in order to know what the client needs, wants, and expects, you have to be immersed in the relationship. And you have to ask. Here, quality is not an abstraction -- it's a reality.
Those who are most successful at client retention are those who actively work at it. They have programs and checklists. Even small firms that are aware of the need for it have programs that focus on paying attention. They listen. They contact. They understand the economics, and know what kind of return they're getting on their investment in it.
And they know, at first hand, why it's true that keeping a client is still cheaper than getting a new one.
Bruce W. Marcus is the author of twelve books, including COMPETING FOR CLIENTS -- THE COMPLETE GUIDE TO MARKETING PROFESSIONAL SERVICES (Probus, 1986, Rev. 1991); NEW DIMENSIONS IN INVESTOR RELATIONS (Wiley, 1997); COMPETING IN THE NEW CAPITAL MARKETS (Harper Business, 1991); and THE NEW PROFESSIONAL FIRM -- COMPETING FOR CAPITAL IN THE 21ST CENTURY (Haworth, 2000), as well as numerous articles, studies, and position papers on business, finance and marketing. His writing has appeared in major business, professional, and financial publications, and he is a regular columnist for several Microsoft industry pages. He has been a speechwriter for many of the Fortune 500 companies, and major national political figures, including Robert Kennedy and Senator Jacob Javits, and was the author of a major report for President Carter. He is on the advisory boards of Accounting Today, Partner-to-Partner, and Practice Development for Solo & Small Firms and writes regularly for these and other publications.