Depending on the industry, recent estimates put the average client retention rate at a disappointing 20 percent. For many fields, the actual number is even lower.
If you find yourself churning through clients at a rapid speed, don’t worry. There are steps you can take to improve your client retention.
First, take a minute to learn why client retention could make or break your business in the first place.
You Need to Invest in Client Retention — Here’s Why
You might be wondering, “Why should I care about client retention? I already have plenty of new clients coming in.”
Yes, that’s great.
However, investing in client retention can benefit your business in several ways — most importantly, financially.
Want to see some hard facts?
Well, in 2001, Fred Reichheld found that a 5 percent boost to customer retention resulted in (at minimum) a 25 percent boost to profits.
And that’s just one benefit of many:
Spend less time chasing down new leads
To maintain a successful freelance or small business, you constantly need to be taking on new clients.
But every hour you spend searching for new contracts to add to your schedule is an hour you’re not getting directly paid.
Of course, your rates should be high enough that you can spend time advertising, drafting estimates, and networking without worrying about your take-home income.
With that said, however, boosting your client retention rate means spending less time searching for clients and more time working on projects. Or, in other words, more money.
Charge what your services are worth
When it comes to new client acquisition, you’re dealing with prospects that want to get the best service for the lowest price.
Unfortunately, all they have is your word and portfolio to know whether your rates are actually worth the cost.
With clients you’ve already worked with, though, there’s no need to negotiate or prove your value. They already know what you can do, and they’re willing to pay for it.
Produce better work for your clients
Even the most talented designer or programmer can’t predict exactly what a given client is looking for from their final project. Instead, they must rely on communication with and feedback from their client.
If a large portion of your client base is made up of repeat business, you already know what they need.
Plus, with repeat customers, you have access to feedback that will get you closer to their ideal with each passing project. When it comes to brand new clients, that type of feedback just isn’t available.
What Role Does Client Retention Play in Your Business?
There are two main types of client retention:
First, you have the type of client retention that, ideally, never lapses. This applies to businesses that offer an ongoing service or subscription that clients use for months or years at a time.
Ultimately, your goal should be to gain customers and not lose them.
Second, there’s the type of client retention that involves returning customers.
This applies to businesses that might offer one-time services, such as designing a logo or catering an event, but that happy clients will return to sometime in the future when they have a need for these services again.
In these latter cases, years can pass before a client returns for more work. But they’re still repeat customers.
6 Strategies to Improve Your Client Retention Today
Whichever type of client retention you’re focused on, there are several business strategies that can help improve your rates.
Remember, you might not see tangible results right away from any of these techniques.
Boosting your client retention rate can feel like a long, neverending task. But it’s 100 percent worth it in the end.
Let’s get started:
1. Be personable without expecting something in return
It can be easy to forget, but clients are human, too. They have emotions, insecurities, families, and personal goals all their own.
Because of this, you should approach every client relationship with a friendly demeanor.
But that doesn’t mean laying on the charm at every opportunity.
Instead, focus on being genuine. Make an effort to be kind and polite to your clients, even when you’re not trying to sell them on an upgrade or extend their service contract.
Small gestures like a birthday card or thank you gifts for each year of loyal business can also have a huge impact on your client retention rate.
2. Exceed expectations whenever possible
Have you reviewed your calendar and discovered that you’ll be able to finish a client project a week early?
Or, do you have the opportunity to offer a client upgraded service at no expense to yourself?
Going above and beyond whenever possible is an excellent way to show clients you don’t just care about exchanging basic services for money. It shows that you also want to provide top-quality service, even when they aren’t expecting it.
Finally, be sure to communicate to your clients when you’re able to exceed their expectations.
This isn’t a chance to brag or ask for additional compensation. Just shoot your client a short email, letting them know what to expect.
3. Encourage feedback and actually apply it
As mentioned above, client feedback is one of the largest benefits of retaining customers.
Don’t be afraid to reference past feedback, either. For example:
“Per your previous feedback, I added X and changed Y to Z. Please let me know if this is what you had in mind.”
This lets your client know that you’re listening and using their feedback to improve your future work.
4. Solve client problems before they emerge
In the world of business, there’s something called anticipatory customer service.
While traditional customer service is reactive — focuses on solving problems that already exist — anticipatory customer service works to meet customer needs and solve problems that haven’t yet occurred.
Instead of needing to come to you with complaints or requests, your client can sit back and trust that everything will work as expected.
If you’re not quite following along, consider this rather common scenario:
At a sit-down restaurant, it’s generally assumed that refills are free-of-charge for beverages like soda.
Needing to ask your server for a refill, an example of reactive customer service, is technically fine.
But wouldn’t you rather have a refill brought to you just before you finish your first glass? This is an example of anticipatory service.
5. Update your service offerings periodically
As time passes, you’ll find that some clients outgrow your services.
To an extent, this is unavoidable. But not entirely so.
The most effective way to maintain relevancy is by updating your services to meet the changing needs of your customer base.
When announcing your new offerings, treat it just like a first pitch. Let your clients know exactly how these services will benefit them, especially within the context of having worked with you previously.
If you’ve invested in learning new marketable skills since first starting your business, this is your chance to advertise those as well.
6. Make doing business with you simple and stress-free
You could be the top expert in your field, but if working with you is a headache-and-a-half, even the most desperate clients won’t stick around for long.
If you want to increase your client retention rate, focus on making the day-to-day operation of your business as smooth as possible. This means making it easy for clients to get in touch with you and ensuring all communication is clear and organized.
Most importantly, ensure that your invoicing and payment procedures are easy to understand and track.
Not only will this make your clients’ lives easier, but it’ll take a load off of your plate, as well.
Rethink How You Create and Manage Invoices
If you still rely on managing your books by hand, it’s time to reconsider how you run the financial side of your business.
After all, few clients want to deal with the hassle of paper invoicing and payment by mail.
With software like invoicely, you can keep your estimates, invoices, expense tracking, and client payments all in one accessible location. Clients can even pay directly through the invoice — no paper checks required.
So, don’t limit your client retention efforts to updating your services or practicing anticipatory customer service. Instead, look at the big picture.
When it all comes together, you’ll start seeing improvements to your client retention before you know it.
Learn more about invoicely and how we can help improve client satisfaction and retention rates for your business.