The quest to attract new clients can sometimes overshadow the importance of client retention, but not paying attention to retention can come at a significant cost. By John Burfitt
One of the wisest adages of business is that it costs five times as much to attract one new client as it does to retain one you already have. Some analysts, however, insist that figure is not correct, stating the cost can actually be 20 or even 30 times the cost of retaining a current client.
Whatever the true figure, it’s agreed that focusing on retaining clients is paramount to ongoing business success. So why is it, then, this basic rule is often over-shadowed by the quest to attract new clients through the doors?
“Business owners tend to be distracted by the new and the shiny, and are always looking to bring new business in, and in the process, can give too little attention to adding greater levels of service to the clients they already have,” Dan Gregory, a behavioural strategist with Sydney’s Impossible Institute agency, says. Gregory recently co-authored with Kieran Flanagan the new book Forever Skills.
“It’s a very common problem as it’s so easy to be always thinking about who else might be out there as a potential customer, but you do need to look sharply at what the engagement is like with the customers you already have.”
Which is not to say, Gregory adds, that attracting new clients should not remain a priority, but a balanced approach to the client base needs to be applied.
“You always need to be feeding both sides of the cycle—attracting in new clients, but also servicing the existing ones so they feel loyal to your business. There’s no point in chasing new clients if you have no focus on retention, so clients just keeping flowing in and then straight back out the door and never come back.”
The benefits of client retention
There are five key reasons cited as why client retention is so important to business success. Client retention saves money on marketing; repeat customers are more likely to spend more money than new ones; they also provide free word-of-mouth promotion, offer regular feedback and are far less price-conscious than new customers.
It is about knowing the true value of your existing client base and what that means to the practice’s bottom line that can make a big difference in understanding why retention is such an important aspect to focus on, claims Perth business coach, Craig O’Brien.
“You need to spend time calculating what is the lifetime value of a highly-satisfied client you have,” O’Brien says. “If the cost of the average visit is about $150, and you see that client four times a year, and that continues over 15 years, then you are looking at a total value of at least $9000—if not a whole lot more—walking through your door regularly.
“Working out that value should heighten your awareness of how important they are, not to mention the referrals they also send in. With that kind of ripple effect, your existing clients might be doing all the marketing for you, which is why you should never take clients for granted and never get lazy. These people are bringing your income in.”
Don’t take clients for granted
Familiarity with long-term clients should never be allowed to breed complacency, but that can easily become the case, adds change leadership specialist Michelle Gibbings, the founder of consultancy Change Meridian and author of the book Career Leap: How to Reinvent and Liberate Your Career.
“Never take loyalty for granted, no matter how long your clients have been coming to see you,” she says. “Sometimes, practitioners get to the point where they assume their clients will not go elsewhere, but the fact is they might.
“The thing to really think about is the investment you have made in that person over the years, and what that has cost you in terms of time and energy to build up that trust and loyalty. Now consider the effort of building all that up again with a new person, not to mention their pet. Clients like to feel they are valued and respected, so if you stop treating them the way you did when they first walked in the door, they will soon realise that dealing with your practice no longer feels so good.”
Client retention strategies
All of which means having a solid approach to retention through a range of smart and effective client policies needs to be in place and implemented at each stage of interaction with a practice, Dr Lindsay Hay of Sydney’s Baulkham Hills Veterinary Hospital says.
“Client retention starts with excellent customer service built around the culture and values of the business and communicated continuously with clients, and with all that, consistency is the key,” he says. “The interaction between the client and the practice should be seamless and similar each time, no matter who they are dealing with. That method is what reassures clients.”
To address the way regular clients are treated within the practice, not just by the practitioner but also by the entire staff, specific workplace training might be a good investment, Craig O’Brien adds.
“Training can help ensure that staff are getting it right from that first phone call through to when the client walks out the door after their pet has been treated,” he says. “It might also be about what other engagement and value service you are providing, maybe special information sessions, social nights involving their dogs or possibly an extended session once a year offering a full check-up. It could also be in the way you follow up after a more complex matter, even with a quick phone call or an SMS, that makes an impression that also has an impact.”
Dan Gregory suggests retention can come down to what kind of story is being created around how clients are dealt with. “Look at your business and think about what it is that’s stopping you from being generic.” he says. “What do you offer as part of your service that makes you stand out from what everyone else is offering?
“That is where the story can be created, as those clients will be more inclined to tell someone else about your ways of service. So when aiming for retention, build something into the client interaction that is worth people talking about when they are talking to other people about your excellent pet care. Look for what makes you different, then make the very most of it.”