4 Reasons Why Clients Retention Is Important For Your Agency
There’s an old saying that can be easily applied to the creative industry. “A bird in the hand is worth two in the bush”. Is it a cliché? Absolutely, but is it a cliché for a reason, ie is it true? Absolutely again. After all, whilst new clients are great for an agency, retaining existing clients is potentially more valuable. In this blog, we will be diving into the importance of client retention and how it can help your agency grow.
The concept of client retention is not a new one, in fact, client retention is so important that it has its own metric – Customer Churn – that measures the percentage of clients that stop using your services in a predetermined period. Thus client retention is the opposite - it is how effective you are at sustaining a long-term client. Measuring retention rate is easy, however, determining the value of retention is a bit more complicated.
Returning Customers Spend More
Let’s start with a fact that is hard to argue with. A study by RJ metrics as quoted in Business.com, retained customers spend as much as 67% more than new customers and as much as 60% of the revenue in top-performing companies may come from these returning customers.
Once you and a client enjoy a positive experience working together, the client will develop trust that will allow them.
New Customers Are More Expensive Than Return Customers
According to The National Law Review, it cost as much as five times more to acquire a new customer, as it does to sell to a return customer.
The road to sale is hard work, no one will argue that with you. Whether you are looking to gain new customers via social media, paid to advertise, or are providing consultations that can eventually lead to them signing on as a client, all efforts cost the agency time and money. Conversely, retaining customers and nurturing the relationship (which is what your account service teams exist to do after all) can be much easier. These clients know your capabilities, have trust (which is why they are still there) and the time to make a decision is much less, all of which will save you time, money.
Retained Customers Help Promote the Agency
By you have worked together on several occasions, existing clients will have developed trust in your team and your service offering. Whether this is founded on the work you provide, or the cost you provide it at, or some combination thereof, this trust has the potential to reap ongoing benefits. Here are a few ways: Your key contact at a client leave. The client firm keeps you on as they are happy with your work, however, the contact now calls you into their new firm to start working with them there.
Your key contact may be at a networking event and be asked who they can recommend. If you have a good relationship, then they will likely, recommend you.
Retention is the key to better profits
According to research done by Harvard Business School, a mere 5% improvement in client retention can result from anywhere between 25% and 95% greater profits. It’s money for jam. Through nothing more than servicing the client well and producing amazing results (check out our blog on the importance of reporting) you have the potential to reduce churn and improve profits. If you would like any assistance with developing tools which help you identify areas where you can improve your service, reduce costs and improve profits for your business, take a look at the way our platform can help you.