Client retention. There, I said it.
Client retention is the most underappreciated number. Growth is the “oxygen” of any company. Companies and sales leaders spend a great deal of time and money trying to win that new client and most companies don’t even measure and report on client retention.
Does your company measure and report on client retention rates every month?
Client retention is the foundation of future growth. Just consider this: if you want to grow 15% year over year and your company has 90% client retention, you actually have to grow 27.7% to hit the 15% number!
Fact: a 2% improvement in client retention (from 90% to 92%) can have the same effect as reducing costs by 10% (and a lot less painful!) and a 5% improvement can improve profitability by 25%-95% (Bain & Company).
A dollar of revenue is a dollar of revenue, right?
Want to learn the fastest way to achieve your revenue and profit goals? Here is the roadmap that will take you there:
1. Measure client loyalty and satisfaction through a 3rd party Net Promoter Score® Survey
NPS® measures the total customer experience and can achieve upwards of 40% response rate
NPS® is the best predictor of future revenue
NPS® provides actionable insights so that your sales and account teams may remedy the situation or leverage referrals for additional growth opportunities
Survey should be administered annually
NPS® Scores segmented by revenue
2. Complete a financial segmentation exercise and layer your NPS® Scores over each segment
Imagine seeing a high-revenue, high margin customer that you enjoy an exclusive relationship with rate you a “4”? There is an opportunity to remedy the situation!
Imagine seeing a high-revenue, high margin customer that you enjoy a “one of many” relationship with rate you a “10”? There is an opportunity for expansion!
3. Measure, report on and recognize your team’s client retention on a monthly basis
"What gets measured, gets managed." Management Guru, Peter Drucker
To calculate customer retention, you will need the following: - Number of customers at the end of a period (E) - Number of new customers acquired during that period (N) - Number of customers at the start of that period (S) - Customer Retention Rate = ((E-N)/S)*100
4. Give your team the tools and training to effectively manage your key accounts
Pareto Principle: 80% of your revenue/profit comes from 20% of your clients
A vast majority of companies do not provide their Account Management teams with key account management, client retention/expansion training complete with:
A dashboard comprised of relationship and risk visualizations
Proactive notifications and reminders containing upcoming strategic action plan items that are due
A governance map to ensure key stakeholders needs are being met
Most Key Account Management tools/training will provide an ROI in less than three months through higher client retention and expansion. Download our Client Retention ROI Calculator.
*estimated average for companies interested in customized training, ClientFit key account management and continuous improvement reinforcement sessions
At Butler Street, we specialize in helping companies and their people grow through best practices in client retention and key account management. If you'd like to learn how our key account management training and ClientFit can help you, let's talk.