The importance of client retention

According to the Harvard Business Review, it can be 25 times more expensive to onboard a new client than it is to retain one. The Review also stated just a five per cent increase in retention can grow profits by up to 95 per cent.

Sounds good, right?

It gets better. Clients who stick around are generally happy with the service they are receiving, meaning they’re more likely to promote your business and generate referrals. Happy clients, happy business.

Despite all the data pointing towards the importance of client loyalty and relationships, some continue to focus on quarterly earnings rather than long-term customer value. This can lead to a host of problems for a business: producing quick profits by compromising on the quality of their service, increasing rates unexpectedly, or taking on work from the wrong kind of client. Ultimately, this destroys any client loyalty and reduces the value a client could create for a firm.

With the emergence of new accounting and marketing tools, many companies are realising that the source of their corporate value is, in fact, their clients. By keeping an eye on their churn (or retention) rate, they can evaluate the long-term health of their business.

I’ve worked across a range of industries, focussing on optimising customer brand experience. From improving an advertising agency’s relationship with multinational clients such as McDonald’s and Nespresso to co-founding an app with thousands of restaurant partners, I’ve seen first-hand how a lack of retention can seriously damage a business’ growth and how a strong retention strategy can bolster a brand.

But how can law firms improve their client retention? Here are my top tips: 

Listen to your clients

Lawyers will generally say that they know exactly how their clients think, what they need, and how they feel. But is that really the case? Closing the loop on client feedback is crucial to improving retention strategies within law firms and gives insight on what a business is doing well and not so well. It also gives a firm the opportunity to address any issues a client might have to strengthen the relationship.

An obvious way of gathering feedback is using the net promoter score (NPS) survey, composed of one simple question “How likely are you to recommend our law firm?” on a scale of 0 -10. After providing a score, the client is invited to explain their rating which is fed back to marketing teams. Businesses will generally send the NPS survey in a thank you message after a piece of work is finished or invite people to give feedback in their email signatures.

It's recommended that teams respond to NPS client feedback to show that they have been listened to, and that their feedback will be used to improve. There are a host of different feedback tools and structures firms can use: from in-person feedback sessions (hosted by someone who didn’t produce the work so that a client is inclined to speak more honestly) to digital tools.