With the beginning of a new year ahead and a few hard ones behind, firms are looking at growing their clientele.
However, before increasing marketing spending, firms should consider increasing their investment in strengthening client relationships to reduce client losses and keep their most valuable assets.
Firms have greater control over client churn than they think. That is not to say that every client is worth saving. However, understanding why your clients change firms is beneficial in keeping your best clients.
It is expensive to continue to replace your clients. It takes time and resources, and most firms are tight on both.
To put it in perspective, companies that focus on customer retention experience the following:
- Boosting customer retention by 5% increases profits by 25-95%.
- Companies have a 60-70% chance of selling to an existing customer vs. a 5-20% chance of selling to a new customer.
- 65% of a company’s business comes from existing customers.
- It costs six to seven times more to acquire new customers than to retain existing ones.
- 72% of customers switch to a competitor after one bad experience with a brand.
Client churn costs more than just revenue; it damages a firm’s morale and can be bad for its reputation. Reducing client churn should be a top priority for any accounting firm.
Here are eight reasons for client churn and what a firm can do to prevent high-value clients from taking their business elsewhere.
8 Reasons clients leave their accounting firm.
An increase in firm rates will cause any client to shop around. Keep in mind some clients will leave no matter what the price.
Prevent clients from churning due to price increases.
Now is an excellent time to be more specific about your services. Most clients want to know if the price increase is worth the value of the service they receive.
A good way of raising prices and cultivating conversation is by providing service tears and allowing clients to choose.
If positioned correctly, most clients will increase their willingness to spend for the services offered.
Clients are habitual creatures and are usually afraid of change, especially with their finances. The mere thought of acquisition might be enough to have them google “accounting firms in my area.” Acquisitions bring changes like increased fees, technology, workflows, and personnel that make clients skittish.
Prevent clients from churning due to firm acquisition.
Early communication is critical. Even if you do not have all the answers, you can help them get their mind around future changes. Most importantly, focus on the things that will not change. Providing clients with some certainty will ease their anxiety.
Hardships are happening more and more often in today’s world. When clients can’t afford accounting services, they can’t afford it. It is challenging to combat hard times.
Prevent clients from churning due to financial struggles.
In times of need, communication and negotiation are essential to a firm’s stability. When strapped financially, clients look at discontinuing services such as accounting. They need financial help more than ever if they are in financial trouble. Now is the time to communicate and negotiate. Find a happy medium to continue providing service but not to a detriment to the firm.
Feelings of Being Nickeled and Dimed
Clients don’t understand that even the most simple requests take time; therefore, that time is billable. When an additional charge appears on their statement, they get upset. Either they will voice their concern or keep quiet and look for another firm.
Prevent clients from churning due to billing.
Once again, it comes down to communication. Let clients know upfront of your billing process. If a request falls outside their service tier, let them know of the additional charge and ask if they would like to proceed.
A client leaving might be better if they can not understand the value of time.
Poor Customer Service
Things don’t always go smoothly. Errors can occur and can be costly. However, this should not be the norm.
Prevent clients from churning due to customer service.
You can still come out on top during those rare situations where a client might lose trust due to a mistake. Owning a mistake is the quickest way to begin rebuilding trust.
When mistakes happen, quickly let the client know the following :
- What went wrong
- Why it went wrong
- How will it affect them
- How will it be corrected
- The safeguards put in place so it will not happen again
If poor customer support is constantly producing customer churn, investigate, locate and isolate the problem. Workflow, fix it. Staff, then train them. Sometimes eradicating the problem is the only way to save a firm.
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As mentioned above, clients are habitual creatures, and change is hard. If you or your client relocates, it might seem natural for them to look for another accounting firm in their new location.
Prevent clients from churning due to relocation.
Today relocation should never be a concern. More and more firms are providing their services remotely to clients worldwide.
Through dashboards, client portals, and electronic reports, accounting firms are impacting their clients more than in years prior. Ensure you have the infrastructure to operate digitally.
Cloud-based accounting services mean clients can access the financial data they need 24/7, no matter where they are.
Needs Not Met
The client’s needs are changing drastically day by day. Firms must be bold in their services and how they provide them. Though a client has been with a firm from the beginning, loyalty only goes so far when needed services are required to be competitive.
Prevent clients from churning due to a lack of services.
Listen to clients’ requests and keep current on what other firms offer. Do some research regarding accounting and advisory services and if it makes sense financially, implement them and deliver them to your clients.
Clients like to know that their firm always provides the most current solutions to support their business and keep up with their financial needs.
Lack of Value or Cheaper Elsewhere
Your client’s network with other business owners and accounting topics often arises. One owner will tout the perceived value of their accounting firm while other owners take note.
Prevent clients from churning due to perceived value.
Knowing that perceived value significantly contributes to churn, firms can improve their client’s education of their service and value.
Take time to regularly visit with each client about your service offerings and the value you provide. Understand their pain points and do your best to deliver a solution they proudly discuss in their networks.
Get specific and let them know that their finances are your business and you are there to help them achieve their goals.
When clients feel their accounting firm is interested in their success, it increases their perceived value, trust, and willingness to talk openly with others about the value they are receiving from their fantastic firm.
Communication decreases client turn.
Don’t hide from the awkward conversation if you feel a client is frustrated or looking around. Call them up and have a direct conversation. A conversation costs so little, but it is usually the difference between losing a client or retaining their business.
Ask the following questions:
- Are your needs being met?
- What value do we bring to your business?
- Has your situation changed since we last met?
Take time to realign with them. This simple interaction will strengthen your relationship and increase their perceived value of your firm. These suggestions will not eliminate client churn. But now, the clients that churn will create openings for the right clients to fill.