Customer retention is the lifeblood for a consultancy. Whether you are into design, software, project management, interior decor or even babysitting; without strong retention and referrals you are going to struggle to grow your business.
In 2024 it takes much more than a good project and a happy, satisfied client to make them come back for the next project. Customers have become increasingly more demanding, competition has become hungrier and attention spans have become shorter.
For most consultancies the turnaround time from one project to the next is often a few months and you can imagine the amount of noise that surrounds a client within those months. For most clients the happy feeling that comes from a great project is often forgotten by the time the next project comes around and the client goes back to the discovery stage.
At More Business Less Problems customer retention for consultancies and service providers is one of the top concerns we tackle. So let's take a look at the top four root causes that are common across industries, geographies and demographics.
Side note: if you can systematically fix these four problems you will not only fix your customer retention issues but you will also make your business essentially bullet proof (give us a shout if that sounds interesting to you).
Root Causes of Poor Customer Retention
1. Lack of Follow-Up and Engagement Post-Project
Silence or just not staying connected to clients after a project is a carnal sin. As I mentioned above, customers are surrounded by competition and general advertising noise on a daily if not hourly basis. Remaining silent between projects means that by the time the customer is ready for round 2 they would have forgotten the awesome feeling after the initial engagement. This means it's much easier to lose them to the last consultant they spoke with. Often times you wouldn’t even get a call - the competition has already taken them.
📉 Lack of follow-up doesn’t happen because you hate your clients. It’s usually because:
👎 Who has the time: Managing follow-up communications can be tough when you’re juggling multiple ongoing projects. There simply isn’t enough time in the day!
👎 What on Earth are you supposed to say: You know the client is not ready for another project. It can be downright awkward trying to come up with something to say to clients when you have nothing to sell them.
👎 How are you supposed to keep track: Without a systematic approach or CRM tools, it’s hard to manage and automate follow-up processes effectively.
2. Weak Marketing and Branding Strategies
Quite often service providers have an ability to reinforce their brand in customers’ minds. If all a customer remembers is the good feeling after your last project they will be easily swayed by a strong brand message from a competitor. During and after a project is when you need to make sure customers understand your purpose and why you do what you do.
📉 Weak branding doesn’t happen because you have a terrible brand, remember you got the client because of your brand (even if you didn’t realize it), the problem typically happens because:
👎 Who has the money and time: Extensive marketing campaigns and branding efforts require resources that are stretched thin.
👎 Where am I supposed to start: There are several platforms and channels to show your brand. Are you supposed to be on all or just one? How do you know where to start?
👎 What does showing my brand even mean: Creating high-quality content that shows your brand without making you look cheesy is easier said than done. Again, where should you start?
3. Competitive Market Landscape
To be quite frank the market for most service providers is competitive. Just because you won project 1 does not mean you will be ahead of the pack for the next project. Competitors are not going to sit quietly. They are going to double down on efforts so they do not lose to you again. Couple this with staying silent and weak branding and a competitor who is active will easily win project 2 and make it harder for you to get the client back.
📉 Losing out to competitors is not because you’ve suddenly become the worst, it's usually because:
👎 New competitors are going to enter: The market will always get more saturated and standing out gets harder and harder.
👎 Competitors are getting better: Old competitors are going to try harder and harder to convince the same customer to come to their side.
👎 Client loyalty is not what it used to be: Creating strong bond with a customer is very hard to accomplish as customers in truth are very easily swayed to a competitor.
4. Client Perceptions and Expectations
Over time clients will look to their own competition and their peers, they will keep researching trends and the expectations from their future projects will start to evolve. They will develop bigger levels of delivery. Higher standards, newer solutions and better service. A customer's expectation will grow and if they don’t think you can match the new expectation then you shouldn’t expect to be in consideration when the next project comes around.
📉 Clients not thinking you can handle new expectations is not because you’ve become outdated, it's typically because:
👎 Trends are always changing: During the first project the client had an understanding of your service but as market trends change they don’t immediately associate you with the new trend.
👎 Customer always feel like they need some variety: Even satisfied clients might want to try different providers often just to see what else is out there in the market.
Understanding these root causes can help you navigate the complexities of client retention.
Have you faced any of these challenges in your business? Share your experiences and let’s discuss how we can overcome these obstacles together! 🌟
If you want to learn how we are solving our clients customer retention issues in under 90 minutes:
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