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Client Retention 101: Why Clients Leave Businesses and How to Stop It From Happening

Updated: Dec 13, 2020

Plausible Reasons Your Clients Leave You and How to Make Them Stay


Relationships end—amicably, terribly, or rightfully. The same goes for the relationships you’ve built with your clients and customers. They can foster, grow or eventually end.

Building lasting relationships with customers should be the goal of any business owner. Marketing to new customers is all well and good, but nurturing the ones you already have is where the money's really at.

According to a study, client retention is the top driving factor for retail revenues, beating client acquisition and product innovation.

Consider these facts:

● Attracting new customers costs five times more than keeping your existing ones

● Improving your retention rates by 5% increases your profitability by 25%-95%

It's clear to see. If you're after long-term growth and success, your focus should be on client retention.

You gain your customer's trust. They continue using your services. Everyone's happy.

Unfortunately, things don't always have a happy ending. In fact, 60% of American customers want to switch to another company if they experience subpar customer service on the third strike.

At any give moment, business owners should re-evaluate the quality of service and customer experience they're delivering and predict where things can go wrong. Because when relationships get cut, it may be difficult to re-entice clients to come back to you.

To get on top of your customer churn, let’s examine the reasons behind client break-ups first:

A Third Party Say you’re selling web design and SEO services to various niche markets. Dental SEO, real estate SEO, law firm SEO—you name it, you deliver it. But then, you see one of your partners already acquiring the services of a competitor. It happens.

Sometimes, it’s you. Maybe you delivered poor customer service; they didn’t see much change in their search rankings and in the organic traffic they were supposed to gain now. You just couldn’t deliver the service quality you’re supposed to deliver.

But sometimes, it’s them. During your flourishing customer relationship, despite how solid and high-performing it has been they wanted something more, something different. They have new needs that somehow your services don’t provide.

Either way, it’s then that they become persuaded to try a new service that may somehow address their needs.

Promises, Promises

Underpromising and overdelivering is a popular strategy in managing the expectations of your clients. Ideally, it’s a good idea; you set the expectations of your clients and then go above and beyond, surprising and delighting them.

Over the years, this tactic has lost its novelty. In some studies, it's been revealed that there’s no pay-off to being the nice guy. There isn’t a relevant impact in overdelivering your promises, says a study published in the Social Psychological and Personality Science journal. On the other hand, PrimeGenesis’ George Bradt says to tame the expectations created when overdelivering; underpromise, overdeliver but not by too much.

Managing expectations is a huge part of customer retention. You want to keep your clients impressed and keen on returning for more. If your clients’ expectations aren’t met at all, you’ll know. From talking to their friends to posting angry company reviews on Twitter, they will try to influence prospective customers to not take a chance on your service because their expectations weren’t met.

You May or May Not Have Changed

Be it for the better or the worse, some customers will leave you if you change. Businesses evolve now and then. They gain or lose services; they weather through tough times or surf through great ones. Your business can experience a period of growth and improvement; it can also see a time of stability and comfort.

But remember that your customers, like any two-way client relationship, have their changes to get through as well. In times of change and evolution, you might’ve forgotten to help clients transition with you during that period. If they feel neglected, they’ll leave on a whim.

On the other hand, stability also breeds stagnation. The current situation might currently be comfortable, but resting on your laurels and simply leaving the customer relationship as is won’t work for the best. Inert customer revenue growth prevents your business from increasing its scale. Stagnation only breeds more reason for customers to jump over to the next competitor.

There’s Failure to Communicate

Whether it’s about business, friendship or love, healthy communication promotes, nurtures and strengthens a great relationship. Being able to talk to your clients about the process, the current work, and the future keeps them informed and tames or creates better expectations. At the very least, that’s the ideal relationship you want to achieve.

In every business relationship, miscommunication weakens your ties with them bit by bit. The same goes for using negative languages. Framing your statements negatively will lower your credibility to deliver the work you promised.

Another communication-based mistake that destroys business relationships is when you don't treat clients like people. At the end of every phone line, chat window, or face to face conversation is another human being. Failing to personalize your interactions with clients can come off inauthentic. The second they feel like you're just in it for the money as opposed to value, all your attempts to build a business relationship are destined to fail.

They Feel Unappreciated

Similar to communication, showing customers you care goes a long way in maintaining ties with them. When they feel like they’re not being appreciated, taken care of, or they feel that there’s a disparity with the service they receive, that can cause your customers to walk out. They feel betrayed and undervalued in the customer relationship you’ve built. Instead of fostering a beautiful relationship, you’ve only created something transactional.

Customers want their money well-spent on companies that value their business and time. From the sales calls you make to your transactions, they want to feel like a priority, not a nuisance.

So, What Now?

Your efforts to increase client retention rates can come in two forms: 1.) proactive measures, before the change of heart happens, and 2.) reactive steps, post break-up.

Proactive: Reading the Tell-Tale Signs

The signs are there. From tiny cracks to glaring neon lights, you can spot the reasons your client wants to rid themselves of you. That is, if you know where to look. Signs or no, it’s important to prevent the break-up before it happens. Here’s how you can make them happy.

Find Your Top-Performing Accounts

While gaining new customers should be an on-going effort, you should always prioritize your most important customers over your recent ones. Customers stick to businesses that work. Even greater, they eventually turn into brand ambassadors, becoming organic, unpaid, 100% free promoters of your products and services. That's when you've reached the pinnacle of customer-business relationships. Never underestimate the cost-effective and revenue-friendly value of nurturing your top-performing accounts.

Determine What Made Them Come Back

Examine carefully every painstaking detail from the beginning of your transactions to the present. They’ve been partnering up with you for a long time now. You know the ins and outs of handling their account. You’ve built the relationship from the ground up, gaining their trust. Sift through your conversations and check the metrics your partnership has achieved. Whether it’s the fast and accurate service or the overall quality, identify the reason why they stayed.

Give Them Love Plus Ultra

Offer them the same quality of service plus one. Give them something new to come back to—perks, loyalty rewards or even simple VIP treatment. Go above and beyond when it comes to providing them high-quality service. When it comes to nurturing your long-time clients, nothing beats exclusive perks and a whole different level of service quality; give them what they deserve 24/7.

Every solid customer relationship has its foundations rooted in trust. Do what you can to keep your customers; reward them for their loyalty and they’ll keep coming back.

Reactive: Fixing the Broken

Whether it’s the client’s unpremeditated decision or your actions that lead to the break-up, business relationships can be saved. Maybe the parting of ways is an isolated churn; maybe there’s a simple misunderstanding that can be remedied.

It's never always too late. Here's how you can gain them back:

Look Back at What Happened

Firstly, carefully assess what happened during the relationship. What mistakes were made and how did they generally affect the business relationship? Maybe there’s a disconnection between you and your client that needs to be addressed. Or there’s a pain point they want to be fixed but it still isn’t taken care of. A conversation with the client or an outside perspective of an expert or a consultant helps you pinpoint what went wrong.

Confront or Own Up

Next, you need to confront the issue. Once you discover the mistake, and you've established that it’s a shortcoming on your end, own up to the mistake, pay for it if you have to (especially if there are legal implications that needed to be paid). If there’s no fault, and that it’s on the customers’ end (i.e. mismatched expectations or unreasonable deadlines), you can stand your ground and make them realize that a business relationship is a two-way relationship. They need to be realistic with their expectations.

Repairing the Relationship

From there, should your client choose to stay, it’s time to mend the relationship. It won’t be the same again, but you do what you have to do, to the best of your abilities, to maintain the relationship.

Start over with the client if you have to. Set more reasonable expectations and create equal compromises between you and your customer moving forward. Ask them for feedback to see what you can improve with your current processes.

If you have to deliver something beyond your agreement, then do so from time to time, maybe offer a discount or a freebie. Show your dedication to maintaining the business with them. Constantly communicate with them to check on their overall satisfaction.

Bottom Line

Like any kind of relationship, a business relationship can be likened to kintsugi—golden joinery in Japanese. This art form is the repairing of pottery using liquid gold or silver to fill in the cracks. This not only repairs the broken pottery, but it also enhances it, adding value and refining it even more.

Winning back your customers’ trust is a gold-lacquered pottery; it may be different but it’s stronger than ever. If you're willing to achieve true and long-term business growth, keep your clients happy and maintain their trust, win them back if you have to.

At all costs, providing the greatest value to the clients you already have should be your primary order of business.

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