10 Causes of Client Attrition—and How to Stop It
By Andrew Sobel
Even firms that enjoy strong client loyalty and high levels of repeat business lose 20 or 30 percent of their revenue every year due to attrition. Some attrition is desirable. Some is unavoidable. But much of it can be prevented. Think about how much work it requires to replace nearly a third of your revenue every year.
Why does this happen, and what can you do about it? Attrition has many complex causes. Here are ten reasons why clients leave—and tips for how to keep them.
- A reorganization or executive turnover
Ever spend years cultivating a client relationship, only to have that individual retire, move to a new position, or leave?
Executive turnover is higher than ever. Here’s how to make the best of these situations:
- Build many-to-many relationships with all your key clients, so that the account does not hang on one single connection.
- Make sure you are connected to a senior executive above your day-to-day client. That relationship will be worth its weight in gold when turmoil hits.
- Work hard to get the departing executive to vouch for you and introduce you to their replacement
- Redouble your client development and relationship-building activities when there is organizational change.
- A one-off need for your services.
Sometimes, clients only have a periodic need for what you do. A college may hire a fundraising consultant only once every five or ten years, when they do a capital campaign. A corporation might only need the services of a construction company when they build a new headquarters building.
The first and most important thing you need to do is develop additional products and services that meet recurring needs. Ask yourself, “What adjacent, ongoing needs can we help the client with?” For example:
- A fund raising consultant can help a university run their annual campaign more effectively
- A construction company can help clients manage their facilities and do sustainability audits
- An executive search firm can do talent planning, executive assessments, and leadership coaching in-between periodic searches.
Second, you need to add value in-between major engagements. The client needs to perceive you as a trusted advisor in both good times and lean times. Are you calling on all your past clients each year, and adding value by sending them insightful pieces of thought leadership that addresses their most challenging issues?
Third, if your clients only rarely use what you offer, make sure you get referrals and testimonials from every single person you do business with. Your marketing strategy must be to spread a wide net, and those references will help you enormously.
- A financial crisis or profit squeeze
When there’s a financial pinch, companies often cut back on discretionary services.
It’s never true, however, that there is “no budget.” What they have decided is that using you is not a priority given their limited financial resources.
You need to demonstrate why your offerings should attract scarce budget. You do this by:
- Showing exactly how you are part of the client’s growth, profits, and innovation—not simply a cost, a necessary evil. You must compellingly draw a direct line between what you do and the client’s highest-level goals
- Relentlessly communicating the value and impact of your work. Show how your solutions can help the client deal with their financial crisis.
- Spending sufficient face-time with executives so that you have a good understanding of what is most important to them.
- The impact of your work is not compelling
This reason often leads to the feeling that you aren’t needed on an ongoing basis (reason 2) or unavailability of budget (reason 3). If you are delivering good quality, why would your client feel that what you’re doing isn’t relevant or compelling? Here are some possibilities:
- You have not sufficiently communicated the value you’re adding
- You are working at too low a level in the organization and your product or service is basically hidden from view
- You have not shown the client how you are helping them achieve their most important goals or priorities
- Your work is acceptable but not perceived as “a cut above.” You’re not wowing the client in any way.
- The client perceives your products or services as solving a relatively insignificant problem.
In this situation:
Can you do a better job of quantifying the benefits of your work?
Can you get some of the managers who know you and like you to vouch for you with senior management?
Can you make yourself useful in more meaningful ways to the client, either by evolving your service offering or raising your client service levels?
Can you tie what you do–even if it impacts a small part of the client’s business–to something larger and more important? One of my clients, for example, is in the executive relocation business. They raised their relevance and profile with clients by changing their value proposition to “enabling the mobile workforce”—much more incisive than just “relocation.” Early on in the development of my own firm, I created a focus around “building clients for life” rather than things like “relationship training” or “sales training.”
- Quality or delivery issues
“Quality” is a function of three things:
First, actual quality. Have you provided—by objective standards—a truly high-quality service or product?
Second, expected quality. You can do a great job but have a very disappointed client if your solution does not meet their expectations, no matter how unreasonable you think they are.
Third, perceived quality. Why do people buy expensive dishes made with the relatively unappetizing Patagonian Toothfish? Because restaurants call it Chilean Sea Bass and dress it up with fancy cooking methods, sauces, and side dishes.
To help bolster your client’s perception of the quality of your work, think about these strategies:
Put real, meaningful quality control mechanisms into place. Get formal client feedback several times a year.
Carefully agree expectations at the beginning of a project or engagement. Focus on agreeing outcomes and objectives, not deliverables. A deliverable is a quarterly meeting, whereas an outcome is improved response times when customers call.
Enhance your client’s perception of the quality and effectiveness of your work. One good way to do this is to create transparency around your process, so that your client sees all of your hard work and effort. A second way is to share the difficulty of what you’re doing—in other words, make sure your client understands the challenges you’ve overcome to deliver for them and the special requirements of the engagement. A third approach is to ensure your client gets positive feedback from their employees about your work.
- Bad chemistry
Sometimes, there is poor chemistry between the relationship manager and a particular client executives. So what do you do?
First, you should distinguish between an irreconcilable conflict and tension caused by two different personality types. If it’s the latter, perhaps you can adjust your own style to better match your client’s temperament and approach. For example:
- Are you being a good listener? Do you listen carefully, affirm, and ask thoughtful follow-up questions?
- Have you shown your immediate, work-with client that you can be trusted to support them and their goals—as opposed to serving your own agenda and/or even going behind their back to their boss?
- Have you taken the time to understand how your client would like to structure and manage the relationship and how they like to communicate?
If you work with a firm, you have the possible option of bringing in a new relationship manager or account executive when a lack of personal chemistry threatens the relationship.
- A decline in trust
Professional trust is influenced by four main factors:
- Competence. Are you delivering against expectations?
- Integrity. You have to demonstrate honesty but also reliability, consistency, and discretion.
- Agenda Focus or Perception of Intent. You have to show you are deeply concerned about your client’s agenda and looking out for their interests at all times.
- Risk. The greater the perceived risk, the harder it is to trust.
Often, a decline in trust is precipitated by a feeling that you no longer care as much as you used to and the work you’re doing is not as sharp as it was.
Try to increase your face-to-face time with your client. Face time increases likability, which enhances trust. It also gives you a greater opportunity to ask your client thoughtful questions about their priorities and plans, which increases the perception that you care.
This is probably the reason many relationships end—professional and personal. One side takes the other for granted. Or, both simply stop caring the way they did at the beginning of the relationship.
Every year, look at your client list. Ask yourself these questions:
- Which clients keep you up at night, and which ones get you up in the morning because you’re excited about the work?
- Which clients are at risk of leaving you for some of the reasons outlined in this article?
- Do you have a valuable client towards whom you are getting complacent? Why is that happening?
- What would a competitor do to go after your clients and take some of their business away from you?
- This year, are you taking your practice to the next level—or at least, markedly improving it in several respects? What’s your plan to do that?
- Your competitors offer something more and/or better. For many years, the rise of Amazon as a major bookseller hurt the large bookstore chains (e.g., Borders closed, and Barnes & Noble has struggled mightily). The convenience and selection of ordering online swamped the benefits of going to a local bookstore. Interestingly, independent bookstore sales have been growing again. Many of them now offer something more/better than buying online: Specialist knowledge and advice in a specific category of books (e.g., children, travel, etc.), increased personal service, and a milieu where you can have a coffee and hang out.
What are you doing to enhance your offerings and your relationship experience? How are you making it easier to do business with you? Even little things can enhance a client’s perception of your total value. For example:
- Writing up meeting notes and sending them to your client within 24 hours
- Maintaining high levels of responsiveness—e.g., returning calls within a few hours.
- Capturing success stories from employees that highlight the impact of your solutions.
- Being proactive and sharing a steady stream of ideas for improving their business.
- Demand dries up/you get disintermediated. Usually, this happens because new products arrive that have dramatically greater functionality. Motorola’s share of the US cellphone handset market, for example, went from over 50% to almost zero after the iPhone came out. In the executive search business, many firms have been challenged by the establishment of in-house search teams and services like LinkedIn, which give companies more direct access to talent.
Whole books have been written about this problem. I’ll leave you with one simple suggestion to avoid Motorola’s fate: Stay very close to your clients and constantly evolve your solutions. You may have heard me use the Beatles as an analogy for this. Instead of churning out the same music year after year (like most rock groups!), they constantly evolved their songs. They started with teen-pleasing numbers like I Want to Hold Your Hand, but swiftly moved on to more sophisticated songs like Day Tripper and Eleanor Rigby. Every record—two per year for about seven years—was a significant evolution from the previous release, in terms of song themes, melodic complexity, arrangements, production methods, and so on.
So evolve your own songs. You won’t keep clients for life by singing “I Want to Hold Your Hand” over and over again. Bring the same fresh ideas, creativity, and enthusiasm to the 100th meeting with your client that you demonstrated the first time you met.