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PKF Texas – Entrepreneur’s Playbook®: Client Retention

by | Aug 13, 2010 | PKF Texas - The Entrepreneur's Playbook®

Note: Running Fridays in FromGregsHead.comis a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on KPRC 950AM. Audio files can be found on the PKF Texas – Entrepreneur’s Playbook® page of the PKF Texas website. 

This may sound obvious, but clients are critical to the success of your business.  If you don’t have someone willing to pay for your product or service, you don’t have a business.

Larry Bildstein, writing for the February 2010 issue of the Journal of Accountancy, broke down the costs to attract a $50,000 client versus retaining a $50,000 client.  The positive net profit to attract the client is $0.  The positive net profit on the existing client is $11,500. Below is his breakdown:

 

Attract New $50,000 Client

Retain Existing $50,000 Client

Time Investment

30 hours @ $250/hour

Four hours @ $250/hour

Opportunity Cost

$7,500

$1,000

First-Time Engagement Costs

$5,000

None

Profit Margin

25% = $12,500

25% = $12,500

Profit Margin Minus Expenses

$12,500 – 12,500

$12,500 – 1,000

Positive Net Profit

$0

$11,500

Given those numbers, these days we can’t afford to lose clients.  What are you doing to retain your clients?

• Have you sent a client satisfaction survey recently? 
• Are you asking at the beginning of each engagement, what does success look like to the client?
• Are you delivering on your contracts in a timely manner?
• How often are you communicating with your clients about their business?
• How often do you take the time to visit with your clients in person rather than dashing off an email or leaving a voicemail?

Be prepared to act on the information you receive.  If you don’t back up what you say you will do, you lose credibility in the eyes of your clients, thus opening the door for your competitors to step in.  Show your clients how important they are to your business. 

 

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