Should your accounting firm have a higher client retention rate? The average for financial services is 75%-84%.
Did you know it costs 5X more to get a new client than to retain the ones you have? Increasing your accounting firm's retention rate by just 5% can boost profits by more than 25%.
You've invested upfront time and resources. You expected to recoup over time. That means you could lose thousands to client churn annually, depending on your cost of acquisition, initial setup, hours paid, etc. For these reasons, 65% of companies say they're spending more on retention this year.
Should your accounting firm be, too?
The Value of Client Retention
Client retention rate is a vital number to know, even though it doesn't make it onto financial statements.
It's the number of clients you have at the end of a period minus the ones you acquired this period divided by the number you had at the beginning of the period. Then, multiply that number by 100.
((Number of Clients - Number Acquired) / Number at Start) x 100
This critical success metric can make or break your accounting firm and clients' businesses.
Here's the truth:
A high retention rate leads to increased profits through:
- Lower acquisition costs
- Revenue stability
- Cost-efficient marketing, sales, and service
- Cost-efficient office operations
- Time-efficiency...Spend more time getting paid vs. trying to acquire clients!
- Positive social media, reviews, word-of-mouth, and direct referrals
So, what does it take to retain a client? Hint: it's more than providing accurate and timely financial services. It's not friendliness either, although that's still important.
Key Client Retention Strategies for Accounting Firms
Personalized Client Engagement and Communication
Every client is unique, and you should treat them as such. In the past, true personalization required a single dedicated point person who knew the account and client inside and out. But small business software now:
- Automates personalized communications
- Sends client reminders on client-specific schedules
- Makes booking their appointments and securely uploading documents easy
Business software eliminates the need:
- To sacrifice speed to get personalization
- For multiple people in your firm to answer precise account questions that once had to go to the client's accountant.
That's because all communications to and from clients are centralized, secure, and accessible within your CRM.
This facilitates teamwork along with fast, accurate, and consistent communications.
Clients expect you to see a problem before it becomes a problem. Business software solutions can help spot these issues so you can make quick adjustments. Missing signatures, delayed documents, incomplete information, and repeated issues that cause delays—business software can spot and analyze problems. It allows you to address them quickly and develop a system to prevent them. Enhance efficiency to keep clients happy.
Provide Valuable Services
This one seems like a no-brainer, but your services should match your client's needs. Don't push services they don't need.
Do your best to accommodate their service needs (within reason). Align the services you offer with what your client base is looking for. Surveys, testimonials, review analysis, and simply speaking with clients can reveal what value looks like to them.
Loyalty Programs and Incentives
Loyalty programs help you stand out in a sea of accounting firms. They increase client engagement in the services you offer. This is a win-win for you and them. Incentives can evoke emotions like loyalty and trust.
It can also spark FOMO (fear of missing out). This can encourage them to invest in more accounting services that you know they need to succeed.
Consider what works best for your clients. Maybe one of these:
- Perks & tiers - Offer incentives to bundle more services, years as a client, etc. Or create an incentive for different levels of accounting service use.
- Referral program - Provide clients who refer other paying clients a complimentary service or discounted price
- Gamified surveys - Add in-depth client surveys to your site. Award points, discounts, etc. For some clients, status is a reward. They've achieved Platinum Plus Survey Taker status, etc.
Don't Forget to Monitor Client Retention
You should know what your retention rate is quarter to quarter. Measuring proves which retention programs work and are worth your money/time.
These key performance indicators (KPI) tell you you're on track for high retention:
- New client acquisition
- Loyalty program engagement rate
- Number of services per client
- Average order value
- Client annual or lifetime value
- Client acquisition costs
- Social media engagement
- Are you getting more positive reviews?
Business software helps you track and analyze these metrics and other KPIs to improve retention. For example, are people using the perks they've earned? If not, you may need to rethink your loyalty program.
Client Retention Strategies are a Must for Accounting Firms
Client retention rate strongly impacts profitability. Tracking it helps you understand how business decisions affect that rate. Business software can help you implement retention strategies and track retention to know what's working.