Client retention – How can we be better at it?

Customer retention versus Customer acquisition

HandIt is argued that it costs on average 8 times more to acquire a new client than it does to retain an existing one.  Indeed, a recent article by The Chartered Institute of Marketing suggests that it can cost up to 30 times more!

Customer care is something we hear a lot about, and indeed a subject that many businesses would say is a key priority for them.  This is a very worthy aim, but if it is really true why do so many of us shop around for other suppliers of our products or services?

Whilst I understand that there is a potential cost implication to the actual ‘customer care’ itself, and indeed a measure of lost profit if the care equates to some form of additional service, or even a price reduction, but given the ratios above it has to be worthy of consideration.

Drive for increased sales

Many businesses measure their success by the number of new sales they make.  This is not unreasonable as most businesses start with no customers and the most important part of getting to a break even situation is the Sales function.  There is a big feel good factor that permeates through the organisation when a nice new client comes on board.

The Honeymoon period

However, as businesses get through this barrier and the demands on time become greater, customer care is often one of the areas that start to receive a little less attention.

Cost of acquisition and Cost of loss

We often hear discussed the term ‘Cost of Acquisition’ – how much it actually costs to get a new client on board.  This figure is calculated in a number of different ways, but is generally a mix of the sales and marketing spend (not forgetting administration costs) in the previous period divided by the number of new clients taken on in the same period.

What we don’t hear so much is the cost of Client loss. The Lifetime value measure is regarded as the key metric, but this is of course entirely governed by how long that life is?

The areas to consider are:

  1. Loss of ongoing profits from existing products/services– albeit at potentially reduced margins
  2. Loss of ongoing profits from new products/services that could be sold to this client
  3. Building a reputation (internally and externally) for addressing client issues
  4. Higher levels of Client satisfaction
  5. Introductions from satisfied Clients to new clients
  6. Economies of service – Once an issue has been dealt with the cost of ongoing support of an existing client who knows and trusts you is less than that associated with a new client


I am in no way advocating a client retention policy ‘at all costs’, but given the above firmly believe that it is in all businesses interests to do more to keep clients for longer.

We get the signals and the clues to Client issues:

Whether we have client management routines and/or a sophisticated CRM systems or not, customers often give us the clues as to what would make them more satisfied, or even really happy.

They will let slip in conversations that the service they received last week wasn’t very good, or that they have been approached by a competitor offering a lower price, or that they have just suffered a large bad debt that is threatening the business, or even that they would like to acquire a competitor.


We often carry out customer satisfaction surveys, but do we truly listen to what we are being told?

The next time your client expresses concerns or let’s slip they have a particular need or business issue, I would strongly urge you to listen carefully and then seek to work with them to asssist in whatever way you can.  If it’s an issue outside of your area of expertise use your own network of contacts and introduce them where appropriate. Your client will appreciate it and it will build a stronger relationship that will pay dividends in the longer term.

Client retention eguide

If you have any comments on this article or would like to discuss any aspect of it please contact me at or on 0845 689 8750.

John Thompson is Managing Director and founder of Trans Capital Associates