Why Professional Services Firms Lose Retainer Clients (And How to Address It)
Retainer clients are crucial for the stability and growth of professional services firms, including consultancies, law firms, and accountancy firms. However, keeping these clients can be challenging. Often, the reasons a professional services firm (or any business, really) loses clients are symptoms rather than root causes. Understanding why firms lose retainer clients and addressing these issues through root cause analysis can significantly improve client retention.
Reasons Professional Services Firms Lose Retainer Clients
Ineffective Communication: Keeping in regular and transparent communication is vital. When firms do not keep clients informed about progress and changes, it leads to frustration and eroded trust.
Unmet Expectations: Retainer clients expect a consistent level of service quality. If the services delivered fall short of their expectations, clients may feel undervalued and seek alternatives.
Misalignment with Client Needs: Firms must have a deep understanding of their clients' evolving needs. Without this, the services provided may not align with what clients require, causing dissatisfaction.
Subpar Customer Service: High-quality customer service is essential. Poor response times, lack of personalised service, and ignoring client feedback can drive clients away.
Perceived Lack of Value: Clients need to see clear value in the services they receive. If they believe the benefits do not justify the cost, they will consider other options.
Operational Inefficiencies: Delays and inefficiencies in delivering services can lead to client frustration. Retainer clients expect prompt and efficient service delivery.
High Staff Turnover: Consistency in personnel is important for building strong client relationships. Frequent staff changes can disrupt these relationships and make clients feel insecure.
Technological Lag: Keeping up with the latest technology is important for efficiency and competitiveness. Firms that are slow to adopt new technologies may appear outdated.
Competitive Offers: The professional services market is highly competitive. Clients may be enticed by competitors offering better services or more attractive pricing.
Lack of Proactive Solutions: Clients appreciate firms that anticipate their needs and offer proactive solutions. A reactive approach can result in missed opportunities to add value.
Root Cause Analysis to Determine Client Loss
Root cause analysis (RCA) is a systematic approach to discovering the fundamental reasons behind client dissatisfaction and attrition. Here’s how firms can effectively implement RCA:
Define the Problem: Clearly articulate the specific issue or symptom seen, such as a decline in client satisfaction scores or an increase in client churn rates.
Gather Data: Collect comprehensive data related to the problem. This includes client feedback, service delivery records, staff performance metrics, and any other relevant information.
Identify Potential Causes: Brainstorm all plausible causes for the observed problem. Use tools like fishbone diagrams (Ishikawa diagrams) to visually map out potential causes across different categories (e.g., process, people, technology, environment).
Analyse Causes: Examine each potential cause to figure out its likelihood and impact on the problem. Techniques like the "5 Whys" can help drill down to the root causes by repeatedly asking why a problem occurs until the fundamental issue is found.
Develop and Implement Solutions: Once root causes are identified, develop targeted solutions to address them. This may involve process redesign, staff training programmes, upgrading technology, or improving communication strategies. Ensure that the solutions are specific, actionable, and measurable.
Monitor and Evaluate: After implementing solutions, continuously monitor their effectiveness. Use key performance indicators (KPIs) to track improvements and make necessary adjustments. Regularly review the outcomes to ensure that the root causes have been adequately addressed and that client satisfaction is improving.
Document and Communicate: Maintain detailed documentation of the RCA process, findings, and implemented solutions. Communicate these to relevant stakeholders, including staff and clients, to show the firm’s commitment to continuous improvement.
We mentioned the “5 Whys” above. In case you were wondering, the "5 Whys" is a problem-solving technique used to explore the root cause of an issue by repeatedly asking the question "why?" Here’s how it works:
Identify the Problem: Clearly state the problem.
Ask Why: Ask why the problem occurs and note the answer.
Repeat: Use the answer to ask another "why." Repeat this step five times or until the root cause is identified.
Example:
Problem: The client is unhappy.
Why? Because their project is delayed.
Why? Because the team missed the deadline.
Why? Because there were unexpected technical issues.
Why? Because the system wasn't adequately tested.
By the fifth "why," you often uncover the root cause, which helps in addressing the fundamental issue.
Conclusion
Losing retainer clients is a significant concern for professional services firms, but it is often preventable. By understanding the reasons behind client attrition and employing root cause analysis, firms can improve client retention. Prioritising effective communication, meeting expectations, understanding client needs, and providing proactive solutions are key strategies for retaining strong client relationships and ensuring long-term success.
Are you struggling with client retention and seeking effective strategies to mitigate customer loss? Lagom Consulting is a specialist growth consultancy that not only helps firms increase revenue and margins but also conducts thorough root cause analysis to address client attrition. Our experts develop and implement customer loss mitigation strategies tailored to your unique needs.
Contact Lagom Consulting today to ensure your firm not only retains clients but thrives in a competitive market.
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