Magazine article The CPA Journal

When Clients Leave

Magazine article The CPA Journal

When Clients Leave

Article excerpt

Your most profitable client says, "I've decided to work with another firm."

"But I thought we had settled our differences," you respond.

"No, I disagree. Things are still the same, and for too long now." Click.

Does this scenario wake you up at night? Have you mused lately that you are not sure what clients want anymore? Losing clients, especially profitable ones, will gut the profitability of a practice, causing high operating costs from turnover expenses. More shocking is the fact that clients don't leave because of fees, or other seemingly concrete issues. Clients leave due to perceived indifference exhibited by someone at your firm. Indifference leads to dissent and defection.

Indifference has as many faces as the exceptions to the rule against hearsay. Indifference may be the slow response on your part to a client's question. What's slow? Ask a client about response time; often it differs from your notion of speed. Indifference may be not explaining the steps you have taken on your client's behalf. Your hours of labor may be transparent to the client. The phone call returned two days later, not today, may prove indifference. Indifference may be perceived rudeness on the part of staff, such as questioning incoming callers as though they have to prove their worthiness to speak with you. With four or five of these "negative" incidents, you and your staff have proved your indifference. The client leaves, fails to give you a referral, or speaks negatively about your firm. You'll need three new clients to replace this lost profit stream.


On a positive note, client dissent flows from highly remediable behaviors and miscues in your relationship. At the same time, the financial motivation to manage loyalty factors is clear. Boosting your client retention rate has Serious implications for profitability; a 5% improvement in retention rates can boost profits 15% to 50%. The most profitable firms have a retention rate of 93-95%; whereas the average firm has a 78-85% retention rate. Managing the process takes planning and behavioral change for both partners and staff. Measurement, setting goals, and review is the starting point.

If retention rates drive profitability, managing the process of loyalty has three key issues:

1. Pay keen attention to your most profitable clients. If you think about your client base in three levels (very profitable, sort of, and not so profitable), spend the most time and expense with the your most profitable, the level one clients. This means that both you and your staff need clear cut procedures to know when to delegate client questions and issues upstream and down. …

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