The five factors affecting client retention are client satisfaction, client delight, client switching costs, client relationships, and client service standards.
Client satisfaction – Unsatisfied clients either leave the practice or buy fewer services than satisfied clients.
Client delight – In today’s ultra-competitive world merely satisfying clients is not enough and practices need to delight clients by providing exceptionally strong service. In addition, the critical definition of client service is not what the accounting practices think, but what the clients think.
Client switching costs – These are ‘one-time costs’ that clients associate with the process of switching from one provider to another. For basic salary tax returns the switching costs are nil and clients move accountants frequently and easily (sometimes ten accountants in ten years). For business clients the switching costs are greater as the accountants often control the client’s cloud based accounting data and software, have in-depth knowledge of the client’s business, and have developed strong personal relationships over many years. This is the reason business clients are very loyal and rarely change accountants unless completely dissatisfied.
Client relationship management – The social and personal relationship between an accountant and their business clients is very strong and aids client retention. Numerous studies have indicated small businesses rate their accountant as their most trusted advisor.
Client service standards – The implementation of these standards leads to improved client service practices and client retention. It includes standards on time to return phone calls (normally two hours), reply to emails (four hours), time to complete the work (21 days), etc.