A few years ago, Bain & Co. and Harvard Business School did a study which concluded the following:
Increasing customer retention rates by 5% increases profits by 25% to 95%.
While I’m a big fan of customer retention for obvious reasons, I wanted to share with you my experience with customer retention as an independent consultant and principal consultant of a small firm.
One of the biggest advantages of hiring a consultant is to have someone with relevant expertise and an “outside perspective” come in and solve a problem for an organization.
Everyone has blind spots and leaders of organizations are not immune to them. So the right consultants can add tremendous value very quickly just based on their outside perspective.
But here’s what happens the longer you work with a client: your outside perspective diminishes over time.
I tend to work very closely with my clients. So the more I worked with the same client, I found myself becoming a part of the echo chamber. My ideas weren’t as fresh as they were when I initially started working with the client.
It’s a risky situation to be in when your clients don’t get the best results. Your reputation begins to take a hit.
Experiencing this made me realize something very important about myself as a consultant: don’t retain clients forever.
I understand this is personal and may not be relevant to all consultants reading this. But for me, I realized that I didn’t want to work with a client for more than 2 years.
So I voluntarily ended the relationship and/or recommended someone else. It was best for the client, and best for my business as well.
The bigger lesson here was that if I didn’t have an active sales pipeline, I would never have the confidence to voluntarily end client relationships. So, building an active pipeline actually improved the quality of my work!
—
Ready to add $100k-$500k revenue to your consulting business in 12 months or less without burning out? Schedule a call and let me show you how.
Image credit: Giving Site
