Employee retention and strategies for optimizing it are a constant consideration for organizations. It might be particularly important for those having specialized, customer-facing employees. For those firms, an employee transitioning to a new firm brings along an additional issue. Will clients follow the employee rather than being loyal to the firm?
This is particularly an issue for law firms, financial firms, and consulting groups, but all companies face it to some degree. It's an aspect of client retention that can cost firms, as it is an estimated seven times more expensive to acquire new clients than to service existing ones.
A recent article in the Harvard Business Review analyzed whether clients remained with companies or left in the wake of departing employees. Several factors influenced whether firms remained with the company or with the employee.
Duration and Specialization Matter
The first is that the length of time a client had been working with a specific employee made a large difference in whether they went with that employee or stayed with the firm. Loyalty to the client-service individual rose several percentage points for each year they had worked with an organization. After three-and-a-half years, the probability that they would follow the individual doubled.
The second factor is the degree of specialization. A client-facing employee who specialized in a particular field generated a significant degree of loyalty. (The study looked at lobbyists. Lobbyists specializing in a field like energy or workplace regulation garnered more loyalty than a generalist, who worked across different fields.)
Not only that, but teams of specialists generated even more loyalty, but to the team rather than the firm. This heightens the risk that teams who quit as a unit, or who leave to start their own firm, can take clients with them quite easily.
How to Retain Clients
The strong pull toward duration and specialization, however, also provides several indications of how business strategy can work to retain clients.
It starts by retaining the people and teams the clients favor.
Client-facing specialists, both individuals and teams, should be incentivized to remain with the firm. They can end up contributing a significant chunk of business. Salaries, bonuses, and partnerships, if appropriate to your firm's structure, are methods of retaining both employees and clients.
A second business strategy is to shorten the duration of service for a particular client. Your company could rotate client-facing positions regularly, in a move to bring in fresh perspectives.
A third is for several teams to maintain contact with key clients. Establish connections not only with specialists but also with the upper management of your firm. Provide anticipatory service so that you know what the client's issues are in advance. Meet every issue, not only those that solve a problem.
A fourth business strategy might be to recruit individuals or teams that bring business with them. In effect, you are taking a potential challenge and reversing it, becoming the port of arrival rather than departure. Be aware, though, that you will have to make sure their compensation is in alignment and does not rely on their gaining new business.
Client retention is a key metric for any organization. Make sure you retain the people that keep clients well-served and monitor clients' perceptions of service.