Determining Attrition in Service-Based Businesses

Jacob Brain


Determining customer retention in a professional service business is one of the most difficult business metrics to calculate. One reason for this is the lack of key indicators that product goods retailers benefit from such as close, repetitive purchases, related products and services, lower priced items, and continual need.

In this post, we’ll take at look at how you should position you retention efforts to keep the customers that keep you in business. Beyond great customer service, there are tactical measures you can take to better position and execute retention with your customers.

Acquire and Refine Data

The most important and overlooked element in retention is data. Without it, you cannot begin to put together an understanding of your customer demographics, psychographics, and history. A good profile of your client will allow you understand their needs and potential with you company. As well, it will help you focus your efforts in outreach to those who are more likely to make the next purchase sooner. We recommend using a CRM such as salesforce to track all of your customer interactions and information. It allows to you see history as well as make notes about campaign results. Even if you use a simple excel sheet, tracking your current customers will pay huge dividends in the long run.

Initiate Conversation

Even though in the professional services marketplace your interaction with your clients tends to only last as long as the billable project, you have an opportunity to continue to nurture that client into the next purchase.  You should have a newsletter or some other way to continue the conversation with your client. This allows you to 1) keep collecting data on them, 2) cross-sell them into the next purchase, and 3) nurture the relationship as new needs develop.

This might also include other interactions such as direct mail, phone calls, and luncheons. Continuing conversation opens the door to exploring other needs the client may have on their own timeline. They can learn about all your company has to offer, follow your news, and when the time is right for the next purchase, you have positioned yourself beyond the research phase.

Create Realistic Goals

With any marketing effort, a realistic expectation of what the results should be can seriously affect how your results shape your efforts. Before beginning any effort, an understanding of what the lifetime value of your client might be is an important aspect of gauging your investment in this process.  If each of your services creates a 20% profit on a 10K consult, you have at least a 2K window to invest into retention marketing for that service. Since you have already acquired the client, the cost of retention can be very low compared to lead generation. Spending a hundred dollars on a lunch seems nominal to the thousands spent on lead generation. But even still, you need to understand that not every client is going to stick with you. 100% retention is a myth and an unhealthy expectation. You should expect to use retention to keep the clients you want and have the highest growth potential and let the others go when they are ready.

Keep the Conversation Going

Keeping customers in a service industry takes more of what you already offer, which is direct conversation. If a person has to interact to service you client, then a person has to interact in the retention efforts. But these small interactions and conversations can lead to great results.


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