A figure pushing a heavy wheel with four coloured spokes, the wheel already turning

TL;DR

Why Clients Stay: the Flywheel of Giving Clients Their Own Data

  • Professional services firms lose about a quarter of their clients a year, and most leave quietly when the work runs out.
  • Switching costs predict staying better than satisfaction does, and frequency of use is the strongest switching cost of all.
  • A client who has a living picture of their own people, and uses it weekly, has both. The data is theirs; the conversation is yours.
  • That is a flywheel: heavy to start, then self-sustaining, and worth 25 per cent or more in profit for every 5 per cent of retention gained.

Most advice about keeping clients is advice about manners. Return calls faster, send the quarterly note, remember the birthday. None of it is wrong and none of it explains the number that sits over the whole profession: professional services firms lose, on average, about 27 per cent of their clients every year. A firm with forty clients replaces eleven of them annually just to stand still, and every one of the eleven was, by most accounts, satisfied.

I spent years on the headhunting side of that number. The project ends, the invoice is paid, the relationship goes into a drawer marked "call them in the spring", and by spring someone else has called them first. What I want to set out here is why that happens, what the research says actually holds a client, and why giving clients a living picture of their own people changes the shape of the relationship from a series of projects into a wheel that keeps turning.

The Number Nobody Puts on the Wall

Why do clients leave consultants and professional services firms?

Mostly because the work ended and nothing kept the relationship alive between projects. Professional services firms lose about 27 per cent of their clients a year on average (CustomerGauge). Satisfaction is a weaker predictor of staying than people assume: Burnham, Frels and Mahajan (2003) found that switching costs explained more of a customer's intention to stay than satisfaction did. A client who is happy but has nothing of yours in daily use is a client who can leave without noticing.

That last sentence is the whole problem. A consulting engagement is designed to end. The report is delivered, the workshop is run, the recommendations are handed over, and the better the job, the less reason there is to call again. Satisfaction, in other words, is the outcome of a transaction; it is not a bond. And the research on what does bond a client is clearer than the profession's folklore.

A client who is happy but has nothing of yours in daily use is a client who can leave without noticing.

What the Research Says Holds a Client

How do switching costs affect client retention?

Switching costs are what a client gives up by moving: time and effort (procedural), money (financial), and the relationship itself (relational). All three raise the intention to stay, and together they predict retention better than satisfaction (Burnham, Frels and Mahajan, 2003). Chen and Hitt (2002) found that how often customers used a provider's platform was the strongest predictor of staying, while ease of use on its own made no difference. Usage, not delight, is what holds.

Two studies do the heavy lifting here, and they come from different directions. Thomas Burnham, Judy Frels and Vijay Mahajan set out to build a typology of switching costs and test what produces them. They found three kinds. Procedural costs are the time and effort of moving: learning a new provider, setting things up again. Financial costs are money lost, such as benefits that do not transfer. Relational costs are the discomfort of breaking a working relationship and the identity that went with it. What matters for anyone selling professional services is the antecedent they found most consistently: the breadth of what a customer uses with a provider. The more of your things a client has in use, the more of all three costs they face when they think about leaving.

Pei-yu Chen and Lorin Hitt looked at the same question with behaviour rather than survey answers, in online brokerage, where switching is a few clicks away and there is nothing to be polite about. Their finding is the one I would frame: the strongest single predictor of a customer staying was how often they used the provider's platform. Customers who visited frequently built up what the authors call implicit lock-in through learning; customers whose usage fluctuated were the ones who left. Ease of use, which everyone assumes is retention's friend, made no measurable difference on its own. What held people was habit.

27% Average share of clients that professional services firms lose each year CustomerGauge, B2B benchmarks
3 costs Procedural, financial and relational switching costs together predict staying better than satisfaction does Burnham, Frels & Mahajan, JAMS, 2003
25%+ Profit lift from a 5 per cent improvement in customer retention, in Bain's original financial-services finding Reichheld, Bain, 2001

Put the two studies together and the recipe for a client who stays is short. Give them something they use often, and give them more than one thing to use. Neither is about being liked. Both are about being present in the client's working week.

The Wheel

What is the flywheel effect in business?

The flywheel effect is Jim Collins's term, from Good to Great (2001), for growth that comes from many consistent pushes in one direction rather than one dramatic breakthrough. A heavy flywheel is hard to start, but each turn makes the next one easier, until momentum does most of the work. In a client relationship the pushes are the small, repeated moments when the client gets something useful from you; the momentum is the point at which leaving would cost them more than staying.

Collins used the image to explain why the companies in his study never had a single moment of transformation, however much the business press wanted one. They pushed a heavy wheel, slowly, in one direction, and at some point the wheel began to carry them. The image has since been borrowed by everyone from Amazon to the software industry, usually to describe how a product gets better as more people use it. I want to borrow it for something smaller and closer to home: a single consulting relationship, and what happens when the client has a living picture of their own people.

Here is the wheel. A client's people take a ten-minute survey and each gets a map of how they prefer to work. Managers use the maps in hiring, onboarding and one-to-ones, because the maps make those conversations easier, which is a push. Each use adds a little to what the client knows about their own organisation, so the picture is worth more than it was, which is another push. New starters are surveyed as they arrive and people are re-surveyed as things change, so the picture stays current and the habit stays alive. And the person the client calls when the picture shows something they did not expect is you, because you hold the conversation around the data, which is the push that matters most to your practice.

The data is the client's. The conversation about the data is yours. That division is what makes the wheel turn.

Notice what the wheel does to the three switching costs. Procedural: the client has a year of surveys, maps and history in one place, and moving means starting again. Financial: the maps are paid for and accumulate; a new provider begins at zero. Relational: every one of those conversations was with you. And notice what it does to Chen and Hitt's frequency finding. A quarterly report is opened once. A manager's map of their own team is opened before the one-to-one on Tuesday, and again when the new starter lands, and again when two people keep colliding. The client is on the platform weekly, and it is your platform with their name on the reports.

Why It Has to Be Their Data

There is a version of this idea that is simply lock-in, and clients can smell it. The wheel only turns if two things are true.

The first is that the data belongs to the people who produced it. Each person owns their own map, consent is captured before every survey, and the organisation sees the aggregate because the individuals chose to share it. That is not a legal nicety; it is what makes people willing to be re-surveyed, and re-surveying is what keeps the picture alive. A picture that is taken once and filed is a report. A picture that is refreshed is a relationship.

The second is that the client could leave. The maps are theirs, exportable, readable without you. What you are offering is not a lock but a reason: the conversation is better with you in it, because you know the client's people through their own answers, and you have watched the picture change. Reichheld made the point thirty years ago in a different vocabulary. Long-standing customers cost less to serve, buy more over time, refer others, and will pay a premium to avoid the bother of switching. He was describing what a flywheel looks like from the accounts department.

The Practical Version

How can a consultant or coach retain clients for longer?

Leave something behind that the client uses between engagements, and make it theirs. A living picture of their own people, which managers open for hiring, onboarding and one-to-ones, gives the client a reason to be in contact every week rather than at renewal. Because the data is about their people, it is theirs; because it accumulates, it is worth more each year; and because you hold the conversation around it, the relationship deepens rather than resets. That is the flywheel, and a 5 per cent improvement in retention is worth 25 per cent or more in profit (Reichheld, Bain).

In practice it changes three habits. You stop selling projects with a beginning and an end and start selling a first map, from which the engagement grows. You stop measuring the relationship by the last invoice and start measuring it by how often the client's managers opened their maps this month, which you can see. And you stop treating the spring call as a sales call, because by spring you have already been in the room three times, each time about something the picture showed.

Whether that is worth doing is a sum, not a slogan, and it is on the partner page: what turnover costs a client, what fewer regretted exits are worth to them, and what one more client staying a year is worth to you. The wheel is heavy at first. It is meant to be.

Sources