Articles / Entrepreneurship

What Is Client Retention, Anyway?

Most business owners may throw client retention in the same category as all the other metrics they constantly utilize to see how well their business is performing. 

However, not all metrics are made the same and it’s an important detail to remember. Just the same way that 300 calories of mayonnaise is not the same as 300 calories of grilled chicken.

Client retention is a superfood; the smallest upticks in client retention will boost the overall health of the business.

Referral Base/ Word of Mouth Marketing

Client retention naturally improves your referral customer base and it’s no secret these referrals are on every business owner’s wishlist.

“Make sure to tell your friends!”
“I’m never too busy for your referrals.”
“If you share this on social media, I’ll give you an additional 15% off!”

We crave that word of mouth marketing. It has a large impact, is far less expensive to acquire, and the leads are red hot. A referral client is far more forgiving than a cold lead that clicked on your site or landing page at 2 o’clock in the morning, only to hear:

  • They gave someone else the business because you didn’t respond fast enough.
  • They’re no longer interested.
  • They don’t respond to your calls or emails at all.

Not to mention, you paid for this cold lead with your hard earned money which was put to use by staying on top of the ever-changing SEO algorithms, updating buzzwords, adjusting target demographics, setting up budgets for your bids, and all the exciting things that come with SEO. Much more than just giving them a phone call went into acquiring and attempting to talk to this lead.

A red hot referral comes with built-in forgiveness in the sense that you won’t need to keep your phone glued to you while you’re laying on the beach sipping your favorite drink during a vacation in order to prevent the lead from going elsewhere. Or having to subscribe to the knee-jerk return call within 5 minutes (because every minute after that drastically minimizes the success rate of closing the lead…blah blah). That is just exhausting.

Referrals come from another client or customer that have already given you their business and trusts you so much they want all of their friends to experience what they have experienced. It is the same reason you tell all of your friends and family “You have to go see this movie!!! YOU HAVE TO!” after you have seen an amazing movie or “Oh my gosh! You have to visit (insert country here)!” after you’ve traveled and made remarkable memories.

After and only after creating an unforgettable experience with your current clients is this forgiveness granted. It is passed down in a conversation between your past clients and their friends and family that should be treated like a knighting ceremony. If done correctly, your clients will vouch for you from the tallest mountain and tell their friends and family, “You HAVE to go to Derek! He was great!”, or “Samantha was the best! I’m not letting you go anywhere else for this!”; And you can lower your blood pressure knowing they will still answer your phone call if you miss their call and respond after the 5 minute mark. 

Photo by Paweł Czerwiński on Unsplash

Increased Revenue

Client retention means more than just how many clients return to you. It also gauges how attached people are to your business/brand. 

Ignore this at your own will. 

Here’s why:
It is far easier to sell to an existing or past client/customer.  The probability of selling to an existing customer can be up to 70%, while the probability of selling to a new prospect is anywhere from 5-20% ( Their ears are already open so no need to start from square one every single time, AND we all know it’s a hell of a lot cheaper to keep your current clients than to acquire new ones. This statistic could play a huge role in the way you choose to operate your business.

Author Tim Ferriss set bookshelves on fire by putting “The Pareto Principle” on display in his book, “The 4-Hour Workweek”, telling the story of how he minimized his tasks, distractions, and clients in his business and personal life by letting go of those that would not provide a worthwhile return relative to their labor input.

The Pareto Principle or “Law of the Vital Few” states that for many events, roughly 80% of the effects come from 20% of the causes. 


  • 20% of a company’s products represent 80% of sales
  • 20% of employees are responsible for 80% of the results
  • 20% of friends is leading to 80% of your happiness
  • 20% of your prospecting activities are giving you 80% of your clients

If done correctly, this could also mean 80% of your revenue could easily come from 20% of your clients and by focusing on your current and past clients this could easily be so.

Increasing your client retention doesn’t mean working just a little less, but a whole lot less and making your revenue come easier than trying to constantly find new clients to sell to. Now what if you could just find more people like those that fit in the 20% profile? Like attracts like, so those clients probably know more people that fit your ideal clients profile.

Another study by Kapost states that increasing your client retention by just 5% can increase profits up to 95%. Where else can you find a return like this?

Client retention means achieving more with the vital few and we hope your wheels are spinning, going through your mental rolodex of current and past clients that clogged your email inbox with headaches and yielded little revenue; and are now thinking about the clients that were a joy to work with and made a significant impact in your business, whether it was revenue or gifted referral business. 

Make notes about such clients and put together a plan to increase your retention. Double down on them.

Strengthening Emotional Connection

Increasing client retention usually means figuring out what resonates with your client to have them return but sometimes the product isn’t what is keeping them around, especially if the product is available elsewhere.

Have a look at the fashion industry. Those jeans you are wearing. You bought them for a reason. Could be the color. Could be the cut. But most likely you purchased them because they made you feel amazing. The jeans just looked amazing and you lived vicariously through the model in their ad because their hair just looked like something you’d do.  They catered to your emotions and gave your strut an extra scoop of “oomph”. Now you’re hooked on this particular brand and choose to purchase them regardless if they are next to a cheaper competitors display at the store.

This emotional connection is another positive side effect of client retention and can become vital to your business. It keeps your audience subscribed to your business and makes a massive impact on your bottom line. Customers with an emotional relationship with a business or brand have a 306% higher lifetime value than those that don’t (Motista).

The average customer spends 67% more in his or her third year as a customer of your business than in the first year ( What’s the lifetime value of a client in your business?

How can we simply glaze over this statistic when looking at our spreadsheets when the positive effects are this significant? 

Wrapping Up!

We started today’s article asking the question of what client retention is; And after looking through some of the statistics, we can all agree we have truly underestimated it in favor of constantly chasing the new and exciting clients and leads, versus nurturing and caring for the people that have already given us their trust.

What would happen if you paid less attention to the clients you DON’T have and started doubling down on the clients you DO have?

What would happen if you were active about establishing a deeper connection with them, showing up for them, and showing them you care every chance you get?

Increasing your client retention is the way to future-proof your business.