For small businesses, retaining a base of loyal clients is the easiest way to establish a consistent income. In fact, 61% of small businesses say that over half of their revenue comes from repeat clients.
However, many business owners focus most of their energy on acquiring new clients. And when you’re focusing entirely on new business, you could overlook valuable opportunities with existing clients.
Here’s how to retain clients for stable, consistent business.
Why client retention is your most underrated growth strategy
To attract new clients, you need to spend hours each week on marketing and onboarding. These activities are time-consuming and often require upfront investment that can eat into your income.
When you have a predictable group of repeat customers, you can spend more of your time on lucrative revenue-generating projects, rather than going back to the start with outreach messages and onboarding calls. Having a client retention plan is key to keeping these relationships strong and generating predictable revenue.
Your loyal customers may even provide referrals, which creates a low-effort stream of new business.
7 tactics to improve client retention
Here’s how to improve client retention and turn one-time projects into long-term relationships.
1. Deliver an exceptional onboarding experience
Making a strong first impression significantly improves your chances of retaining a new customer. A structured onboarding experience builds trust with clients while ensuring you have all the information required to start the project.
Focus on creating a positive onboarding experience with a welcome guide, intake questionnaire, and kickoff call to help clients feel comfortable.
With HoneyBook, you can create automated onboarding workflows to save you time while maintaining a great customer experience.
2. Communicate proactively throughout every project
If clients feel like they’re out of the loop on a project, they’re less likely to return in the future, even if they’re happy with the final product. Focus on proactive communication so your clients don’t have to chase you down for updates.
It can be difficult to stay on top of communication when you’re busy with so many other tasks. To make sure that client updates don’t fall by the wayside, try incorporating them into your project workflows. Plan when you’ll send status update messages based on key project milestones.
To stay organized, keep all client communication in the same place. With HoneyBook, you have a CRM that also lets you create a branded client portal to keep information centralized. This simple switch can save you hours of work, since you don’t have to dig through emails or Slack messages to find important information. You can even automate follow-up messages.
3. Set clear expectations with contracts and scope documentation
When conflict arises during a project, it’s usually because expectations aren’t aligned. To prevent this, detail the scope—what the project includes—at the beginning. This helps the project run smoothly for everyone and can improve customer retention rates.
Clarify project deliverables, deadlines, and payment terms with the client. This is also a great time to set boundaries to prevent overworking later on. For example, if you’re working on a graphic design project, clarify how many rounds of revisions are included in the project price and how much additional revisions cost. An upfront conversation prevents confusion later on.
After establishing these details, make it official with a contract. A written contract provides legal protection for both parties. HoneyBook offers a library of legally-vetted contract templates for a variety of industries, which you can customize to fit your business. Plus, e-sign features make signing convenient for both you and your clients.
4. Personalize the experience beyond the deliverable
Small personalized touches can elevate a customer experience. When you start a new project, take note of your client’s business goals and preferences in your CRM. Then, use that information to add personalized touches to your messages. This can be as simple as sending the client a congratulations when they meet a business goal.
Another way to make your services feel more personal is to proactively anticipate your customers’ needs and act on them. Say you’re a marketing consultant providing branding services for a startup. That startup is likely to need other marketing services, such as paid ads or social media posts, in the near future.
Instead of waiting for the client to ask, put together a no-pressure proposal for those services or provide referrals to professionals in your network (if you don’t offer the service). Busy clients will appreciate the extra help, and you could end up landing even more work.
5. Ask for feedback and visibly act on it
One of the simplest but most effective customer retention strategies is to ask for feedback. This shows clients that you value their opinions, which can strengthen relationships. It’s also beneficial for your business, as your clients can provide valuable insights to help you improve.
A quick post-project survey is an easy way to get feedback without requiring too much effort from clients. Keep questions simple but impactful: ask clients how satisfied they are with your work, if there’s anything about the customer journey that could be improved, or how likely they are to work with you on a future project.
6. Follow up after the project ends
Another way to increase customer retention is simply to keep in touch after the initial project ends. Many clients would be happy to work with you in the future, but they may need a nudge to make it happen.
There are plenty of ways to keep customers engaged, even if you’re not actively working together. For example, you could send a simple thank you note after the project and then schedule seasonal check-ins to show you’re thinking of them. And you don’t need to send these messages manually. With HoneyBook, you can automate post-project outreach to take one to-do list item off your plate.
These follow-up messages are key to keeping your business running smoothly. New customer acquisition is time-consuming, but a well-timed follow-up could lead to more business or even a referral with minimal effort.
7. Build a simple loyalty or referral incentive
You don’t need to be a big business to start a customer loyalty program. Even simple rewards like a discount or a small gift in exchange for repeat bookings makes a difference when it comes to customer retention.
Referral programs are also a fun way to keep existing customers engaged while attracting new ones through word of mouth. Your existing clients can be some of the most effective advocates for your business, and chances are, they know people who could use your services. Provide discounts and other incentives for clients providing successful referrals.
How to measure client retention
Tracking your customer retention rate shows you how effective your strategies are, and noting how many customers leave is key to identifying gaps in your processes. Track these metrics to see how you’re doing:
- Client retention rate: The percentage of new clients that return for future projects are the clients you retain.
- The client retention rate formula is: (Ending Clients – New Clients) ÷ (Beginning Clients).
- Customer churn rate: The percentage of clients that leave your business in a specific time frame shows your churn rate.
- The formula is: (Churned Customers) ÷ (Beginning Customers).
- Customer lifetime value (CLV): The average amount each client spends over the course of your relationship is your CLV.
- Calculate this by multiplying your average revenue per customer by your gross margin, then dividing it by your churn rate: (Average Revenue × Gross Margin) ÷ Churn Rate.
- Referral rate: Tracking how many new clients come from referrals shows you if those programs are working.
- Calculate the percentage of new clients that are referred by existing ones by dividing the number of referred customers by the number of new ones: (Number of Referred Customers ÷ Total Number of New Customers).
Start retaining more clients today
Providing a consistently great customer experience turns one-time projects into long-term relationships. Personalization, regular follow-ups, and loyalty programs are all customer retention strategies that you can implement, regardless of your business size or industry.
HoneyBook makes it easy for small businesses to improve client retention and engagement. With HoneyBook, you can manage every aspect of the client relationship, from the initial contract to communication to payment—all in one place. Plus, you can automate routine tasks like follow-up messages to save time during busy workdays.
Get started with HoneyBook today and build client retention strategies that make an impact.
FAQs
What’s a good client retention rate for a small service business?
A good client retention rate will depend on your industry and business model. In most industries, a retention rate of 75–85% over one year is an indicator of success. If you work on shorter projects, a timeframe like six months might be a better indicator of how many clients you’re retaining. It depends on the services you provide.
How do you measure client retention as a service provider or small business owner?
The easiest way to measure client retention as a small business owner is to track the percentage of clients that return for multiple projects. Using a CRM software like HoneyBook will help you track the customer journey for more accurate data.
What’s the difference between client retention and client loyalty?
Client retention is the percentage of clients that return for multiple projects, while client loyalty describes how your clients feel about your brand. Loyal clients feel connected to your business and are more likely to return for future projects.
