It’s one of the numbers you want to keep low in business. Churn. Firms with churn rates of more than 5% are often less profitable and that’s usually because they have higher acquisition costs and slower productivity as they constantly onboard new clients. In fact, it’s estimated that the average churn rate in the professional services industry is as high as 27%. As a result, reducing churn is usually one of the main priorities of firms. So how do they go about it? We think the key is a solid closed-loop feedback process.
So what is closed-loop feedback?
Gathering feedback from your clients is only the first part of the puzzle. But the good news is, they often see the benefit of providing thorough feedback. It’s the next step in the process that often stumps many firms. Taking action.
The act of sitting with your feedback, digesting it and then coming up with an action plan is what’s key to client retention. Show your clients that you’ve listened to what they have to say and have identified ways to improve your relationship. This is the essence of closed-loop feedback. Closing the gap between the feedback and the resolution.
How does this look in practice?
There are several quick and easy steps you can take to start to close the loop:
Respond to the feedback
Let them know you’ve received their comments - read them and will be coming back to them with suggestions to improve service. This is equally as important to do if the feedback is positive, as it is if you receive areas to improve on.
Top tip: Use this as a chance to clarify any of the feedback you’re not sure about. Ask the client to expand on certain points or ask specific questions to gain an even better understanding.
2. Create an action plan
Next up… you’re going to need to show the client how you’re going to take their feedback onboard moving forward. Perhaps their comments mentioned that communication could be better. Propose ways to improve this through more regular meetings, status reports or even email updates. This stage is all about taking some if not all of the areas for improvement that were highlighted and finding ways to resolve them.
If your feedback was overwhelmingly positive you’re on to a great start. Still complete this step and clarify with the client how you’ll be working moving forward, even if this is largely the same as it always has been.
Top tip: Get buy-in from across your business before agreeing on an action plan with clients. Make sure everyone who needs to be is on board with the plan. This will make following through with the actions a lot easier.
3. Agree next steps
Once you’ve provided your clients with a clear action plan, involve them in the process of agreeing on the next steps. This will make sure all parties are happy with the ways of moving the relationship forward and keep the feedback process open. Clients should always feel that their comments are welcome.
4. Set regular intervals to catch up
Client relationship meetings are an important way to check in and make sure things are progressing as you’d both agreed. The frequency of these will depend on several factors including how long it will take to make meaningful changes and action on the feedback, how many action points you set and how often the client wants to meet. Agree to a frequency, and use your action plan as an agenda in meetings to make sure the feedback is being met and the loop closed.
And that’s it. The closed-loop feedback process is a proven method to increase loyalty and reduce churn and is quite simple to implement. If that sounds like music to your ears, get in touch to find out how we can help set up your client experience measurement programme.
For more information on how we can help, send us a message.