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Becoming Succession Ready: Client Retention

When you contemplate your practice succession, you must consider and review many aspects of your practice. Client retention is essential to your practice, directly impacting revenues and profitability. In this blog, we discuss how you manage the process when clients leave your firm, the best practices to retain clients, and how to best prepare your practice for succession.

Most accounting firms have some level of client movement from one year to the next. Clients may leave your service for a wide range of reasons. New clients, often referred by existing clients, add to your growth. Ideally, fees from departed clients will be consistently less than those from new clients.

It is a beneficial exercise to record each year which clients have left and why. The 'why' is important from your succession perspective. If revenues are declining, or there is a one-off dip in the lead-up to your succession, your successor will want to know why. More importantly, they will want to understand if this trend is likely to continue. Ultimately, if your financial performance is trending upward, any client leakage will typically be less of a concern. It is always wise to be prepared and have the data to explain any client movement.

Clients leave their accountant for a range of reasons, including poor service, lack of communication, uncompetitive pricing or hidden fees, lack of expertise or guidance on financial and tax matters, lack of technology or innovation in services, limited range of services offered, negative company culture or unprofessional behaviour, changes in key staff, office relocation, or dissatisfaction with the quality or timeliness of services provided.

When a client departs your practice, you must take the time to understand the reason. You should evaluate and learn from the situation to improve future client relationships. Was there anything you could have done to prevent the client from leaving, and more importantly, what can you do to avoid this situation from reoccurring?

Best practices to retain clients in quality accounting firms include:

  • Offer high-quality, timely services.

  • Build strong client relationships through clear communication.

  • Stay up to date on industry changes and regulations.

  • Continuously gather and act on client feedback.

  • Offer value-added services, such as financial planning and asset protection services.

  • Use technology to increase efficiency and provide easy access to information.

  • Provide clear, transparent pricing and billing practices.

  • Be responsive to the client's needs and concerns.

  • Offer regular performance reviews to demonstrate the value of the services provided.

  • Continuously educate clients on the importance of sound financial planning and management.

When planning for your succession, you will want the relevant data for the last three years for client departures and new clients and their associated revenues. In your preparation, you would investigate any negative trends related to client departures and financial declines (revenue or profit) and ensure these issues are not repeated in the lead-up to your succession.


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