Poor Client Retention and Low Lifetime Value?
Why do clients leave us? We spend so much money on sales and marketing to get them, why can’t we keep them?
Client retention and lifetime value (LTV) are key metrics that signal long-term success for a B2B business. Yet, we find ourselves struggling with high churn rates and short-lived customer relationships, where clients quickly drop off or fail to engage fully. This results in missed revenue opportunities and a continuous drive for new customer acquisition, which can be costly and unsustainable.
In this blog, we’ll explore why poor client retention and low lifetime value are common challenges, what’s causing these issues, and actionable steps you can take to turn things around.
Why Are You Struggling with Client Retention and Low Lifetime Value?
1. Lack of Fit with Ideal Client Profile (ICP)
One of the biggest reasons for poor client retention and low LTV is an initial mismatch between the client and your product or service. When customers don’t align with your Ideal Client Profile (ICP), they may not see the full value of your offering. As a result, they’re more likely to disengage early or leave when another option appears. If your sales and marketing teams are focused on acquisition volume rather than quality, they may bring in clients who don’t truly benefit from your solution, leading to high churn rates.
2. Unmet Expectations
Clients who enter the relationship with unrealistic or mismatched expectations are likely to be disappointed. This can happen when the sales process overpromises or fails to communicate the value and limitations of the product or service effectively. When clients don’t receive what they expected, they’re quick to leave, resulting in a short-lived relationship and lost potential revenue.
This is often the result of selling to the wrong prospects in the first place. If you are shoe-horning your products into them in the hope that eventually the glass slipper might fit, you are always going to lose that client.
3. Inconsistent Client Engagement and Support
After closing a sale, it’s common for businesses to reduce engagement with clients, focusing instead on acquiring new ones. Yet it is at this very moment where you can make the most dramatic difference. This lack of ongoing support and engagement can make clients feel undervalued, and without regular touchpoints or proactive support, they may not fully utilise the product. This weakens the relationship and limits the opportunity for upsells, cross-sells, and overall client satisfaction, leading to early churn.
4. Limited or Poor Onboarding Process
The onboarding process is a critical time for client retention. If clients don’t receive proper onboarding, they’re unlikely to understand how to fully benefit from your product or service. Without a structured onboarding experience that provides guidance and value, clients may struggle to use the product effectively and quickly lose interest.
5. Failure to Deliver Value Continuously
Clients want to see consistent, measurable value from their investments. If your product or service doesn’t deliver ongoing value that aligns with client goals, they’re likely to seek alternatives. Businesses that fail to adapt and innovate alongside their clients’ needs risk losing them to competitors who can meet their evolving demands.
Why Traditional Approaches Aren’t Effective
1. Focusing Only on New Acquisitions
Many businesses place a heavy emphasis on acquisition, devoting most of their resources to generating new leads rather than supporting and nurturing existing clients. This acquisition-first mentality leads to high churn rates and neglects the potential of maximising LTV by strengthening client relationships.
2. Treating All Clients the Same
Retention efforts are often broad and generic, failing to address the unique needs and goals of individual clients. Without personalised engagement and communication, clients can feel disconnected and unvalued, making them more likely to leave.
3. Measuring Success with the Wrong Metrics
Businesses focused solely on metrics like customer acquisition costs (CAC) and revenue growth may overlook retention metrics like churn rate, client satisfaction, and LTV. Without measuring and focusing on retention-specific metrics, it’s difficult to identify pain points and optimise the customer experience.
How to Overcome Poor Client Retention and Low Lifetime Value
Fortunately, using the concepts laid out in Fried Egg Marketing® there are ways to improve client retention and maximise LTV by focusing on alignment, engagement, and value delivery. Here’s how we do it.
1. Focus on the Right Clients
Fried Egg Marketing is all about defining your Ideal Client Profile (ICP). An ICP is a clear description of the type of client who is best suited for your product or service, based on factors like industry, company size, goals, and pain points. By refining your ICP, you can focus your acquisition efforts on clients who align well with your offering and are more likely to see its value. By making sure that both marketing and sales understand and prioritise the ICP, you are much more likely to bring in high-fit clients from the start.
2. Set Clear Expectations from the Start
To avoid disappointment, it’s essential to set realistic, clear expectations during the sales process. Be transparent about what clients can expect, including both the strengths and limitations of your product. Setting clear expectations helps build trust, reduces the risk of buyer’s remorse, and ensures clients are fully aware of the value they’ll receive.
3. Implement a Structured Onboarding Process
Onboarding is a critical period in the client journey, setting the tone for the relationship and ensuring clients feel equipped to use your product. A structured onboarding process that includes personalised guidance, training, and check-ins helps clients get the most out of your solution.
4. Consistently Engage and Deliver Value
After onboarding, make client engagement a priority to keep the relationship strong. Regular touchpoints help you understand clients’ evolving needs and provide opportunities for feedback, while proactive support helps clients overcome challenges before, they become issues.
5. Measure and Optimise for Retention and Lifetime Value
Start tracking retention-specific metrics, including churn rate, Net Promoter Score (NPS), and client lifetime value (LTV), to gauge the success of your retention efforts. By analysing these metrics, you can identify areas for improvement and optimise your client experience over time.
Building Long-Term Value by Focusing on Retention
If as businesses we can make the mental shift to improving every aspect of our clients’ life with us, we can move away from the broken paradigm of expensive acquisition and selling to anyone to a place where we only recruit the clients who will truly benefit from what we do.
It’s time to take a more client-focused approach. By refining your Ideal Client Profile, setting realistic expectations, providing structured onboarding, and prioritising ongoing engagement, you can create a retention strategy that drives long-term value. Remember, a focus on quality and alignment from the start will yield clients who are more likely to stay, engage, and maximise the value of your solution.
When you invest in retention and client success, you’re not only reducing churn but also creating a stronger foundation for sustainable growth. By making these strategic shifts, you’ll build lasting relationships, increase revenue, and see the full potential of every client.
