A friend of mine told me their company recently lost a multi-million dollar client. There was no warning. Just a seemingly arbitrary decision to move on. The client is a successful organization in their industry, so this was an absolute shock to the leadership of the company who lost this business. “While unfortunate, these things happen in business” may be a common response/excuse, but is that an accurate assessment? Or is it more of a justification for sweeping the real reason under the rug?

Successful businesses don’t arbitrarily make rash decisions. These decisions had been on the radar for at least a moderate amount of time before action was taken. If you’re spending millions of dollars in one area of your business, would you just make some sudden decision without serious discussion? I thought not.

Behind every client leaving, there is a need that hasn’t been met. Many reasons include: cost/pricing, values alignment, service, communication, and mutual benefits from the business relationship. With the exception of values alignment and possible cost/pricing, the remaining 3 reasons I listed rest squarely on the shoulders of leadership and center on leadership development, organizational culture and employee engagement.

  • Leadership Development: As leaders are being developed within the organization, they must learn that there are no bad employees, just poor leadership. Quality leadership will not permit divisive elements in the organization. There is the opportunity for training and coaching and if the employee is unresponsive or unwilling, then they are to be invited to move on. This influences how communication is modeled and used within the organization. It also sets the tone for the service element of an organization to its client base.
  • Organizational Culture: Nothing will drive service more than culture. It is truly the heartbeat of your organization. There are as many ways to develop culture as there are ideas. There is no one right way to do it, however there are some common elements to do it well. Purposeful language. A vision that touches people emotionally. Respect and dignity. Giving people a voice. A healthy culture communicates well and values the opinions of everyone, including the client. Concern for mutual benefit rounds out the list.
  • Employee Engagement: It’s nearly impossible to separate organizational culture and employee engagement. Engaged employees become a part of the culture. The culture is what engages the employees. Leadership development is what drives both of these things and collectively they provide service, healthy communication, and add mutual benefit between your organization and clients.

Client retention centers around the proverbial “soft skills”, or behavioral competencies. It must begin with leadership in any organization or team. Once you have begun to gain momentum in these areas, you will notice an increase in client retention. Not because your clients will think your cool or hip, but because your organization will be more engaged with their needs by default. Engaged clients are loyal clients. If your culture fosters genuine concern for the needs of others (employees, clients, etc.) then you will address any problems before you lose people to your competitor.

  • Steve G

    Leadership Advisor –

    Good thoughts on Client Retention. Your opening statements are right on…A client leaving doesn’t happen overnight! “Successful businesses don’t arbitrarily make rash decisions. These decisions had been on the radar for at least a moderate amount of time before action was taken. If you’re spending millions of dollars in one area of your business, would you just make some sudden decision without serious discussion?”

    Your points about Organizational Culture and Employee Engagement resonated with me the most. SERVICE all stems from the CULTURE of the organization – without a DOUBT! I’ve have seen too many times how employees are singled out for poor service, when there has been no level of standard of service clearly communicated to the team. (And don’t tell me a statement of… “We will provide good customer service to our clients” from the leadership is enough!) Good Service and Employee Engagement all stem from a culture that truly exemplifies those points – every day, every hour, in every aspect of the business and the organization.

    Thanks for the read.

    SPGonz

  • Thanks for your detailed comments and thoughts Steve. Culture makes such a difference to a company’s bottom line. The important bit to take note is that even if you’re not purposefully creating culture, you’re still developing one.

  • Had an interesting conversation today with the owner of a start up who was asking about the relevance of leadership to small startups. He was stating that most leadership development is aimed at large to SME companies.

    It really made me think how important this is for all business sizes and how emerging entrepreneurs need to get their head around these principles of client retention, organizational culture and their own leadership development before the company becomes too big.

    Timely reminder.

  • So true David. I think it’s important for those of us in the Leadership Development space to make it a point to share our insight and expertise at community centers where start-ups look for direction, advice, and support. Thanks for reminding us all of the need for this!