Accounting is a competitive field that comes with a lot of challenges. In a survey of top accounting firms, the Journal of Accountancy found that one of the biggest concerns firm owners had was acquiring and retaining new clients. So, which one should you focus more attention on – acquisition or retention? We spend a lot of time considering the importance of acquisition, but I'd like to make a case for the importance of retention over and above new acquisitions.

As the Journal of Accountancy found, retaining happy clients has a greater impact on the bottom line than prospecting for new clients, and landing new clients can cost anywhere from five to 25 times more than retaining existing clients! With that in mind, perhaps it's time we look at ways you can make the most of the clients you already have and keep them loyal to you in the long term.

The 80/20 rule, or Pareto Principle, explains the phenomenon of disproportionate distribution, suggesting that 80% of results come from 20% of causes or inputs. If applied to your accounting practice, this means that 80% of your revenue likely comes from only 20% of your clients. So, if you focus on that 20% of clients and keep them happy, you stand to grow your revenue significantly.

To make the most of these top customers, you should think of ways to strengthen your relationships with them and foster loyalty. By dedicating time to understanding what these clients want and need, what their business goals are, and where they'd like to be in the future, you can tailor your services to them to provide truly exceptional, personalized insights to help them grow their businesses and achieve their greatest ambitions.

Another way you can leverage these loyal customers is by offering additional services to them that you think they may benefit from. For instance, perhaps you usually provide a client with a quarterly management report, but you think they could improve their performance through more frequent analysis of their financials. You might then suggest giving them a weekly financial health report or giving them the ability to log into Syft to check metrics on their daily Dashboard so that they can be truly proactive. And you might then charge an additional fee for these reports and analytics.

By strategically allocating resources to your top 20% of clients, you can reduce customer acquisition costs and invest more time in retaining these clients.

When it comes to acquiring new clients, you can calculate the cost of this by using the Cost of Client Acquisition (CAC) equation:

Tracking this metric allows you to measure the profitability of your sales and marketing efforts, so you can see how much it's really costing you to acquire a new client.

These costs tend to be a lot higher than you might expect. However, they shouldn't be considered in isolation. Another important metric to consider is your client's lifetime value (LTV). LTV shows the total financial benefit you can expect from a client during their time as your client.

By investing in clients in the long term, you can increase their LTV and more than cover the CAC.

So how do you improve a client's LTV? One way is by treating them as individuals and taking the time to understand their personal needs and goals. To do this, it helps to:

This is key to fostering loyalty. Think of any shop, restaurant, or brand that you are particularly enamored with, and ask yourself why this is the case.

Whenever in doubt, picture your favorite restaurant, store, or doctor and ask yourself why you find yourself returning to their doors again and again instead of going elsewhere.

In case you need further motivation to focus on client retention, consider this: happy clients can become brand ambassadors for your firm. You can spend hundreds of dollars on fancy marketing campaigns but, at the end of the day, there's no better marketing than word of mouth. People trust the opinions of their friends and family. When I'm looking for a new dentist, I'll ask my colleagues who they recommend in the area. The same is true of accountants.

Plus, if you have really happy clients, you can ask them if you can interview them to be featured as testimonials on your website. This is something really powerful to include on your website as it adds an element of authority and authenticity. After all, people are more likely to believe you're an amazing accountant if five legitimate business owners say so than if you just keep saying you are.

In the same way, you can leverage reviews on Google to showcase your trustworthiness. To get reviews, just ask clients to review you after a meeting. It shouldn't take them more than a couple of minutes to do and having good reviews can bolster your reputation. If you think about it, reviews are the digital equivalent of word of mouth – and very persuasive.

Retaining loyal clients doesn't have to be an entirely manual process either. There are tons of tools you have at your disposal that can help you turn retention into a repeatable process.

If you have a Customer Relationship Management (CRM) system such as monday.com or HubSpot, you can leverage a variety of tools to check in with your clients in personalized ways without spending hours crafting individual messages. CRMs can help you turn emails into repeatable processes, automating routine tasks such as asking for reviews, following up after new acquisitions, or providing live chat support on your website. And all of this can enhance your clients' experience of working with you and their overall satisfaction.

The key to keeping your clients happy is having a client-centric culture at your firm. I've spoken about this a lot before, but I'll say it again, you need to position your client as the hero of the story. You are trying to help them solve their tax issues, grow their business, improve their cash flow, and achieve their financial goals. Therefore, the focus should be on them and what you can do for them, not on how amazing you are at working with debits and credits.

If you shift the focus to your clients, you'll be better able to meet their needs or demands – or even preempt them.

However, client-centricity doesn't just happen. It takes a concerted effort from everyone in your team. This means that you may need to train your team in client relationship management, improving their communication skills and ensuring that they understand the importance of maintaining good client relationships.

Ultimately, if you want to align your firm's goals with client satisfaction metrics, you will need to integrate client satisfaction objectives into the broader strategic goals and vision of the firm. This alignment is crucial for ensuring that the entire organization is focused on delivering services and experiences that meet or exceed client expectations. To do this, you should:

In addition, you may want to periodically review the alignment between organizational goals and client satisfaction metrics. Adapt strategies and objectives based on changing client needs, market dynamics, and emerging trends in the accounting industry.

In today's competitive environment, client acquisition and retention are central concerns for any accounting firm. However, while many have focused their attention on client acquisition, a strong case can be made for shifting the focus to client retention. The 80/20 rule highlights the significance of a core group of loyal clients that account for the bulk of your revenue generation. By focusing your efforts on understanding and exceeding the needs of these clients, you can not only reduce acquisition costs but also lay the groundwork for robust, long-term revenue growth.

Moreover, focusing on client retention is a lot more cost-effective, and by investing in long-term relationships with clients and fostering a client-centric culture, you can ensure that your clients' lifetime value outweighs the cost of acquisition.