Planet Client | How to segment client retention data

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In the final part of our look at client retention analysis, author, businessman and CRM software expert Joel Scott explains the importance of client segmentation in retention analysis.

SO, you have your raw client retention analysis, which you’ve gleaned from your accounting system. The question now is how are you going to make best use of this?

Use CRM solution in tandem with accountancy software
As we’ve seen in the two previous articles in this three-part series on client retention analysis (Client retention is key to growth, and, How to calculate client retention rates) basic client retention reports can be conducted using virtually any accounting system, However, you will be able to extract significantly more information if you have an integrated CRM / accounting system.

At Scott’s company (Computer Control Corporation), they use an accounting system called QuickBooks in conjunction with the CRM solution GoldMine 6 (about which Scott has written a Dummies guide book – see right). While specific products or services are not important for this discussion, what is important is the ability to segregate various types of clients.

Client segmentation adds value to client retention analyses
Scott outlines what the game plan should be from here: “Let’s say that you have a computer hardware division and a consulting division. Within your CRM system you would track whether clients are dealing with your hardware division, your consulting division or both.

“Because your CRM system is integrated with your accounting system, you can look at retention figures for each division.”

Scott says it’s also instructive to run analyses comparing the retention rates as they relate to different sales people in your organization, or customer service people.

He adds: “If you have offices in different territories, it will be interesting to look at retention rates based on which office any given client deals with.

“And then there’s client size – you’ll likely have big clients and little clients. No matter what spin you hear from various companies about treating all clients equally, the fact is that your biggest clients deserve the best treatment, and should cause you the greatest concern with regard to retention.”

Automating client retention measurements
Scott warns that if you have a significant number of accounts, realistically, it’s practical to regularly monitor client retention rates only if you have an automated way of doing so.

Scott’s company has developed a spreadsheet-based automated method to regularly produce these numbers with minimal effort, about which he says: “It doesn’t do anything that cannot be done by hand, but it does turn a half-day effort into a three-minute exercise allowing us to spend the time we just saved analyzing the results and developing plans.”