Average life time of a client

Average life time of a client

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With my sis joining me in the practice, she has started on making a business plan for the "new" practice.

I am stuck on giving her an answer on average life time of a client within our industry. Is there an accepted norm figure for this?

Thanks 

Replies (8)

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Glenn Martin
By Glenn Martin
27th Jun 2013 13:52

Life time of a Client?

Do you not mean average length of client appointment. A client could be 60 be with you for 5 years then live to 100 so average age and time with you are 2 different things. For the purpose of business plan I would imagine its the time with you are interested and what your annual client retention rate is. Their will be an industry average I would imagine about 85% per annum.But its your retention rate that will be critical to what you are trying to do. In last 12 months how many fees have you lost as a % of GRF, this will let you know what you need to recruit to tread water, expand etc.

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FT
By FirstTab
27th Jun 2013 13:55

Glennzy

Thanks. Yes on reading your response, it is retention rate that I wanted. 

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Glenn Martin
By Glenn Martin
27th Jun 2013 14:01

At the Firm I trained with they worked on 85%

of current clients would still be here next year, so had to recruit 15% each year to allow for retirements, business sales, insolvencies etc. For a small 1 man firm retention should maybe be higher through personal contact and the like. I'm sure AWEB will advise you of what they achieve.

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By andy.partridge
27th Jun 2013 14:31

So . . .7 years?

That doesn't sound unreasonable, but it will depend on you as much as them.

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By B Roberts
27th Jun 2013 15:10

Why change ?

Just thinking out loud .....

I guess that if a practice sets out to gain clients based on price, then it is likely that the client will be very price sensitive and will look to shop around each year / couple of years to get the lowest cost.

For other clients who have been with a practice for a number of years - why would they change ?

I am not saying that they would / should stay with the same accountant for ever, but apart from retirement, selling the business etc. in order to change there must be a significant event that is the precursor to change.

I am not sure if that makes sense (I don't even work in practice, just assume that most clients would just carry on as they were unless something happens that almost forces a change.  A bit like changing banks - not worth the hassle for most people).

 

 

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Teignmouth
By Paul Scholes
27th Jun 2013 16:13

Is it worth it?

As it's impossible to predict, with any degree of accuracy, the type & fee earning capacity of the next prospect that contacts you, or the likelihood of any average existing client, popping their clogs or going somewhere else, I'm wondering whether the time you spend doing this type of stuff might not be better spent doing a set of accounts or a VAT return?

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Replying to Duggimon:
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By andy.partridge
27th Jun 2013 16:17

Yes and No

Paul Scholes wrote:

I'm wondering whether the time you spend doing this type of stuff might not be better spent doing a set of accounts or a VAT return?

I agree it's utterly pointless if he intends to stay small, but if he has 'ambitions' I can see it has some merit.

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By pembo
27th Jun 2013 16:54

statistical pedants corner

for average read typical...I've companies who have been with us over 50 years that would distort an average...

Think for those of us nearing retirement the typical retention period would be substantially longer for a number of reasons. Essentially depends on your philosophy. Know of some firms who are quite open that theirs is to bleed the client for as much and as long as they can get away with...needless to say their retention rate is not that good.

As ever largely depends on your interpretation of what being "professional" is all about. 

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