What would happen if even just one of your top clients stopped giving you job orders? Are you leaving that money on the table for your competitors to take?
If you think that couldn’t happen to you, consider this: companies are streamlining every aspect of their businesses, including their recruiting functions. If you’re not meeting all their needs and providing the best value, they may go elsewhere. It’s called client defection, and it can have a major impact on your recruiting firm. The worst part? By the time you notice that you haven’t received job orders from a client in a while, they may have already defected.
Why is client retention so important? What causes client defection? With the help of industry experts Barb Bruno, CPC, owner of Good as Gold Training and Development, Inc., and Amy Bingham, managing partner of Bingham Consulting Professionals, let’s examine these issues and their possible solutions.
Importance of avoiding client defection
Client defection, also known as client attrition, is a key metric for any business, but it can be even more important for recruiters. According to Bruno, 75% of a recruiter’s business typically comes from only five clients. This shows how devastating it can be if a recruiter loses just one top client.
Statistics also show that it costs five to seven times more to acquire a client than to retain one. The divide may be even greater in the recruiting industry, considering the complexity of client development.
“When you think about all the blood, sweat, and tears it takes to get a new client, it is extremely costly,” said Bruno. “When you have an established client, you know the hiring authority, the culture, and what it takes to be successful there. All of that enhances your chance of a placement. You don’t have that with a new client.”
Bingham agreed, noting that while new client acquisition is vital to the growth of a recruiting firm, retaining existing business is just as important.
“It is always easier to nurture existing business than to acquire new clients,” said Bingham. “Consider all the time and energy it takes to get a potential client’s attention, sell a solution, and close the business. It can take at minimum 30 days and up to six months, depending upon the complexity of the direct hire placement. Once the relationship is established, the process is a lot faster for direct hire and contract staffing services.”
Red flags of client defection
Your clients probably won’t inform you they are taking their recruiting business elsewhere. More likely, you will simply notice that you haven’t gotten job orders from a certain client in a while, by which point it may already be too late.
“Recruiters often buy the excuse that clients aren’t hiring new employees, but they need to take a minute and see the red flags,” said Bruno.
Some of those red flags include the following:
• No job orders, sometimes despite the client posting jobs online
• The hiring authority delegating your calls to HR or elsewhere
• The client no longer using you as a “sounding board”
• A lack of referrals from the client
• The bottom line? “If you are not communicating with or generating any income from them, they have checked out on you,” Bruno said.
Causes of client defection
Client defection is particularly high in the recruiting industry due to the large number of recruiters competing for the same business, Bingham noted.
However, there is good news: The main reasons for client defection are largely under your control. According to Bingham, clients usually look elsewhere due to unsatisfactory service, price, or because the recruiter is not offering all the services needed. While lowering your price may not be an option or a wise decision, you can always give clients more value by providing excellent customer service and offering all of the staffing services they need.
Contract staffing: the big trend
Being a total service provider involves anticipating your clients’ needs by keeping up with trends in the industry. Right now and for the foreseeable future, the biggest trend is contract staffing. The use of contractors has grown steadily, as companies replace the traditional workforce model with a blended workforce that includes both direct hires and contractors in their long-term business strategy.
“I speak at industry events all across the country, and the hiring trend I’ve heard about everywhere is contract staffing,” Bruno said. “A Careerbuilder survey found that 42% of employers planned to hire contractors this year. By 2020, experts predict 50% of the workforce will be contractors.”
Yet there are still a number of recruiters who fail to recognize this reality, offering only direct hire services. They believe that their clients will remain loyal to them for direct hire business even if they have to go elsewhere for contract staffing, but Bruno disagrees. As larger companies streamline their hiring processes and limit the number of approved vendors, they often don’t have enough room on their list for a direct hire recruiter and a contract staffing recruiter for each discipline. They tend to only select recruiters who can do both.
“Here’s the bottom line: you can’t ignore that 50% of the workforce is going to contract staffing,” Bruno said. “Failing to provide a service your clients need does not make sense. You are leaving money on the table.”
How to get your client back
Getting a defected client to come back to you can be difficult, but it is possible. Bingham and Bruno both recommend facing the issue head on.
“To win a customer back, we need to first find out why they left us, resolve any issues, and ask for another chance,” Bingham said. “A straightforward approach to asking for feedback is best. Just ask your client if there has been an issue with the service or if they have a need that cannot be met through your firm.”
“Schedule a call or appointment with them. Ask the tough questions,” Bruno added. “Don’t focus on ‘This is what we do,’ but rather on what’s in it for them. Then you can get them back.”
Offering contract staffing services is a great way to help lure them back and keep other clients from defecting. You can add contract staffing services to your business model with no ramp-up time, no additional staff, and no upfront financial investment when you utilize a full-service contract staffing back-office such as Top Echelon Contracting, Inc. (TEC). The back-office will become the W-2 employer of your contractors, handling all of the financial, legal, and administrative issues associated with contract placements.
Keep your clients close
Getting and keeping quality clients takes effort. Don’t let a lack of contract staffing services make it more difficult. As the old adage says, “People do business with people they like.” By providing the options they need and the quality customer service they deserve, you can be their recruiter of choice. Combined with your own expertise, contract staffing services will help ensure that your clients have no reason to leave.