Your client database: A valuable asset
Make your client database a real asset
Make your client database a real asset reminds us that, while it’s not found on your balance sheet, your client database is a valuable asset. And, as with all assets, maximising your ROA (return on assets) is sound business practice.
A client database is not just a collection of names, email addresses and other contact details. It is a list of people and organisations that have, depending on how up-to-date yours is, chosen your firm as best to meet their business needs. In other words, if you have delivered value and taken good care of your clients so that there are no post-purchase regrets, it is a list of people who have already ‘drunk the Kool-Aid’ with regard to your firm. They have an established working relationship with you, they know you can undertake their work to the requisite standard, and they pay your fees.
Further, if you link your client database to your marketing activities, you’re able to measure how your clients are responding to promotional campaigns. And by linking to financial information, you can assess the value of each client to your firm.
Storing this and other relevant information in your client database informs your relationship with each client and has the makings of a useful CRM system. You’ll stay informed and can use this information to plan and measure progress. For example, segmenting your clients, e.g. high versus low value or heavy versus light users, allows you to better allocate your resources and focus on your most active and profitable clients.
This all relates to the often stated truism that it costs less to sell to an existing client than to acquire a new one. Depending on which study you read, to whom you talk, and which industry you work in, the cost of acquiring a new client ranges from five to 25 times greater than growing your share of a current client’s spend.
Irrespective of the exact cost-benefit, a quality client database is an important asset and tool for building strong client relationships and profiting from those relationships.
The corollary is that your firm’s ability to exploit the benefits of selling to your current clients is directly related to the quality of your client database. Out-of-date contact and other details severely restricts keeping accurate lines of communication open. This in turn negatively affects your ability to stay informed about future work prospects in your clients’ pipelines or help you anticipate clients’ concerns.
Quality of databases submitted for the 2019 Client Choice Awards
When beaton cleaned nearly 100 client databases in preparation for the 2019 Client Choice Awards survey we found the average proportion of invalid emails was 13%. Invalid here means the email was ‘dead’ because the addressee had left the organisation, or the organisation had changed the format of their email address and is no longer forwarding to the new address, or some other reason. In the worst case scenario, this shows that on average firms have lost contact with one in eight of their current or recent clients.
In addition, we found on average each client database was missing 3% of their contacts’ first name. This speaks poorly to the quality of a firm’s client database if something as basic and vital as a client’s first name is being missed. It makes it difficult to maintain a dialogue if you can’t speak to a personal relationship on first name terms.
Things to look out for
With the above in mind, here are some tips for maintaining the hygiene of your client database:
1. Mandatory information (completeness)
Ensure that you are collecting all vital information such as a client’s first and surnames, email, phone number, organisation. These key pieces of information should be set as mandatory when inputting.
2. One field for one piece of information
Each field in a client database should only store one piece of information. For example, for an organisation’s address, it is good practice to separate street address, city, state and post code in different fields. If you store more than one piece of information per field it makes it difficult to use those variables to segment and profile your clients.
3. Duplicates
Duplicates indicate that your client database is not set up in the most efficient way. The presence of duplicates often means that neither record is entirely complete. Rather than deleting one of the duplicates and potentially losing information, it is good practice to compare and merge duplicates.
4. Email validity
Emails are always changing as people change companies and/or roles. Email addresses should be regularly validated either by checking the addresses (and other details) with clients or by asking a third-party service to validate the email by pinging the email server. We recommend this be done at least once-a-year.
Conclusion
Maintaining a quality client database is time-consuming. I hope this blog post has highlighted some of the benefits of investing the time it takes to maintain a quality database and provided guidelines for managing your client database.
There are plenty of more detailed articles on this subject. Here’s one 9 Ways to Improve Your Company's CRM System.
Good luck!
Grant Hollings
Research Manager