THE ANGELWOOD GLOSSARY
Client Retention Rate
The percentage of clients a firm keeps over a specific period, typically measured annually.
DEFINITION FIRST
The percentage of clients a firm keeps over a specific period, typically measured annually.
Best for operators who need a quick definition first and then the operational context behind client retention rate.
Definition
Client retention rate measures the percentage of clients who continue working with a firm over a defined period. It's calculated by dividing the number of clients at the end of a period (minus new clients acquired) by the number of clients at the start, then multiplying by 100.
Why it matters
For professional services firms, retention rate is a critical metric that directly impacts revenue stability and growth. Industry benchmarks suggest healthy firms maintain 80-90% annual retention rates. Improving retention by just 5% can increase profits by 25-95%.
AN ILLUSTRATION
Example
If a firm starts the year with 50 clients, acquires 15 new clients, and ends with 55 clients, the retention rate is: ((55-15)/50) × 100 = 80%
The calculation
((Clients at End - New Clients) / Clients at Start) × 100- Clients at End
- Total clients at period end
- New Clients
- Clients acquired during the period
- Clients at Start
- Total clients at period start
IN YOUR CLIENT WORK
Track and Improve Your Retention Rate
Angelwood's client health scoring helps identify at-risk clients before they churn, directly improving your retention rate.
YOUR NEXT STEP