Here’s a story we hear all too often.
A top-tier law firm acquires a big, exciting new client. The leadership team is thrilled, and the onboarding phase goes smoothly. But under a year later, the client quietly walks away. No complaints, no disputes – just a short email saying they are moving in a different direction.
Why is this so common?
Many B2B firms are delivering excellent work but feel dismayed when it does not translate to client retention. Repeat business remains elusive. But it shouldn’t be – if firms are measuring customer lifetime value (CLV) and leveraging it to implement smart, evidence-based client retention strategies.
This article explores the best practices for measuring customer lifetime value, why it matters, and how to use that data to boost client retention and ultimately, profitability.
What is customer lifetime value (CLV)?
Customer lifetime value (CLV) – sometimes called client lifetime value – refers to the total revenue your firm can expect to earn from a client over the entire span of your business relationship. It encompasses not just repeat purchases, but also cross-selling, up-selling, referrals, and even collaboration or co-innovation opportunities.
In B2B professional services, where engagements are often multi-year and bespoke, understanding the lifetime value of a customer is crucial. It allows firms to understand long-term profitability and prioritise clients who offer the most value. This is important because a long-term client relationship can be worth substantially more (we’re talking millions of dollars more) than individual projects.
“There’s a clear financial benefit to long-term relationships, in that the cost of winning work and incremental work from a regular client is much lower than continually going out to try and find new clients,” says Paul Hugh-Jones, partner at Beaton.
“But there’s also a relationship side. So, if you as a professional, are interested in working regularly with people and getting to know their business, their culture and the human side of things – not just doing the technical work – then building genuine relationships with clients that last is very rewarding.”
Understanding your customer lifecycle value enables smarter investment in client relationships and can help firms prioritise and develop those genuine relationships with long-term clients that will reap high value. This additionally makes revenue forecasting much easier and leads to stronger client retention.
Why customer lifetime value matters in B2B professional services
In business-to-consumer (B2C) transactions, CLV relies on frequent, smaller transactions. There is a much narrower gap between short and long-term customer value. In comparison, B2B transactions tend to involve much larger sums of money. Professional services firms very often work on large deals, with multi-year cycles, budgets and strategies for their clients. For this reason, it’s arguably far more important to measure the lifetime value of customers in B2B than in B2C – and yet so few firms are doing so.
According to a Bain & Company study, increasing customer retention rates by just 5 per cent increases profits by 25 to 95 per cent. Beaton partner Paul Bonomy has estimated that losing a client in professional services can cost large firms 10 to 20 million dollars per year.
In professional services, where trust can be your most impactful marketing tool, client retention can have enormous positive impact on your brand as well. Loyal clients don’t just stick around – they may become your best advocates, referring new work to you without much effort on your part.
“By building a client relationship over a long period of time, your firm becomes known to that client as a trusted advisor,” says Paul Hugh-Jones.
“Looking at this from a brand point of view, it is incredibly valuable to have long-term clients on your books. New clients will look at the current clients your firm has in its portfolio or on its website, and having established relationships with well-known businesses can really elevate your brand. Every client wants to work with a firm that can show proven results with other companies.”
These key characteristics differentiate CLV in B2B professional services, compared to B2C:
- Typically fewer but higher-value clients
- Revenue may fluctuate based on project scope and retainer agreements
- Relationship quality and trust heavily influence future business
Requires factoring in service delivery costs, account management effort, and client satisfaction over time
Customer lifetime value (CLV) formula
Calculating the CLV can help inform your firm’s business development and key account management processes by highlighting which clients are worth more to you financially. Logically, the most valuable clients should command more resources from your firm than lower-value clients (you’d be surprised how often this is not the case in firms that do not regularly take stock of CLV!).
There are several ways to calculate CLV depending on your business model, but here’s a basic customer lifetime value formula for B2B professional services firms:
CLV = (average purchase value x purchase frequency) x client relationship lifespan – acquisition cost
Example:
- Average purchase: $50,000
- Purchases per year: 2
- Relationship length: 5 years
- Acquisition cost: $10,000
CLV = ($50,000 x 2) x 5 – $10,000 = $490,000 over 5 years
More advanced customer lifetime value calculations can include margin, discount rates, changing purchase frequency and size, cross-selling and on-selling opportunities and client referrals.
Tracking customer lifetime value over time helps businesses identify growth opportunities and optimise long-term profitability strategies.
Using CLV for customer profit analysis
When calculated correctly, CLV customer insights can help firms prioritise profitable relationships, predict client behaviour, and make smarter investment decisions.
Step-by-step example: Using CLV for profitability analysis
- Annual revenue from Client A: $150,000
- Average relationship: 5 years
- Total acquisition + service cost: $100,000
- CLV = ($150,000 × 5) – $100,000 = $650,000
This allows firms to perform a more nuanced customer profit analysis, identifying which clients drive long-term profitability.
Paul Hugh-Jones explains that for most firms, analysing the value of clients over multiple years – rather than the whole lifetime, which could be decades – provides enough data to identify potential issues.
“If you are doing financial analysis correctly, you’ll be looking at the value of a client over three or five years, avoiding the ups and downs that might come up naturally,” he says.
Predicting and reducing customer attrition and client churn
Once you have a reliable CLV formula in place, you may use this as a foundation for predicting and reducing customer attrition – what we in B2B services call “client churn”. By assessing your CLV customer data over time, and monitoring it through a key account management program, you can forecast both profitability and client retention risk with greater accuracy.
One of the most valuable ways to use CLV is for identifying early signs of client churn. When a client’s customer lifecycle value starts to decline – through reduced engagement, shrinking spend, or fewer projects – it can be an early indicator of dissatisfaction or misalignment. Combining the CLV trends with industry benchmarking can paint a broader picture for you to understand whether your own CLV is an outlier or similar trends are happening in firms like yours. Adding a qualitative tool like regular client feedback surveys can also help you gauge why dissatisfaction might be increasing.
Keeping an eye on these trends across your client base enables proactive intervention before it’s too late. Think of CLV as your early alert system: if a high-value client’s behaviour shifts, it’s your cue to act fast.
Warning signs that might precede client churn:
- A drop in spending or fewer projects year-on-year
- Shortening contract terms or lower renewal values
- Requests for write-offs and discounting
- Pushback on bills
- Fewer scheduled meetings or slower email response times
- Declining net promoter score (NPS)
- Negative feedback in post-project surveys
Hugh-Jones says requests for write-offs and discounts are clear “red flags” that should warn you a client is dissatisfied. But if you spot any of these behaviours in meetings or surveys with clients, your relationship may be at risk.
“What can you do about it? It’s really important is to escalate the issue to a senior part of the practice group leader – the director or managing partner – and reach out. Ask how things are going and try to get a face-to-face catch up or at least a phone call to address issues directly and swiftly,” says Hugh-Jones.
Proactive, personalised intervention strategies are critical. But the smarter strategy is to prevent churn signs from showing up in the first place. In the next section, we’ll explore how to use client retention techniques to reduce customer attrition before it impacts your bottom line.
Looking at this from a brand point of view, it is incredibly valuable to have long-term clients on your books. New clients will look at the current clients your firm has in its portfolio or on its website, and having established relationships with well-known businesses can really elevate your brand
Client retention strategies in professional services
When you retain clients, you cut down on the time and cost of constantly chasing new leads, open up more chances to cross-sell and upsell, and build long-term relationships that boost your bottom line. Hugh-Jones adds that you’re more likely to work on important projects that might be more interesting, meaningful and profitable to your firm.
Here are some smart, scalable tactics for client retention that work:
Regular client feedback surveys
Use quick, automated surveys at key touchpoints – such as the start, midpoint, and end of projects – to gauge whether clients are satisfied with your services. A survey with multiple choice options on a single page, that is quick to answer for the client, will offer the best return. Beaton Debrief makes this easy and will flag when you receive negative feedback – providing opportunity to rectify the situation quickly.
Closed-loop feedback processes
Alongside surveying your clients, it’s crucial you respond and act on feedback. When negative feedback comes in, respond within 48 hours. Log outcomes through a system like Debrief to track improvements and demonstrate your commitment.
Tracking NPS
Net promoter score (NPS) is a clear, simple metric by which to measure your client loyalty and satisfaction. Tracking NPS over time can be a powerful way to predict client churn and prevent lowering CLV. If your NPS scores start to trend downwards, that is a warning sign to check in with your client and try to understand how to serve them better before their CLV is impacted.
Client feedback benchmarking
Compare your firm against industry benchmarks to identify strengths and gaps that could be impacting your CLV. Beaton Benchmarks is free to participate in and offers access to the largest benchmarking study based on client feedback of professional services firms globally.
Benchmarking your firm against competitors using client feedback is key to understanding client sentiment and boosting client retention.
Focus on improving client experience
As many as 95 per cent of clients say they would use a firm again if the firm gave them an excellent experience. A coordinated effort to improving communication, anticipating client needs, and showing genuine care can set your firm apart. See our report on The State of Client Experience in Professional Services for activities that help move the needle.
Key account management
Assign dedicated account managers to your highest-value clients, develop a personalised approach for those relationships and build consistency into their service. Key account management ensures you spot cross-sell and upsell opportunities and resolve issues before they escalate – directly increasing the lifetime value of customers. It ensures your top clients feel prioritised, supported, and less likely to churn.
Client interviews
These can be resource- and time-intensive but annual client interviews are a goldmine for insight. Plan for structured, 15–20-minute conversations that give you a chance to step back from day-to-day delivery and ask big-picture questions: What’s working? What’s not? Where can we add more value? These help you uncover unmet needs and spot churn risks early with the added benefit of showing clients you genuinely care.
Employee CX training
Your people are the face of your firm – and when they deliver a consistently excellent experience, clients notice. Investing in employee CX training can translate to increasing client retention very effectively. Even short, scalable training modules can lead to big improvements.
Client journey mapping workshops
Hold an internal half-day workshop annually with teams from BD, delivery, and support to map pain points and brainstorm improvements.
If you are doing financial analysis correctly, you’ll be looking at the value of a client over three or five years, avoiding the ups and downs that might come up naturally.
Turning insight into action: reporting and tools for measuring CLV
Understanding CLV is the first step, but the real magic happens when you track, measure, and improve it over time. The below retention tools can help you turn data into stronger relationships and better business outcomes.
Tools we recommend for client retention
To make your client retention plan truly stick, you need more than good intentions – you need the right tools that turn insights into action. Think of them as your radar and GPS: collecting real-time client feedback, flagging risks before they escalate, and showing you exactly where you’re gaining ground (or where you may losing it). Here are a few essentials:
- Feedback collection: For client feedback software with full-service backend support and tailored design for your organisation, we recommend Beaton Debrief. This software enables you to send automated surveys at key client touchpoints and receive real-time data to an interactive dashboard you can act on immediately.
- Compare client retention KPIs: Track client satisfaction, churn rate, CLV trends, and NPS via Debrief and measure them against industry standards using Beaton Benchmarks.
- Key account management (KAM): Our KAM diagnostic helps you evaluate how well your firm is identifying, managing, and delivering value to key accounts. With it, you can assess areas like account planning, team collaboration, client insight, and value co-creation. In our experience, the success of your KAM strategy has direct influence on CLV.
Benchmark externally to measure client retention success
Understanding how your firm performs against competitors using consumer research reports is a powerful way to uncover where you’re excelling – and where clients may be slipping away.
Beaton Benchmarks is the largest client feedback benchmarking research study on professional services firms across Australia and New Zealand. Tapping into this kind of research offers you objective, market-validated data to show how your client experience measures up. You will also unlock opportunities to improve client retention by closing service gaps and exceeding expectations.
Customer service reports
Customer service reports should be created regularly if you are serious about boosting CLV. Their frequency can depend on project volume, contract size, or client expectations – but quarterly or twice-yearly can be a good starting point. These should clearly demonstrate the life-time value of your clients, highlight success metrics, and identify early risk indicators.
Results, project milestones and outcomes should be shared with internal stakeholders such as account managers, leadership and client delivery teams to align on client status and risk. Build a regular rhythm around customer service reporting to ensure everyone stays client-focused, accountable and alert to signs of churn.
Conclusion
Understanding and tracking customer lifetime value isn’t just a financial exercise for B2B companies – it’s the foundation for building stronger, longer-lasting client relationships in professional services. By using CLV insights to personalise service, spot churn early, and focus your efforts where they matter most, your firm can stop the silent goodbyes before they happen. The payoff? Happier clients, more repeat business, and a healthier bottom line.
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