How to Measure Client Health as a Service Firm

With agencies and other service-based businesses struggling to maintain clients and headcount during these uncertain times, it feels like a suitable time to share my experience over the past 30+ years developing and measuring key performance indicators (KPIs) for professional services firms that measure client health. 

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As the owner of a digital marketing agency for over 20 years, we have had a few key client success metrics we used to measure the health of our business. While the metrics may work for any service-based business, I’ve found them particularly effective for the marketing and advertising agency model, over my tenure at ten agencies. I’ve outlined a host of quantitative and qualitative metrics below and hope they will help you forecast revenue more effectively in 2026 and beyond.

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Anecdotal Metrics

Let’s start with the easier success metrics: those that are largely informal, ad hoc, and organic in nature. One of the fundamental, but often overlooked, methods of evaluating client health, is to review and analyze regular communications. In our business, most communications are electronic (email, Slack or Basecamp or web conferences). Fortunately, electronic communications are easier to monitor and measure. Even phone calls (especially via web-conference platforms can be recorded or automatically generate a transcript). Elements to evaluate include client responsiveness (how quickly they respond to communications), tone/sentiment and the frequency and quality of unsolicited feedback (we call positive feedback “kudos” and both track and share it with the team).

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Additional anecdotal metrics include structured meetings and communications, like monthly conference calls, strategy meetings, or performance reviews. Elements to evaluate include how often, if at all, meetings are rescheduled (pushed out), the content and tone of questions and comments and the general mood. We found that consistently delayed monthly calls are a red flag, as well as specific questions about account history or documentation, especially when asked out-of-the-blue (which can signal an agency review). Payment history is another element to consider: do the clients pay quickly, consistently or are willing to chase down delayed payments on your behalf? Lastly, utilizing business intelligence (internal gossip) as well as company, competitor, and industry news, may shed light on your client’s health and longevity. We discovered that client mergers and acquisitions are often a big red flag, as are changes in management or marketing team contacts.

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Client Success Metrics: Client Feedback and Behaviors

There are a handful of leading indicators that can help predict future client health and happiness, the best of which is formalized client feedback. The single best leading indicator I’ve found in recent years is bi-annual client check-ins. Twice a year, I scheduled calls with Anvil clients to see how they were doing, how we’d performed and what we could do better. These conversations provided a wealth of insight, both identified unhappy clients and provided a roadmap on how to resolve any issues. My final check-in with ~30 clients indicated we had the highest overall satisfaction rate in our 20-year history, which is truly inspiring. 

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To layer more quantitative feedback on top of the qualitative check-ins, we implemented an annual Net Promoter Score survey for 15 years. While Net Promoter Score is somewhat controversial as a simplified leading indicator of client happiness and retention, I highly recommend going through the process regularly. Lastly, it’s important to monitor, analyze and respond to client reviews/ratings on third party sites. Proactive management of client reviews can help influence overall ratings, yet the reviews themselves may also provide actionable insights. This is particularly important in the post AI-world, where GEO is the new SEO.

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Client Success Metrics: Lagging Indicators

We’ve covered a host of ad-hoc client success metrics that can be formalized and measured relatively easily and provide historic context. The greater challenge is instituting formalized metrics that can provide a greater level of actionable insights over time. We utilized a host of client success KPIs at Anvil (outlined below) and found each to provide an elevated level of accuracy regarding the health and happiness of current clients.

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At Anvil, part of our mission was to delight and elevate clients daily. One wonderful way to measure our progress towards that goal was to track client testimonials and case studies. Testimonials measure levels of client delight regarding our partnership, while case studies indicate our ability to consistently deliver results for our clients. Both are also useful for sales and marketing efforts. Another related metric includes the quality and quantity of client references and referrals. Our goal was to have 100 percent of our clients pre-approved client references, and we also measured the number of referrals to prospective clients. Asking the team to secure testimonials, case studies, references, and referrals naturally led to happier clients.

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Despite the ability to quantify generally qualitative metrics like references and referrals, there are hard numbers any service-based business should measure and monitor regularly. The first and most important lagging client success metric we monitored at Anvil was net client revenue growth. The goal was to retain 100 percent of existing clients while bringing on new business, but it didn’t always turn out that way, so we measured the net gain or loss of ongoing clients based on revenue. A related metric we also tracked was client retention (as a percentage) with a goal of 100 percent retention quarter-to-quarter. 

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Finally, I recommend tracking and analyzing client profitability. There are diverse ways to track this metric, but we based it on budgeted vs. actual hours accrued and invoiced during the month, on a quarterly basis. This is an excellent way to separate out the efficiency of your team vs. the level of support any given client requires. Every client is different, and some require more attention than others. Even your largest clients can be unprofitable, which can be deadly in terms of employee morale and overall company profitability. 

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I hope the client success metrics outlined above help provide motivation and an opportunity to increase customer retention and profitability for your agency.

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