Churn, churn, churn…
It’s a thorn in the side of all digital marketing agencies.
And as someone who ran their own agency for over five years, I feel your pain.
Not only is it frustrating when a client pulls the proverbial rug from under you, but it’s extremely costly for your agency. Acquiring a new client costs up to four times the amount of retaining a current one.
With the state of the world economy at the moment, agency churn is more prevalent than ever. So unless you find a way to fix that leaky tap soon, it could mean the end for your agency.
Why is agency churn so prominent?
When it comes to losing clients, it’s easy to blame external factors.
It’s the current economic environment… It’s the client’s business… They “just didn’t get it”…
Sure, all of these reasons MAY be valid, but they’re not helpful in solving the problem.
The only way you’ll solve your agency churn problem is if you look internally and take responsibility for what you control.
Instead of making excuses, ready yourself with better processes, risk mitigation strategies, and a client-centric mindset.
Sure, you won’t eradicate churn completely. Losing clients comes hand-in-hand with agency life.
But you can take steps to reduce your churn rate and inevitably improve the profitability of your business.
Before we get into the solution, why do clients churn in the first place?
Why do agency clients churn?
Do you ever really know why a client churns?
There’s the reason that they give to you – we’re out of money, we’re taking things in-house, or we just didn’t see the value.
But then there’s the real reason…
The real reason that clients churn is much more complex. It’s a combination of different factors from hard metrics to intangible gut feelings that are very difficult to break down.
In saying that, here are seven common mistakes agencies make that increase the chance of a client churning:
- Setting unclear expectations in the beginning. Do your clients know exactly what they are getting from your services?
- Working with the wrong clients. Is your agency positioned to work with the type of clients that have money for marketing services and see the value?
- Not reporting on a regular cadence. Once that contract is signed it’s easy to take a client for granted. Are you diligently reporting back to them about activity and results?
- Over-selling the expected results. It’s very tempting to exaggerate the results a client is likely to see to get them across the line, but this will come back to bite you in the end.
- Missing deadlines. You may think a client bottleneck or unforeseen event makes missing deadlines “ok,” but in reality, you need to plan for these things. Regularly missing deadlines will frustrate your clients.
- Not practicing what you preach. It’s important to maintain the same high standards for your own marketing that you expect from clients, otherwise, they may lose respect for you.
- Lacking quality control. Everything you send to your clients needs to meet a certain level of quality – whether that’s audience research, ad copy, or design briefs. Inconsistent levels of work quality can decrease trust with clients.
Be honest with yourself for a moment… are you making any of these mistakes?
If so, you could be your own worst enemy when it comes to client churn.
To help you out, here are 5 tips to solve your agency’s churn problem for good.
#1. Get your positioning right
The type of clients you attract, the prices you charge, and the likelihood of retaining a client can all be traced back to your positioning.
Here are some tips for positioning your agency to reduce long-term churn:
- Niche-down. Choosing a niche enables your team to specialize in an industry sector, makes your marketing copy more magnetic, and helps you understand the problems your clients face.
- Become known in your niche. Double down on brand building and thought leadership for your niche of choice so that you’re the go-to source for potential clients in that sector.
- Start with a narrow value proposition. Rather than being the all-in-one agency for everyone, deliver a very specific outcome that solves a unique problem in your sector of choice.
For example, this agency specifically provides email marketing services:
An agency with a narrow value proposition.
Even if your agency is already established, it’s not too late to nail your positioning strategy. In fact, it should be even easier because you’ll have client results and data driving your decisions.
As well, there is a common misconception that choosing a niche means that you are limiting your opportunities. In reality, you’re just getting laser-focused on lead generation and messaging. You can always target multiple market segments over time.
#2. Think about retention from the get-go
Unfortunately, too many agencies think of retaining a client when it’s too late.
They chase leads, sales, and growth, rather than really focusing on the outcomes of the leads they close.
Retention should be on your mind at all stages of the buyer’s journey. Even before a prospect gets on the phone with you, your positioning and marketing tactics should be designed in a way that aids long-term retention.
When it comes to the sales conversation you have with new prospects, the way you interact will determine how long that client sticks around.
Ask yourself these questions about your current sales process:
- Are you establishing yourself as a strategic partner or a paid service provider? It’s much harder to slash budgets on strategic partners. For example, this agency uses the important space above-the-fold on their homepage to show the other brands they have worked with. This creates credibility and establishes them as a strategic partner:
How to establish your agency as a strategic partner.
- Are you quantifying what your clients care about the most? Set a clear goal and trajectory for the relationship during the sales conversation.
- Are you over or under promising? If you truly understand where you can deliver value, be sure to under-promise and over-deliver.
- Are you choosing the right clients? Rather than taking any client that comes your way, select the ones that you are confident you can deliver value for.
The truth is, most agencies are under-skilled at sales. The art of sales isn’t about closing deals, it’s about creating long-term strategic partnerships.
#3. Focus on the first 90 days
Onboarding a new client is one of the most important parts of long-term retention and reducing churn. After signing that contract, your new client is looking for reinforcement and proof that they have made the right decision.
Yes, they are excited to work with you. But they have also visualized a certain expectation of the relationship in their mind that you need to meet.
The onboarding process typically only takes a week or two, but for the first 90 days, you are still being assessed by your new client.
Here’s what you should aim to do in that time to minimize the chance of churn:
- Put quality controls in place. How can you assure that every interaction, work product, or campaign is a winner for your client? You need strict quality control processes in place that your whole team understands and sticks to.
- Establish accountability. Don’t let your team or your clients assume who is in charge of a critical component of the relationship. Clearly document who will handle each aspect so there is no grey area.
- Create a strategy for the long-term. Even though you may have only signed a short-term contract, show your client you are in it for the long-term prosperity of their business by mapping out a plan for the future. Of course, incorporate your agency in this plan, too!
- Get initial results. As much as your clients may say they are patient and understand that results take time, they will want to see something happen in the first 90 days. So, structure your strategy to achieve some good results early on and deliver value.
In combination, quality control, accountability, long-term thinking, and results will keep your clients happy and wanting more during the onboarding phase of the relationship.
#4. Exceed expectations
Unfortunately, many agencies are great at selling the potential benefits of digital marketing campaigns, but many fall short when it comes to execution.
As I touched on before, you’re far better off losing a prospect by under-promising in the sales conversation, than you are exaggerating the results you can achieve and then burning your reputation a month later.
Not only will exceeding client expectations help reduce churn but it will also improve your chances of getting case studies, referrals, and all that other good stuff.
The most critical step in being able to exceed the expectations of your client is to set those expectations to begin with. The more granular you can be about exactly what the client gets from the relationship, the easier it will be to meet those desires and go above and beyond.
While the concept of “expectations” is somewhat intangible in nature due to human emotions, the more scientific you can be about it the better. By setting data-driven goals, tracking performance, regularly reporting, and making all decisions based on the real-time results of your campaigns, you take out all the guesswork.
Data is king when it comes to exceeding the expectations of clients. Also, don’t be afraid to triple-check and debunk any assumptions in relation to the client’s desired results. There is always an objective underneath the surface that they aren’t talking about. You need to uncover that.
#5. Create a high-performance culture
Most agencies start with one or maybe two people working directly with clients to achieve an outcome. The founders.
When it’s the founders that are doing the grunt work, setting expectations, and delivering results, quality control is fairly simple.
However, as soon as you start growing, getting more clients, and hiring staff, it becomes increasingly difficult to sustain the same level of quality.
If you want to create a great experience for a new client and set up that relationship for success and retention, you need to have a high-performance team culture. Your account managers and topic area experts need to have a desire to over-deliver for every single client. They also need to understand what over-delivering actually means – in very specific terms.
Here are some tips for building a high-performance culture in your agency:
- Have documented systems in place for hiring. As you grow you’ll need a rock-solid approach to finding and hiring the best talent in the industry.
- Invest in learning. Your clients are paying for expertise and they expect that from every interaction with your agency. Invest in your team and make learning a priority.
- Be cognizant of individual motivating drivers. People are motivated when they feel like they are making a meaningful contribution that is aligned with their core values. If you’re clear on the company values, you can hire and motivate individuals that are all rowing in the same direction.
- Don’t underestimate the importance of regular and open communication. Communication is more than just the verbal or written interactions between team members. It’s about effectively delivering a consistent message to your entire team and giving them the tools they need to collaborate effectively.
For example, this agency has a full section on its website for “Careers” that discusses the culture and lists job opportunities:
An agency ‘Careers’ section on its website.
Retaining clients in the long-term comes down to how well you find, hire, train, motivate, and inspire your team to exceed clients’ expectations.
At the end of the day, churn is never going away.
Losing clients comes with the territory in any service-based business, especially a digital marketing agency where there are so many alternatives available. It’s highly competitive.
In saying that, the best agencies build systems and processes that focus on long-term client retention.
They get their positioning right, establish clear and tangible expectations with new clients, follow strict onboarding best practices, over-deliver on expectations, and foster a high-performance team culture.
Which area does your agency need to fine tune?