Apr 17, 2020
It can take you 3 months to land a client.
And only 1 email to lose them.
Our CEO Tim S. Burke, Director of Ad Ops Rob Burke, Director of Client Experience Tim C. Burke, and Senior Manager of Search and Social Kwasi Asare-Darko sat down to discuss reducing agency churn by demonstrating value.
Check out some of the awesome tips and tricks on how your agency can reduce churn and keep your business growing in 2020.
What Is Churn Rate?
Before we get into the ways your agency can reduce churn rate, first we should discuss what churn rate even is.
Churn rate, in a very broad sense, is the measure of the number of people or items that are moving out over a certain period of time.
Having a low churn rate essentially means the number of clients who leave your agency are out weighed by the number who stay or sign on.
As an agency owner, or anyone in the business market, you want to reduce the number of clients leaving your business so your profit continues to grow.
How Do you Calculate Churn Rate?
In order to calculate churn rate, you need to take the number of clients your agency lost last quarter and then divide it by the number of client’s you started with. This will give you your churn rate.
For example, if your agency had 100 clients and lost 20 over the course of the quarter, your churn rate is 20%.
What is A “Good” Churn Rate?
If your churn rate is 10% or higher, it may indicate that your customer management may need to be relooked at and altered.
Having a high churn rate can be an indicator that something in the way you conduct business needs to change and lucky for you, we have a few tips that can help with that.
Why Decreasing Churn Is So Important
The issue of agency client churn is an issue that is near and dear to our hearts.
In a lot of ways, we have made it our mission to decrease client churn as much as possible.
Why?
When you work so hard to land a client, then optimize and strategize on a campaign to bring them great results, only for them to leave, it is a lot like running in place.
You want your agency to be in a place where you are constantly growing and moving forward. When a client leaves you, they’re not saying good things about you and that’s number one.
The other thing is the activity around that is that it’s just bad optics internally when people leave so it leaves you running in place. We want our agency friends to run forward.
Why Do Clients Churn
Sometimes you can run a campaign to perfection and create incredible results for your clients.
Yet for some reason, they still want to leave. So what are the biggest reasons that agencies experience client churn?
Expectations
One of the biggest reasons agencies churn clients are improper expectations.
For example, we’ve seen as we’re executing OTT campaigns, people might not be saying that they are expecting to see their ads on Hulu coming in.
As an agency, you know the budget that you are utilizing is maximized at a lower entry point.
So while their ads may be served on Pluto, which is a rock star in the OTT industry, they might not have heard of it.
They were expecting to see their ads on Hulu, or even Netflix and Disney+ platforms that don’t deliver ads.
Making sure to fully communicate goals and expectations to the client will help them understand what they bought. Although it may seem obvious to us, guiding them through your process is a better way to ensure they won’t leave.
We believe transparency is key.
Try showing prospective clients an example report before they have even signed on to build that trust and expectation.
Expectations also have another level. Before a client starts working with an agency they have to have reasons why they’re working with that agency.
A lot of times we talk about all of the campaign goals but we don’t talk about how did you find us, where did you find us, why do you want to work with us and discuss what’s right for them.
One of the things that a lot of digital agencies do in particular is lead with data that’s the wrong data.
Agencies push metrics like CPC and the number of impressions that are much less significant to a business owner than how many people walked in and purchased or purchased online.
Ultimately you know we say all the time around here it’s CPC and it’s SEO but it’s really ROI.
Leading With ROI
ROI has to be really part of the upfront discussion of, what do you want to happen at your business.
If you’re gonna spend $5,000 on a campaign, whether it’s traditional or digital, what do you want to have happen in your business for you to continue to want to do that.
Focusing on ROI first is so important, but usually in the first few weeks of any campaign, we’re really gathering data, we’re testing, we’re trying to produce results.
However, the data is always going to dictate how to go about it.
It is important that a baseline is established of how this is working at the bottom of the funnel, driving conversions and leads, and how that’s impacting your client’s business.
It is not necessarily a great thing to show impressions or show clicks right off the bat because that data doesn’t become important until it’s established that this many impressions on percentage basis leads to this many clicks, which on a percentage basis leads to this many conversions, which on the percentage at least this much real return on ad spend.
It Starts With The Sales Process
In the sales process, if you’re just going to rush in to close the deal and then just throw it over the fence, it’s a recipe for churn right away.
If you’re just rushing through and not really truly understanding the needs of the client, you’re setting yourself up for failure.
People buy advertising for a reason, and it’s not always the same reason.
Get to the bottom of what it is they’re really looking to have happen at their business and then having your solution be able to drive that end result.
It comes down to establishing that upfront, and then all the data that you’ve gathered can support that direction.
A lot of clients are looking for a checkmark.
For example, they hear that PPC is a solution for them so they just expect to see a PPC campaign.
However, it’s the job of the agency to push a little bit to find out what exactly they want to do and why they want to do that.
Have honest conversations with the client when they’re telling you I know what’s right.
Be able to show them or just have a blunt conversation with them that you’re not right.
No one wants to be told they’re not right but the fact of the matter is, as an agency you can’t be held accountable for producing results any other than your way.
If you were going to write a prescription, you would want to know what’s in that medicine.
What it really comes down to is the ability to say listen I heard you loud and clear what you want to have happen at this business.
Here are the steps that we’re going to take to get there.
It’s All About Helping The Client Grow
Our job as agencies is to help clients grow.
To get there, you need to have benchmarks supported by return on investment.
Ultimately it’s got to be done in a way that allows you to achieve not only the clients win, but the collective win results from the way your agency created those results.
If you’re going to just do it to please your clients, then start the clock because that client is going to churn.
You weren’t hired for them to give the direction if you’re telling. If you have to, tell them that they’re wrong off the bat.
Stop, Collaborate, and Listen
Your client knows their business better than you know their business. So the truth always lies somewhere in the middle.
If the client is looking for a direction that might not work, just remember they’re still bringing that up for a reason.
Be willing to test for your client or be willing to say you know what this just won’t work but here’s something that will.
When you have to have the conversation about why something didn’t work, have it with data. Numbers don’t lie numbers don’t lie.
Otherwise, you’re just saying no and it’s based on your opinion. That’s when it becomes a combative relationship.
Compromise with your client and work together to make intelligent decisions based on data.
If the client’s only goal is to see their OTT ad, then absolutely we can make that happen.
But the data will always support the direction. You can spend a client’s budget on some impressions if that’s truly all they want, but it is far better to let the data lead the path to results.
As the agency, it is your responsibility to discuss through and educate the client whilst using their business goals as the platform.
Trust and Credibility
We talk a lot here about trust and credibility. They are really the things that have to be sold on a regular basis to any client.
If they don’t trust you it’s gonna be a hard relationship to manage if you don’t have the credibility.
Guide them to their goals or they’re not going to pay attention.
In every sale that we’ve gotten, the first things we have to do to maintain this relationship are trust and credibility, and those things can’t be broken.
Listen to your client but ultimately the client tells you what it is that they want. In the ad space, it’s us assisting them and how to do it the right way.
Trust and credibility can be proven through transparency as well. In the last edition of the Conduit Connections Pain Point Series, we talked about effective communication, proactive communication, and owning mistakes.
Everyone makes mistakes. How you handle those mistakes is the mark of true transparency.
Conclusion
Decreasing churn is a major problem for any agency. Closing the disconnect between client expectation and performance will be a key factor for any successful agency in 2020.
It is more important now than ever to ensure you have an honest and open dialogue with your clients, set realistic expectations, and dive deep into their ultimate goals.
In a world of SEO, PPC, and KPIs, always remember that the most important metric is ROI.
Conduit Digital works with thousands of clients every single month and we know from trial and error and experience how to decrease churn by proving results.
Partnering with an agency like Conduit Digital that understands your needs and can help achieve to your client’s expectations is a sure way to decrease overall customer churn.
