Build a cadence of regular planning/strategy sessions
Regularly ask for feedback
Celebrate wins so the customer can see their progress
At your agency:
Align your sales and service teams to prevent overpromising
Build the processes necessary for efficient work
Create backup for each role
Keep your people happy
Expand your offerings
Small digital marketing agencies live with the threat of client churn every month. For most agencies, it’s simply a reality of the work they do. Every month, they could lose clients, which means they always have to be on the hunt for new business — even when they’re operating at full capacity.
This perpetual uncertainty creates ripples throughout your business that cause profound negative consequences that hamper growth and limit opportunities.
A high customer churn rate can have a wide range of implications at your agency:
Customer churn leads to lost revenue, making it hard to plan your finances.
Losing clients hurts employee morale, leading to stress and higher turnover rates.
Thin profit margins make it hard to raise salaries, which further contributes to turnover.
Departing clients are less likely to recommend you to their network.
Each time customer churn occurs, your body of work is impacted. This makes it harder to show new prospects a track record with long-standing clients.
At IMPACT, this is a challenge we know all too well. As a HubSpot partner agency for more than a decade, we lived through years where we churned clients every single month. Sometimes, these were customers whose churn we anticipated. Other times, we were totally surprised when a client told us they’d be moving on.
As a result, we always had to be seeking new business — not to grow our agency, but to be ready to replace the customers who were ready to walk out the door.
This was an exhausting, demoralizing state to be in. We knew we were working as hard as we could. Still, we were struggling.
Now, IMPACT is in a much better place, with customer churn no longer the issue it once was.
So, how did we get here? What do we now know about customer satisfaction that we wish we knew five years ago? How do we keep our churn rate so low?
You’re in luck. Below, I’ll explain how you can prevent customer churn at your agency so you can stop worrying about losing revenue and start planning how to grow your business. You’ll learn:
What causes customer churn at agencies.
How to improve the experience of each existing customer.
How to set up your agency to retain customers and limit churn.
Together, we’ll explore exactly how you can set your agency (and your clients) up for long-term success so you can finally say goodbye to the issue of customer churn.
Free Guide: The Blueprint for a More Profitable Agency
What causes customer churn at agencies?
The revolving door of clients that so many agencies experience comes down to one simple problem: Marketing is hard.
Even with a talented, dedicated team, even with a great strategy, it can be hard to deliver the results your clients are hoping for. They’re hiring you to do a job — to grow their leads with marketing — and if you can’t do that to their satisfaction, they’re going to move on.
But even though the work you do is challenging, you can still reduce customer churn by reconstructing your relationships with those customers.
So, why is churn such an issue? It starts in the sales process.
Unrealistic promises made during the sales process
Your sales team wants to close deals. Sometimes, this can lead to making big promises to prospects to get them to sign. Then, when the rubber meets the road, your team is unable to deliver the results the clients expected. They were promised X. If you don’t deliver, you’re not cutting it.
Working with these types of clients is tough. You always feel like you’re running a little behind. Even exceptional customer service and great work will not be enough. These are cases where your team is set up to fail and you can almost predict customer churn to occur.
Inefficient agency processes
This is often a problem at younger and smaller agencies: You don’t have the structure in place to deliver exceptional customer service.
The best customer service happens when there are processes in place to organize and track the work being done. When these processes are absent or inconsistent, the customer experience suffers.
Every time there’s a breakdown in communication, a deadline that doesn’t get met, or a deliverable that is not good enough, the customer feels overlooked or undervalued. As a result, customer attrition becomes more likely.
Poor execution by an inexperienced team
For small agencies with high customer churn, it can be difficult to hire and retain top talent.
Often, this means you bring on younger team members who will cut their teeth at your agency. The problem is that less experienced team members are more likely to make mistakes or produce work that’s not up to par.
We all need to start somewhere, so there’s nothing wrong with younger employees. The problem is twofold:
If you have too many young, inexperienced employees, it could result in poor customer service that makes client retention difficult.
If employees gain experience at your agency and then leave for more lucrative jobs, you’re stuck being an agency that can’t retain its talent.
Turnover at your agency
Connected to poor execution is the unpleasant reality of turnover.
When someone on your team leaves, their existing customers become high churn risks. The relationship the customer had with your agency is lost. Now a new team member has to come in, learn the customer’s business, build a new relationship, and deliver the same level of service, all with as little interruption as possible.
All too often, customers in this situation churn.
Fussy, hard-to-please clients
But let’s be honest, sometimes the issue is not you. It’s them. Nobody likes losing customers, but we all know clients that, when they leave, everyone can breathe a little easier.
Some customers churn because that’s just sort of what those customers do. They bounce from agency to agency, never staying anywhere for too long. They might be difficult to work with or overly demanding, or they might just have itchy feet.
As I said before, some churn is natural — and some businesses tend to move between agencies pretty regularly.
9 ways to avoid customer churn at your agency
From the list above, you can see how customer churn is a vicious cycle that can doom an agency to failure. It’s hard to break free from because the causes and results are so closely tied to each other.
It just keeps repeating:
You have customers leave, making customer acquisition more critical than ever.
When you need to bring on new customers to fill the void, you’re tempted to promise the moon so they’ll sign with you instead of another agency.
Your team is stressed, trying to execute and deliver on these high expectations.
Financial instability keeps salaries and morale low, so you lose team members and have to hire to replace them.
More clients leave, and the cycle keeps going.
On and on it goes, with more churned customers, more new customers, and more instability at your agency.
Katie Coelho has helped lead IMPACT for nearly a decade, and she now works as VP of services. Her work with clients and as a manager has given her a valuable vantage point to reflect on what works and what doesn’t, and she shared her insights with me.
Below, you’ll see the steps she advocates to build a more resilient, stable client base at your agency.
First up, improve your work with each customer.
To improve your relationship with each customer
Every customer your sales team brings on could become a dissatisfied customer with a high probability of churn — or they could become a happy, long-term customer you feature in a case study.
How do you guide them toward customer loyalty? As with any relationship, it comes down to doing the right things at the right time.
Do these things and you’ll build the strong customer base you’re after.
1. Work with your customers to clearly identify goals
What are your customers trying to accomplish?
Many businesses get into inbound marketing thinking that traffic is the most important leading indicator for success. Sure, traffic is important, but the wrong traffic won’t do you much good.
Katie recommends pushing back with your new customers to really understand what they’re after. If they’re coming to you saying they want to 10X their traffic, help direct their ambition in a more productive direction. This way, you can help them avoid the trap of vanity metrics — and you can save yourself from an impossible task — all while delivering better results.
“Most of the time a client wants to cancel is due to poorly set expectations,” Katie says. “If you can clarify your goals at the onset, you and the client are both better poised for success.”
Starting a relationship off on the right foot is critical — and goal setting is a big part of that.
2. Build a cadence of regular planning sessions
Katie recommends holding planning sessions to kick off every engagement — and then doing the same thing every quarter or every month thereafter. Planning sessions provide you the opportunity to check in, course-correct, and set goals for the future.
By breaking the engagement into manageable chunks, you can build a better strategy and chart progress more accurately.
3. Regularly ask your customers for feedback
Whether you use the net promoter score (NPS) model, a happiness score, or some other method, regular feedback from your clients helps you take their temperature and adjust your services to better meet their needs.
“Client feedback is a way to get ahead of a problem and reduce churn,” Katie says. “Especially if the agency’s leadership can see this data and intervene if necessary.”
Think about it like this: Before a customer leaves, there are any number of red flags that can help you make adjustments if you only notice them. Feedback is a way of regularly checking in and monitoring customer satisfaction.
4. Help the customer see their progress
Marketing is a game of small wins and momentum building. To retain existing customers, make sure they can see the small wins along the way.
This can take many forms, depending on the culture of your agency and the needs of your clients. For Katie, it comes down to finding ways to chart progress and celebrate results.
Are there wins can you shout out? What milestones can you acknowledge?
These are examples of things you might celebrate:
A first inbound lead
An article ranking No. 1 in Google
1,000 organic site visitors
The client’s sales team closing a deal using marketing materials
100 subscribers to the business’s YouTube channel
The launching of a newsletter
You get the idea.
Whatever you choose to celebrate, make sure the client can see the progress that’s being made. Sometimes digital marketing can feel like the ultimate long game. Help your client take stock along the way.
Katie recommends the book Never Lose a Customer Again by Joey Coleman, which stresses the importance of the first 100 days for setting the tone of the relationship.
Clear expectations and frequent check-ins go a long way toward providing good customer service.
To improve your agency
Getting each client relationship off on the right foot is vital for improving your churn rate, but that’s just half the battle. You’ll need to address structures and processes within your agency as well so that you’re set up to service clients more effectively.
5. Align your sales and service teams
Your salespeople want to sell, and we get that. But overpromising to prospects will only yield short-term success. Yes, you’ll close the deal, but those new customers will soon become frustrated and disappointed. Not only will your churn rate go up, but your agency’s reputation will suffer.
Make sure your sales team is not overpromising. Have members of your service team watch calls to be aware of what’s been said.
Then, bring service team members into the sales conversation as early as you can. This will ensure that your potential new customers are hearing directly from the people they’ll be working with. The earlier you establish that relationship the better.
6. Build the processes to work efficiently
Building an effective, well-oiled business does not happen overnight, but if your business isn’t running well, you will provide poor service to your customers.
A business needs structure and processes to operate effectively. What this looks like for your agency will be unique, but things like sprint planning, time tracking, project management, and job scorecards help your team know what’s expected of them and how they should get it done.
You want to be delivering your services at an efficient labor ratio. Too often, agencies cut into their own profit margins to service their customers.
With the right processes in place, your employees and your customers will feel supported, and your churn rate will go down.
7. Create backup for each role
As a leadership team, it’s your job to plan for contingencies so that the customer experience doesn’t suffer.
What happens if that account manager is on vacation?
If that content writer is on paternity leave?
If that graphic designer takes a different job?
Who has their back so that you’re not losing customers when the unexpected happens?
Build a team structure that allows for substitutions and backups. “In any given time period, your team will experience disruptions,” Katie says. “But those must be minimized to keep servicing your existing customers.”
Plan for the unexpected so that you’re always prepared.
8. Keep your people happy
Things will happen. You’ll lose customers despite your team’s best efforts. Even so, make sure you’re celebrating and rewarding the great work your team is doing.
Celebrate ways they delivered excellent service and kept customers happy. You should dedicate company resources to do so. When you can, provide raises and advancement opportunities.
Katie recommends that you keep those top-notch team members around by treating them the way you’d want to be treated at that stage in your career. Celebrate wins, provide professional development, and offer promotions and raises when you can.
Just as customer retention is much cheaper than customer acquisition, it’s much easier to keep and groom great employees than to go out and find their replacements.
9. Expand your offerings
At IMPACT, we struggled for years as a scrappy inbound agency, dealing with all of the familiar challenges we all know so well.
We shifted our business to focus on coaching and consulting instead of implementation. As a result, we now operate at much better profit margins, and our customers experience significantly better results.
The impact on our business was profound.
As we addressed one problem, the other ones started solving themselves. Clients were happier, so our customer churn rate dropped. Happy clients recommended us to others, and our total customer count skyrocketed. Our higher profit margins grew, which allowed us to pay our employees better, which, in turn, cut attrition.
The key for us was shifting our mindset. Along the way, we built systems and processes for delivering exceptional service to our existing customer base. And we kept bringing on new customers as well.
Generally speaking, preventing customer churn really comes down to two things:
Setting better expectations for your customers
Delivering an improved customer experience
Customer retention is not an easy problem to solve, but if you can follow the steps laid out above, you can get ahead of customer churn and help stop it before it starts.
But let’s be realistic. First off, this kind of change is not going to happen overnight. It takes months (or longer) of incremental improvement. But if you’re moving in the right direction, you’re making progress.
Second, churn is still going to happen. At some point, all of your existing customers will leave. The goal is simply to make that process more predictable and mutually beneficial. You want clients to rave about their experience with your agency — and the way you get them to do that is outlined above.
But don’t be afraid to fundamentally shift the way you serve your customers.
While it might feel intimidating to add coaching or consulting to your business model, we’ve found that it increased customer satisfaction and drastically cut our company’s churn rate.
We’ve been able to add more customers — and not just to replace a steady stream of dissatisfied customers going out the door. Rather, we’re building a steady base of customers for stable income and predictable growth.