Josh Nelson, the founder of the Seven Figure Agency, spoke about the strategies for retaining clients in the webinar on “How To Maximize Client Retention for your Digital Marketing Agency.”
One of the biggest challenges in running an agency is you get the clients, you pour yourself into it, and they cancel.
The Importance of Retaining Clients
A study by BAIN found that a small increase in customer retention can significantly improve profits, ranging from 25-95%.
Despite the focus on acquiring new clients, improving retention can have a significant impact on profitability. Low retention leads to wasted effort, loss of recurring revenue, damage to reputation, reduced confidence in acquiring new clients, and difficulties in forecasting resources.
Why Do Clients Leave
Retaining clients can be challenging, especially for agencies early on in their journey. The most common reasons for client loss include poor onboarding, inadequate systems, misaligned expectations, and poor relationship management.
However, the primary reason clients leave is not due to poor execution or results but rather a perceived lack of interest and engagement from the agency. Clients may feel that the agency has disengaged and no longer cares about their success.
Steps for Retaining Clients
Retention is crucial for increasing profits and improving profitability.
To achieve long-term client retention:
- Focus on the impact of your services,
- Provide a comprehensive solution that drives a measurable return on investment,
- Select clients that have the right systems in place and can pay your fee while getting a good return on investment.
- Set the right expectations by framing the relationship as a long-term business partnership,
- Effectively communicate and show clients that you care, and
- Maintain a balance between achieving results and building a strong relationship with clients.
Remember, if either of these is out of balance, clients are likely to leave.
The Model to Address Perceived Indifference
In this model, there are three key things to focus on; onboarding, effective communication, and success management.
World Class On-Boarding
Having a strong onboarding process is crucial for ensuring that clients stay with you for the long term. By focusing on the following three elements during the first 60-90 days, you can greatly improve the chances of retaining clients:
- Make a strong first impression and show appreciation. Send a welcoming gift and clearly map out the next steps for the client to feel confident in their decision to work with you.
- Streamline data collection by making it as simple as possible and taking on as much of the burden as you can.
- Engineer quick wins by identifying and implementing two or three strategies that will quickly generate leads or revenue and excite the client about their decision to work with you.
Effective communication with clients is vital for maintaining a positive relationship and ensuring that they understand the value of your services. To achieve this, focus on the following elements:
- Use strategic reporting and key performance indicators (KPIs) that align with the client’s goals and objectives. Lead with the KPIs that are most important to the client, such as the number of leads generated and return on investment.
- Establish a consistent meeting rhythm with clients, including the frequency, agenda, and plan for when they don’t show up.
- Continuously share the vision for the future and the progress being made towards achieving it. This helps to keep the client engaged and prevents them from considering other options.
- Communicate frequently and transparently about all tasks and progress being made. This helps to build trust and ensure that clients feel informed and in the loop.
- Implement an ongoing customer communication process that includes regular meetings, progress reviews, and a video recap of the meeting.
- Continuously seed the vision for the future and the progress being made towards achieving it to keep the clients engaged and prevent them from considering other options.
As an agency grows and takes on more clients, it’s important to have a strategy and system in place for success management. To maintain strong relationships and avoid perceived indifference, consider the following:
- Track client churn rates by monitoring month-over-month, quarter-over-quarter, and year-over-year how many clients are being gained and lost and what the retention rate is.
- Use strategic KPIs to keep a pulse on the account management team and ensure that they are taking the right actions to maximize retention rates.
- Implement a traffic light system to quickly identify which clients are happy, which are at risk, and which are about to leave.
- Hire account managers as the agency grows, as the owner can only handle a limited number of accounts before reaching a cap.
Bear in mind these five principles:
- measure what matters,
- keep a bird’s eye view on all accounts,
- get ahead of issues,
- prioritize those most in need, and
- take proactive weekly actions.
The Initial 10 Touchpoints
Josh’s workbook provides a guide for creating a successful onboarding process for new clients, which includes the following steps:
- Send a personal thank you message to the client immediately after they sign up, through email, social messenger, or a personalized video recording.
- Provide an onboarding form to the client so they can begin filling in key details right away.
- Create a welcome sequence with contingencies built in for clients who may not be ready to move forward.
- Hold a structured launch call within the first few days of signing up to reset expectations, resell the investment, set the long-term vision for the relationship, and collect login credentials.
- Send a gift basket with chocolates and goodies, such as a bottle of wine, within three to five days of signing up as a nice surprise.
- Launch the PPC campaign and start driving traffic and leads within the first seven to fourteen days.
- Set up client review tracking and discuss the results in a structured conversation.
- Show the client the design composition and other tools being implemented for them in week two.
- Launch the client’s website by the sixth week.
A monthly retention rate of 97% is considered a good benchmark for agency services. When the rate drops below 90%, it is a sign that something needs to be reevaluated, such as the promise made, onboarding experience, and monthly reporting.
It is also important to consider if the client is still using the more profitable services even if they have discontinued some of the services, as this can still make a significant contribution to the gross margin.
So, to recap: