At the beginning of March, I attended the Borrell Phoenix Conference for local media and advertising companies. As well as learning a lot about current trends in the industry, I participated in a fascinating panel discussion all about churn in the marketing world.
Together with Justin Yurek, Head of Strategy at Townsquare Interactive and Rebecca Kaplan, Regional Digital Sales Director at Cox Media, and moderated by Leah Muench, Director of Client Services at Borrell Associates, I discussed the causes of client churn and what techniques marketing agencies can use to reduce it.
This left me thinking deeply about the problem of churn, and how vcita’s InTandem partnership program helps to solve it. Let me share my top four recommendations for churn reduction in marketing, based on the conversation I had with panel experts.
Why do clients churn?
Before anyone can really tackle churn, we need to understand the causes. When it comes to marketing agencies, client churn is almost always due to the client not perceiving the company as a true partner. Our own research among SMBs showed that out of the 67% of SMBs who churned within six months, 17% of them did so because they didn’t see their marketing service provider as a true partner.
The question is, what leads them to feel this way? Our panel identified four main factors that contribute to this perception.
Poor communication
Too often, there’s a lack of communication between the marketing service provider and their clients. This might take the form of expecting SMB clients to log into a dashboard to see the results of your marketing efforts, instead of proactively sending them a clear email once a month.
Or it could be SMB clients who don’t hear anything from you at all for months on end. Justin mentioned that at TownSquare, they visit as many of their advertisers as possible every month, face-to-face, which is the ideal scenario.
Setting unrealistic expectations
Misaligned expectations kept coming up throughout our panel discussion as a key cause for churn. Rebeca expressed this very clearly.
“Almost all the time [when a client churns] we find out that expectations weren’t aligned, whether they weren’t aligned between the media consultant and the client, or internally, when the media consultant said “Your ROI is going to go through the roof,” which is unrealistic and doesn’t align with the reality of what we can deliver,” she said.
Billing and pricing challenges
It might sound simple, but as Justin pointed out “in the early months, the number one reason we see someone churn is simply that the credit card stops working.”
Billing issues and unintentional payment processing hiccups can derail your client relationship. Clients who feel that they’re paying too much and/or can no longer budget for your services are also highly likely to churn.
Competition
There’s no such thing as a company that doesn’t have competition, and sometimes your competitors can get fierce. There’s always someone coming in with a more impressive story or a shinier solution. Your rivals will compete with you on almost every basis, from price to availability to customer response speeds, and you need to be ready for that.
How do you solve churn?
Now let’s move on to the real meat of the panel: what you can do to overcome these causes of churn and retain happy clients.
Build strong value-driven relationships
As Rebecca put it, at the end of the day it all comes down to your relationship with the client. You want to start off on the right foot by outlining and setting clear expectations, and then build up a relationship where you communicate frequently and clearly.
“It’s about really understanding what is success to the client, getting them to articulate that you both agree on that success metric, and setting some KPIs along the way,” said Rebecca. She emphasized that your sellers need to continuously check in and update the client about progress towards their goal.
Differentiate your offering
You want to provide a unique solution that helps your clients to grow their business, and gives you an unfair competitive advantage. When your offering stands out in the marketplace as meeting your clients’ needs, you don’t need to worry about the competition.
Justin pointed out that competition is never the real reason why a client churns. They actually leave because you didn’t deliver, whether it was poor service or insufficient features or being too expensive. “Those are really root causes,” he said. “The competitor just came along at the right time and exposed those causes.”
Track and monitor
It’s crucial to constantly monitor your client relationships to spot red flags that could indicate dissatisfaction or that they are considering churning. These include client engagement metrics, performance KPIs, and client ROI.
Every company will have different red flags, so cast the net wide. For example, Justin noted that clients who suddenly become unresponsive is a big red flag for his company.
Make it too costly to switch
Last but not least, you want to create so much friction that it’s too difficult for clients to move to another provider. Ideally, your solution should be integrated into their day to day business operations so that it’s too much hassle to make the change. Look for add-ons to upsell, because the more products your clients buy, the stickier your solution becomes.
Leah recommended making your solution as simple as possible to use, so that all their activities are concentrated on your platform. You also want to make it clear that success takes a while to arrive. That way, even if a competitor offers a lower price for the same services, the client is less likely to abandon the investment they’ve already made.
How vcita can help
At vcita, we have a partner program called inTandem. It enables agencies and marketing companies to hit most of the recommendations that came out of the panel.
With inTandem, you can expand your SMB offering to cover most of your clients’ daily business operations, building a sticky, value-focused, high-engagement solution that differentiates your company and strengthens loyalty. inTandem can also drive higher ARPA by opening up a path for upselling and intent-based leads.
For example, one leading U.S. publicly traded digital agency was struggling to distinguish itself from its competitors. It was grappling with poor ARPA growth, inefficiencies, and low customer loyalty.
The company adopted inTandem Complete, which expanded its core SMB service offering to a comprehensive business management solution. It effectively transitioned SMB clients to a broader set of tools for managing their everyday business tasks, all in a single centralized and branded platform.
This gave the company a unique offering in a saturated market, boosting ARPA, increasing retention, and enhancing brand awareness. Within 3 months of implementation, the company cut client churn by 10%, increased daily active usage for its branded app by 62%, and saw overall engagement rise by 24%.
It’s possible to drive down churn
While every marketing agency faces the problem of churn, especially in the SMB market, there’s no reason to put up with it. Our panel discussion made it clear that there are concrete steps that you can take to cut churn and improve revenue.
If you’re interested in learning more about reducing churn and increasing SMB engagement, I’m happy to talk. Let’s schedule a call!
