Combatting the Top Causes of Agency Customer Churn

There’s one word that makes agency leaders’ blood pressure rise like no other. That word is churn. I’ve experienced the frustrations of churn as a former agency professional myself, and I still hear a lot about it in my conversations with the marketing agencies that partner with vcita, the tech provider I’m with now.

When churn is high, you end up dedicating much of your time and energy to close that gap by bringing in new clients, only for them to churn and be replaced by new ones. It’s a vicious cycle.

To some extent, churn is inevitable, especially for agencies that work with small business clients. I remember this well from my years working at an agency, too. Small businesses are simply more likely to make changes to the services they buy than larger companies, because they tend to have smaller cash buffers, so they are at higher risk of hitting financial issues.

However, with the right strategies and mechanisms in place, it is still possible to significantly reduce churn. The more you do to combat the main causes of agency churn at the source, the less you’ll worry about your customer base, the higher your revenue per account will be, and the better you’ll sleep at night.

Reducing churn is an art. I’ve set out to find the best anti-churn remedies that can help agencies keep their customer base healthy, happy, and highly engaged.

Here are some of the factors I’ve observed prompting the most agency churn, together with some especially effective steps that owners take to plug up those leaks.

Clients Struggle to Perceive Your Value

Can clients quantify the ROI that they receive from their agency? Marketing agencies often focus on generating leads as their top KPI. Obviously, this is a vital marketing function, but without a clear logical line between leads generated, customers created, and revenue received, your agency might be rendering its value dangerously unperceived.

It’s often difficult for clients to connect the dots between the leads their agency sends and the money they receive in the bank.

More problematically, you might be a lead generation powerhouse, but if your client doesn’t have the tools and/or expertise to follow up effectively, few of those leads will translate into paying customers, and your clients won’t feel that they gained anything from your lead generation.

I’ve definitely seen my fair share of agency sweat and tears go into the generation of leads, just for those precious leads to sit untouched in their client’s inbox.

Combating this means finding ways to help your clients push leads along the funnel and earn more revenue from each of their customers. You want to assist them in turning leads into real opportunities, closed deals, and loyal customers. Arguably, the best way to accomplish this is by coaching or by offering lead nurture and customer communications as a managed service, while reselling the tech that makes it possible.

I’ve seen agencies launch lead follow-up services and client nurturing solutions. These types of services are received well among SMBs. The business gets to close more deals, and the agency wins an upsell opportunity while simultaneously increasing its perceived value.

You Aren’t Part of Their Business Core

When a small business owner lies awake at night thinking about their company’s top burning issues, marketing isn’t likely to be one of them. They’ll probably be mulling over the best way to get a pesky customer of theirs to pay an overdue bill, where best to apply for a business loan, or the last thing they said to a contact who’s about to close a big deal with them.

To the disappointment of marketers everywhere, marketing activities tend to be seen as peripheral, so they are often the first to be jettisoned if and when budgets need to be trimmed.

But we’ve seen marketing agencies take steps to become part of their customers’ core business operations. They might become involved in more aspects of the marketing funnel, or help with customer lifecycle optimization, appointment scheduling workflows, or document management.

I’ve seen successful agencies offer their clients solutions that help with the core elements of managing a business. Many agencies choose to do this with white label tech partners, which enable them to offer solutions like CRM, payment collection, and email marketing, all under their own brand.

The more that customers rely on you for vital business activities in addition to marketing, the less likely they are to churn.

Competition is Fierce

There are thousands of marketing agencies competing for a slice of a finite pie, so even if your agency is particularly amazing at what it does, you could still struggle to capture and keep clients.

Part of the trouble is that marketing agencies tend to offer similar rosters of services as each other, so it can be hard to differentiate yourself. This is where adding extra services can help. Most agencies provide the “three pillars” of lead generation, lead nurturing, and lead conversion, but some add a fourth pillar — helping clients collect payments and get money in the bank. The more tools you offer, the sharper your competitive edge.

It’s ironic, but marketing agencies often aren’t great at showcasing their own success. They might send a list of leads each week, but they don’t invest time explaining how the number of leads impacts conversion rates or closed deals.

Agencies that connect the dots between leads created, deals closed, and income received put themselves into a totally different position with their small business clients. Instituting data reports as part of your monthly cycles can go a long way towards keeping your value visible and top-of-mind.

Brand Visibility Is Anemic

When you compare marketing agencies with SaaS companies, the difference in branding is astonishing. Agency customers rarely see the agency’s logo. It might be at the bottom of the email sent each week with the list of leads, or appear on the invoices, but that’s about it.

SaaS companies, on the other hand, have their logo front and center. SaaS customers stare at the logo and interact with the color scheme all day, every day. Agency branding simply isn’t visible, which is another aspect of not being part of the customers’ business core. But agencies that push their branding create more “stickiness,” and less churn, with their clients.

There’s a hot trend at the moment of small businesses adopting more SaaS solutions. Our research has found that last year, 96% of SMBs adopted new digital tools as part of their daily workflows, and a majority invest $100-$500 monthly in digital tools. This creates a huge opportunity for agencies to offer digital tools that carry their branding and help small business clients to run their daily operations.

Agencies Can Cut Churn Rates

Agencies do have the power to act to reduce the incidence of client churn. In my experience, agencies that broaden their offering to include digital tools that help small business owners manage core tasks can push their branding, gain stickiness as part of the client’s business core, improve their competitive edge, and emphasize the value they deliver.


  • Rachel Nulman-Schapiro

    Rachel Nulman-Schapiro is vcita's ambassador to the small business and agency communities. She started her own agency when she was still in college, helping businesses build their web presence and shift from offline to online advertising. As vice president of product marketing at vcita, Rachel supports agencies assisting business owners as they venture into the digital space.

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