6 ways to improve customer retention.
Every company wants to do what it can to increase its bottom line. It is always a challenge to figure out the most cost-effective ways to promote sales, but focusing on customer retention can be a strong strategy.
About 82% of companies feel that client retention is cheaper than client acquisition. Additionally, increasing your retention by just 5% can lead to a revenue increase of 25% to 95%. To take full advantage of this, you need to make sure that your client retention processes are functional, delivering the results you need.
Refresh your memory on how to diagnose any current client retention issues you have and then overcome them to boost your retention rate.
What does client retention mean for agencies?
No matter your industry, customer retention refers to the process of encouraging past clients to continue to work with you. For a marketing agency, your focus will be on continued services or additional services. This contrasts somewhat with companies selling physical products, but many of the client retention strategies are still the same. In either case, you want to focus on long-term relationships with clients to maximize the customer lifetime value.
The fact that marketing agencies sell services instead of products does cause a few differences from traditional retention. For example, your service must always be efficient, and you need to ensure you have flawless customer service. While customer service is still a concern with physical goods, it is more critical with services like marketing, thanks to the constant interactions between your company and clients.
How to calculate client retention
It is not that hard to calculate your client retention rate, but the process does require some information. You will need to know:
- The number of clients at the beginning of your chosen period (a year, quarter, month, week, etc.)
- The number of clients you have at the end of the chosen period
- The number of customers you acquired during the chosen period
Perform the following calculation:
[(Clients at the end – Clients acquired) / (Clients at the beginning)] x 100
The result will be a percentage.
Diagnosing your client retention
Before you can work on fixing your client retention rate, you need to know how to recognize if there is an issue. The first thing you need to do is examine your retention rate over time. Look for periods with lower retention rates.
What’s a good retention rate?
The holy grail of retention rates would be 100%, but this is not practical. It is near-impossible to maintain every single one of your clients.
Asking what a good retention rate is will vary by industry. The following gives a quick outline of some of the biggest industries:
Based on these categories, those in marketing would want to aim for the professional services or media rates, which are both 84%. This should be your goal. The figures in the above image come from ProfitWell’s research, and they would classify marketing as “professional services.”
This lines up with the general advice of aiming for 85%. This rate is attainable yet still allows for scalability.
What causes bad retention rates?
After you find the times when your retention rate was low, it is time to figure out why it was low then. Some of the most common explanations include:
- New managers
- More cancellations
- Fewer new clients
- Poor customer service
- Ignoring the needs of clients
- Not appreciating clients
How to improve customer retention (with examples)
Some of the steps you can take to fix your customer retention directly counter the above challenges. For example, if you are not getting enough new clients, you could expand your marketing focused on attracting more clients, such as improving your lead-capturing methods via Webchat. Consider incorporating the following methods to start retaining your customers.
1. Provide great customer service
One of the most important steps to increase your customer retention is to ensure that you provide high-quality customer service. Excellent customer service should span your entire relationship with your clients. They should feel like your team listens to customer concerns and needs during the initial consultation and throughout your marketing campaigns.
Communication is critical
Customer service should also extend to being easily accessible to your clients. Keep the lines of communication open, so they can reach you with any concerns or questions. If they have any issues, address them quickly.
Further the communication with semi-regular meetings. These should help you keep your clients updated and will also allow you to gain insights. Through even seemingly-casual conversations, you can learn more about the pain points and goals of clients.
Remember that the best customer service will be proactive. Think about what your clients will need and then provide this. An example would be looking for the common questions that your clients typically have and creating a document with all of them.
2. Create a great company culture
You may not realize it, but your company culture can affect your client retention. With a great company culture, your managers will show passion for their work. This will translate to more excitement for the clients.
Additionally, clients will see the enthusiasm of their contacts and assume that this enthusiasm reflects better work quality and more dedication.
3. Getting feedback from clients
Think of getting feedback from clients as going straight to the source to see what you can do to retain clients. Look for the changes that clients want and see if you can implement them. Look for aspects of your service that clients love and keep those.
You have several methods of getting feedback from clients. A traditional option is to send out client surveys. You can also get feedback based on comments on social media. A simpler option is to use special software like the Feedback tool from Podium. This tool delivers similar results as a survey but in a more comfortable way for your clients and does not necessarily feel like a survey.
4. Make sure you understand your client
Taking the time to understand your clients and their goals is part of customer service. That said, it is important enough for marketing agencies that it should be discussed separately. Right from the start, you want to make sure you know what your clients want from your marketing campaigns. Work together to create measurable goals or KPIs.
When you help your clients achieve those goals, they will be satisfied with your service. This makes them more likely to continue using your services in the future.
Working with your clients to understand their goals can also give you an idea of your expected customer lifetime value. It allows you to make more accurate future projections. For the clients, setting these goals will let them see what they can expect, enabling them to create similar plans or projections.
For even better results, take this to the next level. In addition to understanding your client’s goals, understand them as people. Take the time to create more of a personal connection, such as learning about their families. This will help them look forward to your interactions, encouraging them to continue working with you.
5. Innovate when necessary
Every company needs to constantly innovate to remain competitive, and this is particularly true for marketing agencies. Digital marketing solutions, in particular, are continuously evolving as more methods for marketing appear and different social media platforms become more popular.
For marketing agencies, this means adapting to offer advertising campaigns for the latest social networks or incorporating the latest trends.
6. Choose clients carefully
If your primary goal is to boost your retention rate and gain long-term clients, you may want to be selective about who you work with. It can seem counterintuitive at first, as this involves turning down potential clients.
However, it will likely lead to better results in the long run, in addition to a boost to your retention rate. Simply put, if you think a client is not likely to stay with your agency, consider passing on working with them. Or, if you think they are high-risk, do the same.
You can even identify traits common among short-term clients and try to avoid clients with those traits. For example, if you notice month-to-month clients have a higher churn rate than those with longer contracts, consider eliminating month-to-month contracts.
Conclusion – why client retention is relevant to your business
Having a strong focus on client retention can help your company achieve a better ROI. Retaining clients reduces your need to attract new clients to your agency. To maximize your customer retention, you need to recognize warning signs that you need to improve and be familiar with strategies to improve.
If you want to work with a company that can assist you with sales and promotion, consider Podium and the Podium Partner Program.