Client retention is a huge factor for agency success.

Agencies that can acquire a lot of clients quickly look great on the outside, but they crash and burn hard when jaded clients start dropping nasty reviews about how they’re all talk and no walk.

There are different numbers floating around out there agency retention. I’ve seen reports that the average agency churn rate was anywhere from 25-50% annually. 

According to The State of Agency Operations report, put out by in 2023, 69% of agencies lost clients in the first half of this year (2023), with 21% losing 30% or more of their clients in that time.

However you look at it, losing 25%+ of your clients every year wrecks profits. Gain 4 clients, lose 1-2. Gain 2 clients a month, lose 6-12 clients in the time it took you to gain the first 24.

If they’re all paying you $1,000/mo and you have a 25% churn rate (or 75% annual retention rate), you’re basically only getting $750/mo.

Add to that the fact I heard from another agency consultant, that most of the agencies he works with operate on 10% margins (I generally see 35-55%), and you REALLY can’t afford to lose those clients.

This kind of churn makes it so that you have to work harder on acquisition to continue paying your employees and other expenses. I’ve had agencies call me when they lost a big client that was a sizable chunk of their revenue. They scrambled to acquire more clients and were desperate to avoid losing team members. That’s a rough spot to be in for any agency nearing the line between 6 and 7 figures.

So to spare your profitability and your team, here are 3 practical ways to increase your client retention: 

1. Focus On Employee Retention

Employee retention actually affects client retention.

I talked about this in the first issue, so I won’t go into all the details again, but suffice it to say that business is all about mutually beneficial relationships and whether the relationships is client-facing or behind the scenes, changing the employees involved on a client account even a few times in a year can be enough to cause the client to get fed up and leave.

This is definitely more pronounced with client-facing roles, which tend to be harder to retain. They’re generally paid less and asked to wear more hats. They’re told to be a strategist, data analyst, admin, sales rep, conflict resolution specialist, communication specialist, and often even a therapist. 

They’re often given 30+ clients to manage and then blamed when they drop a ball. To make matters worse, we hire people who are wired well for all of this, making the perfect account manager, but expect them to do things in an organized, process-centered way. If you read my issue about how behavioral assessments help, you’ll get the disconnect there.

Communicate well with your client-facing team and try to get a feel for their bandwidth, the type of work they like and dislike, and where they see their strengths and weaknesses. Remove or reassign non-essential tasks to an admin and do your best to avoid bogging any one account manager with too many clients (or too many difficult clients).

If you can keep the client-facing team members happy, it will go a long way to providing consistently great relationships with your clients, which affects the client experience tremendously. 

2. Design Your Processes Around Client Experience

Speaking of client experience…

A lot of processes are designed to make sure a task is completed in a certain way and without missing steps. This is great for delivering performance, which is the whole reason the client is paying you.

However, designing your processes in this way can lead to lapses in communication. I’ve seen many a client agency-hopping because they “didn’t feel valued”. They generally have decent performance, but complain that their point of contact never knew what was going on with the account and that they were always talking to different people, or that they had to drag information out of them.

On the other side of things, I’ve worked in agencies where I had to email, Slack, text, and call to get a response from a boss or co-worker who had vital information that I couldn’t find anywhere. Sometimes you jump through those hoops and they don’t know.

Great communication should be designed and planned for. It starts with collecting all relevant information from the client as early as possible (think intake form and kickoff call), then requires documentation.

That’s right, communication can involve writing something down and putting it somewhere everyone can find it. That’s a huge win for internal communication. As you get updates from clients (hopefully budget increases), it should be part of your process to update the client document so everyone knows the changes or new status.

With the client-side communication, you’ll want to make sure any setup phases have a steady flow of updates built into the process. You should have regular performance reports that are appropriate for the flow of data (with PPC, this is generally spend-based) and you should also schedule annual or even quarterly planning meetings with clients based on their company maturity and retainer. It would also be prudent to ask about holidays and promos during intake so you can schedule tasks to ask about promotions 2-4 weeks in advance.

Many agencies have a certain tier of service that includes a dedicated Slack channel for the client, which I highly encourage. Let them know that they should only expect responses during work hours to protect your boundaries, but this lets them feel like they can reach out any time and get a quicker answer than via email. It keeps communication clean and all in one place. 

If you have the ability, you should make sure you’re talking to clients on a call at least once per month. Emails and dashboard reports are great, but actually talking to someone is essential for building a relationship, which is essential for retaining clients long-term. 

3. Be More Selective With Your Clients

Lastly, you’ll be able to get better performance for your clients, have better relationships with them, and retain them longer, if you’re more selective with who you’re willing to work with.

I wrote about this at length in the 5th issue of my newsletter. You can give it a read for more details, but the benefits of being more selective are extensive. 

You’re more likely to get good results for your clients if you work with clients that “check all your boxes”. Maybe you’re looking for the right business model. Maybe an industry you know inside and out. Maybe you have a pre-built funnel and ad model that works every time. Maybe you’ve crushed it for e-commerce stores enough times that you know which stores will succeed and which will struggle. 

Getting good performance for them is a big win after you close them, but it also gets easier to sell to clients you understand well. When you can explain the problem to them in detail and confidently claim competence in solving it, sales becomes a cakewalk. Show the prospects (or even cold traffic) case studies of similar businesses and you’re generating demand at much greater rates.  

Then, in addition to closing them and getting great results for them, you’ll also know how to communicate with them more effectively. You’ll have strategies and tactics to recommend for different situations. You’ll know when they would be upset with performance and when to ask for more budget. You can also generally spot when they’ll be difficult or have other red flags.

More success with more clients and better retention lead to better lead flow, higher close rates, increased profitability, and attracting better employees. 

There you have it. 3 ways to increase client retention.

You’ll notice I didn’t mention getting better client results as a main point. 

That’s the obvious thing, but I’m not going to promise you practical tips for improving retention and then tell you to “just get good”. 

As mentioned in point 3, though, sometimes better performance comes from choosing to work with the right type of clients. 

There are a billion ways to market any business, but some ways are more effective than others and most agencies specialize in marketing channels rather than marketing for a specific type of business.  

If you really want to retain clients, building strong relationships with them via your client-facing employees, keeping a healthy and accessible line of communication, and working with clients that you know you can market well, are some of the best ways to ensure that they’ll stick around longer.