I first heard this statistic while attending a AAAA‘s New Business Workshop in Chicago this year. The room was full of mainly new business types, who were encouraged by the statistic, and confident that they could attract some of that 30% to their agency. While it was good news in this environment, as a seasoned agency CEO I could not help but also feel a little panicked.
That means on average 30% of my existing clients are currently open to other agency approaches!
I did not know if I wanted to stay and hear more or leave immediately and start focusing my attention on my existing clients.
Unfortunately, most agency leaders believe that new business is the silver bullet to success and the cure to all evils. If you focus on winning new business you will ultimately succeed. In reality, that could not be further from the truth. We all tell our clients that CRM is important, and that it is far easier to get additional business from your existing clients than new clients. Yet once we have a client on board, we too often quickly take them for granted and become order takers.
Proactivity against the account soon diminishes. The top minds in the agency disappear over time as they get assigned to new business pitches and settling in newly won clients. The relationship becomes stagnant and within a fairly short period of time the relationship becomes stale.
It’s no wonder that the average agency-client relationship is 2 years.
Trying to reduce your churn in existing client business is just as important, if not more so than new business development. The agency can have a stellar new business year, only to find itself treading water, as the hard fought new revenue only goes to replace the business that has walked out the door. When you add the cost of getting that business in to the equation (new business strain) the agencies bottom line probably took a hit. Even worse is that in most instances you are most likely funding your new business efforts off the back of your key client accounts. Lose one of them and you have your worst nightmare.
Proactively minimizing existing client churn is one of 5 key pillars upon which to grow a profitable agency. To do this successfully you need to:
- Develop a key account plan for your top 3-5 clients every year.
- Train your account service staff to be both farmers and hunters.
- Ideally hold agency-client business reviews twice a year or yearly at minimum. Each time make sure you tell them something new about your capabilities.
- Have a plan to deliver pro-active thinking against their business at regular intervals.
- Allow the agency team the time and resources every year to make sure that they are keeping up to date with the industry and competitive environment.
- Align your key success measures with those of the client. If possible, link at least part of your compensation to their compensation/success.
- Make sure that your contribution value is recognized at as many levels and departments as possible.
- Invest against areas that are perceived as valuable by the client versus your internal perspective.
If you can minimize churn you can then focus on organic growth. The next critical pillar on which to grow a profitable and successful agency.