Many agencies find themselves in a pretty fragile spot compared to product companies. Losing just one major client can hit their bottom line and long-term growth hard. For some agencies, this fear of client churn is a constant worry—especially since it’s not unusual for clients to look elsewhere. In fact, SetUp’s Marketing Relationship Survey revealed that nearly 40% of brands are likely to switch agencies within the first six months of working together, as reported by Ad Age.
The reasons for this churn can range from poor communication to mismatched expectations, but the result is always the same: a steep cost.
Did you know that acquiring a new client can cost five times more than retaining an existing one?
Decreasing client satisfaction, as reflected in a drop in Net Promoter Score (NPS) or Customer Satisfaction (CSAT), is often the first sign that a client relationship is in trouble.
But there are other signs to watch for as well.
This blog post will discuss the warning signs for agencies to look out for when an SMB client is about to churn. Recognizing these signs early can be a game changer in preventing client losses and ensuring steady growth. But first, let’s review some of the basics.
The churn rate represents the percentage of clients who discontinue their relationship with your agency over a specific period. Here’s how to calculate it and what to aim for regarding healthy churn and retention rates:
Churn Rate = (Number of Clients Lost during a Period/Total Number of Clients at the Start of the Period) ×100
For example, if you start the month with 100 clients and lose 5 by the end of the month, your churn rate for that month would be:
Churn Rate = (5/100) × 100 = 5%
According to
Vendasta 2023 Agency Insights Report, most agencies experience a churn rate between 2% and 8%. However, it’s essential to contextualize these numbers based on your agency’s specific circumstances and client base.
Interestingly, 15% of respondents in the Vendasta survey didn’t know their agency’s churn rate, highlighting the importance of tracking this critical metric, which brings me to the next section.
Predicting churn is crucial for everyone, not just agencies. However, for marketing agencies, losing even a few clients can significantly impact the bottom line. The ability to foresee potential losses and identify when a client might jump ship can literally mean the difference between your agency's growth and its survival.
Moreover, understanding churn risk can shape your overall strategy. By identifying which clients are more likely to leave, you can prioritize your efforts toward nurturing those relationships. Being proactive enables you to address their needs and concerns before they become deal-breakers.
Okay, now that you know why how to calculate churn rate and why to consider churn in the first place, let's tackle the bigger question: why are clients heading for the exit? It’s not just bad luck—there are usually reasons behind it. Up next, we’re diving into why clients leave agencies.
Clients don’t just up and leave your agency for no reason—it’s usually a buildup of little (or big) things that go unchecked. Understanding why clients bail can help you nip potential churn in the bud. Here are some common reasons they might be heading for the exit.
When clients sign on with your agency, they have certain expectations for results, timelines, and communication. If those expectations aren’t clearly set—or worse, if they aren’t met—clients can quickly become disillusioned. It’s not just about delivering great work; it’s about ensuring that what you deliver matches what the client thought they were getting.
Poor communication is one of the most common reasons clients leave. If they feel like they’re being left in the dark or have to constantly chase down updates, frustration builds. Clear, regular, and transparent communication goes a long way in reassuring clients and making them feel valued.
Related: Client communication: tips, tools, and best practices for agency owners
Clients invest in agencies to see results. If your work isn’t producing a measurable impact—whether that’s increased sales, better leads, or improved visibility—they’ll start questioning the value you bring. Clients need proof that their investment is paying off, and if you can’t deliver that, they’ll start looking elsewhere.
Sometimes, it’s not you—it’s them. As clients grow and scale, their needs change. An agency that once fits perfectly might not be equipped to handle more complex strategies or larger budgets. This can be a tricky situation, but spotting when a client’s needs are racing ahead of what you can provide gives you a chance to either adapt or part ways with a friendly wave.
The first few weeks of a client relationship are crucial. A clunky or confusing onboarding process can set the wrong tone from the start, making clients feel unsure or unsupported. Without a strong onboarding experience, even small hiccups can lead to bigger frustrations down the road.
Related: Everything you need to remember when onboarding your next client
Clients want to feel like a priority. If they sense your attention is focused elsewhere—whether it’s on bigger clients or other projects—they may start to feel neglected. Agencies that don’t maintain regular touchpoints or personalized attention can quickly lose a client’s trust.
Sometimes, clients churn because of financial strain or because they don’t believe the value they’re receiving matches the price they’re paying. If a client feels they’re overpaying for the level of service they’re getting, they’ll either renegotiate or leave.
Understanding why clients leave is just the first step; recognizing the warning signs can be your secret weapon in preventing churn. So, without further ado, let’s dive into the main issue at hand.
If you’re spotting one of these signs, you’re not just being paranoid—these warning signs might be signaling trouble ahead.
If a client starts involving third parties in discussions about your work and grants them access, it may indicate they are exploring alternatives and allowing the third party to assess the account.
What to do about it: Address any concerns directly by reaching out to the client. Schedule a call to clarify roles and expectations, reaffirming your commitment to their success. It’s a good idea to make sure you are regularly updating clients on project progress and seeking their feedback, showing you value their input and keeing them engaged in the process.
A sudden decrease in communication or engagement, also known as going radio silent, can signal a client's dissatisfaction.
What to do about it:
Initiate proactive communication by reaching out to check in on their experience. Ask open-ended questions to uncover any concerns they may have. Regularly scheduled check-ins can also help re-establish connection and demonstrate your commitment to their needs.
An uptick in support requests or consistent complaints can indicate underlying issues with your service or deliverables.
What to do about it: Analyze the types of tickets or complaints being filed to identify common themes. Implement a feedback loop that allows clients to voice concerns directly, and address these issues promptly to prevent escalation. Consider offering additional resources or training to help clients navigate challenges.
If a client starts missing payments or requesting extensions, it may be a sign of financial trouble or dissatisfaction.
What to do about it: Reach out to discuss their financial situation openly and empathetically. Offer flexible payment options or a temporary reduction in services if necessary. Reinforcing the value of your services during this conversation can help reassure them of your partnership.
When clients start negotiating for better pricing or discounts, it could mean they’re questioning the value they receive from your agency.
What to do about it: Reaffirm the value of your offerings by highlighting success stories or case studies relevant to their goals. Consider offering a loyalty discount or enhanced service package that aligns with their needs to strengthen their perception of value.
If you notice a decrease in a client’s budget or spending, it may suggest they are scaling back or losing confidence in your agency.
What to do about it: Engage in a candid conversation about their budget constraints and strategic priorities. Propose tailored solutions that align with their reduced budget while still delivering value. This approach can help you retain their business even during lean times.
A shift from long-term goals to short-term objectives can indicate a client is losing faith in your agency’s strategic direction.
What to do about it: Schedule a strategic review to discuss their long-term goals and how your agency can help them achieve these. Emphasize the benefits of a long-term partnership and showcase how your ongoing strategies can deliver sustained results.
If a key decision-maker, advocate, or champion within the client’s organization leaves, it can jeopardize the relationship.
What to do about it: Actively cultivate relationships with other stakeholders within the organization to mitigate risk. Reach out to the new decision-maker to introduce yourself and offer insights into the partnership. This approach can help build connections and establish your agency as a trusted resource.
If your client starts asking about competitors or mentions other agencies, it’s a clear sign they are exploring options.
What to do about it: Engage them in a conversation about their needs and concerns to uncover any dissatisfaction. Highlight your unique value proposition and explore ways to enhance their experience. Propose a meeting to discuss how you can better align with their goals moving forward.
Difficulties during the onboarding process can set a negative tone for the entire relationship.
What to do about it: Assess the onboarding process and identify pain points. Offer additional support or resources, such as training sessions or personalized guidance, to help clients navigate the transition smoothly. Regularly check in during this phase to ensure they feel supported and confident in your services.
Clients who express dissatisfaction or leave negative feedback are sending clear signals that something is amiss.
What to do about it: Address these concerns directly and promptly. Encourage open communication by inviting them to discuss their feedback in detail. Implement actionable changes based on their input and follow-up to show that their concerns are being taken seriously. On a regular basis, try to provide ongoing value: Continually demonstrate your value through insights, reports, and recommendations that showcase the impact of your work. Regularly share industry trends and relevant updates to help clients see the benefits of your partnership.
Keeping an eye on client churn is super important for any agency. Those at-risk clients? They’re not just trouble—they're opportunities to connect and turn things around. When you reach out, you can find out what’s really going on and show them you care.
Don’t forget to train your team to spot the signs of churn early. A well-prepared team can make all the difference in keeping clients happy and loyal.
