Tackling your company’s scariest monster: churn

Sales | February 7, 2019 | 6 min read
We can’t stop talking about churn. Why? Because churn is the agency-killer: it single-handedly takes the cake for the scariest monster your company is currently running from.

Just to make sure we are all on the same page, let’s define churn. Churn is when a paying customer stops being a paying customer. Your rate of churn is the percentage of paying customers that you lose within a certain period of time.

Aside from the fact that losses hurt twice as much as gains make us feel good (good ol’ loss aversion), losing customers means losing recurring revenue and all of the time and resources spent on building that customer relationship.

Churn is the ultimate monster hiding in the shadows, but we’re about to help you gather the mob and chase it out of town. Grab your pitchforks, and let’s get to it.

The Churn Study

Leading the way on our monster hunt is Stephanie Goertzen, a business intelligence data analyst here at Vendasta. She has conducted an in-depth analysis on churn trends using data from 200,000 of our partners customers.

To help break the findings down, we are focusing on two main themes. These themes have proven to be factors in both increasing customer satisfaction and reducing churn.

  1. Be the trusted local expert
  2. Proof of performance is key

Be the Trusted Local Expert

Focus

Small businesses have a lot on their plate. As a digital marketing agency, you know that you can swoop in and help them to grow. But to get the SMB to accept your help (and to pay you for it), you have to convey expertise and earn trust.

One of the best ways to build that trust is to become the industry’s trusted expert. Our churn study data has shown that agencies that focus on clients from a single industry retain 34% more customers than those who take on clients across industries.

Now, that’s not to say that you should drop your existing clients and laser-focus into a single vertical, but it should be a consideration if you find your agency struggling to keep customers. This is also an important consideration for up-and-coming agencies: will you be able to provide your clients with the same level of service across different industries? It may be more beneficial to leverage your expertise in a certain industry and zero in on it until you are the first to come to mind within that industry.

It makes sense. To be exceptional at something, you have to put a lot of time, energy, and focus into that one thing. It’s pretty rare for an Olympian to participate in two different sports or a famous musician to play two different genres (imagine 50 Cent singing country or Taylor Swift in a heavy metal band). Your agency might be churning clients because you are over-extending yourself by servicing too many industries.

Stuck Like Glue

Though our data suggests that your agency will be better off servicing one industry, it does not say you will be better off only offering one product.

If you’re thinking ‘my customers don’t need a bunch of products, they just need a foundational set’. Well, they do. Needs change, and technology changes, and it’s up to you to package some of those and provide the solution, not just the product.

Jackie Cook

CSO, Vendasta

We all have our strengths, and we tend to be drawn to doing familiar things more often because they are easier and probably more enjoyable. It also seems counterintuitive to offer something that you aren’t confident in being able to deliver.

Let’s revisit the metaphor I used earlier: think about it like a playbook or a setlist. If an Olympic gymnast is able to excel on the vault but not on bars, they won’t be in the running for an overall gold medal. If Taylor Swift performed a concert and played the same song over and over again, her concerts likely wouldn’t sell out.

Likewise, we found that companies who sell two products to their customers increase their retention rate by 20%. I’ll break that down further, you’re getting more revenue from each customer and keeping them longer. Nice.

Hang on, because these numbers are about to get even better. Companies who sell three or more products to their customers have an 80% increased retention rate.

If your agency is only selling one product, you’re missing out on potential revenue and what we like to call “stickiness”. The more products you sell to your customers, the more dependent they are on you. You’re increasing the customer’s switching costs, because they know finding replacements for three products is way more effort than finding a replacement for one.

Proof of Performance is Key

We recently talked about how to provide digital marketing reports to prove your agency’s ROI. Digital marketing reporting shows the customer how you are delivering results. After all, small businesses often don’t have large budgets. They have to prioritize their spending on sure-fire, result-driven business needs. The small business you are serving will churn if they do not see their investment paying off.

Our findings back this up: we found that with regular and thorough reports, client retention increases by 38%. Companies thrive on feedback, and this increased retention proves it.

Google Business Profile Insight reports are additional reporting tools that can boost your customer relationships. The more proof of performance you have, the better off you will be. Results from the churn study conclude that businesses who are provided an Executive Report and a Google Business Profile Insight report have a 47% reduction in churn. With that in mind, your company should encourage Google Business Profile authorization.

Takeaways

Stephanie’s revealing study provides great insight to help your company scare away the churn monster. Here are a few key tactics to remember:

  1. Gain the trust of your customers by mastering your industry and becoming the trusted local expert.
  2. Get your customers to depend on you for more than one product. You’ll become much harder to leave and replace the more the customer needs you.
  3. Make sure to show the customer proof of the great work you are doing for them. The success of your work is directly related to your customer’s success. Concise, timely, logical, and actionable reporting will lead to a noticeable reduction in churn for your agency.

Don’t forget to check out the full study and video for more information about how your company can reduce customer churn.

Turn your digital agency into a scalable power house with Vendasta

About the Author

A busy bee that you can find spending time at the gym, reading, hanging out with her black lab Joey, or visiting the newest restaurants in town. Alyssa is a former marketing intern and onboarding success specialist with Vendasta.

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