By Jeff Tomlin

Churn is a killer. It can be a painful part of doing business, financially and emotionally. It can stop growth in its tracks. Worse yet, it’s a common problem that organizations are not effectively solving.

Small and mid-sized businesses (SMBs) provide opportunities for marketing agencies and software companies. SMBs are moving parts of their business online according to the study The Full-Stack, Tech-First Future of the SMB Market commissioned by Vendasta. They are also consolidating vendors.

The growing complexity of marketing stacks and sheer number of suppliers today are big reasons why SMB customers are churning. But it also represents a big opportunity for agencies and vendors to bring new clients on board and more importantly, keep the ones they have.

The “churn formula” pursuit

Vendasta produces software that serves SMB needs. I’m the chief marketing officer (CMO) and have a vested interest in ensuring our partners (Vendasta customers) see results. It’s what led our company to commission The Full-Stack and conduct an internal study called Why Your Clients Churn. The latter sorts out the core of why customers cut ties with their marketing or ad agencies in order to better understand how they may retain the next customers.

We used the wealth of SMB data stored within the software platform to produce the paper. It assesses businesses’ product adoption as well as agency engagement to better understand what others might be able to do to improve—and extend—client/agency relationships.

The research uncovered valuable insights into product adoption by—and critical touch points with—SMBs. For example, companies that work with SMBs can increase retention by identifying needs and providing solutions to those needs, solving problems with more dependencies, producing rock-solid onboarding processes and partaking in frequent engagement. Also, being attentive to clients’ needs and engaging early can lead to long-lasting relationships. It’s the difference between fast sales and forward success.

Be problem solvers

Let’s look a little deeper into the findings. Needs-based selling doesn’t end with the initial conversations. It’s about identifying clients’ problems and solving the most acute issues first. Agencies that concentrate on identifying specific needs for prospective clients and then tailor plans to meet those needs increase client retention by 30%.

Further, higher product adoption leads to greater retention. The study found that selling an SMB:

  • Only one product results in a 30% retention after two years;
  • An additional product increases retention to nearly 50%; and
  • Four solutions grows retention to 80%.

It’s important, then, that agencies focus on solving for their clients’ biggest problems and finding new opportunities as a relationship grow.

In any relationship needs may change and it’s important to keep an ear to them. We noticed that agencies that touched base often had the best success of keeping customers. Moreover, there is a specific time frame after purchasing a solution when upselling works best, which is at the end of the first three months of a customer relationship.

Setting time aside to re-evaluate the results and respond to new acute client needs will result in higher product engagement and more sales. The needs-based approach is not a start gate conversation. Instead it is a benchmark that should be revisited frequently.

Engage often

Selling is just the start. Vendasta recently surveyed agencies and learned that selling solutions isn’t the key problem. Instead, it is retaining clients. Automated needs assessment reports and strategic sales plans that focus on prospects’ needs will get people in the doors, but engagements will give them seats at the dinner tables.

Once an agency makes the sale it’s important to get the client onboarded and engaging with their new plan early. The study found that doing so can result in a 20% spike in client/customer retention and clients that engage weekly have a 26% higher retention rate than those who do not.

Adopt the cloud, defeat churn

As Baby Boomers move toward retirement and more tech-adoptive owners grab the reins of local shops, SMB-focused software solutions will become even more prevalent than they already are. Agencies will have ample opportunity to grab hold of new business, but they must be prepared to provide more solutions in order to become single-source providers.

With cloud-based service demand on the rise many vendors offer advanced integration options. Cloud delivery is a must particularly for SMBs because it is scalable, entails less IT costs and is pay-as-you-go. There is a wealth of vendor-partnership opportunities to provide everything under one roof without building it all in-house.

Identifying acute needs, providing solutions, bringing clients up to speed as soon as possible, providing consistent touchpoints and upselling at the three-month mark is a recipe for success in ending churn.

Jeff Tomlin is a cofounder and CMO of Vendasta, a white-label software platform built to help B2B marketing agencies and other companies provide solutions to local businesses. To download the full churn study, visit www.vendasta.com/content-library/guides/client-churn-study.

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