Results matter in the advertising business. Reasons agencies lose clients vary from poor internal communication, account management issues, and improper expectations set at the beginning of the relationship.
But often there are other factors that cause an agency to fail that move past cash flow problems. Here’s some reasons agencies lose clients.
Bad Performance or Service
Adding to the reasons agencies lose clients. Is when the client becomes dissatisfied with the quality of the service is a major one but not always. It is possible to course correct and fix the problem keeping the client.
But if the client feels that it is not working out. They will cancel services and you could get the, “it’s not you, it’s me.” text message or email.
No account manager wants that but I’ve seen clients cancel via text message.
Unrealistic Demand by the Customer
When the clients demands on the agency exceed the amount of compensation received. This reduces the agency’s profit margin. A completely justifiable reason as every business needs to make money to survive. Clients are not concerned about this.
But as an agency, you should watch for those that want Cadillac service on a Ford Probe budget. In the end they will not work up to the budget you need to keep the account.
Unrealistic demands can create animosity and bitterness between the client and agency. This causes communication to break down. Resulting in the account managers risk sounding like they are lying and not that knowledgeable about the clients needs. If clients have unrealistic demands, it’s not you, it’s your client.
Change in the size of the Agency or it’s Clients
Reasons agencies lose clients is that clients sometimes outgrow the agency they started with. Or require a larger, more experienced agency to handle its business. Staff size matters for customers in an agency. Not how many are on staff. But how many of them are clearly defined in the roles. Do they have the skills for the service clients need? If your agency is developer heavy and doesn’t have many marketing managers. Then clients could feel that another agency would be a better fit for their needs.
If the agency grows, then the clients they have are too small a percentage of its business for attention. It’s not personal, but client budgets have to be large enough to justify the hours and resources for the agency to cover cost. Which ultimately keeps it in business.
Changes in the clients marketing strategy
The market changes constantly and requires constant evaluating and monitoring. Customers may not think that the current agency can carry out the new program. It’s possible that this happens due to the client not having a clear idea of their own product or service. Therefore with them having a lack of sales. Or feeling that they are declining on new customer acquisition is because new blood is needed.
Declining Sales and Poorly Managed Resources
Sales are only one part of the driving force that keeps any business alive. Quite often there is a over compensation of sales staff. Which causes fulfillment to fail if not supporting the work coming in. As well as too many workers in the office and not enough sales staff. Thus results in no one having work to do. Your staff is you back bone. Careful to not grind it out to the point there is not a drip of passion left. Passionless employees are just drones, and feel like they are under appreciated and not valued.
Therefore, do not focus more on client acquisition to simply cash a check for payroll. It’s a balance between maintaining a healthy environment. This is done with good clients and good management allowing employees freedom to create. And not feel the crushing weight of stress. Or secondary stress of the job due to poor resources not available to perform the work.
If you are an agency or business owner looking to improve your advertising contact me for a free consultation.