Improving Client Retention: Key Benchmarks and KPIs for Client Satisfaction

This is the 7 Figure Agency Podcast. Discover the strategies and techniques to grow a highly successful and profitable digital marketing agency with your host, Joshua Nelson. What's up, digital marketing agencies? On today's video, I wanna talk a little bit about client churn and client retention and really the key metrics, the key benchmarks you wanna be tracking to improve your retention. If you're struggling with keeping clients on board, you're frustrated with the clients pausing and canceling their services, you're gonna wanna watch this video. Well, hello, my name is Joshua Nelson. I'm the founder of Seven Figure Agency and the author of The Client Retention Handbook, and on today's training, I want to talk a little bit about the key benchmarks and the key KPIs you want to be tracking to improve your client retention and to reduce your client churn. Uh, there's one thing I know for sure, it's that what you measure gets done. What you track always improves. And I find a lot of agencies, they're not really sure what they should be measuring and tracking when it comes to their client retention and their client retention strategies. And so, some key benchmarks that I think are really important. Obviously you have to track your retention. If you're not doing this, put tracking retention here in the comments and I will send you to a video that walks you through a formula that will help you very easily track your churn and your retention on a monthly basis. Right, if you're not tracking that, that's the minimum thing you need to do. Now, most of you watching this, you're like, yeah, I track my retention. I know what my retention numbers are. But what's good? What should I be shooting for? Are we doing well, or is there a massive problem within our agency? And so what I like to say is, having worked now with hundreds of digital marketing agencies that have gone to 7 figures and multiple 7 figures, um, 100% churn at scale, or 100% retention at scale, doesn't exist, right? No matter how good you are, no matter how dialed in your positioning, no matter how fantastic the client service you create, there's going to be some level of churn once you get to a certain level in your agency. There's a lot of competition in this space, so, you know, the greener grass is always a thing. You know, there's also businesses change, right? The owner changes, they sell their business, they go a different direction. So what I like to say is ideally, if you can shoot for 97% monthly retention, within your digital marketing agency, and you can hit that consistently, you're doing really well. You're in the top 1% of digital marketing agencies in this space. So what that means is you're losing no more than 3% of your client base in a given month, right? So if you've got 100 clients, then at 3%, you'd probably lose like 3 clients in a given month, right? And so that's a good benchmark to shoot for. That means you're winning, you're doing a lot of really good things. Now, even 95% is solid. Like, I mean, you're like, to retain at 95%, you have to have a good operation in place. You have to be doing good work, you have to have set clear expectations, you have to have probably a good communication process in place. So I think there's room for improvement if you're turning 5% or more, up to 97%, right? And that's what you wanna optimize for, like kind of your sweet spot as an agency between 95 and 97%. What I find a lot of agencies wanna do is like, let's say they get to 97 or 98%, and they just wanna stop everything they're doing and vex on what could we do better? How could we generate better results for these clients? How can we improve? They take their eye off the ball in terms of growth, and they just start chasing their tail trying to get that 1 or 2% improvement in retention. And I just wanna kinda set your mind at ease that between 95 and 97%, you're doing really, really well, and there's probably not that much to worry about. So like a 5% churn is kinda that mark where you're like, oh, you know, we're losing more than 5%, that's a red flag. That's where we need to start to pay attention That's where we need to start to look at our expectations. Maybe we need to look at our onboarding. Maybe we need to look at the deliverable that we have for our client base to improve that process. Now, I will tell you, less than 95% is a red flag. It should, it should trigger you that there's room for improvement in this aspect within your agency. And less than 90% is a major issue. Less than 90% means you're losing more than 10% of your client base any given month. If you're tracking your churn, and you got 100 clients and you're losing 10 clients every single month, that's a big issue. And it's, it's, could be something going wrong with the sales process, right? Could, you know, just be that you're selling a dream, you're selling a guaranteed service, guaranteed outcomes that you necessarily can't deliver. Could be that you're not onboarding correctly, you're not communicating effectively with the client base. Could be that your service offering just isn't built correctly. Like maybe your service offering isn't really built to get wins, it's just an activity-based thing. But I'll tell you, you cannot grow in scale and have, you know, peace of mind losing more than 10% in your agency every month. So hopefully this is helpful. 95% or higher, kudos, you're doing a good job. 97% or higher, slam dunk, high fives all around. Your team should feel really good about what you're doing. And how you're retaining your client base. Less than 95%, there's room for improvement. Less than 90%, stop what you're doing. Stop selling, go re-engineer the offering, go re-engineer the process, and get things dialed in. Let me know in the comments, if you're watching this, you feel so bold, like let me know, what is your retention rate today? If you're tracking it, like where are you right now? And I know, you know, there was times in our agency where we were retaining 99%. And it was like, hey, at that moment in time, at that little encapsulated moment, things were going really, really well. We've also had times where we dipped below 94% any given month, and it was really concerning. It was like, what is it that we're doing wrong? And what's great is that there's corrections you can make along the way to improve the client experience, to improve the retention rate. And again, if you can just get a 5% increase in your retention, it could have a 90% increase or 95% increase in your profitability within your organization. So things to think about in order to move these numbers, in order to move these metrics, it could be your monthly communication process. For us, when we dropped below 95%, what we realized was we didn't have a great communication rhythm. We were just working on the clients, we were focused on making it rain, We were doing our work and only reacting to the client. We were waiting for the client to reach out and say, "Hey, I got an issue." "Hey, I need to jump on a call." And once we recognized that, we said, "Hey, we need to actually proactively set meetings. We need to have an intentional meeting agenda, and we need to track that that activity's happening every single month." And for some of us, hiding behind the technology or having some automatic reporting in place can be problematic, right? 'Cause we think we don't need to connect with that client. We don't need to spend the time. But this could be a big reason you might fall behind or fall below a 95% retention rate. So KPIs, right? Benchmarks is what we shoot for. KPIs are the key things we wanna track. What we found really moved the needle from a retention perspective was number one, what percentage of our clients did we meet with this month and have a meaningful conversation? Ideally, you'd meet with everybody, but what we found is, as we crossed 100, 150, 175 clients, certain clients are busy, right? They're Type A personalities, they got a lot of things going on, they don't wanna meet, right? And they don't wanna spend the time, but we also can't use that as an excuse to say, you know, they didn't wanna meet, so we're in the clear. Hopefully they're not gonna cancel, right? Because if you do that too long, eventually clients will cancel. So this is a great benchmark to track what percentage of your clients did you meet with? And we're usually shooting for 65% or higher, right, across our entire group of account managers. So what percentage of clients do we meet with? What percentage of clients have we touched at least 2 times? And while we can't control which ones we meet with, 'cause certain clients don't wanna meet, we can absolutely control the percentage that we touch. Right? That's an email, it's a text message, it's a voicemail, it's a recap video. What percentage of our clients that we touch at least 2 times should always be 100%, right? The number 1 reason a client will leave is perceived indifference. They feel like you and your agency don't care and you've just kind of put them on autopilot. You did your thing, you're letting the automatic reports run, and you're not paying attention. And when you're not paying attention and they don't feel like you care, they got lots of options, right? And they're going to hop to somebody else. And so making sure you touch all your clients at least twice a month, that's a KPI you absolutely want to manage towards. Um, and then percentage of clients that we sent some type of video recap to— for us, that's 100% every single month, has to be. So we try and touch them 2 times, they've seen communication from us, manual communication, not automation, but legitimate our account manager reaching out. And then if they didn't meet, we can still pull up the reports, we can still pull up the activity, we can still kind of give some homework and record a quick video that says, hey, Mr. Client, sorry you're busy this month. I just want to show you, here's kind of the results for the month. Here's what we're seeing, average cost per lead. Here's our projected ROI. Here's what we've done. Here's what we're working on. Here's the game plan for the next 90 days. Here's what we need from you. If you have any questions, let me know. Would love to hop on and kind of walk through this with you. Every one of our clients, if they don't meet with us live, absolutely can and will have that done. And so, you know, those 3 KPIs, key performance indicators, if you measure towards them, they will start to move the benchmark, right? You'll actually start to get better retention over time, which leads to better profitability, which leads to more referral-based business. And then the other thing we like to track from a KPI perspective is the number of clients that are net promoters. And so there's this whole concept called the net promoter score, and it's basically one question: how likely would you be to refer us to a non-competitive, you know, person in the industry? And, you know, it's between 1 and 10. 10 is what we're shooting for. A 9 or a 10 means they're a promoter. They like you, they would refer you, and they're happy with you. If they're less than 9, they're kind of indifferent. They're kind of like, you know, I don't know, you guys are doing okay, but there's certain things that I'm not happy about, what I would not want to Refer. And so ideally, you know, you're gonna be shooting for at least 75 to 80% of your client base are net promoters. They love you, they're happy to refer you, they're happy to say good things about you. That is much easier said than done, and there's a whole ball of wax around how do you ask for this, how do you track this, how do you manage towards it. But the top 3 here: number of clients we met with, number of clients we touched twice, and the number of clients that we sent the monthly recap. I promise if you just start to track that, your retention will start to improve and you'll start to get closer and closer towards those benchmarks that we're after. The other thing that can really move the needle from a retention perspective is having some type of dashboard where you're tracking all of your clients and you can see where they sit— red, yellow, and green. Um, we do this on a Trello board. You could do this on HighLevel, you know, in a pipeline, you could do this, and ClickUp in a, like, a Kanban board. But really, all we're doing is taking all the clients. Let's say you get 10, 20, 100 clients. You put all of the clients onto the board, and you would filter them based on green, they're happy, they're getting good results, we're good to go, right? They're a net promoter, they're green. Yellow, something's not quite right. Maybe they haven't met with us, or they're not responding to us, or their results aren't great. Those yellow clients, how many do we have that are yellow? And then also super important, red. Red clients are the ones that are unhappy, the ones that are, are not getting good results, the ones that have asked for their usernames and passwords or something along those lines. We also want to be tracking red. And what I found is when we put a tracking mechanism in this place and we could see from a bird's eye view who's happy, who's unhappy, where are red clients, we could start to prioritize our effort You know, those red clients, what can we do? Can we stop what we're doing and generate a win for them? Can we show care to them? Can we engage with them in some way to move them from red back to yellow and ideally back to green, right? And a lot of times it's, it's just a matter of reaching out. It's a matter of, you know, showing some effort that can make all of the difference. And when a lion's share of your clients are sitting in the green column, that's a good place. That means there's better retention and there's better growth within the business. So hopefully this is helpful. This is kind of all part of the big picture client, client retention maximizing strategy. And it really does— it really is all around world-class onboarding and how you come out of the gates, effective communication, how you report back to and communicate with the client base, and success management, how you build up and train that account management team so that they can have those conversations, so that they can manage those KPIs, and so that they can keep the clients engaged, ideally without you having to do any of it. So if you'd like to get a checklist that kinda walks you through that client retention formula, I do have a great document that kinda walks you through it and will let you kinda checklist what you could do to dial in your client retention strategy. You can access that by going to 7figureagency.com/retention. Workbook. That's client— 7figureagency.com/retention-workbook. So hopefully you got great value from today's video. If you have follow-up questions, post them in the comments. If you feel so bold, type in what your retention is today, and if it's great, high five. If it's, you know, if it's not great, maybe posting it kind of gives you that gut punch that you need to say, hey, I got to go spend some time, I got to dial this in. So thanks so much for watching. If you got value, please subscribe to this channel. We post new videos every Monday at 10 AM, so be sure that you've got that on the calendar, that you hit the, the little bell icon so that you can get the alerts. And I look forward to talking with you again real soon.