The Ultimate Guide to Great Customer Retention: What All Agencies Need To Know To Build Better Client Relationships, Reduce Customer Churn and Increase Profitability

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No matter how big or small you are, every agency faces a number of consistent challenges. One that keeps many agency owners awake at night is client retention. 

I know this is a significant problem because it’s something my coaching clients ask me about over and over again. And, much like value pricing and selling or choosing a well-defined niche, this is a subject you can gain mastery over by implementing the right strategies.

Of course, learning what these strategies are is easier said than done. While there is much written about client retention, finding actionable information on this topic is quite difficult – but I aim to change that with this blog.

Contrary to popular opinion, there’s a lot more to keeping customers happy for the long haul than bending over backwards to meet their every need, or forgetting how to set boundaries (that will put you on the fast track to unprofitable work, overservicing and burnout). 

These behaviours aren’t sustainable – you can’t build a business around them. You need to take a strategic approach to satisfying your clients today, tomorrow, six months and a year from now. 

That’s what we’re going to cover in this article – everything you need to know about the process of keeping clients happy with your agency (without overextending yourself) resulting in long-term relationships and revenue growth.

Specifically, we’re going to talk about: 

  • The prerequisites to great customer retention (without these, you have no foundation to build your systems on)
  • The four core competencies of client retention
  • A simple framework for identifying your client retention weak points
  • What we can learn about keeping customers happy from businesses that don’t
  • Why implementing client retention strategies is far more sustainable than just focusing on acquisition 
  • How to set realistic expectations from the outset (massively important to ensuring client satisfaction)
  • How and when to use overservicing to your advantage
  • An easy rule of thumb for figuring out if your churn rate is too high
  • Six quick tips for boosting customer loyalty and reducing churn that you can put into practice right away 
  • My personal favourite resources for simplifying the process of client retention

If you’re interested in getting a handle on this crucial topic, then read on for more info!

We’re going to cover a LOT of ground in this article so in the spirit of TL:DR, you can get instant access to a summary and top takeaways in a free One-Page Action Plan. Just click the image below. 

Prerequisites: The Unspoken Fundamentals of Great Client Retention

Let’s get down to business. First things first: what do we take for granted when we’re talking about customer retention?

Well, we assume that if you’re in a position where you’re confidently pitching your services to clients, then you’re capable of delivering on your promises to them i.e. you know what you’re doing on the technical side of things. 

Beyond this, the key skills you need to keep clients satisfied with your service are: 

  • Honest, frequent, timely communication
  • Being able to say no
  • Meeting deadlines
  • Consistently delivering a great experience (without overservicing)

That’s it. If you master these four core competencies, then you’ll be well poised to boost your retention rates, increase profitability, reduce churn, and build a more stress-free business experience for you and your employees. 

Let’s dig a little deeper into these four skills before moving on with the rest of the article. 

The 4 Core Competencies of Great Client Retention

client retention

Skill #1: Communication

Hands-down, the most fundamental skill you have to master to ensure great client retention is being able to communicate well. 

Sometimes, you’ll:

  • Miss deadlines 
  • Fail to meet the client’s expectations 
  • Recommend a change in direction
  • Need to ask for more money or request more information to proceed 

Addressing these issues in a timely manner (and via the appropriate channels) is key. You don’t want to bury your head in the sand and hope that they go away of their own accord… because they won’t! 

Additionally, there’s no surer way to frustrate clients than by failing to keep them up to date with how your work for them is progressing. Creating solid plans for the work you’re carrying out is all well and good, but if you don’t keep your clients in the loop (communicating often, and ensuring they understand what’s going on), it’s all for nothing. 

Keeping them up to speed doesn’t have to be difficult. You can do something as simple as checking in via regularly scheduled emails or go more complex with a project management system such as Asana or AgencyHub.

Regardless of what you choose to do, remember this: communicating with your clients appropriately (i.e. via their preferred medium) and in a timely fashion is key. Failing to do this is a surefire way of losing a client.

Skill #2: Being Able to Say No

Mantras like “the customer is always right” have programmed us (as service providers) to be overly accommodating to client requests. If we think there’s a chance we can help them with something, we agree to it. We’re eager to please because we think this is a good way to keep a client. 

Thankfully, there’s more to client retention than simply becoming a ‘yes man’. If that was all it took to keep clients happy, businesses would be trapped in a race to the bottom, each competing to deliver as much extra work to their customers as they could possibly manage without charging for it!

Being able to say no when a client is asking for something entirely new or outside the agreed scope-of-work is key to avoiding difficult situations (or saying “YES but we need to drop something else”). Additionally, you have to be able to resist when what they’re asking for is not going to help them achieve their objectives. By acting in this consultative way you’ll help to position yourself as a trusted partner (rather than just a supplier).  

Train your staff in setting boundaries and sticking to the original scope of their projects. Doing this will ensure you avoid getting caught in the Overservicing Trap (discussed in more detail below). 

Of course, there’s nothing inherently wrong with saying yes to additional requests – just ensure your staff know to change the scope-of-work or fees being charged, as needed.  

Skill #3: Meeting Deadlines

This is a simple skill, but one that many agencies struggle with from time to time. 

Being able to deliver work when you said you’d deliver it is a small thing that goes a long way towards keeping clients satisfied with your service. 

There’s a principle in software development known as the “ninety-ninety rule”. It goes something like this: 

“The first 90% of the code accounts for the first 90% of the development time. The remaining 10 percent of the code accounts for the other 90% of the development time.”

This is obviously tongue-in-cheek, but the point remains: things often take longer to complete than you think they will. 

When you’re agreeing to deadlines with clients, be sure to allow yourself some wiggle room. Inevitably, some other client could walk through the door with a crisis, a key member of staff could need time off, or things could just get busy. 

And when you can’t meet those deadlines? Refer back to skill #1 and communicate. Odds are your clients are reasonable people, just like you. 

Skill #4: Delivering a Great Experience (Without Overservicing)

Many agencies have fallen for the age-old Overservicing Trap. They think that keeping customers happy is all about going the extra mile and giving them more than they paid for. 

Overservicing is a major issue for many agencies, for a few different reasons. 

Firstly, it conditions clients to receive more than they’re paying for any time you work with them. Going the extra mile quickly becomes the norm, and you end up going even further next time to satisfy your clients (or else maintaining your standard level of overservicing to keep them feeling neutral towards your business). 

Secondly, it creates stress in the agency and lower profits – all because of the belief that “if we don’t say YES then the client will leave us” – which is NOT TRUE!

Thirdly, it devalues the work you do as an agency. If clients can get some of your additional services for free (or get them for less than they should cost), they will never value this work (think about it – anything for free is rarely really valued).

Being able to deliver a great client experience without overservicing is an art. The other three skills listed here help (as do the strategies we’ll detail later on in this piece), so be sure to reread this section and figure out which areas your agency is falling down in. 

A Simple Framework For Identifying Client Retention Weak Points

The four skills listed in the previous section are critical to successfully retaining your ideal clients – but how do you know which ones to focus on developing first?

To make this information easier to use, I’ve created a straightforward grading system you can use to score your performance in each of these areas. 

Skill Score ActionPlan

Consider each of the competencies we’ve just talked about and grade your mastery over them on a scale of 1-5 (1 = your skill is non-existent in this area, 5 = you have absolutely zero problems in this area).

  • A score of 1-2 in any area is a major red flag – be sure to give this skill immediate attention. 
  • A score of 3 indicates decent performance but allows for plenty of room to improve. 
  • A score of 4 or 5 is great – you have little to no problems with that skill. 

Over time, your goal should be to improve upon your weak points, maintain your strengths, and fully develop the skills you need to master client retention. 

Now that we’ve finished talking about the core competencies you need to satisfy clients effectively, let’s see what we can learn about customer retention from companies who don’t care about it at all. 

What We Can Learn About Keeping Customers Happy From Companies That… Don’t

I often like to frame these articles with a case study or story to explore the topic, but this time around, I want to talk about a particular industry (not just one company) that is going about this all wrong

I’m pretty confident that you’ll agree since we’re probably both frustrated customers of this industry. And that industry is? 

The mobile phone market.   

Here are some quick stats for you to consider. According to The WDS Mobile Loyalty Audit

  • Customer churn in the mobile phone market is sky-high at a staggering 40%
  • Only 16% of polled consumers said they felt rewarded for their loyalty 
  • 54% of consumers reported that they didn’t feel valued by their provider 

In today’s competitive mobile phone marketplace, service providers can’t afford not to take care of their clients. New UK legislation has made the process of quitting your current provider as simple as sending a text message!

They’re not the only offenders, of course – broadband providers are often just as bad. How often have you seen an ad that promised a great deal, only to see in the fine print it was for “new customers only”?

client retention

These ads are designed to attract new customers, but offer nothing to loyal current customers… a common theme of these businesses. 

Why do they continue to do this?

The sector is highly commoditised.  Every provider offers a broadly similar product. Without anything else to compete on, they compete based on price – which is a race to the bottom. 

Consider what would happen to your agency if you behaved like your services were a commodity. You’d probably do the following: 

  • View acquiring customers as being far more important than retaining them
  • Stop focusing on the quality of delivery
  • Set rates that are in line/cheaper than your competitors (and not in line with the value you create)

These three mistakes are more bearable in an industry where consumers almost expect these behaviours (as is the case with mobile phone providers). But for an agency like yours?

Focusing on acquisition above retention, forgetting about being strategic and failing to deliver a high-quality service will spike your customer churn rates… 

And pricing with too much regard to your competitors will limit your profits and see you caught in a race to the bottom. Read my blog on pricing to get some help here.

With all this talk of acquisition vs. retention, you might be wondering: which one should you be spending your time on? 

Acquisition vs. Retention: How To Balance Both In Your Agency

client retentionWhen it comes to your focus on acquisition vs. retention, it’s not a case of “either or” – it’s more a case of figuring out the best strategies for attracting your ideal clients, then holding onto them. 

Client retention problems often stem from winning the wrong type of client in the first place. The wrong client is much more difficult to satisfy, creates a challenging relationship and retaining them is exhausting and challenging for even the best agencies. 

Research from the Harvard Business Review has indicated that increasing customer retention rates by 5% can increase profitability 25%-95%. 

Other studies have shown that it costs 5-25 times as much to win a new client as it would to keep an existing one. That’s a staggering statistic (one that you should take to heart if you’re spending a lot of money on outbound marketing). 

According to, boosting retention rates increases profitability for a few different reasons: 

  1. It’s more expensive to go out and win a new client than it is to simply keep an existing one (which is common sense)
  2. The longer you work with a client, the more money they’ll spend with your business (and the more chances you’ll have to upsell them to greater levels of service). Additionally, the longer you’re together, the more trusting your relationship becomes. This means they’ll value your advice more, and view you as a partner – not just a supplier
  3. Satisfied customers that stay with you for the long-term are more likely to refer other prospects to you. Word-of-mouth marketing is free, and these prospects are typically much easier to close (as they’re warmed up ahead of time)

Getting a handle on client acquisition is a separate topic – one that we’ll cover in more detail another month. For now, just remember that the key to getting your relationship off on the right foot is to find the ideal type of customer and sell based on value, then measure your delivered work against that value.  

Great Client Retention Starts With Setting Realistic Expectations From The Outset

Keeping clients satisfied is a game of expectations. And the single biggest chance you have to set a good tone for your relationship with a prospect is before you start working with them

The four core competencies we discussed previously lend themselves well to set the stage for a positive, productive relationship with clients. Honest communication helps – as does the ability to say no, being able to meet deadlines and satisfying without overservicing. 

When you commence working with a client, everything that you agree to deliver as part of your service to them can be considered a “standard” (i.e. part of your arrangement), and anything outside of this can be considered an “extra” (beyond the scope of your current deal).  

The terms of your work together are set out in a scope of work agreement. You need to have this clearly defined before starting out on a new project. Without this, you could be left trying to deliver on the client’s vague vision, wondering if the price you initially quoted them is going to cover the ever-increasing demands they’re placing upon you. 

With a scope of work in place, you’ll be able to look back on it and figure out if what the client is asking for is a standard (i.e. already part of your agreement), or if it’s an extra (it’s beyond the scope of the current agreement). 

It’s important that you and your team understand that you shouldn’t feel obliged to deliver extras for free. Doing so will condition clients to expect the same in the future. Before you know it, those extras have become implicit standards. And if you suddenly decide to skip out on these extras one month, what’s the likely result?

Client dissatisfaction, as their expectations have not been met. Going the extra mile is all well and good, but when that becomes the norm, it ceases to be extra… and is soon seen as par for the course. 

A clear upfront agreement, laying out what’s part of a monthly retainer or project (and what isn’t) is key.  Your agreement should also contain details as to how any ‘extras’ will be billed. The most common approach would simply be charged a flat rate per hour or per additional deliverable completed. 

Beyond the work itself, you should also consider expectations/service levels around deadlines and response times. Once again, this is an area that junior staff often struggle with (so we must explicitly train them). The impulse to agree to a client request without thinking or to respond instantly to their emails/instant messages/phone calls is one that needs to be trained out of them. 

If a client’s fee level means that you respond within 3 hours yet they are conditioned to expect a response within the hour – because the team always responds immediately (who has ever thought “oh I might as well answer this email now since I can”), they’ll be disappointed when you take three hours… even though that is what they are paying for! 

Expectations are everything. It’s important that your staff do everything they can to ensure client expectations remain reasonable. Sometimes, that’s going to mean letting client calls go to voicemail, or allowing emails and IM’s to sit unanswered for a while. Staff may be eager to jump in and respond right away, but make sure that enthusiasm is tempered with understanding: expectations matter, so they need to be managed correctly (more on time management and productivity in a future blog).

Strategic Overservicing – A Useful Tool In Your Arsenal

I don’t want to imply that you should never overdeliver. Occasionally doing a little bit more for free (if it’s valuable to the client) can be a good strategy to boost long-term retention, or to help set the scene for a later upsell to a new level of service. 

The key here is to ensure that they understand they’re getting something for free and that they’re not under the impression that it’s going to be a standard from that point on. 

Once again, clear communication is key. 

An example of how you could deliver an extra without being put on the hook for delivery in the future:  “This month, at no extra cost to you, we’ve produced x report/deliverable. This would typically cost in the region of ___, but as we feel your business will benefit from it (given that ____), it’s yours for no extra cost. 

If you’d like to discuss adding x to your monthly service plan, just let me know and we’ll set up a time to talk about it.”  

The above is just an example – tailor it to fit your business, but remember the spirit of it: extras are great, but doing more work for no additional payment is not. 

On a month-to-month basis, I typically tell my coaching clients it’s okay to overservice by about 5-10% (as you can probably make that up in a quieter month anyway). Going much over this tends to put you in a bad position moving forward and can create all sorts of capacity issues in your agency, so I don’t recommend it.  

Benchmarking Your Churn Rate: An Easy Rule of Thumb to Figure Out if Yours is Too High

Customer churn rate is an easy metric to measure for your agency – and it’s one that has a big impact on your bottom line. Decreasing customer churn by even 1% can have a significant influence on your agency’s profitability, so it’s worth talking about. 

Now, it goes without saying that a certain amount of customer churn is inevitable. Anything can happen: a change in personnel at the client, you might fail to deliver a satisfying experience, or their objectives might change – making your service obsolete. Whatever the case may be, some customers will always leave your agency over the course of a year. The question is… how much is too much?

Churn rates vary dramatically from industry to industry. For instance, churn in the mobile market is around 40% (which would be absolutely atrocious for an agency). However, churn rates could be under 1% for a company like Verizon in the US, due to their contract structure. 

In my experience, I think 20% churn is a good goal for agencies to aim for. Depending on your industry, you may be able to get that figure as low as 7%. Maybe 25% is more realistic for your sector. Whatever your starting point, know that every little improvement you make in this area can have a huge impact on your profitability.

6 Tips For Better Client Retention: Boost Loyalty, Increase Profits and Scale Your Agency 

Client Retention

Now that we’ve covered the fundamentals of great client retention, I’d like to offer you six quick tips you can put to work in your agency right away to help build a loyal, low-churn client base.

Tip #1: Understand Your Client’s Goals

If you want to retain clients for the long-term, then you need to deliver results. And without first understanding what it is they care about and setting appropriate objectives, how can you hope to deliver results they want to see?

When you understand what they hope to achieve for their business, you’ll be able to align that vision with the goals of your campaign. 

This isn’t just something you do at the outset, of course – goals can change over time. The key here is to discuss with the client, revisit periodically and adjust your approach if and when appropriate.

Tip #2: Understand Your Client’s Preferred Method of Communication

Communication was another one of the core competencies discussed earlier. The point of this strategy is to illustrate that you should report back in the manner that clients prefer (within reason). 

  • Some clients will want a detailed monthly report
  • Some will want a brief high-level report
  • Some will want a quick phone catch up 
  • Some will want you to sit down with them and touch base every few months 

And within reason, you should understand and accommodate their preferences. 

Another point here that is really important: most clients don’t care about having you report back on tasks completed (sending a very long list of tasks does not translate into delivering great results). Report with reference to outcomes – talk about how you’re delivering against your goals, and how this feeds into the achievement of their business goals. 

Tip #3: Win The Right Kind of Client

The process of retaining clients starts with attracting the right kind of prospects in the first place. When you have a crystal-clear image of your ideal client (see the resources section below for more info), this gets much easier. 

The best kinds of clients to work with are those that: 

  • Are from your target niche and match your ideal client 
  • Value the work you do
  • View you as a partner, not just a supplier
  • Are easy to communicate with

Working with these kinds of clients is a dream compared to the opposite. The wrong kinds of clients for your business (I’m sure you’ve encountered many in your time!) drain your time, are usually dissatisfied with the results you deliver and are bad for your business growth overall. 

Retaining the ‘right’ clients is easier than retaining the wrong ones. Focus on finding and winning your ideal client type and you’ll reap the benefits of longer customer retention.

Tip #4: Seek Regular Feedback

If you want to keep clients satisfied, you have to regularly reach out and seek feedback on your performance. If there are any issues, don’t bury your head in the sand – confront the problem in a timely manner and work on solving it. 

Seeking feedback doesn’t have to be complicated. It’s easy to tack a question or two onto the end of your regular meetings, soliciting any concerns they may have and create a relationship based on honest and open communications.

Don’t assume everything is okay because they haven’t voiced a concern on their own initiative. Be proactive and seek out issues before they can derail the relationship entirely. 

Tip #5: Handle Staff Changes Carefully

Changing the personnel assigned to a client account can be a tricky situation to navigate. In my experience, I’ve seen agencies making a few mistakes in this area: 

  • Sending in the big guns to pitch the client… then not assigning these people to work on the account once the deal is closed 
  • Not informing a client when a key member of the team moves on 
  • Not introducing their replacement carefully and having them build credibility with the client (ideally before the old client lead leaves)

I generally advise my coaching clients to be upfront when something like this changes. Let the client know in plenty of time when changes are coming, introduce their replacement and ensure that they have plenty of opportunities to show they are capable. Finally, stress that the quality of service they’re receiving won’t change. 

Tip #6: Do Some Account Development Planning

My last tip is to take a strategic approach to account development. Set aside some time in your calendar to carry out regular reviews of your key clients (and of your own business too). 

With regards to your relationship with the client – review your strengths and weaknesses, and figure out how to mitigate the challenges/risks (while maximising your advantages). 

With regards to your clients – review their situation, and identify areas in which you could add more value to their business. This could be an upsell to an additional service, a strategically chosen freebie (to give them a taste of something else you offer), or even just a quick consultation to impart some ideas you have about their strategy moving forward. 

The key takeaway point here is to take the time to focus on developing your key clients. Doing so will allow you to boost retention rates, increase profitability and have an easier time satisfying them… all good outcomes for your business!  See below for my free template you can use for your client development planning.

The Best Resources for Simplifying the Process of Great Client Retention

In this article, we’ve been digging deep into the topic of client retention. 

We’ve covered a lot of ground up to now, so let’s switch gears for a minute. I’d now like to share my favourite resources for maximising your client retention.

Developing crystal-clear customer personas is the first thing you need to do if you want to win your ideal client and boost retention rates. If you intimately understand your customer then you know what “makes them tick” and therefore give yourself the best chance of retaining & growing them. You can download a free copy of the Customer Personas workbook here to help with this process. 

In my 13 years as a business coach, I’ve come across many different client management techniques – and learned which ones work best for real businesses just like yours. If you’re interested in getting your hands on these techniques, you can download a free copy of my Client and Account Management eBook here

I’ve always been a fan of Hubspot’s content. They put out great articles on all aspects of running a high-performance agency, but I particularly enjoyed this one on some different customer retention programs you can put to work in your business right away. 

As mentioned in the last section, periodically stopping and taking a strategic view of your clients is vital to head off any potential issues and looking for upsell opportunities.  So I want to share with you something I normally only give to my paying clients and that is an Account Development Planning template. This will enable you to capture useful data about your clients and help you address any weaknesses whilst maximising opportunities.

You may want to use a CRM system to help you monitor clients and ensure you are not dropping any balls. There are many you can use but I found this list to be both useful and comprehensive.

Finally, I recently published a guest post over on Hubspot on increasing customer retention rates (including details on how to carry out crucial “Strategic Reviews” of your biggest clients). You can read that here if you’re interested. 

Your Action Plan

We’ve covered a lot of information in this article. At this stage, your head is probably spinning!

To help you get started with the process of better client retention, I’ve outlined the very next steps you should take in a handy One-Page Action Plan. 

To get your copy for free, just click the picture below for instant access. 


That concludes our in-depth breakdown of client retention. 

I hope that you’ve learned something new here (and please ensure any of your team read the article), as an understanding of this topic is a crucial part of scaling your agency sustainably. Without having good customer retention rates, your agency will suffer from the Revolving Door Problem – clients come and go, leaving you scrambling to close new business just to stay afloat. 

Winning a new client is great… but closing the deal is just the beginning of the journey. 

This is a trap that many agencies fall into. They work hard to win the client, put their best foot forward and then move on in search of the next win, hoping the accounts team do a good job of keeping the client.

To win in the long-term, you need to take a more strategic approach than this. You have to take client retention seriously: it will have a major impact on your bottom line, so it’s worth focusing on.

I hope you found this article useful. If you have any questions, be sure to post them below and I’ll get back to you with my thoughts.

If you would like to learn more about HOW to win more ideal clients & retain them for the long term then sign up for my FREE Sales Pipeline Masterclass (where we cover niching in detail)

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