4 Steps To Reduce A PR Agency’s Client Churn – The Old-Fashioned Way

When a public relations agency chases a business prospect that is in a non-aligned business, then expect client churn.

When an agency over promises a prospect during the hunt and can’t deliver later, then expect client churn.

When an agency takes on a new client that it can’t create and sustain value for, then expect client churn.

When an agency takes on a new client ( aka a “dog” of a client) only because it needs revenue, then expect client churn.

When agency principals keep the client relationship at arm’s length, then expect client churn.

And when an agency doesn’t take the time to proactively manage and measure a client’s expectations, the relationship itself and the value that’s being delivered — guess what? Expect client churn.

So what’s your agency’s client retention methodology?  If it has one, here are a few ideas that can give it a shot in the arm.

• Work with clients you can deliver immediate and ongoing value to.  If you’re a tech B2B shop with expert, relevant experience in cloud computing, mobile and security, don’t think you can add immediate value to a healthcare IT company. Firms who have tried and failed to fake domain knowledge give the PR profession a bad name.

• Develop an expertise in your employees.  Having more “experts” than generalists in-house means the agency will likely be more valuable to a client and will lead to greater client retention.  An account supervisor who understands mobile computing ecosystems is much more valuable to an organization than someone who pinch hit on a couple of mobile-related accounts and who may have just a cursory knowledge of the market.

• Find a way for staffers to work more deeply on fewer accounts. At a previous agency I called this “fewer-deeper.”  Clever, huh? Clients know when they do and when they do not have the attention of their account team. Expecting account executives to offer significant value on more than four (five tops) accounts is unreasonable and unfair to the employees and the clients.  No one benefits from such a model.

• Work harder to retain employees.  There’s a direct correlation between employee churn and client terminations.  Losing the lead player on a key account will disrupt that account to no end. Bury an employee in too many accounts, dogs or not, and you could say sayonara to the employee and the business.

What am I missing?

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Things a New A.E. Should Not Assume About Client Relationship

Original post appeared August 20, 2013 by Arthur Solomon in PR News.

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By Arthur Solomon

So you’ve been promoted to a level where you will have your first substantive client contact. Congratulations. This is the opportunity that you’ve been seeking. You now have a chance to show your stuff. But good work is not enough. Good client relations are just as important as good results (often more so) in your quest to climb the agency ladder. Conversely, good results will not necessarily advance your career if you can’t hit it off with clients. Just as in your personal life, relationships are important in the business world. Never forget that. I say this from experience.

During my 30 years in public relations, before, during and after my nearly 25 years at Burson-Marsteller (where I played key roles and managed national and international sports and non-sports accounts and traveled as a media advisor with high-ranking foreign government officials), I have seen account people whose work I thought was below par advance on accounts because, as a client told me about one person, “If I told him to jump out of a 35th-floor window for me he would.”

Below are some lessons about client relations that in all probability were not covered in communications schools but that might help you survive the client-agency dance.

> Don’t assume that the gorgeous young woman who accompanies your client is his daughter.

> Don’t assume that your client isn’t miffed when you always win at tennis or golf. (Lose occasionally.)

> Don’t assume that if you ask if your work is satisfactory, you’ll get a positive answer.

> Don’t assume that if you go drinking with a client, it’s okay to say, “You look terrible” when you meet the next morning.

> Don’t assume that, just because you have a good social relationship with your client, it will assure you of a good year-end account team review.

> Don’t assume that when a client complains about being passed over for promotions that you can vent about your situation.

> Don’t assume that what a client tells you about your work is necessarily what will be told to your superiors.

> Don’t assume that when a client says, “As long as I run this account, you’ll be on my team” that it is written in stone.

> Don’t assume that when you’re about to leave on vacation and a client says, “It’s really not necessary to tell me how to contact you if an emergency occurs,” it means you don’t have to leave contact information.

> Don’t assume that when a client says “no rush” regarding a request, that there isn’t a “rush.”

> Don’t assume that when a client, (or your agency superior), says, “I’m going up the corporate ladder and I’m taking you with me,” that they mean it.

> And finally, don’t assume that all the praise the client showers on you will change what your agency superiors think of you.

Do your best to stay on the good side of a client by doing high-quality work that will make your client contact look good to his or her manager, but always remember your fate is in the hands of your agency supervisors. They sign your paycheck.

Arthur Solomon was a senior VP/senior counselor at Burson-Marsteller. He can be reached atarthursolomon4pr@juno.com

 

Note to AOL’s Tim Armstrong: “The Apprentice” Is Staged

It’s official:  AOL CEO Tim Armstrong said 350 of its Patch.com employees will be fired and an additional 150 will likely lose their jobs by October.  Apparently, the employees were notified American Idol style, with the winners notified in one room and the losers huddled in another.

Armstrong, a co-founder of the struggling and unprofitable Patch.com, composed of 900 local news web sites, alerted employees and investors just over a week ago that he would be shutting down about one-third of his sites.  Since then, employees have been just waiting for the ax to fall even though Armstrong hinted at an all-employee meeting on Aug. 9, during which he also opted to publicly chastise and fire another Patch.com executive, that he might be able to save everyone’s position.

Wishful thinking.

Guess what?  I wasn’t the only one critical in a post of Armstrong’s handling of the communications around Patch’s woes.  In “What CEOs Can Learn From AOL’s Tim Armstrong’s Awful Week,” I called out Armstrong’s lack of humanity, his ambiguity and his otherwise Draconian handling of the situation — all of which could have been avoided with the right counsel.

There’s no doubt that Patch.com’s financial situation requires urgent and decisive leadership, action and clear direction.  But in his communications to employees, Armstrong ignored all five of the key elements to preserving a CEO’s reputation: honesty, respect, care, integrity and humility.

Here’s what a few “reputation communications” experts are saying about Armstrong’s handling of recent events including his “Apprentice” style firing of Patch.com executive Able Lenz for taking this photo during the all employee meeting/conference call on August 9:

“It looks like big business being a bully,” said Jim Webber, who conducts workplace training and runs a human resources advice blog called Evil Skippy at Work.

Ron Ashkenas, a senior partner with Shaffer Consulting, Stamford, Conn., said: “If he was trying to make himself out like Donald Trump, then this isn’t the way to do it. ‘The Apprentice’ is a staged television show.”

And from Bill Murphy, Jr., an ex-Washington Post reporter and author of “Breakthrough Entrepreneurship”: “Dramatic firings can be useful, but impetuous moves overshadow everything. The way you handle this decision reflects the kind of leader you are.”

What impact do you think Armstrong’s communications approach will have on his reputation?  If you need a reminder of how Armstrong handled the all-employee meeting, here it is again.

 

What CEOs Can Learn From AOL’s Tim Armstrong’s Awful Week

As you’re reading this several hundred AOL Patch employees are walking around with bullseyes on their backs.  They know they’re a target because their boss — AOL CEO and Chairman Tim Armstrong — told them so last week during a highly publicized “all hands” meeting during which he very publicly fired another executive for videotaping the meeting.

The firing has been covered ad nauseam but if you haven’t seen the leaked audio catching Armstrong in the act, you can watch it here.

Armstrong, who co-founded Patch.com, a network of 900 local news websites that has come under much criticism for its content and working conditions, informed his employees on August 9 (a summer Friday no less) that Patch would shrink by 300 sites.

Since then Armstrong has apologized for the way he fired Abel Lenz, Patch’s ex-creative director who is now looking for a new gig.  But otherwise, employees are saying the CEO has been largely invisible.

“Not sure what he thought he was going to accomplish on that call on Friday but I can assure you all he did was create resentment and kill morale.  Everyone is just sitting around waiting for the bad news,”  an employee said.

Armstrong handled the employee meeting, and firing, wrong on so many levels that one doesn’t know where to begin.

But for starters…

• his tone was punitive from the outset and not in the least bit encouraging.  He missed a huge opportunity to showcase his human side.  A more sensitive communications approach would have resulted in at least a neutral tone in the ensuing media coverage vs. the bashing he’s endured.
• there was no exchange of information…just Armstrong telling, telling, and telling some more.  I’m not suggesting he run AOL by committee, but inviting suggestions from his employees to help stave off a Patch implosion gives his employees “skin in the game” and a sense of ownership, collaboration and hope.
• he was ambiguous.  He implied to analysts on the preceding day that the shrinking of the Patch network would mean employee layoffs.  But 24 hours later he was telling employees that layoffs could perhaps be avoided (by selling some of the Patch sites). When there’s a lack of clarity and direction, imaginations run wild and it’s human nature, in such situations, to think the worst.  His lack of clarity means that even Patch’s best employees are concerned about their livelihoods and are updating their resumes too.
• since then, Armstrong has largely been invisible, further heightening anxiety among his employees.

CEO.com reports that…

• up to 50 percent of a company’s reputation comes down to its leadership.  How are you feeling about AOL today?
• the reputation of a company’s CEO has a marked impact on customer purchasing decisions and investors’ investing decisions.  Are you buying from or investing in AOL today?
• there’s an 80% chance a company’s stock will drop 20% in a single month during a CEO’s administration and a good reputation speeds the way to recovery.

What CEO reputational qualities have the greatest impact on the overall reputation of the organizations they serve?  All Mr. Armstrong had to do was ask and listen:

• Honesty – A CEO must view business ethics as key to overall success.
• Respect – People are not objects a CEO owns.  CEOs who respect others are usually shown the same level of respect.
• Care – People (a.k.a. employees) are guided by feelings.  The best CEOs work to understand the feelings, values and beliefs of their employees.  A CEO and caring person can be one in the same.
• Integrity – the integrity of any organization starts with strong leadership; strong ethical leadership.
• Humility – legendary business consultant Jim Collins said that among other things, the best CEOs “display a remarkable humility about themselves, ascribing much of their own success to luck, discipline and preparation rather than personal genius.”

What would you add to the list?

Client Warning Signs – Part II

Turns out I was wrong…again.

I’ve been informed by a number of public relations professionals that last week’s post, “9 Telltale Signs An Agency-Client Relationship Is On The Rocks” was way off base (grin).

Apparently, there are well over nine telltale signs.  I left out a few very obvious ones, like this one from Seattle-based PR pro Steven Spenser: “the client stops returning your phone calls, and getting her on the fone (sic) … becomes difficult.”

Or these gems from Gillian Findlay of Cambial Communications, greater Johannesburg, South Africa: “When the client asks to see the agency contract, the writing is on the wall. Another sign is when the agency is moved from a retainer to project basis.”

In England, where “manners rule,” Nigel Massey, chairman of The Massey Partnership in London, says that when a client is “terse in tone” then it’s “patently clear that the wheels have come off.”

Robert Sanders of Pittsburgh, Penn.-based Sanders Consulting, which consults with firms on new business strategies, tells his clients facing retention challenges to focus their attention on “controlling the relationship rather than attempting to control the client.”

Sanders said, “Agencies that modify behavior to make clients more comfortable improve cohesion and enhance their chances of retaining clients.”

He also believes that “chemistry” is the most important part of winning new business. I think many of us would agree that chemistry is also an important component of client retention.

Peter Smith, a U.K.-based veteran marketing, advertising and PR professional and today a managing director at The Marketing Doctors — a customer engagement firm — generated the most creative response to “telltale signs.”  While Smith cited the client’s call for a “review meeting” as a telltale sign (and he’s spot on with that one!), he followed with this creative, albeit somewhat cynical progression of all too many agency-client relationships (passed on to him by a former client):

Month -3 to 0 Flirting 
Month 0-3 Passionate, creative, invigorating 
Month 4-6 Steady, reassuring 
Month 7-9 Annoying habits start to emerge 
Month 10-12 Predictable 
Month 13-15 Little dissatisfactions chip away 
Month 16-18 “I met this really interesting person at an industry dinner….” 
Month 19-21 Illicit meetings with new person leading to….. 

Flirting. 

Cynical? Moi? No – just seen it all happen too many times!

Love The One (Client) You’re With

What’s the real cost to a public relations agency of losing a good customer?

Well, there’s the risk of bad publicity via word-of-mouth. Clients can be pretty open with their network about why they’re ditching an agency.  Many even go as far as sharing the specifics with the agencies who are vying for their business. We’ll hear anything from “I only saw the agency executives when I called them” to “they put only junior people on my team” to “we really didn’t have a good sense of what we were getting for our retainer.”

There’s also the risk of low employee morale.  Each time a client leaves a firm, there’s the concern by the now underutilized rank and file that their job is in jeopardy.  Instead of only focusing on their remaining accounts, they’re distracted by the outgoing one. They ask their friends at other agencies to keep an eye out for opportunities for them, start talking to recruiters and look for reassurance from agency principals that all will be OK.

And then there’s the mad scramble to replace the business.  Initially, the intention is to replace the outgoing client with a competing company to leverage the account team’s domain knowledge.  But the stars have to align for this to come to fruition.  For one, the prospect has to be either actively seeking a new agency partner at the time, has to be dissatisfied with its current agency and is mulling a change, or your agency was doing such fantastic work for the outgoing client (unlikely given the circumstances) that the prospect would have to be crazy to not jump at the chance to make a switch.

What happens in many cases, despite the best of intentions, is that an agency will wind up chasing the first piece of new business that comes there way even if it isn’t strategically-aligned business; even if the firm knows going in that it can’t create and sustain value for the prospect.  This creates an entirely different set of client (and employee) retention issues. Losing a good client is one thing, but replacing it with non-aligned business because employees are underutilized leads to the same nasty outcomes:  1, bad publicity (“XYZ Firm will go after anything that moves”), 2, employee morale suffers because staffers are forced to work on bad business, and 3, non-aligned business will leave a firm…eventually…starting the vicious cycle all over again.

Replacing an existing customer can cost up to five times more than retaining an existing one.  A one step forward, one step back strategy is not a growth strategy – for any business.

Client profitability increases over the life of the agency-client relationship (customer lifetime value).  The longer an account team stays on an existing account, the more knowledgeable they become about the business and thus become more deeply engaged on the account. There’s a direct correlation between high employee morale and deep engagement.  The more an account team knows about a client’s business, the easier it is to grow that account organically.

Even a small improvement in client retention rates (as little as 5 percent) can have a significant impact on a firm’s overall profitability.

Courtesy of Entrepreneur.com special projects editor and WSJ alum Colleen Debaise, here’s a great list of client retention tips directly from a few folks in the trenches.

9 Telltale Signs An Agency-Client Relationship Is On The Rocks

When the relationship between a public relations agency and a client is on the rocks, the agency is all-to-often the last to know.

And in many cases, the agency has no one to blame but themselves for either not proactively managing the client relationship, for not really listening to the client or for missing client clues that all is not well — or for all of the above.  When you add it all up, it boils down to neglect – taking clients for granted and then acting surprised when a client takes the business elsewhere.

Sound a little familiar?  If you’re an agency veteran, it should.

Nothing stings more than losing a client for reasons of poor agency performance, and the realization — once the dust has settled and your firm or account team has gone through the five stages of grief — that the the client is right.  As mentioned in a previous post on client retention, proactively managing and measuring the expectations and value of the agency-client relationship begins on the first day of the relationship and only ends when the relationship does.

Once the telltale signs of a dissolving agency-client relationship have surfaced, it’s often very difficult to repair and rebuild the relationship — though not impossible.  Having been on the client side, I know from first-hand experience that once a client believes his or her business has been taken for granted, recovery is a long shot.

The good news is that many clients will fire a number of warning shots before shopping their business to competing agencies.  The bad news is that not every account team recognizes them and thus go about their business like nothing is wrong .  The hole gets deeper, and deeper…and deeper.

So what are a few of the warning signs that all is not well between client and agency?  While some are quite obvious, others are very subtle and can be missed by all but the sharpest of account team members.

Here are nine signals: 

• The client cancels consecutive weekly team calls, or doesn’t cancel but just doesn’t dial in only to apologize later “because something came up.”
• The client emails you a creative program idea sent to them by another agency and asks you for your thoughts on it.
• The client sends you a news article favorably positioning a competitor and asks, “When are we going to start seeing coverage like this?”
• Competing agencies start following your client on Twitter, and are followed back.
• Your client asks to see your media pitches before you send them out.
• The interactions you are having with your client are all business and devoid of any small talk (the client can’t wait to get off the phone).
• The client asks if you’ll consider reducing the monthly retainer by 10-15 percent while keeping the team in tact and not reducing the number of program hours.
• The client starts expressing frustration with certain account team members and ask you to make some changes.
• The client asks you to send over your list of tier one and tier two influencer contacts, complete with phone numbers, emails address and twitter feed info.

Am I missing any tell tale signs that a client-agency relationship is on the wane?

Transparent Communications Can Save Your Business

On any given week (or day, hour or minute of every day), politicians, appointed officials, celebrities, athletes and business leaders provide their publics with communications gaffs as well as moments of sheer communications brilliance.  As a result, reputations either advance or retreat, are strengthened or are tarnished, are wounded or destroyed.

For some, the damage can be managed.  For others, well, maybe not. But for those who make the connection between the value and power of “reputation” and success, guys like Ayr Muir, well, they’ll continue to flourish.

Larger companies can learn a lot about transparency in communications from a small business owner like Muir, a materials science MIT grad and Harvard MBA, who also happens to be a distant relative to American naturalist John Muir.

Since 2008, Ayr Muir has been the owner and executive chef of Clover Food Lab, a vegetarian-based chain of food trucks and restaurants operating in Boston and Cambridge.  Since day one, Muir has been as open and honest with employees and customers, sharing the good, bad and the ugly with his constituents on his blog and Twitter feed.   For this, he is revered.

And the halo effect he created for his business by being open and truthful has rescued his business from a recent major crisis — one that might have crippled another enterprise if handled differently.

Last month, City of Cambridge health officials linked a salmonella outbreak to Clover.  When Clover was shut down, as a consequence, Muir managed the message and his reputation by announcing the temporary closure himself.  He didn’t put his reputation in some else’s charge.

But he didn’t stop there.

Throughout the crisis, Muir posted regular updates on his blog, including details about the health code violations and what his company was doing to address them.  He also borrowed bank money to pay his employees during the closure.  And in keeping with his reputation for being a “glass is half full” kind of guy, Muir wrote in one post:  “That’s right, this scary time is turning into a sort of vacation.”

Muir took further advantage of the crisis by taking the opportunity to establish a higher benchmark for food safety — a benchmark his competition may be forced to emulate.  Today, Clover has a food safety consultant on the payroll, has introduced a sanitizer to the water used to clean produce and food preparation surfaces are tested for for bio-contaminants.

“None of these are things that are required, but we think they will improve our operations as we grow.”

Clover is once again open for business.  As strong as ever.