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7 Reasons Most Digital Agencies Lose a Client After the First Year

...and what to do about it!

The first year of any agency-client relationship is pivotal. During this period, digital agencies must prove their value and solidify trust.

However, a significant number of agencies fail to maintain their client roster after the first year. Recognizing why this happens and how to prevent it is crucial for agency owners committed to long-term scalability and profitable business development.

Today, we’re going to cover some of the most common reasons that agencies can lose clients after the first year of the account relationship. Let’s start with one that we see all too often: misaligned expectations.

1: Misaligned Expectations

Misaligned expectations can sour relationships quickly. Agencies sometimes overpromise to secure a contract, leading to client disappointment when reality doesn't match the hype. Other times, agencies may not communicate clearly, leaving clients confused about what they’re actually getting.

To prevent unclear expectations from causing friction, begin every new account relationship with a comprehensive discussion about goals, metrics, and timelines. Ensure you're not just on the same page but in the same line of the same paragraph.

Agencies should also consider conducting monthly reviews with clients to align on progress and adjust expectations as needed. Regularly checking in keeps both parties in lockstep on the client’s business goals and creates opportunities to expand accounts or pivot strategically whenever necessary.

2: Lack of Proven Results

At the end of the day, clients are after one thing: results. They are investing in your agency, and they want to see the returns.

When an agency cannot show a positive impact within the first year, clients may walk away. Often, the issue isn’t a lack of results but a lack of demonstrated and communicated results.

This can also tie back into misaligned expectations. For example, an SEO campaign could take months to start showing measurable results, while Google Search campaigns are intended to drive them instantly.

The solution: Implement a thorough reporting system that translates data into the language of value. Instead of overwhelming clients with metrics, focus on the key performance indicators that resonate with their objectives. If proving ROI is a challenge, consider refining your measurement tools or strategies to better capture the value being delivered.

If you are working with an external partner, such as a white label agency, be sure to also vet their reporting processes. If they do not have any reporting process, you may want to start also searching for a new partner.

For any external reporting, be sure to check for clear, transparent, and insightful information that you can use to empower your discussions with your clients. You should not be left in the dark, but instead given the resources to be the authority that your client relies on you to be.

3: Inadequate Communication

When clients feel out of the loop or sense that their agency isn’t responsive, frustration builds. Inadequate communication can give the impression of indifference, making clients feel as though their business doesn’t matter.

Agencies should establish a clear communication plan that includes regular updates and check-ins. This doesn't necessarily mean daily calls or emails but finding a rhythm that keeps clients informed and engaged without overwhelming them.

This should also trickle down to any partners that you also have served your client’s campaigns alongside your team. Be sure they have a reasonable turnaround time for messages and calls so that you can give your clients an expected response time for their questions, comments, or concerns about their marketing campaigns.

4: Lack of Quality Control

In the pursuit of efficiency and cost-effectiveness, agencies often use multiple individual vendors, leverage artificial intelligence (AI) solutions, or offshoring work. While these practices can be beneficial, they also introduce risks concerning quality control.

When deliverables aren't consistently vetted, clients may receive work that doesn't meet their standards, leading to a rapid erosion of confidence.Oftentimes, this can be chalked up to:

  • Not proofreading or vetting a vendor’s work before it goes to a client (cutting and pasting)

  • Over-relying on AI without any human checks and balances in place to ensure accuracy, originality, and overall quality

  • Offshoring work to large, low-cost providers that do not treat your client’s marketing operations with the same care and consideration that you do.

It’s essential to establish rigorous quality control processes for any external deliverables to ensure that every piece of work, irrespective of its origin, meets a high standard. Regular audits of work done by AI marketing tools, vendors, and offshore partners are essential.

To avoid some of these common issues with outside providers, consider collaborating with a white label agency that maintains a reputation for high-quality deliverables to manage overflow work and maintain standards. Ask them about their own quality assurance processes to see if they give you the necessary confidence to rely on them to work for your client, both independently and in collaboration with your in-house team.

5: Limited Scope of Services

Digital marketing is an expansive field, and clients' needs are diverse and evolving. When an agency's offerings are too narrow, they risk losing clients to full-service competitors that can provide a more comprehensive suite of services.

To put it simply, the scope of marketing is vast, and only having a piece of the pie can put you at a competitive disadvantage against an agency with a full digital bakery at its disposal.

Agencies should evaluate their service offerings regularly and consider strategic expansion to meet market demands. Collaborating with a white label agency partner can be a smart way to extend your services without overextending your resources. This can allow you to offer new services under your brand, satisfying your clients' needs and keeping the business in-house.

6: The Client Was Too Big

Landing a white whale-sized client can seem like a big win for any agency, but if your infrastructure isn't prepared to handle their volume or complexity, it can backfire. Pursuing these types of clients without the capability to deliver on their expectations can damage your agency’s reputation and lead to a loss of trust.

Before pursuing or agreeing to work with a large client, assess your agency’s capacity and have a concrete plan for scaling operations quickly and efficiently. If necessary, establish a partnership with a white label agency that can help shoulder the load, providing the additional resources and expertise needed to satisfy a major client's demands without compromising quality.

7: Overlooking the Personal Touch

Clients often choose agencies for their personalized service. When agencies grow and start to standardize their processes, this personalized approach can get lost.

Even as your agency scales, strive to maintain a level of personalization in your interactions. Get to know your clients’ businesses intimately, and let that knowledge inform your strategies and communication.

Get the Client Retention Support Your Agency Needs

The first year with a client is both an opportunity and a test. Agencies must consistently demonstrate their value through clear communication, robust results, responsive customer service, and personalized attention.

By actively managing client expectations and being willing to adapt, agencies can avoid the common pitfalls that lead to client turnover. Building a solid foundation in the first year can set the stage for a lasting and fruitful relationship.

If you are looking to boost your agency’s client retention efforts, consider partnering with a white label agency like our team at Conduit Digital. We proudly serve established agencies in North America as an elite ad operations partner - providing 18 expert-managed channels that are fully U.S.-based along with the communication and reporting infrastructure to support even the most complex campaigns.

It’s time to upgrade the way you deliver for your clients rather than just outsourcing. Schedule a call with us today to learn more about an agency partnership.









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