Why do clients leave their marketing agency
There can be a myriad of reasons why a company might decide to ditch their strategic marketing partners. I have personally witnessed reasons ranging from spite (bad relationship) to finances (too expensive) as to why clients leave their marketing agency . Below are the three most commonly found reasons.
1) Agency is not meeting expected goals – This one is quite simple, the agency is just not performing up to the standard they sold the client on. This might include (but not limited to) key metrics not being met, or just sloppy, and uninspired work as a whole.
2) Top level management turnover – This reason is a bit more complex. Client and agency relationship is just that; Its a relationship. Which means it is susceptible to decay, and in constant need of maintenance. This is also the reason why agency account management is so critical to keeping good relationships. Sometimes though these things can be out of the control of an agency or the company. I have seen numerous agencies be discarded because a new CMO or Director comes into play. This new hire has a lot of clout, and will be keen on bringing in their choice for an agency of record (perhaps someone they have done business with before).
3) Expense – How expensive the agency is could play a huge factor in the agency turnover rate. For large (Fortune 100) companies, these expenses are less relevant, but for the majority of small and medium size companies, price is a constant and ever growing concern. They often follow a rigorous RFP process just to shave off some money here and there. There is however one thing they can all count on. All agencies that pitch new work expect that they will be compensated for the discovery process, which can often account for a third of the total bill.
The business world is littered with agencies which never make it past this stage with a new client for a number of reasons, usually out of the control of the agency, and sometimes even the client.
Most importantly, as the profit margins for agencies is decreasing, and revenue growth for the top 4 agencies is slowing, the advertising industry is looking for a game changer. More than 13,200 advertising agencies existing in the U.S. in 2010 (all mostly with 5 or less employees), and hourly rates falling sharply across the board, agencies must find a new way to attract, and more importantly keep their current clients.