If you want to succeed, hold on to your clients. PR lecturer Dr Bill Nichols explains how

Back in the mid 1980s, the average client-agency relationships lasted seven and a half years. Just 25 years (and three benchmark studies) later it was down by over 50 per cent to just 42 months. And that was late 2007, before the credit crunch got its steel-edged teeth into long-term contracts. 

So what? Well annual disloyalty costs the UK PR agency business around £340 million (based on old 2005 CIPR figures). Say over one million for a mid-size £4-million firm. Or 130 grand every six weeks.

Just the way the world works? After all it’s good fun jumping on the pitch whirligig. While most agencies budget to replace a proportion of their existing income each year, this is still a seriously sobering statistic.

Whenever I’ve studied an agency that secures consistent above-trend growth, it’s fuelled by highly effective retention. This, in turn, complements often average new business efforts.

So now, if you want to secure the base defensively and lay a platform for higher-than-average growth, here’s a five-step outline.

1. Start measuring goodwill. It’s an amalgam of traditional satisfaction and loyalty measures and far more effective as a predictor than either in isolation. You’ll find it helpful to imagine that your agency possesses goodwill ‘bank accounts’ with each client. Build up your deposits and you may get away with a massive cock-up. Let them run down and misspelling the CEO’s name may be enough to trigger termination!

2. Learn how to manage the six ways to pay into your account. And note that emotional stuff like ‘pleasure’ (yes it was a good meeting; yes I always enjoy visiting the agency) and ‘fairness’ (they’re pretty honest, they don’t rip you off like most do) are by far the most powerful. And, sorry, left-brained logical types, all that utility satisfaction rates least.

3. Maintain a working internal goodwill dashboard for weekly assessment. Among these you’ll find that the level of your team’s empowerment (trust) is the longest leading indicator. Micro-management increasing? Clients complaining that they have to rewrite stuff? Someone used that tolling bell of a word ‘proactive’? Mmm, amber light time: your credit is running down.

4. Ensure that you embed/train goodwill management in the agency’s working practices. My favourite is the ‘management of expectations’ (another longer leading indicator). Pretty much every suit I ever speak to thinks this is common sense. True, but one forensic research study identified no less than 57 reference standards in expectation setting. And all those standards can lead to enormous confusion. If I reference the client by some ideal, you do it by best practice and your exec talks in terms of basic service, you can see where we’re heading.

5. Start using the goodwill mechanism to segment your client base into five types – including the most likely advocates. But that’s another tale.

Formerly chairman at PR consultancy Whiteoaks, Dr Bill Nichols specialises in services marketing and is now public relations course leader at Bucks New University. He is also on visiting faculty at Henley Business School.

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