It’s the kind of knowledge every agency wants to get their hands on – why clients leave – and in the latest Digital Marketing Outlook from Volume 1 of the 2016 SoDA Report, the international association of leaders from agencies the world over have found the answer.
Turns out, just like in any relationship, miscommunication is a root problem. While clients list a stack of reasons for their termination of a partnership, agencies consistently list management issues and changes as the reason.
The percentage of agencies laying the blame on client management changes as a reason for breaking up sat at 56 per cent in the 2016 report, up from 33 per cent in 2015. That’s 19 per cent higher than the second reason agencies list for why relationships end.
Management changes as a reason jumped up for clients as well, from 11 to 18 per cent year-on-year. But despite this figure, it’s still the seventh reason listed for clients to split from agencies.
Thirty-seven percent on both sides attribute the end of their relationship to the issue of pricing/value, with agencies struggling to prove the value of their work through measurement, and clients expected to present impressive deliverables.
“Agencies owned by holding companies feel this more acutely with 48 per cent selecting pricing/value as a reason for termination versus 35 per cent of independent agencies,” the report said.
“This could be because holding company agencies are often sitting on bigger budgets and clients expect greater efficiencies.”
After pricing/value, the client-side response was focused around unhappiness with strategy, creative and project management — “the bread and butter of most client and agency relationships”.
What clients want, according to the SoDA report, is for these areas to remain top priority, which would explain the average level of satisfaction clients are experiencing with agencies.
“Agencies that turn a blind eye to why their clients are really leaving will fail to address key improvement areas. The dysfunctional circle will continue until a new entrant comes along to disrupt the cycle,” the report claimed.
In 2015, only six per cent of clients listed understaffing or inexperience as a reason for termination, but this figure jumped to 21 per cent in 2016.
“As agencies struggle to stay competitive and meet client needs, they are sacrificing talent and sufficient skill development — and clients are starting to notice,” the study added.
“We expect inexperience to be an increasingly prevalent causal factor in agency-client relationships going south, as the percentage of agencies who indicated they are not providing any training to their staff almost tripled in 2016, growing from five per cent to 14 per cent.
“Overall, client expectations are increasing across the board and agencies haven’t caught up yet. And they aren’t always bringing their business to other agencies. Many are also taking it in-house, which came out in the colour commentary provided by respondents.”
You can see the reasons clients and agencies part ways in the infographic below:
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