What does a marketing agency’s client churn pattern tell me about its retainers?
Churn shows whether retainers are truly recurring or only repeat orders. Look at how long clients stay, when they leave and why. A pattern of exits after the first campaign points to a project business dressed up as a retainer one.
Ask for a list of every client from the last several years, with start dates, end dates and the reason each left. Then sort it. Do clients leave soon after the first big result, around budget season or after a staff change on their side? Each pattern says something different about what holds the relationship together.
Look closely at the contracts. Is a retainer committed, or can the client walk away at short notice? A retainer that is easy to cancel behaves like a monthly decision, and the agency has to keep earning it. Check also whether fees have shifted over time. Clients that stay but quietly shrink their spending are a form of churn too.
Ask the seller what they did to win back or retain clients, and who did it. Then talk to a couple of former clients if you can. They often explain departures more honestly than the records do, and their answers show whether the weakness was price, results or service. Finally, compare churn with the agency’s own sales effort. If new clients arrive at about the pace old ones leave, the business is running to stand still, and the owner’s selling time may be quietly holding up the numbers.
Key takeaways
- Get a client history with start dates, end dates and reasons for leaving.
- Read the contracts for how easily a retainer can be cancelled.
- Treat shrinking spend from clients who stay as a form of churn.
- Check whether new sales are only replacing the clients who leave.
Related reading
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Due diligence
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 02Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
- 03Business Development Bank of CanadaGovernmentHow to minimize negotiations when selling your business
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