As with any business, customer retention is far more valuable than customer acquisition. Companies that succeed in the long run are the ones that invest heavily in keeping their customers satisfied, rather than only spending money to acquire new ones. One of my absolute favorite marketing books is The Loyalty Effect by Frederick Reichheld, which explains in painful detail why companies that retain their customers far outperform companies that don’t ( trust me, it is the best $11.86 you will spend on a marketing book this year).
I wrote an homage to Reichheld’s book last year with a particular focus on eTailers, in which I noted: “If you can get the customer to return five times and spend $100 each time, that’s $500 more you could spend profitably acquiring this customer. Moreover, it turns out that repeat customers tend to spend more than new customers, require less customer service, and are more likely to recommend your business to others.”
You would think that search engine marketing consultants – being marketers – would understand the importance of customer retention better than the average business man. Sadly, this often appears not to be the case. I’ve only been doing SEM consulting for about four months now, but I’ve already seen plenty of examples of SEM consultants doing a great job of customer acquisition and then doing next to nothing on customer retention.
For my personal SEM consulting business, bad customer retention is both a blessing and a curse. It is a blessing because it enables me to a) win new business and b) come in and “wow” a client with my consulting (and I’m not bragging about my consulting skills here – many clients are wowed by the most basic services after a bad consulting experience). But it’s an overall curse for our industry because it leaves a bad taste in our customers’ mouths. The weakest link in the chain brings everyone else down. To use an analogy, there are good car dealers and there are bad car dealers, and most Americans are suspicious of all car dealers because of their run-ins with the bad guys, which ends up hurting the businesses of the guys trying to be honest with their customers.
So I write this article with the knowledge that it could result in a short-term loss of business to my consulting firm, but a long term benefit to SEM consulting overall. And in the spirit of customer retention, that’s good for everyone.
Here are my seven tips for keeping your SEM consulting customers happy:
1. Don’t take the work if it really isn’t your area of expertise. I recently had a potential client call me who was interested in building out an end-to-end lead generation offering. While I’ve been in the lead gen industry for several years, I certainly am not an expert at building out lead generation business. So I told them that I couldn’t take the work and referred them to a friend who I thought could really do an awesome job for them.
While it’s true that I turned down an opportunity to make money immediately with this client (short-term financial win), I believe that in the long-term this will turn out to be a win for my business. Why? Well, first off, the potential client now sees me as a straight-shooter and we’ve established a relationship based on trust. Second, the client knows that when they are ready to invest in SEM lead gen, that I am their go-to guy. And third, the friend I referred the business to will want to reciprocate the favor in the future and send some business my way. In other words, I rejected one client but will probably end up getting several clients out of the deal in the long-run.
2. Don’t accept work too big or too small for your practice. It’s hard to turn down clients, especially when you are trying to keep the lights on at home! But accepting the wrong clients may pay the bills this month but hurt your long-term ability to grow your business.
As an SEM consultant, you need to understand your “client sweet spot.” For some businesses like ReachLocal or Yodle, a client that is paying $300 a month is a great client. But if you are a one-man shop, you may find that a $300 client actually costs you more money than you are getting paid (think about it this way, if you have to spend ten hours a month on a $300 client, are you hitting your business’ financial objectives?).
Inevitably, if you accept clients that are ‘too small’ for your business, you will feel pressure to spend less time on their accounts and more time on the accounts that are paying your bills. And this will lead to bad customer service and bad performance for these clients and eventually the cancellation of their accounts. The adage ‘a satisfied customer will tell one person about your business, a dissatisfied customer will tell ten’ applies here.
By the same token, while it is tempting to try to close a client that spends $500,000 a month on the search engines, you need to be really confident that you have the time, tools, and resources to satisfy this client before you accept the contract. Big clients generally require more face-time, have more bureaucracy, may have their own reporting systems, and may expect very specific deliverables from you. If you don’t have the staff to support this, you may end up signing a big contract that only lasts a few months before the client bolts.
3. Be brutally honest. An easy way to close a client is to overpromise and flatter. People love compliments, and if you come into a meeting and talk about how much you love their Web site, product, and marketing strategy and promise huge ROI from SEM – even though you don’t believe any of this to be true – you will no doubt win the battle (the contract) and lose the war (the long-term client).
If a potential client’s Web site is horrible, or if he sells a product that just won’t work on search, or if his back-end economics pale in comparison to the competition (and thus you won’t be able to bid effectively on the search engines), honesty is the best course of action. Search engine marketing cannot exist in a vacuum, nor do search marketing consultants have magical powers to turn straw into gold.
Moreover, telling potential clients the truth about their overall potential for success may end up being a good business opportunity for your consulting firm. I frequently pitch clients on a combination of ongoing SEM consulting and a one-time usability tune-up. Again, this is a win-win situation – I get more of the client’s business by charging for the usability assessment, the client gets a much better converting Web site out of the deal, and we both end up satisfied with the increased success of the search engine marketing campaign.
4. Establish clear business goals up front. Most people are optimistic by nature, and this is particularly applicable to Internet start-ups. After all, if you don’t believe you can change the world, why bother taking the gamble to start your own revolutionary business? As much as I love hanging out with people try to subvert the dominant paradigm, it’s also important as a consultant to try to bring these folks at least a little closer to earth and establish realistic and clearly understood goals at the beginning of the relationship.
This can be as simple as setting a “cost per conversion” goal, a margin objective, or a 30-60-90 day plan. However you want to do it, establishing benchmarks and goals upfront avoids any misunderstandings down the road. The worst case scenario is one in which you are very excited about the positive momentum you are driving for your client and the client thinks you are failing. With clear understanding upfront, that should never happen.
5. Be responsive. As you grow your client base, it becomes harder and harder to provide personal attention to every client. Your clients, however, have only one business to run and (deservedly so) believe that their business is the most important business on earth, and expect you to feel the same. So if a client emails or calls you, you need to find a way to get back to them ASAP. My rule of thumb is that a non-urgent email/call from a client must be answered on the same business day and urgent calls should be returned within two hours.
Even if you can’t get the client an answer immediately, you should still respond promptly acknowledging receipt of the communication and giving the client a timeline as to when you will respond in full.
6. Check on the basics at least once a week. Here’s two amazing but true anecdotes I heard from clients. Client #1’s business was running fine until one day his phone stopped ringing. This went on for a week and he had no idea why he wasn’t getting new client calls. Finally, he logged into his AdWords account and discovered that his credit card had been rejected. He fixed the credit card problem and promptly fired his former consultant, who clearly wasn’t paying attention to his account.
Client #2 was working with a pretty sizable SEM agency and paying the agency about $4500 a month for their services. When the client logged into AdWords and checked the “My Change History” tab, she noticed that the agency had spend a total of less than an hour and a half making changes to her account – over a three month period. In fact, for the entire month of March, the agency hadn’t made a single change. On a prorated basis, she was paying $10,000 an hour for these SEM services.
To do a good SEM consulting job, you don’t have to run sophisticated regressions every day or figure out some advanced day-parting strategy. But you do need to pay attention to your clients’ accounts on a regular basis – at least weekly and preferably more frequently. Not making any adjustments for an entire month – and collecting $4500 – or letting an account go quiet for an entire week is completely unacceptable.
7. Act like it’s your business. Everything I’ve mentioned above can be pretty much summed up by this point. If you don’t care about your clients’ business because it is too small, because you have too many clients, because you think it is going to fail no matter what, or for any other reason, this will show in the quality of the work you perform for your client. I’m not saying that you have to be excited about your clients’ products, but you do need to be pumped about doing everything you can to grow your clients’ businesses.
Sometimes this means doing things that will negatively impact your consulting business. For example, if you are charging clients on a percentage of spend basis, whenever you pause or bid-reduce high volume keywords you are inevitably reducing your monthly bill. Ultimately, however, whenever you make decisions that benefit your clients, there’s a good chance it will end up benefiting your business in the long run. Again, if you are serious about your consulting business, you shouldn’t be thinking about this month’s revenue; you should be thinking about where you’ll be three years from now.