3 Ways to Increase Client Retention Through Transparency
"Transparency" is no longer a buzzword -- it's a real necessity in today's business world. Here's how to make sure you're exercising it.
Here’s a news flash: The days of corporate silos and veiled marketing are over. No longer can a company hide its real intentions or results from investors or clients. In a Label Insight study of SmartLabel transparency technology, 40 percent of consumers surveyed said they would switch brands if one were more transparent; and 73 percent would be willing to pay more.
Let that sink in: Transparency is so important that a majority of people will pay more for it.
But let’s be real. Being transparent isn’t easy. When you’re trying to keep clients happy, somebody will eventually have a less-than-stellar experience, and mistakes will happen. When you commit to transparency, you open your company up to more criticism and questions around any mistakes. And no one is ever psyched to address that kind of feedback.
However, as with so many things in life, when you do the right thing, even though it’s hard, you’re often rewarded -- in this case, with higher client retention. In any relationship, transparency is the key to trust. And trust is the key to not only building strong relationships, but also maintaining them. You can’t have one without the other.
The virtuous cycle of transparency and trust
At my company, we go so far as to show clients unfavorable numbers in their existing businesses just to prove that we are transparent, regardless of whether that news is fun to hear.
Occasionally, when clients are convinced that something is true (while we insist that it’s not), our radical transparency can make those clients angry or combative. Nonetheless, it always fosters better long-term relationships. Many of our clients have been burned by marketing agencies that didn’t fully disclose where ad dollars went, or actually inflated returns; but because we understand how vital transparency is, we’ve been able to retain nearly all of them.
BrightInfo is one company that learned the value of transparency after research revealed that, while customers were happy with its product, many falsely assumed that its value was diminishing. To rectify the situation, BrightInfo’s client dashboard began offering irrefutable proof that its product drives ROI by clearly showing the results of all A/B tests and KPIs. After the company instituted that change, its churn rate decreased from 4.4 percent to .5 percent.
How to be radically transparent
No matter what kind of company you run, regardless of whether you provide a product or service to businesses or directly to consumers, you will need to prove your worth over and over again.
Being totally transparent will help you foster the kind of trust and collaboration that keeps clients happy, even when things don’t go perfectly. Here's how:
1. Start with honest value propositions. You know how this works. You really want to land some certain business or sign some certain client, so you throw in little pro-bono perks, often called “value adds.” Each one might seem like no big deal, but after you've provided a number of these, you may suddenly realize you’re not adding value; you’re just doing a lot of extra work for no compensation.
When this happens, clients sometimes start to believe they’ll get whatever they request -- for free. So, from day one, let people know why things cost money and where that money goes, to proactively defend your value. Clients rarely understand what it actually takes to effectively perform a service, and when you consistently throw in time or money for free, you devalue your work and create a downward spiral. This is why 71 percent of organizations agree that establishing your value clearly up-front is the best tactic.
2. Don’t create “black boxes.” If your partners don’t provide full transparency into where every dollar goes that you’re spending with them (and how those efforts are going), you won’t know what’s working. You don’t want that and shouldn’t stand for it. So, why would clients want to work with you unless you provide the same level of transparency to them?
The owner of an account holds the power. For example, if a marketing agency says, “We’re going to create a separate account that we own for all of your campaigns and all of your ad spend,” it's effectively telling you that the company not only owns your data, but also controls the illusion of success or failure.
To avoid creating a “black box” where your efforts will be obfuscated from view, use your clients’ platforms and preferred tools, rather than setting up standalone platforms that they can’t access. Describe this best practice and the motivation behind it during the sales process, and execute on it at onboarding -- be honest and open, early and often. Your commitment to transparency will be a big selling point for the right clients.
3. Own your mistakes, from start to follow-up. Here’s a hard truth: Only 39 percent of agencies meet client expectations, according to a survey by Bedford Group. To be part of that group, you must be willing to take the initiative when it comes to owning up to mistakes.
When one of our client’s campaigns isn’t performing as well as we thought it would, for example, we’ll say, “So, here’s what things look like so far. Let’s keep an eye on it, and then optimize based on some further tweaks we’ll make next week.”
Related: Owning Mistakes Is Part Of Success
Don’t hide from poor performance. Clients will see it and ask about it, anyway. When you make mistakes or see lackluster results, report the bad news before they ask about it. By pointing out the issues and outlining a solution, you ensure that they can see the improvements happen, which only strengthens their trust in you as a partner.
To keep them coming back for more, be transparent with your value proposition, clarifying how, why and where their money is going to be used. Give clients access to their own performance data, and when results don’t turn out as expected, get out in front of the situation by describing your thoughts on why they didn’t. Then, once you’ve determined an appropriate course correction, tell your clients what you’re going to do, do it -- and tell them what you did.