Board Agenda item: One From: Lloyd Silberstein, President, New York Office To: Board Directors Focusing on client retention The concept of client or customer churn describes the cycle of acquiring new clients and losing others. Churn is traditionally seen to limit long-term customer value due to the cost of acquiring new clients to replace the ones that have been lost. 80 businesses have focused on 'client retention' as a strategy that drives protability. In the advertising and marketing communications industry, the concept of 'business partnerships', i.e. informal relationships developed over a long period which are benecial to both supplier and client, are at the core of protable growth. These are built on trust, condence, mutual understanding and mutual success. Clientagency relationships are one of the most complex in the business environment, requiring a substantial level of collaboration to be effective. According to a recent research report by the American Association of Advertising Agencies, in the average clientagency relationship tenure was 7.2 years. By the mid-2010s that number declined 25% to 5.3 years, If the trend continues, we are soon heading for a situation where clients will search for a new agency every four years. While top agencies in the US. admit they are not doing their best work for many of their clients, 'creative genius' is not always the key component of the success or failure of the clientagency relationship. The WRSX Board asked me to investigate the client churn l retention situation in businesses managed by the New York ofce which is substantially above those of other ofces and to recommend a strategy for turning this around this nancial year. We have been working hard on this and I would like to present our new client retention strategy to the Board. We call it 'Strengthening Client Relationships'. I would like to present this at our next Board Meeting if there is room on the agenda. MSX V4_EM2_Detailed_Agerida_ltems l Copyright Learning Dynamics 2021 All rights reserved. Research Findings Clients continue to cite the same reasons for terminating their relationship with the New York agency. What is sad is that most of the time, these issues might have been resolved if they were acknowledged and addressed earlier. - Turnover new marketing director - Lack of interest/understanding of client's business - Strategy and creative linkage unhinged - 'Outgrown' the agency - Understafng and inexperienced personnel - Changes at the top - Research scores consistently below norms - Creative intransigence and arrogance - Mandated consolidation - Loose attention to budgets Strengthening Client Relationships in response to the issues raised by our research, the Strengthening Client Relationships (SCR) programme will be introduced into all New York managed businesses. This programme will focus initially on the Top 10 (T10) clients in each operating unit. Generally these will be clients generating income of10m per year. A key part of this process is the T10 meeting, involving rm-wide representation, in order to challenge current thinking and further develop the client relationship. Each meeting will focus on only one client business. The meeting's objectives will be: - Strengthening relationships - Increasing client knowledge and understanding ' Identifying opportunities (and resolving issues) - Improving communications internally and externally The appointment of a Client Relationship Manager (CRM) for each business is key to the success of this programme. The CRM will organise research with all Top 10 clients in advance of any meeting in order to ascertain the client's current view of the service provided by WRSX. The CRM will then facilitate the T10 meeting which will bring together everyone who has a signicant role in providing service to that individual client business. Time involved will be four hours per year for each Top 10 client. The CRM will be responsible for facilitating the T10 meeting: - To raise awareness of the importance of delivering excellent client service - To provide strategic input and advice to drive the growth of the operating unit's key accounts MSX VA_BM2_Detailed_Agenda_ltems | Copyright o Learning Dynamics 2021. All rights reserved - To support in identifying ideas and opportunities, drawing on best practice solutions from other accounts - To provide constructive challenge - To encourage effective team communication and sharing of knowledge across a multi-disciplinary team - To link with other Client Relationship Managers in cross-fertilising best practices and ideas across the rm The outcome from each meeting will be a Client Relationship Plan that will: - re-afrm client expectations and agreed deliverables - include key actions for this individual client business - include Client Service Standards - be communicated to client within two months - be reviewed annually, identifying successes and areas for further development This is a 'first' for the WRSX Group and | feel that the New York ofce is leading the way in terms of improving client retention and as such I commend the Strengthening Client Relationships programme to the Board. The cost of this programme for the rst three years for all New York managed businesses is 3.6m. Agenda Item Decision Options: The Board has four Action Options: Option A: The Board believes that the SCR programme has real merit and focusing on the Top 10 clients for each business is a clever strategy as they are the big spenders who it would be most damaging to lose. The Board should sanction the new Client Relationship Managers posts for each New York business and approve the full budget for the SCR programme for the next three years, i.e. 600,000 per half year for three years. Option B: The Board believes that the SCR programme has real merit but that focusing on the Top 10 clients for each business is not correct as many of these clients are long-standing business partners of WRSX and the degree of collaboration is such that these clients are unlikely to move, Better to ask each Account Management team to suggest clients that they think are 'at risk' and to focus the SCR programme on these clients only, whether they be large clients or small. The Board should sanction the new Client Relationship Managers posts for each New York business and approve the full budget for the SCR programme for the next three years, i.e. 600,000 per half year for three years. Option C: The Board believes in the SCR programme but that it is too costly and it should not sanction the new Client Relationship Managers posts for each New York MSX.V4_BM2_Detailed_Agenda_ltems | Copyright Learning Dynamics 2021. All rights reserved. business but ask the Account Management team for each business to nominate someone from their existing team to take on this extra responsibility. The full CSR programme should be implemented but no CRM posts created. This would reduce the budget for the SCR programme for the next three years to 200,000 per half year for three years. Option D: The Board believe that this programme is costly and does not put the responsibility for Client Management where it belongs, i.e. with the Account Management Team. The Board refuses to sanction the budget for this programme at all and Lou should be sent back to New York to come up with an alternative proposal for decreasing client churn. MSX.V4_BM2_Detailed_Agenda_ltems 1 Copyright Learning Dynamics 2021. All rights reserved