“Your client isn’t choosing between your agency and doing nothing—they’re choosing between your services and something else.”
Client retention is the real marker of success in agencies, consultants, and marketing teams. Too many businesses focus on the mechanics of their service—tasks completed, reports delivered, and actions taken or vanity metrics like rank, impressions, likes, or views without ever stepping back to ask the crucial question: Are we delivering measurable economic value for the client?
This epiphany builds on Epiphany 6, where we explored helping individuals understand their economic value. Now, we’re shifting that perspective to how agencies and consultants can prove their worth to clients in a way that justifies their fees and ensures long-term retention.
What is Economic Value?
Economic value is the worth of a product or service based on the benefit it provides compared to its cost when compared to other related activities. In business, it measures how much a client gains—through revenue growth, cost savings, or efficiency improvements—relative to what they spend.
Why Clients Leave: A Hard Truth
During the pandemic, I had multiple conversations with small SEO agencies struggling with client churn. One agency had a renewal rate of just 20%, meaning that 80% of their clients walked away at the end of the contract. When I asked them how they pitched their renewal, the answer was shocking:
They sent the same scope of work from year one, slapped a “renewal” label on it, and expected clients to re-sign.
Unsurprisingly, these clients weren’t seeing enough value to justify continuing the engagement. They weren’t asking, “What did you do?”—they were asking, “What did I gain?” And that’s the fundamental shift agencies need to make: moving from consulting by the pound (a list of tasks) to demonstrating real economic impact (the value delivered).
The Reality of Budgets: There Is No New Money
One of my most significant wake-up calls about budget allocation came in a meeting with a Fortune 20 CMO, who was part of the roadshow after my first agency was acquired. After I finished the presentation, the CMO agreed this was exactly what they needed. He turned to my new parent agency account director and asked how they planned to reallocate funds. The AD replied that this would need to be a new money activity. The CMO turned to the team and said something I’ll never forget:
“You have 100% of my budget. There is no new money! Shift it from whatever is underperforming”
This simple truth applies to nearly every business: budgets don’t magically expand. If you want to win more work, you must prove that your services deserve reallocation from something else. In this case, we demonstrated that search could deliver far more measurable value than print advertising, and they shifted dollars accordingly.
Lesson: You’re Always in Competition for Budget
Your client isn’t choosing between your agency and nothing—they’re choosing between your services and something else. That means your ability to justify economic value isn’t just nice to have; it’s critical for survival.
Both times my agencies were acquired, this was one of our biggest challenges with existing agency clients. Despite the clients wanting our services, getting the account teams to cannibalize an existing service was nearly impossible. Client budgets are allocated annually and tied to agency manager bonuses, so they fought for it despite what may be the best for the client.
The Two Pillars of Economic Value
Unfortunately, many agency leaders do not understand two types of economic value, which causes friction between clients and agencies. The two participants in the transactions approached it from different perspectives.
- Delivered Value – Let’s think of this as the agreed contractual value. Typically, the agency team thinks of a client paying them X amount to deliver specific tasks, which is a laundry list of work-for-hire activities detailed in the scope of work.
- Perceived Value – Contrasting delivered value to the client’s belief that the money spent will generate some often unstated value and a positive return on that investment in new clients, revenue growth or cost savings.
Like the agency above, I had another consulting client with an 88% annual turnover, and they wanted to improve their retention. During my consulting, I interviewed over 100 companies that did not renew. Interestingly, about 55% only paid for a website to be developed and no marketing services. Despite not paying for marketing, they all expected more clients to visit their websites. The sales team had told them their websites would rank well and be this magical magnet of new customers. When I fed this back, the sales team was frustrated, stating that the clients did not state that “getting new clients was the goal of the website” and that “we delivered 100% of what they paid for”. I pointed to the two definitions I had written on the board above. Over the rest of the day, we strategize how to reconcile those two different definitions of value.
The Danger of “Consulting by the Pound”
Too many agencies operate under this potentially dangerous model of consulting by the pound. Starting with the scope of work, they will indicate all of the “tasks they will do” and how much time will be allocated, and for that, they will be compensated at some rate. This is also how they report: an hour a week or month is spent going through the checklist of tasks and deliverables, completing them so they can be invoiced.
This type of reporting fails to connect actions to economic impact. Instead of focusing on what was done, agencies must tie their work to revenue generation or cost savings.
A Framework for Proving Economic Value
To ensure you’re delivering measurable value, follow these key steps:
- Identify the client’s key KPIs – Whether revenue, cost savings, or lead generation, know what success looks like. Understanding their “perceived value” and their metric is critical to shift the budget from another action to you.
- Tie all work to economic impact. Reports should emphasize outcomes over actions. I am not saying don’t show them what tasks you completed, but you must also show what they achieved. It is frustrating as a business advisor to be asked to these meetings and hear clients complain they have not seen any business impact, while the account manager keeps showing all the things they have done.
- Show the cost of inaction – To be fair to the hard-working agencies with clients that don’t take action, demonstrate how much money is lost by not implementing changes. You can use my “Cost of Inaction” report to explain how their lack of implementation is costing them.
- Communicate value consistently – Another big mistake I see with agencies is waiting until renewal time to showcase impact; make it part of regular reporting. Use some of the reports I have used to demonstrate strategic value to help show what you have achieved.
- Establish a Client Satisfaction Feedback Loop – By implementing a structured Client Feedback System, agencies can identify issues early, strengthen relationships, and improve service delivery before It’s too late.
- Course-correct quickly – If results aren’t materializing, shift focus before the client loses confidence.
Closing Thoughts
Clients don’t renew because you did a lot of tasks. They renew because you made them money or saved them money.
If your agency or consultancy struggles with client churn, ask yourself:
- Are we proving economic value, or just listing completed tasks?
- Are we aligning with the client’s core business objectives?
- Are we helping them achieve success in a way that justifies reallocation of their budget?
The agencies that master this shift—who make economic value the foundation of their client relationships—are the ones that thrive.
“Your job is to do nothing more than to keep your client employed.”
Make that your north star, and you won’t just retain clients—you’ll become indispensable.