Common myths
Adding a retention practice to your business is a great way to increase recurring revenue, maintain stable profitability, and reduce client churn. However, there are several common myths that prevent agencies from taking this step. Let’s go through each of them.
Myth: There is a perfect time to add a retention practice
Identifying the right time to introduce monthly support services is one of the biggest hurdles for ecommerce agencies. In reality, there is no perfect time. If you wait for the perfect opportunity, you’ll leave money on the table and cause your clients to go elsewhere. In short, the right time is now.
This course provides a blueprint and some best practices on how to add a retention practice to your business.
Myth: You have to wait until your agency is a certain size to add retention services
You might think your agency needs to be a specific size to add monthly support to your retainer offering. However, the size of your agency is not the most important factor. It’s more important to determine if your agency has the expertise and resources to provide ongoing support to clients.
This may require you to add talent to your agency. However, this doesn’t mean you need to immediately hire an entire ecommerce marketing department. For example, you can start by hiring contractors or freelancers for some roles or a generalist with skills in multiple areas and start building your team from there. You can also invest in training for your current staff to help them develop the needed skills and expertise.
In this course, we’ll go over how to scale your agency in more detail and provide guidance on adding the right expertise.
Myth: It’s too difficult to add a retention practice
Adding a new line of business to your agency can seem daunting. We recommend starting auditing your existing client base to better understand their requirements. This includes understanding their internal structure, whether they have a marketing team in-house, and if Klaviyo is a priority for them.
If you identify a client using Klaviyo for their email marketing but they are struggling to get positive results, there may be an opportunity to offer ongoing support to them. If you identify that a client is not driving between 20-40% of their revenue from their email marketing, it's time to talk to them about how you can help them improve those numbers.
We’ll provide more details on the main steps to build a retention practice, including prospecting clients, later in this course.
Myth: Pricing ongoing Klaviyo support is too complicated
Pricing retention services require a mindset shift away from a time-and-materials pricing model (i.e., estimating how long a project will take, adding some contingency to allow for scope creep, and presenting a few pricing options). Using this model makes offering ongoing Klaviyo services unprofitable.
The nature of most marketing services is that you get better and more efficient over time, which means a time-and-material pricing model will penalize you for getting better and more efficient. The solution is to pivot to value-based pricing, which encourages you to charge based on the value you create for clients. What is value-based pricing? Here’s an overly simple example: the project you create for your client might net them $100K in new sales. You charge 20% of that ($20K). Any smart client will be willing to invest $20K to earn $100K.
We’ll describe how to price and package your retention services in more detail in this course.