43/43/14 split

Last email I went deep on capacity forecasting.

Today we're getting into the churn data (this one's a bit more uncomfortable).

The split was almost perfectly even. 43% of you are tracking churn by individual account manager. 43% are not. And 14% aren't tracking churn at all.

I want to talk to all three groups because the advice is different depending on where you're at.

For the 14% not tracking churn at all: I'm going to be direct with you. You are flying blind on the single most important metric in your business. You need to start tracking two things immediately. First, churn by number of clients - how many clients are you losing per month? Second, churn by revenue - how much revenue is walking out the door per month? These are different numbers and they tell you different things. Losing five $1K clients is a very different problem than losing one $15K client. You need both.

The ideal target is 2.5% monthly churn or less. That translates to roughly 30% annual churn. If you're thinking "30% sounds high" - it means you're keeping clients for an average of about three and a half years, which is excellent. The biggest and most profitable agencies I work with are at 2.5% or below. If you're above that, and especially if you don't even know your number right now, this is probably the single highest-leverage thing you could work on.

For the 43% tracking company-wide but not by account manager: You have the foundation but you're missing the insight that makes it actionable. Company-wide churn is an average, and averages hide everything.

I keep coming back to this example because it's real and it's common: I've worked with agencies where the blended churn was 6-7%. Totally acceptable on paper. But when we broke it out by account manager, one person was at 2% and another was at 20%. That's a 10x difference in client lifetime value between two people doing the same job at the same company.

Once you can see it by person, the fix isn't necessarily firing anyone. It's figuring out what the 2% person is doing differently - their communication cadence, their proactivity, how they handle problems, how they set expectations — and training everyone else to do the same thing. The 2% person is your best training asset and you probably don't even know who they are yet.

For the 43% already tracking by AM: Great. You're ahead of most. Two follow-up questions. First - are you managing against it? Do your account managers know their individual churn rate? Is it part of their objectives? Is there accountability if someone's consistently above target? Having the data and using the data are different things.

Second - are you also tracking churn by originating sales rep? This is the one most people miss. If one sales rep's clients churn at 15% in the first 90 days and another's churn at 3%, the problem didn't start in delivery. It started in the sales conversation. That rep is either overpromising on outcomes, attracting the wrong type of client, or framing the purchase in a way that sets the relationship up to fail from day one. It looks like a delivery problem. It's a sales quality problem, and it's invisible unless you connect the churn data back to who closed the deal.

Knowing your churn numbers - even by account manager, even by sales rep - doesn't fix your churn. It tells you what's happening. It doesn't tell you how to change the behaviors that are causing it.

For that, you need the management infrastructure to actually drive accountability and behavior change across your team.

More likely than not, you know what your employees are responsible for. You know what they "owe" the business. But do you have clear, structured expectations for what your managers owe the employees? And what the managers owe the business in terms of managing those employees against targets?

If you have managers in place but your team is still coming to you for every decision, you're missing what I call the "missing middle" - the management accountability layer that connects your strategy at the top to your delivery at the bottom.

That's the next email. I'm going to tie everything we've covered - capacity, churn, all of it -together into an actionable framework you can start implementing this week. Which, by the way, is exactly what 55% of you told me you wanted.

In the meantime - if you want to figure out whether churn is the thing holding you back, or if you should just be focused on doubling your top-line sales, book a call here.

I have a specific process for diagnosing which one it is.

Nick