How To Grow Your Agency Slowly and Painfully

Are you stunting your agency's growth?

At the beginning, a lot of Digital Marketing Agencies grow without too much effort. A team with top-notch skills forms to provide DM services and through word of mouth and grass-roots sales efforts, developing a full-fledged agency with enough clients to keep the doors open and attract new business.

These agencies build processes and improve them, hire more employees, and sell to more businesses to manage the overhead and increase profitability.

A lot of them are doing it in the slowest and most painful way.

Digital Marketing Agencies have a tendency to offer a lot of variety. Web design, SEO, AdWords, Videos, Print Ads, Facebook Ads, Content Marketing, Social Media Management, Strategy, Consulting, Chatbots, and whatever hot new trend is hitting the market next week.

With so many different services you'll either need a lot of employees (or contractors), or you'll likely be sub-par at most of them. (Even if you don't grapple with this, keep reading. The solutions could still help you.)

Sub-par products or services lead to either fewer clients or clients who pay less. Yes, you're selling huge advertising packages, but you can't charge what other agencies can. Yes, you've got hundreds of clients, but they're small clients and your retention rate is pitiful.

Looks like more employees is necessary.

More employees results in higher overhead and the need to sell more business. Your sales team (or you, depending on your agency structure) has to say yes to as many prospects as are available to make payroll. This leads to smaller clients, clients that are a bad fit, or clients that have never tried digital marketing before. Let's break down each of these and why they hurt your agency growth.

1. Smaller Clients

There's nothing wrong with selling clients that don't have huge budgets. Somebody has to help the little guy! The problem is that you have to get A LOT of clients to pay the bills, let alone grow your agency. This is tricky, because the more clients you get, the more employees you'll need to manage them. It sounds great to say you have 500-1,000 clients, it sucks when you're responsible for the success of that many businesses and you're still not taking home a decent paycheck. The biggest issue with small clients is that they're more likely to complain than clients with bigger budgets. More likely to complain, ask questions, and worst of all, demand that you prove your worth every month. It's silly to justify a $500/month management fee to a business owner every month when there are business owners spending 10x-100x that and ignoring performance reports. The problem is that $500 feels like a lot to someone only making $1500/month in profit. People investing $5,000/month in SEM understand the value and are much less likely to complain.

2. Clients That Are A Bad Fit

Some clients are a bad fit because their industry doesn't perform well on the platforms you specialize in. That's pretty rare. Some clients are a bad fit because you specialize in Local Search marketing and they're a nationally focused e-Commerce business. That's much more common. Some clients email or call you every time they're having a bad day and want someone to yell at. Some clients ask for "little extras" that result in scope-creep of thousands of dollars. I'd consider all of these bad fits. Mis-matched specialization can lead to shoddy results and losing a client. Perpetually angry or rude clients and scope creep are a waste of your time and money. These people are not treating your agency with respect or professionalism. They cause emotional and mental stress among your employees, they eat away at your profit margins, and they should be fired. That's right, I'm a huge advocate of firing clients that waste your time and money or that create more trouble than they're worth.

3. Clients That Have Never Tried Digital Marketing

If your agency is focused specifically on helping people start digital marketing for the first time that's a very helpful venture. If they grow large enough to really start spending some advertising dollars, they've outgrown you and will leave. Another issue with these clients is that you're starting from scratch. With AdWords and SEO in particular, starting from scratch makes it an uphill battle to get really good results. If you don't get the results the client was hoping for, you can lose a client before they have the chance to gain the needed traction. Sometimes these clients can have silly expectations too. I've spoken to multiple business owners who expected to generate $10,000+ per month in sales by running Google Shopping ads for the first time on a $1000/month budget. I asked where they got their numbers and they said "it just sounded like a good number". Yikes.

How Can I Grow My Agency More Smoothly?

Looking at just a few issues that can stem from certain types of clients, it becomes evident that we need to be more selective, but how to do that? Where do we draw the boundary line to raise the bottom line? (I'm totally going to trademark that...)

Learn to say no.

Putting up boundaries within your agency, on services offered and clients you serve, allows you to provide better services to better clients at better rates.

Here's how.

1. Full Service vs Specialist

We mentioned near the beginning of this article that offering every service under the sun seems nice until you have to deal with the consequences. I'm not suggesting you drop 95% of your services and start layoffs, but choose one or two services to focus on, get the best of the best employees (or contractors, or training), and jack up your rates for those services. You're not a moderately-priced "full service agency" anymore, you're a high end "Amazon Advertising Agency" that just happens to provide a lot of other services. By specializing in Amazon SPA, AMS, and organic optimization, you can charge a much higher rate than someone who just "does that too". This model allows you to bring in bigger clients at a premium rate and offer upsells and profit maximizers after establishing trust. Bigger clients, fewer complaints, piping hot leads for your other services.

2. Refer Out Startups

We've discussed clients who haven't tried digital marketing before. Too many problems, not very cost effective. Taking over management of a client from another agency gives you the benefit of being able to build on someone else's work (bad as it may be sometimes). You've got performance history and data to start with, and you've got trust and authority built with the platforms (Google, in particular). You can also save time on setup, because you don't have the same amount of keyword research to perform, ad copy to write, settings to adjust, etc. You transfer ownership and optimize. Basically, you get better results in less time, making you the hero. Find a good agency that helps these startups (or a good contractor) and set up a referral program. You get 10% of the fee for the life of the client, 20% of the first billed amount, whatever. But anybody that comes to you sending red flags flying gets sent to this referral partner. They get a client, you get money anyway, the prospect gets help. Win-Win-Win.

3. Pick A Vertical To Target

Do you ever tell your clients to be specific with their targeting? Maybe to create a customer avatar? Have you done that for your agency? The cobbler's children often have no shoes when it comes to digital marketing agencies. You don't have to pick a specific industry to help, and you don't want to turn away good leads because they're not in your vertical of choice, but you should choose one on which to focus all of your marketing efforts. This helps you position yourself as "healthcare marketing experts" or whatever industry you choose. This leads to more credibility, more trust, and higher rates when speaking to prospects in that industry. You can still talk to and sell to businesses in other industries, but choosing one for your marketing efforts really comes with a lot of benefits. Grown quite a bit in one industry with great success? Move on to the next one. Tackle them one at a time with specialized marketing messages (and specialized rates) and you'll see much more profitable and stable growth.

Summary

Profitable, sustainable, and consistent growth does not come from expanded effort, it comes from focused effort. Take a good look at your agency and be honest with yourself. If you notice problem areas eating away at your time and money or preventing you from charging a premium, start setting up boundaries to remove the problems and prevent more.