This is the Part 3 of my series on ‘Agency Blockers’ – why some agencies seem to ‘bounce’ up against an invisible ceiling.
You might recognise it – the business grows for a while before things start breaking, only to contract back to its original size. Rinse and repeat. Over and over in a frustrating cycle.
This series discusses some of the most common reasons that I’ve seen, both in my time as CEO of a large independent agency, and now as a consultant and advisor to agencies of all sizes.
Part 3 is focused on Strategy and Positioning. Part 1 and 2 are linked below!
Let’s get into it.
Getting stuck in the day-to-day is a very common feeling for those running agencies. Working in the business, rather than on it. It’s important though to step back and ensure you’re not making some common mistakes when it comes to growing your agency into what you know it could be.
I’ll be the first to admit that I get a little frustrated by how much the word ‘strategy’ is thrown around to describe things that aren’t strategic. Buuuut I also couldn’t think of a better word to describe this grouping of challenges than ‘strategy’, so I’ll just appease myself by using the broadest possible definition.
The 4 strategic blockers to agency success are:
- Offering Saturation
- The Painters House
- Organic Growth
- Expectation Misalignment
Article Structure
Blocker: A short summary of an identified blocker to agency success.
Symptoms: Sometimes it’s hard to see the forest for the trees. The symptoms are the trees – see enough of the same sorts of trees and you’re probably in a forest.
Next Steps: Obviously every business is different and the details of these challenges are unique. Broadly though, I’ve outlined some next steps to explore to help you get out of that forest.
1: Offering Saturation
Blocker:
The market is saturated with whatever you’re offering. Your target customers are well served either by yourself or competitors and there’s no real potential to grow market size or market share.
Symptoms:
If you’re in a situation where you’re battling over market share in a stagnant or declining market, you might be seeing revenue growth is stagnating or declining due to a lack of new business. You might have difficulty in attracting new clients, or even in identifying new clients to pursue.
If you or your team are relying on pricing changes (discounts) in order to get new work over the line, this will likely be showing up as decreased profitability.
Assuming your agency otherwise has a strong reputation for doing good work (and a lack thereof isn’t why you’re having difficulty winning new clients), you might be facing a saturated market.
Next Steps:
Spend time mapping out the market (clients/competitors/you) to try and determine if this is the cause. Talk to your sales team (or whoever in your agency manages new business) to determine if they are encountering more ‘tyre kicking’ clients.
Talk to clients who have left. A good indication that this may be what you’re is if they’re leaving due to price, not quality of work/service. That being said, be careful not to confuse a pricing issue with market saturation. Maybe you are charging too much for the perceived value of what you’re delivering.
Once you’ve determined that this is the issue, you’ve got a few different ways you could begin to tackle it:
Competitive differentiation is one way – how can you position yourself as different from your competitors in order to capture larger marketshare without relying on undercutting on price? For example, agencies that niche down into specific sectors are able to charge more for largely similar work that has the overlay of industry expertise (and often attract higher valuations when selling the agency).
The other would be to interrogate your current offerings, and determine whether you should introduce new products to your mix. For example, a purely performance marketing agency could extend into brand marketing, or vice versa.
Neither of these options will be a quick fix, and will require some brand repositioning in some way (in addition to training/hiring the right skills).
2: The Painter’s House
Blocker:
The agency doesn’t have any sort of marketing strategy for itself.
This should go beyond “advertise on Google Ads” – that’s not a marketing strategy. You should know what you’re trying to achieve, who your target market is, how they can be reached, who your competitors are, what they’re saying, and importantly how you’re different.
Symptoms:
Agencies that haven’t got a marketing strategy, first and foremost, will struggle to differentiate why they’re any different from their competitors. Being a “Google/Meta/Microsoft/TikTok/LinkedIn Certified” agency isn’t a differentiator – it’s table stakes. As are the common call-outs of being ‘data driven’ or ‘client first’. This is a tough exercise, but agencies that nail it can go a long way.
Due to the lack of clear agency positioning, the agency may be faced with a lack of inbound opportunities or even a lack of recognition in talent market.
They may be over-reliant on performance advertising to generate leads.
Similarly, an agency without a marketing strategy will likely have a lack of understanding of their target clients, who the decision makers are, their pain points, and how to reach them. As a flow on, they may have difficulty in growing revenue (new and organic). This can also contribute to higher revenue churn where clients are sold on something that is not the reality of the business (misaligned marketing strategy).
Next Steps:
Moving forward with this one will take some time and reflection.
Dedicate some of your time/effort to defining who you are, why you exist, and who you exist for. Depending on your agency size, you may have people charged with new business – talk to them about what prospect feedback has been on your agency, how they found you and so on.
It may be helpful to bring in an external agency for the initial work if you’ve never done this before. They’ll bring a new perspective without the years of baggage that comes with founding and growing an agency.
Check out this draft/WIP deck from Strat_Scraps for some interesting thinking on agency differentiation.
3: Growth
Blocker:
An easy trap to fall into is to focus only on acquiring new clients, rather than trying to grow existing clients.
You already have a relationship with your existing clients. They (hopefully) trust you, and you (hopefully) know how you can be even more valuable for them. If you’ve never done any sort of structured rescoping programs in your agency, in my experience it’s likely there’s at least ~20% of new revenue waiting to be unlocked.
Note I’m not talking about doing some sort of bait-and-switch on your existing clients. Where you can add additional value to your clients and you neglect to do so, you’re doing them a disservice.
Symptoms:
The easiest way to determine if there’s an opportunity here is looking at where your revenue growth is coming from. If existing clients don’t make up a healthy chunk of that (it’ll vary, but say 10-25% of annual growth) you might be leaving money on the table.
Similarly, if all of your business development/relationship building budget is being spend on acquisition activities, and not on strengthening ties and understanding between agency and client, you’re probably missing out.
Next steps:
Among the most frustrating refrains I heard from clients was “I didn’t know you offered that”. This isn’t a failing on your clients’ behalf – it’s a failure of your agency to communicate your breadth of solutions despite understanding the clients’ business and pain points.
To combat this and turn it from ‘missed’ to an opportunity, investigate training the whole team on how to identify new opportunities (including those not interfacing with clients). Make opportunity identification part of your normal way of working. This doesn’t have to mean ‘selling’, but simply identifying where there’s an opportunity for you to make your client’s life easier/better or more effectively hit their targets.
Have regular touchpoints where team members are encouraged to look for new growth opportunities as part of a checklist (eg QBRs, annual reviews etc).
Finally, include organic growth in annual revenue projections, and have client teams give estimates of target growth for each client. Report on progress regularly.
4: Expectation Misalignment
Blocker:
You’ve done a great job in repositioning the agency, but now your newly won clients are unhappy.
Symptoms:
The most glaring symptom will be an uptick in complaints/churn for newly won clients that fit into this new ‘category’ or tier that you’re trying to service. For many growing agencies, this will be larger, more established, and more mature businesses that have historically been serviced by the agency.
There might be complaints from your team that “We’re doing everything we usually do but they’re still unhappy”. It’s probably starting to look as though there’s a disparity between what your brand/sales team are saying about you, and what the clients who have been sold the dream are experiencing once they’re on board.
Next Steps:
Immediately look to run post-mortems on all lost clients (not just ones that fall into this category). If you can, as the owner/leader of the agency, you should try and speak with clients directly when possible. Try and find out the reasoning behind leaving the agency, keeping in mind that most people will sugar-coat in a conversation like this.
If you’re working with a different ‘tier’ of clients than you’re used to, review how their typical agencies would work with them. Do they focus more on ‘service’ rather than ‘delivery’ than you? More strategic? More/less touchpoints?
Review what someone who has never heard about your agency before is seeing from your brand out in the market. What perception are you creating? What about your sales team? You will either need to better align internal workings of the agency with the vision being sold or walk back some of the external communications to better suit your capability.
That’s it for the third article on common agency blockers and why agencies ‘bounce’. Let me know if you have any feedback or if there’s another blocker you think it would be worth discussing.
The first article on People is available here. The second, on Structure, is available here.
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