The agency environment is undergoing many changes, including M&A, consolidation, increased competition, decreased client loyalty, and increases in project-based work. In this post, I want to pull out some highlights from Hubspot and SoDA’s recent reports documenting the 2016 agency environment and talk about what they mean for your new business program. These are basically my quick tips for what agency owners need to pay attention to for 2017, based on current industry trends.
More clients are engaging multiple agencies.
How are you at sharing? If you can’t play nice with other agencies (and in-house marketing teams), don’t expect to be included. Nearly four in 10 clients are working with three or more digital shops (The SoDA Report). Clients are looking for the best performance in each area of specialty, more than a “jack-of-all-trades” agency that is willing to try everything but not do any of it exceptionally well. And clients don’t want it at the expense of a seamless, integrated marketing machine. Improve your internal processes to better facilitate these collaborations, train your team if necessary, and adjust your new business plan as needed to account for this shift.
When they aren’t engaging multiple agencies, clients are engaging just one or two agencies.
This is entirely counter to the previous point, but the 2016 SoDA report identified these “parallel and significant counter-trends.” Clients don’t necessarily want to engage a ton of agencies. Common sense dictates that it’s easier to engage fewer than more. The motivation appears to be the same (chasing exceptional work in each area of specialty, without sacrificing a seamless, integrated marketing machine). Consolidated agencies being built up through acquisitions by holding companies, for example, may appeal to potential clients for this reason—even though they still face the same challenges to seamless integration internally. Forward-thinking agencies may find creative ways to compete through cross-agency alliances that make it easier for clients to get what they want.
Communication between clients and agencies is still terrible.
In recent surveys of agencies and their clients, there are major discrepancies between the two parties over marketing priorities, perceived strengths, and the reasons why agencies are fired. The 2016 SoDA Report identified a pattern of “lukewarm client satisfaction” with agency programs. Agencies are working harder than ever, only to attain a feeling of “meh” from their clients. Hubspot’s Agency Pricing and Financial Report found that agencies spend more time chasing new accounts than on improving current relationships and retention. It’s time to work smarter. Improving your client onboarding process and building regular “client satisfaction checks” into your process will help you stay on the same page as your clients and retain their business.
Agencies will spend even more time and resources chasing deals they are less likely to close.
Competition is unprecedented, with larger agencies chasing smaller deals and smaller agencies stretching to land deals in areas out of their expertise. More existing clients require pitches just for you to keep their business, and many more agencies are competing for every scrap of new business. The closing rates for agency pitches are abysmal (Hubspot’s Agency Pricing and Financials Report identified closing rates of 9-13%). Desperation in the air. Get out of the feeding frenzy by doing a better job of differentiating your agency and tightening up your new business plan. Be selective in the business you chase and focus on those deals you are most likely to close.
You aren’t losing your clients because of their management changes.
I mentioned this under poor communication, but it needs to be singled out. 56% of agencies in SoDA’s report blamed client management changes for their termination. And they are completely off. Clients actually cited pricing/value, unhappiness with strategy, creative, and project management as reasons for termination. These are issues that could be known—perhaps even resolved—through better communication. But they also may reflect staffing and training issues. Increasingly, clients cite understaffing and inexperience as reasons why they are ditching agencies. If you’ve skimped on hiring and salary to compensate for lost revenues, be aware that it may end up costing you more in the long run.
Get better at analytics, insight and data.
Increasingly, these skills will become deciding factors for which agencies land new business. Clients are looking for advanced customer insights to improve customer experiences and provide highly relevant content (SoDA Report). Train your team or hire someone new, but this skill set is becoming more important than it has been in the past. Not having it may cost you opportunities.
You must differentiate your agency.
Here’s the deal: differentiate or die. Clients and prospective clients are getting hundreds of calls, and eventually other agencies are going to find a way to break through the noise. Whether it’s a voicemail or the way they have positioned their firm on their website so that it comes up when a client is looking for that one specific area of expertise, some agency is going to have a message that resonates with your client. And if your firm is (like half of the agencies out there) a friendly, yet generic do-it-all firm, you aren’t going to be able to compete. Even for the business you already have. 43% of agencies don’t have a strong positioning statement, according to Hubspot’s 2016 Pricing and Financials Report. Do an agency audit and determine how you can stand out.
No new business plan or established sales process? Prepare to feel the pain.
Hubspot found 42% of agencies have no established buyer personas. If you don’t have clearly identified target prospects and personas, you will continue to waste tons of resources and time on proposals for business you are unlikely to land, and will probably regret if you do. Are you among the 44% of agencies not using a CRM (Hubspot)? How can you prioritize opportunities and address problems in advance? Get serious about your business for 2017 and use a CRM for a realistic view of your pipeline and projected revenue. Invest the time to develop a formal new business plan and implement a repeatable sales process that will yield the best ROI for your time and resources.
Don’t rely on referrals alone to grow your agency.
90% of agencies rely on referrals to generate new business (Hubspot). This takes your agency’s future growth out of your control and puts it in your clients’ hands. Your clients may like you and your work, but they don’t care about your agency as much as you do. Not to mention, the business they refer may not even be business that you want. Make referrals only one part of your new business growth strategy, and figure out how to identify and chase the opportunities that are right for your agency.
Improve your business management skills.
Hubspot identified a major issue for agency new business in their recent report, and that is that agencies aren’t adequately tracking key performance indicators. If you aren’t tracking KPIs, how can you know if your hiring, pricing, and profits are where they should be? Only 27% of the agencies in Hubspot’s survey are tracking the number of leads they generate. Only half of them track revenue per client. Just 42% track client satisfaction. And a measly 16% track employee satisfaction.
Losing and replacing employees is costly and disruptive to business. I mentioned previously that agency staffing is becoming more of an issue for clients in the SoDA report, and it should be given greater attention. Tracking client satisfaction also feeds directly into the poor communication and client retention failures that I mentioned earlier. Implement systems and processes to track these metrics and it will be easier to make improvements in these areas.
How do you get from where you are to where you want to be?
If you are like most agency owners, the thought of implementing some of these changes may seem overwhelming. If you had the time and ability to do so, you probably would already have them in place. There is help available. When you assess where your agency is at for 2016 and where you want to be in 2017, think about whether you are well positioned to get there if you keep doing things the way you have been to date.
Learn about how outsourcing can help your new business in our eBooklet:
You may also be interested in these posts:
- The Benefits of Having a Sales Process: New Business
- How an Agency Brand Audit Can Boost Your New Business
- 15 Steps to Creating a New Business Sales Plan
- 15 Questions to Ask Before Your Agency Responds to an RFP
This was originally published on LinkedIn Pulse on October 20, 2016.