What’s the biggest problem stalking marketing agencies?
It’s a no-brainer for agencies.
It’s lead generation and closing new clients! According to research from Wordstream, 63 percent of agencies list getting new clients as the biggest challenge they’ll face this year.
It’s no secret.
Winning new agency clients comes with its own set of frustrations, problems, and setbacks. Today, I’m going to show you a simple model you can use to rapidly scale your business without most of the usual headaches that come with growth.
Why growth is a constant struggle for agencies
Agencies swing back and forth between feast and famine cycles. The majority of agencies have 1 to 49 employees, complicating things. When agencies win a sizeable contract (feast), they frantically hire employees to keep up with the new demands that come with clients.
Then the famine hits.
These agencies are forced to lay their employees off. They go back to scrounging for business, reaching out to current clients, doing everything they can to keep the lights on.
They usually succeed.
Because agency owners are tough. Here’s the thing, though, these feast and famine cycles are exhausting. So at some point, it gets harder to maintain your business.
Take a look at the data.
- 63 percent need help generating traffic and leads
- 42 percent struggled with getting new clients
- 7 percent struggled to keep their current clients
- 40 percent need help to prove the ROI of their marketing activities
- 28 percent need help securing a large enough marketing budget
See what I mean?
Agencies continue to struggle with:
- Generating leads
- Winning more clients
- Attracting and keeping A-player employees
Problems #1 and #2 are the biggest by far.
Agencies struggle to generate the kinds of traffic, leads, and revenue they need to keep their doors open. But why? It’s not like marketing agencies are terrible at lead gen or generating traffic.
They do it for clients every day.
How reputation management boosts agency growth
It’s low-hanging fruit.
Most agency clients understand the significant impact negative reviews have on their reputations. If we look at the data, we see:
- Employers with a poor reputation spend 10 percent more per hire
- It takes roughly 40 positive customer experiences to undo the damage of a single negative review
- Negative reviews stop 40 percent of buyers from wanting to use a business
In a previous post, I shared research showing that businesses risk losing as many as 69.9 percent of customers if they have 4 negative aggregate reviews in Google.
Your clients know this.
As a service, it’s an easier sell because clients already see the value of reputation management.
You do, if you’re aware of the value, it provides.
Reputation management is a gateway service. It’s a service that leads to other services — creative, marketing, analysis, and consulting services.
The logistics of profitable reputation management services
It starts with your business model.
At first glance, it looks like there are only two options for selling review management here — managed or self-service. In reality, there are actually more than two options here.
- Managed services: You provide clients with full service and support for their review/reputation campaigns. This option is easy for most agencies to integrate. It’s the most natural, but it’s not as profitable as the other options due to large direct labor costs.
- Self-service: A do-it-yourself option that empowers clients (especially those with a lower budget) to help themselves. You white label a provider’s platform and then access new and existing clients.
- Managed to self-service: This option can be used in various ways. Three common approaches could be. (1.) A managed option that transitions to self-service once the campaign is stable and producing results. (2.) An agency can use the managed option to bring in much-needed revenue and then pivot to self-service once the client roster is mature. (3.) A semi self-service option that gives clients help on an as-needed, infrequent, or low-level basis.
- Self-service to managed: This option can be used in several creative ways. (1.) As an upsell for skeptical clients who are looking for help but prefer to start with self-service so they can better evaluate your performance. (2.) A loss leader agencies use to get their foot in the door with clients. This can be done via a free trial, compelling offer, or bonus.
- Managed + self-service. You allow your prospects to self-identify; they’re able to choose the service they want. You’re able to build a large audience and diversify your cash flow. You’re able to use any of the options I’ve suggested above or come up with something new, your choice.
What about your pricing model?
Pricing is a struggle for many agencies, but it doesn’t have to be. You just need the right pricing structure for your agency. Your pricing structure gives your agency the financial breathing room you need to grow.
Should you use an hourly, retainer, or fixed-rate pricing model?
Use our pricing guide to find out.
Let’s take a look at the inner workings of this structure. It may not seem like it, but this structure is actually more important than your pricing. You’ll see why in a moment.
There are a few ways you can approach this:
- À la carte. You pick and choose what you want from this. Keep the meat, leave the bones.
- Take it all. You keep and test everything. You throw everything against the wall and see what sticks.
- Customize. You use this to create your own idea or plan.
Here’s the leapfrog structure.
- Identify your agency’s breakeven point. This is the absolute bare minimum you need to cover all of your expenses.
- Set a low price you’re comfortable with.
- Close the clients you need to meet your breakeven point.
- Keep your clients. Double your client roster.
- Double your price for your newest clients.
- Keep your clients. Double your client roster.
- Double your price again at the end of your contract term for your newest clients.
- Repeat steps 4 – 6.
- Replace or re-up existing clients at your new rates.
Let’s role play with some numbers.
- Your breakeven point: $3,000 per mo.
- Introductory price: $500 per mo.
- Clients needed: 6
What if you doubled your price per client five times?
That’s $8,000 per mo., per client.
If you keep 6 clients, that’s $48,000 per mo. or $578,000 per year. It’s doable, but it’s also comfortable. With the right tools, resources, and leverage, you can manage six clients on your own.
This is frightening for most.
Some agencies prefer to keep wonderful clients and their current rate. They value relationships highly and prefer to work with the right client instead of every client.
Do what works for you.
It’s tough for most people to increase their pricing systematically. It takes a certain degree of mental toughness, so I mentioned having a battle-hardened mindset.
You’ll need practice.
This strategy works incredibly well. In fact, this is the exact strategy I used to scale my own agency’s price from $500 per project to $175,000 per project.
That’s an increase of 34,900%!
It gets better.
Now use the leapfrog structure to upsell customers into a pay-per-lead model for your lead generation services. Instead of billing clients using a retainer or subscription model, you go pay-per-lead.
Why would you do that?
Because it’s way more profitable!
Let’s run the numbers.
Agency A (reputation + retainer)
Agency B (reputation + pay per lead)
$1,000 per mo. retainer x 12 mo.
$55 per lead x 100 leads per mo.
$1,000 per mo.
$5,500 per mo.
Can you see what’s happening?
You can bring in more money from fewer clients using the pay-per-lead model. There’s no need to chase after an endless array of clients; using reputation management as your foot-in-the-door strategy, you can attract, convert and grow your agency using a small number of quality clients.
Growth should be a constant for your agency
The majority of agencies struggle to generate the leads they need to grow. They find it hard to close new clients or retain quality clients.
Reputation management is an easy win.
Agencies swing back and forth between feast and famine cycles. Use this simple model to rapidly scale your agency without most of the usual hiring, prospecting, or logistical headaches that come with agency growth. In my next post, we’ll tackle the details you need to fill your agency with high-quality, low cost leads for reputation management.
Use these tactics, and you’ll counter the feast and famine cycles most agencies endure.