TL;DR: That most (>75%) are struggling, while it was not nice to hear, it was definitely comforting.

Pete Caputa, while announcing Databox’s agency partner program, points out here: “With 250,000 agencies worldwide, many of them struggling to get over 5 employees (or disinterested in doing so)...”

So why are agencies always struggling or now disinterested to grow (after all every entrepreneur wants to grow, which is why they started a business, isn’t it?) Here’s what i learned while speaking to other agencies:

  • Documentation and Processes: Clodagh Higgins (an agency coach) in her session asked how many agencies have processes - 70-80% of the people raised hands. Then she asked, how many of you have ‘documented processes’ - 90% of those hands went down!
    • Agencies are always working to manage client expectations, which because are not documented at the beginning of the project, keep changing.
    • Hundreds of reporting formats, and at different frequencies. Some want visualizations, some PPTs, some spreadsheets. Some want weekly, some fortnightly, some monthly.
    • Learning 1: For the first 45-90 days of a project, just focus on documenting and getting a buy-in from all stakeholders on the strategy, brand guidelines, deliverables, acceptance criteria, number of iterations on a creative (this could be done as part of the sales process), key success metrics.
    • Learning 2: Document your delivery processes. However hard and tedious it may seem, if you don’t document, don’t think of scaling up, ever.
  • Creating Content: Customers want content, but don’t want to invest time in creating/getting that created.
    • In cases where the client wants to do the content themselves, it often never comes from the client, or it comes so late that your plan doesn’t matter anymore.
    • If we are to do the content, when we ask a client team questions, they don’t speak. It could be that they don’t consider a specific thing important (which marketing would consider important). It could also be that they should not be wasting time in explaining us about their business/technologies/processes. I remember one instance while we were creating video stories for a client, along with the founder, we were told (by the founder herself) that her team thought all this content creation (writing case studies, videos etc) was a waste of time and resources (and money).
    • Learning: Build trust with the client team, get a buy in from them, not just the decision maker. Show them the value of your work and build relationships so that they are ready to help you do your job.
  • Expectations: Justifying that Inbound marketing takes time to deliver:
    • We deal with marketing managers (at the clients’ end). These are people who are mostly looking to switch jobs in two years. For them, the lifetime value of the content and marketing, doesn’t matter. They want quick results, hence would run a few ads, instead of investing in creating content that would deliver results in the long run, continuously! (There is a reason why Google and Facebook have become so humongous, so quickly ;-))
    • Learning: Set expectations correct, show lifetime value to the business heads/ founders, unless they are struggling to meet payroll (in which case you should never be taking them on as a client), and they will want to invest in long term results.
  • Profitability: Most of the agencies are struggling for profitability, and are booking profits by founders lowering their own salaries.
    • The feedback loop: You make a creative (content, ad, email whatever). First it goes to the client SPOC, then her manager, then finally the CEO/VP Marketing (depending on the size of the organization). The CEO/Founder/VP most likely has a different perspective/opinion than the rest of her team, and so with two iterations at three levels - the agency has spent three times the time that should actually have been spent in the creative. Will the client pay for 3X the time spent? Most likely, no.
    • I’ve personally seen a case where the process was: send the creative to one cofounder, when he approves (after multiple iterations), it is sent to the other cofounder, who would just trash it and ask for it to be done from scratch. Forget making a profit, how does one expect to even meet payroll?
    • Learning: Focus on profitability on each single project. Don’t bother about selling more unless you’ve solved the profitability issue (When I heard that, this came as a revelation to me, because all these years, I’ve been told by other founders in India,“Get more sales, don’t bother about how to deliver, that will get sorted”.
  • Pricing: Most of the agencies are undercharging. Mike Lieberman, of Square2 Marketing puts this brilliantly.
    • You’re trying to grow, you have an opportunity to get a new client, but deep down you know you’re not charging enough, they don’t seem to be ideal but you move forward anyway. Do this too many times and you have an agency full of bad clients. Clients who ask for more than they pay for, clients who don’t respect you and clients who don’t value you or your team. Don’t do this. Trust me, I’ve done it twice.
    • Square2 is the Inbound agency probably all of us look upto, and even Mike Lieberman accepts he has done this! I think the difference between a Square2 and the rest of us is that, they have done this just twice! The rest of us have done this too many times!
    • Learning: Don’t under value yourself, believe in yourself, find out your BATNA and don’t under cut yourself just to get that one client.

Given that all these challenges exist, this is probably why there were a lot of sessions around the theme of how to grow your agency. I am grateful to HubSpot that they’ve built this amazing community of agency partners, who are so open and willing about sharing their learnings, processes and failures. In fact, the successful agencies are even coaching other agencies, which is kind of amazing. There could always be a fear of the agency you are coaching becomes your competitor, but I guess the HubSpot community believes, there is enough room for everyone, and hence, is always ready to help. Which is what makes this community even more amazing!