Figuring out how to maximize profits for your agency? We asked 26 professionals about their strategies for managing their revenue streams.
Agencies | Oct 18
Kevin Kononenko on November 17, 2017 • 10 minute read
On one side of this equation, client demands for marketing and web development change every couple of years. In order to keep up with the latest trends, your agency can hire in-house staff that are ready to develop new skills at any given point, or work with an army of independent contractors that reliably deliver work on time and on budget.
Sound realistic? If you’ve tried this approach, you know it’s easier said than done. Freelancers come and go. In-house specialized staff often go under-utilized or force you to take work you don’t want just to keep them on payroll.
On the other hand, you can choose to offer a limited number of services where you are guaranteed to make money, but risk losing deals when clients ask for services that go beyond your capabilities.
To make matters worse, after all this struggling, when are you going to find time to market your own services? Clients are going to want a marketing agency that practices what it preaches!
After working with the 150+ members of the Databox Partner Program, we have discovered a common solution to this problem: hiring an agency-to-agency service provider. These are agencies that serve other agencies. They focus on work that agencies either:
In some cases, agencies will let the client know that they are working with a partner to execute the services, or they may just deliver the service provider’s work as part of their own package.
Since these agencies focus on a few specific services, they can afford to stay up to date with the latest trends and technology. And because they have many other agencies helping them get the same types of work, they can confidently deliver on time and within budget over and over again.
We interviewed the leaders of these agencies to learn about the challenges they see in the market, and how they provide a unique solution.
How They Started: From 2005-2010, Joe Jerome, CEO of BrandBuilder, was a data consultant that helped marketers investigate their data. In 2010, he began offering “old-school” marketing services, like broadcast ads and direct mail. He also learned about the HubSpot Partner Program, and found that there was a whole community of agencies that agreed with his core thesis: your website is your best salesperson.
At the time, BrandBuilder only had 2-3 employees. They realized that the needs of most companies could be satisfied with customizable WordPress templates. So, they used StudioPress to build a set of proprietary templates that could cover the needs of most corporate websites without months of development work.
Joe discovered that websites were a consistent pain point for other agencies, so he launched a site called Inbound Partner to Partner that would allow agencies to share best practices.
“We realized that most agencies were only using a fraction of HubSpot’s capabilities. It was hard to coordinate all the different parts internally, so users would simply focus on a smaller set of features. We felt that they could do better, so we returned to our original mission: turning websites into the company’s top salesperson.”
Founder, BrandBuilder Solutions
Joe realized that the HubSpot CMS had a better chance to help companies accomplish their growth goals, and replicated BrandBuilder’s template system on top of HubSpot’s CMS in 2011. (Their latest is the HubSpot CMS Template called Liftoff.) Rather than use their web development expertise to compete with other agencies, they decided to partner instead.
How They Work With Other Agencies: Websites had become a pain for smaller agencies especially. By 2010, web development had become low-margin work that required months of labor that would delay retainers (it could take up to 6 months).
Smaller agencies were forced to rely on one developer that could leave the company at any point. Or, they could outsource and risk missed deadlines and inflated costs. After all of this, the site still may not be exposed to any marketing strategy! The client could be left with a website that was not focused on conversion.
The BrandBuilder team aren’t just experts in building websites on the HubSpot CMS, though. They also help agencies provide web strategy services on an ongoing retainer.
“We have found that clients can be their own worst enemy when it comes to websites. They don’t always know what is best for their business when it comes to designing and optimizing their website for traffic and conversions. By focusing on the numbers as well as the design, we help agencies cut out the low-margin and painful work and let them get straight to the retainer portion.”
Their Unique Approach: Brandbuilder helps marketers build websites in weeks at lower cost with their Liftoff framework. Liftoff allows marketers to build the site themselves using customizable templates. No developer is needed, and they can quickly switch from one Brandbuilder template to another before customizing branding. It works within the HubSpot CMS’s unique capabilities and challenges.
In some cases, agencies choose to build the site and develop the strategy themselves, which usually costs around $1000 for the templates and 4 hours of consulting. Or, they can allow BrandBuilder to handle the entire process, from branding to strategy to development. At the end, they will still have a site that any marketer can quickly edit, so they will not need to continually pay for development help.
How They Started: Daryn Smith was an in-house marketer at a South African telecommunications firm. His good friend Graeme Wilson, who was on the sales team, would constantly ask whether his branding efforts were helping sales in any way. He didn’t have a great answer.
So in 2013, they began looking for marketing technology that would help them track their impact. They learned about HubSpot and the inbound methodology. The found the technology so compelling, they created an agency focused on quantifiable results. Within 11 months, they had achieved HubSpot Platinum partner status.
“Because we didn’t come from an agency background, not a single customer has come from our network. They haven’t been friends or past colleagues. Every single one came through inbound marketing.”
For the first 2-3 years, they strictly worked with marketers in South Africa. Daryn and Graeme are very process-oriented, and other agencies began to ask how they had scaled so quickly without losing clients.
“Most agency founders are passionate about developing a strategy for clients, building beautiful websites and getting their hands dirty. We are not like that. We have always tried to build a business that doesn’t need us. You need process, training, systems, and technology to support that goal.”
– Daryn Smith
They started consulting with agencies, and soon, agencies were asking them to execute the work as well!
How They Work With Other Agencies: MPULL works with both large and small agencies. Large agencies may not have an analytics team, or a web development team or a content team. Since they have 50 employees, MPULL can fill in for any of these teams.
They also work with agencies that only have 2-3 members. These boutique agencies are overwhelmed by sales, client services and execution. They make their margin through strategy, and they need a way to outsource the execution of the services. MPULL can provide the needed services while also giving the client confidence that they are working with a larger partner, rather than a small agency.
These agencies scope out the needs of the client, and then partner with MPULL on doing the work. MPULL creates a plan for helping the client achieve their high-level goals. For example, if the client needs 100 leads per month by the end of the year, MPULL will plan experiments across multiple marketing channels and types of content until they have a reliable and repeatable process to hit the goal.
Their Unique Approach: Although MPULL has 50 team members, they still need to have the flexibility to meet digital marketing demands around the world. And, they need to be ready to offer the latest marketing services before they become mainstream.
Agencies must take a risk when they want to offer the latest marketing service. They need to plan their offering, price it and then hire someone to execute. MPULL offers an alternative approach.
“We run training every single day for the team. Alongside the training, we create processes so we can quickly onboard team members and allow them to begin working with our clients.
Additionally, because the team is so large compared to most other HubSpot partners, when we decide to launch new services, we sometimes already have an expert in-house. For example, we found that some of our designers were already experienced with video, and we only needed to create a process to share with the rest of the agency.”- Daryn Smith
Since MPULL’s success is directly tied to the success of their agency partners, they also help partners retain and upsell clients. They help with strategy when they feel they have an opportunity to improve client results so that their partners are well-positioned by the end of the retainer.
How They Work With Other Agencies: NewFangled helps agencies trying to market themselves via digital marketing, but are so caught up in client work that they do not have the time, energy or in-house expertise. Agencies know they SHOULD be publishing unique, long-form content to their blog, doing webinars, nurturing leads and everything else. But they are so busy with selling and servicing clients, they often lose track of their own marketing.
Mark O’Brien, CEO of NewFangled, has a theory for why agencies give up on their own marketing.
“Agencies get an automation tool, they try content marketing, but they don’t apply the right amount of effort because they don’t know where to apply their efforts. When they don’t see returns, they conclude that content marketing just can’t work for them.”
NewFangled helps agencies differentiate their brand, emphasize their expertise and use a combination of inbound and outbound tactics to create a lead generation machine.
Their Unique Approach: NewFangled creates a 1-year plan for agencies with three distinct phases. They offer consulting and technology, but it is ultimately up to the agency to do the marketing and implement the strategy.
At the beginning, they help agencies solidify their pitch and positioning in the market. Then, they make sure the website reflects that positioning. They also help them build and clean a targeted list of contacts that will respond to the agency’s positioning, since most agencies do not have a large enough contact list or enough inbound traffic to build one quickly enough. Then, they set up all the technology systems that will be needed to track incoming leads. Finally, campaigns begin in the third phase, using both inbound and outbound tactics.
NewFangled does not like to solely focus on inbound because, although it is important for the long term, agencies also need to see results in the short term. They even have their own software and methodology to support the dual approach.
Usually, agencies choose between hiring a new employee, outsourcing to an independent contractor or working with an agency service provider like the ones listed above.
You probably know which are the high-margin services for your agency, and which are low-margin. Or, in the case of marketing, you probably know your ideal target client. The best part of working with another agency is that you can still do the high-margin parts in-house. You can outsource the rest to an expert who has done similar services for tens or hundreds of other agencies. Given their efficiency and focus, you may even be able to turn these loss-leader services into money-makers for you by adding a margin.
The key to growing an agency is helping clients grow, increasing your client’s willingness to pay for more services. Since it’s not always possible to profitably offer most services yourself, start making it happen by partnering with other agencies.
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