The Rules to Running an Agency That Nobody Tells You
People act like running an agency is either the easiest or the hardest thing in the world. The people who think it’s easy have never done it, while those who think it’s insanely difficult usually don’t have processes in place to avoid classic problems.
If you’ve worked in an agency setting before then these will sound familiar:
- Becoming a cost center for button-pushing work.
- Getting caught in a pricing race to the bottom.
- Letting clients dictate internal processes and tactics.
- Getting low-quality work from freelancers.
- Having everyone do everything instead of specializing.
- Killing productivity with office layout fads.
These lessons are worth taking to heart even if you’re not running an agency. If you can solve these business challenges while working on 20 clients at once, then you can do just about anything.
And this is where to start.
Don’t Chase Lower Prices
In the words of the wise Robert Craven, pricing yourself specifically lower than your competitors “only attracts the pond life and scum of the business world.”
I learned that lesson quite early in my career, but I’ve worked with at least 5 agencies and consultants who never did. They both chased low hourly rates instead of delivering inarguable value.
It’s no surprise what happened next, of course. Those agencies became revolving doors for clients who left for the same reasons they arrived in the first place:
- The clients found a lower price somewhere else.
- The agencies became cost centers for menial tasks instead of value.
- The clients demanded a growing list of unpaid side requests.
- “Price conscious” customers never grew with the account even if they stayed.
The most ironic part? Some of my “price conscious” clients were also agencies and consultants just trying to win a race to the bottom of the pricing ladder with their clients.
With the exception of commodity-based retail and ecommerce models, pretty much all businesses need to price themselves based on the value they deliver rather than shaving down margins on their time. That’s because price is always relative to value.
That’s why you can buy a car for tens of thousands of dollars and consider it a steal, yet walk out of a theatre feeling cheated over the $11.50 you just spent.
Don’t price your marketing (or any service) just to undercut the market. Someone younger and less experienced will undercut your price, and they’ll still be desperate enough to do anything that the client asks.
Believe me, because I did exactly that to get my foot in the door.
But I could only get away with it for so long because I wrote quality content. I didn’t even realize how much I was underpricing myself for thoroughly researched long form content. But most of my customers were the “price conscious” consultants and agencies who just wanted cheap services without any goal of generating real value for their clients.
My content was great, but that quality didn’t matter all that much to those who chase the lowest dollar.
But that higher quality didn’t matter much to penny pinchers. Races to the bottom don’t have winners though, and their clients will treat them the same way. That’s why agencies should never play that game.
Lock Out Scope Creep
Just as price is relative to value, agencies need to remember that revenue is often relative to time—just like any service industry with good processes in place.
Those keeping track may have noticed that the value you generate doesn’t correlate directly to time spent, which is true.
But we all have a set amount of hours in a day.
Scaling up agency work is tough enough as it is, because they usually operate on an hourly structure until they get the clients who stick with them for value. This makes it all the more difficult to turn a reasonable profit when you find that bucket of overhead getting bigger month-over-month.
It’s called “scope creep,” and it plagues every agency in existence—even solo consultants like myself.
Clients ask for freebies all the time. It’s not even intentional with most of them—they just think of it as a sign of good will, operating on the assumption that you’re going to make an effort to stay in business with them for a long time with some small favours.
And many service-based businesses do this all the time, which is usually a good thing:
- Mechanics throw in complementary oil changes
- Financial planners might provide additional portfolio advice
- Caterers can offer volume discounts on large events
The list goes on, and it’s not anything new.
But agencies face this problem every day because they need to prove themselves on a daily basis to the same customers, walking a fine line between good customer service and derailing daily operations.
Most of the time it just takes process tweaks that filter client communications through written channels (even if it’s a summary of a phone call over email).
It’s hard to set firm boundaries with clients, but you need to get these requests in writing and then place a price on them—or roll them into the next regularly scheduled touchpoint call. I ease clients into it by helping them out the first time and then, on delivery, providing suggestions on how to accomplish that same task cost-effectively.
Doing so reframes the conversation as a brief and free consultation, adding further value to that customer. Sometimes they’ll inquire further about how much it costs, and sometimes they’ll drop the topics altogether to avoid talking about spending any more of the budget.
The point is to keep some form of written record with clear expectations on such tasks to that you can cross-reference them with your contractual agreement just in case the client’s expectations begin to extend beyond it.
It happens all the time in business—it’s usually just a matter of process, documentation, and confidence in the value you’re already delivering.
Use Freelancers for Growing Pains
Freelancers are fantastic to get specialist services without taking on the cost of a full- or part-time employee.
However, agencies can, on occasion, lose sight of their internal processes in order to accommodate those freelancers.
For example, I’ve had to rewrite entire blogs from freelancers who:
- Ignored the keyword data
- Neglected all internal linking
- Didn’t include a single external source
- Wrote 80% fluff
- Committed plagiarism
It got to the point where I had to redo the freelancer’s work, defeating the entire purpose of hiring someone else. The company’s other decision-makers furrowed their brows and said, “well that shouldn’t happen.”
But they only saw the finished product once I had cleaned it up, so they didn’t quite grasp the drain on resources it caused.
It’s important to remember that freelancers help us close the gap between the value we need to deliver and the resources we have on hand, so you should raise a major red flag when you’re redoing work over and over again.
But Don’t Take Advantage of Freelancers, Either
I’ve also done freelance work for several years, and, from the outside looking in, I can tell you that many agencies also dig their own graves.
I worked with a small website design agency to create blogs for a few of their clients who wanted to try out this new-fandangled digital marketing thing for themselves. After agreeing to write blogs for them for itemized pricing rather than hourly pricing, they immediately asked me to create the entire content calendar for a client of theirs.
They didn’t pay for the creative work or the research that went into creating the calendar. They also provided woefully incomplete information for certain products related to those blogs, prompting a string of revisions and friction with the end client.
That’s not how you look after your client and that’s not how you set up business partners for success.
Freelancers need a structure in which they can operate to focus on the specific items for which they were hired. It’s just a plain bad idea to offload operational issues onto freelancers that you hired to accomplish one specific thing.
Assign Designated Specialties (Even on a Team of Generalists)
Although I believe in the power the generalist, I think it’s safe to say that we’ve all worked on teams where everyone ran around like panicked squirrels because no one knew what they had to own and where they should ease off the gas.
Dysfunctional agency symptoms include:
- People don’t have specialties.
- Cross-functional teams become non-functional teams.
- Clients have too much access to creative team members.
This happens a lot in agencies because they have a lot of employee turnover and they’re always trying to play the hourly billing game. Leaders panic in the scramble to get everything done on time and resort to throwing raw, unqualified labour at the looming deadline.
It becomes quite a mess, too. My first employer wanted to turn people he hired as writers into telemarketers. I’ve seen graphic designers and PPC specialists assume account management responsibilities for over a year. At an altogether different agency, I was hired as a content writer and turned into a glorified inside sales rep for a brand-new client.
It was a bad call on multiple levels, and it showed.
That lasted for 7 months. I hated it, and, if you’ve done this to any of your employees, I guarantee that they hated it too.
The truth is that forcing people to do everything cuts their productivity in half. Forcing people to do jobs they never agreed upon for extended periods of time is the equivalent of dividing your business by zero.
Try it on a calculator and see what happens. I’ll wait.
I didn’t get to write stellar content for that client because I was chasing down leads. My coworker didn’t get to manage advertising campaigns because she spent all of her time reporting to another client over the phone, over email, and through Jira documents.
What kind of operational management is that?
No company can sustain long-term success by expecting teams to perform each other’s tasks in random order, or just to fill a gap in the team’s structure. It’s absolutely crucial to let people do the job they signed up for in order to let them produce their best work.
There’s always time for learning new skills, but that shouldn’t come at the expense of organization and fulfilment.
There’s a better way. A much, much better way.
Intentionally Funnel Communication Channels
There’s an old historian’s joke that every royal line is descended from some lost ancient Greek prince. The punchline is that when everyone’s special, no one’s special.
The same thing goes for communication. No message can be a priority when everything’s a priority.
I worked in two digital agencies in which the owners thought clients should have instant and open access to individual team members.
They could not have been more wrong, and both agencies came to the brink of closing down. One eventually did.
Letting clients pester your core, value-generating employees interrupts them in the middle of their work. It derails their train of thought, their workflow, and—more on the nose—it just eats of billable hours that you could better spend doing work for that very client.
It seems hip and enlightened to let clients into the process as a way to collaborate with them to make them feel like they’re special.
The second agency where I worked made it a point of pride to integrate itself with every client’s existing communication channels. Unfortunately, this included all the channels we used daily:
- Personal phone numbers
It’s this idea that if everyone is communicating with everyone, then by the sheer numbers of it, someone will pick up the slack every time.
But that’s not what happens.
Instead, the clients go around the designated point people (leaders and account managers) to the writer, designer, or PPC expert. That expert switches gears, leaves a project half-finished, and derails the entire client retainer without the account manager even knowing.
It also compromises the integrity of the creative work before it’s had a chance to be fully developed.
Marketing professionals should know this better than anyone. People process five times as much information on a daily basis today than they did in the 1970s. We’re not immune to information overload anymore than the millions of consumers we market to on a daily basis.
Let your team members do their work, and let them do it with insulation from outside interference, however well intentioned.
Leaders or account managers can collect and filter the information. That’s why they’re there.
Don’t Fall for the Open Office Fad
Most leaders don’t.
It’s trendy and cheap, which is the way that most companies like it. But those very employers make everyone else sit in open offices while they give themselves private offices.
Every place I’ve worked has used a form of open office, some more strongly than others. The two agencies I worked for in my early career had full-blown open offices, and it made it difficult to focus.
Everyone’s meetings become your meetings whether you like it or not. Same with water cooler chats and even sensitive conversations about improvement and performance.
Not super ideal for building a positive culture.
You can’t tune out much when it’s all happening right around you—while at the same time you’re afraid to initiate real conversations because you know how much it will disturb everyone else. People are also afraid of being perceived as slacking away from their desks, or even just chatting at them.
All of this reduces meaningful communication in favour of instant messaging and email silos. Don’t even get me started on email silos.
It’s also a part of this larger notion that collaboration is inherently better than solo work, which, unfortunately, tends to backfire on management teams who just don’t know any better.
Give people purpose, opportunity, and professional space. Let them fulfil their vision for their own work without interruptions or forced collaborative working sessions. That includes seclusion wherever it can be provided.
SEO and Content Marketing Consultant
Andrew is the digital marketing consultant at Webb Content and currently the in-house Search Engine Marketing Specialist at aha insurance. He's worked in a few different agencies full-time and with another seven or eight as a consultant.
He's usually writing new content, finding new ways to optimize his websites, and fixing bad digital marketing wherever he sees it.
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Feel free to send an email if you’d like to chat. I love talking shop over a cup of coffee, even if you just want a second opinion on a marketing or advertising plan.