u/DearAgencyFounder

People massively over-index on lead generating tactics and ignore the part that reputation has to play.

And that's why we have so many people coming to this sub saying, "How do I get leads? I tried the tactics, and they didn't work. What am I doing wrong?"

And the answer is, there's two parts to getting a lead. One is getting the click or the eyeballs or the ears. And the other is having the credibility and reputation required for someone to be interested in working with you.

The less you know someone, the more that reputation matters and the road to building reputation is a long one.

The good news is that if you really want to start an agency and are prepared to make that slow progress, then you can know a huge proportion of your competition is trying for a couple of months, posting on here about how they can't get anywhere, and then disappearing, leaving the road clear for you.

But you've got to focus on the long game. And if you're spending your time on tactics that require an established reputation when you don't have one then do we think that's going to work?

I can forgive you that, given the amount of advice and manipulation and influence that you're going to come under every day on this mess we call the internet.

But those people are just trying to create a closed system where there are no variables except their tactic.

No one sells courses on how to improve your reputation, because it's much harder, and takes much longer, and you can't really put it in an ebook.

But it's a bigger factor then how much attention you get.

And you need to be working on it.

We watch delivery margin. It's how you know a project actually paid for itself and contributed enough to your overall profit.

It’s project revenue minus direct project costs (subcontractors, the slice of salaries that project consumed etc). We didn’t track it for ages, and then you do, and it’s an eye opener.

Importantly the benchmarks say it’s a margin that you don’t want too high, it has an upper limit. That’s because you want some delivery cost.

Every other cost in the business you'd happily get rid of. You don't want to spend on ads, you want the leads. You don't want the accountant's bill, you want your books in order. If you could get the outcome for free you'd take it.

Delivery cost is different because it's not the cost of an outcome for you, it's the cost of the outcome you… well… deliver. It's the price tag on the actual value you provide.

AI and automation mean we can deliver at a lower cost, we have hyper-margin agencies breaking that benchmark now, and my question is: does this shift the benchmark or is this a leading indicator that the service is becoming less valuable and agencies that offer it will eventually have to find something else to do?

When a service gets cheap and easy to deliver and the margin balloons... that's the value getting easy to produce. And if it's getting easy for you, it's about to get easy for everyone. AI, automation, or someone cheaper and greener does the same thing for less.

Things like your brand and the risk profile of the work could keep this margin high, but if it’s just efficiency then is it the canary in the coal mine?

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(If canary in the coal mine is just something english people say then apologies, it’s a saying that means an early warning, it refers to miners taking a canary down into the mine because it would die first if there was poisonous gas and indicate that everyone should get out)

I ran an agency for 15 years and worked with clients spending next to nothing to clients spending £250k a year on design.

During that time, we had the goal of becoming more strategically important to our clients, to be more consultative, and to be in the room when decisions were made, because doing that made us more valuable, got us more work, got us more impactful work, which was great for growth.

Here's a couple of things I learned, though.

Firstly, how valuable you are is your client's decision, not yours. We believe in the ongoing investment in our services as being key to the growth of our clients' businesses, because this is our specialism. It's the thing we've dedicated our careers to. So of course, we hold the belief that it's a really important thing, be it design, marketing, brand, or whatever. However, if your client just isn't buying that ongoing retainer or letting you into the strategic decisions around their own growth, you need to have some empathy and realize that perhaps they don't hold that belief, and that they, like plenty of other businesses, are going to grow without your set of skills. And they, like plenty of other businesses, are going to grow with less of a focus on your set of skills.

To them, the services you provide might just be table stakes, not a multiplier. To them, the services that you provide might just be a thing they have to have rather than something they believe is going to provide them with huge results. The lesson is not to spend time trying to change the mind of people who don't see your services as that valuable. Instead, spend that time trying to find the clients who do. There's some clients you have to grow past till you find the ones that are going to retain you, value you, and keep working with you.

Second thing to know is that even when you do become that consultative strategic agency, it's still only a percentage of your clients that will treat you like that. On some of our largest accounts, we were still just order takers. And from there, you've got two choices. You either do what the advisors say and focus on having a roster of clients that truly treat you as a strategic advisor, or you accept that that's not going to be true for every engagement. We did the latter. There was plenty of money on the table to be had just for doing execution. And I don't know many agencies that don't say yes to some of that work, because it's profit and helps them grow in other ways.

Finally, if you want to become a strategic advisor to clients, you need to make sure you can actually deliver. Is your team experienced and able to be consultative? Because actual strategy is way more than just the best practices and thought pieces written by people in your industry, for people in your industry. Saying that you can help with design strategy and then going in and parroting things you've read in books isn't going to get very far. If you're going to actually be invited to the decision-making table, you need to understand the client's entire business, where your services fit within that, and provide advice within context.

We found that this was very rarely something that we pitched, and much more something that happened organically because we encouraged our team to ask questions about the client's business, to be consultative, to look at what was happening in the market, and bring those bits of advice into their projects. So rather than clients coming to me and saying, "Please help with strategy," it was actually via our team members that people would say, "What should we do next?" And we could then say, "Let's run a workshop and help decide."

Anyway, that was me! What's your split of consultative to strategy to execution, and how much do you focus on trying to be more strategically valuable?

Financial incentives for your team.

They feel like the right thing to do. Firstly they feel like the thing a nice boss 😇 and good company 🍏 would do, and you are both of those things.

Then they also a way to get the type of buy-in from a team that might allow us to step away from the day-to-day of the business a bit more (maybe even completely).

Personally I didn’t get them right (or they just don’t work as well as they should).

I’m not talking about commission for the sales team, although that creates and interesting tension and an awkward question: where is the commission for the design team, or ops? (answer: they don’t get one).

The thing that failed for me is once a bonus becomes a bonus scheme you find that an expected bonus isn't a bonus at all.

Also a profit share is too far out of people’s control and paying out on personal KPIs is just, well, paying people more to do their job.

So do you run a bonus scheme? How do you incentivise people beyond their salary?