Why should you scale your digital marketing agency?
The reason is quite plain.
As more and more businesses are going online, there’s a heightened demand for digital marketing agencies. Online marketing has become a norm as consumers expect businesses to serve them virtually.
As the web becomes more and more crowded, the competition between businesses to attract clients has stiffened. When consumers are spoilt for choices, customers are likely to churn. A report by ProfitWell showed that even subscription-based SaaS companies are having trouble retaining clients.
That’s why businesses look for reliable digital marketing agencies that can help them beat the competition.
If you run an agency, chances are that you plan to scale your digital agency to the next level to cater to the needs of the growing target market. However, the road ahead may be rocky. Many challenges await you.
To mitigate the risks that come with scaling up your digital agency, you need to arm yourself with certain marketing strategies, tools, and resources. That’s what we will cover in this post.
Let’s get started.
Challenges of Scaling Your Digital Marketing Agency
Before you plan how to scale your marketing agency, it’s wise to familiarize yourself with the roadblocks ahead. That way, you’ll know what things to keep in mind while scaling your business. After all, you won’t want to sacrifice service quality, customer goodwill, or other hard-earned credentials in the process.
There are three main problems that a digital marketing agency encounters when they scale up their business.
1. Higher Customer Churn Rate
In the last quarter of 2020, the year-over-year revenue of small businesses in the US dropped by 52%, according to a survey by Biz2Credit. The major reason for this revenue drop was consumers’ changed purchase behaviors.
Many agencies failed to retain their clients, which caused them to stay underfunded yet overstaffed. To prevent this, you should make contingency plans for lean periods when scaling up your agency.
2. Lower Profit Margins
When you scale your agency, you need to expand your payroll budget to hire new employees. But with profit margins of small and mid-sized digital marketing agencies hovering around a mere 11%, there’s no scope for budget expansion.
Agencies might have to upsell their marketing services to existing clients or find new clients if they want to increase expenditure on recruitment and employees’ salaries. But before that happens, their existing teams may have to shoulder extra responsibilities stemming from new projects. All of this can take a toll on their productivity and morale.
Wonder what will happen if an employee suddenly walks out of your company due to low compensation?
As an agency owner, you will be forced to find a comparable resource (without paying extra) to replenish your talent pool and scale your business. That kind of pressure on your hiring process can be too much to handle for a small or medium-sized agency.
3. Sourcing Quality Talent
Digital marketing agencies live in a fast-paced ecosystem. Their employees are always required to upskill themselves to stay relevant and competitive. Couple that with the pressure of scaling up, and you have a potboiler situation where it’s hard to attract and retain quality talent.
In fact, hiring talented employees is the third biggest challenge for digital marketing agencies, according to WordStream’s State of Agency report.
Now that you understand what’s in store for you when you scale your agency, let’s talk about how to overcome these challenges.
How to Scale Your Digital Marketing Agency: 6 Clever Strategies
The situation might seem bleak at the moment, but there’s a light at the end of the tunnel. There are many ways to grow your business without hampering your work culture, service quality, business goals, and bottom lines.
Here are some great scaling-up strategies for your digital marketing agency:
1. Re-Evaluate Your Buyer Personas
The main aim behind scaling a business is broadening your client base. But, your target market might have changed considerably since the time you first launched your company and created buyer personas.
If you continue using outdated buyer personas to guide your marketing strategies, you might not be able to attract new clients and achieve your business goals.
To refresh your buyer personas, look at the demographics, interests, and needs of your existing clients. Are they offering new products, demonstrating new purchase behaviors, or prioritizing different things? This analysis will indicate how your customers’ demands have evolved and how their businesses have shifted over time.
You can use these insights to create fresh buyer personas of your potential clients. Using the revamped personas, formulate a new marketing strategy. Don’t hesitate to tweak your personas whenever you discover new customer insights during campaign execution.
When you are proactive about meeting client requirements, your customer relationships deepen, which can resolve the high customer churn rate issue.
Greater customer satisfaction will not only help you retain clients but will also generate positive market sentiment, which can be a game changer for your digital marketing company.
2. Optimize Your Workflows
Your current workflows may become inefficient when you scale your marketing agency. Your processes and people will need to be ultra-productive in order to churn out more work in less time.
You will need to:
- Shorten meeting hours.
- Streamline processes of each department.
- Reduce labor-intensive tasks by using automation tools.
- Encourage your team members to develop new skills.
- Enhance team coordination.
In addition to these points, your management and creative teams should look for ways to make your work processes more efficient. Encourage people to share their ideas and maintain transparency in communication to enhance your company’s work culture.
3. Build Your Brand
In order to attract new clients and talent, you will have to build a positive brand image of your company in the market.
You can present yourself as a specialist in promoting companies in a particular niche.
For instance, if you work with experts from the health and fitness industry, show them off on your business pages and newsletters. This will help you attract health and food brands, gyms, and similar entities.
Being in the digital industry, you need to showcase your digital marketing expertise and build brand awareness. Use all tricks of the trade to nurture existing customer relationships and build a good online presence.
If you are not able to market your own brand effectively, how can you possibly do it for your clients?
So, be available 24×7 on all customer-facing channels like websites and social media platforms. Invest in conversational chatbots to engage your on-site visitors and gather their requirements. Automate your customer communications so that no potential lead returns empty-handed from your website and social media pages.
Keep your portfolio updated at all times and highlight your successful projects through case studies and customer testimonials.
For inspiration, take a look at our website. We offer useful resources related to digital marketing, right on our homepage to gain people’s traction.
Image via Attrock
You should start a blog and publish informative industry-related articles to showcase your expertise. Also, publish case studies that convey how your tactics helped a client generate good returns from their digital marketing campaigns.
Want a pro tip?
Don’t gate any of your premium content behind paywalls. However, you can use it to collect email addresses. You should focus on fostering trust rather than monetizing your website, at least until you build a decent reputation and client base.
4. Offer Tiered Solutions
Another great hack to grow your agency is to offer tiered solutions to your customers. This way, you can provide them more value for money, upsell effectively, and streamline your workflows.
How can you create tiered solutions?
Start by identifying your most basic services. Then, build at least two more tiers on top of that with advanced services and higher prices.
Make sure that your tiered plans are well-structured and fairly priced. To explain how your services are spread over tiers, you can offer a free consultation to potential clients. In these sessions, you can understand client requirements, explain your pricing structure, and help them pick a plan that best suits them.
To upsell your service plans efficiently, you can offer add-on services at concessional rates.
5. Monitor Your Team’s Productivity
Scaling your agency entails hard work. That leaves managers with little bandwidth to track the productivity of each employee. At the same time, productivity tracking is critical to your scaling efforts.
- It can help you identify bottlenecks in task completion.
- It can give an idea about the time and effort invested in each project. You can track work hours and quote your new clients fairly once you’re aware of the number of hours that go into a similar project.
- You get a helicopter view of your team’s working capacity, strengths, and weaknesses. After that, you will be in a better position to assign the right task to the right person to improve the overall efficiency of your team.
Instead of having each team member maintain their own timesheet, opt for time-tracking software and project management tools like Clockify. This way, you will be able to get a unified picture of your employee’s productivity and clients’ work progress in one place.
Many of these tools also allow you to generate project-wise and department-wise reports to help you calculate expenses and allocate budgets.
6. Look at the Big Picture
It’s easy to get carried away and overwork your employees when you’re striving to scale your business. It’s also a natural instinct to say “yes” to every project that comes your way, even if it’s beyond your scope of services.
To avoid these pitfalls, you should step back every once in a while and look at your business from an outsider’s perspective. Compare your current position to the target you had set for yourself.
Take a breather and celebrate the journey with your teammates. It can do wonders to boost your team’s morale and overall productivity.
Q1. How do I scale my digital marketing agency?
A. To scale your digital marketing agency, you need to:
- Create new buyer personas.
- Make your processes more streamlined and agile.
- Boost your brand’s image to attract new employees and clients.
- Track the productivity of your employees.
- Offer tiered solutions to your clients and upsell services.
- Keep your agency growth goals in sight.
Q2. How do you scale an advertising agency?
A. To grow your advertising agency, you can:
- Pick a niche in which you offer the best services and have ample experience.
- Use content marketing to move new prospects down the sales funnel.
- Revamp your customer-facing properties (website, social media pages, etc.).
- Reduce your lead response time to nurture them effectively.
- Hire talented employees and find ways to boost their productivity.
Q3. How much do digital marketing agency owners make?
A. Typically, digital marketing services are billed on an hourly or monthly basis. On average, agencies charge between $90 and $250 per hour for basic services.
Sometimes, they charge per project, which amounts to $4.5K-$7K, depending on project size, duration, and requirements.
Q4. How do you scale your marketing efforts?
A. Some of the best ways to scale your marketing efforts are:
- Identify and capitalize on what differentiates your business from your competitors.
- Use marketing automation tools for expediting repetitive, mundane tasks.
- Analyze current market sentiment about your brand and improve it.
- Ask your existing customers for feedback through surveys.
- Repurpose your best content.
Q5. Is digital marketing a good business to start?
A. The digital marketing industry is expanding rapidly. With more and more businesses embracing digital marketing, it’s a good time to venture into this domain.
You can bill basic marketing services at anywhere between $90-$250 per hour. As your team size, experience, and expertise increase, you can charge more and pick up lucrative projects to grow your agency.
Q6. Is digital marketing expensive?
A. On average, digital marketing services can cost from $90-$250 per hour or $35K-$145K per month. The actual cost varies from project to project based on work requirements.
Q7. How much does it cost to start a digital marketing agency?
A. Here is the estimated cost breakdown required to start a digital marketing agency in the U.S.:
- Fee for incorporating a business – $750
- Liability insurance, permits, and licenses cost – $2,500
- Cost of leasing/constructing/renovating a brick-and-mortar office – variable
- Cost of office infrastructure – $5,000
- Cost of launching a new website – $600
- Payroll budget + utility bills (2 employees for 3 months) – $10,000
- Promotional and miscellaneous expenditure – $4,000
Q8. How do I start a digital marketing agency?
A. In order to start a digital marketing agency, you need to:
- Equip yourself with requisite skills (building landing pages and websites, social media marketing, PPC advertising, etc.).
- Work in an agency or as a freelancer to gain industry experience.
- Build your business model.
- Understand taxes and liabilities.
- Register your business as an LLC, a Corporation, or another appropriate business structure. Consider scaling possibilities while choosing your entity type.
- Pick a niche to stand out from the competition.
- Start offering your services to existing contacts and other potential clients.
Q9. How can I promote my digital marketing agency?
A. To promote your digital marketing agency, you can:
- List your business in online directories like Google My Business, Bing, and Yelp to attract local clients.
- Develop case studies of your successful projects and promote them on various channels.
- Share client testimonials and reviews on your website and social media pages.
- Ask existing clients for referrals.
- Identify an area of expertise and highlight it in all of your customer communications.
- Be your own client and market your business like you would promote your clients’ businesses.
Q10. What are the common challenges faced during agency scaleups?
A. When digital marketing agencies scale up, they face bottlenecks such as:
- Increased customer churn rate
- Decreased profit margins
- Unavailability of quality talent
Scaling a digital marketing agency is not easy. But with the right mindset, tools, and tactics, it can be a painless process.
While implementing the above tactics, don’t forget to keep strengthening your customer relationships. If you lose existing customers, the cost of acquiring new customers might cancel all of the benefits of scaling up.
Do you need any more advice on managing your digital marketing agency? Feel free to leave your requests in the comments below. We’ll get back to you with the information soon.