Are you currently working with an agency or planning to hire one soon?
Gray discussed the keys to building a productive relationship with your marketing agency, as well as some of the warning signs to look out for when hiring one.
Here’s a recap of the presentation.
It doesn’t take much to have a bad experience with an agency.
A few common mistakes and it can very quickly turn into a huge waste of everyone’s time and money.
But when you use an agency correctly, you’ll get not only a go-to team of experts with specialized knowledge but a true partner that can generate exceptional results.
How to Measure Success When Working with an Agency
When we talk about working with an agency, we can measure success based on “return on agency spend” as opposed to return on ad spend.
The equation is simple. Return on agency spend is equal to the value the agency brings minus the cost that the agency incurs.
Agency value pertains to:
- Results: Is the agency generating marketing qualified leads (MQLs), increasing your revenue, and helping you achieve your business goals?
- Innovation: Are they innovating and pushing your marketing strategy forward? Are they helping make a positive impact across your organization?
- Capability: When an agency is capable, their value increases especially when they are able to minimize the time and effort spent by their clients.
On the other hand, agency cost refers to:
- Agency fee: The cost of working with the agency.
- Time: How much time will it take you to work with them? Do you have to stay on top of your agency regularly or can you trust them to do the work they said they’re going to do?
- Integration complexity: How complex is the integration of the agency with your organization?
Working with Agencies: 5 Tips to Get the Most Value
The key to improving return on agency spend is to increase the value they provide and decrease the cost that they incur.
Follow these five steps if you want to get the most value out of your relationship with a marketing agency.
1. Goal & Statement of Work (SOW) Alignment
Make sure that your goal and your statement of work are aligned.
Be very clear about what you want and determine whether you want a deliverable-based, goal-based, or hourly-based contract.
Here’s how they differ:
- You wish to be solely accountable for the strategy and results.
- Great when bandwidth is the primary issue.
- Generally lower cost, less chance of success.
- Your procurement team requires all vendor agreements must be based on deliverables or hourly figures.
- Your business doesn’t have enough historical data to create a reasonable goal.
- Agency should have more skin in the game.
- Great when looking for a strategy.
- Typically requires a higher budget, but there is a higher chance of success.
- You have the personnel and expertise to act on the optimizations given by your agency.
- You have a reliable source of historical data you can trust to form accurate goals.
- Most flexible, option to scale up and scale down quickly.
- Least level of accountability on the agency.
- There is a danger of going over budget, make sure the agency has a quick feedback mechanism on hour usage.
Choosing the Right SOW
Each type of contract has its pros and cons.
But if you want your agency to be more involved with your strategy (which is what you want typically from an agency partnership), you might want to look into a goal-based SOW.
It allows your agency to employ more levers which they can pull to achieve the desired outcome.
This incentive can lead to a higher chance of success for your organization over deliverable-based or hourly-based SOW.
What happens if KPIs are not met?
Oftentimes, this question goes unasked. But it’s essential to establish this from the onset.
This is where a performance-based statement of work comes into play.
In a performance-based statement of work, both parties agree on a percentage of refund or bonus based on the percentage of goal completion.
You need to set caps on both ends as this prevents you from paying out a lot of money that you’re not prepared to pay if your agency just completely smashes the goal.
Ideally, that contract is focused on one main KPI.
You can have other KPIs, but the percentage is based on one main KPI and that should be as closely tied to revenue as possible.
You want to make sure that you are issuing a bonus to your agency because your company did make a lot of money out of it.
2. Know Exactly What You Need
Before you hire, know what you want from your agency.
To prepare for your search, ask yourself these questions:
- What is my company goal?
- What is my marketing goal?
- What are my channel goals?
- Where will an agency fit into my channel/marketing/company goals?
You’ll also want to start thinking about KPIs:
- How will you measure the relationship?
- What numbers will you look at to know if things are going well?
- What are the current baselines for those KPIs?
Identify your ideal work relationship:
- How do you want to communicate?
- How do you expect reporting will work?
- Are you looking for foot soldiers, strategists, or something in between?
Here are some questions you can ask during the vetting process:
- How long have you been in business?
- How many people will be working on my account? Who will be working on my account?
- What makes your agency different?
- How will you help us achieve our goals? Why do you recommend that strategy?
- How will the work be executed?
Ask for references. Surprisingly, not all people do this.
The more you’re investing, the more you should make sure that you’re decreasing risk by asking for references of people that have actually worked with that agency before.
Start the search process by asking people that you trust who they’ve they’ve used and had good experiences with before.
This will give you better output than just doing a Google search.
You want to look for an agency with:
- Happy employees and solid culture.
- Much larger fulfillment team than the sales team.
- Honesty and competency.
3. Make Them Believers
Turn your agency into believers of your company and your product.
When your agency believes in you and what you have to offer, they will be more likely to go the extra mile.
How to Turn Your Agency Into Believers
- Give the team space to learn about your company, where you’ve been, what you’re doing as an organization, and where you’re planning to go.
- Introduce them to people they may not be working with directly. The more people they know, the more they’ll feel like they know your company and the more they’ll understand how their work impacts others.
- Show them behind the scenes. Show them how the company operates and how it’s organized. This context will help with future ideas they may bring to the table.
- Where applicable, get your marketing team trying your product or experiencing your service.
4. Trust Is the Ultimate Discount
When you have mutual trust:
- Results improve.
- Ego goes out the door.
- Quarterly reviews become celebrations.
- Agency costs go down.
- Mental investment goes up.
- Stress goes down.
Below are some tips to help you build mutual trust:
- Regular calls should be organic discussions rather than formal meetings.
- Speak up when something is out of place.
- Allow your agency the space to provide input.
- Spend some time in person.
5. Expect & Foster Innovation
A good agency should be bringing new ideas.
Find an agency that is known to do boundary-pushing work.
Make the agency aware of your marketing stack, as well as your larger goals – beyond the work they’re doing.
If they’re not bringing new ideas at least quarterly, ask for them.
Continue to build rapport and your agency will be thinking about you regularly, which is where the ideas are born.
Here are just some of the attendee questions answered by Paxton Gray.
My agency is working with one of my competitors, my agency is great, what should I do?
Paxton Gray (PG): It’s natural for agencies to carve out a service niche for clients in similar industries. It usually means your agency has proficiency in a specific market. It’s normal to be skeptical of your agency also serving your competitors. My advice is to make that concern known and ask questions to learn what procedures are in place to prevent any kind of foul play.
We often find the business development/sales person great, but end up the actual people who work on our project less impressive, even fresh out of college. What can we do to avoid this gap between sales/onboard skills?
PG: You have the right to know who exactly will be working on your account beforehand. Ask for names, look them up on LinkedIn, and see if you schedule a short meeting with your future team before you sign.
What do you think about the agencies that demand a 6-month or a 1-year contract?
PG: Some agencies frontload investment so results roll in larger and sooner. That said, contracts aren’t for everyone and an agency should be able to adjust strategy to fit that. If your agency is suggesting a 6 or 12-month contract from the get-go, learn to see why.
How long does it take to generate results with clients?
PG: That’s the million-dollar question! It depends on your goals, your opportunities, and the tactics your agency can employ. If everything is in the right place, results can be seen in a month. If not, things can take longer.
How much does 97th Floor charge?
PG: Our retainers start and $5,000/mo with enterprise teams starting at $12,000/mo.
[Slides] 5 Secrets to Getting the Most Out of Agencies (& How to Avoid Getting Burned)
Check out the SlideShare below.
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