There’s a commonly held belief in the agency world — if you’re not growing, you’re dying. But growth is becoming more difficult these days. AdAge reported that revenue growth for U.S. agencies in 2017 declined to 1.8%. Any growth might be considered healthy in some industries, but in the agency world, that’s the lowest growth rate since 2010. And while many digital agencies are experiencing slow incremental growth around their existing practice areas, that may not be enough for agency owners with bigger ambitions.
So, just how do you accelerate growth these days? We explore why more agencies are now selling technology that complements their marketing services in our new ebook, Merging tech with tactics.
The more traditional way of driving growth is by adding complementary new practice areas. But adding new areas of consulting expertise means recruiting and hiring skilled talent, which is costly. For example, let’s say you’re running a digital marketing agency in the San Francisco Bay Area. Your core services have included designing and building websites, content marketing, SEO, social media and online advertising. But you want to add something new to spur your growth — and determine a public relations practice is the way to go. So, you want to hire a senior level PR pro to launch the practice. Then you realize the average PR director salary in San Francisco is about $160K. That’s a steep commitment to make — especially if you don’t have an existing pipeline of potential clients lined up for that new service.
Instead, many agencies are starting to invest in technology — the marketing technology (martech) that in many cases is similar to the tech they already use to run programs and tactics for clients. So, they are bundling the technology as a value-added service to go along with their consulting expertise, and in turn, establishing a new revenue stream. What’s the best way to build or acquire that technology? Thinking lean.
Taking a Lean Startup approach to selling martech
An agency that wants to accelerate growth should consider the popular Lean Startup methodology, which encourages entrepreneurs to launch products and test the “product/market fit” as quickly and inexpensively as possible. While the best-selling Lean Startup book was originally written for product teams building something, the ideology has been subsequently applied to many practice areas, including sales and marketing. Agencies can take a lean approach to selling goods and services by experimenting without unnecessarily risking the established part of its business. In other words, offer something without overinvesting, as quickly as possible, and start learning about whether it’s a good fit for your agency.
“The way forward is to learn to see every startup in every industry as a grand experiment. The question is not ‘Can this product be built?’ In the modern economy, almost any product that can be imagined can be built. The more pertinent questions are ‘Should this product be built?’ and ‘Can we build a sustainable business around this set of products and services.’’ — Eric Ries, The Lean Startup
Undeniably, reselling a white-label product is the fastest way to market — especially compared to building your own custom product. Depending on the nature of the service, you can be selling in a matter of days. With Agendize, for example, once a reseller agreement is in place, you immediately will have access to configure and start selling your new SaaS product.
Following the Lean Startup methodology means having focus on learning from your market. Depending upon the response from customers, you might learn:
- The white-label service you’re selling is a great fit. You can continue to offer as-is, and consider investing more in marketing that service.
- There’s interest in the product but the feature set isn’t quite right. You might want to invest in building your own product -- or perhaps working with the white-label provider on building a custom solution to better suit your needs.
- There’s no interest. And that’s OK because you didn’t spend hundreds of thousands of dollars in development. You can try offering up other white-label solutions, or the feedback you gained may steer you in an entirely different direction.
Need help to start selling white-label martech services?
This scenario comes up a lot with our agency partners — they hire a team of specialists to launch a new practice area only to find out later the demand for those new services isn’t what they expected. Then they come to Agendize and start selling our product services as an alternative means to trigger growth. White labeling our digital tools takes very little up-front investment.