How Offering Email Marketing Can Increase Your Agency’s Margins Over 9.15%
Find out how adding email marketing to your agency’s menu of services can increase your margins by over 9.15% — without training existing staff or hiring new talent.
Email marketing is one of the most valuable marketing assets for any business—it’s 40x more effective at acquiring new customers than a Facebook post or a tweet. Because it’s so important to your clients—and so easy to do—offering monthly email marketing packages is one of the best ways to boost your agency’s margins. We’ve written about how you should switch to a subscription billing system to combat the irregularity of the billable hour, but if you’re not willing to overhaul your entire pricing strategy just yet, here’s another option—offering “add-on” monthly packages like email marketing helps you reap the same financial benefits. With an add-on package, your agency can count on regular revenue regardless of who goes on vacation and can’t bill time. Plus, while you normally scale by adding more employees and clients (since you can’t add more hours to the work week), adding on extra packages like email marketing helps you increase profits using the talent and client base you already have. In this post, we outline the reasons why your agency should offer email marketing packages and include the calculations to prove how it will make your margins soar.
Why Email Marketing?
You might think that you’re not the right agency to offer email marketing. After all, you specialize in a particular area like social media or content marketing. You’d rather deepen your knowledge of your particular niche than spread yourself too thin by adding another service. But you can use email marketing to deepen your specialization instead of dipping your toes in an entirely new area. Email marketing, when used correctly, can directly complement your agency’s core services. For example:
Content Marketing Specialization > Distribution Emails
Offering a newsletter or other email distribution services helps your client get more eyes on their content.
Branding Specialization > Lifecycle Emails Adding lifecycle emails (like welcome emails and onboarding emails) to your branding agency’s menu can help your clients’ customers and potential customers become more acquainted with their brand over time.
Social Media Specialization > Referral/Shareable Emails Writing emails with shareable content or instituting an email referral program encourages your clients’ customers to share and increases their brand presence on social media.
These services directly complement what you already offer, and the email marketing process itself doesn’t have to be a huge undertaking. While the process can seem intimidating, email marketing tools provide most of these automatically—you can use a single service like Campaign Monitor for drag-and-drop design, testing, and analytics.
The email marketing process. Other popular email marketing platforms include Constant Contact, Drip, Robly and MailChimp. Each of these platforms offer a range of pricing and feature packages, which you can review and compare here to find the best fit for your business. If you use an email marketing tool, you don’t have to train your creatives in new skills that take away from billable hours. They already know how to write compelling copy—now they just have to translate it into subject lines. You can also reuse copy and design assets from the marketing work you’ve already done for those clients so you’re not starting from scratch. For example, a branding agency could reuse a logo they helped create. It’s a low-effort, high-payoff situation. Your clients get a ton of value from having your copywriters dash off a few emails as opposed to having their team take time out of their day to learn do something they don’t have any experience with or recruit new hires. On the other hand, it only takes your agency a few minutes to drag and drop their logo into an email.
Proof That Email Marketing Boosts Your Margins
Leverage this low-effort, high-payoff situation by creating a monthly email marketing package option for your clients. With a flat monthly fee per campaign (in addition to your hourly rate for your core services), you won’t lose money as your team works faster over time—you’ll have room to make even more. Here’s the breakdown for the numbers behind a typical small agency to see the way it can benefit from email campaigns. A team of 6 works 6 billable hours per day (leaving 1 hour for lunch and 1 for administrative tasks), 22 days per month (the average number of days worked in a month).
Let’s say you charge $2,000 for a monthly email campaign. This campaign could include four emails, one per week. From there, you need to factor in:
Hours spent: You can’t bill the hours you spend on the email campaign if you’re charging per unit. So each hour you spend on email marketing gets deducted from the total hours your team can bill per month. For a single email campaign, that’s 5 hours to write the copy and design the emails, 1 hour to strategize with clients, 1 hour project management work = 7 hours of labor in total per campaign.
Cost of service: Email service Campaign Monitor has scaled pricing based on the numbers in your subscriber list, but let’s pick their price of $699 per month for unlimited emails for up to 50,000 people—so you can send emails for multiple clients. They also give agencies a 10% discount, so the total price would be $629.10.
Take a look at how this impacts this agency’s margins if they only sell a single client on an email marketing package. We subtracted 7 hours from the hours billed, added $629.10 for Campaign Monitor to software expenses, and added $2,000 from charging one client for email marketing.
Even with only one client covering the overhead costs, email marketing is an easy way to increase your guaranteed monthly cash flow. Once you offer more clients an email package, the profit compounds since you don’t have to pay for another email service subscription. This is what your profit margins look like with five clients using your email marketing package. We subtracted 35 hours from the hours billed (5 campaigns x 7 hours for each) and added $10,000 ($2,000 x 5 campaigns).
With the extra reliable revenue coming in from the email marketing packages each month, they can raise your profits by at least 9.15% (14.96% before email marketing > 24.11% email marketing for 5 clients). The numbers might be different for your particular agency depending on how many clients you have, what you decide to offer and what you decide to charge, but it’s easy to see how offering email marketing packages boosts your reliable monthly revenue.
The Types of Email Marketing Packages You Can Offer
Your profits aren’t limited to a single campaign per agency, per month, either. On their blog, Campaign Monitor explains that agencies can charge for two other types of client email services in addition to traditional email marketing.
Setup. You can use your agency’s technical expertise to charge for setting up an email marketing program—like integrating your client’s CRM into the email marketing tool to send behavior-triggered emails, adding a “subscribe” button to their website or blog to grow their email list, or uploading subscriber lists to their email client.
Marketing tool. Tools like Campaign Monitor allow you to “white label” their product and present it as your own. You can offer clients access to your subscription at a markup price. Your clients get an easy-to-use email builder and the benefit of you overseeing the campaigns they create, and you can charge for a service that takes your agency no time at all. You can manage multiple clients’ accounts from Campaign Monitor’s agency dashboard and even invoice from there, too.
These services yield significant profits but require minimal effort, which will help your agency build a reliable revenue stream.
Package Value Into Your Services
The different email marketing options your agency can offer are just a couple examples of effective monthly packages. Your content marketing agency could provide SEO optimization, or your design agency could take care of infographic distribution in addition to production. If you’re not sure about overhauling your time-tested billing system or don’t have time to do so, these monthly add-on packages—email marketing and beyond—are the best way to combat the limits of the billable hour without switching billing systems entirely. Pricing based on the value your clients get from connecting with their audience through email instead of the 7 hours it takes to create a campaign is one of the easiest ways to grow your agency’s profits. To get ahead in your industry, you’ll always be thinking of ways your clients can improve—but by offering these ideas as monthly packages, you can ensure your profit margins reflect your excellence.