The Wrap-Up: 4 key takeaways from the ‘5-Part Framework for Increasing Agency Margins’ webinar

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Every month, we invite agency experts from around the world to share their advice on some of the toughest questions facing the industry.

Teamwork’s Head of Partnerships and webinar host, Logan Lyles, was recently joined by Databox CEO, Pete Caputa, to discuss how agencies can use a 5-part framework to increase their margins – a hot topic in today’s macro environment. 

Pete was one of the first sales reps at HubSpot in the mid-noughties, and eventually became VP of Sales at the CRM giant. Drawing on his experience selling to agencies of all shapes and sizes, Pete gives us his unique take on what can make or break an agency in this ever-expanding and overcrowded market space.

Here’s our four biggest takeaways from the discussion (you’ll have to read on to get the full picture!)

1. Position yourself as consultants, not service providers

2. Find your niche and specialization

3. Engage with external collaborators to position yourselves as market experts

4. Use data to maximize efficiency and effectiveness   

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Watch on-demand: A 5-Part Framework for Increasing Agency Margins

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Position yourself as consultants, not service providers

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The idea that agencies should position themselves as consultancies isn’t a new one. But, according to Pete, this doesn’t stop it being a “scary thought” for many agency owners.

We get it. You’ve spent years building your agency up from scratch and now everyone’s saying you’ve got to be a consulting firm. Sounds like a lot of work, right?

“The good news is that this isn’t about completely changing your business,” explains Logan. “We’re talking about a few steps to capitalize on some of the intellectual property… and talk about it in a different way. It’s a slight shift, but it can get you to a very different destination.”

“The reality is that most agencies are seen as outsourced labor… you’re always going to be seen as selling hours for dollars,” adds Pete. “Consultancies are seen as a bit more specialized and focused on a niche. They’re hired to come in, assess a situation and make a recommendation. This leads to more authority in the relationship […] and allows you to recommend things that differentiate you from the competition.”

The takeaway: By making a few small tweaks to your marketing strategy and positioning, you can start being perceived as an agency that consults and advises their clients, rather than providing a service that thousands of other agencies offer too. This will make you stand out from the crowd, and be able to charge more for what you do. 

Find your niche and specialization

To niche or not to niche? That is the question.

According to Pete, the answer is a big yes. “Whenever I speak to agency owners who don’t specialize, they generally have low margins, have difficulty keeping their employees, and are competing against multiple other agencies in the same space.”

While this rule doesn’t apply to everyone, the pros of having a defined niche and specialization massively outweigh the cons.

“When you pick a market, customers know you’re here for them,” reveals Pete. “But when you don’t, it’s hard for them to know if you’re really relevant. Having something on your website that a client can instantly recognize will get them to enquire and schedule a call, where you can further demonstrate your knowledge of their industry. The other pro is that you can begin to develop unique services your competitors don’t have, which is where the real value comes in.”

The takeaway: Having a defined niche and specialization (we’re SEO consultants for healthtech scaleups, for example) will make you instantly stand out as an agency who understands a client’s unique challenges and needs. There’s no one-size-fits-all approach, but taking steps towards this could see you land more clients and bigger margins. 

Engage with external collaborators to position yourselves as market experts 

As an agency owner, you may be wondering how a prospect will ever find you when you’re not ranking on the first couple of pages on Google. 

The hard truth is that you will never be able to compete with companies that have much higher domain authorities (and budgets) than you. Doing a bit of keyword research and writing a few blogs every month probably won’t cut it anymore. 

But, as Pete explains: “Once you pick a market, a whole new world of easy marketing is open to you.”

And the secret ingredient is collaboration: firstly, with experts in your field, and secondly with technology providers who can show you how you compare with other agencies in your space. 

In terms of market collaboration, hosting and joining LinkedIn discussions, podcasts, and benchmark studies are just some of the ways you can gain credibility and cement your position as industry experts.

Pete also talks about Benchmark Groups, a free tool from Databox that connects 50+ tools to instantly see how you are performing against your competitors. 

Logan is quick to call out the benefits of this: “So many clients ask, how do we compare and what do these results mean? But this changes the game. You can now be a consultant who puts this information into proper context. Not just here’s what we delivered, but here’s the results and how it compares. That’s a different conversation.”

The takeaway: Marketing is – of course – never easy, but there are ways you can position yourself and get in front of more prospects without relying on search traffic alone. Harness the power of external collaborators to separate your agency from the pack. 

Use data to maximize efficiency and effectiveness 

Finally, and according to Pete, most importantly, agencies should be using project management tools to see what the most profitable parts of their business are. They also need to look at where improvements and efficiencies can be made.

In Pete’s words: “If you can maximize the efficiency and effectiveness of something, that’s where profit margin lies. If you can do something for a client in 20 minutes that delivers an amazing ROI, you can charge them a lot more than those 20 minutes cost you.”

The takeaway: Success lies in continuous improvement. You need to have a system in place where you’re constantly looking at how efficient and effective a project or campaign was. By reviewing this data with your teams on a regular basis, you can work it back into your methodology and marketing–increasing your margins in the process.

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