8 Early-Warning Signs Your Agency Is Failing

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Jami Oetting
Jami Oetting



You might have noticed it. Things just seem a little "off" in your business. 

agency failing: image shows person on floor with crumpled paper and waste basket

Sure, there are problems -- there are always fires to put out -- but the issues these days are more serious. The challenges are not so easily solved. 

It can be difficult to see the real issues and solve them when you are so involved in the day-to-day success of your agency. 

But you have to be realistic about the future. Consider these signs as a wake-up call and reconsider how you run your firm.

8 Signs Your Agency Is in Trouble

1) You don’t have a roadmap for your agency.

You can’t get to where you want to be without a plan, yet many agency executives fail to review their business on a yearly basis. In addition, they don’t set specific and measurable goals each year that provide a roadmap for growth and stability.

There are a few main areas you should consider when creating your annual business plan:

  • Financials: What profit margin do you want to achieve? Do you know your agency’s utilization rate, or how efficient your firm is? Which clients are profitable and which ones are unprofitable? (Check out these financial metrics for more detailed guidance.)
  • Management: What goals do you have for you and your leadership team? Do you need to focus on building a stronger culture? How do you recognize great work and could this be improved? How can you increase trust in management?
  • Talent & Retention: Based on your quarterly or yearly financial predictions, how many full-time staff members will you need to recruit this year? What does your current recruitment program look like and how does it need to change? Do you have a turnover issue? What could you do to improve the retention rates of your top talent?

2) You discount your services.

According to Agency Management Institute’s 2015 Agency Hiring and Firing Insights report, 46% of marketers say there are factors that automatically disqualify agencies, and one of those stated is the fact that agencies discount their fees. Pricing isn’t just about what something costs; it also is a signal of the value of your services and the relationship. An agency that discounts their services right away -- or without any pressure from the client -- will be seen as devaluing its own work.

3) You don’t have the right tools.

One of the only ways to improve profitability in an agency -- especially if you are mostly engaged in project-based projects -- is to improve your efficiency. There are two ways to approach this. 1) You need defined, repeatable processes for qualifying prospects, onboarding new clients, scoping work, managing kick-off meetings, and completing and launching projects. 2) You need to evaluate, test, and use the right tools, with the goal of making communication, project management, and delivery of services more efficient and effective.

Check out these resources for more information on tools to run your agency:

4) You sell to the wrong clients.

Bringing on the wrong type of clients is problematic for a few reasons: A hostile or difficult client can cause your team’s morale to sink, leading to a dissatisfied and unhappy team and even higher turnover. If the client is unprofitable -- because of scope creep or your initial pricing was too low -- then you’re doing work for free, which can cause resentment between the agency and the client. Do a client check-up on your accounts to better understand your best type of clients, i.e., those who pay on time, allow your agency to do your best work, respond in a timely fashion, etc. Then, revise your ideal client profile, and create qualifying questions that will help you to identify who you do your best work with and which types of clients create mutually beneficial relationships.

5) You don’t have a plan for generating new business.

An annual new business plan will give you the opportunity to review the previous year’s wins, the sources of those accounts, and how well they align with your ideal client profile. Once you better understand the high value sources of clients, the number of new clients you need to bring in to meet your revenue goals for the year, and your client churn rate, you can create a plan for meeting your targets. A new business plan will help you to get the executive team and the staff to see the priorities for the year, identify the tools you need to succeed in bringing on new business, and create a plan for generating leads and taking advantage of upsell opportunities.

6) You haven't built up a talent bench.

You’ve been there before. Your new business is in a rut, and you haven’t onboarded a new client in two months. Then, all of a sudden, you find yourself adding five new accounts in one month. You need to hire -- fast. Yet, the average interview process takes 23 days, according to Glassdoor Economic Research. This number doesn’t factor in the time between the candidate’s acceptance of the position and start date (typically between two and four weeks) or the time required to train, which can be three months, six months, or even more in some organizations.

One way to speed things up is to create a recruiting program that develops a strong bench of qualified candidates. These are people you have pre-vetted and know would be valuable additions to your team. In addition, you can also build relationships with freelance talent who you can call upon when additional projects are beyond your current staff’s capacity.

7) You can’t prove your value to clients.

Clients want numbers, data, and results they can provide to their own bosses to show the success of their marketing team. If your agency can’t provide information on the metrics that really matter to the client or the CMO, then you’re at risk of being fired. With data on traffic, leads, MQLs, customers, etc., generated and the ROI of those activities, you will be seen as a valuable partner that understands the needs of the client’s business and can help them achieve their goals.

8) You rely only on referrals and cold prospecting.

Referrals are a valuable source of new business for agencies, but if you are solely relying on this and cold prospecting, you’re missing out on an opportunity to build a sustainable pipeline of leads that will provide you will a predictable growth pattern. By combining the two, you can create a much more stable and profitable firm.

By making your agency your #1 client and creating -- and sticking to -- a marketing plan for your firm, you can attract the type of clients you want, shorten the buying cycle through pre-qualification, and increase trust through nurturing campaigns.


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