10 truisms about agencies and clients
Agency-client relationships can be complicated. Columnist David Rodnitzky shares what he's learned to help you build a solid, long-standing partnership.
Over my nine years in the agency world, I’ve realized that I have certain “canned responses” to specific questions or situations. For lack of a better term, these are “Davidisms” that my team can probably repeat verbatim at this point. I thought I’d share 10 of my favorite ones with you.
1. Clients get the agency they deserve
There are a lot of different companies out there. Some focus on quantitative metrics; others are obsessed with brand and positioning. Some companies treat team members great; others create toxic environments.
In my experience, clients typically choose an agency that mimics its internal culture, and its business focus. I use this internally as a motivator when a client doesn’t choose my agency (which is focused on quantitative growth for clients and building a great culture): The client that didn’t choose us is going to get the agency they deserve!
2. An agency without process is just a bunch of people running around doing things
Imagine going into an agency and pulling three account managers into separate rooms. You ask each of these account managers a fairly mundane question about how they would manage your account. In many agencies, you’d get three totally different answers to the same question. Why? Because those agencies don’t have any underlying process for how they run accounts — they just hire (hopefully) smart people and expect them to make smart decisions for clients.
But is this really an agency? Of course not; it’s just a bunch of smart people doing smart things. Without consistent process, the success or failure of an account will vary based on the account manager the agency assigns to it.
3. An agency-client partnership means profit on both sides
This sounds like a simple concept, but it is often misunderstood in practice. If either side of the relationship isn’t making a profit, there are two options: One, the contract needs to be renegotiated, or two, the relationship needs to end.
I once had a client hire a new procurement manager who immediately called me and said we needed to lower our fees. I dug into the financials of the account and realized that we were actually below our typical profit for the account (so theoretically, I should have told him that he needed to pay us more than he was paying now).
When I told the procurement manager that we couldn’t lower the fees, he said he was going to immediately open up an RFP (request for proposal) for the business. I told him he could do that, and we would elect not to participate. He never ran the RFP, and the client is still a client of ours today.
4. Agencies know channels better than clients; clients know their business better than agencies
OK, this one is going to make some in-house teams angry, but hear me out. Agencies look at dozens of different accounts daily. As such, they are seeing more data and more approaches to marketing than an in-house team, which is focused on the same account day-in, day-out.
This translates to faster learning and more knowledge, which means that agency teams are better at specific channels than in-house teams. By contrast, in-house teams know the intricacies of their business far better than any agency, so they will also be able to make better business-specific choices than an agency.
5. The client is always right, unless he’s wrong, and then he still may be right
You’ve heard the expression “The customer is always right” — this is a modification of that statement. My take is this: If a client wants to do something, but the agency disagrees with the decision, the agency has an obligation to tell the client that they think he/she is wrong. At that point, if the client still disagrees, the agency needs to do what the client wants.
The important distinction here is raising an objection first, before simply doing whatever the client wants.
6. If you think an expert is expensive, wait until you see what an amateur will cost you
When we are competing for a new client, and the client is primarily choosing their agency based on cost, we usually withdraw from consideration.
Price is an important factor in choosing an agency. But a client who is using price as the main factor isn’t going to be a long-term good client for any savvy agency, simply because the client doesn’t have the ability or desire to understand the difference between experts and amateurs.
7. You never want to be the smallest or biggest client of an agency
I sometimes talk to small businesses who get really excited about my agency’s services and are willing to pay absurd fees to work with us (in one case, a client was spending $12,000 a month on SEM and was willing to pay us $10,000 a month to manage that spend). I do my best to dissuade small clients from working with an agency that is too big for them.
First, being the smallest client runs the risk that you’ll get the most junior team at the agency; second, the fees will eat up any profit that the agency might make for you; and third, the agency isn’t accustomed to working with clients at that size.
On the flip side, being the biggest client for an agency can cause problems, primarily because the agency doesn’t have the staffing or experience to handle the scale of your business.
8. Clients who claim they test everything rarely do bake-offs between agencies or between agencies and in-house teams
Especially here in Silicon Valley, CMOs are proud of noting that all decisions they make are driven by quantifiable testing. And yet, when these same CMOs replace an agency with a new agency or in-house team, the decision is based on qualitative factors like “fit” or “a need to own marketing internally,” whatever those mean!
My solution is pretty simple: If you think someone can outperform your agency, give a chunk of your marketing to that challenger (be it an agency or in-house) and measure performance over 60 to 90 days to quantifiably determine the winner.
9. All agencies are hammers looking for nails; it’s just that each agency is looking for a different type of nail
If you go to an SEO agency and ask them to recommend what percentage of your budget should be spent on SEO, the recommendation is going to be very high, if not 100 percent! This is not necessarily because the agency is acting in its own self-interest; it may just be that they live and breathe SEO, and this is all they think about.
10. Agencies get business two ways: referrals and thought leadership
I often hear agency sales folks brag that all of their new business is inbound. In other words, their agency is so great, they don’t even need outbound sales! I also used to brag about this with my agency as well, until I found out (through numerous failed attempts to hire outbound sales folks) that 95 percent of all agency business comes from referrals and thought leadership!
That being said, if an agency does want to brag, I’ll add in one more bonus Davidism: The goal of an agency is not revenue growth, but market share growth. In other words — especially for digital agencies — the market continues to grow every year, so simply growing revenue should be easy for most agencies. The real metric of success is whether an agency is growing faster than the overall revenue growth of their industry.
I have plenty of other Davidisms that aren’t related to agency-client relationships, so perhaps this is the start of an entire series of columns. Stay tuned!