Spencer GallagherCEO Cactus - The Agency Growth Consultancy

I am a mentor, non-exec, chairman, consultant and advisor with a successful track record, someone who has **actually** “been there & done it”. I’ve suffered all the pain and successes that growing an agency has at every stage from start-up to post exit delivers. CEO Cactus - The Agency Growth Consultancy Author of Agencynomics - Amazon five star rated, best selling Book and Audiobook. Host of Agencyphonics - Live Vodcast series on YouTube & Podcast. I started life with no privileges; I started my agency from a purple shed in my late mum’s back garden, after being made redundant with just one month's salary in the bank £4,500 and ended up running a $20m global agency. I learnt 10% of what I know today having organically scaled an agency, the other 90% has come from helping over 1,000 agencies with their challenges over the past 8 years. I am fortunate to have seen what works & what doesn’t time & time again and I share those insights, the patterns I see, through my daily consultancy work. That said I have a favourite system that has led to my client average today of 85% average growth per annum delivering 10x growth against my fee, directly and indirectly, I have achieved ROI typically of over 30x value.

Recent Answers

So, having started from a shed in my mum's backyard, and building $1,000 websites, and growing that without investment to 200 people. My biggest two websites builds at that later stage were $1.5M so I'm probably qualified to answer this question :-)

Firstly I wrote a whole book on the subject called Agencynomics, so I'll keep the answer less than 250 pages for you!

The first step is to understand that you need to get the business to a position where one person is designing/building and one person is selling/account managing and project managing. To do that you need to get your billings to a level where you can afford two salaries.

When I started, I was selling all day and designing/building all night or vice versa, but I sold $45K dollars in that first year and managed to recruit someone, once I got to about $6K a month, as a result, the next year I grew to $150K, with that second person. I was able to charge for Account Management/Project Management/Strategy from me and Design and Build for my employee. The key thing was to keep adding in value-added lines, which slowly bought the price up, like UX, SEO optimisation etc. Today websites are commoditised so maybe a shift to focus towards progressive webapps (PWA) or other more scarce services will help you drive up day rates.

What I found was and still do today, in the early stage you give away the thinking planning, strategy, and small clients don't want to pay that much either, but as you grow you master selling better.

Try not to sell to price buyers, but to clients that are relationship or value buyers, people that appreciate the service. Try not to overdeliver, underpromise and overservice, but not overdeliver! Scope creep from clients makes it harder. So be careful. The truth is as you scale you naturally get better at pricing and the projects get bigger and you get more confident in your pricing. But if you play in the "many providers" market of websites, the prices are going to be commoditised. So think about the design and build problems you can solve that are scarcer and therefore people pay a higher premium for and can't get your service everywhere. Lastly, set yourself targets. Each month, everytime you hit the target move it up and keep pushing. This is the best way to scale faster in the earlier years. Everyone forgets to set targets in those early days.

There are three main models. Firstly, reciprocity, we recommend clients to your agency to partner with and the agency recommend clients back to buy your service. The value exchange needs to be equal, but when this works it usually forms the strongest of strategic partnerships. Secondly, there is a commission structure. The main challenge for this model is often an agency is developing tens or hundreds of thousands through their sales to clients yet the commissions from products are often only hundreds or thousands and whilst they provides a passive income, by themselves the commissions are not lucrative enough. Also it’s hard to remain front of mind with the Agency account or sales teams. The third model is created by creating a value added partner programme. Where on top of commissions, because the agency, has been trained and certified in your product they can also benefit from an introduction to new clients, from the partner product, where they can sell the their services on top of the commissions they make from integrating the partner. Most CMS, hosting or ecommerce vendors have these types of programs. Happy to pick up more details on these on a call.

There are three main new business strategies for agencies to create new business opportunities. As you are a service business you will sell on trust and capability. Rarely one or other. I would recommend a rounded approach to include all of the following networking, speaking, event/webinar, social selling strategic partnerships, fame through awards/pr and driving referrals from existing clients combined with an inbound content strategy. There is no one quick fix all approach to agency lead generation, don’t let anyone tell you there is! Good luck!

I’ve worked with over 500 digital, creative and marketing type agencies from 1-42,000 employees. I started out as you are today, a web developer. It’s taken me several hundred millions pounds worth of reviewed pipelines for new business over the last 10 years to finally understand the following insight. Firstly agency businesses find new business much easier when they build trust/chemistry and demonstrate their capability with a prospect. You need both things ideally to win a sale! There are 5 main ways agency win business. The first four I call it the 30/30/30/10 methodology and the second one is Fame. 30% of your new business should come from 1. Nest (Networking (inc social selling) /Speaking/Thoughleadership and Events) 2. 30% of your new business leads should come from strategic partnerships that drive referrals. 3. 30% of leads should come from existing Ciients recommending you new clients or leaving their job and taking you to the next company they go to. Finally the 10% area which whilst is important for the 8-12 touch point marketing activity needed on average to make a sale. It contains marketing activity such as seo, outbound cold calls, classified sites, ppc, social media, email news letters, other such outbound activity. Of course we all know of a big sale from ppc or a cold call, but over large amounts of data reviewed these are the actual stats on where leads come from.

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