Over the course of running your agency, you are bound to make big mistakes. But the good thing is we can learn from these big mistakes and develop strong perspectives on spotting and rectifying them in the future.
Besides, there are many existing agencies and their major mistakes we can learn from. For instance, some of the obvious pain points in the world of agencies are project management, communication, and client retention.
In this article, I am going to talk about the 5 big mistakes agencies make and how you can avoid them.
Extended Projects – Scope Creep
Have you ever heard of the Denver International Airport (DIA) project? It got delayed by 16 months and exceeded its budget by 250%! According to a case study, there were 2100 design changes made over the course of this project and most of them were undocumented.
Now, this project had nothing to do with digital agencies but if you have ever worked in an agency or own one, you must have experienced similar major mistakes before.
More than 50% of projects experience scope creep and every time this happens, your profit margin depletes. As such, it becomes one of the major mistakes agencies make that you must handle.
Here’s how you can avoid scope creep – one of the major mistakes agencies make.
- Define the scope of your project – covering every minute detail of it, right at the beginning of your project. Make sure your project scope contains all the important elements like in-scop, out-scope, resources required, risks & dependencies, etc.
- Establish a clear and easy form of communication between your client and the team that is working on their project. This helps you to expedite the project execution process. Also, make sure that your team understands the scope of the project.
- Keep your sales team on the same page with the project managers and the core team of your agency. It’s important to manage your clients’ expectations and ensure that they understand the complexity of a project.
Lost In The Herd
There are thousands of agencies functioning in each industry. It becomes important to stand out in the crowd rather than getting lost in the herd – another big mistake agencies make.
Let’s say that you are an advertising agency in the entertainment industry. How will a company know if there are hundreds of other agencies offering the same services?
Differentiating your agency from your competitors is the key here. Creating an identity for your agency is important. People call this branding, market positioning, etc. but this can help you deal with this big mistake agencies make.
Consistent branding across all channels increases revenue by 23%!
If you look at successful agencies and other businesses, you will find that branding has a major role to play in it.
Take ThomasNet RPM for instance. It focuses on the industrial marketing industry. Ogilvy, another example of a successful agency, handles marketing for the media and entertainment industry.
Here are a few other ways to stand out in the market despite hundreds and thousands of competitors.
- Bring uniqueness to the table.
VaynerMedia, founded by Gary Vaynerchuk, recently launched a sister company – GrapeStory that helps companies create content specifically for social media platforms like Snapchat and Vine.
- Be the best in the market at what you do.
Sylvian Labs – a strategy and design consultancy, for example, has been able to attract clients like Spotify, Pepsico, Google, and many more with its unique & innovative ideas. It helped Spotify to stand out in its fight against Apple Music. Apple Music’s premium subscribers surpassed Spotify’s premium members.
- Collect information, predict trends, and publish the results.
If you look at any popular agency, companies look up to them for trends and insightful reports in the industry. For instance, Hubspot publishes the State of Marketing Report in Feb – March every year.
Not Focusing On Finances
This is one of the top mistakes agencies make.
Most of the creative agencies often make the mistakes of overlooking their finances. It doesn’t matter whether you are a small or a large agency, balanced finances are super-important to ensure its sustainability in the long run.
Every agency should be familiar with terms like Adjusted Gross income (AGI), profit margins, cost of services, etc. If you don’t understand these financial terms, your agency is bound to fail because the entire project pricing strategy depends on these terms.
Do you know which is your most profitable client? Do you understand the pain points in your pricing strategy? How much money does every salaried employee bring to the table?
You, as the CEO of your agency, need to understand the finances. If you don’t, make sure you have a reliable co-founder or a financial advisor whom you can trust!
Ill-defined Agency Management Practices
I have discussed scope creep in project management but there are many ill-defined practices that can impact your entire agency.
We have often talked about creating well-defined processes over hiring a great team on our blog. This might sound a bit offbeat but here’s a question for you.
How many of your current employees have worked with your agency since the beginning?
The most common answer to this is less than 10. Employees come and go. Now, this doesn’t mean that you shouldn’t hire a great team for your agency.
This means that defining a great process for everything – from meeting formats to client communication & delivery, is more important. Over the course of your agency, a well-defined process can save you from the trouble of micro-management so that you can focus on the big-picture stuff. Besides, it also helps you avoid these big mistakes most agencies make!
A few poor management practices that you should tackle to ensure productivity and growth are – miscommunication between coordinating departments, lack of meeting formats, poor clarity on individual roles, etc.
Not Partnering With White Label Providers
You, as a CEO, should be constantly looking out for ways to optimize the functioning of your agency in terms of operating costs, profit margins, overheads, etc. This brings us to another big mistake every agency makes.
Here’s an example. A survey by Fast Company found out that over 30% of U.S employers say that a bad hire can cost more than $50,000! Compare this cost to that of a white-labeled agency ($2000 – $5000) and you would know where to put your money.
This is just one of the pitfalls of not partnering with white label providers. To fuel your growth as a leader in your industry, you’ll have to face many other challenges!
Did you know that the revenue growth of agencies in 2019, at 1.9%, was the lowest of the entire decade? So, now more than ever, you should partner with a white-label service provider. A white label provider can
- Help you scale.
- Increase profit margins and reduce operating costs.
- Reduce your agency’s bottom line.
Resourcifi is a white label provider of web & app development, digital marketing, and software testing services. Partner with us to reduce service delivery costs and management overheads of your agency. Contact us to know more!