[Study] Why Agencies Don’t Grow

It's a common problem.

Agencies serving the local business markets are facing a growing number of challenges as the industry bloats with competition and is met with more technologies and client demands every day.

Scaling is undeniably the biggest challenge agencies face.

In a recent Vendasta study, I sought to figure out the critical growth challenges agencies struggle with and provide data-backed strategies on how to solve them.

Get the full Challenges Agencies Face study

5 Reasons Why Agencies Don’t Grow (and how to grow your agency)

1. Your sales approach is too pushy

Pivoting to a needs-based sales approach over traditional product pushing will improve your conversions.  

Sales and client acquisition in the local business market is challenging. If you're a startup, it can be especially difficult to acquire those first crucial clients to build up the reputation and experience needed to grow and deliver results.

So what's your sales strategy look like? Are you old school, pounding the pavement? Cold calling? Buying email lists to blast with blanket campaigns?  The ROI on your efforts doesn’t scale with these methods. Never has. Never will.

Experience (and data) has taught us customers not only convert better, but are also retained longer, if you take a needs-based approach. That means cultivating a unique sales pitch to each business prospect based on their specific needs, and steering away from the classic brochures and product page sales conversations.

How do you discover prospect needs without dumping time and resources into it? Leverage data and auditing tools (like the Snapshot Report, or Google's PageSpeed Insights tool) to identify gaps in local business' marketing. Build your pitch on that data, and show prospects how your services can help them succeed.

2. Your eggs are in the wrong marketing basket

Agencies must expand beyond selling digital advertising in order to grow.

Local promotions and marketing are growing 2.5 times faster than digital advertising, yet many agencies are putting their eggs in the advertising basket.

While the digital advertising market is projected to hit over $2 billion in 2018, it's a highly competitive market with 83.33% of agencies selling advertising solutions. A whole 11% of agencies sell digital advertising with only one or two additional products/services, and 2.5% of agencies only sell digital advertising.

Comparing the digital advertising market to other marketing categories reveals many untapped markets to leverage for growth.

Listings and Reputation marketing services are the ripest marketing categories to tap into, representing a combined $600 million market with low competition—fewer than 45% of respondents sell either service.

Websites and social media are the fastest growing markets, so agencies should include these solutions in their marketing packages. Bundle additional services such as listing claiming, reputation management, and email marketing to capture those growing markets and differentiate from the competition.

Marketplace: Explore white-label solutions for social media, email marketing, and more

3. You're a one-trick digital marketing pony

The fuller the stack, the fewer the growth challenges.

The more value you bring to the table for clients, the better off you'll be. With over 86% of local businesses wanting to buy solutions from a single provider, it's clear that agencies can't be a one-trick-pony anymore. Yet 8.3% of agencies are still point-solution providers, and a full 20% of agencies offer 3 or fewer digital solutions to clients.

Only 22.5% of agencies are "full-stack" providers, selling at least one solution in each of the critical marketing categories. What's the benefit? More products means more upsells and cross-sells with existing clients, and new markets for acquisition.

Review your clients' marketing performance and start asking questions. What pain points still exist in their marketing that their services aren't addressing? That's a good place to start for researching additional products and services to introduce.

But how, you might ask?...

4. You're too competitive to win

Collaborate to diversify without in-house development, resources, and integration hassle.

So you want to become full stack, but you're worried about the resources you have at hand? No need. Nearly 41% of full-stack agency respondents have only one or two employees.

How is this possible? Through white-label and third-party apps and services! Not every player in the local marketing space is a competitor—some businesses are built to be collaborators, looking to expand their product/service reach through resellers like small agencies.

With the availability of wholesale and white-label digital solutions on the market available to resell, in-house development is no longer a necessity to become a provider. Over half of agencies (53%) identified that white-label solutions would help them navigate their major challenges, which means the competition has already begun to trust these avenues for product diversification.

If you want to truly scale and have a thriving agency, you need to get help. You don't need to have a giant payroll in order to scale. In fact, you don't need to hire a single full-time employee. There are plenty of white label agencies, vendors, and freelancers out there to partner with in order to take on more clients and scale. More agencies need to have a "collaboration" mindset and not a "competition" mindset. By doing so, you allow yourself to leverage the expertise of others in your space while both of you work towards the common goal of GROWTH!

Mandy McEwen

Founder/CEO, Mod Girl Marketing

5. Your clients aren't seeing your value

Focus on the client experience and results will follow.

Scaling is the #1 challenge revealed by agencies, yet revenue growth not only comes from acquiring new customers, but also by keeping and growing the accounts that you have.

Getting to the root of what makes customers leave is the key to improving your customer service, and ultimately, your retention and growth. Nearly 40% of agencies report struggling with high client churn, 18% of agencies struggle to meet their clients' needs, and 26% find it “very to extremely difficult” to fulfill their services.

There is a lack of focus on customer service and client retention, which are both required to reliably scale.

Yet as a local agency, you're in a unique position to beat out other big brand competition.

  • You can offer better and more personalized service
  • You’re part of your clients’ community and can be more involved locally
  • You have superior knowledge and expertise in the products you sell, your niche, and the needs of your local market
  • You can offer a more customized and enjoyable experience for your clients

Excellent, local customer service is why clients will choose you over the likes of Google, Facebook, and other brands competing for marketing dollars.

Related Reading: Why Your Clients Churn: Data From 100K+ SMBs


The digital landscape isn't slowing down anytime soon. With new free apps and tools available to small and medium businesses everyday , agencies must differentiate themselves with unique offerings, excellent customer service, and a constantly evolving product portfolio.

Here are some steps you can take right now to move your agency in the right direction.

5 Steps to grow your agency

  1. Review your clients' performance and ask them questions about their current marketing—identify one or two areas they could improve.
  2. Diversify your product portfolio with 1 or 2 solutions that match the needs of your clients. If your clients are experiencing these pain points, chances are other businesses are too.
  3. Leverage white-label and third-party apps and services to go-to-market quickly by upselling existing clients and bundling these products with your core offering to new clients.
  4. Report, report, report!
  5. See the results (and revenue) flow in.

Agencies must invest in the right sales strategy, product expansion, and focus on customer service to overcome these challenges and build a solid business.


About the Author

Dew is the a former Managing Editor at Vendasta, but will also respond to "content juggler," "blog wrangler," and "internet explorer." Speaking in fluent pop culture references, and Googling at the speed of sound, she is always looking for new and innovative ways to stretch her creative muscles.

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