Vendasta’s Dakota Zirk on how to sell marketing services in a tough sales environmentBy Emily Dyrland
Closing new deals has become more challenging for agencies as prospects take longer to make decisions and attempt to negotiate or defer marketing spend. Some current customers may also be reconsidering their marketing budget, requiring your sales team to focus more heavily on retention as well. In a tough sales environment, how to sell marketing services can feel like a whole new playbook.
The sales cycle is changing for digital agencies. Whether you're an agency owner or an agency sales rep, you may have noticed it's getting harder to sell, and that's because the economic climate is completely different today. Inflation is rising, interest rates are rising, and everyone's costs are going up.
It’s something Dakota Zirk, Account Manager Team Lead at Vendasta, knows all too well. That’s because, day to day, Zirk “helps partners grow, scale their businesses, and ultimately help the local businesses in their area by providing them with digital solutions and best business practices.”
Zirk emphasizes the significance of marketing for local businesses. Without an investment in marketing during difficult economic times, the small and medium-sized businesses agencies service may come to a standstill.
Fortunately, in this article, Zirk offers strategies that will:
- help persuade local businesses to view marketing as an investment
- help agencies secure deals that may be more challenging to attain today
What change is occurring in the sales cycle?
We all feel it, the economic environment is changing. This change significantly affects agency sales cycles. According to Zirk, there have been a large number of changes, and they started in 2020.
“Specifically though the sales cycle, we are seeing a large increase when it comes to the amount of time and the number of people who are actually involved in the decision making process. On top of that, you've got a little bit less budget to work with. Cash is not as free flowing as it used to be, which leads us to the last point, that there are more choices than ever. So you essentially have all these compounding elements, which lead to longer sales cycles and less initial upfront revenue,” says Zirk.
How important is marketing during a recession?
When economic conditions change, marketing is typically the first budget to get cut. This doesn’t help the business in the long run though because marketing services are what continue to bring in revenue. So we asked Zirk how he helps his partners work through this challenge.
His strategy? Reframing that conversation around marketing as an essential investment that can't be cut.
Marketing should not be seen as a cost. It is an investment in the growth of your customers, your business, and ultimately your revenue. But that exact train of thought is what I used to subscribe to.
Zirk explains that during his involvement in family businesses, when times got tough, the first thing they would cut was marketing. It’s short-sighted because costs will be reduced at first, but over the next quarter or so, the marketing efforts that were being made previously will have disappeared. The top of your funnel that used to be filtering in new leads and customers will disappear with them.
“The example I like to use is that it's a little bit like pouring gas into your revenue engine. If you stop pouring your gas (or investing in marketing, in this case), how long can your engine run when it's not being fueled?” says Zirk.
“The same is true for a local business. Yes, you have great customers who appreciate you, who have been with you for a long time, but you always need new customers. And if you stop your marketing efforts, how are you going to win that business? Plus at the same time, not everyone is going to stop their investments into marketing. There are some business owners who will double down. Those are the businesses that, I believe, are actually going to come out ahead. In a less competitive market with fewer people actually spending, you have a chance to take over some market share for fewer dollars.”
How to pivot your approach in this economic cycle
We asked Zirk how he helps agencies reframe marketing in an economic cycle that results in budgetary constraints. The answer is surprising simple.
How to sell marketing services in a tough sales environment? Put your customers first.
Zirk says, “The first thing we see our most successful agencies doing is putting the customer first. The key piece there is meeting them within their buying journey. A big focus that we've seen our successful partners start to work on is creating that demand and ultimately educating their prospects before they're ready to buy.”
The idea of education-based marketing is to provide educational materials that help your agency build authority and trust with your prospective customers. Rather than pushing products, explain and provide information as to why prospects might need your products or services (GrowthMarketingGenie).
“As you’re educating prospects, you’re simultaneously building trust by showing them how your products and services benefit them. You're putting out this educational material where they can start to educate themselves and decide without being ‘sold to’ whether you’re the right provider for them.
“So, in times like this where you have additional decision makers, longer buying cycles, and more choices, you need to have an action plan that you’re working toward. This is where you need to make sure you’re matching what your buyer is doing. The focus needs to be split between growth and the cost of inaction.”
Zirk frames this as two questions to ask your prospects:
- Can you afford the status quo?
- If you're not starting to make changes when competitors are, will you be able to keep up?
What common mistakes do agencies make in an economic downturn?
Agencies who aren’t managing to sell more or retain budgets are essentially moving backwards during an economic downturn. Zirk, who works directly with agencies every day, sees the common threads being pulled by successful and unsuccessful businesses alike. He knows which mistakes to avoid when marketing in a recession and which to avoid when determining how to sell marketing services in a downturn.
Mistake #1: Losing sight of the problem being solved
“Agencies that continue to sell on features and benefits really start to struggle in these times. The reason for that is they've actually moved away from the problem they're supposed to be solving,” says Zirk.
It’s easy to lose sight of the problem that needs to be solved when you get caught up in the features and benefits of a solution.
“Agency owners ultimately set out to solve problems for local businesses. Whether that's bringing in more customers, creating brand awareness, making a store more discoverable online, they’re always solving a problem. We see agency owners hyperfocusing on all the benefits and features rather than the problem that they initially set out to solve for their clients.”
Mistake #2: Jumping to discounting products and services
“Another common mistake I see being made is going straight to discounting in a tough sales environment. This is not how to sell marketing services. An economic downturn is the time when you actually really want to showcase the value your agency provides. By going straight to discounts you're lowering your margin and your value when you're lowering your cost.”
Discounting your solutions can cheapen your brand image, which is difficult to build back up. Discounting should be a last resort. So, how do you retain clients in a bad economy if you don’t offer discounts? Zirk’s response to this issue is to provide more value to clients instead.
He explains, “This is an opportunity to coach your clients on the value that you bring and explain why they shouldn’t cut back on their investment in you. Because, ultimately, that will impact their business in the long term. So like we discussed earlier, now is your opportunity to pivot your approach and educate those clients to turn this into a position of strength where your value as a digital marketing agency has never been more important.”
How to communicate your value
You know the value you provide and the problems you solve for as an agency. But it can be difficult to communicate your value effectively to clients who are about to churn due to a restricted budget. So how can you best communicate your value in a way that makes sense to clients in a tough sales environment?
“You always want to showcase what you've done for them by providing your previous proof of performance. Start there, but it's always going to come back to understanding each client's number-one need,” says Zirk.
“If a client says their budget is the issue and that’s why they're looking for a discount, get to the root of the reason. Is it because they're not able to keep all of their staff employed? Do they need some help with hiring? Once you're able to get to that root cause, this is where you can attach your value and share how you can actually help with the problem. Take it as an opportunity to explain why throwing money at the problem or putting a bandaid on it isn’t actually a solution.”
Essentially, know what you bring to the table and understand your clients as individual businesses with individual problems. The more you dig into their problem, the more easily you will be able to help a client find success without losing their business.
“So in the case of, ‘Dakota, I need to cut the marketing budget here. We just don't have enough to continue investing in digital advertising.’ This is a chance where you as an agency could show proof of performance of all the customers you’ve brought in through your digital advertising work. Clients will always understand ROI. Next, ask them where their customers will come from if they stop or drastically reduce their marketing programs. This can help pivot their mindset and see the situation from a different angle,” says Zirk.
Which digital solution becomes more popular in bad economic times?
To help determine how to sell marketing services during bad economic times, it pays to know which solutions become more popular in these environments.
For example, during the COVID-19 pandemic, businesses were rushing to invest in websites and ecommerce stores. Businesses that weren’t online were struggling to survive.
In this economic cycle, Zirk has some advice about providing digital solutions to struggling clients:
“It’s always going to go back to what your client needs and the problem that you're trying to solve. But one thing that I do not see going away is online reputation management. The ability to be found online will never stop being something a business needs.”
How to sell marketing services in a downturn: Prove your value
The sales cycle looks different as the economy changes in tough times. As this changes your clients’ budgets, they might be looking to cut marketing efforts. This is your opportunity to flip the switch on that old narrative of cutting marketing services first. Prove your value with proof of performance reports and convince clients to double down on marketing efforts to get them ahead of their competition.