How to Scale Rate a Digital Marketing Agency An Interview with CEO
Stage 1: Rating from 1 Team Member to 3
Most agencies start out with one founder or two co-founders. Hiring plays an important role when there are just too many customers for one person to handle. But most fresh agencies don’t have much money for good hires (as you’re probably well aware of it).
So, most business owners hire “People who are blank slates. You’re trying to train someone to duplicate your important time,” CEO explained.
Unfortunately, that results in a small collection of people who can do limited tasks—and they aren’t oriented toward future growth. In the meanwhile, the owner goes from being a “creator” to a “transactional manager”: A person who’s checking off boxes in a never-ending to-do list, following up with teammates who haven’t completed their tasks yet, doling out pay as tasks are finished, and so on.
To reclaim their time and fix growth, digital agency owners should take the following three important steps.
1. Choose Your Specialization or Expertise
Many agencies suffer from being too generic in their policies. Not only does this affect your ability to perform better, higher-paying customers down the road, but it also affects your ability to search for the right experts to build a stand-out team.
CEO says that most agencies begin as generalists out of need. They start as a one-person band collecting customers wherever they can find them, often servicing customers in multiple industries.
Some agencies use vertical positioning to better target their customer acquisition efforts (ex: “We only work with realtors”).
Others choose horizontal positioning (ex: “We develop websites”), focusing on the specific service they can offer.
“Vertical positioning is better in general,” CEO explained. “It does have some cons to it. For example, when you have one customer, it’s good. When you have two customers, you have a conflict of interest. When you have three customers, they become your specialization.”
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2. Locate& Enable ‘Outcome Achievers’
The good news here is that searching ‘raw, unformed talent’ isn’t a bad approach. The real problem is assigning tasks to these team fellows without an emphasis on output.
I’m going to be a transformational leader of my team.’ What that means is that I will tell my team member, ‘Here’s what I need to see from you. As a result, I don’t really care how long your task and I don’t care where you do that task. All I care is that you have all the support in terms of time, tools necessary to get the work done by Xyz date.’
When you say: Hello, do you need any help to get this task done to your team? instead of, ‘Where is it? Did you get it done or not?’ The line of questioning is an important hint between transactional and transformational management,” CEO Said.
The idea here is to give new hires the tools they looking for to succeed and insight into the goals you need to achieve without micromanaging. When they’re focused on solving problems to improve their output, everyone in the company wins.
3. Hire Slow and Fire Fast
Multiple times, agency owners keep a toxic person on staff because they “don’t have a replacement” available with the skillset to take over that role. CEO admitted that he learned this one the hard way. Keeping someone who doesn’t align with company values will only drag down the whole company. To fix that problem, CEO outlined a few tips for better hiring (and easy firing).
First, consider that you’re hiring for a combination of skill and attitude. Whenever you can hire a skilled person, that’s extremely helpful in a small agency. But someone’s skill must not come at the price of a terrible or bad attitude. He thinks of hiring as a sequence: “Look for attitude at first glance, then test for technical skill.” Ultimately, you can help someone grow their skills, but you can’t force them to change their attitude at all.
Once you’ve found someone with the right attitude and a smart skill set, set expectations from the day one. Make it clear that hiring is just the beginning: outline your goals for their performance within the first three months and make sure you know where they stand. After Three months, check-in and see where things are going. If they’re improving, great! If they aren’t, they need to know it and you have some objective criteria to make a right decision.
A mentor of mine says: “Never remain unclear on something” and I’ve really taken that ‘suggestion to heart,” CEO added. If you don’t let your team member know the flaws that is being unclear to them. You’re actually holding them back from being a superman somewhere else.”
Stage 2: Rate from 3 Team Members through 10
Revamping your hiring practices and fasten your agency’s positioning is crucial to getting things moving. But once you approach ten team members, communication breakdown starts again.
One of the major problems at this company size is that there are so many people for one person to manage.
To grow above ten people, it’s necessary to start hiring managers, make adjustments to your salary structure, and “lead from back.” It’s also the point where multiple founders decide whether to drive sales and marketing or to be the head of operations. (Most founders, CEO notes, choose Marketing & Sales).
Whatever role you don’t choose is a role someone else needs to fill in.
1. Hire Managers and Team Leaders
In most cases, your first hire needs to be someone who can manage daily agency tasks. Then, you can hire managers as per your need and structure your company as you grow above ten people.
In the meantime, it’s important to provide clarity around who’s expected to do what in the agency. Whenever roles start changing, you need to be clear about any new expectations with your teammates. A digital marketing agency recommends assigning an experienced person to be a “team lead” when anyone team reaches up to 4-5 people.
In doing so, you’re polishing them for a management role while making a leader who is close to the ground, so to speak.
2. Adjust Your Salary Compensation Structure
Making and shifting roles comes with changes in compensation.
Digital Marketing CEO strongly recommends that bonuses be tied to specific objectives. Rather than offer a generic “Easter bonus” that your employees grow to expect, tie incentives to achievements. The moment an employee exceeds a set objective, reward them and celebrate their achievement with the rest of their teammates.
“I set quarterly objectives,” the digital marketing agency CEO explained. If the agency employees meet assigned objectives, they should be praised. In addition, he tailors the benefit to the right team player.
I believe in utilizing situational ownership when you lead and praise your employees because different things are important to each team member. Look for equity instead because different things are important to different teammates,” CEO added. “Somebody might really value money.
“A very good friend of mine, Rodger Baily, developed a program which is a way of crack what your team’s personal dreams are. Maybe they want to do a summer in Spain. Maybe they want to be able to buy an upgraded electric wheelchair for their grandfather. And knowing that, you would commit the financial resources to help them achieve the end goal. How much more bonuses would they be to come in and really kill it for the agency the next day? How much more invested would they be in the agency’s future?” Digital Marketing Agency asked.
Stage 3: Rate from 10 Team Members to 30
Once you try to rate above ten people. New employees don’t know who to turn to for help. Processes are scattered. Tasks get lost and in the meanwhile, leaders spend all their time holding up their weakest links instead of developing stellar talent. To fight these problems, Digital Marketing Agency has two simple solutions.
1. Systematize EVERYTHING
Yes. Systematize everything. Make process document for your process documents. If your agency is going to maintain or improve upon the early excellence which drove your performance growth, your employees have to know how to do their jobs smoothly.
Start with the problems you’re facing currently. Once you solve them, write the solution so that everyone knows how to handle that situation in the future. If someone has a great process, ask them to write it up. Keep writing so that you develop a solid knowledge base. Powered by Growth uses G Suite and Google Cloud Search to manage everything.
Always keep the responsible employees in your team. It’s not a specific person because that employees going to go crazy if they need to prepare systems for the entire company,” Digital Marketing Agency explained.
2. Educate Your Best Employees (Not Your Worst)
Many of the leaders that worked with Digital Marketing Agency would spend “all of their training time with the junior or less performing employees in the agency (employees who are negative, noisy, or toxic).” You know the type: the ones who routinely blame their issues on a customer or an assignment instead of taking responsibility and actively problem-solving.
In the meanwhile, those same leaders would be blindsided when their best talent left. Decentplayersnever ask for extra help and say, can I get a bit more mentorship, training? They just keep doing what they’re doing and then one fine day, they leave,” Digital Marketing Agency shared. “And owner says: What the hell…?
Actually, they didn’t get enough attention, and now they’re leaving for a new job where they expect to further develop their skill-set. Rather than letting them blend into the background, Digital Marketing Agency recommends prioritizing their professional growth.
Digital Marketing Agency identifies their top performers by noticing these five characteristics:
1. Desire for excellence
2. Bias for solution
3. Transparency
4. Sense of urgency
5. Client empathy
Those are the characteristics they have identified as success indicators for their teammates. Whether those are the criteria you use or not, it’s worth refocusing on your best or most promising employees to improve retention and promote company-wise growth.
Stage 4: Growing Beyond 30 Team Members
Digital Marketing Agency CEO realized that even though the agency was perfectly growing, but profitability was not. It seemed like more and more of his time was caring to adding customers and growing the agency, but all of that increased revenue was filled back into hiring more workers and promoting the ones he had. At the same time, he had so many employees working with him that he couldn’t get to know them individually.
It’s a situation many business owners face: do you go for pure size and find a way to squeeze more profit, or do you rate back to a specific number? For Digital Marketing Agency CEO, the answer was scaling employee count back down.
“I was workable. If I want output for my effort, I needed to think differently. And after spending some time thinking about how I’m thinking, I decided to framework before we worked. We went through a whole process of breaking things out, customization and building the next generation of our agency,” CEO explained.
1. Decide on Your Ideal Employee and Customer Count
“We know there are limited hours each day.You are bound to deal with XX number of customers and XX number of team mates in my agency who gives me the right balance for money, meaning, and power,” CEO explained.
So, for example, you might decide to grow your agency until you have 50 customers and 50 employees. But at that point, growth will come entirely from rating your fee for service (rather than adding in more customers at the same rate).
Getting to the figures that works for you will take reflection & research. But at this stage, it’s worth taking the time to decide what you really want your company to be.
That brings us to his second point: how to grow your income with a fixed number of customers.
2. Rotate Out Legacy Customers
CEO recommends structuring pricing per client, as opposed to productized pricing. Because they produce a relationship with each customer and develop customized solutions, not every engagement is going to have the same value as another.
Even so, your prices should rise over time as your team grows its angle and expertise. But dragging legacy clients into new rates never works: there’s always an excuse for why they just don’t have enough money in the account for what you do. Instead of keeping them on, CEO recommends rotating out your lowest-paying customer every time you get a new, high-paying customer (assuming you’ve hit the maximum number of customers you can take on).
Continuing his example from above, the CEO explained, “It is OK to part ways with long-term clients. To grow an agency you do it. This gives you the opportunity to bring on a new customer who might be bigger or more profitable, which lets me then add staff or give current employees more responsibility and compensation.”
Just remember that as you increase your rates, your clients’ expectations rise as well. So part of your job will be managing expectations and helping them know what to expect from them; the other part will be delivering on those expectations.
Final Thoughts: How to Scale,Rate a Marketing Agency
CEO says that it’s normal for founders to hit the six or seven-year mark and realize that they’re either tired of their work force or tired of their clients. They’ve had some wins, they have a great team, and they have the big office. But they’re still not happy. And that’s where the reflection and rebuilding in stage 4 comes into mind.
When you make these changes is all about growing the digital marketing agency to a point where you, as the founder, are happy with what you’ve developed (or at least, are happy to keep developing it). And in the meanwhile, his advice holds up for every stage along the way.
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