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In episode #553, Eric and Neil reveal some important things that big agencies won’t tell you. Tune in to hear what you should know before signing on to work with a major marketing agency.
Time-Stamped Show Notes:
- [00:27] Today’s Topic: What Most Marketing Agencies Won’t Tell You
- [00:37] There are good and bad clients.
- [00:45] They measure this using the labor efficiency ratio.
- [01:04] When the whales are profitable, you are going to spend more time on that client.
- [01:24] Most agencies are pitching a dream, but they aren’t always able to deliver.
- [02:10] When you go to Chipotle or Taco Bell, you’re expecting the same thing every time.
- [02:20] When you have an agency with hundreds of clients, you are looking to deliver the same experience every time, to everyone.
- [02:32] Eric recommends that you actually have an in-house marketing person to have a laser focus on your goals.
- [03:12] Maybe start with an agency, then hire someone full-time, then consider using an agency again.
- [03:32] When you are starting out, you say “yes” to everything simply because you need to earn revenue.
- [03:40] When you’re established, you can be a lot more selective.
- [03:53] Eric feels the quality of his work suffered when he was doing every aspect of marketing and was trying to deliver on things that weren’t his or his agency’s strengths.
- [04:34] The quality of paid ads and SEO is better now, because he isn’t spread so thin.
- [04:56] People on Eric’s team want to add services, but he’s trying to temper that.
- [05:22] When working with an agency, you have to ask them what their strengths are.
- [06:04] You only want to work with people on things that they are good at.
- [06:22] Full-service agencies are big, brand names, with great revenue, but the quality suffered because they couldn’t possibly specialize in anything.
- [07:00] That’s it for Today!
- [07:04] Go to Singlegrain.com/Giveway for a special edition of Crazy Egg, the heat mapping tool.
- [07:09] Tweet at Eric @Ericosiu and let him know if you want them to curate their podcast content.
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The post What Most Marketing Agencies Won’t Tell You | Ep. #553 appeared first on Marketing School Podcast.
Full Transcript of The Episode
Eric: Welcome to another episode of Marketing School. I'm Eric Siu.
Neil: And, I'm Neil Patel.
Eric: Today we're going to talk about what most marketing agencies won't tell you. So, Neil, now we both have agencies in addition to all the other stuff that we're working on.
The first thing I'll say is, most agencies in actually all cases, there are better clients and there are worse clients. What do I mean by that? Well, the way we measure it is we will look at the labor efficiency ratio, so we're looking at the gross profit divided by the employee salaries, and we get a ratio. We look at the ratio and we say, okay, if it's above two we're doing a good job with the client. We're being very efficient with the client.
Or, you can look at even profitability per client. When you look at the big wheels that are paying you really well and they're very profitable, you're going to put more time towards those if you're running an agency. Most people they expect kind of the same service across the board. Ideally it should be that way. Over the years, the reality is after running an agency for a while, that's just how it is. There are better clients and there are worse clients and there are clients that you need to fire.
Neil: Most agencies when they take you on, they're also pitching you a dream or they're going to give you projections on here's how much traffic we're going to get you, here's how much revenue we're going to get you, here's the growth. Here's the thing I notice with that.
Most agencies are unable to deliver on the results. They're just using tools like SEMrush to make projections. There's nothing wrong with making the projections but you need to make sure they also give you technical data. I, myself, love it when people give me projections but I also require them to tell me how they're going to achieve those results.
Agency pitches typically talk about results and ROI versus how they're going to get there. If they don't give you a good roadmap or action plan on how they're going to achieve those results, then it doesn't matter what projections they're going to give you. Chances are they won't end up hitting them.
Eric: Yeah. The other thing is, think about it, when you go to a Chipotle or if you go to Taco Bell, for example, you're looking for the same exact experience every time. Well, when you have an agency and you're working with hundreds of clients and they're showing off all the badges, things like that, the thing is you're looking to deliver a consistent experience all the time, which means everybody is following a process, a proven process.
My thing is, and this is counter intuitive, I always recommend people, like if you're looking for innovation or trying different things or different ideas, maybe you might start looking to agency. Eventually, you're looking to bring that in-house so you have someone completely focused on your company, on your business because that's just the main thing. When you're working with an agency they're just being pulled in all these different directions, they're being asked to do different things, there's a lot of scope creep. It can get really disorganized.
Eventually, I think people should graduate to hiring someone in-house. Maybe down the road, again, when you're looking for kind of additional resources or some ideas, maybe you would pull an agency back in. Maybe you want to start with an agency first, hire someone full-time, and then go back to agency.
Neil: When you started your agency back in the day, Eric, and a customer asks you do whatever and you had very little revenue, what would you tell them?
Eric: Yes, absolutely.
Neil: Now, when a customer asks you to do everything, what do you end up telling them?
Eric: Sorry, can't do it.
Neil: Why did you end up making that switch?
Eric: When you are starting out in the beginning, you say yes because you need the revenue. I think right now we can be a lot more selective. We know what we're good at so it's in our process to just focus on what we're good at.
Neil: But let's go back to when you did say yes to everything. Do you feel that the quality of the work that you were producing was the same as now?
Eric: No. Because we're being pulled in so many different directions and trying so many different things, and working with different size clients, different demands, the quality of the work suffered. Now, because we're more targeted, the quality can remain a lot closer because we know what we can do. Let's say we work with SAS companies or education companies, it's the same experience.
Neil: Let's go over a hypothetical situation. You're starting out and a client asks you to do CRO, social media marketing, content marketing, SEO, and pay per click. Out of those, which ones are you the best at?
Eric: I would say we are the best at paid ads or SEO.
Neil: When you accepted all of them, was the quality of paid and SEO the same back then as it is now?
Neil: Why is that?
Eric: Because there was one where we're clearly better than the other.
Neil: It's not also that, it's also because you were spread thin.
Neil: If you're doing everything and your account managers and your staff was worrying about stuff that they're not great at, you know that their time and effort that they're going to put on SEO or pay per click, which is what you guys are the best at, is going to start suffering.
Eric: 100%, which is why right now even though there's people on my team that want to add all these services, like, oh, let's go add this service next year, let's go add content marketing services, da, da, da. I'm trying to really temper that because the more services we add where we're not really that good at, then the more issues, the more headaches we're going to run to. People are going to be stressed, people are going to be sad, that's going to leave the people doing worse work, and that's going to leave the people leaving. It becomes this domino effect.
Neil: Yep, and that's the key. When you're working with an agency, you need to ask them what are you the best at. If you don't ask them what they're the best at, then you're going to end up getting pitched on everything. If you ask them what they're the best at and they end up telling you, oh, we can do everything, we're amazing, they're usually lying.
For example, if you ask my team what we're amazing at, yeah, we're great at inbound marketing. But, if you told us, hey, we want you to do conversion optimization, sure, yes, I, Neil Patel am great at it and I can do it, but my team isn't ready to take on conversion optimization customers yet. We're not amazing at it. We haven't built out a great process for it. Yes, we can do it and probably better than most people, but it doesn't mean we should be selling the service.
You only want to work with people on what they're the best at. These days when I talk to companies they're like, we want a one stop shop to do everything. You could try to hire a one stop shop, you're going to get mediocre results in everything. Hire companies or agencies that specialize. You're much more likely to get better results.
Eric: That's 100% true. When you think about the full service agencies out there, yes, they're big, they have the brand name, great revenues, and everything. I've worked at a big agency before. This was like when I was 24, 25, and we just tried to do everything under the sun. I believe that company does about $80 million a year now, which is great. They're just out there acquiring other businesses or other agencies.
Keep in mind, most marketing agencies aren't going to ever tell you that they're mediocre across the board. They're going to say they're great. But, it's in your best interest to focus on working with the companies that specialize in areas and then also people that you get along with. These are people that you would want to hang out with at the end of the day.
Neil, do you have anything else to add before we hop off?
Neil: No, that's it.
Eric: Great. Before we go, we have some marketing goodies for you. Just go to singlegrain.com/giveaway to get in on the goodies. The other thing is, if you're interested in having us curate all this podcast content, just tweet at me at ericsoiu. I'm curious to get your feedback on it, and we will see you tomorrow.
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