Over the past 5.5 years here at Credo we’ve seen over 5,000 companies contact us looking for an outsourced marketing provider, and we’ve seen about 15% of those actually hire (the number is likely a bit higher as not everyone tells us they did hire, especially in the early years of Credo).
Unfortunately of course, not everyone hires successfully and we from time to time hear from a client or an agency that an engagement ended either early or at the agreed upon time and badly. The second one is rare, but has indeed happened.
Ever the optimizer and curious person, I’ve tried to get to the bottom of why a company will end up hiring an agency that is not the right fit for them. I’ve managed to uncover eight main reasons why a company hires the wrong agency, and what you can learn from each of these so that you can do a good job hiring for your own company.
Here they are in order:
- Not clear on your need for services or strategy (or a combination)
- Unrealistic expectations for amount of and timeline to results
- Haven’t asked for case studies or relevant experience
- Going with the cheaper option
- Hiring the wrong type of provider
- No understanding of acquisition metrics
- No processes for handling growth
- Bad conversion metrics
Not clear on need for services or strategy
The single most common reason we have seen a relationship between a client and agency end prematurely is because the client expected one thing while the agency provides another.
For example, a client might hire a small agency that specializes in strategy for a specific digital marketing channel. But what the client really wants and needs is a team to dig in and get the work done instead of just telling them what needs to be done.
When a client asks us the difference between freelancers, consultants, and agencies, we tell them this:
- Freelancers are doers who get things done usually for a lower hourly rate than other provider types. This is usually because they are less polished and less experienced, but if you find a great one it can be a great deal. When you hire a freelancer, it’s like hiring a junior to mid level individual contributor.
- Consultants are more senior solo people who usually work on the strategy level with companies who have teams in place who need to be directed. Hiring an agency is like hiring a fractional Director of (marketing channel).
- Agencies are a group of experts, from senior to junior, who usually specialize in getting things done but sometimes have figured out how to leverage their senior people to work on strategy for clients as well. When you hire an agency, it’s like hiring a whole team.
So how do you figure out if you need strategy or services, or both?
Fortunately it’s a simple set of questions to ask:
- Do we already have a strategy, and are we confident in it?
- If not, do we have expertise and bandwidth in-house to create it?
- Do we have a team in place to execute on it, and do they have bandwidth?
If you have the first and not the second, you need execution on the strategy which is best for a team of freelancers or an agency.
If you have a team in place but no strategy, then you should hire a consultant first and then likely an agency later to execute on it.
The second reason we see client/agency relationships end badly is because of a misalignment on expectations for time to see results or the quantity of results expected. Interestingly, unrealistic expectations from the client side are also the most common reason a client doesn’t end up hiring an agency at all.
Before hiring an agency, I recommend asking a few questions to the agencies you are considering:
- Do you think our expectations for results are reasonable?
- If not, what should our expectations be?
- What do you think the potential upside is for our business by investing in (channel)?
I like these three questions because they help you understand how confident an agency is in their ability to produce results, you see how they think about getting results, and they have to have enough experience to say whether your current or future expected results are reasonable or in line with what they usually see.
Sometimes, you may even find that an agency tells you they can’t get you better results than what you are currently getting!
Haven’t asked for case studies and relevant experience
I’ve heard quite a few times from a client that they ended an agency engagement early because “they didn’t have the experience we assumed they had.”
This means, in short, that the client never asked and just “assumed”. I don’t have to tell you what happens when you assume, so you should ask them for case studies and relevant experience on projects that are similar to yours.
Any good agency will be able to provide you case studies and examples of clients they have worked with and projects they have worked on. Bad ones will not be able to.
Go with the cheaper option
Prior to the Covid-19 pandemic, this was the most common reason we’d hear that a company hired an agency other than those we referred them to. And unfortunately, we’d often hear from them later on that the agency was not able to get them the results they needed.
Many companies are afraid of spending too much on marketing, but way too few ask if they’re actually investing too little in order to see results. I cannot tell you how many times, when asked how much they are spending on advertising, a client has told me “Oh not much right now, but if the results are there then the sky is the limit.”
If you can’t get results on your own, why do you think someone else (even an expert) will be able to get different results? Too many companies underfund and take forever to learn and expect that someone else has a silver bullet reason, when in reality it is much better learn and iterate faster so you get to good results faster.
Historically we saw companies hire the cheaper option because they figured the worst that could happen would be that they’d spend a bit of money and see no results. These types always forget to factor in that they’ve also then lost months of time working with a provider who didn’t get them results.
Like anything else in life, you get what you pay for when hiring. If someone or an agency is way cheaper than another, ask yourself why all of the others are willing to charge more for seemingly the same services. By asking yourself this, you can then determine if the tradeoffs for hiring the cheaper provider are worth it.
Hire the wrong type of provider
I like to joke about this, but the number of times I’ve heard someone wanting to hire a cheap freelancer to run multiple marketing channels well is astounding. Usually of course this is coming from a founder or executive with no grasp of what marketing entails, but it is still a common desire.
I mean, I’d like a Ferrari in my garage for $20/mo, but that’s just not going to happen.
“We need SEO, PPC, content created, landing pages optimized and new copy written, and my lawn needs to be cut. And I want a freelancer who doesn’t charge more than $20 an hour with 15 years of experience.” https://t.co/X0WuXOizU7
— John Doherty #maskupCO (@dohertyjf) March 24, 2021
If you need services (things done) then you need a freelancer/freelancers/agency (depending on scope and need for scale and channels).
If you need strategy, you likely need a consultant.
If you need both, hire both.
No grasp of acquisition metrics or timelines
The next common reason we see companies hire the wrong agency is that they don’t know their acquisition metrics and what success will look like.
For example, it’s hard to hire a marketing firm who promises results and then get those results if you don’t know the monetary amount you need to acquire a new customer profitably.
Too many companies hire a firm to get them results based on ad spend, but completely forget (or don’t know) to also take into account what they’ll pay the agency to manage that ad spend or those SEO/content campaigns as well.
You might need to acquire a customer for $500 to make it profitable, but if you’re also paying your agency $250 for their management to acquire that customer, all of a sudden you’re unprofitable on those customers unless you make some changes to either reduce ad cost (and thus efficiency) or find a way (like an onboarding fee) to make back some of that spend up front.
If you don’t know your numbers like this, then how will you know if you’ve hired the right firm?
Similarly, companies will often hire an agency without asking how long it will take to see results. Marketing is much more akin to business consulting than development or design, yet companies hire marketing firms like they’re hiring a development firm/developer (or how they think it would be to hire those). Some agencies may promise quick results, but silver bullets are rarely found (I think I’ve found 2-3 in my 12 years of marketing). Having timeline expectations set will keep you from hiring someone who is short term thinking or who takes longer than expected.
No processes for handling growth
I have seen quite a few times where a company hires an agency to help them get to the next level and the agency does just that only to lose the client because the client does not have processes in place to handle that growth.
I get it. I’ve set out before to bring in a firm to help us with growing a specific channel, only to realize that if it worked other things would break that we were not in a place to fix either because of business model or team constraints or something similar.
Before hiring an agency, you need to think carefully through what will need to change should your marketing problems be solved. Maybe your team will need to grow. Will you be able to afford them? After all, you also just committed more to marketing to fix your problems, and now you need to spend more money to handle that floodgate being opened.
This is all figure-out-able, but you need to be ready for it ahead of time.
Bad conversion metrics
Before hiring an agency and agreeing to a budget, it’s important to understand your current visitors -> customers conversion rate (and cost of acquisition as talked about above).
The reason you need to understand your conversion metrics is that this directly correlates to how much you need to spend to hit growth goals.
If you have a .5% conversion rate, you’ll need to spend twice as much to acquire the same number of customers as another company (maybe a competitor) with a 1% conversion rate. And this is assuming your conversion rates hold steady as you scale spend/traffic, which they likely won’t.
Understanding your conversion rates will help you understand if an agency’s proposed rates and your level of spend has a chance at achieving your goals.
At the end of the day, marketing is usually a math game. Will your investment get you the return that you need? It’s fine to run some campaigns to learn, but once you’re ready to scale you need to own those metrics so you can hire well and take your metrics to the next level profitably.
If you’re ready to hire, get in touch with us here.