Many agencies struggle to stand out and stay profitable. Learn how focusing on differentiating in the buyers journey is critical to growth.
Agencies face an uphill battle and will almost certainly encounter three primary challenges. Overcoming or mitigating them is the path to profitability and growth, failure to do so leaves owners stuck on a never ending hamster-wheel. So what are they?
Although agencies are our focus, most B2B service business face similar problems. This article explores the first two challenges, outlining potential causes, cures and touching upon why RoTi is being built to overcome them. The third is inherent to every business, through solving the first two (at least in part) more resources will be available, making it easier to attract and retain top people.
A differentiated service makes it easy to tell the difference from competitors and alternatives. So the unique value is obvious to buyers and it’s clearly the best choice for their specific circumstances and requirements. By extension, it’s easy to see why the price is worth paying.
An undifferentiated service is difficult to tell apart from competitors or alternatives. Making it problematic for buyers to make the right choice and discern the unique value. As a result, buyers cannot determine why some providers have higher prices, leading them to purchase more economical options. After all, why pay more for something when you don’t understand what the extra value is for you?
A clear sign you are playing in an undifferentiated market is the need to compete on price. That’s not to say price isn’t a factor with successful differentiation but rather that it is a significant determinant in decision making and not just a point to consider.
Put differently, if you are shopping for a tv and all the options are of a similar quality, the same size and come with a guarantee, would you be prepared to spend an extra €1000 on one of the models?
Typically a sellers offering (service) becomes commoditised when they are forced to compete on price is their. The value is determined not by the services uniqueness or potential ROI but rather by supply and demand. As more competitors (suppliers) enter the market, services are easier to find and purchase (scarcity decreases), so everyone is forced to cut prices to match competitors and the price falls. This is of course unless the number of buyers increases at a proportional or higher rate, resulting in services becoming scarce or difficult to obtain.
Before reaching the point of needing to compete on price, you will likely also find it difficult to generate meetings, both through marketing and sales initiatives. Buyers are bombarded by a sea of similar messages and propositions, which makes them numb to the noise and difficult for agencies to cut through and be heard. It also results in expensive advertising costs as multiple players fight for the same real estate, the same is true of organic rankings.
Another effect of operating in undifferentiated markets is finding yourself forced to sell undesirable services. Competitors offer package deals that include less profitable services or those your firms lacks in-house knowledge on. A one stop shop allows them to avoid a second buying cycle and the administrative headache of managing multiple service providers. So in order to win deals, agencies must match competitive offers and sell these undesirable services. In a differentiated market, the perceived value and scarcity of the primary service/s would warrant or force the buyer to put up with the extra work that comes with more than one provider.
Global competition comes into play to further drive prices down and expand the range of services firms are required to offer. Countries with a cost advantage (lower wages and weaker currencies) can undercut local firms and offer less profitable services. Due to commoditisation, it’s a no brainer for buyers to go with cheaper options. Thankfully peace of mind and trust are important factors due to the potential for significant revenue loss and so buyers tend to select firms closer to home (language and time differences also come into play).
Now on to the good news right? Yes and no. While it’s possible to engineer some degree of differentiation, it’s not possible to completely differentiate, given the nature of marketing services. So that leads us to two primary strategies for differentiation.
This article focuses on how differentiation affects customer acquisition, so the emphasis is on marketing and sales. Saving retention and expansion for a separate piece.
Differentiating through marketing and sales is about understanding your buyer better than competitors and ensuring buyers repeatedly feel and experience your superior understanding.
What does this look like in practicality though?
It’s strong positioning that hits on issues buyers experience, high quality content tackling topics they run into that genuinely offers value, rather than SEO laden dribble. Fresh and easy to consume design, reputable case studies exuding trust, clearly articulating the ROI of customers. The list could go on but I’m sure as marketer, you get the point.
For sales, it’s about specific industry knowledge, subject matter expertise and putting in the work to understand your buyers business and their personal position. Making it possible to align your offer with their goals and draw an easy to read map to the finish line. It’s also about not forcing shit that people don’t need down their throats.
Getting to know your prospects businesses well required research and creating content that truly holds value requires experienced people. So time both pieces of the buyers journey require time if they are to be done properly.
Lastly, it’s providing a better buying experience, plain and simple. For instance, if a sales rep consistently takes a day to respond and competitor get’s back to the buyer within an hour, the effect is profound.
All of this is easy to say and hard to do, it’s the core pillars upon which a successful go to market motion is built. It’s the difference between winners and losers, none of it is easy but it is one of the two only real options available to agencies to consistently differentiate.
By picking a specific niche and becoming an undisputed expert at generating success within it, agencies can build a name and show off scarce industry knowledge that provides buyers with a top tier experience. It allows for the development of repeatable systems and processes that lead to a higher likelihood of success, higher margins and pricing. But you don’t need me to tell you about niching down.
Service businesses generally struggle with profitability. If you sell hours, someone needs to get paid for working them and not all worked hours are billable. Then comes the costs inherent with facilitating work, be it software, offices, training etc.
To add fuel to the fire, any work that does not directly service clients, like sales or your own marketing eats away at margins. Generally, senior or owner resources are required for much of the sales process, so it’s expensive time and the same is true of working on systems and process that facilitate more efficient operations.
In other words, to take two steps forward, you almost always find yourself required to take a step back with no guarantee of success. Add in the constant Adhoc demands of keeping the ship afloat and it’s easy to see how agencies get stuck.
The ‘’profitability challenge’’ refers to the fact that in order to differentiate agencies will need to do work that eats at their margins and so the catch 22 is born. Do paid client work and stay in the same place, or work on stuff that doesn’t pay without any guarantees.
While building repeatable sales process for a new CDP (MarTech solution), we found ourselves struggling to book meetings with enterprise customers. Keep in mind that Adobe and Salesforce were competitors. As a solution, we built an early version of Ortium that enabled us to cut down on account research time and find insights that helped to book more meetings.
We knew continually ramping outreach and advertising volume to make up for falling conversion rates wasn't a sustainable solution and so a quality over quantity approach needed to built. As a result, it made sense to explore Ortium as a solution for Agencies and Martech companies outreach programs, given the similarities.
At this point, you’re likely wondering what exactly Ortium is? It’s a marketing research and personalisation service that enables agencies to deeply understand the marketing strategy, resource allocation and position of prospective customers in relation to their competitors. The information is used in combination with customer case studies to generate hyper personalised on-brand landing pages. Top insights are autoamtically included in outreach messaging with the aim of driving prospects to the landing pages or booking meetings directly.
Simply put, it helps agency sales reps or owners research and present valuable insights supported by relevant success stories on well designed landing pages. In combinartion with generating message content. The result? Minimal impact on profitability while improving your buyers journey and customer understanding to stand out from 99% of your competitors and provide prospects with a top tier experience that facilitates differentiate.
Agencies face intense competition, pricing pressure and profitability challenges. Differentiation is key to breaking free from the commoditisation that causes these problems, yet achieving it requires deep customer understanding and a special approach to the buyer’s journey.
Ortium streamlines research and content production, enabling agencies to offer prospective buyers hyper-personalized outreach and value with each interaction, without sacrificing their margins. By focusing on quality over quantity, agencies can stand out, win better clients and build a more scalable, profitable business.
