Why agencies turn away small businesses?
The answer in short is “profit margin” but there is much more to it.
Due to many circumstances agencies are tied to certain dollar amounts that they require for a client to spend before they will work with them. Depending on the size and structure of the agency that number ranges but based on our experience those requirements fall somewhere around the $3000 to $5000 mark. Depending on the services offered the price points can be offered at a one-time price or monthly. If you are looking for a Web Design that is probably going to be one-time fee, but SEO, Paid Advertising, Social Media, or Email marketing are typically billed on a monthly basis so that quickly will run the annual price of their services well into the $50,000 plus range. In most cases this price range alone would take the Small Business Owner out of the running for services.
The “more to it”
Profit is the driving factor for agencies to not want to work with the smaller companies with lower budgets but there are other factors involved as well such as:
Management: When working with a Small Business owner there is a certain level of need that a large company does not have considering their availability to resources. Larger companies have people on staff that handle a lot of their digital marketing needs and are fairly knowledgeable (hopefully) in other aspects of marketing that putting a strategy to work is not as challenging. Talking with the Small Business Owners who in many cases comprise the whole marketing and sales department for the company may not have the most knowledge of Digital Marketing so it will take more time to walk them through and help them understand the whys around what needs to be done. With profit margins being ever important to the large agencies and hours being counted the bottom line is time is money so the more time it takes the more money it costs.
Implementation: To go along with the last point, small business owners don’t typically have a development or design team available to implement the recommended changes from the agency. Therefore, the requirement then falls on the agencies internal team to not only put together the strategies and deliverables but also do the implementation of any recommendations. Although these tasks are rather easy for someone who knows what they are doing they still take time and as point out previously time is money. The more time each task takes the less profitable the deal becomes.
Impact: This subject is a bit of a pride thing, but most agencies want to be able to ensure that they are moving the needle a certain amount before they will decide to work with someone. At the end of the day it is easier to promise with a large budget that we will be able to do this, this and this. The larger the budget the larger to opportunity to throw our projections and meet them. With the smaller budgets of the small businesses there is less room for error and even less room for profit.
Multiple Needs: In most of our cases when working with the smaller businesses we have had to change mid-campaign to take care of an additional need that the company may have. Example: XYZ company has signed up on our monthly SEO services but as we start the campaign we realize that many of our suggestions could not be implemented do their previous design of their website. In this case the client really requires a website redesign in order to move the needle for SEO. Many of the larger agencies are not built to handle this and would find themselves in a bit of a pickle because this client signed on for SEO, which has a certain amount of profit margin and web design (if they do it) would have a different margin. In either case they would have to stop what they were doing from an SEO standpoint and reallocate funds or ask the business for more money to do the web design. This same thing could be true with Social Media, Email campaigns, and other digital services. The business owner has a limited budget where they want to get the best ROI.
Where do Small Businesses Turn?
With larger agencies not wanting to work with Small Businesses, where do they turn to get their digital marketing needs fulfilled?
Online Resources: There are thousands among thousands of online resources available that claim that they will do everything you need for you at a fraction of the cost that agencies require. This is all fine and good, but I would strongly recommend caution when it comes to these resources. Although these resources do have huge benefits they WILL NOT do everything that you need and, in some cases, can actually hurt you more than help.
Overseas Agencies: Along with the online resources there are a ton of options that are offering digital marketing services cheap. Many of these agencies will promise the world only to help you find yourself on googles naughty list by doing “black hat” tactics or take your money and run as there is no real oversight. Please be extremely cautious with these type of pay low and win big strategies.
Companies that Specialize: There are some agencies out there that prefer to work with small businesses over the big players. My company Endurance Marketing is one of those companies. We actually prefer to shy away from the “agency” term and call ourselves the “Anti-Agency”. We embrace those factors that many of the large agencies shy away from. Our goal is to be a friend and not count the minutes we have spoken to ensure that we are billing properly. Most agencies require that you sign a 6 to 12-month contract where as we work solely on a month to month basis, with the emphasis on a business owner wanting to and is able to continue to work with us. Ultimately, our feeling is the best place for the small business owner to be is a place where they are wanted.
Author: Kevin McLauchlin
Title: Owner/Co-Founder of Endurance Marketing