TL;DR
- We have a new 93-pg research report/guide on designing repeatable revgen systems for digital agencies (and it’s free!).
- Revgen at agencies is broken, and that’s nothing new.
- Even if you build out an entire traditional sales, marketing, bizdev, and account management team, there are still major holes.
- The solution I’m presenting is to restructure revgen into a single, cohesive unit. This solves the most critical challenges revgen teams face.
- There are some serious pitfalls to avoid, including a lack of direction, ignoring prerequisites, moving too quickly, lacking buy-in, and insufficient cash reserves.
Before we start, I have a favor to ask of you…
Almost all of my research is self-funded. I do it because I’m curious. I publish it because it helps me connect with the people I can help most. The more leaders I connect with, the easier it is to publish more in-depth and varied research. Some upcoming projects I’m working on include:
- An updated agency salary survey
- An AI implementation guide
- A 2024 trend report
- Next year’s agency outlook report
- An agency sales / pipeline tracker
Here’s where the favor comes in.
If you appreciate this work, or if you’d like to discuss the report, let me know on the LinkedIn announcement post:
https://www.linkedin.com/posts/nicholaspetroski_digitalagency-activity-7122597506223374336-67ef/
The algo loves that stuff, and it helps get my research in front of more agency leaders.
Thanks!
-Nick
Onto the content!
Revgen is one of the biggest challenges digital agency leaders face. It’s a nuanced topic, with a lot of moving parts, and not a lot of definition or structure. I’ve watched teams who do absolutely excellent work shut down because they didn’t have the right revgen strategy and systems in place.
It comes up every year when we survey agency leaders and ask “What will be your biggest challenges in the coming year?” These were the results from earlier this year:
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Clearly, leaders already had revgen on their minds well before the summer drought.
Why’s revgen so frustratingly hard to solve?
It’s not even like revgen is comprised of some esoteric forbidden knowledge. It’s all relatively simple. The problem is that revgen challenges need such an immediate answer that solving them doesn’t typically come from a measured, strategic view. Leaders will hear about another agency doing revgen-tactic-X that’s working well for them and try to copy it.
It doesn’t usually work.
Most revgen tactics need a support system to really be effective. They need consistent, pin-point messaging from marketing, engaging follow-ups from sales, and strategic account growth from account management. Most agencies don’t have these dialed in.
Even when everything’s in place, agency revgen is broken.
Most digital agencies underinvest in their revgen systems in terms of dollars, effort, and strategy. This causes inconsistent revenue generation, poor alignment, adversarial relationships, and, ultimately, a continually undifferentiated value proposition.
I describe this in detail in the report, but the main takeaway is that even if you build out everything the way it’s traditionally prescribed, there are still issues.
The solution to revgen.
Here’s a Revgen Report spoiler: Reframe your revgen activities so your team thinks about them under a single umbrella. This requires a few steps, but it can help solve the alignment and differentiation issues where traditional revgen systems fail.
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Step 1: Restructure revgen – A full integration of the four core revgen functions (bizdev, marketing, sales, and account management)
Step 2: Elevating account management – AM is an unfortunate afterthought at many agencies. By elevating AM, we’re acknowledging that continued client relationships are just as meaningful as new ones.
Step 3: Marketing-Sales parity – Most agencies are sales-lead organizations, partially due to the immediate revgen needs in a feast-or-famine cycle. Breaking this cycle requires investments in an appropriately funded marketing department.
Step 4: New lines of support: Investing in quality marketing teams and systems acts as a force multiplier for your sales, bizdev, and account management teams.
Step 5: Specialize – Concentrating on a specific niche allows agencies to develop deep expertise in that area. This lets them provide clients with a superior level of service and deeper insights into their industry’s core issues. Also, they grew twice as fast as the pure generalists last year.
Step 6: Remastering metrics – There are a million metrics to measure, but the main takeaway is to ensure you’re measuring those that genuinely impact your business. Secondly, ensure you’re grading each functional area (bizdev, marketing, sales, account management) on metrics they can actually influence.
Pitfalls to avoid.
Pulling this off isn’t easy. There are some significant pitfalls you’ll want to avoid, including lack of direction, ignoring prerequisites, moving too quickly, lacking buy-in, and insufficient cash reserves.
Lack of direction: This is the big one. Having specific goals and direction gives the team a guide. It lets them focus their efforts on things that move the needle.
Ignoring the prerequisites: In the report, I described some prerequisites that need to be in place before tackling this kind of change. They include having a rev/FTE of at least $150k, the ability to invest 10-15% of revenue in revgen activities, adequate project management and value delivery teams and systems, and above-average cash reserves (2-3 more months of OpEx than normal).
Moving too quickly: This is a long-term transition simply because of how difficult change is for people. You’re moving a lot of titles and seniority around. Make sure you’re giving people time to adapt.
Lack of buy-in: Because this requires such significant change, it’s critical that the team understands why it’s important and believes in it.
Revgen shouldn’t break agencies.
The filter on which agency gets to continue creating digital experiences shouldn’t reside in revgen. It should live in production/value delivery. Hopefully, this guide helps more agencies who already do great work do more of it.
Until next time,
-Nick
