How to Diversify Your Agency Revenue When One Client Dominates

There are few things more rewarding for an agency than landing a large client. The new business allows your firm the opportunity to grow your resources and capabilities by providing an influx of new revenue. It’s an immediate shot in the arm for the agency, but it could also provide future challenges.

Most prominently, what happens when the business from your major client dries up?

And especially if your revenues are largely tied to that one account? If your agency is generating more than 20% of your revenues from one client – you have an 800# Gorilla. This situation is one that nearly every agency could face: lose that account and the livelihood of your organization could be in jeopardy.

So how do you prevent the fall-out from the loss of a major piece of business?

There are two primary strategies that can help you balance your revenue streams – proactive new business development and active diversification. A well-balanced firm will have solid programs in place for both, creating a planned buffer of new business opportunities in a robust pipeline for new clients, and organic revenue growth from a diverse base of existing clients.

Proactive New Business Development

A focus on client service provides the agency the best opportunity to do work, however, by it’s very nature, the focus on billable hours often gets in the way of an active new business program – the dedicated resources and an overall strategy for developing new business. Agencies that find a balance between client service and self-preservation typically have a proactive new business development program.

A healthy new business development program typically includes the following three steps:

  1. Clarify Positioning

To potential prospects, agencies often look quite similar. This isn’t very surprising since most agencies market themselves based on their list of services and projects.

Positioning allows you to clearly define the unique niche your business will serve, and the key benefits you provide for that niche. It gives your target clients a clear understanding of why your agency is unique and gives your team a clear focus from which they can identify and support your differentiation.

Achieving simplicity within ad agency positioning is essential.

  • Identify where your agency is at its best or in what verticals you’ve seen the most success
  • In what areas does your knowledge of the customer truly make you unique?
  • What types of proprietary tools or methodologies has your firm developed that may be unique?

Creating intellectual capital and content is much easier with clear positioning, allowing your firm a more targeted path towards establishing your digital footprint in a timely manner. In addition, having a clear focus of exactly who you are will make building your own new business development strategy much more efficient and effective.

The idea of “positioning” is ultimately about creating a unique and emotional impression of your company in the mind of the consumer (prospect client). It provides the all-too-elusive “elevator speech” that could lead to your next client.

An example of a powerful positioning statement comes from Sonnhalter, an agency based in Cleveland that works with companies targeting professional tradesmen in the construction, industrial and MRO markets. Sonnhalter calls their unique niche B2T marketing – Business-To-Tradesman.

They’ve become experts at working with brands that sell to electricians, plumbers, machinists and tradespeople who work with their hands by immersing themselves in the world of construction sites and factories. It’s the combination of hands-on experience and knowledge of this specific industry that positions Sonnhalter directly to their target audience and sets their agency apart from other marketing firms.

  1. Create Intellectual Capital

Well-deployed intellectual capital can dramatically increase awareness of your agency by leveraging the strengths of your team. The right intellectual capital involves tapping the knowledge of each team member within your organization and helps stir interest in your agency, strengthen current relationships and ultimately attract new clients.

Like knowledge, intellectual capital is gained through experience or association. It’s basically a way of sharing what you’ve learned by teaching it to others.

Your intellectual capital also demonstrates your expertise in a specific category, providing credibility for your agency and its services. In its truest sense, intellectual capital helps explain why your agency exists and what is important to your team and your clients.

Minnesota-based agency Brandpoint leverages their intellectual capital in a big way with their Brandpoint’s speciality is content marketing, so they provide expertise from their team regarding content news, developments, best practices and emerging ideas within content marketing.

For example, a recent Brandpoint post called “How to Create a Quiz for Lead Generation” provides their unique point of view on the necessary components of this lead gen strategy. The post includes ideas that come directly from their experience, such as Designing An Effective Lead Capture and Creating Results That Get Shared. By incorporating real-world ideas and industry expertise, agencies like Brandpoint can use their intellectual capital for much more than education.

  1. Develop an Inbound Marketing Methodology

Brand marketers are bombarded by marketing and business solution vendors daily. Traditional agencies, digital agencies, specialty agencies, data analytics providers and even business consultancies are constantly approaching brand marketers with new solutions.

Despite this increase in competition, most agencies still promote themselves with awards won and their clients roster. However, they should be focused on providing a clear view of the agency and what they stand for.

The best way to accomplish this is by demonstrating your knowledge and providing it to others in the form of content marketing. This give-to-get approach is known as “inbound marketing” and is commonplace online and has come to be expected by your customers.

By sharing your knowledge and educating your potential prospects, you are not only demonstrating your proficiency and attracting awareness, but you’re taking the first step in attracting leads for your pipeline and establishing trust. Inbound marketing can be the catalyst for a consistent flow of new ideas and new potential prospects.

A dedicated inbound marketing program will allow you to create a systematic approach to reach your prospects throughout their customer journey. In addition, it can help you evaluate which content and distribution platforms are most efficient at generating response.

Unlike paid media, inbound marketing is about building a foundation for the future and usually takes time to build an audience. However, it can be an economical way to generate awareness with a deep list of potential prospects. It also provides a view to evaluating your prospect’s level of interest and position in their buying cycle.

Diversified Revenue Streams

diversificationThe downside of acquiring a major new client can be having all of your eggs in one basket. If one piece of business provides a large percentage of your revenue, diversification of your revenue streams could allow you a better way to gain more fiscal predictability through more efficient income.

In the book The Marketing Agency Blueprint, author Paul Roetzer provides three primary options of diversified revenue streams for agencies:

  1. Software Development

Software and product development could be a viable alternate revenue stream for those agencies with the resources necessary to build and market these types of products. By generating consistent recurring revenue and licensing fees, software products can provide a predictable business model to offset the ups and downs of a service business.

  1. Educator and Publisher

Another benefit of developing a solid intellectual capital base is the potential opportunity to monetize your knowledge and capabilities outside of services. For example, you could create online courses, webinars, digital publications or focus on book publishing or speaking engagements. All of these options could provide tremendous opportunity for recurring revenue through education and publishing.

  1. VAR and Affiliate Programs

Value-added reseller programs (VAR) are those in which your agency provides services for third-party products. By providing your expertise with products and tools that you’re already using, your agency can earn compensation through licensing fees and boost referrals.

By participating in affiliate programs, you earn revenue when your promotional efforts result in a new lead or sale. You receive a percentage or set fee for the third party program that you’re helping to promote. Many marketing software companies offer affiliate programs including Eloqua, Marketo, HubSpot, ConstantContact and MailChimp.

The next time you’re close to landing a big new client, consider how this will eventually affect your agency, and make sure you plan ahead so your firm is prepared when the life cycle of this, or any client/agency relationship ends. A strategy for new business, supported by consistent implementation, will protect your agency from the extreme highs and lows of client wins and losses.

Back to Top