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6 Killer Strategies to Increase Your Agency's Margins

Article Updated October 19th 2020

Did you know that the 50 top-performing marketing agencies in the country have an average profit margin of only 10.4%?

There is a HUGE amount of room for improvement, even without adding more clients.

Today, we're sharing six strategies that can dramatically improve your bottom line and make you more money.

These are real strategies we've tested with our business, and we think you're going to like them.

Let's get into it:

1. Offer High Value, Low-Cost Upsells & Cross-Sells

One of the hardest things to do is get a prospect to become a client, but once they cross that line, it's easy to offer upsells and cross-sells.

Think about how much extra cash is made in the grocery store checkout line. You've already purchased everything you need, but just the additional offers of candy, gum and magazines get the total purchase price up - with consistency.

The same can happen in your business. We've tested this and we've added hundreds of thousands of dollars in revenue by offering small upsells.

Upsells don't have to be complicated or fancy. Here are a few ideas you can test out:

  • Upsell them to more of the same thing they are purchasing. For instance, if you are selling websites with a certain number of pages, offer to double the number of pages for a discount. As you do more volume, your costs typically decrease.
  • Offer add-ons that are easy to execute but make the client's life way easier. For instance, if you sell blog content, offer to actually post the content directly to their blog, or even boost on Facebook for a small upgrade.
  • Offer services that you don't currently offer and outsource the production. It usually costs little to set up and you can test new offers quickly, without hiring more staff. For instance, if you just sell web design, you could sell SEO, blog content, social media, PPC, retargeting, email marketing or live chat. There are lots of services that can be outsourced.

2. Get Rid Of Your Open Office Environment & Reduce Distractions

Did you know that the average employee is productive for less than 3 hours per day?

That's more than 50% of the day WASTED.

Distraction is the number 1 killer of productivity, so you need to encourage a productive environment.

Open office environments have been popular because they increase "creativity and interactivity" but studies are showing that this is actually a terrible idea for productivity and collaboration.

Studies also show that almost any kind of noise has a negative effect on productivity.

Instead, give people quiet spaces where they aren't interrupted. This can increase your productivity which means more money on your bottom line.

3. Outsource Production To Reduce Overhead

Instead of paying the overhead it takes to hire employees, taxes, rent, coffee, toilet paper or Friday lunches, you can outsource deliverables for a fixed price, and pay your staff to manage the process.

Anything that is not your core service is probably not worth your time to bring in-house (at least not at first), and you may be able to dramatically improve your margins by outsourcing.

Shameless plug - This is exactly how we help agencies at The HOTH.

Getting links, content and local citations is difficult and time-consuming. That's why we've spent the last 9+ years refining the process so you can outsource the hard stuff of delivering SEO to us, and improve your margins. You only pay for deliverables with us at a fixed, wholesale price!

If you want to reduce overhead costs, consider outsourcing some of your deliverables to a trusted vendor.

4. Offer More Expensive, Premium Packages

There will always be a certain percentage of your clients that are willing to pay more for a better service, you just have to offer it.

This was shown over and over in our own business.

When we started our business, our first product was $100, someone bought it. Then we created a version of it that cost $500"¦ and someone bought it. Then we combined multiple products and offered a higher tier package at $400, and someone bought it.

We even offered a $50,000 package"¦ and people bought it.

But this never would have happened if we didn't have the offer. These were all relatively easy to execute, but we had to make the offer.

Try offering a more expensive, premium package and watch your revenue and margins increase!

5. Automate Monitoring & Reporting

Monitoring and reporting can take up a large amount of time, so why not automate it?

We love using WooRank because it gives quick, beautiful reports that we can share with clients (or even potential clients to help them convert!)

This makes us look like pros, and we can quickly identify exactly what we need to fix.

Good, automated reporting not only saves time, but helps retain clients. That means we make more per every client that we bring on.

6. Productize Your Services & Create SOPs

I'm a huge fan of productizing services.

When you customize each product, it becomes exponentially harder to run a scalable operation which hurts margins.

But if you're able to productize your services, you can really define your processes and scale.

This allows you to sell more, reduce costs and ensure the client gets exactly what you promised.

Now, with digital marketing, you might say, "Well how could I ever productize my services? Each client is so different!" You're right - each client is unique and has different needs, but the more you create a system, the better results you can get.

Here are some examples:

  • If you run an email marketing agency, you can sell packages of number of emails per month.
  • If you run a web design agency, you can sell websites by number of pages.
  • If you run a social media firm, you can sell based on number of posts per week.

When you're able to productize your services and package them up, you can eliminate all the margin wasted from customization.

Increase Your Agency's Margins Today

If you follow these tips, your margins will increase and your business will run more smoothly.

Not only that, you'll unlock the ability to scale at a faster rate.

What other tips do you have for increasing your margin? We'd love to hear in the comments!

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