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Three Core Frameworks for Growing Accounts
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Account GrowthWelcome to part two of our series about the most effective ways to grow an agency based on our latest research on digital agencies. Last time, we did a deep dive into account retention and explored some key activities that make it easier to retain accounts. Check it out if you missed it. We started with retention because if we get that right, it makes everything that comes next easier. There’s less to backfill, and the agency can grow faster as a result. Today, we’re going to cover account growth, and then we’ll tackle referrals and that secret bonus growth vector in future newsletters. Three Core Frameworks: Cross-Up-ExpandLet’s look at cross-selling first.This is when you sell additional, complementary products or services (e.g., offering SEO services to a client buying a website). Most of the time, you’ll get hired because you solve an acute issue the client’s facing. The thing is, that’s typically only a portion of the value that most agencies could potentially deliver. Our research shows that agencies offer an average of six services, and a new client rarely buys all six at the beginning of the relationship. There’s often a ton of room for account expansion with this framework, and it’s one of the easiest ways to jumpstart an agency’s growth. On to upselling.You can sell a higher-end version of the same product or service (e.g., offering a custom web design instead of a basic template). This is something we see a lot of smaller agencies try. They start with selling an SEO audit or a UX review and then try to upsell the account an ongoing SEO retainer or a full UX/UI redesign. It’s rarely as effective as they hope, and I have a feeling this is because of where the relationship starts off. If your initial project is a tiny fraction of what you can do, that’s where you exist in the mind of your client. You have to do a massive amount of work proving your worth to move up the chain. Some people will easily see this and bring you on for more work. Others will be tough to convince. While it can be effective in some cases, I don’t love upselling as a primary growth strategy. Finally, expansion selling.You can sell larger-scope versions of the initial project (e.g., instead of one website, it's a multi-site rollout; instead of one campaign, it’s an ongoing retainer or multi-channel initiative) This one’s similar to upselling except that the services offered are more similar. Instead of upselling a UX review to a full UX/UI redesign, it’d be more like selling a UX review that covers more of their business. E.g., instead of a UX review on their app, it’d be a full UX review of their app, their internal-facing software, their website, and their subsidiaries’ sites. The scope expands, but the service stays relatively the same. This one’s easier than upselling in that you’re not trying to build their trust in your ability to do a new thing. You’re building trust with a new department in your ability to do something for them that you’ve already proven to another department within their org. I've seen this framework work well where it builds the sales muscles of the agency's account managers and helps unlock the other frameworks where appropriate. Successful Account GrowthNow that we're all familiar with the three frameworks, let's review some of the key aspects that can make or break a growth strategy based on them. Someone needs to own it.That’s easily the most common issue I see with this kind of strategy. It’s easy to talk about in sales or strategy meetings, and most people will begin with the best of intentions, but someone has to actually do the work. Agency leaders need to be explicitly clear with their team about whose job it is to have the sales calls about upselling/cross-selling/expansion selling. Then, that person must be adequately trained and incentivized to do these things. Many times, sales teams are structured and incentivized based on new logo acquisition. That’s fine, but it leaves little space for account growth. This is where account managers come in. The biggest problem I see in my agency consulting work is that account managers are typically more focused on “keeping the accounts happy” rather than actually growing them. It’s a complacency issue that’s made worse by a lack of focus on account growth and a poorly structured incentive structure. The good news is that both of those are solvable issues. The focus on account growth can be built by setting KPIs and goals that align the AM role with the growth you'd like to see. These can be as simple as quarterly account plans with revenue targets similar to how sales would be structured. Structuring incentives.Once that's set, it becomes possible to design an incentive plan that matches. Unfortunately, this step is rarely executed well. I analyzed 114 account manager compensation structures from our Digital Services Salary Guide. 81% of them didn't receive any kind of bonus beyond their standard salary. When they did receive a bonus, it was only 3% of their total earnings. An average of $2,612. A typical incentive structure for AMs in other industries is closer to 80:20 Salary:Bonus, but I've seen this up to 50:50 in some cases. Here’s a high-level example of an incentive plan for an Account Manager:
Make sure to adjust this to meet your agency’s specific situation. If you're looking to incentivize account retention, shift that to 15% and growth to 5%. Do the opposite to incentivise growth. Square peg, square hole.Beyond properly establishing and incentivising a role to own account growth, we have to match the strategy to the agency's specific service mix and target client profile. Here's how we categorize client sizes:
Cross-selling: Full-service agencies can excel at cross-selling with mid-market and enterprise clients because they have the additional services to offer, and the clients are large enough to have both the desire and the budget to engage more broadly. Cross-selling has far less impact for tiny clients or specialized firms with few additional services to offer. Upselling: Upselling is probably the most common framework we see, but it's specifically effective for specialized agencies that sell into larger clients. The client has to have additional needs and the headroom to spend, and the agency needs to have services tiered out to meet the additional needs. Mid-market and enterprise clients can significantly ramp up investment when they see results, while micro clients cannot. Expansion selling: Expansion selling works beautifully when targeting large, complex clients. Those targeting enterprise accounts should think about these in the context of a multi-phased growth plan for the account In contrast, expansion plays are essentially irrelevant for micro or small businesses (there’s simply nowhere to expand in a 5-person company). Limitations: For the smaller clients, we have to recognize the limits. Sometimes, the best strategy is to help them succeed on a small scale and earn their loyalty and referrals, rather than trying to force additional sales. A team that understands when to grow an account vs. when to simply execute brilliantly on the current scope will have stronger long-term client relationships and more sustainable growth. Retention, Growth, Referrals, and a BonusNow that we've covered retention and account growth, stay tuned next time for a deep dive into referrals! They can be a massive growth vector when done correctly. Depending on how long the referrals topic gets (there's a lot to cover), I might tuck the bonus vector into the next newsletter too. I help agency leadership teams navigate these kinds of growth questions and design growth strategies that work. Let's chat if you'd like to see if we're a good fit to help your agency grow. -Nick P.S. I'm working on a new referral revgen guide that'll include many of these principles. I'd love to hear what topics you'd like to learn more about. If there's anything referral-related that you'd like to see in the guide, reply to this email and LMK. |
Research & Strategy for Digital Agencies
The latest research, insights, tools, and resources that make managing a digital shop easier,
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