Opinions expressed by Contractor the contributors are theirs.
Profitable growth in e-commerce is more difficult than ever. And forget about finding the right agency to help you achieve that profitable growth.
Why is it?
Simply put, the traditional agency model charges based on the total revenue generated by their clients, not the gross margin they generate. This metric alone is a leading indicator of success, not metrics like gross margin.
Not to mention the massive influx of marketing agencies that have flooded the markets over the past 3-5 years.
As a result:
If you own an online business, chances are you’ve come across the following scenario (this is specifically about e-commerce, but a lot of it applies to local businesses as well): you are struggling to increase your income on your own, then you go looking for outside help. A so-called expert e-commerce marketing agency helps you. You sign up for $ 2,000 per month and they say the results will come after six months. But after those months, you have little or no leads or income to show.
Believe me, I’ve been there too. Before I became the owner of my agency, I had to do the same. I had to go to agencies that promised the moon and the stars.
Related: Why You Should Hire A Small Digital Marketing Agency
Here are the problems with this:
- Case studies – They’re probably spitting up some success stories they’ve got.
- Lack of strategy – They don’t have a proven strategy to grow an e-commerce business or a local business. You want an agency that specializes in local commerce or e-commerce. Both require radically different tools to master, not to mention that each also takes years to master.
- ROAS, not KING – They measure their results based on a high-end version of ROI (aka ROAS) instead of taking your variable costs into account. So in their eyes, they always succeed, even if you don’t make any money. Instead, the primary metric that should be measured by a partner agency is gross margin
- Single service vs full service – You also hear many agencies claiming that they offer full service when in reality they specialize in one service such as Facebook ads or SEO. They list all of these other things that they specialize in, but don’t implement them as part of your core strategy.
- Practitioners vs dilettantes – Most agency owners have never even developed a business outside of their agency. They built a business to serve customers, but never had the challenge of actually growing the types of businesses their customers have. So how could they really understand their customers’ weak spots and how to fix them?
This model of switching between agencies is flawed at best, and at worst has hundreds of thousands of ambitious business owners fearful that they will not even look at their bottom line.
Related: Why Every Entrepreneur Should Start Their Own Marketing Agency
What to do about it?
There is a new era agency model that businesses look for in an advertising agency:
Practitioners – An agency built by people with direct experience in e-commerce, developing a successful D2C brand before starting the agency
Active learning – Currently have their own in-house DTC brands, so they constantly stay on top of what works best and actively understand the challenges of growing an e-commerce business.
Focused on performance and value – No need to charge a percentage of advertising spend. What is the relationship between billing a percentage of ad spend and how you should be paid as an agency? Look for an agency that pays for performance or is focused on value. Nothing else.
The main KPI is your gross margin – A good agency uses gross margin as the only indicator of success. Is the bottom line increasing?
Branding and direct marketing – Neither, both. Due to the focus on gross margin, the focus is on building the client’s real brand over time. Which, as a by-product, increases customer lifetime value and dramatically lowers customer acquisition costs.
The goal of every business is to generate profit and grow in a sustainable way, so why would the goal of a marketing agency’s clients be any different? Anything other than that is just morally wrong, because by focusing on the most important income as a metric, they are only boosting their egos and serving their bottom line.
Whether your dream is to transform the world or simply to be able to run a business you love, your daily actions are guided by this vision and dream for the future. And whatever agency you work with as an ecommerce business owner, you should be the hero of the story, not himself.
Related: 10 Laws Of Social Media Marketing