How to identify new services to build for your marketing agency

Digital marketing agencies are forced to develop new services. Client needs and demands have shifted from looking at digital, mobile and social as add-ons to being the primary drivers of their business. Plenty of agencies have added new offerings to their “capabilities” to keep in step, but most are really bad at growth management.

Understandably so, It is tough to balance between developing innovative new services ahead of the competition and throwing resources away at unproven opportunities. There is often times a lot of ambiguity about what the client will buy, how much they’ll pay, what will actually drive real results, and how far our team will be able to stretch their current skill set to deliver these new services. What is more important than the answers to these questions is the process and organizational habits that are used to answer them. Developing an agency that is set up to answer those questions in a repeatable, efficient, and effective way is a key driver of building a sustainable agency business.

These 7 recommendations will help you fill in all 3 categories in this Agency Service Development Model. By implementing these recommendations, your agency will be able to build sustainable long-term growth by identifying which new services or offerings to create and sell to your clients.

1. Identify your organization’s hidden skill sets and interests

Most employees have a life… outside of work. They have interests, passions, hobbies, side-projects, side-businesses, and talents that aren’t used in the job they were hired for. This is especially true if you hire the right people. It’s important to keep a thorough pulse on this and tap into that pool of talents when you learn that a client will pay for it.

“One of the biggest missed talent acquisition opportunities is tapping into your existing employee’s side-passions.”

Stopping by someone’s desk and asking them about their weekend is an important relational way to keep up, but this talent mining needs to be much more thorough. I find that a simple, straightforward questionnaire is perfect. It works for both large and small companies, it includes the shy people and those who work from home, it adds structure, it’s efficient, and it can give you insight right away at-a-glance.

To make this actually useful, ask your employees to rate themselves on their capabilities and interests. Focus on asking them about the areas that you anticipate the industry or your specific business might be moving in. That way, you can get a gage at how well your existing talent pool will be able to keep up with those specific changes and where your big wholes are.

Make sure you also include some fill-in-the-blank questions so that people can include their strong passions that you may not think to ask about specifically. You’ll be surprised by the things that they will include and how often you’ll find a use for that skill once you find out about it. An account supervisor that loves photography could help with a new type of content development for a client. Knowing that someone loves cars would be great to know when you go in for a pitch or are staffing for an automotive client.

The other benefit is that employees are much more likely to volunteer for extra projects, feel heard by their management, stay with the company longer, and produce better work all-around because of their improved sentiment.

I like to use Google Forms for my questionnaire. It’s free, easy to use, and reliable. You can also see a graph of all of the results with the click of a button.

2. Hire and fire your employees based on intrapreneurship

Create a culture that prides itself on identifying and pursuing new opportunities. Intrapreneurship is entrepreneurship inside of an already established company.

Knowledge driven organizations such as agencies naturally cause people to horde their knowledge and ideas. After all, if I share my idea with someone and it then becomes widely known at my company, I then become less valuable because now I’m not the only one with that knowledge anymore. Instead of openly collaborating, many people get a practical education in corporate politics and posturing when others try to “steal” what they know.

That is unless very deliberate steps are taken to counter that and incentivize collaboration instead. Merely asking people to collaborate, making it one of your core values and pasting the word “collaboration” up around the office isn’t enough.

Zappos has made it clear that one of their core values is to Embrace and Drive Change. However, what makes that actually mean something isn’t that their execs decided it was important or that they put it on their website. What actually breeds that into their culture is that they hire and fire people based on how they live up to this. They use those 10 core values to measure performance in employee reviews and when deciding whether to promote someone. That’s what gives them teeth and incentivizes people to memorize and live out all 10. Their CEO, Tony Hsieh, admits to not being a great writer, but his deeper explanation of this in his book, Delivering Happiness, A Path to Profits, Happiness, and Purpose is insightful.

3. Find and listen to your full-stack leaders

Full-stack employees are individuals that bring many diverse skill sets together to solve the problem at hand. They know enough about design, software, SEO, and digital business models to make intelligent decisions about any of them. They may not be a production designer or developer, but they care about typography, know how to make UI mockups and know what GitHub is used for. These people are critical to developing profitable new services because the biggest, most profitable opportunities lie in between disciplines.

Full-stack employees are the ones that see the big picture and bring all of the separate agency departments together into a cohesive project to drive the client’s business objectives. They’ll be able to see the opportunity to build a web app on a client’s website that creates a natural reason for people on social to visit, optimize it for the latest SEO algorithm update, build in conversion calls-to-action to get people to explore deeper into their e-commerce products, decide to promote it with the best Facebook ad unit, and then collect cookies from visitors to remarket to them later. They’ll figure out how to show this was all was profitable even though the client is on a last click attribution model, and then they’ll do a heat map analysis to learn how to improve the next project.

At the same time, these full-stack people are also the ones that are able to dive into the details and push any one discipline further. For example, you can’t get really good at social or search unless you understand elements of web development and code. For example, you have to know how to optimize OG tags to increase the click-through rate when people share content from your website to get the most from social. Similarly, you can’t become a great web developer until you learn about UX design and how real people interact with technology. At the same time, to be really good at SEO, you have to know mobile, social, and most recently, user experience.

If you don’t have anyone like this on your team, put a strong push to recruit a few. Once you hire these people, create space and time to listen to them. Definitely give the questionnaire mentioned earlier to everyone, but go further with these full-stack people. Take them out to lunch. Ask them open ended questions about the industry and your business. Get out of the office and pay attention to what they’re interested in and their comments about things outside the scope of your existing business. Capitalizing on their observations about how things can be improved at the intersection of disciplines is an extremely valuable way to discover new services to offer.

4. Identify where your client’s needs and your potential capabilities overlap

To recap, so far:

  1. You’ve gotten a pulse on your organization’s known capabilities
  2. Built a culture of intrapreneurship and created incentives to pursue new opportunities
  3. Figured out where your untapped capabilities and opportunities are from your full-stack leaders.

Now you can focus on your client’s needs. This requires most people to re-learn how to listen. You’re going to have to notice what they don’t say. You’ll have to figure out what their pain points are even if they don’t really know themselves. Essentially, you’ll have to get a practical education in studying people and organizations; to some degree, you’ll need to learn how to become a human factors practitioner. Tim Brown wrote a great book explaining how IDEO uses human factors specialists to focus on understanding the problems that people and organizations have.

Practically, this could look like an in-person client meeting. In your 50 slide deck, which slides did they look up from their computer to pay attention to? What did they ask questions about? Given their question, how much do they know about which topics?

This also requires becoming ingrained in your client’s business as much as possible. IDEO is able to find opportunities for breakthrough innovations by watching people use products and services in the natural environments that they normally use them in. It’s then that they can see when the user is frustrated, can’t figure something out, or first tries doing something in a way that is intuitive to them, but not in the way the product was designed. IDEO would then take those observations back to the lab and design a product that was built to reduce frustration, is easier to figure out and is intuitive to use. This is “human-centered design thinking” and it is crucial to building new innovative agency services.

One way to get engrained is by convincing the client that you need to be a part of as many of their related internal meetings as possible. Explain that this is a way to ensure that the service you already sold them will turn out as good as possible and is compatible with as many groups in their organization as possible. Position yourself as a trusted partner instead of a vendor. Then listen to their dialogues. Pay attention to the metrics, beliefs, backgrounds, frustrations, challenges, mistakes, and jokes that are discussed. Even if you don’t say anything, there is an enormous amount that you can learn. When your full-stack people start to do this, they’re going to naturally start seeing ways that they personally could help with some of those problems. That’s the gold you want to collect.

Follow up with the client and get as much information as you can about it. Why does the problem exist? Is it because of their organization structure, policies, old traditions, a decision from a previous boss, or because no one has gone through the work of championing a solution yet? Understanding the current climate and deconstructing the problem so that you understand every aspect of it is critical. Build a checklist of considerations and questions to answer that you can reuse every time you go through this excercise.

Now look at where your client’s greatest needs intersect with your full-stack leader’s abilities.

Then prioritize them based on:

  • Shortest development time for your team
  • Greatest future profits for your agency
  • Differentiation from competitors
  • Biggest impact for your client
  • Likelihood of success

5. Build an early, sub-par prototype or MVP of your offering

Clients don’t know what they don’t want until they see it. Did you want an iPad before you knew what it was? If apple had asked their potential customers if they wanted a tablet that didn’t have a phone, or a keyboard or a mouse, was too big to walk around with, and wasn’t as powerful as a computer, they would be confused.

Urban legend has popularly credited Henry Ford with saying:

“If I would have asked my customers what they wanted, they would have said a faster horse.” — Henry Ford

On the other hand, clients can tell you much more concretely whether they want something if you put a very tangible version of it in front of them. Better yet, they can tell you WHY they do or don’t want something. This allows you to learn what your client think about your offering which turns out to be one of the most critical building blocks of a successful program.

The startup community calls this the Minimum Viable Product (MVP). The idea is that if you strip away all of the fluff, non-essential features, and beautiful polishing, you’ll be left with the core of your service still. In other words. If you had a hot dog stand, you could take away the mustard, buns, cokes, and napkins and still have a hot dog stand. However, if you take away the hot dogs you no longer have a product. Only build the bare bones version of your service and then put in front of your client so that you can collect feedback and build the next version with your client’s feedback in mind. You’ll spend less money and less time building pieces of the service that they don’t care about.

However there is a need for agencies to put professional work in front of their clients. Therefore, in our case, a minimum version of your service can be scaled back in scope rather than quality.

Source: http://moz.com/rand/7-unlikely-recommendations-for-startups-entrepreneurs/.

6. Learning is your most important objective at first

The natural tendency for agency leaders is to maximize profits wherever possible. That’s usually very important to stay cash-flow positive and stay in business. This is especially an important consideration for agencies that have more short-term projects than long-term retainer based contracts because they inevitably hit slow periods in between projects.

Even with that being said, profits should not be the most important objective of a new service; at least not a first.

“It is more important to learn than turn a profit when building a new agency service”

Most agencies track their employees billable hours and push to have everyone maintain a certain amount of those billable hours every week. Your best, most valuable employees (your full-stack ones) will likely work more than everyone else because they typically take on the most difficult parts of every project. On top of that, here I am advocating that you take these people OFF of their client, billable projects to do something that you can’t bill a client for (at least not at first). How does that make sense? If your only objective is to maximize immediate profits, it won’t won’t make sense and you won’t develop that new service. This will put your business at risk of stagnant growth, having an irrelevant suite of services, and declining sales in the long term.

The challenge that most agencies face when developing something that is truly new is that they don’t really know what the client really wants, what they’ll pay extra for, what will actually work or what the specific solution will look like. This is a situation with extreme uncertainty. When in those circumstances, relying on your understanding of what has worked before is usually not very helpful. Certainly, some things will transfer over, but very important questions remain unanswered. The way most startups used to tackle this problem was to put their nose down, work for 6 months (or more) on the first version of their product, and then try to sell it to the people they thought would most want to buy it. Only then would they start to collect feedback about their work. If they built in the wrong direction or included features or information that the customer didn’t actually care about, they would have wasted their valuable resources. There are many things wrong with this approach and its a very good way to go out of business.

However, if you allocate some of your staff’s time to focusing on accomplishing learning objectives instead, you will be able to grow new profit centers while your existing services are still viable. Learning objectives should be very specific, achievable and have time tables. This is part of the methodology from the Lean Startup movement that has transformed the way startups discover, build, and sell new products and services. They refer to it as Validated Learning. The book is also phenomenal and foundational for building businesses.

“Startups exist not to make stuff, make money, or serve customers. They exist to learn how to build a sustainable business. This learning can be validated scientifically, by running experiments that allow us to test each element of our vision. -Eric Ries”
The validated learning cycle for marketing agencies.

It is important to think about this process as a series of scientific experiments. Practically, this requires creating a hypothesis like “I believe that clients will care about and see the value of bringing traffic from social media onto their e-commerce website.” The learning objective would be to learn whether that hypothesis is true by either proving or disproving it as quickly as possible. Ask your client if that’s important to them. Research to see if anyone else in the industry is doing that. If this is a truly new thing, it may require taking a step further and thinking about what the benefits might be. A common response might be “why should I care about that?” If you do hear responses like that, you should try explaining it with a different value proposition or at least with a different approach.

For example, you could adjust your hypothesis and ask “do you care about activating your existing audiences on social channels, driving them to your website, educating them on your latest product, and then getting them to consider purchasing it?” If the client validates that they do care about this, you’ve proved your hypothesis correct and then you can create a new one. The faster you can prove or disprove your hypothesis the better. You should expect to answer hundreds of questions like this as part of your validated learning process.

7. Balancing your agency’s offerings with Blue Ocean Strategy

Blue Ocean Strategy is a strategy framework designed to propel companies to pursue unexplored opportunities in the market. The authors have built a really effective case and plan for organizations to pursue maximum profits by developing radically new products and services. They detail specific and actionable recommendations about how to go about doing this in their incredible book.

“Diversify your agency’s risk the way a mutual fund would.”

One of their recommendations is to carry a balanced portfolio of services similar to the way a mutual fund investor would. The goal is to keep the majority of ones money safe by putting it in a wide selection of diverse, relatively conservative stocks. This won’t make you wealthy, but it will increase in value over time and keep you from losing your money. Then once you have this safety net set up, it allows you to invest a smaller amount of money in more risky investments with a larger potential upside. It would be wise to diversify your agency’s services in this same way.

How to diversify risk for marketing agencies with a balanced portfolio of services.

Agencies need to rely on their conservative, low risk services for most of their current revenue, but they also need to invest in creating a handful of more risky services to grow their business. Here the size of the circle represents the amount of effort to build or maintain the service. Agencies should maintain their existing offerings in the bottom left quadrant, prioritize building the new services in the bottom right quadrant, deprioritize building the new offerings in the top right quadrant and not ever build the potential new services in the top left quadrant.

Any new service that you build would be the risky investment that has the big potential growth. Because you pull away valuable resources from your existing services to work on them doesn’t mean you ignore your existing services obviously (at least not at first). Sometimes the new services will grow to become the majority of the business over time, but that will usually take a very long time. Andy Grove explains how he did that with Intel in his famous book, High Output Management.

Be intentional about which of your team members work on which projects. Most companies have people that would rather work on the established, known projects. These people would prefer to follow the directions and training given to them rather than try to figure something new out on a very ambiguous project. It is important to have these people on your team. They are the ones that will maintain your business as usual (BAU) projects, do it well, and be very happy doing it.

“Streamlined training frees up resources that can be put on innovation projects.”

Also, streamlined on-boarding and team training is a critical piece to make existing services profitable enough to fund new growth. Additionally, this training can help reduce the cost and impact of high turnover for all, but especially junior employees. Beyond that, it can ensure consistent deliverables and service over time and from account to account. I find that pre-recorded evergreen video courses are most effective and affordable to serve this purpose. Lastly, having these courses in place will ensure that the execution of your established services won’t draw your full-stack leaders away from their service creation as much to train other people. This is one of the courses I created for this purpose.

On the other hand, the full-stack leaders would likely get bored, go crazy, and leave your company if they were relegated to the BAU type of work. Put them on the intrapreneur team that blazes new trails because that is where they will thrive and be happiest.

Your feedback

It’s your turn. What new projects or services are you thinking about or are in the process of creating? What challenges are you facing? What can I add or take away from my thinking here? What related topics would you like me to explore next?

Thank you for your time, attention, and trust.

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