Is your agency charging enough via the five Strategy Tiers?
Want to work with clients on high-level strategy? In my experience, your agency’s clients consider five Strategy Tiers (or layers) in their business.
Client perception impacts which firm they ask to handle what, and it impacts your agency’s ability to charge more… versus needing to take what you can get.
Moving from highest to lowest value (and from big picture to small picture), here’s the Strategy Tiers hierarchy I’ve developed for digital agencies I advise:
- Business Strategy (the client’s business in general)
- Integrated Marketing Strategy (all of the client’s marketing)
- Digital Marketing Strategy (digital-only marketing for the client)
- Channel Strategy (e.g., SEO vs. PPC vs. social)
- Campaign Strategy (your strategy for a client’s specific campaign)
This hierarchy ties closely to what your agency can charge your clients—let’s take a closer look at the implications.
Higher Tier = Higher Fees
The “higher” your agency works (that is, the closer to Business Strategy at the top), the more you can potentially charge.
That’s partly why management consulting firms like McKinsey get paid so much—they’re advising executive-level clients about high-level business strategy. In contrast, campaign-level strategy is a step away from low-level execution, so clients tend to value it less.
McKinsey does provide execution-related services through its Implementation business (and McKinsey Digital), but that’s not where consultancies seek to start their client relationships. Strategy first, then tactics (as I share in my Think, Teach, Do services model).
You’re not McKinsey, of course—you have more of an uphill (or up-the-tiers) fight. You may even need to bring in new team members, to help you fight your way up the Strategy Tiers hierarchy.
Cascading Down from Business Strategy
Does this mean your agency needs to do only Business Strategy? No. But the closer you get to Business Strategy, the more you can potentially charge.
In my work, I focus on Business Strategy for agencies—for instance, agency pricing models. I sometimes get into Integrated Marketing Strategy—for instance, inbound branding. I sometimes share advice on Digital Marketing Strategy and Channel Strategy, including advice to clients on their email marketing strategy. I occasionally share campaign-level advice—for instance, ghostwriting a sales email for a coaching client. But clients hire me for Business Strategy, and anything else cascades down from there.
If your clients are used to a lower Strategy Tier, you may struggle to shift their view of your value. That is, you may need to fish in a different part of the river to attract new clients who don’t have preconceived notions.
Client Size Matters
Client size and sophistication matter, too—digital marketing strategy for an enormous brand will likely be more lucrative than business strategy for a tiny business. But within a particular industry and client size, Strategy Tiers predict what you can charge, your ability to raise prices, and how hard it’ll be to build a strong sales pipeline.
QUESTION: Which of the five Strategy Tiers does your agency handle today? What would it take to move up-market a tier or two?
