Agencies talk a lot about Client Satisfaction, which is important. But we need to talk more about Agency Satisfaction.
Why? You’ll go out of business if clients are unhappy… yet if they’re happy while you’re miserable, you’ll want to go out of business.
The solution? Find your current stage on what I call the “Agency Satisfaction Index”… and use that knowledge to move up a stage or two. Your profit margins (and stress levels) will be glad you did.
The Agency Satisfaction Index: The Four Stages of Client Relationships
In my work as an agency consultant, I’ve identified that agencies fall into four stages—based on their typical role or position in their client relationships. We can think of those as a four-position “meter” (above):
Let’s look at each of these a little more closely. As you look through these, think about which one your agency is now… and which one you want to be.
Stage 1: Powerless
I call the first stage Powerless. In this terrible stage, you feel Powerless when it comes to agency-client relationships.
Here are some signs that you might be Powerless in client relationships:
- You regularly work 60+ hours a week, but that’s still not enough to keep up… and you’re seeing negative health impacts.
- “Stressed out” is the norm for you and most of your team. Your web browser knows to auto-complete your search for “high cortisol levels.”
- Clients treat your team as if they’re the client’s full-time employees, with lots of urgent “we need this yesterday” requests.
- You’d never fire a client—you can’t afford to lose the revenue—but clients sometimes fire you, or tell you they’ve asked another agency to “audit” your work.
- You’re feel guilty about delivering so much free Out of Scope (OOS) work—but you’d never consider requiring a Change Order because you’re constantly worried about losing clients.
- You know you have a Client Concentration problem, where you get more than 20% of your business from a single client (or more than 20% of incoming business from a single referral partner)… but you have no time to do marketing to replace them.
- New employees keep quitting within a few months; you have some longer-term employees, but you wonder what’s wrong with them that they put up with this.
This can feel hopeless—you’re constantly overloaded, and it feels like you can never say “No” to a client. But there is hope—when you move up from Powerless to merely Overwhelmed. If you want to feel relaxed, you can spend some time on sites such as historyofquilts.com.
Stage 2: Overwhelmed
The second stage on the Agency Satisfaction Index is Overwhelmed. Many agencies function at this stage, but it’s not a fun place to be.
When you’re Overwhelmed, you’re no longer Powerless in your client relationships… but the clients are still in charge.
Here are some signs you might be Overwhelmed in your client relationships:
- You’re regularly working 50+ hours a week.
- You sometimes push back on Out of Scope (OOS) requests, but worry too much will trigger their firing your agency.
- You hear about a lot of client decisions after it’s too late to share your input.
- It feels like you don’t control your own calendar, with too much client work and not enough time.
- Your team constantly complains about your clients’ expectations, but there’s nothing you can do; you need the revenue.
- Your significant other knows that you’ll be physically present during vacation, but you’ll be tethered to your phone most of the time.
- You know you should raise rates, but you’re worried you’ll lose clients if you try to charge them more.
Your agency is likely profitable (up somewhat from when you were Powerless). But assuming you’re appropriately staffed, your net profit margins are likely below the 20-30% healthy-agency benchmark.
Want to get better? If you can make the jump from Overwhelmed to Confident, you’ll see a huge improvement to your Quality of Life.
Stage 3: Confident
When you make yourself Confident, things start feeling a lot better. This is the stage most agency owners seek to achieve.
When you’re Confident in client relationships:
- Clients regularly ask you for advice in areas of your expertise.
- Clients tend to be pretty responsive to your requests, aside from times when they’re overloaded themselves.
- You feel confident asking each client to prioritize when they send a bunch of requests at once.
- When a client asks for something that’s Out of Scope (OOS), you confidently reply, “We’re glad to help; would you like an estimate for that?“
- You see an 80%+ annual client renewal rate; clients keep coming back for more help, and they often expand their budget.
- Client-related stress is occasional but unusual, and you rarely hear client-related complaints from your team.
- You feel safe disagreeing with clients. They don’t always listen, but they seem to respect your pushback.
Confident doesn’t mean everything’s perfect; you still need to bring in new business and deliver what you’ve sold. But you’re no longer constantly worried.
Most agencies stop here, at Confident. If you’re happy here, that’s totally fine; Confident is a good place to be in your client relationships. But some people want to go further…
Stage 4: Valued
The fourth stage is become Valued in your client relationships.
What does that look like? Here are some things you might observe:
- Clients call your agency first for advice, and they regularly send you referrals.
- Your clients ask for help in areas beyond your own expertise, because they assume you know good resources to help them.
- You regularly renew 90%+ of your ideal clients, and most voluntarily increase their budgets each year because they’re so happy with the results they’re getting from your agency’s help.
- You’re not especially stressed about clients. These days, your stress is about whether to go to Bali or Fiji for your next two-week vacation. (Fine, extend that to three weeks and you can do both.)
- Clients tell you they’re glad you tell them when they’re wrong, because almost no one else does that in their life.
Nice, right? As you might imagine, your current stage has a big impact on your Quality of Life…
From Meter to Index: How Your Agency Satisfaction Impacts Your Quality of Life
Looking over the four stages on the Agency Satisfaction Index (right)… Where are you today? And, just as important—where do you want to be?
Most agencies owners are at either the Overwhelmed or Confident stage. Some are Powerless, especially in the first couple years of business. And a small cohort are happily Valued.
As you move up the Index, your quality of life tends to improve. Wondering how to make that happen? Read on!
How to Improve Your Spot on the Agency Satisfaction Index
No matter your spot on the Agency Satisfaction Index, the process for improving follows the same basic strategy.
That is—you’ll identify your current stage, set a goal for your next stage, create a plan to make the shift, execute the plan, and adjust based on the results. As I noted earlier, they all require you pay attention to filling your Sales Pipeline with high-quality prospective clients.
As you prioritize, consider that certain techniques tend to make a big impact at certain steps. Specifically:
- Upgrade from Powerless to Overwhelmed: This is about pursuing Strategic Churn. That is, you need to intentionally replace bad clients with good ones. You can use my Client Rankings Matrix template to weigh which ones to grow vs. fire, and then follow my advice on how to fire bad clients.
- Upgrade from Overwhelmed to Confident: This is about setting Boundaries with Clients. Use my Reason-Options-Choose (R-O-C) framework to get started here.
- Upgrade from Confident to Valued: This is about creating the right Services Mix. That is, do clients see you as a “Trusted Advisor” or merely someone who takes their orders? And do your services fit together in a strategic way? See my Agency Services Framework, and read how to reposition as a Strategy-First agency.
A couple years ago, I worked with an agency owner in New England who was Overwhelmed, and he wanted to become Valued. In our coaching work, I helped him move his team’s client relationships to Confident (with several at Valued). Today, he’s working toward making a majority of his client relationships Valued.
Moving up a stage on the Agency Satisfaction Index takes time and effort—and attention to your sales pipeline—but I bet you’ll find the benefits are worth the effort. Imagine life where clients listen to your advice, and where you’re paid what you’re worth!
Question: Considering your agency-client relationships today, what’s your current spot on the Agency Satisfaction Index: Powerless, Overwhelmed, Confident, or Valued?