The Rise of the Conversion Agency
During an economic crisis, a business can either survive, thrive or die. Making this one change to your agency's services could mean the difference between rapid growth or a long road of struggle in the months ahead.
I hate to be the bearer of bad news, but the recent economic downturn has many agencies and their clients struggling. Many are on the verge of shutting down.
Within a few months, thousands of businesses went from bustling with customers to closing their doors, and laying off their people.
Government-imposed lockdowns across the world radically morphed consumer buying behavior, and left many business owners frantically trying to figure out how to adapt.
With so many businesses shifting into survival mode, many are putting projects on pause, reducing marketing budgets, and aggressively cutting all "non-essential" expenses that don't show a measurable positive impact on revenue and profits.
This sudden, unexpected shift is sending chills down the spines of marketers and agencies that depend on their clients' marketing budget to keep their lights on and bills paid.
As companies try to weather the storm by slashing marketing budgets and prioritizing ROI on marketing spend, many agencies are struggling to directly attribute what they do to an increase in revenue or profits. And unfortunately, many are running a serious risk of having their services cancelled by their clients.
Losing a number of clients all at once is an agency owner’s worst nightmare.
The good news is, with every economic upheaval, new opportunities are simultaneously created. And with most companies shifting into survival mode, we find ourselves moving into an era where showing measurable results and ROI is more important than ever.
For many marketing and creative agencies this focus on ROI will be extremely challenging, but others that recognize and embrace this new reality will have a chance to prosper more than ever before.
Marketing during hard times: Why ROI is king
As companies seek to survive and hopefully thrive during this global recession, more of their budget will be invested in optimizing their conversion funnel to get a better marketing ROI.
This makes sense. During challenging times, most of us try to do more with existing resources, rather than acquire new resources. In the case of companies, acquiring new resources may be expanding operations, hiring more staff, and buying new business.
After all, it's more cost-effective for them to generate revenue by selling more to existing customers, increasing conversions on their website, and running more promotions to their audience.
During tough times, making better use of the resources you have is often safer than testing out unproven channels or competing on ad spend to acquire new customers.
So what does all this really mean?
Well, in this brave new world of ROI-first marketing, companies with the best conversion funnels will win because they’ll not only be able to survive, but they’ll also be in a position to out spend and out compete their more fragile, lower-margin competitors.
This new reality is forcing companies to take a hard look at their conversion problem and fix it by using services, tools and education that empower them to build better-performing conversion funnels and marketing campaigns that generate more leads, sales and repeat business.
While there was already a growing need to solve the conversion problem for companies whose primary marketing channels are becoming more and more competitive, the recent economic downturn has accelerated the adoption of conversion tools and services by companies that need to compete online, as well as by businesses moving more of their operations to the web.
But these businesses have a nagging problem.
While many want to build out their conversion funnels, the options available to them are limited. They can either use custom code to stitch together a messy web of marketing tools or they’re forced to switch to high-cost enterprise solutions that require annual contracts.
As you can imagine, many companies would prefer to avoid signing annual contracts during periods of economic uncertainty like the one we’re currently experiencing.
So, if these companies haven't already gone with one of these options, chances are they're overwhelmed and aren’t doing anything at all. In many cases, doing nothing can be a costly mistake they’ll regret later on.
Fortunately, for years, our team worked on solving the conversion problem for online businesses while running an agency, and we’re trying to solve the same problem here at ConvertFlow.
Here's what we've realized:
Whether the economy is good or bad, companies that use marketing to survive and grow want to see a good ROI on their spend, without all the headaches that come from stitching together a bunch of ninja tools or writing custom code.
To these companies, the fewer layers of complexity needed to achieve this, the better.
So what does “getting ROI” involve?
Well, getting a positive ROI is usually achieved through a combination of factors including:
- Identifying a baseline customer acquisition cost for the marketing channels a company uses.
- Controlling customer acquisition cost by improving conversion rates in a conversion funnel (the higher the conversion rate, the lower the cost per acquisition).
- Having a high enough customer lifetime value to finance customer acquisition costs and a sustained investment in marketing.
- Having a short enough payback period from marketing spend so a company can quickly reinvest money back into growth and/or operations.
Customer acquisition costs, LTV, payback period. All of these are key factors that result in a company seeing ROI on their marketing spend. The good news is, they can be influenced by improving conversion rates.
For example, by improving conversion rates at various stages of the funnel, a company can:
- Reduce customer acquisition cost.
- Increase customer lifetime value through upsells, cross-sells and repeat purchases.
- Reduce the payback period on marketing spend.
As the marketing implementers for many companies, both consultants and agencies are discovering this growing opportunity to help companies solve their burning conversion problem.
Within and beyond the ConvertFlow community, we're seeing smart marketers build agencies that are achieving impressive success by focusing their services to deliver this outcome, show clients ROI, and tap into this fast-growing demand.
All these changes are giving birth to a new breed of agencies.
The rise of conversion agencies
Conversion agencies drive profitable growth for their clients using conversion marketing to optimize their clients' conversion funnel and marketing ROI.
According to Wikipedia, Conversion Marketing is marketing with the intention of increasing conversions – that is, site visitors who are paying customers.
Conversion marketing can include services that help agencies generate more leads, sales, and customers for their clients by creating and optimizing targeted campaigns, CTAs, emails, ads, and content that converts visitors at different stages of the buyer's journey.
Unlike the traditional creative and full-service agencies that have served the online marketing industry for the past 20 to 30 years, conversion agencies are breaking the traditional agency model.
Instead of pitching clients on lofty visions, brand perception, and the latest silver-bullet internet marketing tactic, conversion-driven agencies provide services that generate real, indisputable ROI for their clients.
By fixing a company's conversion problem and generating more revenue, these agencies give their clients the power to steadily increase profits and invest in growth.
Because of this, even during an economic downturn, companies still need the services they provide. Even to the point of considering them "essential."
By being results-driven, this new breed of agencies not only deliver high-conversion rates and ROI for their clients, but they also create a high-ROI funnel for their own business.
While most agencies depend on referrals and word of mouth to attract and get potential clients to engage and trust them, conversion agencies optimize their services, brand positioning, marketing, and client onboarding to land new clients, and grow client lifetime value.
Fast-growing conversion agencies do this by:
- Positioning and productizing their agency, so it’s known for solving one burning problem for their clients.
- Achieving product/market fit with clients in specific verticals.
- Shortening their sales cycle by offering entry-level service packages, clear pricing, and upgrade paths.
- Streamlining client onboarding and delivery of services, so clients see ROI quickly.
- Using a recurring revenue model to build predictability into their business.
- Proactively investing in marketing and sales to fuel continued growth.
Not only is focusing on fixing the burning conversion problem generating better results for the clients of these agencies, but this new approach is also proving to be a more scalable growth model for these agencies.
For example, New York-based BounceX (now called Wonderkind) broke the traditional agency model and scaled its conversion services business to $100 million in annual revenue in just 7 years.
Serving primarily online retailers and publishers, BounceX currently has about a dozen Fortune 500 companies as customers. It also serves many leading e-commerce brands and several of the world's largest publishers.
The company’s A-list clientele includes well-known brands like; Hugo Boss, Forever 21, Samsonite, Avis, ClassPass, Clarins, JetBlue, Comcast Business, and The New York Post.
During an interview with Andrew Warner of Mixergy, Ryan Urban, the founder of BounceX said, "I hate the agency model. What really sucks, especially when I was consulting is say you’re charging someone $1,000 a month or $5,000 a month or $15,000 a month, you’re putting so much effort in the first few months and they’re getting way more value than what they’re paying you. Then, in month three, it’s probably getting the appropriate value, and then month six they’re getting less value."
Although Ryan knew he didn't want to build a traditional marketing agency, he also knew he didn't want to build a pure software company. "Software is great, but the truth is, people don’t really use software to its full capacity,” Ryan explained during the same interview, “They don’t have a developer to put it on their site. They don’t have a designer to design it right. They don’t have a passion for Robert Cialdini and all that other behavioral marketing stuff that I’ve developed.”
So Ryan thought to himself, "I’m going to merge the two. I’m going to create the software, but I’m also going to hire a team of people that are really good at using it to increase conversions for our customers.” he recalled , "We just decided we’re going to have designers. We’re going to have strategy people, and engineers. We’re going to do it all for everybody."
Looking back, it looks like this comprehensive, done-for-you approach paid off for Ryan and his team. By 2015, he says they generated $16 million in revenue, and they were on track to achieve their goal of a run rate between $40 million and $45 million in 2017.
In early 2020, they shot past $100 million in annual recurring revenue.
While BounceX’s meteoric revenue growth proves beyond a shadow of a doubt that the business model Ryan and his team at BounceX built is working, they're not the only ones profiting from this rapidly-growing market of companies that need to solve their conversion problem.
Exit Intelligence, a small agency based in Raleigh, North Carolina, is also building a scalable conversion agency that serves top ecommerce and direct-to-consumer brands.
Unlike most agencies that try to be all things to all people, and that suffer from a lack of focus and systemization, Exit Intelligence brands itself as an "Email + SMS capture agency" that specializes in handling all email and SMS collection efforts for their clients.
The agency has a small team that focuses on helping ecommerce sites sell more by targeting behavior to increase email acquisition and conversion rates through a fully-managed solution that includes:
- Positioning Strategy.
- On-brand design.
- User journey optimization.
- Customized campaigns.
- A/B testing.
- Detailed reporting.
To provide this done-for-you solution at scale for leading brands like FabFitFun, Gusto, Best Western, True Religion, Single Grain, and CopyHackers, Exit Intelligence recognized that they needed to leverage technology to power their services. That's why they invested in building their own in-house conversion optimization software.
By doing this, the agency has been able to expand beyond their small city to work with top brands around the world. Their website says that they’ve captured over 342,987,635 emails for their clients, while managing to keep their team relatively small compared to the level of scale they've achieved.
As an agency owner who may be concerned about losing clients or is experiencing a significant drop in revenue during these challenging times, by now you can see how helping your clients with conversion services could not only save your agency and your clients' business during a prolonged economic downturn, but also give you the power to drive rapid growth in the years to come.
How your agency can drive growth with conversion services
While BounceX and Exit Intelligence are stellar examples of how agencies can grow and build multi-million dollar businesses servicing the rapidly-growing demand for solutions that help companies fix their conversion problem, in order to do it, both agencies had to build their own software.
Of course, the idea of building software may seem out of reach for most agency owners. After all, developing and maintaining sophisticated software can be a formidable challenge, even for big agencies and venture-backed companies.
But don’t worry, here’s some good news!
Nowadays, smaller agencies don’t have to become software developers or hire a team of engineers to take advantage of the fast-growing demand for conversion services.
At ConvertFlow, we’ve built an all-in-one platform for converting website visitors. We did it to give agencies like yours the power to fix the burning conversion problem for your clients and build a scalable, profitable agency that can deliver indisputable ROI on the services you offer.
By partnering with ConvertFlow, consultants, agencies and other marketing service providers can now offer conversion services that help them and their clients grow faster, without having to overcome a never-ending barrage of technical challenges.
Put another way, our team takes care of hiring and managing the engineers, designers, and technical team that’s required to power the software, so you’re free to focus on what you do best, which is serving your clients and growing your agency.
As a ConvertFlow partner, you can quickly start delivering in-demand conversion services for clients, at scale. You can also launch, manage and optimize all your clients' campaigns, as well as streamline your agency's conversion workflow from a single platform.
Best of all, you can do all this without coding or relying on developers.
As a ConvertFlow partner, your agency will be able to:
- Fix your clients' conversion problem and deliver indisputable ROI through in-demand conversion services.
- Upgrade your services to attribute new leads, customers and sales to your agency.
- Productize your agency to adapt and grow faster in today's economy.
- Power your agency's own marketing and conversion funnel using ConvertFlow's platform.
To give you a better idea of how it works, here's the playbook we use to help our agency partners execute more successfully.
1. Upgrade your services to attribute new leads, customers and sales to your agency
- Install ConvertFlow on your clients' websites for lead attribution.
- Offer an initial conversion campaign launch service to clients or bundle it with your existing service offerings.
- Introduce new services or upgrade existing services to fuel, optimize, and scale your client's conversion funnel.
2. Productize your agency to grow faster in today's economy
- Position your agency to be known for solving one main problem.
- Optimize messaging for product/market fit with clients in specific verticals.
- Shorten your sales cycle with starter packages, clear pricing, and upgrade paths.
- Build more predictability into your agency with a recurring revenue model.
- Streamline client onboarding to increase profitability and deliver measurable ROI.
3. Scale your agency by building a growth engine
- Build your conversion funnel.
- Join ecosystems your customers belong to.
- Partner with leading SaaS companies.
- Co-market with partners.
- Educate audiences about the problem you help them solve.
- Reach out to activated prospects.
Ready to fast track your growth as a ConvertFlow Partner?
If you'd like to see how your agency can grow faster as a ConvertFlow Partner, and know how you can provide in-demand conversion services while delivering indisputable ROI to your clients, make sure you check out our partner program page, where you’ll see how it can work for you and your agency.
Ethan is the Co-Founder & CEO of ConvertFlow. He loves reading about and sharing anything that helps marketers convert more website visitors.