Q3 agency owner survey shows overall optimism, but dissatisfaction with state of business development

Agency Leadership Podcast

In this episode, Chip and Gini discuss results from the SAGA Q3 Agency Owner Survey. Despite a difficult year, the survey reveals widespread optimism among small agency owners regarding future revenue and profit growth. However, there is a noted contradiction, as not as many respondents plan to increase headcount.

The discussion highlights agency owners’ dissatisfaction with their business development efforts, scoring an average of 4.8 out of 10 in satisfaction. Effective tactics like podcast hosting and video content are underutilized, while traditional methods such as attending events and word-of-mouth continue to play significant roles.

The episode encourages owners to adopt more modern business development strategies and to be mindful of adequately resourcing their growing needs.

The full survey results are available for download on the SAGA website here.

Key takeaways

• Chip Griffin: “Agencies need to be careful about growing revenue without also growing the resources that they have to service the clients, because that can lead to morale problems for your team. It can lead to execution problems that result in poor client satisfaction.”
• Gini Dietrich: “I think we’re going to grow our revenue and grow our profit, but it’s not helping you put a plan into place that’s going to help you scale and grow a business.”
• Chip Griffin: “Look at the data and understand podcasts work as a tool for business development. You might want to think about doing them.”
• Gini Dietrich: “I think a quarter of your time on business development is good. I think 50 percent of your time is better.”

Resources

• Agency owner growth expectations and business development insights revealed in Q3 SAGA survey

Related

• Best practices for your agency’s podcast web presence
• How podcasting can help grow your agency
• How podcasts can help agencies and their clients (featuring Kelly Glover)
• Block time on your calendar for business development — and stick to it
• Should Chip stop blindly hating RFPs for agencies?

View Transcript

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.

Chip Griffin: Hello, and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin.

Gini Dietrich: And I’m Gini Dietrich.

Chip Griffin: And Gini, I think we need to survey and see what we think about this show. You know? Okay.

Gini Dietrich: I wish I had one of those sound machines that I could be like, survey says

Chip Griffin: I wish I’d come up with a better opening than that. That was pretty sad and pathetic, but you know. Sometimes I hit the mark and more often than not, I don’t.

Gini Dietrich: Sometimes you do.

Chip Griffin: It is what it is.

Gini Dietrich: This time you did not.

Chip Griffin: My theory is people listen to us despite the opening, not because of it.

Gini Dietrich: I hope so.

Chip Griffin: Unless they’re listening just to the opening just to see how miserably I fall flat so they can have their chuckle for the day and then move on.

If you’re going to stick with us today, we are going to talk about surveys, but we’re not surveying ourselves and we’re not talking about the show. We’re talking about the SAGA small agency owner survey that was, completed in August and we released the results just after, the Labor Day break. And so as you’re listening to this, it’ll be a little bit after that, but, , the results are still relevant because we’re looking at both the outlook for owners for the future, where they see their agencies headed, as well as a deep dive onto some of the business development tactics and strategies that they’ve been trying, that have worked, that haven’t worked.

And so there’s a lot of things to chew on here as we get into it. So that’s what we’ll do. We’ll get into it.

Gini Dietrich: Yeah, it’s pretty interesting, you know, it’s the first time you’ve done this and I think it’ll be interesting to see what the trends are over the next several quarters. But one of the things that struck me about it is that it’s very optimistic.

Especially based on conversations I’m having and you know, my own situation too, where this year has been rough and I think it’s been rough for everyone. So, so I was looking at the results and I’m like, wow, this is, optimistic.

Chip Griffin: Yes. And, and as you say, this is something that I plan to do every quarter so that we can track the outlook, that owners have and we can see trends over time.

So since this is the first in this, effort, we only have a snapshot. We can’t talk about the trend. So future ones of these, we’ll have a little bit more to chew on there and a little bit more to share as we see how the numbers move from quarter to quarter. But, but I think even as a snapshot, there’s some interesting things here, but then the other thing.

In addition to the outlook is each quarter will be a different topic that we dive into. And so this first one is on business development, because obviously that’s a popular thing that owners like to ask about. And so we thought that it would be helpful to see you know what, what their peers are up to and what they see working and what’s not working.

So, but on the optimism side, I mean, the survey clearly shows that small agency owners believe that their revenues are going to increase. I think 68 percent believe that over the next 12 months, their revenue will increase. 59 percent believe that their profits will also increase, but on the other side, only 35 percent think that they’re going to increase headcount over the next year.

Okay. There’s a little bit of a conflict there. I mean, in fairness, they could be saying that the revenue is only going to go up by a dollar or two, in which case, okay, technically you are saying you are predicting that your revenue is going up, but it wouldn’t make sense to hire. That said, I think most people who are predicting revenue growth would be anticipating more than just a dollar or two.

And so you ought to see those numbers tracking at least a little bit more closely than they are. So that’s, that’s a little bit of a warning sign again, as we get more data and we can look at trends over time, we may be able to learn more about it, but certainly agencies need to be careful about growing revenue without also growing the resources that they have to service the clients, because that can lead to morale problems for your team.

It can lead to execution problems that result in poor client satisfaction. So it’s something to be wary of. And just keep in mind, if you really are meaningfully growing your revenue, you probably need to devote more resources as well.

Gini Dietrich: Yeah. And I think you put in the executive summary of the survey, you, you put a couple of reasons why, and you’ve alluded to it for here, but one is that it could be that you’re, you’re not profitable right now.

And so adding profit is, is good. It could be that you’re going to, I think you, I can’t remember exactly how you put it, but essentially your employees are going to do more with less because. That’s that’s happening. Or I think there’s a third thing, which I see happen a lot, a lot, a lot, is that agency owners go, well, I’ll just do the extra work myself.

So I’ll just work 150, 000 hours a week instead of 120, 000 hours a week. So I think those, one of those three things is happening. And to your point, you really, if you’re going, if you really are looking at revenue and profit increasing, you really have to look at resources growing as well.

Chip Griffin: Absolutely. I mean, I always talk about the agencies who balance their books on the backs of their employees.

And that’s something that the agency world as an industry has been known for for a long time. That is why you have so many people say, oh, agencies are an awful place to work. It’s because instead of pricing correctly or resourcing correctly, the team that you have is asked to do more and more all the time.

And we all certainly saw this as we grew up in the agency world. And it was just expected that you would work well over 40 hours a week. You wouldn’t complain about it. You wouldn’t get paid for it. It was just what you did. And the world has changed. And so people are pushing back reasonably, I think, against that notion.

And I think that, that for agencies to survive and even thrive, you need to be thinking about how do you price and resource correctly so that you don’t have to do that. And, and this survey, at least as a snapshot in time, suggests that there may still be work to be done in that area.

Gini Dietrich: Yeah, I think I think the bigger challenge is, I mean, as you look at this is the things that we hear over and over again, and I just last just a few days ago, did a webinar for Counselors Academy where we talked about business development and you know, you have all these agency owners in there in the webinar and they’re saying the same things. Like we, I can take on more of myself.

We aren’t profitable. This year has been terrible. We’re not growing revenue. And to your point, like maybe everybody’s optimistic that, that revenue is going to increase because the election will be over and hopefully things will start to stabilize again. You know, the Fed has said that we’re going to have a soft landing so that hopefully interest rates are going to start to come down.

Inflation will start to be relieved a little bit. So all of these things happening, makes sense that revenue would, would increase, but also because this year and last have been so terrible. It’s hard to believe that revenue wouldn’t increase. So I think that there’s, there’s something to be said for that, but it’s, it’s really, I think the bigger overarching challenge is exactly what you said.

We don’t know how to price correctly. And because we’re not pricing correctly, we aren’t, we don’t know how to grow our businesses. And because we don’t know how to grow our businesses, we aren’t doing things from a new business perspective that allow us to build and to grow. And all of those things combined create great optimism.

Yeah, I think we’re going to grow our revenue and I think we’re going to grow our profit, but it’s not helping you put a plan into place that’s going to help you scale and grow a business.

Chip Griffin: Yeah. And look, I mean, part of the optimism here may simply be, effectively what you were alluding to, which is it’s been so bad.

It can only get better, right? I mean, it can’t get, it can’t get worse, can it? So it will be interesting to see both what really happens as, as well as how those, scores evolve over time. The other thing that the, the survey asked for was for owners to rate their satisfaction with their businesses on a scale of, of 1 to 10.

And I, I would say it was sort of a middling result. It was about a 6.8, 6.9, average score for the, the respondents. So, I mean, obviously, not overwhelmingly satisfied, but also not, not as miserable as they are about business development, which we’ll talk next, but, , you know, I, so I, I think that despite the, the challenges, I think by and large, agency owners seem to be saying we’re going to get through this.

Yep. We’ll see what happens.

Gini Dietrich: Yeah. And I think they, I think, Oh, by and large, everybody’s pretty optimistic about the next 12 months.

Chip Griffin: Yeah. I mean, I certainly, everybody agreed in reading the comments on the survey. Everybody agreed that it’s been bad. Yeah. There were very few people that said, Oh yeah, we, we went gangbusters, this year, so we’re, we’re expecting to do even better next year.

It’s, it was all in the, the tone of it’s been bad, but it’s going to get better. And, and I would say anecdotally in some of my conversations with agency owners over the last, you know, 60 days or so, there does seem to be at least some movement with prospects. I wouldn’t necessarily say a lot of new business is closing, but conversations that had been paused seem to be picking up, there seemed to be more inquiries coming in, so, so there’s, there’s at least some anecdotal evidence that, that this optimism is not completely misplaced.

Gini Dietrich: Yeah, for sure. And I agree with you, you know, I think since. We see this every year, you know, the summer is always so slow and I stress every summer and then Labor Day hits and everybody comes back. And we’ve seen that’s exactly what we’ve seen as well. Like prospects that we heard from at the start of the year that went dark.

We’ve started to hear from again, you know, the week after the week of Labor Day was probably one of our busiest, all year. So we are seeing it start to pick up as well, which is good. That’s, you know, it represents the optimism I think we’re having.

Chip Griffin: Now where they were not optimistic and they were not satisfied was on the business development side of things, which kind of makes sense if it’s been a rough year, you’d be, you’d be dissatisfied generally, but the, on the 1 to 10 scale, the level of satisfaction with their own agencies, business development was 4.8. That’s not good. If 6.8 was middling for your overall business satisfaction score, 4.8, that’s, that’s pretty bad. We’re, we’re below five. So that means, and that’s the average. There were some who put in, you know, 1 as their, their score for their own agency and business development. So, and I don’t think there were any nines or tens, if I read that correctly.

So. This is, this is certainly an area that agencies know they need to focus on. And this is not a surprise, right? I mean, this is, I think we probably would have gotten this answer even two years ago when things were looking pretty good for many agencies. I think a lot of them would say, look, we’re doing well, but it’s, it’s more by accident than by design.

And so, so this does make sense. Interestingly, though, as we, as we dive into some of the details here, it looks like agencies may not be doing some of the things that their peers tell them are most effective at generating business. And we’ll get into that in a minute. So that’s a little bit of a tease for you to stick around for a little bit longer.

But the, one of the things I started with was, was taking a look at, you know, what is the owner doing? Because we all talk about small agencies and the owners are critical to business development. And I was frankly, a little bit surprised because I think 56 percent of the respondents were spending at least a quarter of their time on business development, which I can tell you in my general conversations with agency owners.

Doesn’t seem to be what I generally hear. Most owners I talk to are not really spending at least a quarter of their time. But this survey suggests that at least more broadly, and that may be self selection, right? The ones who are talking to me, maybe they’re talking to me because they don’t have the time.

And so they’re, they’re trying to fix that. But in general, owners are spending at least a quarter of their time on business development, which is frankly good. They ought to be spending at least a quarter of their time on it.

Gini Dietrich: Yeah, I agree with you. And you know, we, we talk about gosh, business development from the perspective of sales, and we talk about it from relationships and we talk about the thing, and we talk about bringing somebody into help because not many of us enjoy it, but the thing about it is when you own an agency, especially when it’s not a large global conglomeration, the prospects are expecting to hear from the agency owner.

They’re expecting that your name is on the door. It may not like, may not literally be on the door, but your name is on the door. And they’re expecting that they’re going to get that senior level expert in the room for many of their strategic high level things, right? So sending someone else in like a salesperson to do that isn’t as effective.

And so I think from my perspective, I think a quarter of your time is good. I think 50 percent of your time is better. And if you can figure out how to switch that so that you’re spending half of your week on business development, you’re going to see, you’re going to be able to actually build something that, that makes you happy, you know, that you’re more satisfied with it than.

4.8, which is really terrible. Oh, 6.8 was the satisfaction. 4.8 was the new business, right?

Chip Griffin: Correct. Yeah. Yeah. 4. 8 was the satisfaction, but still like the business development component.

Gini Dietrich: Yeah, it’s pretty terrible.

Chip Griffin: It is. And, and to your point, you know, most, most of the respondents said that they didn’t have a substantial amount of help from their team.

Very few had anyone that was focused on business development, on their staff, which. Makes sense. And frankly, for most PR and marketing agencies with the traditional model, I don’t believe it makes sense to have someone other than an owner who is. Focused on business development. Now, most of them did say they were getting some assistance from their team and sometimes even from outside help, whether that was consultants or appointment centers or agency, other agencies to help them in their business development efforts.

And so that, that is encouraging that they are not shouldering the burden entirely on their own. But you know, I talked to a lot of owners who think that the silver bullet is to hire someone to do it. And I think that what we’re seeing in this data is consistent with the advice that you and I generally give, which is that’s, that’s not the solution that that’s needed.

Gini Dietrich: Yeah, unfortunately, because I would love that solution as well, but that’s unfortunately not how it works for us.

Chip Griffin: Yeah. Unless you’re, unless you’re a high volume agency, which I think is really more of a service provider slash vendor. Yeah. Even though you may call yourself an agency, unless you’re high volume, it just doesn’t make any sense to have dedicated sales teams.

I mean, if you’re doing SEO, PPC, and you’ve got, you know, a roster of hundreds of clients and small businesses and that kind of stuff, that’s fine. You can have a sales team for that. But for the vast majority of PR and marketing agencies where you’re in that sweet spot of 10, 15 clients at any given time, someone dedicated to business development just doesn’t, doesn’t make a lot of sense.

It doesn’t tend to work, nor does it seem to make sense from a resource perspective. But now let’s look at some of the tactics. And so the, the survey looked at what tactics are you using and of the tactics you’re using, which ones are most effective. And so not surprisingly at the top of both lists was word of mouth.

So the vast majority of agencies, I think 95 percent were using word of mouth for business development. The 5 percent who weren’t, I don’t know what, what’s up with that. I mean, no, we don’t want anybody to refer business to us. No. We want to go hunt it all cold. So in any case, but, but that it got the highest score as far as effectiveness, which we asked, the review to be on a one through five scale for that.

And so word of mouth got 4.3 for effectiveness. So by far, then, I mean, the next closest to put it in perspective was 3.4. So it was far and away, which makes sense, right? I mean, if you’re referred by someone who says good things about you, it ought to be your most effective tactic. So we’ll set that aside now because that was fully expected.

Now that some of the more interesting and unexpected things. And so attending events was the second most effective again, kind of makes sense. I mean, I think if you talk to most agency owners, I say, when I get to go meet people in person, it helps. And so I think that makes sense. But now we get down to the third and fourth, most effective podcast hosting and video.

And so I, when I first sat there, I looked, I’m like, wow, those, I mean, look, they, they have very nice, impressive scores. I’m like, Do people not understand this or what? And then I looked at the percentage using them and then it made sense. It turns out that very few people are using hosting their own podcast or creating video, but they are the most effective.

So that suggests to me that those are things that more agencies ought to be doing. And that’s because I frequently recommend podcasts to agencies because I think it’s a great way to get out there. I mean, we know from what we do just for our own businesses today, Yep. This episode is a podcast and it’s also in video.

And I will tell you that 99 percent of the people who come to me have watched me on video. Listened to me on my podcasts. So yes, it seems to make sense. And this data backs that up. Unfortunately, only 28 percent of agencies have a podcast, which I think is high. So it’s probably some self selection cause we’ve got a lot of people who are interested in podcasts or, or, you know, on my lists and that sort of thing.

So I think it’s, that’s a high number, but still it’s, it’s small. It’s one of the least utilized business development tactics. And video is right around the same area. 34 percent are using video in some fashion for business development as agencies. So clearly not being utilized all that much. And so then we looked at, okay, well, what are people planning for the next 12 months?

Unfortunately, hosting a podcast is not on there. It is, it ranks only above cold calls, sponsorships, direct mail, and traditional ads, as far as things that people plan to add to the mix. I mean, exhibiting at events scores higher. Wow. That boggles my mind. I mean, clearly people need to be looking at this data and understanding podcasts work.

You might want to think about doing them.

Gini Dietrich: Yeah. And you know, one of the things I really like about podcasts for agencies is you can create your list of dream clients and then invite them to be a guest on your podcast. And it works so incredibly well. It’s not sales. It’s not a used car salesman. It’s not, you know, all of these things that make us uncomfortable.

You’re simply inviting them to be a guest on your podcast and having a conversation with them. And all of a sudden you’re on their radar, your top of mind. And gosh, you know what? We’ve been thinking about hiring an agency. I’d love to have a conversation with you about that. Happens all the time.

Chip Griffin: Yeah, absolutely.

I mean, it’s a win win. It’s building relationships and it’s creating content for other people to consume. So, to me, it, and people worry about, well, you know, not many people are going to listen. Who cares?

Gini Dietrich: Who cares? Right. Right.

Chip Griffin: You only need a handful of people, really, to listen to your podcast for it to be effective.

You don’t need large listenership in, in the world of what we do. Yeah. And so you shouldn’t focus on, well, I, you know, I need hundreds or thousands or tens of thousands of people to listen to my podcast. Nope. You probably need 20 or 30. And if you got 20 or 30 regular listeners and they’re the right ones because they will be the right ones.

Right. Nobody’s going to listen to your podcast if they’re not a good fit. Correct. Assuming that you’ve created a podcast that’s relevant to your target audience. So you clearly ought to be thinking about that. And I think as you dig into the survey, there may be other things that you see and you say, Oh, I didn’t realize that, that my peers are seeing the effectiveness of this tactic.

Maybe that’s something I should be looking at. But to me, I would really just put a huge spotlight on, on hosting a podcast and creating video, because I think both of those are so effective for the vast majority of agencies out there. And so most of you who are listening should be doing one or the other or both.

Gini Dietrich: Yeah, 100%. And if you want some advice or just want to chit chat about best practices or anything like that, let either one of us know, because we obviously do this quite a bit.

Chip Griffin: We do. And I can’t stop talking about podcasts when asked about it. So I often do it for free. So some of the other things we asked about on the business development front were which platforms are you using to for business development from a social perspective.

Not all that surprisingly LinkedIn top of the list, a little bit surprisingly, it was a hundred percent reported that they were using LinkedIn for business development. That was, you don’t usually see a hundred percent on surveys for anything. After that, it then fell off to a hodgepodge of the others.

Instagram was at 40 percent. X slash Twitter was at 37 percent. Facebook, 33 percent.

Gini Dietrich: A hundred percent! I that makes my brain itch, I think that basically means they’ve got, they’ve got, they’re on LinkedIn. They’re on LinkedIn. Yeah. Right.

Chip Griffin: I suspect that’s, that’s effect, because I can tell you that that is not a measure of how, how many people are using it effectively.

Correct. Or even actively. Right. But they all have LinkedIn accounts, apparently. So that, I suspect that’s probably more of what was there. YouTube, not surprisingly, since video is not very well utilized, only 14%. So, again, look, YouTube shows up really high in search results for lots of things. So, you’re missing the boat if you’re not using video on YouTube in particular.

Also asked about pricing models, because this is a popular topic. And so when it comes to business development, How are you pricing your work? And it turns out that there is a very healthy mix at the top of the list between monthly retainers and fixed fee projects. Not all that surprising. More interesting, for all those people out there who say hourly billing is dead, 52 percent of respondents are doing at least some of their projects with hourly billing.

Which I don’t think is necessarily a bad thing. Whether they’re being used correctly or not is a whole other question that we could dive into more deeply. But for those of you who think it’s gone, it ain’t gone.

Gini Dietrich: 52% are using the hourly rate. Interesting.

Chip Griffin: As, as one of the mix, right? I mean, obviously Sure, sure, sure.

80 80% are retainers, 78%, , fixed fee projects, 52% hourly billing. So Wow. Clearly a lot of agencies are, are using a mix and, and we see that the new work that’s coming in consistent with what we’ve been talking about on the show is that there is a, a pretty even mix between project and retainer based revenue that agencies are seeing today.

Yeah. And I know that there are a lot, a lot of the gurus out there will tell you, you need to focus just on recurring revenue. Reality is that’s not what’s closing. It’s about an even mix between them. And I think that’s healthy, frankly. So there’s a, there’s a lot to be learned even on that side of the equation as you dig into some of this data.

Gini Dietrich: Yeah, I think it’s healthy too. And I don’t think that we should be afraid of it, especially in down economies. You know, I talk about really. Yeah. Having multiple sources of, of income and having projects and retainers, that’s at least two different sources, you know, look at ways that you can develop other kinds of, of sources for passive income and scalable income as well.

But I, I do think it’s healthy to have a good little mix.

Chip Griffin: And now the last thing that I want to raise here before, and there’s lots more in this survey that people can download and access, but the last thing I wanted to touch on was. You know, we frequently rant about RFPs on this show and how dumb they are.

Maybe we’re wrong because 64 percent of respondents are responding to RFPs.

Gini Dietrich: That doesn’t mean they’re winning.

Chip Griffin: It ranked number five as most effective tactics for their agency. I, I find it hard to truly believe that. And yet. I have to look at the data in front of me, and as someone who loves data, it does make me wonder.

Now, I think the piece that’s missing here, and so perhaps at some point in the future we’ll do some additional research on this, is what percentage of RFPs are you actually winning? Correct. So is your perception of effectiveness only because you’ve won some? Because my argument is, will you win some RFPs if you, if you respond to enough of them?

Gini Dietrich: Yes. Sure. Absolutely.

Chip Griffin: The problem is that the money that you invest to respond to all these RFPs is outweighed by the fact that you lose the vast majority of them. Yeah. So perhaps somewhere in the future, that scenario, we’ll dig in a little bit deeper to see if, if there’s more to that story. But I, I would be remiss if I didn’t point that out simply because that is contrary to what we usually say here and recommend.

But it is the number five most effective tactic, according to our survey, and 64 percent of agencies are using it.

Gini Dietrich: Crazy. That’s crazy. That’s crazy.

Chip Griffin: So with that, I will, I will draw to an end this episode. I will encourage you to download the full copy of the results. There’s lots more to chew on that we didn’t get to address here today.

You can just go to smallagencygrowth.com and get your copy for free. It’s right there on the website. And, I’d be interested to hear any, any additional feedback or thoughts that you have as you look through it or questions that perhaps we can address in future research. Or in an article or who knows what, maybe another podcast episode somewhere down the road.

But with that, that will draw to an end this episode of the Agency Leadership Podcast. I’m Chip Griffin.

Gini Dietrich: I’m Gini Dietrich.

Chip Griffin: And it depends.