Digital Marketing, Thought Leaders

4 Challenges of Running a Digital Agency

March 27, 2020

by Dipti Parmar

Business & Marketing Consultant

Running a digital agency isn’t easy and comes with challenges of employee engagement, due diligence, customer retention, and timely delivery. If these challenges are overcome, your agency will be on a better path to success.

If you want to grow and run a digital agency successful today, expect to climb some mountains and work hard to stay at the top.

Maybe you were lured into the world of running a digital agency due to its low barrier of entry. Maybe you started out as a low-level graphics designer who did late nights or the accounts guy who sat outside clients’ offices for hours and made your way to the top through the creative or marketing route. Maybe you enjoy a mix of different projects, campaigns, or clients or simply the freedom to make your own choices for your business.

But once you get into the weeds of running a digital agency, you’re bound to encounter a few challenges.

The good news is that you can learn from these challenges and run a thriving digital agency, no matter where you’re located in the world.

4 Challenges of Running a Digital Agency

  1. Employee engagement and advocacy
  2. Due diligence
  3. Customer retention
  4. Timely delivery

Challenge 1: Employee Engagement and Advocacy

Whether your employees are remote or in-house, engagement and advocacy are some of the keys to running a digital agency today.

According to Gallup, only 34% of employees are engaged in their jobs, requiring agency owners to use creative thinking to keep employees’ interest.

There are several reasons why employee engagement is critical for digital agencies:

  • Engaged staff will act as the face of the agency, lending a personal and human touch to the brand.
  • Employees will recommend solutions that embody the best interests of the agency as well as the client.
  • Customers eventually interact more with the actual team members who carry out the work. Keeping them engaged builds and cements better client relationships.

engagement pays off

Source: Cindy Stradling

From lower turnover to higher profitability, there are several ways to keep your digital marketing team engaged.

One approach is to plan and promote a process for frequent internal communications and education. There is something new to learn with digital marketing nearly every day, no matter how many years you’ve been in the business.

Collaboration with remote teams is a given in any digital agency worth its salt. However, the daily pleasure of catching up with “work friends” and sharing a light moment or two at the water cooler is missing in remote work. Directors and managers at agencies can take proactive steps to overcome communication struggles and make remote employees feel included (while defining and clarifying roles and responsibilities for each campaign) with an internal messaging app.

Less formal than email yet as quick and efficient, messaging apps such as Slack help remote teams connect, share knowledge, and build meaningful work relationships, increasing productivity and internal energy in the process.


Source: Slack

A successful digital agency must have engaged, happy employees.

Challenge 2: Due Diligence

Working due diligence into your everyday business operations can save you from a lot of hassles and headaches.

Digital agencies are influenced by a lot of factors and variables that don’t necessarily impact other businesses so hard:

  • They must stay within the boundaries of data and privacy regulations such as GDPR and CCPA.
  • They need to develop organizational abilities in the use of evolving tools and technologies in the martech space.
  • They need to work with multiple vendors as well as online/offline service providers in the tech and marketing spaces.
  • They must manage cash flow well because contract sizes, durations, and delivery specifications vary greatly.

Keeping your business healthy in terms of vendor management, cash flow, data compliance, and more can ensure that your digital agency keeps thriving in good times as well as bad.

How do you keep due diligence in check for a busy digital agency? By ensuring that the leadership team, employees, partners, and vendors all create and access the right documentation they need to do their job when they need it.

Authorization and approvals from clients, branding, and legal teams take up a lot of time at marketing and ad agencies.

Not so long ago, branding, PR and ad agencies had to store client material, contracts, NDAs, and other documents in physical cabinets in offices, leaving them open to the risk of theft, damage, or being mislaid. As a result, agencies are now opting for due diligence with virtual data rooms, which are cloud-hosted digital archives that enable secure online storage and trackable access of important business documents.

This way, access permissions can be managed on a team- or department-wide “as-needed” basis, approvals can be sped up, and tactical decisions can be taken quickly, within the scope of existing agreements. This also enables regulatory data compliance where end-user or end-customer data is involved.

Another super-important cog in the due diligence wheel is finance, especially profit margins and cash flow management. According to a survey by Kabbage, 51% of business owners forego paying themselves due to cash flow issues. Another 63% have anxiety about cash flow.

Put in place a system to make sure your invoices are sent out and you get paid by clients on time. The first step in ensuring timely payment is making sure that expectations are outlined in contracts. You’ll want to include all payment terms and find out if the client has any special requests on how they plan to pay you.

Once the contract is in order, remember to invoice promptly for your services – an ideal time to do so would be one week after delivery. This can allow the client time to experience and evaluate your product or service well enough. It’s also wise to invoice your client online. This allows for auto-generation and quick corrections where necessary while simplifying record-keeping.

FreshBooks is one of the most popular cloud-based invoicing tools:


Source: FreshBooks

Digital agency owners must practice due diligence in every strategy.

Challenge 3: Customer Retention

Customer retention is a serious challenge for many businesses. Digital agencies have it worst, as there is no clear standardization or differentiator of their services that they can claim to beat the competition at.

Unfortunately, no one can control circumstances under which a customer leaves, but we can do our best to understand the reasons and take preventive action.

why do customers leave a company

Source: SuperOffice

The good news is that your competition isn’t very effective at stealing clients from you – it’s in your hands to influence how the client feels about you and ensure they stick around for long. You can do this by:

  • Establishing personal relationships with clients, showing genuine concern, and treating them as an individual rather than a source of income
  • Responding consistently and immediately to their queries and concerns by phone, email, or a communication channel of their preferences
  • Coming up with special offers, additional services, and discounted prices for long-term customers
  • Providing excellent customer service. Think about how you would want to be treated while working with a company like your own
  • Sticking to your word and completing tasks as promised and on schedule

Essentially, you can’t go wrong with using best practices for customer service. It’s important to stay focused in this area of your business to prevent customers from regretting their decision to work with you and seeking out your competitors.

Challenge 4: Timely Delivery

As a service-based business, it can be tricky to ensure that you deliver your promises on time. Whether it’s a website launch, brand creatives, copy for a downloadable ebook, or social media posts, a digital agency must deliver quickly without compromising on quality.

Project management is an important aspect of on-time delivery, no matter the task at hand. There is an array of options, methods, and tools to keep your project on schedule and progressing. These are the ones that managers crave the most:

You need to start by knowing the deliverables and milestones in-depth. Establish clarity with the client on the course of action and execution methods. Agree on simple processes for approvals, change requests, and control. Automate wherever possible. Put in place analytics for tracking crucial metrics and KPIs for every project or campaign at all times.

You might also want to implement time-tracking software for in-house work. This allows you to manage the efficiency of your team members and also makes sure you aren’t undercharging for your services.

If you determine that you don’t have the in-house capabilities to complete a project, don’t hesitate to outsource or “nearshore” part of the project to a relevant service provider who has the necessary competencies. There is a lot of help available online — specialists such as software architects, UX designers, data scientists, and DevOps consultants are all available on hand to collaborate or work on specific tasks so that your delivery wheels never stop churning.

Finally, always be realistic when agreeing on deadlines with your clients. As a digital agency owner, you will know from experience how long it takes to develop creatives, how long a particular campaign should run, and what obstacles might come up during a website redesign or a product launch.

It’s not worth risking the loss of a client – or worse, your reputation – by overpromising on deliveries and falling flat on the delivery date.

Rise to the Challenge

No challenge is insurmountable. Digital marketing and tech agencies are some of the most versatile organizations that ever attempt business. There is a lot of scope to expand the services offered without reinventing the whole organization.

Another good thing is that many agencies are led by very smart leaders, digital evangelists, and serial entrepreneurs who doggedly pursue avenues for client success. Moreover, there is a strong community who is always available to help out their fellow directors.

If you dig in with the strategies we discussed here, your agency will slowly but move forward on the path of growth.

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