In our previous article, Challenges that Inbound Marketing Agencies Face in Latin America, Part 1, we talked about HubSpot's study on Latin American Inbound Marketing agencies. This study shares very valuable results in terms of detecting the common challenges that the Inbound Marketing agencies in Latin America face, in order to be able to solve them.

After reading the study report, we summarized these challenges into two broad categories:

• Consolidation of your team
• Consolidation of good clients

We already talked about the challenge of consolidating your team, about the hiring, training and retention of staff in part 1.

In this article we will talk about the consolidation of good clients: contracts, doing the business, the service that we should provide, tools that can be used and of course, about how all this will reflected in the cash flow that your agency manages, so that your finances are consolidated and you finally reach that level of success that you want to achieve.

Part 2: The Importance of Clients.

A) Contracts

The HubSpot study revealed that the work that Inbound Marketing agencies make is not being properly valued, and this is because the very same agencies:

1. Charge much less than they should for their services
2. Establish contracts that do not benefit the agencies

And they do so, because they don't want to loose clients and would rather keep them at any cost, which, in the long run, turns out to be counterproductive, since in the end, the job gets done anyway and it implies real expenses for the agency. By not charging appropriately, agencias are cheapening their services and thus, preventing it from growing to the levels that it should grow.

Kinds of Contracts

The study points out that "44% of the agencies use a combination of different price models"* and that "adapting to customer price preferences is another obstacle" for the agencies. "Only 30% of them provide services under retention agreements" and what prevails are the contracts by projects.

What to do?

This study suggests:

• Defining the importance of the retention agreements as a business model (the agency itself)
• Considering incentives (discounts, additional work, shorter payments in time...) so that the clients go for a retention agreement.
• Offering services that better adapt to a retention agreement (continuous or repetitive tasks, long-term campaigns...)
• Developing alternative-payment models in order to achieve the same results (paying half in advance, paying by goal reached, registering credit cards...)

Why the retention model or agreement?

When we base our business in retention models, we "get to know how our income will be like even in 12 months, which makes commercial decision-making a much easier task to do".

Due to the few retention agreements done, "51% of the agencies have less than 3 months of cash flow to cover their expenses". Which leads us to rethink the kind of clients that we have: Is it worth having many small clients that won't allow our agency to grow? Let's put it in another way:

• Contracts by projects favor clients, since they don't fully commit, but not the agency
• Retention contracts favor both parts, since the client does get your good service but also allows the growth of your company.

Signing Contracts

"Only 49% of the agencies use contract terms to protect their agreements with their clients (...) in addition, only 24% of the agencies ask clients to sign legal documents".

What to do?

Reconsider your agency's service agreement: sign a legal contract that establishes the payment terms in a "clear and forceful" manner, as well as the policies of your agencies on expenses and special rates. By doing so, agencies will have this key support and will be able to "carry out their business with less stress and more predictability". This brings another challenge along:

How to negotiate the contract?

Piece of cake! Talk about their ROI, focus on their sales. "How do you expect to be hired when your best offer is to manage their social networks?" In other words, "If you know for sure how your services will translate into sales, you will never have to negotiate again".

Agencies need to recover control by avoiding the following:

Mistakes Done When Negotiating a Contract

1. Feeling pressure to immediately sign a non-disclosure agreement
2. Suggesting too many free offers
3. Starting the relationship with the client without having him sign a contract
4. Not getting any authorization to show your work

All of these mistakes put you in a position of disadvantage. "Position yourself with confidence and negotiate the terms that will be beneficial for both you and your clients". If your client offers a deal that doesn't seem to be very good for your agency, is it really worth to put so much effort into that client? Think twice... Invest on clients that are profitable and log-lasting, on those that truly value your services and, in exchange, provide them with your best services so they hold on to you.

B) Services that you Offer

Some recommendations to optimize your resources and the services that you offer:

• Never sacrifice the quality of your service just to meet unrealistic due-dates.
• Make sure your employees time is well organized: prioritize specific clients and tasks.
• Monitor and manage the services that you are offering your client. This will let you have a clear evaluation of them so that:
• The clients recognizes the profitability of your services
• Your agency recognizes the profitability of the client

Fortunately, new technologies offer several tools in order to perform this management, both to deliver your services in a timely manner as well as to analyze the services that you offered to the client. The study indicates in this regard:

"I don't expect agencies to not have any trouble finding new clients or retaining their best employees, since those are obstacles proper of this industry. What I do expect from new technology is for it to change the feeling of chaos and confusion with which most agency-owners must manage their business". Geoff McQueen, Accelo.

Two last recommendations:

1. Update your prices, manage your numbers properly

• "Many agency owners have confessed to me that, despite their agencies grow and improve year after year, they see a decline in profits. This is because they have not increased their prices accordingly." If year after year your prices do not rise but everything else does (salaries, rent, management expenses ...), sooner or later you will be in trouble.
• Do not waste resources on strategies that "require a lot of effort but that generate few positive results". Evaluate the cost-benefit of each of your strategies and focus on those that do bring significant benefits for both your clients and your agency.

2.- Go big! Beyond recommendations

51% of the agencies state that "their main source of sales opportunities are recommendations or personal networks". And although it is very good to be recommended and get some clients this way, it is not ideal, since it means that agencies "have not yet discovered how to position themselves in front of a larger target audience", they are not "present in the surroundings of the prospects in a constant, effective and useful manner". Usually, recommendations bring small clients with limited budgets. Not your main target, right?

In other words, make use of the same tools that you suggest your clients to use. Become your number 1 Inbound Marketing customer! Apply digital marketing strategies to your company the exact same way that you do with your customers. The exponential growth that you know they will have, can also become a reality for your agency. Educate your prospects with your website, have them recognize your value.

Keep those customers who recognize that your agency deserves a good payment for your excellent services.

Remember, "you do not need many incompatible clients, you only need good ones" Jim Darcangelo, UpCity

A Consolidated Inbound Marketing agency is possible

And DataBranding is here to show it. No, we are not exempt from some of these challenges, but it is true that we are an agency that has been successfully carrying out marketing campaigns for many years. We have managed to move from the traditional marketing model to the digital marketing model. We have the tools and know-how that are needed to accompany and support our clients throughout their campaigns.

On the other hand, if you are still a small agency and you are interested in knowing how you can grow more, we can gladly do some advising for you. Learn more about us, know , and feel free to contact us anytime!