Are you a generalist or a specialist?

Do you pursue project work or AOR clients?

Do you define your target clients by industry or persona?

And do you lead with strategy or execution work?

These four questions form the basis of a model I call The 4 Levers of Agency™.

The mistake most agencies make, when looking to reach the next level of growth, is a failure to look deep enough – under the hood – at their core business model.

They look at their sales systems, their marketing tactics – and sometimes have the courage to put their brand positioning on the table for review... never quite looking deep enough at the fundamentals of what they do, who they do it for, and whether or not they have a scalable model in place.

Your business model must evolve as you grow. The world’s fastest growing and most effective agencies have one thing in common: they understand the different models required when doing $1M in annual revenue vs $2M vs $5M vs $10M and so on.

I therefore posit that the reason 78% of agencies fail within the first 10 years is a failure to evolve the core business model – at the right times – along the journey to growth and success.

Simply put... what got you here today, is not what will get you there tomorrow.

In this article, I provide a high-level introduction to The 4 Levers of Agency™, a model I use to help agency principals assess their current business models against their future aspirations.

The 4 Levers of Agency™ model considers four fundamental variables within your business model that you can control, evolve and leverage over time. This includes focus, retention, positioning and offer.

Each lever represents a continuum between two options. The key lies in finding your sweet spot along each of these continuums, then aligning them with each other appropriately.

LEVER 1: FOCUS

GENERALIST vs SPECIALIST

You've been pondering this one since the dawn of your agency – and are likely still pondering it today. How narrow should your focus be? And how might that come across in your brand?

Are we all things to all people?

Or are we just this one thing - to just this one specific dream client.

Too narrow and specialized, and you might push away some high-paying opportunities.

Too generalist, and you might not be compelling enough to any one specific type of client.

LEVER 2: RETENTION

LONG-TERM vs SHORT-TERM 

Are you looking for long-term Agency of Record (AOR) client relationships?

Or are you looking for short-term project-based engagements?

Most agencies dance on a line between the two. You desire large AOR clients, but you accept projects when you can get them – and there’s nothing wrong with that.

Long-term AOR relationships have a slower and more resource-intensive sales cycle, with a bigger potential return over time. Short-term project relationships have a faster and simpler sales cycle, with a smaller potential return (due to the finite time period of the engagement).

Each of these approaches carries significant implications on how you position your brand, market your services, structure your teams and execute your work. Despite this being one of the most fundamental considerations within your agency business model, it’s an area where very few agencies set boundaries or actively determine what their strategy is going to be.

LEVER 3: POSITIONING

INDUSTRY vs PERSONA

Here you consider the most fundamental strategic question of all: who is your dream client?

From my experience, the agencies who can answer this question without hesitation – tend to grow faster than those who cannot.

There are two general ways you can define your dream client.

The first is by industry; by a group of people or companies that have already been clearly defined. You could purchase a list of these people today.

The second is by persona; by a group of people you have defined in your own way, based on certain characteristics such as their problems, goals or behaviors.

Industry positioning enables you to build a targeted list of your dream clients, while persona positioning enables you to establish emotional connections with those clients.

Industry positioning focuses on a specific industry vertical.

Persona positioning focuses on a “type” of person who may exist across multiple industries.

Your dream client sits at the intersection between the two.

To be clear, you need both.

Yet, many agencies are held back by a generalist position that fails to lean into either. They haven't clearly defined an industry - or a persona - never mind both.

Leaning into one makes a substantial difference.

Leaning into both is where the magic happens.

LEVER 4: OFFER

STRATEGY vs EXECUTION

You only get one first impression. Therefore, how a client first enters your domain is crucial.

Although all agencies do some combination of both strategy and execution work, what do you lead with? How do you position your offerings? What do clients initially come to you for?

As you know, strategic services typically demand higher prices (and hopefully achieve higher margins). Whereas execution work tends to be more commoditized, leading to price-based competition and therefore lower prices.

Strategy-first agencies can demand higher prices where execution-first agencies cannot.

It’s why every agency on Earth tries to position their services as being more strategic, although very few do this effectively.

The Client Lens

Every client puts on a different lens when looking for different things.

When looking for strategic work, they put on their strategy lens and are only able to see firms that are positioned around strategic offerings. Everything else will be out of focus, barely visible, and will probably not even be noticed.

When looking for execution or implementation work, they’ll only see firms who are positioned around the specific service they’re looking for

Typically, strategic services can demand higher prices and achieve higher margins versus execution-based services. This is why every agency on Earth can be found looking for ways to position their services as being “strategic.”

Strategy-first agencies demand higher prices, where execution-first agencies cannot. 

The reality is – all agencies do a combination of strategy and execution work.

The question is – what type of client do you want to attract?

Clients who hire you for strategy work, will want to hire you for implementation work later on. But clients who hire you for implementation work, may never want to hire you for strategy work.

What’s important here is how a client enters your domain – the entry point.

ALIGNING THE 4 LEVERS

Decades ago, as a young man, I spent almost 10 years working in the music industry as an R&B music producer. 

I won’t lie, I was pretty hip hop happenin’ back then.

Whereas today... I drive kids to soccer, am passionate about gardening, and enjoy a good quiche ;)

During my time as a producer, I would pull together various artists, compose and record original music, then sit in the studio, in front of one of those big mixing boards – mixing the different tracks until we achieved that magical moment where the sound came out just right.

That moment where I would press play, hear it, and have to stand up and step back from the mixing board – because I could taste the perfection. Tears flowing down my face every single time.

The 4 Levers of Agency™ is like that big mixing board.

But this mixing board isn’t used to adjust the volume levels on different tracks in a musical composition. It’s a mixing board that defines the future of your agency.

If your growth (or profitability) isn’t where you want it to be – your quest begins here.

The 4 Levers of Agency™ represent the fundamental set of interdependent variables that define your agency business model. You must adjust each of them, in concert with each other, until they’re fully aligned, and you’ve found the right mix.

And when you get that mix just right - perhaps you can have a little cry of your own ;)