The four agency games and how to play them
There are tons of people giving advice on how to build an agency. But most of it will only confuse you and stall your progress.
The problem is that everyone is using the same word “agency” to describe completely different things.
There are four different agency games. And you have to know which one you are playing.
This will not only make it much easier to build your agency, but also to know what advice to follow and what to ignore.
First of all, there is of course the freelancers in disguise approach. They are not really an agency. They are just one freelancer or a couple of freelancers who are labeling themselves as an agency.
But what they’re really doing is selling their time. They are not really building a business. They are creating an (often well-paid) job for themselves.
Then there are agencies who are playing what I’m calling the McDonalds game.
You hire an army of cheap VAs, write tons of bulletproof SOPs, and then charge a reasonably low price for your services.
This only works if you are laser focused on a specific niche and have a straight-forward process for delivering value. Your service delivery will not be world-class, but it will be good enough for many clients.
Another popular approach is the arbitrage game. Your value prop is usually a bit vague. Your goal is to get into conversations with as many companies as possible.
Once you’re in a conversation you’re putting out your feelers for what they could need help with.
Then you position yourself as the perfect solution to their pain points.
After the call you reach out to your trusted network of freelancers and agencies and find someone who can deliver the service. Then you put together a proposal with a nice margin and send it over to the client.
This approach is not really scalable but it’s a great way to generate cashflow fast. The other downside besides the lack of scalability is that it only works if you’re world class at sales.
The third approach is the boutique agency, or what I like to call the Four Seasons approach.
You built a team of A-players and you are charging a premium for your services. You are focused on a specific type of service and have solid systems. Your service delivery is not custom for every client but can be customized when needed.
You charge a premium for your services and focus on a specific type of client where you can deliver the most value to justify your premium pricing.
When we started our agency we had no clarity on which game we were playing. We were trying to do a little bit of everything.
However, we quickly learned that the McDonalds approach was not for us. You have to love micro-managing to make it work.
Also trading our time for money is not what we wanted to do. We wanted to build a business that can scale and eventually run without us.
For the same reason, the arbitrage game was not for us either. While my co-founder is world-class at sales, we didn’t want to build a business that is so directly dependent on our skills.
So what we eventually settled down after lots of pain, sweat, and tears is the Four Seasons approach.
I love working with our team of A-players and seeing how we together get better and better at deliverying outstanding results for our clients makes me happy. We’ve already raised prices multiple times and still have more signups than we can handle.
A downside however is that scaling is much harder than with, say, the McDonalds approach. Finding A-players is hard. Really hard. And then you have to train them and make sure they stay happy.
But just to be clear, every approach can work. They all have their pros and cons. Ultimately it’s a matter of personal preferences.
There are wildly successful agencies in every category.
The most important thing is that you get clear on which game you are playing. And once you know, only listen to people who have actually built the kind of agency you want to build.
They can be in completely different niches. That doesn’t matter. As long as they’re playing the same game as you, you can learn a lot from them.