Cloudways, the multi-cloud managed hosting platform and subsidiary of DigitalOcean, has launched its new Digital Agency Landscape Report exposing the obstacles preventing digital agencies from growing during times of uncertainty.
The research conducted by Cloudways found that 40% of digital agencies prioritise growth above personal wellbeing, suggesting that digital agencies are neglecting the welfare of their employees in their pursuit of expansion.
While over half (58%) did state that growth is important “but not at the cost of personal wellbeing/lifestyle”, considering the results are released during Mental Health Awareness Month, the revelation that many agencies are not taking employee welfare into consideration as part of their growth plans is concerning.
Further digging into the results, considering growth as “all-important” could be counter-intuitive. Unproductive teams (9%) and not enough staff (30%) are key challenges for small digital agency growth.
Aaqib Gadit, CRO of DigitalOcean and Co-founder of Cloudways, commented, “Reduced productivity creates a cascade of problems, one being stifled creativity – detrimental to digital agencies success. Whether due to team friction or low morale, lower-quality or less-engaged workers make it much harder to collaborate. When a company has frequent absenteeism and high turnover rates, it will suffer from lower output, profitability and long-term business success.”
While growth in the current economic climate is keeping many business leaders awake at night, the survey found that around a quarter of those in digital agencies are held back by in-house issues, such as poor cash flow (24%) and taking on bad fit clients (26%), with just over a fifth (22%) citing the current state of the economy is a barrier to growth.
Sales and marketing were also key issues for digital agencies’ growth. More than half (52%) of digital agencies blame their sales and marketing strategies for hampering their growth. In addition to this, 40% of those surveyed said their average customer lifespan doesn’t exceed 24 months, suggesting a lack of insight needed for customer retention.
“The good news for the digital agencies whose sales and marketing strategies are holding them back is that these core issues can be overhauled and corrected using tools they may already own,” said Gadit. He continues, “For example, in terms of customer retention, data-driven analytics provide insights into customers’ activities, behaviours and frustrations, helping digital firms retrace customers’ journeys to empathise with them and anticipate future needs.”
Interestingly, agencies were split in their approach to investing in tools for their growth, with 44% of agencies showing a preference for all-in-one tools, and 56% preferring more specialised tools. This is indicative of a divide in what agencies are offering and the differing approaches they take to value proposition – niche or all-encompassing offerings.
Gadit warned: “The key challenge for small digital agencies is knowing how to market themselves to more niche target audiences, without losing out to larger agencies who claim to have expertise in all areas. It’s imperative that small digital agencies promote the areas they are experts in whether that’s branding or SEO, opting for a specialist agency means businesses benefit from a specific set of services that elevates the general marketing offer.
“When looking to grow, prioritising factors that can be controlled and influenced, such as talent, building a customer pipeline and investing in technologies that will help differentiate from the competition can prove to be a powerful strategy in achieving sustained growth. While it may come at a significant cost for smaller agencies, such measures should not be disregarded if agencies not only want to survive but prosper, even during the most uncertain times.”