There is a widely acknowledged power imbalance between agencies and clients, an imbalance happily taken advantage of by far too many clients. It’s a nightmare situation for agencies, having to over-deliver and under charge just to keep the client. It’s worse than a death sentence – instead of the happy release of death, it causes you to be stuck wasting your life working hard for no returns.
It isn’t helpful to blame clients for exploiting something the agency allows – you are at fault and it’s your problem to solve. The route to balancing the power more equally is becoming less exploitable. The majority of the imbalance is caused by the client having an abundance of choice in agencies to use, and you having a scarcity of clients to work for.
We need to deliberately reduce their abundance and decrease our scarcity.
Reduce their abundance
If your agency offers similar services to many others, you are ultimately replaceable and at a higher risk of being exploited. Your job is to make your agency irreplaceable, and there are a few different ways to do it.
There are two forms of speciality you can consider for your agency. The first is a service or product speciality where your focus is being the best agency in the world in that speciality. By specialising you will be able to deliver far better results than a general agency, you can command higher rates for your work, and you’ll be harder to replace.
The second speciality is based on industry. Your agency could offer a broad range of services but if you have a specific industry focus and speciality you’ll again be able to deliver far more guaranteed results leading to higher rates and fewer alternative agencies for the clients.
There is the option to have both specialities, service or product AND industry, but make sure the size of the market will support an agency going this niche, that the double niche will yield significantly better results, and that the clients care.
It’s always a good idea to create IP assets you own which no other agency has, assets that are valuable to your current and potential clients. If you own the IP used to deliver high-level results for your clients, and that IP isn’t available to either the client or your competing agencies, you’ll have created a higher degree of lock-in with the client and elevated your power within the relationship.
It’s also worth creating and owning IP specific to your current clients, IP that increases in value the longer you have the client. As long as you’re contractually allowed to create and own the IP, you’ll create high levels of client lock-in.
Of course, you can also aim to be the absolute best in your field, with all the required and provable qualifications, you can have an incredible reputation and employ all the top people in your field. This isn’t a bad thing to achieve but it doesn’t always solve the power imbalance problem. I know lots of brilliant agencies that still get bullied by their clients because clients often can’t spot the brilliance and “being the best” is really hard to prove.
By far the biggest advantage of being able to prove your brilliance is how it helps with creating new client opportunities.
Decrease your scarcity
As I said earlier, you are the cause of the power imbalance by exhibiting enabling behaviors. You allow clients to hammer you on rates and you allow scope creep to go uncharged because you feel weak. Your feeling of weakness or strength is directly related to the strength of your new business pipeline.
You don’t have to beg clients for rate increases or less scope creep when you can simply replace them. If you create an incredible focus on developing a solid pipeline of work you’ll immediately increase your strength with existing clients and you’ll have the backing (courage) to stand your ground.
It’s not about being abusive back to clients, it’s about developing a fair relationship that delivers equal value to both parties. You charge good rates for your work, you deliver on the scope and deliver high-quality work. Sounds simple but the only way you’ll be able to charge good rates and stick to the scope (and quote correctly and stop over-promising) is to reduce the client’s abundance of choice and decrease your scarcity of new business opportunities.
The power imbalance is your fault and your problem to fix.