Ever wonder how your marketing agency measures up when it comes to growth?
Knowing where you stand can spotlight areas that need improvement and help you focus on what really matters for long-term success.
But what does “growth” actually mean? It’s a broad term that covers a lot of ground and can look different for every agency depending on several factors. So, what’s normal growth, and more importantly, what’s the average agency growth?
In this article, we’ll dive into the many sides of growth—what it typically looks like, what affects it, and how to achieve it.
What Does “Growth” Really Mean for Your Agency?
When people hear “growth,” they often picture more clients, more sales, or more money coming in. And while that’s part of it, there’s a lot more to the story.
Growth isn’t just about having a full client list or bringing in more revenue. It can also mean expanding your team to handle more work, keeping your current clients happy, and ensuring your agency remains profitable without overloading your staff.
Focusing on just one area—like increasing revenue—without considering the others can lead to big problems, like burnout or low-profit margins.
What’s Considered “Normal” Growth for Agencies?
According to recent research, an average digital marketing agency with 18 employees grows its client base by about two new clients a month and its revenue by around 15% each year.
But before you start comparing your numbers, remember that these are just averages. Every agency is different, so use these benchmarks as a rough guide, not a rule.
The key thing to keep in mind is that revenue isn’t everything. Sure, it’s exciting to bring in more money, but if your expenses are growing just as fast, it won’t feel like much of a win.
Let’s say your agency increases revenue by 15% next year, but your expenses rise by 13%. On paper, it looks like you’re growing, but the extra revenue is barely covering your additional costs. You might find that despite more clients and higher sales, you’re not actually seeing much improvement in your profit margins.
That’s why it’s important to keep an eye on both revenue and profitability to ensure long-term, sustainable growth.
Factors That Affect Your Growth Rate
There’s no single formula for growth because it depends on a number of factors.
So, let’s break down some key areas that play a role:
- Your Niche and Services: Do you offer a general range of marketing services, or are you specialized in areas like SEO or social media marketing? Specialized agencies often see quicker growth, especially if they focus on high-demand services. General agencies, on the other hand, might experience slower but steadier growth over time.
- Client Retention: Keeping your current clients happy is one of the simplest ways to grow your agency. If you’re constantly losing clients and scrambling to replace them, your growth will slow down. Aim for a client retention rate of 90% or higher. This not only ensures a stable revenue stream but also reduces the time and effort spent chasing new clients.
- Market Demand: Is your agency in a market where businesses need more marketing help, or are there already too many agencies offering the same services? Agencies that stay on top of what clients need right now—like digital transformation or influencer marketing—tend to grow faster because they’re offering exactly what’s in demand.
- Internal Capacity: Is your agency ready to handle growth with the team and resources you have? Most agencies grow by taking on more clients, not by raising prices. If that’s how your agency operates, you need to make sure you have enough people and systems in place to manage the extra work without dropping the ball on quality. Simply put, if your team isn’t big enough or well-prepared, it can slow down your growth and lead to mistakes or missed opportunities.
- Marketing and Sales Efforts: We can’t be effective marketers of others without marketing ourselves first. Agencies that aggressively market themselves (through inbound strategies, paid ads, or partnerships) often see faster growth. You may use one of two common options to gauge how much to spend on self-marketing efforts: percentage of revenue or full-time employee count.
Healthy Growth vs. Rapid Growth: Which Should You Aim For?
A common goal for many businesses is “explosive growth.” And sure, that sounds great for the bank account, but it’s not always as good as it seems. Growing too fast can lead to cash flow problems, overworked employees, or even losing clients if the quality of your service starts to slip.
Instead, aim for steady, healthy growth. This gives you time to build a strong foundation—hiring the right people, training your team, and keeping clients happy—without stretching your resources too thin.
How to Measure and Track Your Agency’s Growth
To really understand how your agency is growing, it’s important to track key performance indicators (KPIs).
Metrics like Monthly Recurring Revenue (MRR), client acquisition rate, and profitability (such as EBITDA) give you a clearer picture of your agency’s overall health. These numbers help pinpoint where you’re doing well and where you might need to tweak your strategy.
For example, if your MRR is climbing but client retention is dropping, it could mean you’re taking on too many new clients without keeping up the quality of service. This could lead to future problems with profitability or reputation.
If you want a deeper dive into the best KPIs to track, check out the blog we already wrote about the top 5 KPIs for agencies.
What To Do If You’re Not Hitting Growth Targets?
So, what if your growth isn’t where you want it to be? Don’t panic—it’s a common problem, and there are steps you can take to turn things around.
- Audit your services and pricing: Are your services really aligned with what your target market needs? And are your prices competitive but still profitable? Sometimes, a small adjustment in your offerings or pricing strategy can make a huge difference in attracting the right clients. Here at Agency CPAs, we work with clients a lot on their pricing strategy, helping them strike the right balance between being competitive and staying profitable. It’s one of the key areas where fine-tuning can lead to significant growth.
- Increase your marketing efforts: At the risk of sounding obvious, your website, social media, and outreach strategies should always be working to bring in new leads. Don’t let your own agency’s brand awareness fall by the wayside. Consistency is key—staying active with your marketing efforts is crucial for driving long-term, sustainable growth. Make sure your brand stays front and center, no matter how busy things get.
- Increase your marketing efforts: At the risk of sounding obvious, your website, social media, and outreach strategies should always be working to bring in new leads. Don’t let your own agency’s brand awareness fall by the wayside. Consistency is key—staying active with your marketing efforts is crucial for driving long-term, sustainable growth. Make sure your brand stays front and center, no matter how busy things get.
- Focus on client retention: As mentioned previously, happy clients stick around, and they’ll often bring others with them through referrals. Prioritize delivering exceptional service every time. Building strong client relationships is the foundation of a successful, growing agency.
Growing the Right Way
Feeling stuck or unsure about how to take your agency to the next level? You’re not alone, and it’s completely normal to hit a few bumps along the way. But don’t stress—that’s exactly where we come in.
At Agency CPAs, we help agencies like yours align their financial strategy with their growth goals, building a solid foundation for long-term success.
Let us handle the numbers while you focus on what you do best—running and growing your agency. Whether it’s fine-tuning your pricing strategy or tracking the right KPIs, we’re here to support you every step of the way.
Ready to have a chat? Use the calendar below to book a casual chat with our team.
We’re always here to help!
Until next time.
