When I started my own marketing agency, I was blessed to work on a wide variety of accounts.
I worked on accounts for friends that only spent $50 and were done (Kickstarter, they were funded, very proud). I also worked on accounts spending $200,000 per month.
I worked on lead gen and ecomm. Local and National. B2B and B2C. Direct and White Label. The gambit.
When I started, I wanted to work on Larger accounts. When I worked on Larger accounts, I missed the smaller accounts.
While there was a “grass is always greener” factor at play, I’ve since found that there are pros and cons to each.
Large vs Small Accounts – Pros & Cons
The pros and cons of larger and smaller Google Ads accounts are mostly inverse. The cons of smaller accounts are often remedied by working with larger accounts, but the cons of working on larger accounts are also often remedied by working with smaller accounts.
You just have to decide which pros you want and which cons you can stand.
I’m going to list the pros and cons I’ve identified in each, then I’ll share some observations I’ve made in my consulting with marketing agencies that have chosen one or the other.
(Preface: “Small” and “Large” are completely subjective. You will see people on social media calling $10,000/mo small because they’ve never worked on anything less, whereas others have never worked on anything that high. Also, my list is subjective. What I call a con may be appealing to others. Lastly, neither list is exhaustive or in any specific order.)
Small Accounts
Pros:
- Smaller accounts are everywhere and it’s easier to find and sell to them
- Smaller accounts are often able to test offer changes a large account couldn’t test
- Smaller accounts require less time to manage each month because of lower data flow
- Smaller accounts are often less complex and require fewer new campaign builds
- Smaller accounts can experience life-changing growth, which feels great to be a part of
- Smaller accounts rarely need 3rd party tools
- Smaller accounts usually have very simple reporting
Cons:
- Smaller accounts pay smaller retainers so you need more to hit your revenue goals
- Smaller accounts don’t have budget to collect data quickly, run tests, or cover many keywords
- Smaller accounts often don’t know their numbers, such as sale value, close rates, margins, cost targets, etc
- Smaller accounts are often impatient and harder to please because they can’t afford to fail
- Smaller accounts don’t generally get strategic direction or insight from the client
- Smaller accounts may want frequent calls or reports, regardless of how little they’re paying you
- Smaller accounts are more likely to complain about their results
Large Accounts
Pros:
- Larger accounts pay bigger retainers
- Larger accounts are often already performing well, so you just need to make them better
- Bigger budgets mean faster data flow, faster testing, and faster results from optimization
- Larger accounts usually know their numbers and give clear targets
- Larger accounts often have in-house teams, their own assets, a strategy, and clear direction. You just advise and implement.
- Larger accounts have a bigger threshold for losing money. If you test something that doesn’t work, you just try something else.
- Larger accounts don’t need as much hand-holding or education and it’s easier to converse without “dumbing down” your language
Cons:
- Larger accounts require more frequent changes because of the faster data flow
- Larger accounts are targeted more by competitors and harder to find and sell to
- Larger accounts are often more complex and require more labor-intensive work
- Larger accounts don’t usually experience impactful growth, which can be less fulfilling
- Larger accounts often use 3rd party attribution software or other tools that further complicate the work
- Larger accounts often require more complex reporting, often with custom elements
- Larger accounts usually want more face time, which can drain profit margins fast
There you have it. Pros and cons of each. As with any subjective list, there are surely many things you would mention that you don’t see here. I’m always open to an email or LinkedIn message with your thoughts.
So the question you need to ask is: “Would I rather work on lots of small accounts or a few big accounts?”
Or is that really a valid question?
False Dichotomy, But…
Yeah, it’s only a valid question when you’re starting your agency.
There’s no reason to choose small or large accounts. It’s a false dichotomy because there are more options available to you.
For one, it’s not a fixed decision. You chose to focus on acquiring large accounts, but you want to pick up some smaller accounts to train your new ad manager on? Pursue smaller accounts. You’re not locked in. It’s not backsliding and it won’t hurt your reputation.
Secondly, it’s important to recognize your motivations for choosing to pursue a certain type of client.
A lot of agency owners choose to work on small accounts because they think it’s easier to sell a lower retainer. They don’t have the confidence to ask for $1,000, $2,000, $3,000 or more for account management because it feels like a lot of money.
The nice thing about this is that “a lot of money” is relative. $500/mo sounds ridiculous to some, whereas $5,000/mo is a drop in the bucket to others.
The real question to ask is how much value you’re able to provide to the company you’re helping. Will you be saving them 5 years of learning, 10 hours every week, and tens of thousands of dollars a month in wasted ad spend?
Chances are they’d be happy to pay $2,000+/mo for that.
Other ad managers think they’re not skilled enough to work on larger accounts. This is more of a valid concern, but if you’re resourceful and can learn new things, you can keep up with any new things you may run into in a larger account.
On the other side of the equation, you have agency owners who think it’s a waste of time to work on smaller accounts. They want to do big things and work with recognized brands and will turn away anyone spending less than their threshold.
There’s actually nothing wrong with turning away work under a spend threshold. It’s a good idea for larger agencies that need to maintain a certain level of profitability, but it’s arrogant and foolish to start an agency with that mentality.
The progression is generally to start working on smaller accounts and grow to larger accounts as opportunities arise to work on them. Working with larger accounts tends to open opportunities to work with more accounts of a similar size because “birds of a feather flock together” and you’ll see the owners of larger companies spending time with their peers to learn and grow.
Regardless of where you are in the progression, you should understand why it’s even important to make a choice.
You have to focus your marketing efforts on a particular size of company so your target market can read your messaging and self-identify as a good fit.
If you speak to small businesses, larger companies will likely be turned off unless they came from a trusted peer’s referral. Conversely, speaking to larger companies without showing low pricing options will probably scare away smaller clients.
So how should this be handled if you’re working with mostly smaller clients and you want to work with larger clients?
Aim Higher
When you want to grow into working with larger clients, you can shift your agency’s marketing to speak to a slightly larger company that those you’re serving.
If you’re serving companies with $1-3M in revenue, try shifting the language to target $3-5, or even $5-$10M in revenue.
This may require some research into competitors and the language they’re using, review and what people are saying about the type of companies you’re targeting, forums or groups and the problems people in the companies are discussing, etc.
Other times it is as simple as adding a spend threshold as mentioned above, a dropdown field in your contact form with a higher minimum revenue number, or higher minimum retainers. Few things pre-qualify like higher prices.
But should you always aim higher? Should you get rid of your smaller clients as you get larger clients? How should this scaling take place?
Balance Larger Clients With Lots of Medium (try not to let a large client be more than 20% of your revenue)
The ideal scenario is actually one of balance.
As you grow and start closing larger clients, you’ll rarely get exactly what you’re targeting. You may start aiming higher when you have 20 clients at $750/mo retainer, 3 clients at $1,000/mo, and one client at $3,000/mo.
That one bigger account shows you that you can, in fact, keep a client happy at 6x your normal rate.
So you raise your minimum to $1,000/mo and ask your biggest client for referrals. They then introduce you to a prospect on a completely different level who signs at $20,000/mo.
Now you have a problem.
You have to hire additional help, pay for new software to accommodate their management, attribution, and reporting needs, and they require more of your personal time.
However, this one client is now 49% of your revenue.
That puts you in a really precarious position. If you lose that client, you now have to lay off employees and cancel software licenses and subscriptions.
I’ve consulted with agencies in this position and they were decimated when a single client left. I’ve worked with other agencies that lost a few big clients within a few months of each other and had to fire nearly a dozen employees.
That kind of scenario hurts employee morale and makes it hard to maintain productivity or bounce back with new clients and employees.
It’s not always easy to do, but I advise pursuing an 80/20 model where no single account is 20% or more of your revenue. 90/10 is an even better split if you can maintain it.
That’s not to say you should turn down a whale if they want to work with you, but you should recognize the imbalance and appreciate the shaky foundation you’re growing on.
The goal in this scenario would be to take the client and allocate some of the increased revenue to marketing and sales efforts. You’d want to target these efforts on mid-sized accounts (around $3-$5,000/mo in this scenario) to provide balance and stability.
Adding even 4 clients at a $5,000/mo retainer each would mitigate the potential damages from losing your $20k client quite a bit. They’d go from 49% of your revenue to 33%, requiring 12 clients at this level to bring you within the 80/20 goal.
It’s not always as cut-and-dry as this, but many agencies settle down and get comfortable when closing a client at a much higher rate than any of their others.
If you are aware of the dangers of having a dramatic imbalance in your account retainers and you’re aware of what to do about it, you can begin working to avoid the pain of firing a bunch of employees, losing your premier partner status, having to move, etc.
Summary
The idea of pursing only small or only large accounts is a false dichotomy.
There are pros and cons to either, but you can create a more stable agency by pursuing a more balanced spread of retainers. Slowly growing from smaller to larger is the safest path, but it rarely works that way, and safer isn’t always better.
It’s generally a good idea to aim at retainers that are a bit higher than most of the accounts you’re currently managing, which can be achieved by listing higher retainers on your site and adjusting your messaging to speak to larger businesses.
If you manage to land a much larger client, try to quickly balance out your revenue sources with retainers between your usual and the larger client you closed so you don’t have to fire a bunch of employees if the big client leaves.
In the end, run your agency however you want. Not everyone wants to grow a large agency and you should work to be clear about your goals and vision for your agency. This is just my advice on how to grow based on what I’ve seen working well for other agencies and my own.
If you’re curious about how I work with agencies or if you’re frustrated with your agency’s profitability or retention of clients or employees, feel free to reach out to me and I’ll see how I can help. I never charge for the first consultation and if I can solve it in 30-minutes, there’s no reason to pay for my services and you walk away happy.
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