4 Strategic Questions Every Agency Leader Should Be Able to Answer

Quick, can you describe your agency in an interesting, relevant, memorable, and differentiating way — in 30 seconds? If not, you haven’t devoted the necessary time and energy to defining your agency’s positioning strategy.

The competitive environment for agencies has changed dramatically in the last few years. We have large volumes of talent leaving agencies who are fully capable of starting their own firms. We have new and innovative staffing solutions for brands to employ in place of an agency. And we have CMOs bringing increasing amounts of work in-house. Your agency needs to be unique to thrive in this kind of environment, possessing specialized expertise that competitors and in-house teams can’t replicate.

Unfortunately, I see many agencies spending more time working on becoming better than they do on becoming different. They eventually find themselves experiencing a common set of challenges because they don’t have a focused, differentiating positioning strategy.

How Strong Is Your Agency’s Positioning?

A focused and differentiating positioning strategy is the foundation of your agency’s success. It answers four critical business questions that will help you attract and win more of your ideal clients with less effort.

The benefits of a clear positioning strategy include:

1. A well-defined set of criteria for identifying “right-fit” clients.

2. A stronger win ratio for new business because you are playing to your strengths.

3. A clearer direction for how your agency should spend its limited time and resources.

4. A broader — not narrower — geographical market area.

5. Fewer competitors because there will be fewer agencies who specialize as you do.

6. Better margins because specialized, differentiated agencies have more pricing power.

7. A marketing program based on a focused, meaningful, unifying theme.

8. Clearer hiring standards for the people you need to deliver on your strategy.

9. A more efficient and effective delivery model because you’re not trying to be everything to everyone.

These Questions Can Determine Your Agency’s Success

Here are the four sets of critical positioning questions every agency leader should be able to answer:

1. WHAT are your agency’s core competencies?

What are the areas in which your agency is best-in-class? To answer this question, identify not just capabilities but competencies. Competencies are capabilities your organization can deliver in a dependable, differentiating way.

To define what’s core to your organization, it’s helpful to look at a shortlist of your best services and abilities and then break them down into parts to find what’s truly distinctive. As you do, ask yourself:

• What unique skills do we possess?

• What communication channels do we know better than anyone else?

• What customer points of contact do we know best along the customer journey?

• Do we own any strategic assets that we can leverage?

• What business outcomes do our clients seek that we consistently deliver?

• Do we provide our clients with other benefits they can’t get elsewhere?

These are all different ways of asking the same question, which again is: in what areas is your agency best-in-class? These are your core competencies.

2. WHO are your agency’s best clients?

Who does your agency know best in terms of business categories, market segments, audiences, brands, and types of business models? Defining an effective positioning strategy means having a clear definition and understanding of your best customer — the types of clients your agency is best suited to serve.

So who does your agency know so well that it could form the basis of your business strategy? Ask yourself:

• In what business categories does our agency perform especially well?

• What distribution and delivery channels are we especially talented at?

• Who of our clients’ internal and external stakeholders do we have the best relationships with?

• What types of target audiences and market segments do we know best?

• What types of brands have we always been best at helping?

• What business models are we particularly well suited to support?

Most agencies choose to focus their positioning strategy around one of three groups of clients: clients in a particular industry, clients that target a specific audience, or clients that have built specific types of brands.

3. HOW is your agency different from others by the way it thinks?

The third cornerstone of a positioning strategy is your organizational culture and intellectual capital: the standards by which your agency operates, serves clients, and makes daily decisions. It includes proprietary approaches you’ve developed to solve client problems.

Agencies that leverage this element in their positioning strategy define how their agency is differentiated by its unique philosophies, beliefs, methods, and approaches. Ask yourself:

• How does our agency add value through the different ways that we work?

• How can we leverage our agency’s unique ways of operating?

• What are our unique philosophies, methods, or approaches?

• How are we different based on the way we think and collaborate?

It’s always tempting for agencies to pick this as the basis of their strategy because it’s easier and less of a sacrifice than focusing on a specific set of core competencies or client types. But it’s also a weaker strategy. Few agencies can develop a philosophy that they alone are known for. 

4. WHY are you in business?

Beyond making money, how would you describe your agency’s purpose? This question weighs heavily on agency leaders’ minds when they start work each morning. It’s also the most difficult question of all to answer. 

“Profit is not the purpose of a company, but rather a test of its validity.”

— PETER DRUCKER

This strategy dimension is especially relevant for recruiting and retaining top talent. A shared sense of purpose motivates our next generation of rising talent. Employees who share a motivating purpose with their employers are more engaged and productive. Turnover is also lower at companies that are organized around a motivating purpose.

Rather than being driven solely by external factors like the market, the competition, or the numbers, what drives your agency from inside? Your purpose must be at the center of who you are as an enterprise. Ask yourself:

• Why are we in business in the first place — what’s our purpose, our calling, why do we do what we do?

• Where is our agency headed? What are we trying to become?”

• Why do we get up in the morning?

• What do we preach?

• What are we crusading against? What do we fight for?

• What would we want to achieve if we knew we couldn’t fail?

Without exception, the most notable agencies have an ambitious reason for being.

The Worst Possible Direction Your Agency Can Go

Michael Porter, the Harvard Business School professor who some refer to as the father of modern business strategy, suggests that there are really only two basic business strategies. Every strategy is a variation of one of these two. The first is cost — you can compete on cost, but I don’t know many agencies that would want to pursue that option. The second is differentiation. 

The worst possible direction is to choose not to focus on either. You’ll end up not being the best cost option or the most valuable in the market. That’s the worst possible way you could go. 

Which way do you want your agency to go?

Next Steps

When your agency has a strong positioning, you’ll be able to put your time and resources behind what you do best. Directing your energies towards a long-term business strategy will increase your organization’s value and relevance to current and prospective clients and talent. Instead of being only mildly appealing to a broad group of prospects, you’ll become intensely appealing to a select group of prospects — prospects who will want your agency for what it does best. That means a lot less selling.

Now, tell me about your agency in 30 seconds.