Is your agency actually working? Here's how to tell.
Are you getting a good ROI on your agency retainer?
Money goes out every month, orders come in and the report has green arrows on it. You got 20% more views than last month! You're being told it's all going well despite some minor things that are easily explained away but are you actually value for your money.
Meta and Google decide which sales to take credit for, and they are generous with themselves. A customer who already knew your brand, searched your name, and would have bought anyway gets counted as a conversion the ad “drove”. Your agency pulls that number into a slide, and it looks wonderful. A platform ROAS of 6 sounds like a licence to print money. The trouble is it measures the platform’s opinion of itself, not your bank balance.
Get your house in order
One number is not enough. You need many different takes on your ROAS e.g. just ad spend, all marketing spend, all platform expenses, operational overheads vs orders, vs new orders, vs orders-returns, net/gross profit etc. There are many ways to come at a number and you need to be clear on which one your agency is aiming at and why. You need to make sure everyone knows what the targets are, what you care about and what is fluff. It is almost always worth having regular 'day to day' review calls with agencies every week/ month and less structured strategic calls every quarter/ half year to ensure everyone understands the largert vision and brainstorm new opportunities.
Figure out the Fee
Figure out how you are going to review your performance counting the cost of the agency. Say they charge £2,000 a month, manage £10,000 spend which generates £40,000 in revenue. The true return, including the fee, is £40,000 divided by £12,000, about 3.3 times. Do you need to hire people just to manage your agency? What is the cost of that, what is the agency producing that your staff/ AI can't? Are they repeating work without adding the same value they used to? How much time are they taking?
Do you sense they are intune with the brand or pushing unrealistic points e.g. the solution is more creatives and so its not their fault the ads don't work? Can they increase retention without relying on discounts? Do they run with your ideas or block them? If you aren't providing direction beyond new product launches and discount details then are they aware they should be setting the strategy?
The Devil's in the Details
How well do you know how the platforms are structured How often do you or someone you trust log into your various platforms and accounts to have a look at the "raw data"? If you only get information from their slides or a high level dashboard there will likely always be some confusion. When you ask about profit, do they talk margin and contribution, or retreat to ROAS? Are they bringing you new ideas or rehashing the same work, expecting new results? A good agency makes itself easy to check and easy to leave, then earns the stay.
What to do if it's not adding up
Set a clear 3 month target and ask what they will do each week/month. Treat them like AI, ask what they are missing to be able to deliver the results you want. Understand their limitations, they are realistically not going to be privy to the companies inner working or financial set up. They may have the product margins but very few will know the operational costs office overheads, salaries so understand that they will need clearly defined parameters set by you.
If you genuinely cannot tell, get an independent read from someone with experience providing clarity and who understanding the situation from both sides. With twenty years in ecommerce I'll plug in, get the whole context and tell you the truth. Where the time and money is being spent well, where it can be improved and where it needs to be rethought.
If you have had that nagging feeling, it is usually worth a look. Book a free call today.