Mini : Performance Agencies are Terrible
"There is no magic. There is only knowledge, more or less hidden."
― Gene Wolfe, Shadow & Claw
Recently, we began running qualitative research to understand what our previous clients thought of our work. To no one's surprise, most clients tell us that working with performance agencies usually is a "waste of time and money" and that, in a way, their expectations are hardly ever met.
Truthfully, the agency model's success depends on the client's success. So... why are performance agencies perceived as institutions that intentionally waste resources? Isn't that the opposite of what they should do?
A nuanced answer
As with most things in life, the answer is relative. Agencies have clients with a limited lifetime value, so most believe being constantly on the lookout for clients is adamant. The problem with this superficial take is that you may be willing to overlook that some clients aren't ready to work with a performance agency (they may need to work on more structural issues of their product).
To clarify this issue and answer this common scenario, we developed some ideas to help decision-makers determine if and when they are ready to hire a performance agency.
When to hire a performance agency
The best moment to hire a performance agency is once you are ready to cross the technology adoption chasm and want to enter the early majority section of the curve. If your SaaS is there, you should:
Have a crystal clear picture of your users/JTBD/problems.
Know precisely the critical features of your product that your customers love.
Have precise positioning, messaging, and overarching communication guidelines that resonate with your customers.
Understand your category and how you play in it.
Have an orchestrated in-house team (sales + marketing) that can move fast without attribution dilemmas/issues.
Be sure the agency helps you build a data-capturing machine to log all your marketing and sales operations activities (Marketing Ops). Performance without this is useless.
Have built some performance marketing campaigns and figured out what works and what doesn't (or you have some hypothesis).
Have the budget and growth needs that a freelancer will never be able to achieve (agencies move and help you grow faster, but they are usually more expensive).
When not to hire a performance agency
Generally, you should avoid performance agencies if you believe their role is to help you solve fundamental business problems. Performance agencies help companies build upon what already works; they are not specialized in figuring out what is not working and how to iterate and improve the product. Instead, they help you perform at the highest level possible.
If your SaaS is struggling with structural business issues, you should prioritize the following instead of hiring a performance marketing agency:
Fine-tuning your product and channel market fit. Figure out exactly why your product is helpful for your customers and the places where they live online so you can get in front of them.
Understanding who your customers are (and aren't). Understand who are the people that value your product and why, as well as the segments that may benefit from other types of solutions.
Nailing your messaging, positioning, and brand. Know what you are saying about your product, how it compares with your category, and the benefits customers receive by trusting your brand beyond features.
Work with consultants that can help you figure out problems. You might not be ready for an agency, but a consultant or freelancer with a deep understanding of performance marketing can help you figure out some wins/add clarity to your strategy.
Are performance agencies terrible?
Sure, if they sign the wrong customers at the wrong time. Performance marketing is not a magical lead generation machine; it is an orchestrated effort that helps companies expand their reach and solve evident problems potential users are experiencing.
As a performance agency, we take these insights and understanding to heart. We hope to be more equipped to provide strategic guidance rather than falling into the trap of closing the wrong clients (wasting everyone’s time and money).
There is no magic. To perform in any domain, you must be ready for it.