Growth can be scary, but it can also present necessary opportunities for change. 

As competition intensifies and Clients get more selective about what they want, Agencies must navigate hurdles that directly affect their ability to meet Client expectations and learn to adjust. Our recent Marketing Relationship Survey uncovered the core obstacles Agencies are tackling, why they’re critical to address, and practical strategies to stay ahead in an ever-changing industry. 

1. Team Retention: The Silent Crisis

In 2024, team retention as a challenge skyrocketed to 40%, up from just 16% in 2023. This sharp increase highlights the growing struggle Agencies face in finding and keeping top talent. With more competition for skilled professionals, burnout, and a shift in employee expectations post-pandemic, retaining team members is more challenging than ever.

Why It Matters:

Clients consistently cite "Dissatisfaction with Delivery" as their #1 issue with Agencies. If Agencies are struggling to keep their teams intact, it directly affects their ability to deliver high-quality, consistent work.

What Agencies Can Do:

• Invest in Employee Development: Offer training, mentorship, and clear career growth opportunities to keep your team engaged and motivated. It is a reciprocal relationship with your employees - what can you both do for each other. Employees want to feel like they are growing and that there is a place in the organization where they belong and where they can climb higher. 

• Focus on Culture: Build a workplace culture that values work-life balance and employee well-being. According to Forbes, 71% of employees say that they would leave employment if the culture deteriorates, thus reiterating that a positive workplace culture is critical to loyalty. The pandemic was a big shift in mindsets - employees were able to be at home more to take care of their loved ones and focus on mental health. This balance remains a priority for new hires. 

• Competitive Compensation: In a market where talent is at a premium, competitive pay and benefits are no longer optional. We review the internal teams of Agencies of all sizes and disciplines, and a common theme employees bring up is not feeling valued. Whether it is shout outs, compensation, or rewards, employees want to feel appreciated and recognized for their work. 

How Setup Can Help: 

Wondering how your employees really feel? Tired of internal surveys that don’t tell the whole story? With our Agency Assessment offering, we go beyond the surface to uncover what’s fueling your Agency’s success—and what’s holding it back. Through candid interviews with your team and past and current Clients, we provide a 360-degree analysis of your Agency’s strengths and opportunities for growth. Ready to gain the insights that drive real change? Let’s talk.

2. Revenue Reliance on 1-2 Key Accounts

Another major challenge for Agencies is their over-reliance on a small number of clients. 57% of Agencies now report that the majority of their revenue comes from just 1-2 accounts, a significant jump from 37% last year. While nurturing strong Client relationships is vital, this kind of revenue concentration poses significant risks.

Why It Matters:

If one major Client parts ways, an Agency’s financial stability could be severely impacted leading to lay-offs and shifted responsibilities. Agencies need to diversify their Client base to reduce this risk–don’t put all your eggs in one basket. 

What Agencies Can Do:

• Expand Your Client Roster: Build a robust business development strategy that includes targeting new industries or geographic markets. Need to sharpen your BD skills? Joe Koufman, the Founder and CEO of Setup has over 20 years of Business Development experience. Because of this, we offer advice and services centered around BD training. Check out this blog if you’d like to leap into Structuring an Agency Business Development Team.

• Cross-Sell Services: Deepen your relationships with existing Clients by identifying additional services that align with their needs. Don’t know where they need help? The biggest challenge in the Agency-Client relationship is a lack of communication. Regularly have a dialogue centered around feedback of current campaigns and your Client’s goals to see how you could expand your services. 

• Market Your Agency: Many agencies neglect their own marketing. As Setup's blog, The Expert’s Irony: Are Agencies Losing Their Own Game? points out, Agencies must practice what they preach and leverage their own marketing expertise to stand out. Showcase your competence, unique offerings, and success stories to attract new clients. Marketers need to market. Here is a blog to help shift your focus on uplifting yourselves: The Benefits of Inbound Agency Marketing. 

How Setup Can Help: 

Imagine if your Business Development team had a support system that connected them to the perfect opportunities. Our Sustainable Pipeline offering is an exclusive network where we pass on vetted opportunities that fit your budget and capability needs. We work with Agencies with the following requirements:

• Comprehensive Services: Delivering scalable solutions for diverse client needs.

• Industry Expertise: Proven success across a range of industries.

• Distinct Value: High-impact services that set your agency apart.

• Scalable Team: At least 75 full-time employees or scalable capacity.

• Business Development Focus: At least one team member dedicated to driving growth.

• Growth Stability: Demonstrated success and readiness for accelerated partnerships.

Contact us if you’re interested in becoming a partner, getting more support for your team, and finding the right opportunities to expand your Client roster. 

3. The Disconnect Between Scoping and Delivery

Interestingly, project scoping (22%) and consistency (18%) are lower-ranked challenges this year, yet Clients continue to report dissatisfaction with delivery. This disconnect raises a critical question: Are Agencies underestimating the complexity of scoping and executing projects consistently?

Why It Matters:

Clients expect Agencies to deliver work that is both high-quality and aligned with their expectations. If Agencies aren’t properly scoping projects or maintaining consistency, it leads to misaligned expectations and Client dissatisfaction. Of course, an Agency's inability to fulfill needs could relate to staffing issues which would impact processes and timelines–so improving internal problems will lead to improving external performance. 

What Agencies Can Do:

• Refine Scoping Processes: Clearly define project deliverables, timelines, and KPIs upfront to avoid misunderstandings. Having a clear Marketing Brief and regular check-ins throughout the process can help both parties stay aligned. 

• Implement Quality Control Measures: Standardize processes and review protocols to ensure consistent results across all projects. It’s so important to keep communication frequent and constant. Agencies should act as an extension of the Client’s team and Clients should bring them in for advice and expertise. 

• Proactively Communicate: Keep Clients informed about progress and address potential issues before they escalate.

To overcome these challenges and have a successful year, Agencies must take a proactive approach to both internal operations and Client relationships. Here are some steps Agencies can take today:

1. Prioritize Talent Retention: Invest in your team—they’re the backbone of your Agency’s success. Listen to them and value their contributions and perspectives. If everyone feels like their voice is a part of the mission, then they have more stake in the outcome. 

2. Diversify Revenue Streams: Don’t put all your eggs in one basket. Focus on business development and cross-selling services.

3. Align Scoping and Delivery: Ensure your internal processes are consistent and match Client expectations. Chemistry is often more important than capability. Have an open relationship with your Clients so when conflicts do arise, you can work together. 

By addressing these challenges head-on, Agencies can position themselves for sustainable growth. Are you ready to rise above the competition and meet the evolving needs of your Clients? Let Setup help you align your strategies and unlock your Agency’s full potential. Learn more here.