Why Digital Agencies Aren’t the Death of Traditional Resellers

Over the last 18 months, the channel has been buzzing about the rise of a new kind of partner: the digital agency. Veteran resellers and managed service providers (MSPs) are now finding their client relationships at risk as these firms that specialize in marketing or sales encroach upon long-established territories.

But traditional channel partners aren’t fated to cede their business to these agencies. Michael Greer, a digital marketing consultant based in Dallas, Texas, says there’s a real opportunity for resellers and MSPs to outsell digital agencies. The trick is to recognize their vulnerabilities and be ready to step up when they fail.

Marketing agencies in general, says Greer, are struggling to find the right balance of revenue and profit. Historically, marketing has held a special spot within business where ROI isn’t measured with quantifiable metrics, but instead with things like consumer opinion polls and soft market research.

“Customers don’t have the patience anymore for firms that don’t dive super deep into their business. It’s a natural—and necessary—progression from selling marketing to selling POS or CRM systems in order to start tying everything back together.”

That’s just as easy to do for IT firms as digital agencies, says Greer. Whether it’s with a marketing agency or an IT partner, clients want to go with the firm that can show them that every $10,000 they spend will result in $100,000 in sales.

“When you can tie all of those things together and show a measurable ROI, that’s the brass ring. And that’s when you start to get word of mouth referrals and really become a big player in your market. “

In order to compete with the digital agency, partners must really consider the playground they’re entering. The primary directive of these agencies is to vertically integrate. Marketing might be flashy enough to get you in the door, but it’s also the first piece clients cut when they’re trying to just keep the lights on. Digital agencies have phenomenal sales teams, but after the client is signed, many of them have difficulty executing. Marketing has become a commoditized skill set, so it’s the first to go when the client has a bad month or gets a better pitch. If all you do is marketing, you’re sunk.

This is why digital agencies are intruding into the IT space, says Greer. It isn’t enough to build a flashy website or have a convincing PowerPoint presentation. IT firms are scrambling to find ways to sell to the line of business (LOB) buyer, but they may not realize that digital agencies are in the same boat. What good is selling the marketing manager if the only ROI you can offer is a website that’s pretty but doesn’t convert?

“There’s an incentive to keep moving across the business as wide as you possibly can if you have any hope of keeping the marketing funnel alive,” says Greer. “An old school IT firm that already has an ‘in’ with a client can expand into marketing in order to make themselves an imperative part of the business just as easily as a marketing firm can steal the IT function from a channel partner.” 

At the end of the day, a big advantage that partners have over digital marketing agencies is that IT isn’t expendable, nor is it as easy to swap out solution providers.

In order to compete, however, partners have to make a concerted effort to educate themselves about the digital marketing space, as well as the major players in their geographic region. If every company is a tech company, then every function that touches the business requires an expert IT touch. Partners need to know every option for email marketing, cloud computing and marketing services in order to position themselves as a valid competitor to digital agencies.

Channel firms, therefore, can leverage pre-existing relationships, but they also have one other big ace up their sleeves: customer service experience.

“The single greatest differentiator partners have from a digital agency is customer service,” says Greer. “Digital agencies run at scale. Anyone working on your account has a set number of hours per month to devote to you and your business, so you’ll wind up waiting in queues.”

If partners can devote their efforts to ensuring a 10-minute maximum email response time and make sure they answer the phone every time it rings, they’ll win every time.

In the end, Greer says partners that make an honest effort to understand a client’s entire business and all the ways they can impact it will find success. Every aspect of business touches technology, from HR to marketing to accounting. Partners who are proactive in recognizing all the touchpoints between tech and business will have a huge advantage.

“Being a ‘trusted advisor’ is great, but it only goes so far. In order to beat a digital agency, you have to make the client feel as though you’re an integral part of their staff. When a business owner feels as though you’re an actual employee, they’ll give you anything. Agencies can undercut you by half in their proposals, and it won’t matter.”