If investing in AI will mark the difference between success and failure for digital agencies in the future, then smaller agencies need to start digging deeper in order to compete. This is just one takeaway from Vendasta’s very interesting inaugural Agency Insights Report.
The report, based on survey responses from more than 400 agencies across North America, found that agencies earning more than $1 million annually prioritize AI investment.
For example, among agencies earning between $1 million to $3 million, only 6% have not incorporated AI. And 94% of agencies earning between $1 to $3 million consider AI crucial to their business strategy.
The report, released this week, reveals a lot more than just agency commitment to AI investment. For instance, the report looks at which service offerings are most profitable (websites). And it reveals how many salespeople an agency has. And the impact sales have on financial performance.
What’s My Churn?
The report also tells us about the current state of customer churn in the digital agency world.
For example, it was striking how many agencies were unaware of what their churn rate is. This was particularly true among agencies predominately serving clients at $25,000 or less per year. A full 28% of agencies with average client revenue of $25,000 did not know what their churn rate is. And 15% of agencies overall didn’t know their churn rate.
Vendasta’s COO Jacqueline Cook told us the report’s real lesson is that quality trumps all other factors in agency success.
“Though agencies have always been keen on stacking themselves up against their peers, Vendasta’s 2023 Agency Insights Report is timely given the state of the market,” Cook, COO, told Localogy Insider.
“It’s truly a time of flux and in a few short months, there have been major changes in the way agencies operate. To me, what’s so invigorating about this report is that the data shows that the route to success is less about the sheer volume of work and more about quality-driven, smart scaling strategies, which means agencies of all sizes can level the playing field.”
