The Truth About Agencies (They're Not the Problem)

Agencies need to execute on your business strategy. The brand is the architect and the agency might be like the builder or the general contractor.

Agencies need direction. If you can hire them, then ignore them, you just get generic work.

When to fire them? They're not proactive, performance isn't improving, they're misaligned with your goals, you've outgrown them, and they're gatekeeping knowledge. And at the end of the day, you need to make core decision-making that affects the larger part of the business.

You have to train your agency on your brand voice. You have to give them examples, give them some kind of style guide, give them feedback When they miss the mark.

From the open to the click, they're the masters of the flow. Just watch your list grow and your leads turn to go. Did we retain you so far, or do we have to extend it? If you want results, you know you gotta send it. Yeah, you know you gotta send it. Yeah, you know you gotta send it. Yeah, you know you gotta send it.

What's up everyone? Welcome back to Send It, where we discuss anything and everything retention marketing, specifically in email and SMS marketing in e-commerce. My name is Jimmy Kim, and I'm here with my co-host.

Chase Diamond.

All right, Chase. So today we're going to tackle a question that we kind of get all the time from founders and VPs and executives. And the question is, should I hire an agency or build in-house? And I think it's a loaded question because the answer is never simple. It's actually, it depends. And when I say that, it means it depends on your revenue, your team, your goals, and where you really are in your business, and even down to your skill sets that you have as a founder and executive team. And I think both of us have strong opinions on this because, well, you've run an agency and worked with dozens of brands as a retention partner, and I've been on the brand side and I've been on the in-house side, I've been on the agency side and I've worked as a SaaS side. So I've got a pretty unique client perspective on that side. So with that, I know that we've both seen both sides, and honestly, I think most founders make this decision for the wrong reasons. What do you think?

Yeah, I totally agree. I think they either hire an agency often too early because they don't want to deal with email or retention as a whole. Or on the flip side, they wait too long and they try to do everything themselves until it's a complete and utter mess.

Yeah. So today on this pod, I think what we're going to do is we're going to break down the real decision framework. When does it make sense to hire an agency? What should you never outsource? And what is the right time to fire them and bring it in-house ultimately? You ready?

Yeah, dude, let's run it.

All right, let's get into it by starting by busting some myths first. What are agencies actually good at in your opinion?

Yeah, I think 3 primary things come to mind. I think the first often is speed. The second often is expertise. And then the third is execution. Let me kind of break this down real quick. Let me start with the first one. So I mentioned speed. So I think if you need to go from like zero to a full email program in 30 days, I think oftentimes outsourcing that or working with an agency is probably a great path to take here.

Yeah.

And that's probably because they've done it 50 times or more, right?

Yeah, that's exactly right. They have templates, workflows, playbooks, et cetera, and they know how to set up the ESP. They know how to build the flows and they know how to launch your campaigns fairly quickly.

Yeah.

And whereas if you hire someone in-house, they have to learn your business, your products, your system, and that can ultimately take months.

Right. So if you're launching a brand or you just raised funding and you need email revenue ASAP, I think an agency's great because it helps compress the timeline to go from nothing to something or more. Um, the second one that I mentioned though was expertise. And again, this isn't for every agency, but a good agency has often worked across dozens or more brands and they can see what's worked and what doesn't work.

Yeah, that makes sense because they bring this like pattern recognition to the table and they've seen your exact problem probably 10 times before.

Yeah, that's exactly right. You know, if you're struggling with deliverability or your flows maybe aren't converting, or if you can't figure out segmentation yourself, you know, a good agency has solved that same problem a number of times over.

That makes sense. It's pretty valuable, especially for smaller brands who can't afford to hire that senior retention marketer for $120,000 to $150,000 per year.

Yeah, that's right. You know, with an agency, you're getting often the senior-level expertise for You know, a fraction or so of the cost. And then finally, that third one I mentioned is execution. I think at the end of the day, agencies really are built to execute. You know, they have designers, copywriters, strategists, developers, you know, a really full kind of complete team.

Yeah. So if you need to launch 20 flows, redesign all your templates and run weekly campaigns, they can handle that workload.

Yeah, that's right. Whereas if you do hire that person in-house, They would be very overwhelmed.

Okay. I like those 3 points. So if an agency's good at speed, expertise, and execution, let's be real. What do you think agencies suck at?

Yeah, look, I know that sounds amazing and great, but for every pro there's a con. And I think this is where founders who don't know what cons to look for can get burned.

Well, let me give you a contrarian take on this, and I've heard this before. Agencies don't care about your business as much as you do, and they can't. It's not their fault. It's a structural problem. Thoughts?

Yeah. Elaborate on that for me, please.

Okay. Well, an agency has like 20, 30 clients, right? And you're one of them and they're optimizing their business and not really yours. If they can do a minimum to keep you happy and retain the retainer, that's what they'll do, right?

Yeah. I think that's a little bit harsh and extreme, but I do think that there's merit to that for sure.

But here's the thing. Agencies are generally incentivized to keep you dependent. If they Build everything in a way only they can understand, well, you can't leave, right?

Yeah. Again, I think that's a little bit more of like a cynical view, but it does, and I've seen it happen, right?

Okay. Yeah. And I want to make sure it's clear. I'm not saying all agencies are bad. I'm just kind of giving you the take that I've heard pretty often. I'm saying that the incentives are often misaligned between the, you know, the company and the agency, whereas an in-house person's success is really tied to your success. An agency's success is tied to retaining you as a client.

Yep. Yeah, that's fair. I think given all that, let's talk about when should a brand hire an agency?

Well, I want to let you take this one because I'll chime in with some hot takes here.

Okay. Yeah, totally fair. Okay, so here's when I think it makes sense to hire an agency. So if you're doing, let's say, under $1 million a year, you probably can't afford a full-time retention hire. I think a smaller agency that kind of specializes in working with these types of folks, Um, could make sense here.

Okay. I agree with that. And specifically if you want like a freelancer or that little boutique agency, not a big shop, because really the truth is big agencies don't care about a sub-million dollar brand.

Yeah, I think they are gonna be too expensive also as well. Um, and I think you really want someone here that's very nimble. Um, focus on them being very responsive and really willing and being excited to work with someone Not that it's a bad thing, but you know, it is a thing.

And I'll add one thing. I think if you do work with someone like this, the engagement should be project-based or part-time because there's no real full retainer that's required. Like, help us set up our flows and then we'll kind of take it from there.

100% agree with you. You know, definitely do not sign a 12-month contract when you're that small. It will not make sense.

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All right. So the second scenario here, right, is you need speed. Let's say you're launching in 60 days or September and you desperately need a BFCM strategy yesterday, right?

Okay. This is where agencies shine. Generally, they can move fast because they've done it before.

Right. And an in-house hire would take many, many months to get up to speed where the agency can often start executing within the first week, maybe second week, right?

Yeah. Now let me just drop a hot take here. This should be temporary. If you're hiring an agency because you're in a rush, fine. But the plan is to transition in-house within 6 to 12 months, in my opinion.

Yeah. Will you explain why you think that?

Because I think speed is expensive. Agencies charge a premium for that speed. And once you've stabilized, you don't need to keep paying that premium.

Yeah, that's fair. And then the third scenario here, right, is you have a specific kind of problem. Like for example, maybe your deliverability has tanked or maybe you want to migrate ESPs or maybe you're launching like a new product line entirely.

Okay. That's a good use of an agency. Bring them in for a specific problem and then let them solve it and then part ways, right?

Yeah, exactly. And it kind of elaborates on some examples. So maybe you're bringing someone in for like a deliverability audit and fix or some kind of ESP migration warmup, right? Maybe you're going from Klaviyo to Omnisend. A flow build out for like a new category or even help with like a BFCM campaign strategy.

Okay. Now these are projects, not ongoing relationship, and that's definitely a solid way to use an agency.

Yeah, that's correct. Another scenario for you is you're testing email and SMS as a channel and you don't know if it's gonna work yet for you.

Okay. I don't know if I agree with that one.

The reason, you know, there are a couple reasons, but I guess why do you disagree?

Well, in my opinion, because if you're testing a channel, you're not really committed. And if you're not committed, you won't give the resources it needs to succeed or the time. And then if the agency underperforms because you're not giving them a good creative, good product info, good strategy, well then you end up blaming the channel.

Yeah, I think that's fair. And I'm, you know, we've been there, done that. It definitely does happen.

Yeah, but in my opinion, if you're going to test the retention, commit to it properly. Either hire someone in-house who owns it or hire an agency with a real budget and actually partner with them.

Yeah, that's right. If you're half-assing it with an agency or a freelancer or whoever, in-house hire, doesn't matter who, it's not going to give you enough signal as to whether the channel actually works for you or not.

All right. Well, let's flip this thing again and let me ask you another question. What should a, what should brands ev— what should brands never outsource to an agency?

Yeah, I would, I would say there's a couple things, right? And I think that never might change. But today in the present time, I would say don't, don't entirely outsource the strategy, the customer insights and the brand voice. You know, I think first for the strategy, agencies need to execute on your business strategy, right? They shouldn't own your business strategy. They could help own the retention strategy alongside you, but you at the business level need to help dictate what are the goals, KPIs, et cetera.

100%. I see brands mess this up all the time.

Where do you think they get it wrong most often?

Well, what they do is they hire an agency and say, figure out our retention strategy. And then the agencies just run some generic best practices, welcome series, abandoned cart, BFCMs, et cetera. And then it doesn't work.

Right. Or, or maybe it works to a degree, but not entirely, right?

Yeah, it's just not differentiated. It's not specific to your brand, your customer positioning. It's really cookie cutter and I don't really like that.

So what do you advise brands to do here instead?

So I'm pretty big on brands owning their strategy. Here's our customer, here's our positioning, here's what we stand for, and here's how we want to communicate. And the agency really just executes that vision.

Yeah, I love it. I'm going through a, a house remodel right now. I think about it as like the brand is the architect and the agency might be like the builder or the general contractor.

That's a great analogy. And if you outsource that architecture, you end up with a generic house basically, right?

Yeah, exactly. Yeah.

Okay. Second, second thing you said was you should never outsource understand your customer.

Yeah. Why don't we elaborate on this one then?

Okay. So agencies don't talk to your customers, they don't read your reviews, they don't sit on support calls, they don't see Reddit threads or DMs, right?

Right. So they're basically cut off from the really deep insight that you need to have on your customer to do the marketing well.

But they do the good stuff around email tactics and, but they don't know why your customer buys or why or what they're struggling with or what language resonates.

Yeah. So there needs to be a way for the brand to share that, communicate that with the agency. So They are actually up to speed.

Yeah, exactly. So if you want good creative, good copy, and good positioning, you need to give the agency customer research, voice of customer data, and almost like a messaging framework.

Yeah. And let's be honest, most brands are not giving that data, at least to that extent.

Yeah. Which is why I think most agency-created emails feel generic and they tend to because the agency's kind of guessing.

Yeah, that's fair. And then the third thing is the brand voice, right? And I think there is a really, really big disconnect here.

Okay. Why, why do you say that?

I, I would say, you know, cuz agencies default to safe, professional, kind of boring copy.

Okay. Yeah, that makes sense because they're scared of getting it wrong basically, right? They don't want to offend you or overstep, so they write this vanilla copy and it sounds like every other e-commerce brand.

Yeah, exactly right. So what's the fix here?

Well, I think one of the things that I think about often is you have to train your agency on your brand voice. You have to give them examples, give them some kind of style guide, give them feedback when they miss the mark.

Yeah. And if they can't nail your brand voice after a few tries, what do you think?

I almost say you got to fire them because the voice is wrong. Nothing else matters. Your emails just sound like spam.

Yeah. All right. So we've talked about when to hire an agency and what not to outsource. Let's talk about like what actually works in practice. Yeah. Real quick. I have a 30-second message for you to tell you something that we've been working on, and I'm super excited about this and you should be too. So what if I told you you could instantly search every single email that Allbirds, Parachute, or Sunday's Edition ever sent? That's Imbooks with 2 Os.ai. It's an AI-driven searchable database of over a million emails from the fastest growing Shopify brands. Need a win-back sequence? Type it in. Want to see how the best brands handle abandoned cart? Type it in. It's there. Looking for a holiday promotion idea? Done. We've got you covered. No more endless Google searches or digging through your personal inbox, hoping you saved that one email and never being able to find it. With our platform, you can search, find, and execute campaigns way quicker. It's like having every single top brand's email strategy At your fingertips, inbox.ai. Again, it's inbox with 2 O's. Stop guessing, start searching. Head on over to inbox.ai to check it out.

Yeah, I think the best model, in my humble opinion, is the hybrid model. You own the in-house strat— in-house owns the strategy and the brand, and agency handles execution.

Okay, let's break this down then. Yeah.

Okay, so I've got the in-house, which could be the founder, the marketing lead, the retention hire, whoever. They own the strategy. They understand a customer, they define the voicing and messaging, they set goals and KPIs, and there's some kind of review around the creative process, right? And then you flip over to the agency that you're hiring and bringing in. They're going to execute the campaigns, they're going to build the flows and templates, they're going to handle the technical setup, the ESP, the integrations, etc. They're going to produce the creative, the design and copy, and then they're going to make reports on the performance.

Yeah. So I guess I'm missing football season. A football analogy here, right? The in-house person will probably just be, I guess, like the quarterback of sort, and the agency will be like, let's call it your offensive line, something along that.

Yeah, I like that. And I think this works because you're leveraging the agency's speed and execution power, but you're not outsourcing the thinking part.

Yep. So at what point should a brand bring everything in-house, do you think?

That's a great question. I say generally you got to be doing at least $3 to $5 million in revenue. You should start thinking about it.

Why that range specifically?

Well, because if you're like $3 to $5 million, email and SMS are probably driving, let's say 20, 30, 40% of your revenue. And it's way too important to outsource completely.

Yeah. And at this point you're probably getting ready to be able to afford a solid retention marketer. Yeah?

Yeah, right. At this point you can pay $80K, $120K for a senior enough, someone senior enough to kind of own the channel.

In this instance, right, when you go from agency to in-house, what happens to the agency?

Well, unfortunately, you've got to phase them out entirely, or you got to keep them for your execution, but you got to let that in-house person manage them.

Yeah. So the agency more, if they're going to be kept on, becomes like the workhorse, the kind of the production shop. Yeah.

Yeah, you nailed it. They're doing the design, they're building templates, maybe they're running campaigns, but the in-house Person owns that strategy, testing, and optimization.

Do you think there's ever a case to be made when you keep an agency longer term or kind of just long term in general?

No, absolutely. I think those are specialists. Like there's a complex deliverability issue, you might keep them for deliverability agency on retainer, for example.

Yeah, or maybe if you're doing SMS at scale and you might need like a compliance kind of expertise person.

Yeah. Just like a really advanced personalization that you might be doing and you need a technical partner ultimately.

So your point here is for specialists, yeah, but for more generalists, not necessarily.

Exactly. Because once you've got your scale, you shouldn't need a generalist agency running your whole retention program. You should just have specialists to help you. But at this point you're building in-house. All right. Let's talk about the thing I said earlier. Let's talk about when you have to fire your agency, because I think brands hold onto their partners too long. What do you think about that?

Yeah, I agree with you. I think a good way to think about this is in terms of red flags. So what are the red flags here that we should look for?

All right. My first major red flag when I'm consulting with someone and I'm reviewing their stuff is they're not proactive. They're always the ones reaching. If you are always the one reaching out and asking for updates and pushing for new ideas, I think that's a problem.

Yeah, I agree. So what should they be doing instead?

Well, I would say a good agency should come up to you with ideas, tests, optimizations. Hey, I noticed this flow is underperforming. Here's what I think we should try.

Right. So they should be your partner, um, your kind of counterpart, not just a vendor.

Yeah. And I hate that word, but that's exactly right. Because if they're just taking orders, you're most likely overpaying.

For sure. So I got a red flag for you then.

Okay.

Um, performance isn't improving. So if you've been working with someone for 3, 6 months, let's call it, and the numbers aren't improving, I think something's wrong.

Okay. That works because they should be showing you the data. What tests did we run? What worked? What didn't? What are we learning? And they should give you some ideas, right?

Yeah. And again, it's not going to change your business overnight in that window, but if you can't at least see some clear progression, I think you do need to cut ties.

Right. And if you don't accept excuses like email is hard or this takes time, I would say a good agency shows results within the first 60 to 90 days.

Yeah. And the, then the third one I think that comes to mind here would be like misalignment. So if they're optimizing for metrics that don't matter to you, I think that's another big problem.

Okay. Gimme an example of that one.

So given where we are kind of in the, the market with email, Um, if someone's obsessing still over open rates, um, but you care about revenue, or they're proud of the number of flows they built, but those flows aren't converting, then I think that's the misalignment I'm thinking of.

Yeah. And I would say this comes right back to the strategy we talked about. If they don't understand your business goals, they can't help you hit those.

Yeah, that's right. So what's the fix here then?

Well, to me, I always start with that hard conversation. Here's what actually matters to our business. If you can't help us move these metrics, we need to part ways. I think that's the, Frank way of kind of addressing it.

And in an instance when someone kind of can't pivot or change, what happens?

Well, you gotta fire them.

Oh man.

All right.

So the 4th red flag, uh, you've outgrown them, right? Um, I think this is a good problem to have, but it's a legitimate problem that does come up.

Oh, this is a real problem. You might hire an agency when you're doing like $500K in revenue and they're great, but now you're $5 million and they just simply can't keep up anymore.

And what does that look like in terms of can't keep up?

Yeah, I think it really comes to sophistication where you're thinking about advanced segmentation or they can't handle the complex attribution or they're really just not thinking strategically about what we call lifecycle marketing.

So someone that's maybe good at 0 to 1 might not be this person that's good from 1 to 10. So you're going to need someone with more seniority, more expertise.

Yeah. Or you just bring it in-house because at $5 million plus, for example, you should have someone internally who owns this in my Humble opinion. All right, I got one more red flag for you, and I think this is the last one I can think of, and this is a big one. They're gatekeeping knowledge.

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Okay. So if your agency won't teach you how things work, won't document processes, or won't share their playbooks, they're probably keep— they Trying to keep you dependent ultimately, right?

Yep. Yeah, I've definitely seen and kind of heard about this. You know, everything's kind of built into this black box, so you can't really leave, right?

Yeah. And I think that's considered toxic. A good agency should be making you smarter, not dumber.

Right. They should be training your team, sharing best practices, documenting really everything.

And I go back to the answer, if they're not doing all this for you, you probably are not a good And you should probably fire them.

All right, let's close with a simple decision framework, right? If someone's listening right now and really trying to figure out for themselves, should I hire an agency or not? What do we think they should ask themselves?

Okay, I'll give you my framework to this. It's just 4 questions. All right, the first one, could you afford a full-time retention marketer at $80K to $120K per year?

And we're saying if yes, then hire in-house.

Exactly. Because even a good agency will cost you somewhere between $3K to $10K per month, which is $36K to $120K a year. And if— and you don't own the knowledge that they learn.

Got it. And if not, right, if you can't afford to pay that $80K to $120K rate, then your recommendation is to go agency or freelancer. Yeah?

Yep, that's right. And then the second question is, do you have time to manage an agency?

I think this is something that most people don't think about. Why does this matter? Why is this so important?

Because I think agencies need direction. If you can hire them then ignore them, you just get generic work, right?

Yeah, that's right. So if you don't have time to actually give them feedback, share the insights they need, approve the creative that they're creating, you just shouldn't hire them, yeah?

Yeah, that's right. I think you either make time or you hire someone in-house to manage this as well. All right. The third question or the third one is, is there, is this a one-time project or an ongoing relationship? If it's a project like an ESP migration, a flow build-out, BFCM strategy, hire an agency. They're perfect for these projects.

Yeah. And I think like even this is one that maybe is going to get replaced soon for like the ESP migration. Like I know Omnisend, for example, is doing migrations as far as I'm aware for free for customers that switch over. So that's gonna be an interesting one to see what happens with that. With agency, you might wanna just use Omnisend and they'll do it for you. But back to what you were talking about, like if it's an ongoing thing, you know, managing the channel long-term, eventually the end-all be-all is hiring an in-house team if feasible. Yep.

And don't pay agency rates for ongoing work when you could build that internal capability. I think that's pretty important. All right. Let me go to the last one here. Are you willing to do the hard work of partnering with an agency?

Yeah, look, it is all hard work, right?

What hard work are you saying here? Yeah, it's hard work. But what I mean by this is like, can you spend time giving the customer insights, the brand guidelines, the feedback on a creative and really setting those clear goals? If you just want to set and forget, in my opinion, agencies won't work for you.

So you're saying then, other words, if you want hands-off, do not hire an agency?

Right. There's no such thing as a handoff agency relationship that produces great work that you're going to be happy with. All right. Let's recap this thing because I think we're doing like giving people solid information here, but here's a quick thing. So when you hire an agency, it's very simple, right? You want to be under $3 million. When you're under $3 million revenue and you can't afford someone full-time, you need speed for a launch or project. I think that's a good reason. Or you have a specific problem to solve and you need a specialist.

And then for what to never outsource, you need to own your strategy and customer insights. You're responsible for providing that. You need to be on top of the brand voice and positioning. And at the end of the day, you need to make the core decision-making that affects the larger part of the business.

Yeah. And it boils down to this. I, we always recommend, and I recommend often the hybrid model. You own the in-house, owns the strategy, the agency holds the execution. And I think that's a great model.

For sure. And, uh, as Jimmy has mentioned throughout, and I've kind of been chuckling cuz I've obviously been fired as an agency a number of times for problems our own and problems unrelated to us. Um, when to fire them, uh, they're not proactive, performance isn't improving, they're misaligned with your goals, you've outgrown them, and they're gatekeeping knowledge.

And that will leave on that end note. With that, that's a wrap for today's pod, the agency versus in-house debate. I wanted to make sure we covered all the bases. both sides. We hope that you found this episode valuable to help you make a decision, and please share it with your founders, your marketers, and different people that might be wrestling with this question. Thank you for tuning in. As always, make sure you subscribe, like, share, comment, all that fun stuff if you enjoyed this episode. And of course, we've got a ton of different things that we have available for you. Join our newsletter. You can subscribe to that. It's a daily retention newsletter. We've got the brand new Vault that just came out. We've got inbooks.ai. I'm sure you've seen it all, but— Check out the show notes if you want to learn more about us, and we'll see you on the next episode.

Cheers!

From the open to the click, they're the masters of the flow. Just watch your list grow and your leads turn to go. Did we retain you so far, or do we have to extend it? If you want results, you know you gotta send it. Yeah, you know you gotta send it. Yeah, you know you gotta send it. Yeah, you know you gotta send it.