Julia Payne, Co-Founder, Incisive Edge
In Investment and Portfolio Management, there are two terms that are used to describe the type of returns.
Beta describes a return for taking on market risk that other market participants are willing to pay to the portfolio owner to bear this risk.
Alpha is a term used to describe a strategy’s ability to beat the market returns, or it’s “edge” over the market.
In short, a beta is what you get up for showing up and taking the assumed risk, applying a process, monitoring, and ensuring that the process is followed.
Alpha is what one wrestles from others in competition.
Although alpha and beta are financial terms, the general concepts apply to all risk-bearing human activities where the goal is some kind of gain or profit – and of course, this applies to marketing – and therefore to digital marketing agencies.
A beta digital marketing company is one that is selling a process. In essence, it undertakes to perform a certain process and if managed and monitored well, the process will provide an expected return for the payment / risk undertaken.
The downside to this is the agency tends to take the approach of one size fits all, across all clients. Whilst this strategy will adapt – slowly – over time to the general changes in the way digital marketing is performed, it rarely, if ever, relies on the prospect or customer data from the marketing activities themselves.
Moreover, it doesn’t adapt to individual company sectors or niches and does not focus on improving results. Rather, the focus is only on the process itself e.g. we have to write 2 blogs this month, we have to create a landing page, here’s your monthly package – and so on.
This type of approach does not incorporate data-led feedback loops to continuously improve and adapt the strategy to win more leads for clients.
A beta agency adopts a never-changing, cookie cutter approach which relies on tasks performed, ticking boxes if you will and blindly following the process.
If the digital marketing agency is alpha driven, then they are selling results above the expected returns. They are performing to win for their clients. If the process does not deliver the results, then the process must change.
Whilst these digital agencies may seem similar to a beta agency, the difference is they have a ‘winning’ mindset. They want to get the best results for their clients and they know that following a generic strategy, or adopting a cookie-cutter approach is not going to drive results.
Strategies will be designed around their customers’ specific industry or niche. Their processes will have data-led feedback loops built in. They may start off using industry benchmarks, but once these have been exceeded, they move on to high water benchmarks.
An alpha agency will be making small changes regularly, based off prospect data and behaviours. They will be suggesting, recommending and trialling new approaches, they will always be A/B testing and they will be driven to succeed on behalf of their clients.
But there’s something more fundamental to an alpha agency and that’s their passion. They don’t do what they do because it’s a job and it fills the hours between 9 – 5. They do it because they have a passion for success – both the success of their clients and the agency’s success. If the client wins, the agency wins. Plain and simple.
An alpha agency wants to win. They know delivering exceptional results means happy clients, which means long-term relationships and more referrals – which in turn, reduces their cost of acquisition and their client churn. It’s a win/win relationship.
But how do you tell the difference between a beta and an alpha digital marketing agency?
This heading begs for a list doesn’t it. The 10 things to ask your digital agency kind of list.
Whilst these lists have value of a sort, they’re not particularly helpful in finding out if your potential agency has the winning mindset.
What is of more value is to speak with the agency and listen to what they are saying.
- Is their conversation centred wholly on your company, or are they just trying to sell to you?
- Are they really listening to you or just waiting to speak – and to sell to you?
- Are they adding value on the call? Have they told you something you didn’t know about your site, your traffic or your conversion rates? In essence, have they done their research prior to speaking with you?
- Can they demonstrate success. Have they got named case studies and testimonials? Can they talk you through a relevant example?
- Do they understand the metrics in your sector or niche?
- Do they know which metric levers to pull to get the greatest returns?
Crucially, are they prepared to give their opinion or are they just telling you what you want to hear?
An agency should have a deep knowledge of what works and what is achievable for your timelines and your budget, to meet your objectives. Whilst this may not always align with client expectations, an alpha agency will have the confidence, expertise and experience to address targets up front with the client.
A beta digital agency may offer token resistance, but will, more often than not, blindly agree with the clients’ targets and worldview just to win the work.
This is not because they intend to do a poor job, but rather, because their focus is not on winning for their client. Their focus is on winning for themselves.
The reality is no agency wants to tell a potential client that their baby is ugly – and it doesn’t really have much of a personality either. However, an alpha agency will find a way to pushback against unrealistic timelines, budgets, and goals by highlighting areas of concern, recommending alternative strategies and setting achievable expectations.
An alpha agency will have the confidence to walk away from the unachievable.
Engaging with an alpha driven agency should be a partnership built on mutual respect and results. Whilst not every strategy will work and not every campaign will drive the hoped-for leads, regardless, an alpha agency will find the way to drive results, revenue and a ROI for their clients. They will go that extra mile and they will have a winning mindset – to win for you.
Ultimately, an alpha agency will give you the edge over your market and in the new world which we all find ourselves in, that could be the difference between survival and extinction.
Published date: April 24 2020