So which digital tools drive growth?
Our research looked at which digital capabilities were most correlated with revenue growth. Our 2020 survey found seven digital capabilities highly correlated with growth, spanning the range of complexity from fundamentals to modernizations and innovations. (Read our previous report to learn more about the digital hierarchy from fundaments to innovations).
In 2021, five digital tools were correlated with growth. Only two (online quoting and live online chat) were also correlated with revenue growth in 2020.
These tools may be a good starting place for agencies that want to improve or optimize their digital capabilities.
Agencies that aim for aggressive growth are more likely to use digital
Our research found that the most forward-thinking, growth-focused agencies use more digital tools than those that aim for slow and steady growth.
When asked about their agency growth plans, roughly one-third of survey respondents said their agencies are aiming for aggressive growth, such as doubling the agency size in five years.
These growth-focused agencies grew annual revenue at a rate more than double that of agencies planning for slow and steady growth. And they stood out from the rest in their hiring strategies, digital use, workplace cultures and more.
Growth-focused agencies are more likely to be high digital adopters and invest in digital tools alongside other growth tactics. They are also more likely to track the source of new business to digital marketing activities.
When it comes to digital tools, growth-focused agencies are more likely than other agencies to go beyond the fundamentals and focus on the more complex tools we’ve categorized as modernizations and innovations.
Digital tools used by growth-focused agencies vs. slow and steady growth agencies
Pulling all the growth levers
Growth-focused agencies clearly recognize that digital tools can help them grow.
When asked about their five-year agency growth plans, 60% of growth-focused agencies said they planned to invest in new digital capabilities, as opposed to 42% of slow and steady growth agencies.
Fifty-five percent said they planned to increase their marketing investment, as opposed to 35% of slow and steady agencies. And 30% planned to hire a dedicated marketing specialist, compared with just 11% of slow and steady agencies.
Growth-focused agencies are also more likely than other agencies to include looking for new lead sources, adding new producers, targeting new market segments and adding new products in their growth plans.
Forward-thinking agencies are using digital tools strategically alongside other growth tactics to sustain their momentum.