Growing A 3PM
Growing a Third Party Marketing Firm
Steven Rubenstein wrote a great article on the life stages of a third party marketing firm here. Here is a summary of that piece.Within each growth stage of Third Party Marketing firms, inherent strengths and potential weaknesses exist along with opportunities to pursue and looming threats.
The Start-up:
During the startup, Third Party Marketing firms must establish themselves and recruit their first clients. In order to be profitable, they must keep their overhead low, often resulting in fewer, and only necessary technology updates. The strengths of a Third Party Marketing firm in this first stage of life include the competitive drive derived from their thirst for success. Another strength lies in their initial flexibility along with an inclination to experiment, often resulting in a tendency to move at a rapid pace and exercise an aggressive pricing strategy. While this initial fervor can lead to an opportunity to leverage their business, a startup must be cautious to not skimp on due diligence or allow the quantity of clients to take precedence over quality. A potential threat to start-ups lies in policy creation and implementation. Incomplete guidelines can greatly hinder the growth and future success of a firm. Maintaining and reinforcing regulations is a crucial component to their operation. The
“Tweener” years:
After about 3 years, a Third Party Marketing firm will enter the next phase of its life cycle, the "Tweener" stage. At this point, a firm has met the initial challenges of establishing itself, but its growth and revenue often plateaus during this period. The success the firm has experienced thus far will continue to fuel competitive drive. At this stage, however, a firm must be cautious not to settle with mediocre managers, ones become increasingly difficult to depict attractively to investors. Enforcement of policies must also continue, and having learned from past mistakes the firm must stringently avoid the repetition of youthful errors. Outsourcing many non-sales related duties helps to secure efficient operation, as it becomes increasingly important to prime all departments for future potential opportunities. During this period, the firm’s main objective must be to continue and accelerate growth, which requires a tight focus on core business goals.
The Veteran stage:
Once a firm has matured, it experiences less concerns than in previous years. In order however, to uphold and continue success, the firm MUST remain competitive. As new firms nip at their heels, veteran firms must uphold their business model while being intelligently selective when choosing managers. Extensive due diligence is critical, as the firm is eligible for excellent managers at this stage, but must be sure to avoid getting overtly picky.
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