The Signs of a Healthy Agency and Why They Matter to Clients

We recently had a conversation that most agencies avoid having publicly

We invited Eli Rubel onto our podcast to talk about agency growth, profitability, and what makes agencies actually work as businesses, themes that also show up in how we approach holistic user experience and long-term client relationships. Eli has founded and sold two companies, currently runs a portfolio of agency style businesses including MatterMade (a B2B marketing firm that provides marketing services to mid-market companies), and recently launched a software product that came directly out of problems he kept seeing across his client base.

The conversation got honest fast. And it hit close to home for us, because a lot of what Eli described are the same tensions we've navigated building Tennis. Whether you run a marketing agency, a design studio, or a services company of any kind, the growth challenges are remarkably similar. The difference is we've made some of those decisions differently, and both paths have taught us something.

This article is for two groups: agency operators trying to build something sustainable, and clients trying to figure out which marketing agencies and services companies are actually worth hiring.

Most agencies are started by people who are great at the craft

That's the good news and the bad news. Eli put it plainly: there are probably three major "stuck moments" for founders who come from a craft background and are trying to scale.

The first is getting out of the work. When you're the one doing website and product design, writing marketing strategy, or building products, the business itself gets neglected. There's nobody focused on agency growth because the best person in the room is still doing client work.

Some founders never leave that stage because they don't want to. And Eli was clear that there's nothing wrong with that. But if the goal is to grow, the founder has to make a deliberate decision to hire someone who can do the work as well or better than they can, and then actually let go.

We've taken a different approach at Tennis. We've kept the team small and senior by design, and we're actively working to get the founders out of day-to-day production. That's an ongoing process, not a finished one. But the intent behind it matters. We want to be lean because lean teams move faster, retain more context across client relationships, and don't carry the overhead that forces bad decision making when the pipeline dips. For companies evaluating marketing agencies or design services, understanding how the agency is structured tells you a lot about what the working relationship will feel like. The point isn't that our way is right and Eli's is wrong. The point is that this decision, how involved the founders stay and what they stay involved in, shapes every other decision the agency makes. And most founders make it by default instead of on purpose.

The second stuck moment is financial management. Understanding a P&L is one thing. Being willing to make uncomfortable decisions based on what it tells you is another. Agency margins require active management. Whether a firm uses value based pricing, retainers, or project billing, the math underneath is the same: you're paying people one rate and charging clients another. If nobody is watching that gap, the business gets thin fast.

The third is the willingness to make hard calls. Scaling a team up and down in response to demand is not fun. Eli described it as a "ping pong game" and was honest about the fact that MatterMade has gone from just him, to 40 people, back to 5, and now sits around 15 to 17. That kind of volatility requires an operator's mindset.

This is another area where staying lean has been a deliberate choice for us. We'd rather maintain a consistent team that knows the work deeply than scale headcount to chase revenue growth and then contract when the pipeline shifts. Both models can work. But for clients, it's worth asking which model your marketing agency runs on, because it affects continuity, quality, and how much institutional knowledge stays in the room when your project is underway.

Pricing tells you what kind of relationship you're signing up for

Eli shared a story that stuck with us. MatterMade started at $2,500 per month per client. Over time, pricing climbed to $45,000 per month. And at that price point, something broke.

The work was good. Clients were getting results from their marketing. But at $45K, MatterMade was the largest single line item on most clients' marketing budgets. That made them a target. Even when performance met expectations, someone in the room was always asking "what else could we do with that marketing budget?"

Client lifetime averaged seven to eight months. That's a brutal number for any services business. The business churned through relationships faster than it could build them.

So they made a deliberate decision to come back down. The starting point is now somewhere in the $10K to $15K range. The result: average client lifetime went from under eight months to over two and a half years. The math changed completely. Longer relationships mean less pressure on new business development. Less sales pressure means more budget for retention and delivery. Better delivery means clients stay longer.

We've thought about this a lot when structuring our own pricing strategies. Tennis positions website optimization retainers as operating budgets, not maintenance contracts. The framing matters because it changes the client's relationship with the spend. A maintenance contract is something you question every quarter. An operating budget for marketing and digital services is something you plan around. When clients treat their marketing website as ongoing infrastructure rather than a one-time project, the engagement naturally extends and the work gets better over time because both sides are building on shared context instead of starting from scratch every few months.

The lesson for clients: pricing isn't just a number. It signals what kind of relationship the agency is set up to deliver. Ask what the average engagement length looks like. That number tells you more about client satisfaction and business success than any case study will.

Revenue is a vanity metric at the agency level

This point came up when we asked Eli about what "scale" actually means. His answer was blunt: a $10M agency might take home $1M in profit. A $3M agency could take home the same amount with a fraction of the headcount and complexity.

Most of the content and advice you see about agency growth focuses on revenue and team size. Eli's definition of scale is different: reliably producing $2M to $3M in annual profit, regardless of how much revenue that requires. And he was candid that he hasn't always been there. The high-water mark was a "flash in the pan" that he couldn't sustain.

The other dimension he stressed was durability. Getting to a number once is different from holding it. A successful agency is one that can maintain profitability across market cycles, not just spike during a good quarter. That kind of sustainable growth requires discipline around services delivery, hiring, and how much new business the team can realistically absorb.

For companies evaluating marketing agencies, this matters more than most people realize. A profitable, stable agency is a calm agency. They have process in place. Their team has been around long enough to know the work. They aren't scrambling to replace the person who was on your account two months ago. An agency that's losing money is an agency with its hair on fire, trying to figure out how to fix margins while simultaneously serving clients. That dynamic shows up in the work, even when nobody says it out loud.

You wouldn't know any of this from the agency's website. Their case studies and marketing materials look great either way. But the internal reality of how the business runs will eventually reach you, usually in the form of missed deadlines, new project managers you didn't ask for, or a general sense that nobody is steering the ship. The tools and processes that make clients successful require stability to build and maintain, from ongoing site optimization and support to stable, well-structured development systems behind the scenes.

Employee churn is the red flag most clients ignore

We asked Eli how clients should actually evaluate an agency's health before signing. His answer was surprisingly simple: look at employee churn.

LinkedIn makes this easy. Check how long people have been at the agency. If the team turns over every six to twelve months, that's a signal worth paying attention to. It probably means the agency is dealing with internal problems (profitability pressure, bad management, poor culture) that will eventually become your problem too. The success of any client engagement depends on the people doing the work. If those people keep leaving, the institutional knowledge, the process, and the tools and systems they've built around your account walk out the door with them.

At MatterMade, after a major restructuring in 2021 and 2022, the rebuilt team has stayed intact. Eli credited the team, not himself, for that stability. But he was also honest about previous agencies where it was, in his words, a "hot swap" situation, where new hires looked great on paper and turned out to be wrong in practice.

If you're going through vendor selection and a marketing agency has a handful of people who've been there less than a year, ask about it. "We're growing and just brought on some great talent" is a reasonable answer. Silence or deflection is not.

Niching down is uncomfortable and it works

Eli shared a story about a friend in the recruiting industry who decided to niche down into CPG companies specifically. It took about six months for the positioning to stick. After that, growth accelerated. He became the obvious choice for a specific type of client, and the business took off.

Eli is going through a similar process himself. Profit Labs, his accounting firm for agencies, initially targeted marketing and design agencies broadly. But he kept running into the same problem on sales calls: smaller companies who thought they already had their financials handled. So he's shifting focus to recruiting and staffing firms, where the operational complexity (commission tracking, accounts receivable management) creates a clearer need.

The pattern is consistent across services businesses. A generalist agency can survive, but it grows slower and has a harder time standing out. Specialization creates the kind of authority that turns marketing into a growth engine rather than a grind.

We went through this at Tennis when we committed to explicitly serve B2B, building on our experience transforming complex digital experiences for clients. We're still actively working through it, honestly. Saying "we focus on B2B" means implicitly saying no to a lot of other work. But specialization changed the quality of our conversations with prospects. We stopped explaining what good web design looks like in general and started talking about how our digital transformation and UX services support what an architecture firm's website actually needs to do, or how member portals break down operationally, or why healthcare organizations face a different compliance calculus. That specificity is something generalist agencies can't offer, and clients can tell within the first meeting.

The client-agency relationship runs on mutual respect

Eli closed with something that resonated with both of us. The difference between a healthy client relationship and a dysfunctional one comes down to mutual respect.

He gave a specific example: a VP of Marketing heading into a board meeting needs something from their website and digital experience partner on short notice. If that VP has been difficult to work with all year, somebody on the agency team will pull the numbers. But will they actually question their own assumptions, think critically about what goes on the slide, and push back if something looks off? Probably not. They'll pull the data, make it look clean, and move on.

When there's mutual respect, the agency team bends over backwards. And the inverse is true too. When the agency has consistently shown up for the client, a bad month or a metric that didn't move as far as expected doesn't trigger a panic. It triggers a conversation. "What happened here? Let's figure it out together." That's a partnership. The alternative is a vendor relationship where every dip becomes a referendum on whether to keep the engagement going.

Symon made a point during the episode that's worth repeating: if the client is easy to work with, they'll get a disproportionate share of attention and care. That's just human nature. People do their best work for people who treat them well. It sounds obvious, but it's the kind of thing that gets lost when procurement processes reduce agency selection to a spreadsheet of rates and deliverables.

One hard truth and one piece of encouragement

Eli ended the conversation with something we haven't heard on a podcast before. He said he's started to feel conflicted about the content he's put out over the years, because so much of it was presented as binary: this worked for me, so it should work for you. He's come to believe that advice ages poorly and that the right way to run an agency is the way that works for you, if it aligns with your values and enables the life you want.

That landed for us. There's a lot of noise in the agency world, and a lot of people building personal brands on the back of "do it my way." The honest answer is that every business is different. The clients are different. The market conditions are different. The founders are different. We made choices at Tennis that work for us, and Eli made choices that work for him. Both businesses are healthy. Neither followed a marketing playbook or a growth template.

The hard truth and the encouragement are the same thing: there is no single right way to do it. Whether you're exploring new digital products and internal tools or considering a new agency partnership and want to open a conversation with our team, the right path is the one that fits your context and goals.

What matters is whether the business you're building, or the agency you're hiring, is being run with intention.

‍