EP47: How to know if you’re ready to hire a marketing agency (and what to do if you’re not)

by | Oct 15, 2025 | Marketing, Podcast, SaaS

How to know if you’re ready to hire a marketing agency (and what to do if you’re not)

I’ve been having a version of this conversation on repeat lately with early-stage founders:

“We’re thinking about hiring an agency to help us with marketing. Does that make sense?”

And my answer is almost always: “It depends.”

I know, I know — that’s the most annoying answer in the world. But it’s true. Sometimes hiring an agency is the perfect move. And sometimes it’s the fastest way to light $50-100K on fire while learning absolutely nothing.

So let me break down exactly when it makes sense to hire an agency, when it doesn’t, and what you should do instead if you’re too early.

Why founders want to hire agencies (and why that makes sense)

First, let’s talk about why this question comes up in the first place.

If you’re in that early go-to-market stage — pre-product, pre-revenue, or just launching — you’re thinking about how to actually get customers. You probably want both strategy and execution, which makes total sense.

An agency seems like the obvious solution. They can handle everything: ads, content, landing pages, email campaigns, the whole nine yards. You can focus on building the product while they handle growth.

In theory, this is great. And for some companies, it actually works exactly like that.

But for many others — especially bootstrapped founders and early-stage companies — hiring an agency too early becomes an expensive mistake.

The risk: Spending money just to learn you don’t have product-market fit

Here’s what happens all too often:

You hire an agency. You spend $8-20K per month for six months. They run campaigns, build landing pages, test messaging, generate leads or trials.

And then you realize: None of this is working because you don’t actually have product-market fit yet.

Your product isn’t retaining customers.

Your messaging isn’t resonating.

Your positioning is off.

You’re attracting the wrong people.

Or maybe the right people are signing up, but your product isn’t converting them into paying customers.

So you’ve just spent $50-100K to discover something you could have learned for a fraction of that cost through more targeted research and smaller experiments.

That’s the risk. And it’s incredibly common.

When you’re definitely too early for an agency

Let me give you some clear signals that you’re too early:

1. You have fewer than 25-100 paying customers

If you’re pre-revenue or very early revenue, you probably don’t have enough data to know what’s working yet.

You don’t know:

  • Who your best customers are
  • Why they bought from you
  • What channels they used to find you
  • What messaging resonates with them
  • Whether they’ll actually stick around long-term

Without that information, an agency is flying blind. They’ll make educated guesses, but a lot of those guesses will be wrong. And you’ll pay for every wrong guess.

2. Your retention is below 60% at 6 months

If you’re losing half your customers within six months, please — please — don’t hire an agency to scale acquisition yet.

You’re just going to acquire customers who will churn out. Your MRR might go up temporarily, but it’ll plateau or decline as churn catches up with you.

Fix your retention first while you modestly invest in acquisition. Then scale acquisition.

3. Your activation rates are terrible

If you’re product-led growth and converting less than 15-20% of trialists to paid customers, the problem isn’t acquisition. The problem is activation.

I worked with a founder last year who was convinced that 15% activation was “normal” and couldn’t be improved. After we optimized their activation experience, that number doubled.

Suddenly every acquisition channel became twice as efficient. That’s way more valuable than spending money on ads before you fix the leak in your funnel.

4. You don’t know your customer journey

I can’t tell you how many times I’ve asked a founder “How do your best customers find you?” and gotten a shrug.

If you don’t know the answer to that question, an agency isn’t going to magically figure it out for you. They’ll test a bunch of stuff, waste a bunch of money, and you still won’t know.

Do the customer research first. Run 10-15 customer interviews. Ask people about their journey — how they realized they had a problem, what they did about it, how they found your product, why they chose you over alternatives.

This takes a few weeks, maybe a month. But it will save you $50K in wasted ad spend.

5. You’re in a new or immature software category

If you’re building something truly novel, or you’re in a market where software isn’t the expected solution yet, you’re going to need more validation before you dump money into acquisition.

Established software categories? Sure, you might be able to hire an agency earlier and see results. But if you’re creating a new category or entering a market that doesn’t typically buy software? You need to de-risk this as much as possible first.

When agencies make sense

Okay, so when should you hire an agency?

Here’s my checklist:

Strong product-market fit signals

You need to see these quantitative signals:

  • 60%+ revenue retention at 6 months (ideally 80-100%+ at 12 months)
  • 20%+ activation rate if you’re PLG (higher is obviously better)
  • Clear understanding of your best customer segments — you know who converts, who stays, who pays more

You should also have qualitative validation:

  • You’ve run the product-market fit survey and most people would be “very disappointed” if your product went away
  • You’ve done customer interviews and understand their journey
  • You have consistent patterns in how people find and buy from you

You have hypotheses about channels

You shouldn’t hire an agency to figure out which channels to test. You should hire them to scale channels you already have hypotheses about.

This means you’ve done enough research to say: “Based on our customer interviews, we think ads + SEO + partnerships are probably the right channels because that’s how our customers say they make buying decisions.”

Then the agency can help you execute and optimize those channels.

Your pricing supports the investment

If you’re charging $20/month, you need insane volume to justify $10-20K/month in agency fees. The math probably doesn’t work unless you have really long retention and low churn.

But if you’re charging $500/month or $5K/year or $50K for enterprise deals? Then the economics of hiring an agency make way more sense. You can recover CAC faster and the LTV justifies the investment.

You have budget to learn

Even with all the right signals, there’s still a learning curve. Agencies need 3-4 months to really hit their stride — just like any new hire.

So you need to be able to afford $30-60K (minimum) to give the agency time to learn your product, your customers, and your market. If you can’t afford that, you’re going to cut things off right when they’re starting to work.

What to do instead if you’re too early

So if you’re not ready for an agency yet, what should you do?

Option 1: Build a small internal team

Instead of hiring a full-service agency for $15-20K/month, consider building a scrappy internal team of contractors and freelancers.

For example:

  • A part-time product marketer to own positioning and messaging ($3-5K/month)
  • A freelance copywriter for landing pages and website ($2-4K/month)
  • A performance marketer or ads specialist on retainer ($3-5K/month)
  • Maybe a designer for creative assets ($2-3K/month)

You’re looking at $10-15K/month, but you have way more flexibility. If you learn something that invalidates your strategy, you can pivot quickly without the overhead of a big agency retainer.

Plus, these folks can move faster on iteration because they’re working directly with you, not through an agency’s internal processes.

Option 2: Do the strategic work first

Before you spend money on execution, invest in understanding your foundation:

Customer research — Interview 10-20 customers to understand their journey. This is the single most valuable thing you can do. We do this all the time at DemandMaven, and it consistently uncovers insights that completely change how companies approach growth.

Go-to-market strategy — Figure out your positioning, your core customer segments, your pricing strategy, and your channel hypotheses. (This is exactly what our GTM Engagement does.)

Run small experiments — Test your biggest assumptions with minimum viable campaigns. Can you get 10 qualified leads with $1K in ad spend? Can you drive 100 organic signups with a well-positioned landing page?

Small experiments are way cheaper than hiring an agency and hoping they figure it out.

Option 3: Hire a strategic advisor or consultant

Here’s the thing about most agencies: They’re execution-focused. They’re good at running campaigns, building landing pages, managing ad accounts.

But if you don’t have the strategy figured out yet, you don’t need execution help. You need strategic help.

That’s where consultants and advisors come in. Someone who can:

  • Help you understand your product-market fit
  • Design customer research to validate your assumptions
  • Build your go-to-market strategy
  • Figure out which channels make sense to test
  • Help you avoid expensive mistakes

This is usually way more cost-effective than hiring an agency to figure it out through trial and error.

(Shameless plug: This is literally what we do at DemandMaven. We help early-stage companies figure out the strategic foundation before they start spending big money on execution.)

Why the best agencies are strategic about who they take on

Here’s something I’ve noticed: The really good agencies are cautious about taking on clients who are too early.

Why? Because they know it’s not going to end well.

If an agency takes on a client that doesn’t have product-market fit, they’re going to spend months testing stuff that doesn’t work. They won’t generate meaningful results. And then the client is going to say “This agency sucks” and leave a bad review.

Good agencies don’t want that. They want clients they can actually help succeed.

So they’re strategic about:

  • What stage of company they work with
  • What signals they look for before taking on a client
  • How they set expectations about what’s realistic

If an agency is pushing really hard to take your money when you’re super early… that might be a red flag.

Product-market fit is not what you think it is

I need to address this because I hear it all the time:

“We have product-market fit! We have customers!”

Okay, but how many customers? How long have they been customers? What’s your retention?

If you’ve had customers for three months and your 3-month NRR is 50%, you don’t have product-market fit. I’m sorry, but you don’t.

Product-market fit means:

  • People stick around (high retention)
  • You can acquire them efficiently (reasonable CAC relative to LTV)
  • They get ongoing value (ideally expanding their usage over time)

You won’t actually know if you have those things until you have at least 12 months of cohort data.

I know that’s frustrating to hear. You want to move fast. You want to start spending on growth.

But the truth is, if you don’t have real product-market fit, you’re going to waste money. It’s better to wait a few more months and validate it properly than to spend $50K learning the hard way.

False positives vs. false negatives in agency relationships

Here’s another thing to watch out for:

False positive: The agency generates a bunch of leads or trials, and you think it’s working. But those people don’t convert to paying customers or they churn quickly. You’re paying for vanity metrics, not actual growth.

False negative: The agency doesn’t generate great results, so you conclude “agencies don’t work for us.” But actually, the issue wasn’t the agency — it was your product activation, your pricing, your positioning, or something else in your funnel.

Both of these scenarios are common when you hire an agency too early. You don’t have enough baseline data to know whether the issue is the agency’s execution or your fundamentals.

That’s why I always recommend: Get your fundamentals right first. Then bring in execution help to scale.

The cost of getting this wrong

Let me paint a picture of what happens when you hire an agency too early:

Month 1-2: Onboarding and learning. The agency is getting up to speed on your product, your customers, your market. Not much execution happening yet. Cost: $20-40K

Month 3-4: They start running campaigns. Maybe you see some lead volume or traffic, but conversion rates are terrible. They start tweaking and testing. Cost: $20-40K

Month 5-6: You realize this isn’t working. The fundamental issue is your product, your positioning, or your retention — not the campaigns. You part ways. Cost: $20-40K

Total: $60-120K spent, and you’re back at square one. Except now you’re more skeptical about investing in growth, and you’ve burned months of runway.

Compare that to:

Alternative approach:

  • $15-20K on customer research and go-to-market strategy
  • $10-20K on small experiments with freelancers to validate your hypotheses
  • Now you actually know what works, and you can scale with confidence

You’ve spent $25-40K instead of $60-120K, and you have way more useful insights.

When you should absolutely hire an agency

Let me be clear: I’m not anti-agency. I love agencies. We partner with agencies all the time.

When you have the right foundation in place, agencies are incredibly valuable:

  • They have specialized expertise in channels you don’t know well
  • They can move faster than you could with internal hires
  • They have proven playbooks and processes
  • They can scale execution quickly

If you have strong product-market fit, clear customer segments, validated channel hypotheses, and budget to invest? Hell yes, hire an agency.

But if you’re missing those fundamentals? You’re going to waste a lot of money.

The decision framework

Here’s how to think about this:

Hire an agency if:

  • You have 50+ paying customers
  • Your 6-month revenue retention is 60%+ (ideally 80%+)
  • You have validated channel hypotheses
  • Your activation rates are healthy (20%+ for PLG)
  • You have $30-60K minimum to invest in the relationship
  • Your pricing/LTV supports the investment

Don’t hire an agency if:

  • You have fewer than 25 customers
  • Your retention is shaky
  • You don’t know your customer journey
  • You’re not sure which channels make sense
  • You can’t afford 6 months minimum to let them learn

Do this instead:

  • Customer research and go-to-market strategy work
  • Small experiments with freelancers and contractors
  • Strategic consulting to help you build the foundation
  • Focus on fixing retention and activation first

A final note on flexibility

One thing I love about working with individual contractors and consultants (rather than big agencies) in the early stages is flexibility.

When you’re early, you’re going to learn things that invalidate your strategy. That’s normal and healthy.

But if you’re locked into a 6-month agency contract with a fixed scope of work, pivoting is expensive and slow.

With a more flexible approach — a consultant here, a freelancer there — you can pivot quickly without blowing up your budget.

Once you have more certainty about what works? Then you can bring in an agency to scale execution.

Trying to figure out if you’re ready for an agency, or what to do instead? Book a free discovery call and we’ll talk through your specific situation. No sales pitch, just honest advice about what makes sense for where you are.