Agency Growth Beyond Referrals Starts Here

I'm Kurt Schmidt, founder of Schmidt Consulting Group and host of The Schmidt List podcast. I spend most of my time working with B2B services firms on go-to-market strategy, and the single most common pattern I see is this: an agency grows to somewhere between $500K and $3M almost entirely on referrals, and then it stops. The founder looks up one day and realizes they have no idea how to generate a lead that didn't come from someone they already know.

Agency growth beyond referrals is a positioning problem. And until you solve the positioning problem, no amount of LinkedIn posting or cold outreach is going to move the needle.

I recently had a long conversation with agency coach Chris Dubois about this exact topic, and it sharpened a few things I'd been thinking about for a while. What follows is my take on what's actually going on and what to do about it.

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Why Do So Many Agencies Stay Stuck on Referrals?

Referrals work because trust is pre-installed. The prospect already believes you can help them before you ever get on a call. That's a genuinely hard thing to replicate through cold outreach, content, or paid media. It makes sense that agencies lean on referrals, especially early. The problem is that referrals are someone else's pipeline. You don't control them, you can't predict them, and you can't scale them.

I've worked with firms that built genuine momentum on referrals alone. One reached nearly $3M in annual revenue without ever building a marketing function. Then the market shifted, a few key referral sources moved on, and the pipeline evaporated. The founder had no playbook for what to do next, because they'd never needed one.

This is where agencies get exposed. Referrals mask a positioning problem. When prospects come pre-convinced, you never have to articulate why you're the right choice. But the moment you have to earn attention from a stranger, the absence of a clear position becomes apparent immediately.

The services industry makes this worse than it should be. If you make water pumps and someone asks you to build a train engine, you say no. The answer is obvious. But if you do SEO and someone asks whether you can run Facebook ads, the line is hard to define. Services feel infinitely extensible, so agencies say yes to everything, serve everyone, and end up positioned as nothing in particular. Agency growth beyond referrals requires breaking that habit.

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How Do You Choose a Niche You Can Actually Win?

The math on niching is more favorable than most agency owners realize. I've seen this play out in practice. Take an agency ranking number one for SEO in their local market that's trying to go national. Pull the chamber of commerce data for the types of clients they actually want to work with. Apply the 5-95 rule (roughly 5% of your addressable market is actively buying at any given time). Assume a 3% win rate within that group. The math points to a $6M agency potential, and every single one of those prospects is a door they could knock on in their own community. Going wide doesn't produce more opportunity. It just makes you invisible in every market simultaneously.

But the math isn't why agencies resist niching. They resist it because of scarcity thinking. The belief is: if I narrow my focus, I'll run out of people to sell to. The opposite is true. A tighter focus makes every conversation more productive because prospects self-qualify before they ever reach you.

There's also an important distinction to make early: niche and positioning are related but separate problems. Niche is who you target; positioning is how you're seen by that group. Both matter, and the order in which you tackle them depends on your situation.

If you already have deep market access, start with niche. You know people in a specific industry or function; those relationships are a head start that's genuinely hard to manufacture. Define who you serve, then figure out how you want to be seen by that group.

If you're starting with fewer established relationships, positioning might come first. What do you want to be known for? Speed, transparency, a specific methodology? That answer shapes who you attract before your network catches up.

One framing I've found useful, from author and advisor David C. Baker: positioning is about who you seek. That reframe matters. It shifts the question from "who am I willing to work with?" to "who am I actively going after?" Those are very different strategies.

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What Should You Look For in a Market You Can Own?

Run a few filters before you commit to a niche direction.

First, do you actually like the people in this market? This sounds obvious, but I've worked with agency founders who were three or four years into serving a vertical they resented. You're going to be in calls with these people, attending their conferences, writing content about their problems. If you don't enjoy their company, no amount of revenue makes that sustainable.

Second, is the market growing or contracting? A shrinking total addressable market turns every year into a harder fight. You want tailwinds.

Third, do the people in this market have budget? This one gets missed more than you'd think. I've seen agencies try to build podcast production services for personal podcasters, for example. Most personal podcasts run at a loss, with the host spending money out of pocket on something they love, and discretionary spending on production is the first thing that gets cut. Compare that to business podcasts, where the investment is tied to lead generation and brand authority. That's a buyer with budget and a clear ROI story. Same service category, completely different client economics.

When people can't decide what they want, I back them into what they don't want. I did this when we launched Foundry. The partners couldn't agree on who they wanted to attract. We started with who we did not want to work with. That list came together fast. And once you know who's excluded, the remaining options get much clearer.

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How Does Positioning Solve the Agency Growth Beyond Referrals Problem?

Here's where a lot of agencies miss the connection. They think positioning is about messaging. "How do we talk about what we do?" That's one piece of it. But positioning is actually your strategy. It shapes offer structure, hiring decisions, content strategy, sales process, and which clients are a strong fit. Get positioning wrong and everything downstream drifts out of alignment. Get it right and the whole business starts to cohere.

In my experience working with agencies of all sizes, the teams that struggle most with delegation, culture, and client satisfaction can almost always trace the problem back to a positioning gap. When the firm has no agreed position, there's no shared definition of what "good" looks like. And without that shared definition, you get a team that's perpetually second-guessing itself.

The difference between "done" and "good" is an operational problem. You can have a swipe file of landing pages you've worked on and show someone a technically complete example. But if your positioning is tight enough, you can also show them what excellent looks like for your specific client type, your specific values, your specific standard of work. That's what separates teams that execute consistently from teams that produce inconsistent output and blame each other for it.

This also filters your client relationships. A shared definition of quality makes projects feel like partnerships. Without it, every deliverable becomes a negotiation and scope creep follows.

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Why Is a Strong Point of View Now the Only Differentiator?

The barrier to entry for starting a marketing agency has never been lower. Two people with laptops and a shared Google Drive can call themselves a social media agency by end of day. It's just the reality of the market right now. Expertise itself has been democratized. Someone can compress years of learning with the right tools and resources, and the gap between experienced and inexperienced looks smaller than it used to from the outside.

This means niche alone isn't enough anymore. Saying "I work with SaaS companies" was a differentiator five years ago. It's table stakes now. Saying "I work with Series A SaaS companies scaling their first outbound motion" is better. But even that can be copied verbatim by someone who decided to steal your positioning yesterday.

What can't be copied is your actual point of view on the world. Your specific belief about how marketing should work, how clients should be treated, what quality means, what pace is right, which tradeoffs to make. That perspective runs through how the team behaves, the processes you keep, the client relationships you've built, and the culture that holds it together. It cannot be replicated overnight, because it took years to build.

Seth Godin's formulation of culture as "people like us do things like this" is one of the most useful definitions I've encountered. It captures why positioning and culture are the same conversation at the strategy level. The clients who choose you because of your point of view are exactly the clients who are going to stay, pay, and refer. They're self-selecting into your worldview.

The practical advice for 2026 is this: be explicit about your perspective. Say what you believe, put it in your content, and repeat it in every sales conversation. The founders I see winning the agency growth beyond referrals battle aren't the ones with the most impressive credentials; they're the ones who have a defensible, specific, publicly stated view of how their category works and why their approach produces better outcomes.

content strategy for positioning

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How Do You Lead a Team When the Agency's Direction Is Still Evolving?

This question comes up in every positioning conversation, even when it isn't named as such.

Agency founders tend to love change; the team is not wired the same way. I've seen founders make six significant strategic shifts in a year and genuinely not feel like much has changed, while the team is drowning in whiplash. The gap between how many changes the owner experiences and how many the team absorbs is almost always larger than the owner thinks.

The exercise I find most useful is something like an agency design session at the outset: model out what you actually want your business to look like. Do you want a lifestyle agency, capped headcount, predictable margin, everyone on 35-hour weeks? Or are you trying to scale fast and exit in five years? Those two goals produce completely different organizational decisions. If you never articulate which one you're building, your team is along for a ride with no destination, and you can't be surprised when the culture feels directionless.

There's also the identity question that doesn't get enough attention. A lot of agency founders built their sense of self-worth around their craft. They were designers, strategists, and writers who had built their sense of self around the craft. And then one day they wake up managing twenty people and they haven't touched the actual work in months. That transition is harder than it looks, and pretending otherwise doesn't help anyone.

One tool I use with clients here is a simple quad exercise: map the things you do against what you're good at and what you genuinely enjoy. The quadrant with low skill and low enjoyment is the obvious delegation target. But the quadrant where you're skilled and you love the work? You don't have to give that up. The conventional advice is to delegate everything that isn't "CEO work." But if a specific part of the craft energizes you and you do it well, keeping it is sustainable leadership.

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Key Takeaways

• Agency growth beyond referrals is a positioning problem first, a marketing problem second. Fix the positioning and the marketing gets easier.
• Niche and positioning are separate levers. Start with whichever one you have stronger footing on, then connect them.
• The market filter for a good niche: you like the people, the market is growing, and the buyers have budget.
• A shared definition of "good" between you and your clients is a better indicator of fit than any sales conversation.
• Your point of view on the world is the one thing competitors can't copy. Make it explicit in everything you publish and say.
• Culture is a competitive advantage that compounds over time. AI can replicate tools and processes quickly; it can't replicate years of team behavior, shared values, and client relationships built around a genuine perspective.

B2B services strategy

If you want a framework for what that pipeline looks like once the positioning is settled, the agency pipeline guide covers the build from the ground up.

If positioning-driven growth is a direction you're thinking about, I covered related ground on The Schmidt List, including how firms successfully shift away from referral dependency and into repeatable pipeline. The agencies that make that shift don't do it by posting more content; they do it by first deciding exactly who they're for and what they genuinely believe about their work. Everything else follows from that decision, or it doesn't stick.