In this episode of Hubstaff’s Agency Advantage Podcast, we’re talking with Drew McLellan of the Agency Management Institute and the McLellan Marketing Group.
Drew has more than 25 years in the agency world, including 5 years at Mega-Agency Y&R, running his own agency for 21 years and counting, and working with hundreds of agencies at the Agency Management Institute.
In this interview we focus on one of the most important aspects of building a successful agency; drumming up new business. Drew covers the 5 mistakes agencies owners consistently make in this effort.Learn about the 5 mistakes agency owners consistently make when drumming up new business (PODCAST) Click To Tweet
But this interview is about much more than that, it goes over everything from when you should stop being involved in client work, to why marketing agencies have no excuse to do a poor job of marketing themselves. This episode is jam-packed with advice and lessons from Drew’s 25-year career.
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5 Mistakes that derail an agency’s new business efforts
1) Falling into the feast or famine trap [6:30 – 10:00]
When asked why agency owners don’t actively sell their services, a common response is; “We’ve grown by referrals and we don’t have to go out and get business. Business comes to us.”
Drew says that can work wonderfully for the first couple of years or when you’re small, but fast forward a year and you get the phone call from a client saying, “We’re going to go somewhere else” or “Our budgets have gotten frozen” or whatever else that may happen.
All of a sudden, you have to scramble, and there’s panic because if you don’t get money in the door quickly, someone’s not getting paid. Either the owner will have to go without a paycheck for three to six months, or people have to be cut from the team. There is no worse day in an agency owner’s life than having to let someone go, not because they didn’t do a good job, but because the owner didn’t do a good job and the agency doesn’t have enough business to support those team members and their family.
Agency owners often have a feast or famine ebb and flow of panicked flurry of new business activity and then nothing. To overcome this, you need to be constantly prospecting, due to the long agency sales cycle. You need to develop systems to make sales a process, in good times and bad, in order to sustain stable cash flow and allow you to build a real business.
2) Believing in the mythical, magical new business guy [10:00 – 14:00]
Once agency owners accept that they need to always be prospecting, many immediately assume they can just hire somebody to do that for them. Because let’s face it, most of us simply aren’t natural salespeople. This almost never works.
Clients have no desire to talk to you about marketing, they want to have a conversation with prospective agency partners about business results. Most new salespeople are not equipped to have those conversations. Who is best equipped for that? The agency owner.
This isn’t to say you can never hire help or even eventually delegate sales away entirely, but if you are going to do it you need to do it right. That means having little expectations of a sale for up to a year while they get ramped up.
3) Looking like every other agency [14:00 – 21:00]
Even if we don’t want to admit it, most agencies describes themselves in the same ways:
“We’re a full-service integrated agency.”
“We partner with our clients.”
“We have X number of years of experience.”
Everybody says similar things, so you need to find a way to truly differentiate yourself. One of the best ways of doing that is niching down and serving certain industries or audiences and becoming thought leaders in that space.
If I’m a generalist and I’m meeting a butcher, a baker, and a candlestick maker, I don’t really understand enough of their business to have in-depth conversations about the industry trends and the specifics of their business, so I have to default to talking about marketing. That’s exactly what clients tell us they don’t want to talk about. They want us to understand their business and they want us to be specialists.
Often, we as agency owners don’t put ourselves in the client’s shoes and think about how frightening it must be to hire an agency. If you’re a business owner and you pick the wrong one, you could go bankrupt. If you’re a CMO, you could get fired. That’s a huge amount of pressure. Show them how you can help, why you’re different, and why you’re the better choice.
4) Losing your swagger [21:00 – 26:00]
Clients want to work with agencies who have confidence. That means willing to say no sometimes. This can be as simple as saying no to discounts. When the client says, “This is exactly what I want, but I only have fifty percent of the budget,” a lot of agencies will go, “Okay, we’ll figure out a way to do it for that.”
The problem with that is you’ve shown that your pricing isn’t exactly ethical since you are immediately willing to chop that much off the top. You’ve also taught them that you can be dragged around by them.
That being said, there’s a thin line between confidence and arrogance, and Drew doesn’t suggest stepping over that line, but don’t be desperate either. If you’ve lost your swagger, are struggling to get back to the C-suite, and want to stop discounting your rates, then you need to demonstrate you have something to say and aren’t afraid to say it.
5) Violating the client’s secret rules [26:00 – 30:30]
Recently, AMI conducted a survey to determine why clients hire and fire agencies. One of the things they asked them is, “Do you have a secret sauce, a formula or a trick that you use to narrow down the field when you’re picking an agency?” Almost 100% of them said yes.
Some of them are things that you would expect, like having typos in your proposals, but others were surprising. For example, they will reach out to some of your clients, former clients, employers and former employers on LinkedIn and ask them about you.
You don’t have to leave passing these tests up to change. Instead, ask the right questions at the beginning of the process:
- What is it you’re looking for in an agency?
- Have you worked with agencies before?
- What did you love most about the agencies you worked with?
- What really irritated you or frustrated you about the agencies?
- Why are you doing a search?
- What are the unbreakable rules?
Just ask, and most will tell you. At that point, you just have to make sure you listen and follow through.
|Andy Baldacci:||Drew, thanks for coming on the show today.|
|Drew McLellan:||Glad to be here. Thanks for the invitation.|
|Andy Baldacci:||Of course. Looking over your resume, it almost seems to me like when you were a little kid instead of saying you wanted to be a race car driver or a fireman, you said, “I want to cultivate a distinguished career in the agency world.” I’m assuming that wasn’t necessarily the case, so can you tell listeners how you got here you are today?|
|Drew McLellan:||I wanted to be a baseball player but that only worked out through college. Honestly I was a psych major, and long story short my advisor was like, “Are you sure that’s really what you want to do.” We talked about it some more, and I was like, “I’m a starting junior and I’ve taken all these classes. What do I do?” We sorted through them and he was like, “Well clearly you like psychology and how people tick, but you also seem to really love writing and English and you’ve taken a lot of business classes. Have you ever thought about advertising and marketing?” Honestly at that point it never even dawned on me.|
|[00:01:00]||He said, “I think you should go over to,” I was up at the University of Minnesota, and the advertising and marketing classes live in the journalism department. They did back then, they probably may not anymore. I went over there, long story short, changed my major. While I was in school, one of my adjunct professors worked for Gray Advertising and she hired me as a freelance writer and I worked for them all through undergrad and graduate school. Then I went to Y&R and lived the big agency life for a while and wanted to get back to the Midwest, and so took a job with a regional agency. When I got there, everything wasn’t quite the way it was promised. I was at this weird age. I was about thirty and I was this perfect combination of arrogant and ignorant. I thought if he can run an agency I can run an agency. How hard can it be?|
|You have enough arrogance to think that you know enough to just get out there and do it.|
|Drew McLellan:||Right. A year later I finally understood exactly how hard it could be, but by then it was too late. I had jumped with no net, so I had to figure it out. My agency’s twenty-one years old. We’re still around. We’re certainly, obviously as most agencies that started back then, are very different than we were when we started. Then early on in my career of running the agency I realized that I needed some tutelage that I really didn’t know what the best practices were of running an agency. I knew how to take care of clients, but I didn’t understand how to take care of employees and P&Ls and all that sort of stuff. I found an organization called Agency Management Roundtable, and it was an organization started by a guy who also used to own an agency.|
|[00:03:00]||His premise was that most agency owners are accidental business owners, that something happened. They either got let go or they were arrogant like I was and quit or whatever it was. Then all of a sudden, they’re freelancing and next thing they know they’re hiring a couple people, and they have ten employees before they know it and they don’t know what they’re doing. He created a business to teach agency owners the back half of the business. Not how to serve clients, not how to do branding sessions but how to run your business well to make money and to be successful and all of those sort of things. I joined and I sound like one of those hair club commercial people, but I was in it for years and it was absolutely transformational for me.|
|[00:04:00]||About a decade ago he was ready to retire and he approached me and asked me to buy the business. He said, “I think you’re the guy that can take it to the next phase.” At first I said I already have one business. That’s a big risk for me, thank you very much. We kept talking and I decided that it really did fit my sweet spot of I love to teach and coach and I’m a perpetual student so I love learning new things. My agency was very processed and systematized. We’re very niche. We have a very narrow focus for clients. Quite honestly, they can do most of it without my active involvement. I bought the business obviously. I re-branded it Agency Management Institute and today I spend about twenty-five or thirty percent of my time on the agency side of my world and about seventy-five or so percent of my time working with agency owners in a plethora of ways teaching them how to run a successful agency.|
|Wow. I can just imagine being in the agency world for over twenty-five years in working with hundreds of agencies through the Agency Management Institute, that you’ve seen it all. The area I really want to focus on, when you said that most agency owners are accidental, it really hit home because a lot of the agency owners I talk to, they’re trying to escape the nine to five, they have a skill, maybe a technical skill, maybe design, whatever it is and they’ll start freelancing. Word spreads around. They get busier than they can do on their own. Like you said, a few years down the road, they look around, they have a team around them and they’re like, “Wow, there’s so much I don’t know. I don’t even know how I got here.” It can be overwhelming.|
|Drew McLellan:||And expensive. There are a lot of expensive mistakes that get made.|
|Andy Baldacci:||For sure. Once you have payroll, once you have people whose livelihood depends on you …|
|Drew McLellan:||Yeah, it’s pressure|
|Andy Baldacci:||… you have a lot of other concerns. I have had a few guests on to talk about the employment side of that. What I want to focus on today relates to actually a presentation you’ve given a few times called The Five Mistakes that Derail An Agency’s New Business Efforts. When you’re on your own or even just a small, small shop, the feast and famine is bad obviously but you don’t usually have to lay people off. You don’t usually have to fire people if you can find a client for a little bit.|
|In the beginning your clients are so small that one going away doesn’t really impact the bottom line too much or you’re scraping by anyway, so if you don’t take a paycheck once or twice, you can get over the hump, you’re right.|
|Andy Baldacci:||Exactly. It’s something that you can grit and bear through. It’s still not a good problem, but once you get bigger it’s inexcusable. Your agency won’t survive. Do you mind if we dive in to that a bit?|
|Drew McLellan:||Absolutely no. I’d love to. It’s one of my favorite topics.|
|Andy Baldacci:||Let’s go for it then. What do you see as the five major mistakes that do derail an agency’s new business efforts?|
|First of all, agency owners, a lot of them don’t love to sell. They define selling as cold calling and that’s not what we’re talking about at all. They avoid it, and they avoid it by saying, “Well we’ve grown by referrals and we don’t have to go out and get business. Business comes to us.” Again, to your point, that works wonderfully for the first couple of years or when you’re small, but over time the value of that starts to diminish for a couple reason. One, a lot of times those are clients that if you had had the choice, you wouldn’t have sought them out, but because they walked in the door you’ve taken them. You become this generalist that serves everybody and anybody. Two, that’s not how most larger clients choose an agency.|
|[00:08:00]||Again, you end up taking the table scraps of agency work, and at a certain point in time agency owners want more than that. What happens is then they decide they’re going to develop some sort of a new business program, but the way it works is they decide to do something, blog post, direct mail campaign, whatever, fill in the blank, and it works. Two or three clients walk in the door, good size clients, right fit clients and then they get so busy servicing those clients and onboarding those clients that all of the new business activity dwindles down to nothing. Then fast forward a year and they get the phone call from the client, any client, saying, “We’re going to go somewhere else” or “Our budgets have gotten frozen” or whatever happens, it’s a million things.|
|All of sudden they have to scramble and panic because as you said, if they don’t get money in the door quickly someone’s not getting paid. It’s either the owner’s going to walk for three months or six months without a paycheck or you’re going to have to lay people out. There is no worse day in an agency owner’s life than having to let someone go, not because they didn’t do a good job but because you didn’t do a good job. You don’t have enough business to support them and their family.|
|[00:09:00]||You have this feast or famine ebb and flow of this panicked flurry of new business activity and then nothing. The problem with that is a couple things. One, it means the pipeline is either full or dry but there’s never consistency to it, and two, the sales cycle for agencies is long. You need to be constantly prospecting. Otherwise, you’re going have to wait a long time. Somebody may be interested in hiring you, but they may not be in a position to do that for another two years. Well if you just lost your biggest client, you can’t wait.|
|Andy Baldacci:||No. That’s the thing is, you’re right. When you’re freelancing or when you’re starting out, you’re picking up whatever you can get. Those $1,000, $2,000 projects, you can close them and deliver them pretty quickly. As you get bigger and you’re working on projects ten, twenty, even fifty times that size, it doesn’t work overnight. If you’re waiting until the work dries up to find another one, you’re going to be waiting for a while to get that check in hand.|
|Drew McLellan:||Right. There’s huge consequences now because you’re big enough that you can’t sustain your expenses for too long without money coming in.|
|For sure. When you have that overhead, when you have an office, when you have payroll, you can’t just keep funding it on a credit card. You need to figure something out. A lot of agency owners that think after going through that, often they have to learn it the hard way, but after going through that they have this dream that you talk about of just “All right, we’ll just hire some guy who can just go out and find the business for us.”|
|Drew McLellan:||That’s mistake number two, which is what I call the mythical magical new business guy. Agency owners, I cannot tell you how many agency owners … I hang out with agency owners all the time in peer networks and other things, and so I’ll see an agency owner, let’s say in February and he or she will be elated because they just hired this new business guy and he’s got this huge contact list and he’s going to rock it, and six months later they’re like, “You know what, he hasn’t even paid his salary yet.” By a year from that February they fired him, probably right about the time he would have made his first sale, but they don’t have the bandwidth and the financial bandwidth or the patience to let that out.|
|[00:11:00]||Part of the mythical magical new business guy isn’t the person’s fault, and I don’t know why we call it a guy. It could be a woman obviously just as easily. Part of it isn’t their fault. We have unrealistic expectation. The owner really wants to just abdicate all new business responsibilities to this person. This person often doesn’t get a decent budget, doesn’t get support. The things they want to do, like, “Hey, we need a brochure. We need a better website or we need the landing pages” or whatever, that stuff gets ignored when client work comes in so they can’t get the assets they need, and they’re given an unrealistic timeline.|
|[00:12:00]||They’re bound to fail. The other reason they are bound to fail is because one of the things we do at AMI is we go out and every summer we do a research project where we talk to CMOs about agencies. One of the things that we learned last year, last year’s research was all about why people hire and fire agencies. One of the things we learned was that our clients have no desire to talk to us about marketing. They want to have a conversation with us about business and about leads and about sales and those sorts of things. Most new business salespeople are not equipped to have those conversations. The person in every agency who is best equipped to have those conversations is the agency owner.|
|It is a rare agency that the owner can completely let go. I’m not saying that a new businessperson is always a bad idea. I’m saying if you’re going to do it, you have to do it well and right and you have to have very little to no expectation of a sale for at least twelve months.|
|Andy Baldacci:||You need to have that runway because there’s going to be a ramp up period for sure.|
|Drew McLellan:||Again, the sales cycle doesn’t change just because a salesperson is out there selling. They may very well stir up some interest, but those clients may not be in a position to hire you right away. About the time that that person gets a little traction, typically that’s when the agency owner gets frustrated because in essence the agency owner has just funded this position and gotten very little return out of it, and so they get frustrated and fire them.|
|Right. That’s the thing is like you said, when you’re an accidental agency owner, when you find yourself here not by plan, it just happened that way, and you don’t like selling, this is almost the holy grail is you’re just thinking, “Oh I want to hire someone and let them deal with all this.” It’s like you delude yourself into thinking it’s true.|
|Drew McLellan:||It’s like believing in unicorns.|
|Andy Baldacci:||Right. You would love it if it was real, but people rush it too early and think it’s going to be just flip of a switch and that’s going to turn on the sales machine.|
|Drew McLellan:||For all the agencies that I work with, maybe one out of I’m going to say seventy-five or eighty new business guys that get hired actually work, actually pay for themselves. You still have to factor in your odds.|
|For sure. I think the next mistake I think actually plays a lot into this, not just with a new business guy selling them, but with them selling themselves is that in the market if you’re a marketing agency, you’re competing against other people who are good at marketing. How do you make sure you stand out and what do most agencies do wrong with this?|
|Mistake number three is that most agencies look just like every other agency. I sit through a lot of agency new business pitches and I read a lot of agency websites and I’m talking to a lot of agency owners, and every agency describes themselves in the same ways. We’re a full service integrated agency. We partner with our clients. We have fill in the blank X number of years of experience. All of the stuff that we all say, we have to understand everybody says. We have to find ways to differentiate ourselves, and for some agencies that’s about niching and that’s about serving certain industry sectors or certain audiences and being thought leaders in that space. That makes it a lot easier because instead of trying to shoot fish in every barrel, you’re shooting all the fish in one barrel.|
|You can really develop an expertise and a conversation level that you can have with prospects that’s very different than just talking marketing. If I’m a generalist and I’m meeting a butcher, a baker, a candlestick maker, I don’t really understand enough of their business to have in depth conversations about the industry tends and all of that. I have to default to talking about marketing. That’s exactly what clients tell us they don’t want to talk about. They want us to understand their business and quite honestly they want us to be specialists. That’s a huge mistake that agencies make is that they refuse to narrow their field thinking that they’re leaving money on the table, but it’s the general practitioner versus the brain surgeon. The brain surgeon can charge a lot more money for the work that they do because they’re a specialist, and so the logic is faulty.|
|If you think about it too, one of my other guests, Brennan Dunn who works primarily with freelancers but also agencies, his analogy is that if you’re an athlete and your body is your business, if you break a hand, you’re not going to go to your physician down the road. You’re going to go to someone who does surgeries on hands, and ideally even one who only does surgery on hands for athletes because it would be crazy to think otherwise.|
|The risk is too great. I think a lot of times we as agency people don’t put ourselves in the client’s shoes and we don’t really think about how incredibly frightening it must be to hire, you have three groups of people who all look the same and they’re all slick and smart and polished and they’re all friendly and they’re patting you on the back, and if you pick the wrong one, if you’re a business owner, you could go bankrupt. If you’re a CMO, you could get fired. That’s a huge amount of pressure. The more that we can help them show how and why we’re different and why we’re the better choice, that is going to, A, shorten the sales cycle because they’re not freaking out, and B, we are going to be able to help them at a different level because we do understand their industry or business at a different level.|
|Andy Baldacci:||For sure. That’s the thing is a lot of people in the agency world, and especially in marketing will say well the principles are the same for any industry. At a high level, the theory, you’re right, it is the same, but the actual applications do vary if you have experience in a specific industry and a specific niche. There are going to be things you pick up on that are a journalist wouldn’t. If you think about it, imagine going to that doctor and him just saying, “Oh everyone has the same body, it’ll be okay,” that would scare me.|
|Drew McLellan:||Right, “I work on feet, but bones are the same.”|
|Andy Baldacci:||They’re all made of the same stuff. That’s basically what generalists are saying to these business owners, to their baby, it’s like, “No don’t worry about it. I got this.”|
|It’s a mistake many, many agencies make. We think we sound and look different. By the way, we all have a proprietary process. It basically is we learn about you and then we tell you stuff that you should do. We make the stuff and then we see if it works and then we change. Everyone has cute names for it, but that’s pretty much everybody’s process. That’s the work we do.|
|Andy Baldacci:||It’s funny because one of my favorite questions to ask agency owners is what makes you different than your competitors. So many of them say, “Well we really care about the clients.” There are agencies out there that don’t, but no one’s going to say that. Just saying that doesn’t make it so.|
|Drew McLellan:||Most of those didn’t survive the recession. The reality is there are a lot of really good agencies out there, smart people, or they’ll tell you it’s their people. You think everyone else has hired all the buffoons and bad customer service people? Come on, seriously.|
|That’s the thing. I think you hit it on the head when you said it’s not always that the agency owner thinks about it from the client’s perspective because if you do, they’re going to be thinking in their head, “Oh really? All these other guys that said the same thing, they’re wrong but you’re right?” Once you’re in this meeting with the clients, once you are going up against other agencies, having that strong positioning, having that way to differentiate yourself is important, but is that it? Do you stop there? What else can set you apart?|
|I think there’s lots of ways you can set yourself apart. The way you handle estimates and billing can set you apart. Transparency and pricing can set you apart. Access to senior people. In a lot of cases when someone hires an agency, there’s a pitch team and then there’s their actual team, and there’s about a twenty year difference in age between the two. One way to differentiate yourself is to have a bunch of gray hairs who actually do client work. There is responsiveness. There’s timing. There’s how often you meet. There’s that you’ll put someone in their office as an internal person. There’s lots of ways to differentiate yourself, but the number one way that clients want us to differentiate our self is they want a specialist, not a generalist.|
|Andy Baldacci:||Once you have that, I think one problem, even once agencies can wrap their head around the fact that as a specialist you’re able to command higher rates and you actually attract people to you so you’re not really leaving them on the table, once they wrap their head around that, there’s one habit that I still see all the time, and it’s the agency owners who act like they’re a contractor, who act like they’re there to do the job that the client gives them and just follow it step by step. They’re a construction worker rather than architect. Do you see that as well?|
|Yeah, and I think it got worse after the recession. I think the recession just beat the bejesus out of agencies and agency owners. They were just trying to survive. If somebody put a penny on the table and said, “Dance,” they took the penny and danced. When I talk about it, I talk about the fact that I think we were humbled to the point that we were taking scraps, and we’ve lost our swagger. We were so used to begging for those scraps, and I’m not sure that that behavior has course corrected itself. I still see a lot of agency owners in that almost I’ll take anything kind of attitude.|
|[00:22:00]||One of the new business mistakes that I talk about is that agency owners and agencies have lost their swagger. People want to work with people who have confidence and people who are willing to say no sometimes. Whether that’s the client who looks at your estimate and says, “This is exactly what I want, but I only have fifty percent of the budget,” and unfortunately a lot of agencies will go, “Okay, we’ll figure out a way to do it for that.” Well now, A, you’ve shown them that you’re unethical in your pricing, and B, you’ve taught them that you’re a dog that they can just drag around. I think agency owners, there’s a think line between confidence and arrogance, and I’m not suggesting you step over that line because by the way, clients don’t like that either as our research will show. Cockiness is not an attractive trait in an agency or an agency owner.|
|[00:23:00]||To be confident about your work, to be confident about the results that you’ve gotten for other clients and to feel really good about what you’re offering that prospect and at what price, and really sticking to your guns and to your point not being an order taker. I think there’s a dance with that. What I teach agency owners is I say when a client asks you to do something that you know perfectly well is a bad idea, you start that conversation with a “You know what, Andy I know that this is your business, and after this conversation we will do whatever you ask us to do. It’s your money, it’s your budget, it’s your business, but I believe it’s our responsibility to give you our best counsel especially when it’s not something you want to hear because a lot of people will tell you what you want to hear and that’s not who we are.”|
|Then you go on to explain to them why you think that’s a bad idea or what’s a better idea, and then at the end of the day if they still want you to do the bad idea thing, unless it’s immoral or unethical, you do it because it is their business and their money. Who knows, maybe they’re right. We’re not always right. I think you have to have the courage of your convictions to go, “You know what, I don’t think this is the best idea, here’s why.” A lot of agency owners haven’t found that. I think they had it and they’ve lost it and they need to figure out where they put it and find it again.|
|Andy Baldacci:||It’s almost a self-fulfilling prophecy because once you lose that confidence, once you’re willing to do whatever it takes to pay the bills, clients can sense that and you’re going to be less likely to actually win that business regardless if you don’t push back where it’s that counter intuitive thing where it’s not the girls want the bad guys, but it’s the idea that if you’re too eager for the business, people get a little suspicious of that.|
|You can smell desperation, right? I think part of it too is I hear a lot of agency owners will say to me, “I’m so tired of being treated like a vendor. I want to get back to the C-suite, I want to get back to the table.” The way you get back to the table is demonstrating you have something to say, or you’re the admin taking notes. Which one do you want to be?|
|That’s a good way of describing it. I think this also ties into the last mistake about agencies sounding the same. It’s really hard to have that confidence unless you’ve been in that same situation over and over again and truly know that niche, know that industry better than others. When you’ve worked with the same type of client or in the same space or whatever your specialization is, it’s a lot easier to say, “Guys, I’ve been here before. We’ve done this. We’ve tried what was suggested. Here’s how it went. You can make your own decision,” but you have the expertise to draw on. When you say you’re a full stack, full service agency, you’re deluding yourself and it’s really hard to have that same confidence.|
|Drew McLellan:||Two things. One, I think when you have war stories to tell it’s a lot easier to get a client to have enough faith and trust to do what you’re recommending, especially if it’s something they’re not sure they should do. Part of it is earning your stripes there. In terms of all of that and being able to not be a commodity, it’s also a place where you start thinking about thought leadership and creating content and all of those sort of things in terms of your own marketing plan for your own agency, it’s a lot easier to do that when you’re not just writing a three ways colors impact brand.|
|Andy Baldacci:||For sure. I want to cover the last mistake, and this is one here it surprised me when I heard it, and it’s also similar. I read the research you did on why agencies are hired and fired, and it gave a little bit of insight on this, but can you share this last mistake for us?|
|Yeah. What we learned in the research is clients have secret rules that either elevate you to getting into the pitch stage or eliminate you from the pitch stage. One of the things we ask them is do you have a secret sauce, a formula or a trick that you use to really narrow down the field when you’re picking an agency, and almost a hundred percent of them said yes. Then we said, “Okay, what is it?” What surprised us is most of them told us. Some of them are things that you would expect. One of the big ones is, and shame on all of us because we’re grownups and we should know better, but typos in our proposals. That often will get us eliminated.|
|[00:27:00]||Some of the things really surprised me. For example, they will reach out to some of your clients, former clients, employers and former employers on LinkedIn and then ask them about you. I was like that’s like stalker behavior, but apparently we got the answer from several people that they seek our our contacts on LinkedIn and ask them what it’s like to work with us or for us. Several people said, “I want a guarantee. I want some promise that there’s an ROI at the end of this, and I want you to help me figure out the math of if I spend a dollar here’s how I get two or three or four.” Another one is that they really want us to be experts in their field, and for them the way they defined that was at least twenty-five percent of our business should be in their industry.|
|Interesting. I think when you do take that client based mindset, especially post recession, they’re going to be paying attention to the ROI above all else almost, but also again, this is something that could make or break their business potentially. They’re going to do their due diligence. They don’t have a ton of extra cash to just throw around and try things out. They want to make sure they’re making the right decision. A lot of them probably have their own SOPs on how to hire these agencies and some of this is built into that.|
|Drew McLellan:||One agency said we take a Hunger Game approach. We put all the agencies in a shootout and whoever’s left standing wins. It’s like holy buckets.|
|Andy Baldacci:||Is there a way to prepare for this? How do you advise people in AMI to handle this?|
|I think it comes to the pre-conversations that you have. What is it you’re looking for in an agency? Have you worked with agencies before? What did you love most about the agencies you worked with? What really irritated you or frustrated you about the agencies? Why are you doing a search? What are the unbreakable rules? Just ask. What are the rules that we absolutely can’t break if we want your business? Define for me or describe for me what you think our relationship will look like. How often will we talk to each other? When you are worried about something, would we be someone you call or do you see us more as a vendor?|
|I think, again, and this gets back to that swagger conversation, I think we’re so reticent to ask questions because we don’t want to offend or whatever. I think we have to walk into those early conversations making it very clear, “Hey prospective client, I know that you are interviewing me, but I am interviewing you because you might not be right for us.” Just like we may not be right for you, we have a right to decide who we do business with. Again, I think that exudes that confidence we’re talking about, but it also would unearth a lot of these things that otherwise go unspoken, and you may become the victim of it and you didn’t even know that it was there.|
|For sure, because that’s the thing. There’s obviously the psychological shift when it’s a two way interview. When you’re not just there applying for a job, you’re actually trying to see if there’s a mutually beneficial fit. That’s one part of it, but the other part is that you should have red flags that you look out for in who makes a bad client because bad clients take up a disproportionate amount of your time, of your resources, of everything, and you need to find ways to systematically avoids those. It’s more than a psychological tactic because you really should be interviewing them to see if they’re right for you.|
|We have an online course where we help agency owners build out their new business program, and one of the tools that we teach in there is a sweet spot client filter. I believe that every agency has a sweet spot for clients, and it might be industry, it might be size. Some things are very tangible and pragmatic like has an in-house art department or doesn’t have an in-house art department, whatever it is. Some of them are very subjective. We work better with women contacts or men contacts or we like somebody who has never worked with an agency before or we love somebody who hires and fires agencies all the time, whatever it is. I think you need to create basically a grid and you need to list maybe the ten or twelve things that you know make the best client.|
|[00:32:00]||The way you do that is you look at the clients that you would clone if you could. One of them might be pays their bills on time, whatever it is, probably a certain size or a certain budget. Then what you need to do is you need to score prospects and you need to agree that let’s say there are twelve criteria, anybody who gets below an eight you say thank you but no thank you, or you have to justify to the rest of whoever’s on your new business team why you would make the exception to the rule that they are worthy of going after even though you got too many nos. I think if we took that attitude around new business and we started hunting that way, I think it changes the conversation and the relationship.|
|Andy Baldacci:||Absolutely. At that point you really are building a partnership. You’re not building a client/vendor relationship, you’re building a true partnership. I really like how you said score them and have rules on what to do in different situations because you’re not going to say just immediately throw out everyone below a score, but that should be the default. If you want to break that pattern, you need to justify it. So many times in the heat of the moment, maybe we’re just having a bad day, maybe we’re hungry, there’s things that can just affect your mindset and you can just make excuses for why no they really are a good fit, but you want to have a framework that prevents too many of those mistakes and forces you to be more rational about it.|
|Especially if your agency is on the rails, you’ve lost a big client, you’re facing maybe potential layoffs and so there’s a desperation about getting new business in. That’s when tools like that help you keep a steady ship and a steady mind about the decisions you make. It also defines who you actively target and who you reach out, so it’s not scoring just inbound leads but it also dictates what you’re going to do in your outbound efforts.|
|Andy Baldacci:||That’s a really good point. I think honestly we covered these five mistakes really well, and I think for me personally that has a thousand ideas running through my head about what this looks like. I’m curious to ask you, what does this look like in practice? What does the holistic system look like for an agency when they put together this new business machine?|
|What’s fascinating to me is it looks exactly like what we do for clients. It is first you have to know who and what you are and who you can delight every day. That’s really having an understanding of your agency, the values of your agency, how you deliver value to clients, what kind of clients love you the most, who do you love serving, what do you want to do in terms of specialization? Do you want to be the agency that knows how to talk to millennials? Do you want to be the agency that serves the steel industry, whatever that is. You’ve got to define all that. Then you spend some time thinking about who your ideal customer is. If we’re that and based on the clients that we already love and can make happy and can grow their business, what does our ideal client look like?|
|[00:35:00]||We talked about that sweet spot filter. Now that I know who we are and I know who we’re targeting, what messages, what authentic, real not “We partner with our clients,” blah, blah, blah, but what can we really say that actually matters to these people? How can we help them today? It really is a how can I help them today and get on their radar screen? It’s like dollar cost averaging investing right? You have no idea what day a client or a prospect is going to be ready to hire an agency, so you have to be top of mind every day. The only way you do that is by being in touch on a regular basis. Just like we tell clients, the market has shifted. We don’t get to decide that we get to be on someone’s radar screen. They give us permission to be there. The only reason they’re going to do that is if we’re being helpful.|
|That’s where all the thought leadership comes. Again, I think there’s three layers of new business. I have written about this many times. I call it the macro, micro and nano level. The macro level is what are you going to do to make sure that people who have never heard of you find you, and that’s, again, thought leadership, SEO, speaking at conferences, writing a book, whatever it may be, writing for the trade pub of the industry that you serve, that sort of thing. Then there’s the micro level. Now I’ve attracted someone’s attention enough that they’ve trade me an email address or something. I’ve met them at a trade show and I have their business card or they downloaded a white paper in exchange for an email. Anyway, I have some form of contact.|
|[00:36:00]||What am I going to do to keep earning the right to talk to them? How am I going to do that? We all default to the e-newsletter and all that, but just like we tell our clients, it needs to be a media mix of things. Then at the nano level, I think every agency should have a target list of twenty-five agencies that they are going to pursue with a vengeance until one of two things happen. Either you get the restraining order saying, “Don’t call me anymore,” or they hire you. Otherwise, you just keep working that list. If you get one, you substitute someone else on the list. Everyone goes, “Yeah, yeah, I know all that. How do I get it done?” That’s really the trick. We can do it for clients, but we can’t do it for ourselves.|
|[00:37:00]||I will often say that the coolest thing about being an agency owner is that we’re not accountable to anyone, but the most dangerous thing about being an agency owner is that we’re not accountable to anyone. It’s really about building a team and it really is about creating system and process around making sure that if you’re dropping lumpy mail to your twenty-five people and you’re sending out five every week and then following up with a phone call or whatever it is that you’re doing, and for every agency it should be different based on who you are and who you’re targeting, but whatever you’re doing, that no matter how busy you are, no matter what’s going on with your current clients, no matter who’s on vacation, that that machine keeps chugging along.|
|[00:38:00]||There are plenty of tools to do that, but quite honestly it’s about not letting it be optional and it’s about deciding stop giving me the cobbler’s children have no shoes excuse. I hate that. That’s garbage. It’s your business, and you have to take care of it, and this is one of the ways you take care of your business. Really honestly it’s wash, rinse, repeat, that once you have that going, you just keep chugging, and what happens is as you maintain that new business activity, you’re speaking at smaller conferences, you’re writing blog posts, you’re doing whatever it is you’re doing, you’re creating info-graphics, you’re doing a podcast, whatever it may be, opportunities will present themselves to up your own marketing game. You have to be ready to take those opportunities.|
|If you do that every day with intention, and by the way I think an agency owner, fifty percent of their time should be spent on new business.|
|Andy Baldacci:||I was going to ask something like that.|
|Drew McLellan:||They shouldn’t be doing it in a vacuum obviously. They’ve got a new business team around them inside the agency that’s helping them execute a lot of those things, but the agency owner and/or the agency owner and the salesperson in tandem need to be driving a lot of the new business. That is a place where an agency owner brings unique value to the business, and they need to merchandise that.|
|For sure. That’s something where, you hit on all the points that I couldn’t agree with you more because that’s the thing is you need to take it seriously. I was going to ask how do you suggest that agency owners do this when they’re so busy, this and that, but you put it pretty simply. One, set aside time to do it, but the second part is actually make sure you use that time to do this because so many times we’ll toss things on a calendar, we’ll get pushed back because like, “Oh this needs to be done tomorrow,” so on and so on.|
|Drew McLellan:||We violate our own promises to ourselves.|
|Andy Baldacci:||Exactly. That’s the thing is you need to treat these really as a promise that cannot be broken because if you break these promises for too long, your agency could easily collapse.|
|It’s no different than exercise or anything else. You have to calendar it, it has to be non-negotiable, you have to make sure you have the bandwidth for it, which means that you’re not still in every client meeting. An agency owner should be focusing on new business fifty percent of the time. They should be mentoring their direct reports. They should be inspiring everyone in the agency by bringing people together and talking about where we’re going and why and talking about the milestones and the goals. They should be doing what I call client love, which is I’m having golf with a client, I’m having a drink with the client, I’m taking the client to the theater or a ballgame, whatever you’re thing is and making sure that we’re doing a great job.|
|Honestly, that’s the lion’s share of what an agency owner’s life should be. Do you sometimes get pulled into client stuff? On occasion yes, but your whole goal needs to be to build a team that you have enough confidence in that you just let them do their job.|
|Andy Baldacci:||I’m sure this is something where there’s not a hard and fast rule, but at what size agency, what sort of headcount do you think the client work should become the exception rather than the rule for the agency owner?|
|Drew McLellan:||I think it’s pretty tough to do when you’re under five or six people but by the time you’re eight or ten there is no reason why you have to be doing day to day client work.|
|That’s a big thing is that it seems like, and this all goes back to the accidental agency owner, is that if you default to that freelancer mindset, you don’t even realize that you shouldn’t be doing it. That’s the default. You just keep doing more and more client work and have other people doing it too, but no one’s really doing all these other administrative, new business development, all those other tasks that are so crucial to keeping an agency going.|
|Drew McLellan:||Quite honestly I think a lot of agency owners default back to their core skill set whether they were a writer or an art director or an account person because it’s easy. They’ve been doing it forever and so it’s super easy, and they really good at it and so that feels good, and they’re fast. All the time I hear agency owners go, “I can do it so much better and so much faster,” and I say, “Well then teach them how to do it better and faster. Stop doing it for them.”|
|Andy Baldacci:||That’s where that mentoring comes in.|
|Drew McLellan:||Right. Or fire them and hire someone who’s as good as you are.|
|Andy Baldacci:||Right. It also goes back not being too arrogant to believe that there is other talent out there, whether you want to admit it or not. There are people who could do similar jobs as you, so find them.|
|I also think one of the things that we as agency owners need to wrap our heads around is that my version of right is not the only version of right, and that there are other ways. Sometimes there is a clear and fast right and wrong for a client, and if your team is going in the wrong direction, you need to step in, but you need to step in and coach. Most of the time it’s subjective or it’s a nuance, and what your team has done is just fine. It’s just not exactly how you would have done it, and you have to get over yourself.|
|Andy Baldacci:||Right, you have to get over that fear of delegation and accept that there are other ways of doing it. What I want to talk about now though is how does the Agency Management Institute fit in with all of this? What do you do specifically to work with agencies to help them institute all of this on their own?|
|The hub of AMI are these owner peer networks. Think of it like a Vistage group or an EO group. Twelve agencies in a membership model make a commitment to belong to a group. In that group, since a lot of the agencies might have partners, there might be fifteen to twenty-five people in the group, but it’s twelve agencies, noncompeting agencies, and they physically get together for two and a half days of best practice sharing. They show their full financials to each other. We bring in speakers. we dig through a lot of challenges. They do that twice a year. They spend about five or six days together, and then they’re in constant contact throughout the year. That becomes like your board of advisors.|
|I’ve seen amazing things happen in those meetings. I can remember an agency owner who was moments away from changing the name of his agency and the group had him walk them through the process of why he was doing it, and in an hour and a half, they convinced him that it would have killed his business.|
|It’s very pragmatic. I have an employee issue, I don’t know what to do about this person. It’s part best practices and coaching, it’s part therapy session quite honestly, and it’s reassuring to see how other people are doing things. We never see any other agency’s financials or things like that. It’s very insightful. That’s one of the ways we serve agencies. We also offer workshops for agency owners and account service staff and agency leaders. For example, we have two workshops coming up in January that I’m really excited about. One of them is how to manage millennials inside an agency. I hear agency owners crying about their millennial employees every day, and so I’m working with and co-teaching this with a guy who’s an expert on seeking out, because there are good millennials and bad millennials, just like there are good baby boomers and bad baby boomers when it comes to employees.|
|[00:45:00]||How do you find the good ones and how do you nurture them and then get them to say and really add value to your agency? That’s going to be a great one. Then right after that we’re doing a two day new business summit where I’m bringing in agency search consultants who talk about all the things we do wrong in pitches and proposals and all of that. They actually are going to take us through a series of exercises so agencies can talk about themselves in a way that differentiates them. We do a lot of those. We do some AE boot camps to try to each AEs how to balance the fact that yes you need to make clients happy, but you also need to serve the agency and help them make money and here’s how you do all those things. We do that. Then we do some remote coaching, and I also do onsite consulting.|
|Then we have the podcast, Build A Better Agency, which we have guests come on every week and talk about kind of the same thing you and I are talking about. Then we just are getting ready to launch, we have our first online course, so five hours of video teaching, a hundred and seventy-five page participant’s guide, and actually this first one is all about new business. Our conversation is teed up with that. We try and be really accessible, but we certain offer a lot of free resources like the podcast and then you can get involved with AMI at various levels obviously. The networks are the biggest commitment in terms of both time and intensity.|
|First, that all sounds amazing. I can see just doing some of the things on my own, I can understand how important it is to be surrounded by a group of peers who, one, you can have as a sounding board, one, you can just vent with, but two, who can help hold you accountable. Then having all that other expert educational material is huge. One of the last podcasts I had, Eric Balm, his big thing is that no matter how unique you might think your problems are, people have been there before, they’ve gone through it, and you need to put your ego aside and realize that and look to them to learn. If you can do that, you can really shortcut your growth. You can avoid a lot of the mistakes that have already been made.|
|That’s the first thing I want to say. The second thing is that how do you possibly balance all of that with running your own agency?|
|Well back to point one, one of the great things about what happens at AMI is even in the workshops you show up as a student but you also end up being a teacher because at some point in the workshop we’ll be talking about something that you’ve gone through or you figured out, and the participants are really great about going, “Oh my gosh, that happened to me two years ago and here’s what we did. First we tried this. That did not work, don’t try that. Then we did this.” It’s very collaborative, which I love. You’re right, it’s awesome to be surrounded by people and be in an environment where it’s safe to talk about your business. If you’re an agency owner, most of the other agency owners you know are either in your vertical or in your town. You can’t have conversations with them. You’re not going to say, “Hey, let me see your P&L. How you doing?”|
|Andy Baldacci:||Right. You just put on a smiling face and say everything’s going great.|
|In terms of running the businesses, and both business simultaneously, in a cool way they’re symbiotic because my agency becomes my lab where I get to try things and then I take them into AMI and vice versa. I learn things that AMI that allow me to bring them back and make my agency better, but I will tell you the truly secret sauce of how I do that is I realized early on what we talked about earlier, which is I can’t be the guy that does everything. My team does most of the day to day work with clients, and I still focus on the things we talked about, new business and mentoring and client love, which I can do a lot of that either, A, when I’m on a plane in terms of new business, and B, when I’m in town. I travel quite a bit, as you might imagine, with all those workshops and all of that, but we’ve figured it out.|
|My staff, I’m blessed beyond measure. The average tenure of my staff in terms of working for my agency is about fourteen years. Part of it is that they are such a well oiled machine and they’ve worked together for so long that sometimes I think when I come in I muck things up, honestly.|
|They have their way of doing things. It’s been so refined in that.|
|Drew McLellan:||Remember when you were a kid and you were having an intense conversation with your friend and then your mom walked in and you both looked at her like, “Are you staying here?” Sometimes when I work in the office I get that same sense. It’s like, “Are you going to be here all week?” They are brilliant. I spend a lot of time and money and effort in helping them continue to sharpen their saws and skills. Really candidly I try and spoil them as much as I can because I know that if a bunch of them left, I wouldn’t be telling this story. I would have to make a choice. I try to ruin them for all other employment, and that’s always been my tactic.|
|Andy Baldacci:||Spoil them so that they don’t want to go anywhere, but entrench them in your own processes so that no one else will take them.|
|Allow them to help be a part of all the process creation and all of that so that it’s not my process, it’s our process, and honestly it’s more theirs than mine. Give them a lot of autonomy and support, and have their backs so that they’re not afraid to make decisions, they’re not afraid to take risk because they’re never going to hear from me, “Why did you blah, blah, blah?” They know it’s a safe environment for them to act like they own the joint.|
|Andy Baldacci:||I’m guessing, without getting into it too much, that the lessons for millennials isn’t entirely different than that with the autonomy, with those types of things?|
|No. I think honestly no different than any employee. The more you understand the employee, regardless of their age, the more you can tailor how you coach and mentor and teach and support and celebrate and encourage and discipline and all those things, that’s true regardless of our age. I think the millennials get a little bit of a bad rap that they’re all the same, but really when you start thinking about if you have three twenty-eight year old employees, they’re not really all the same. I think there are some best practices around figuring out what their mindset is, what matters to them, what motivates them that’s very different than the generations ahead of them.|
|Most of us who are running agencies are in our maybe late thirties, but mostly forties, fifties and sixties, and so it’s also hard I think not to treat them like our kids. I’m sure that’s offense as all get out to them. Anyway, I’m excited for the workshop. I think it’s going to be awesome.|
|Andy Baldacci:||That’ll be great. I have just a few questions before we wrap things up. The first one I want to ask is what do you think you spend too much time on right now?|
|Drew McLellan:||That I shouldn’t spend time on?|
|Andy Baldacci:||Yeah, too much meaning you should be spending less or just not at all.|
|I would say plane delays but I don’t control that. Because AMI is newer to us, we’re still developing process, and it’s grown significantly since I bought it. We’ve added a lot of things like the online course and the podcast. I spend probably too much time trying to figure out how to do things rather than creating the systems. I need to emulate what we’ve done on the agency side, the AMI side more than we have.|
|Andy Baldacci:||If you have that, if you implemented all of that and it freed up some time for you, where would you like to be spending that new time? What do you think doesn’t get enough attention right now? This could be not even specific to AMI or to your agency. Just in general.|
|Drew McLellan:||Maybe sleep. I probably don’t do enough of that. I would probably write more. I write a lot. Even the podcasting I would prep even more than I do. I love to learn and I love to really share what I learn, so some aspect, some medium that would allow me to do even more of that.|
|Interesting. The last thing I’ll asking is what do you see as the end game for your agency, for AMI? Where do you want to take things?|
|Drew McLellan:||Yeah, it’s interesting, I was just having a conversation with an agency owner yesterday and we were talking about succession planning. Many agency owners falsely believe that there are just buyers out there dying to buy our little agencies, and you really have to of a certain size or a certain age or have to have something of value. The most common way an agency evolves quite honestly is the agency owner either retires or dies and the agency just gets shut down, or there’s an internal sale where you sell it to your employees, which is I think probably the most likely scenario if you want to sell your agency.|
|[00:54:00]||Many years ago I approached a couple of my employees and said, “Would you ever want to own this thing?” They were like, “No. We’re risk adverse, so you get all the risk. We get all the perks of running it, but without any of the drama and risk and we don’t have to put our house on the line for the line of credit, so thank you but no.” At that point, then I decided, you know what, I’m going to run this beast until I don’t want to run it anymore. I’m going to run it in a way that I take as much money out as I can and diversify it, get it out of the agency and put it other places, and when I’m done I’m going to lock the door and just say, “You know what, that was a great ride.”|
|AMI on the other side I believe is a sellable asset. Part of as I build that out, I need to build it out in a way that just like the founder found me and convinced me to buy it, that I have something that’s really sellable and attractive and can find my successor some day, but I have no intention of doing that any time soon. I like to work. I like the work that I do. I love hanging out with agency owners. I love watching them be successful and cheering them on and in some small way being a part of that and helping them. I like being a resource that they know they can count on, so I’m not going anywhere anytime soon.|
|It’s funny because a guest that we both interviewed, Jason Swank, one of his big things was that if you build the agency the right way, once you’re at a point where you could even consider selling it, it’s probably not taking a ton of your time and is built to be relatively self-sufficient and with the multiples that agencies are getting, it honestly a lot of times just makes sense to keep it as a cash cow. Obviously it still takes time, but there’s not a huge reason to sell if you get it to a place where you actually could sell it.|
|Drew McLellan:||Or you take on some minority partners so that they have skin in the game. There’s lots of ways to do it. The trick to all of that is thinking about it much earlier than you think you need to. I’m working with a lot of agency owners who the closer to your desired date of being done you start to put all this into action, the fewer choices you have. I think it’s really important early in your career as an agency owner that you begin to think about what would be the ideal way. If you want to sell it internally for example, that should influence your hiring, right?|
|Andy Baldacci:||Yeah, for sure.|
|Probably ten or fifteen years before you’re ready to hand over the reigns. It’s important to think about, but Jason is exactly right. You don’t have to sell it to be out of it.|
|Andy Baldacci:||For sure. I want to end it on that note so that we don’t go way over on the time. You crammed a ton of great insights into that. I’m excited to go through it again and get the show notes written up. To cap it all off, if listeners have enjoyed hearing what you have to share and they want to learn more about what you’re up to, where should they go to learn more?|
|Easiest place is to go to AgencyManagementInstitute.com. You can find my contact information, which is pretty easy, it’s Drew@AgencyManagement.com. You can also learn about our workshops, the owner peer networks, the podcast, all of that stuff. You can see our blog where there’s plenty of content. You can certainly reach out if you have questions. We do webinars. You can ask to get on our list. We just did one today, The Mistakes that AEs Do That Cost You Money. Happy to be helpful in any way that I can. I’m on social media everywhere. Drew McLellan. It’s M-C-L-E-L-L-A-N, so Twitter, Facebook, LinkedIn, all that sort of stuff.|
|Andy Baldacci:||Perfect. I’ll make sure to get all that linked up in the show notes. Drew, I just want to say thanks so much for coming on the show today.|
|Drew McLellan:||My pleasure. Thanks so much for having me. I appreciate it.|
Want to learn more?
To see what Drew and his organization are up to, head over to AgencyManagementInstitute.com.
On the AMI website, you can learn about their workshops, the owner-peer networks, the podcast, and all of the other great content and services they have put together.
Drew loves giving back to the community, so if you have any questions, don’t hesitate to contact him via email (mentioned at the end of the show) or on Twitter.