Rethinking agency biz dev part 1: Find a niche with Drew McLellan

Speaker 1:

Welcome to the Agency Management Institute community, where you’ll learn how to grow and scale your business, attract and retain the best talent, make more money, and keep more of what you make. The Build A Better Agency Podcast presented by White Label IQ is packed with insights on how small to mid-size agencies survive and thrive in today’s market. Bringing his 25 plus years of experience as both an agency owner and agency consultant, please welcome your host, Drew McLellan.

Drew McLellan:

Hey everybody. Drew McLellan here from Agency Management Institute. I am recording this on January 3rd at 6:15 in the in LA, getting ready to do some work with a client. And I am up, I am dressed. I am wearing pants. I am up at 6:15 in the morning. So all kinds of new things happening in 2022. If you know me very well at all, I am not a fan of early mornings. I’m not a fan of pants. So I’m telling you all of this because this is the year I want to shake things up.

So 2022 for me is, my theme if you will is challenge the status quo. Things are going great at AMI. Things are going great in general for me in general. But feel like 2022 is a year for new things, new opportunities, new risk, new challenges, lots of new things. We launched a new product, which I’ve talked about a couple times on the podcast. Succession planning for internal purchases. So when an employee is going to buy out a current agency owner, launched that at the very tail end of 2022 and it’s going gangbusters. So I just feel that it’s sort of inspired me to say you know what, it’s time for me to look at the way we do work at AMI. And ask myself just because it’s going well, just because it’s how we’ve been doing it for a while, is that the way I still want to do it? So you’re going to see that throughout 2022 for me, and I’ll keep you updated on that. But this podcast is the first example of that.

So if you are a regular listener to the podcast, you know that every fifth episode I do, I don’t have a guest. It’s a solo episode. We call them solo casts. And it’s just me talking and teaching a little bit. And I decided, I was thinking about how all of you are coming out of the holidays. And I figure there’s another week or so of what I call holiday hibernation before everybody, clients, employees, you all kind of wake up and go, “Oh crap, it’s mid-January. And we are behind the eight ball. We haven’t started fill in the blank yet.”

And for many agencies, the first quarter can be a little soft. And I think a lot of that is because from mid-December to mid-January, and I’ve written about this in the newsletter if you subscribe to that, we sort of take our foot off the gas. So I decided that I was going to help put your foot back on the gas. So this is me, one of my very first challenging the status quo. I’m going to do a series of episodes that are going to launch in January where I’m just going to talk to you about biz dev, and I’m going to talk to you about different aspects of biz dev. I’m going to give you homework. I’m going to ask you to challenge your status quo of about how you grow your agency.

And my hope is that by the end of January, you’re fired up, you’re actively doing things with biz dev that maybe you wouldn’t have gotten to until February or March, or if at all. And most importantly, you are starting to fill the pipeline for 2022. So honestly, I haven’t decided how long this series is going to be. So it might be two or three episodes. It might be a little longer. I’m just excited to share with you some ideas to get your biz dev machine up and moving. So I’m just going to do that till I feel like I’ve checked that box for you, and I’ve given you enough to really chew on. And then I promise I’ll be back with guests and the normal routine, but just kind of shaking things up for January.

So before I talk to you a little bit more about what I want to do in this episode, I do want to tell you about a workshop that we have coming up that honestly aligns perfectly with my idea of challenging the status quo. I have been reading a lot. I’ve been listening to some great podcasts all about innovative thinking. And a few episodes ago, I had a guest on who talked about how do you stay vigilant when things are going well? And really the greatest risk to us is not when our business is at risk, is not when things are rocky, but actually when things are going well, because we take our eye off the ball and we don’t keep pushing ourselves, and we don’t keep innovating.

So February 17th and 18th of 2022, we have a killer workshop coming up. We’ve never offered it before. The guest instructor is a woman named Carla Johnson. She wrote a book that was all about how to reinvigorate. It’s called RE:Think Innovation, but how to reinvigorate our ability to think differently, to think bolder, to think bigger.

In our industry, what clients hire us for is our thinking. They hire us for our ideas. What we know that they don’t know. And Carla’s premise in her book, which is brilliant by the way, is that we are all born with the ability to be innovative on the fly. And that as we age through our childhood, that ability gets muted. And by the time we’re young adults, that ability is really crippled compared to what it used to be.

And Carla did all kinds of research about how to reinvigorate the ability to have innovative thoughts, and big new ideas, and bold ideas. How do you reinvigorate that in adults? And I think that’s critical in our business.

So anyway, Carla was a guest on the podcast. I invited her to teach this workshop. It is February 17th and 18th in Orlando, Florida. Of course, as always on Disney property. That by the way is not something I’m going to rethink. I’m not shaking that status quo. But anyway, we’re going to be there February 17th and 18th, and it’s going to be super interactive. You’re going to learn all kinds of great skills about how to reinvigorate your ability to be innovative. And, Carla’s going to give you a methodology. This is I think probably the best part of the workshop. She’s going to give you a methodology to take back to the shop so that you can help everybody in your shop relearn how to think bigger and bolder. On behalf of clients, on behalf of your agency.

And Carla’s premise, and I completely agree with her, is that everybody in your shop. From the CEO, to the CFO, to the intern, to whoever answers the front desk, all of can bring new ideas to how we deliver whatever it is we deliver and at whatever level, in terms of our maturity in the business. All of us can. And for many of you, you talk to me about the fact that you are the only one who can come up with big ideas. So all the strategy sits on your shoulders. And the challenge with that is you’re also the bottleneck. You are the reason why projects get stalled. You’re the reasons why new business pitches don’t get the time and attention. And it’s not that you don’t want to give it. It’s just that there’s only so many hours in the day.

So why not get your entire team ready to think in an innovative way and come up with these brilliant ideas that you can take to existing clients, you can take to prospects. You can turn on your own agency and innovate there to.

So anyway, the workshop’s going to be great. Would love to see you there. You can register by going to agencymanagementinstitute.com. Under the how we help tab, you will see workshops. And if you just move the mouse over to the right a little bit, you’ll see the rethink innovation workshop on February 17th and 18th. Would love to see you there. I promise you it’s going to be spectacular. And as always, I’ve never actually had to do this, but as always if you come to a workshop and it is not your cup of tea or you didn’t learn anything, we’ll give you your money back. Happy to do that. I’ve never had to do it, because our workshops deliver. And I know Carla is really going to deliver. But if you’re worried about it, by all means, know that you have a money back guarantee.

All right. So let’s talk about what I want to talk about today. So in early 2020, January, 2020 right before the pandemic hit, Stephen Woessner and I wrote and released a called Sell with Authority. And premise of that book is super simple. It is that how we sell is different, and how we sell has changed. And that the reality for agencies is that we can’t sell the way we used to sell. The just going to networking meetings, or being on a chamber board, or showing up at trade shows and just walking the floor is really not effective anymore. And I watch hundreds and hundreds of agencies every year struggle with biz dev, and I will tell you that the folks that are still doing at old school are challenged. And they’re challenged because they are thinking about selling in an old way.

So I think the first thing we have to think about is when I’m talking about selling, and by the way, most of you hate the idea of selling. When I’m talking about selling, what does that mean, and what does that look like for you? And the great news is that you don’t ever have to sell again. All you have to do is be helpful. And I know that sounds ludicrous. And you’re saying, “How do I get in front of the right people to be helpful?” We’ll get to all of that in over the next few weeks. But I’m telling you that selling is really about helping now. And helping comes from a place expertise.

So helping is really about deciding what it is that you know so much about that people will gravitate to you, that people will want to learn from you. And all you have to do is teach and help. And by teaching and helping, you create a buzz around your agency. And you create a reputation for your agency that makes prospects say when they’re ready to hire an agency … because remember, they’re not hiring the way they used to. They might be asking for a referral. They might be asking for something else. But for the most part, they are poking around on the internet. They are checking out agencies that they’ve heard of. And they’ve heard of them either by word of mouth, by referral, or by the fact that they saw you speak at a conference or something like that.

But all of those things are surrounded by your depth of expertise or your position of authority. It is very, very difficult for an agency today to be successful if they’re a generalist. It is tough to be the best generalist to know enough about everything that you stand out in a crowd, that you are notably different from all the other generalist agencies out there. The way you are different, the way you look different is because of a depth of expertise that most other agencies in the field do not have. That you take a position of authority, a thought leader position. Call it whatever you want, but you own a spot. You own a piece of land, and you have planted a flag that says, “This is mine. And I’m going to demonstrate that this is mine, that I’ve earned the right to stand on this plot of land by showing you over, and over, and over again how helpful I can be,” so that you become more of an expert about this plot of land as well.

And I will have agency owners say to me, “I don’t want to give away all our trade secrets. I don’t want to tell everybody everything.” Yeah, you actually do. You want to tell them all of it. And you want to give it all away, in little tiny bits. And we’ll talk about the execution of this over the next couple weeks. But it starts with understanding and accepting the fact that you have been doing this kind of backwards. You’ve been doing this in a feast or famine way where you don’t do a lot of biz dev activity until a client starts to give you signs that they’re going to go away or you get fired. And then all of a sudden, you scramble and you do a bunch of new business activity. Eventually some of it sticks, but it’s not sustainable because you’re sort of splashing around in the water and you’re doing all these things. And the minute you land a big piece of business, everyone’s attention turns to onboarding that client and getting that client on board. So all of your activity sort of mutes back down until the next time you’re at risk. That feast or famine activity. What that means is the pipeline’s empty, then it’s full. The pipeline’s empty, then it’s full.

So over time, it means that you’re dragging out the biz dev process and it’s taking you longer to find the right prospects or worse. You’re desperate. So you have to take prospects, whether they’re the right fit or not. And all of you know, all of us have done this where we’ve taken a client that we had no business taking because they had money. And we needed the money because we needed to make payroll and we didn’t want to lay people off, and all the good human reasons that we do that. But they’re not the right reasons for actually taking a client on. Right?

So all of this is prefaced by saying the new way of selling is by helping, number one. Number two, you can’t help with everything. You can’t be an expert in everything. No one is an expert in everything. But you can be an expert in something, and you can have a depth of expertise where you can earn people’s respect and trust by telling them, by teaching them what you know over a period of time.

And by the way, the period of time doesn’t have to be super long. So all of this is leading to what I think for many of you is a painful conversation, which is it’s time to niche down. It is time to choose an area, a subject matter area that you feel confident that you can own. So I want to talk today about what are the criteria that you should use as you think through the idea of should I niche or not? And if I should niche, then what does that look like? What is the right niche for my shop?

So I’m going to assume that you are on board with the idea that having some area of specialization in today’s complicated, complex world that we live in is critical. And quite honestly, how most of you introduce yourselves is we’re a full-service integrated agency. And what our research shows us, we do agency edge research year after year. I think we’ve done it for since 2014, maybe. So we’ve been out in the field talking to people who hire agencies, just like us. And one of the things we hear over, and over, and over again in that research is when we say that we are a subject matter expert about everything and we have 27 people, the prospects on the other end of that conversation call bull. Because they know how complicated things are. They know how difficult it is to do digital media buying. They know how difficult it is to understand SEO. They know how difficult it is to really build a brand that is meaningful. And they know that a small shop. And by the way, a small shop could be a couple hundred people or less cannot be good at everything. We can be good at some things, and we can be okay at others.

And when you look in the mirror and you’re honest with yourself, you know that there are things that your agency is brilliant at, whether it’s a depth of expertise in an industry, or a deliverable, or an audience. And we’ll get to what niches are in a minute. Or it is the kind of work that you do. You know that you are great at PPC and SEO, but your PR, not so great. Right? Whatever that is, you know that you struggle to deliver it all if you’re trying to be that broad generalist.

And it’s time for us I think to accept that the world is owned by specialists. The analogy I always use is all of us have a general practitioner doctor. And that doctor, he or she is relatively close to our house. Why? Because we’re not going to drive past 12 general practitioner fields or offices to get to the 13th one to get our annual exam, or to get our flu shot, or to get our fill in the blank. We’re just not going to do it. It’s not worth it to us because for us, GP is a GP is a GP. And once you have one, you’re good. So you want somebody who’s pretty close. Because A, you don’t use them that often. And B, they are a generalist. So we’re not willing to travel to get our general annual checkup kind of healthcare.

But if we had brain cancer or a brain tumor, we would get on a plane, and we would go to Mayo, or John Hopkins, or wherever we thought the subject matter expert was. Because now all of a sudden, we need something that it feels critical, that feels literally life or death. So we are willing to drive by a whole bunch of doctors to get to the right doctor.

Well you know what? To a business owner or a business leader, that’s the truth for them for marketing and for an agency. They know that if they pick the average Joe off the street, they’re putting their business at risk. They’re putting their job at risk. So they want the brain surgeon. They want somebody who has a depth of expertise that is going to help them protect their job, build the company, earn a raise, earn a promotion. Whatever it is, whatever their motivation is. But their motivation is survival and thriving. And for them, that’s not just an annual checkup. That’s not just a get my flu shot. That is a life or death, professionally decision. And they want an expert. And they recognize that they don’t know it all because no one can. So when we tell them we know it all, they immediately go, “I don’t think so.”

But when we say, “Boy, we know this industry,” or, “We know this audience,” or, “We know this deliverable better than anybody.” “And let me show you how. And in fact, you can go to the website and read 52 blog posts, or you can see 200 episodes of a podcast. Or, I’ve actually written a book.” Now all of a sudden they go, “Oh, okay. This person is an expert.” So let’s talk a little bit about what the niches can be. And then we’ll talk about what the criteria is for those niches.

So Stephen and I talk in our book that to be an authority, there’s sort of a three point check. And the first one is that you are a specialist, that you have identified a niche. And this is for most agencies, the most difficult decisions. Honestly, I think you make it more complicated and difficult than you need to. And I’m going to help you figure out how to do that in a better, easier way in a second. But we do make it more complicated than it needs to be. So criteria one is you have to have a niche.

Criteria two is you need to have a unique point of view inside that niche. So you have to view how that world works in a way that is unique to you and really defines the way you help. And I’ll give you an example of that in a minute. And the third one is you have to teach. You have to share generously and on a regular basis. So you have to be a subject matter expert in something. You have to have an opinion about that subject, which I will give you an example in a sec. And, you have to share your expertise that is peppered with your point of view, to the people in that niche or who care about that niche on a regular basis. That’s how you become an authority. I know no experts who keep their expertise to themselves. The whole reason why they’re experts, the whole reason why we know they’re experts, the reason why we give them that label is because they teach and they share, and they try and make everybody experts. That’s the criteria.

So let’s use AMI as an example. So as you know, at AMI, we focus on small to mid-size agencies. And that’s it. That’s the only people we talk to. It’s a very small audience. But it’s an audience that is very unique to us. I have worked in the industry for many, many years. Multiple decades. I have owned my own shop for almost 30 years, still own it. Anybody who works at AMI either currently owns an agency or has owned an agency for at least 10 or 15 years. They’ve been successful at it. So we have a depth of expertise and we have this very narrow focus, which is how to help small to mid-size agencies run themselves better.

And our unique point of view around that is that most agency owners, that’s our area of subject expertise, right? So that’s criteria one. Our unique point of view is that most agency owners are accidental business owners. That all of you, myself included were really great when we worked for some other agencies, we are coming up. Or we have a background in finance, or business, or something. So we have a depth of expertise in something, but it’s not really about running the agency. It’s not really about the business of running a business. That was not what we went to school for. It’s not where we have a depth of expertise.

So when all of a sudden we’re this accidental business owner, we wake up and for many of us, we got laid off or something else happened. We decided to hang up a shingle. Many people did it as an interim thing while they look for a job. And all of a sudden they’re like, “Shoot, I have employees. I have people working for me. This is going really well. I now own an agency. Uh oh, I don’t know how to do this.” And that’s the premise of AMI is that we come alongside, accidental business owners who own small to mid-sized agencies. We help them run their business better. We help them make more money. We help them keep more the money they make. We help them reduce the stress and the high ebbs and flows that happen in agency life. When you run the business by best practices and metrics and some golden rules around how an agency functions, it’s easier. It’s much easier and it’s more profitable. So our job is to teach agency owners and leaders how to do that.

And then as you know, the third criteria is teach generously and often, and in lots of different ways. So you’re listening to one of our core ways that we keep that promise, that we teach every day. And that we are constantly sharing what we know through workshops and podcasts. And we’ve written several books, and we have blog posts, and we’re on social media sharing things. So we are trying to teach every day, everywhere we are. So those are the three criteria, and AMI is a great example of how that works really great. So we attract the right fit clients, clients that want to learn what we teach. And many of them consume our free content like you are right now, the podcast. Which is absolutely fine. And a subset of them come to us and say, “You know what? I want more. So I’m going to give you some money in exchange for whatever it is that I want, whether it’s a workshop, or joining a peer group, or whatever it may be.” That’s how it works. I have to tell you, we have many, many agencies inside AMI. And I’ll be peppering this little series with some examples, that are crushing it because they follow this model.

So for example, we had an agency, a generalist agency. They’d been around for about 30 years. There was an ownership transition internally of that agency. We’ve been working with them for many years. New owner had been a minority owner for quite a while. Finally became the majority owner. And one of the first things that he, actually there were two partners that bought out the original founders. And what they decided was it was time for them to niche down. Because they had been a very broad generalist agency. They live in Florida, so they had done tourism. They had done some higher ed. They had done some technology because that was the background of the two buying agency owners. They had done a lot of different things. And they had this broad mix of clients, and some financial institutions. And they decided it was time for them to niche down. That biz dev was challenging when they were trying to talk to everybody. They didn’t know how to create content that was meaningful for everyone. Honestly, niching makes biz dev selling/helping so much easier, because you have a very narrow audience to talk to, and you know exactly what their pain points are. So you can be helpful every single day.

So anyway, they decided to niche down. They chose an industry to niche down in. So you could niche in several ways. This is one of the things that I think agency owners struggle with. You could niche by choosing an industry. So that’s what most people think of when they think about niching is that I’m going to choose to do pharma for women over 50, or I’m going to choose to do agriculture, or I’m going to choose to do whatever. So an industry niche is certainly one of them.

Another way to niche is to think about an audience. So we have an agency inside AMI that they focus on selling to millennial moms. If you want to talk to millennial moms, they know where they are. They know how to talk to them. They know what matters to them. They know how to resonate with them. So they focus on an audience.

We have other agencies that focus on a deliverable. So Amazon Marketplace, PPC and SEO, things like that. So don’t get caught up in the, “I don’t have a depth of expertise in a certain industry.” That does not mean you can’t niche. You certainly do have depth of expertise. You just have to figure out what they are, and we’ll get to that in a second.

So anyway, so this agency decided to narrow down on an industry. They got very specific. They did a good job of really narrowing that down. And we’ll talk about how important that is in a minute. And with 18 months, 24 months at the most, 85% of their clients were now out of that niche. They were more profitable than they had ever been before. Biz dev was so much easier. Literally they would have someone fill out a form on the website, they’d have a brief phone conversation, and they’d be being asked for a proposal that would get signed that same day sometimes. Because they had this depth of expertise and they demonstrated it. And people are out there looking for you. They’re looking for specialists. And when they see all of the generalist language on your website, they just keep moving, because their job is at risk. Their company is at risk. They want an expert, and we have to give it to them.

All right. So I’m going to take a quick break. I need to wet my whistle. I need to share with you some information, and then I’ll be back, and we’ll talk about what a niche looks like and how do you figure out how to niche. Okay? I’ll be right back.

I’m sorry, but not really sorry to interrupt you because you are going to be as excited about this as I am. The workshop Selling with Strategic Insights with Mercer Island Group is back. So we have taught this workshop twice. I’d say about 70 agencies have gone through it. And the whole purpose of this workshop is to teach you a framework to build your new business pitches for either prospects or even to upsell clients in a way that provides such great vision into your insights, that you will knock the socks off of all the competitors. I will tell you that I have four agencies that have attended this workshop that since they applied this methodology, they have landed the largest client in their history. Those 70 agencies have already landed more than 50 million of new AGI using this methodology. I can tell you because I don’t teach much, I’m in the back of the room kind of offering color commentary. This workshop is spectacular.

So if you want to start the new year growing your business, if you are tired of coming in second, if you are frustrated that you can’t win that big account that would change the game for you, you need to be at the Selling with Strategics Workshop on January 25th and 26th in beautiful Orlando, Florida on Disney property. And I promise you, this can change everything for you, right? I knew you’d be excited about it. All right, let’s get back to the show.

All right, I’m back. So first of all, what does a niche look like? A niche is not healthcare. Healthcare is not a niche. That is a ginormous pond of niches, all woven together to be this broad sweeping industry. I’m telling you, you cannot be too narrow in your niche. You cannot shrink your audience down too far so that your business can’t sustain itself.

So the example I often use is pharma. Pharma also not a niche, too big. But pharma products for women over 50, that’s a great niche. Because now you’re saying, “Look, we understand the pharma world. We also understand a specific audience. So that’s a brilliant niche because it’s sort of a combo of industry, but also audience.”

So the first thing you have to do is obviously you have to figure out what your niche is, and then you need to narrow it down. But as you’re thinking about narrowing it down, don’t say banking. Community credit unions, great niche. Banking, not a great niche. Too broad, too big, too much confusion. And so you want confusion. What I mean by that is how you would talk to a small community bank versus how you would talk to Wells Fargo or one of the other big box bangs. Completely different. Their issues are different. What they care about or different, their resources are different. You need to decide who you can delight on a regular basis, who you can knock it out of the park for. So let’s talk about the criteria for what makes a great niche. All right?

So there are several. So I’m also going to give you a URL where you can download an Excel spreadsheet, where you can kind of grade yourself on some of these criteria. But I want to walk you through them individually first. And then you can download the spreadsheet. And basically, you give yourself a letter grade for each of these criteria. And it adds up your score and it shows you where your strongest opportunities are.

So the first one is we have extensive expertise in this niche already. All of you, hen I talk to agency owners about niching, one of the things that kills me is that in many cases, you think that you have to go invent something brand new. That’s just not the case. Your agency or you as the owner, or as a collective of the leadership team, you already have years of experience in something. You probably have years of experience in several things, and it’s really about narrowing down to the right thing.

So, first one is we have extensive experience in this niche already. We can point to our own examples. We can point to case studies. We can tell stories that maybe that we came out of that industry. We have an agency that both of the people came out of the building materials world. So it made perfect sense because of their core expertise when they were on the client side, it made perfect sense for them to build an agency that was based on building materials, because they already had decades of experience in it. And they could talk about it from their historical perspective. So, criteria number one is we have extensive experience in this niche already.

Criteria number two is we have the skills to deliver what they need. And what I mean by that is once you know what your niche is, you know odds are, what are some of the deliverables that they need on a regular basis? And are you delivering against them? Can your core team do the work that needs to be done?

So for example, if your niche requires a lot of PR and you have no PR people on your team, for you to really own that niche and to be a subject matter expert, you’re going to need to hire PR and bring that in-house.

Criteria number three is we have compelling case studies in this snitch. One of the things that I watch agency owners struggle with all the time is when you’re going after prospects. And you are putting together a pitch deck, or a pitch, or you’re going to go talk to them at a Panera. It doesn’t really matter how formal the pitch is, but you’re scrambling to come up with case studies. And you have to sort of Jerry rig the case study to be interesting to the prospect. You have to sort of bend the case study examples to sort of demonstrate to the client why this is relevant to them. When you are a subject matter expert, when you have a depth of expertise in the niche, you don’t have to do that. You have case study, after case study, after case study that is exactly what they want to hear about. It’s exactly solving the problems that they want you to help them solve. So you don’t have to twist and turn a case study because they’re exactly what the prospect is looking for. They prove to the prospect over, and over, and over again that you have this depth of expertise.

So the next criteria is there are between 500 and 10,000 prospect in this niche. Understand the number 500 is a pretty small number, right? But keep in mind for the average agency, having 20 or 25 clients is about all you could manage. And this is true if you’re three people or 250 people. Because what you want is you want each client to be big enough. So let’s call it 5% of your AGI or a little more. And you also want each client to be small enough. So you want it to be big enough that they matter, that they impact the bottom line for you. So it’s 5% of your AGI is ideal. 10% of your AGI, now you’re down to 10 clients maybe. 10% of your AGI is about as big as you want a client.

In the ideal world, and by the way none of us are ever going to hit this number exactly. But the ideal scenario is 20 clients at 5% a piece. Why? Because they’re all big enough to matter, but none of them are so big that they can dictate what happens inside your shop. You have no gorillas.

So let’s say you have 25 clients, and average agency loses between 10 and 15% of their clients every year through attrition for one reason or another. So let’s say if you have 20 clients, 10% is two, 15% is three. So let’s say you lose three. So if every year you lose three clients, you can go a long ways in an industry that only has 500 prospects. So the pool really can be that small.

Now odds are, it’s not going to be that small. Odds are, it’s going to be more than 500. But my point is with this criteria between 500 and 10,000. If there are more than 10,000, it is not a niche. It is too big to be a niche. So family owned car dealerships is a great niche. All car dealerships on the planet, that’s a tough niche because again, there’s so much variety within that ginormous number of businesses that it’s difficult for you to be relevant to all of them.

Relevancy is such a critical part of choosing your niche. You have to be able to be an expert. So you have to be really honest with yourself about where your depth of expertise cuts off, where you aren’t the subject matter expert anymore, where you can’t be super helpful. So again, the next criteria is that 500 to 10,000 prospects in this snitch.

Another criteria is we could buy a list of prospects for this niche. So we could buy a list of family owned dental practices with fewer than five dentists in the practice. I can buy a list for that. So this helps me recognize that I can find my prospects. And if there are, the next criteria so that these are sort of a combo one, two, I can buy a list of prospects in this niche. And these prospects gather somewhere. Conference, trade shows, something like that. I can figure out how to find and go to a big pool of these prospects in some ways. So again, I can mail drop them, I can email them. I can target them with SEO. But I can also go where they gather. I can go to the trade show. I can go to the conference. I can go to whatever it is. So those two elements of the criteria are woven together. I want to be able to find these people. I want to be able to verify that there’s 500 to 10,000 prospects in this niche.

And by the way, if you get a list and it’s 100,000, you just look at that list and you say okay, where are the subsets in this niche? Where could I squeeze down? So again, healthcare huge. Hospitals, also too big. But when you start thinking about nonprofit hospitals maybe or community based hospitals, now all of a sudden the numbers get small enough. But you also can buy a list of them. And you know that those folks gather to talk professionally about the work they do. So there you have that.

The next criteria is how many other agencies already claim this position? The odds of you being the only agency on the planet that has this particular niche are pretty nil to none. But your goal is that the answer is not that many, right? Or a bunch, but none of them are doing the kind of thought leadership that I’m going to be doing. They’re not teaching. So they may have identified the niche, but maybe they don’t have a point of view. And they certainly are not consistently and generously teaching and sharing what they know. So maybe I can claim that land from them by being more overt about sharing and teaching around this, which means that I’m going to become … the audience is going to identify that I am the subject matter expert because they’re seeing me every day, and they’re hearing from me every day, and they’re learning from me every day.

So the next criteria is current clients in this niche could safely refer us. So what that means is it’s not geographically bound. So for example, if you specialize in local restaurants, that’s a tough niche, because your current clients aren’t going to be super excited about you helping the restaurant down the street drive traffic to their restaurant. Why? Because some of the traffic’s going to come from their restaurant.

So you want to choose a niche where, so everybody loves word of mouth referrals. Don’t get me wrong. They’re awesome. But oftentimes, they are the wrong prospect for us. But if you have a depth of expertise and are very clear about who your audience is, and the geography is no big deal, then all of a sudden your current clients will refer you. I will tell you that one of the ways agencies, one of the biggest ways agencies find AMI is other agencies that my community of agencies are really great about bringing other agencies into the fold. They meet other agency owners and they say, “Do you know about AMI? Or have you listened to the podcast? Or do you go to the Build A Better Agency Summit?” Or fill in the blank? And I have a lot of agency owners that even do that with their local competitors. Why? Because they have a depth of expertise. They’re a subject matter expert. And those agencies, even though geographically they’re close to them, they don’t do the same kind of work for the same kind of people. So these agency owners don’t feel threatened by saying, “Boy, you can get smarter and better at running your agency if you go to see AMI, if you go check out what AMI has to offer.”

This can happen for you too, where your clients, and even your prospects, and even people who don’t hire you, but people who have seen you speak at trade shows, or read your book, or however it is you decide you’re going to teach. And we’ll get into that in another episode. But they can’t help but talk about you because you’re so helpful. And that’s one of the great things about being a subject matter expert. When you are helpful to somebody every single day, they kind of can’t help talking about you. They really can’t. They love what you produce. They love what they learn from you, and they start talking about you to other people. So again, with this criteria, this is your current clients that are saying, “You know what? This agency rocks it for us. And here’s what they do for us. You ought to go talk to them.” So that’s another criteria.

The next criteria gets back to that three prong thing. The have a niche, have a point of view, and teach generously. Which is we have a strong point of view that works for this niche. So just have a depth of expertise in an industry, or an audience, or a deliverable, that’s great. But it doesn’t really position you as an expert. I know of no experts who don’t have a strong opinion about something inside their depth of expertise. So you want to develop that. And quite honestly, you already have it. You’re already working in the niche. You may not have identified that you are, but you’re already working in the niche. And you do have a strong point of view. Why? Because you’re doing good work for them. And you can’t do that without a strong take on some aspect of their business, or their industry, or the audiences they’re trying to reach, or whatever it is. You can’t do that and not have a strong point of view. So I promise you, you already have it. You may have to uncover it, but it’s probably something that you talk about all the time or you reference all the time.

The next criteria as you niche down is I, the owner of the agency and the team can get excited about this work. This is something we’re interested in. This is something we have a passion around. Now, does it have to be sexy? No, it does not have to be sexy. You can have a deep passion or a deep depth of expertise about something that is pretty B2B, or is pretty tame, or isn’t the sexiest thing in the world. But for you, it’s interesting. And for you, you love helping people in that space. Or you have so much knowledge around it. You have so much to say, that you could happily be excited about talking about it for a long time. And in fact, the next criteria is you could happily serve this niche for at least 10 years.

It’s not like the Pantone color of the year. We’re not going to change it out every year. This is something that you’re going to really let take root, and you are going to nurture and grow over time. Because the value is exponential. The way you become the industry leader, even if there are other agencies in the space, is by consistently delivering great lessons and teachings. So why in the world after you’ve done that for a year or two would you abandon that and start over in another niche? Doesn’t make any sense.

So niching is like compound interest, right? It just grows on top of itself, and it multiplies faster, and faster, and faster the more you do it. So you want to be doing this for the long haul. So again, 10 plus years.

And then the last criteria is if COVID taught us anything, the niche is recession proof. Now these are all the criteria. You’re not going to get a great score in all of them. But what you can do is you can grade yourself on all of these. And then you can see where you land.

So the way the spreadsheet works, and I’ll tell you how to get it. The way the spreadsheet works is across the top, you list five different options. So a lot of you wrestle with a niching and in terms of choosing between three, or four, or five choices. So this is really about helping you think through those choices, and identify the one where you have the most opportunity. Along the top, you list the five options. And then you grade yourself. The criteria are down the left side of the Excel spreadsheet. And you give yourself a letter grade. So four for an A, three for a B, two for a C, etc. And then the spreadsheet just adds them up and it shows you where your strongest niche is. And then you have a conversation around it.

So if you go to agencymanagementinstitute.com/nichecriteria, all one word, you’ll be able to download this. You can also download it in the show notes. So you can go to the podcast section of the website and find this episode, and you will see that the criteria of the Excel spreadsheet is there as well.

The point of my first episode of this little mini series, it is very difficult for generalists to survive today. I see the financials of a lot of agencies, several hundred agencies a year. And I will tell you in terms of both, year over year growth in terms of top line, in terms of AGI, and certainly in terms of profitability. Growth, but also consistency of profitability, double digit rather than single digit profitability. When I think about the agencies that have consistently grown year over year that maintain a double digit profit margin, close to 20 or 25%, they have a depth of expertise. They have gone all in on some niche that allows them to be that subject matter expert, to be the teacher that gathers the students to them. And a subset of those students hire them.

By the way the rest of the series, if you’re not going to niche down, if you’re like, “You know what Drew, I love you man, but I’m not doing it.” Do not stop listening to the series. So everything I’m going to teach over the next couple weeks you can do it as a generalist too. It’s just harder. Because you picking the topics, and knowing who to talk to, and what to talk to them about is just more complicated. How you get that message out, more complicated. Can you do it? Absolutely. Do I have agencies doing it? Absolutely. It’s just harder. You being a marketing expert means every agency is your competitor. But that doesn’t mean you can’t get opportunities. It doesn’t mean you can’t use chemistry to your advantage. It doesn’t mean you can’t still teach. It doesn’t mean that this methodology that we’re going to talk about isn’t for you. So come on back next week. I promise, we will lighten the niche conversation significantly. And we’re going to talk more in terms of practical terms of how this all works out. So come on back for that.

All right. Before I let you go, a couple things. Number one, if you were with us for the Build A Better Agency summit in 2020, in August of 2020, it was awesome. The speakers were off the charts. The other agency owners, how everybody connected and networked together was amazing. We had these great round table discussions where eight to 10 agencies would sit around a table with a subject matter expert and talk for an hour about that subject matter expertise. It was amazing.

So we’re doing it again. May 24th and 25th. If you’re an AMI member, you can come on the 23rd to family day. But the price just keeps getting higher as we get closer to the event. So May 24th and 25th in Chicago. Would love to have you join us. The event is capped at 300 people. So grab your ticket now. We sold out last year. And last year, we were still in the midst of COVID. I know we still have some COVID stuff to deal with, but it’s different than it was in even August of 2020. We will of course require a vaccine or proof of a negative COVID test, just like we did last year. So everybody will be safe.

This conference is really something special. And I would love for you to join us. So grab your ticket. Go to agencymanagementinstitute.com. And the upper left navigation says BABA summit, or maybe it just says BABA for Build A Better Agency. Click on it. You can register. Come join us. Not only will you learn a lot, but you will leave fired up feeling great about the industry with some new connections and people that you can sort of form a bond with. Why? Because they are living the exact same life you’re living. So that’s really what AMI is all about is building this community of people that come together, and support each other, and learn from each other every single day. It’s what we do here on the podcast. It’s what we do on the Facebook group, the Build A Better Agency Podcast Facebook group. It’s what we do at our workshops, at our conferences. It’s really about community and information sharing. And certainly, we share information at AMI. But our audience, our clients, they share too. So it is a 360 learning environment. And the conference is a beautiful example of that. So I’d love to have you join us. So that’s number one.

Number two, big shout out to our friends at White Label IQ. They are the folks that do white label, PPC, dev and design for lots of agencies. So all you have to do is go to whitelabeliq.com/ami, and they have some free hours for you for your first project. So highly recommend that you check that out. Really good people. Really good people. People that own an agency. So they get our world. They’ve been inside the AMI community for gosh, a couple decades. Great people who understand our world because they’re in our world. So everything they do is about helping the agency, and the agency owner, and the agency leadership team accomplish what they need to accomplish. So great, great, great, great folks.

And I would be remiss as we kick off 2022 not to acknowledge the fact that I am just super grateful that you keep coming back and listening, and that I have the opportunity to share with you what I know, and what I’ve learned, and that it’s useful for you. I get notes from a lot of you after a specific episode, or a newsletter article or something like, that lets me know that it was helpful. That just what you needed to hear that week.

That warms my heart in a way that I can’t even describe. That we’re teaching the right things that are really useful for you is meaningful to me, and it is why we do this because we want to help. So thank you for listening. Thanks for coming back. Thanks for being a part of the community, however you’ve plugged in. And please know that we’re grateful for you. We really are. And you make it fun to do this every day. So thank you for that.

All right. I’ll be back next week. I’m going to be back just you and me again. Again like I said, I haven’t decided how many of these I’m going to do. But I’m going to do it until I feel like you’ve got what you need to make 2022 amazing. So come on back. Let’s talk biz dev again next week, and we’ll just keep doing it until you’re ready to go. All right? I’ll see you then.

That’s a wrap for this week’s episode of Build A Better Agency. Visit agencymanagementinstitute.com to check out our workshops, coaching packages, and all the other ways we serve agencies just like yours. Thanks for listening.