Episode 200

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During the spring gatherings of AGI owner peer network members, I walk them through a presentation on trends that I’m seeing in the industry. Then I devote two solocast episodes to these findings later in the summer.

In episode 195, I covered what’s happening with agency money and finance, along with some trends in ownership, decision-making, and how you and your peers are managing the pace of change in this industry.

In this episode, I talk about employees, clients, and some tactics with which agencies are having great success in terms of winning clients and serving them well.
If the topic of employees gives you a queasy feeling, you are not alone. It’s a big source of concern for many agency owners. I discuss trends I’m seeing in why retention is such a challenge and what you can do to make your agency the best option for employees you don’t want to lose.

What’s happening on the client-side? There are some really interesting findings. I discuss creative ways in which agencies are gaining more clients and more billables from existing clients.

What You Will Learn in this Episode:

  • Why freelance work is becoming more common and more of a draw to your current employees
  • How to increase diversity in your agency
  • What employees are looking for in agency culture
  • How to set up an attractive incentive program
  • What agencies are doing to counteract clients doing more work in-house
  • The most in-demand work with which agencies are engaging clients and for which they are being well-compensated
  • The four traits that will get you on a client’s radar
  • How agencies can help clients take a stand on the issues that are important to them and their customers

The Golden Nuggets:

“What are your company values, and how are they lived out in the company culture? Your employees are watching and want to know.” – @DrewMcLellan Share on X “Diversity matters from both a recruiting perspective and a client retention perspective. A lack of diversity will be noticed.” – @DrewMcLellan Share on X “One area that employees care about, and that agencies need to get a better handle on, is how to articulate and live out a shared set of values as an organization.” – @DrewMcLellan Share on X “Do not hire a breathing body just because you need a body. You know what that costs you and your agency. Resist the temptation.” – @DrewMcLellan Share on X “Clients want agencies to get faster in managing their systems and processes so projects get turned around more quickly.” – @DrewMcLellan Share on X

Drew McLellan is the CEO at Agency Management Institute. He has also owned and operated his own agency since 1995 and is still actively running the agency today. Drew’s unique vantage point as being both an agency owner and working with 250+ small- to mid-size agencies throughout the year gives him a unique perspective on running an agency today.

AMI works with agency owners by:

  • Leading agency owner peer groups
  • Offering workshops for owners and their leadership teams
  • Offering AE Bootcamps
  • Conducting individual agency owner coaching
  • Doing on-site consulting
  • Offering online courses in agency new business and account service

Because he works with those 250+ agencies every year — Drew has the unique opportunity to see the patterns and the habits (both good and bad) that happen over and over again. He has also written two books and been featured in The New York Times, Forbes, Entrepreneur Magazine, and Fortune Small Business. The Wall Street Journal called his blog “One of 10 blogs every entrepreneur should read.”

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Ways to contact Drew McLellan:

Speaker 1:

If you’re going to take the risk of running an agency, shouldn’t you get the benefits too? Welcome to Agency Management Institute’s Build a Better Agency podcast presented by White Label IQ. Tune in every week for insights on how small to mid-size agencies are surviving and thriving in today’s market. We’ll show you how to make more money and keep more of what you make. We want to help you build an agency that is sustainable, scalable and if you want down the road, sellable. With 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 with another episode of Build a Better Agency. Thanks for joining me. And this is a special episode for me. This is episode number 200 and in podcast land, that’s a lot of podcast episodes. We started this in 2015 and we have been going strong ever since. And so I want to just pause for a second and sort of go, holy crap, this has been awesome. I am so grateful that you have been here every week, that you have stuck around, that you keep coming back for more, that you have been generous with your feedback and your encouragement. I am also incredibly grateful that so many of you have reached out and connected with me on LinkedIn, or Facebook, or Twitter, or all of the above, Instagram. It’s just really great to connect with you out in those social circles and see what you’re up to, learn a little bit about you and your agency.

So if you haven’t done that yet, I highly encourage and invite you to do that. I would love to connect with you there. I’m also so grateful that we have attracted amazing guests. I mean, our guests show up and they are ready to go. They’re ready to share. They are generous with what they know. They are candid with their mistakes. They are humble. And I learn so much from them with every conversation. So I hope that I always embody the questions and the topics that you would love to dig more into as I talk to them. I really do have my agency owner hat on which as you know, I’ve been wearing for a really long time. I really do put that hat on in these conversations. And I really come with the innocence of I want to know and anticipate what you want to know in asking those questions.

So thanks for being here. Thanks for going on this journey with us. And on the one hand, 200 episodes seems like a lot, but I also feel like we’re just scratching the surface. There are so many other people that I want to talk to. There are so many other people that I want to bring to your radar screen and to give you access to what they know and what they’ve learned. So we are just getting started. So I hope that you continue to find every episode valuable. I hope that you continue to stay connected and reach out and that you just keep coming back for more. And thank you so much for your support and your loyal listenership. I’m so grateful and it’s awesome to meet you at conferences and events. And I just feel blessed that I get to do this. And I’m really grateful that you find it useful because that’s why we’re doing it.

So thank you so much for that. Thanks for sticking around. As you might imagine with me blathering on, episode 200 is a solo cast, so for those of you that are newer to the podcast, who are probably wondering what the heck I’m talking about in terms of blah, blah, blah, 200. If you’re relatively new to Build a Better Agency, every fifth episode is a solo cast. So in that instance, I don’t have a guest with me. I’m just talking to you about something that has come up a lot when I’ve been hanging out with agency owners or it’s something that I’ve been thinking about a lot that I want you to be thinking about, or it’s something that I’ve been teaching in a workshop that I think would be valuable for you. And so that’s what this is.

So five episodes ago, episode 195, I gave the first half of my 2019 trends report presentation. So I put together that trends report right after the start of the year and I presented live to all of my AMI owner peer groups. So when I’m hanging out with agency owners and in their peer groups, I am presenting to them this trends report. And then every summer after I’ve presented it to all of the members, I present it to all of you. And it’s too long to do in one episode. So that’s why I break it up. So in episode 195, I covered trends around money and finance and I covered some trends around owners and some of the things I’m noticing in them and decisions they’re making and choices and that sort of thing.

And in this episode, I am going to talk about employees and clients and some tactics that agencies are having great success with in terms of selling those to clients, using them to help clients achieve their goals and some of the things that clients are specifically asking us for. So thanks for being here, thanks for celebrating episode number 200 with me. And hopefully I will see you next week and all the weeks after that and we’ll celebrate 250 and 300 and 350 with each other, and we’re just getting started. All right, with that, let’s get into the trends. So the first category of trends that I want to talk about in this solo cast is employees. And I will tell you that if I said employees and you made a pained expression on your face, you are not alone. This is a pain point for many agencies right now, is the idea of finding and keeping good employees.

And honestly, I think part of that is because one of the trends that I’m seeing is self-employment is getting a lot easier and a lot sexier. So when I started my first agency job, I don’t think it even occurred to me that I could quit my job and do the same thing I was doing for my agency, but on my own and that my agency that I just left, would become my first client. But that’s one of the things that’s happening quite a bit. So not only are your employees coming to you and saying that they’re going to hang up a shingle and freelance, especially if they have a skillset that’s hard to find. So think SEO, PPC, maybe write, content writing.

You make it easier for them to go out on their own because you are so tied to their skillset and their deliverables that you agree to be their first client. So self-employment is getting easier and sexier. We’re making it easier because we’re buying a block of hours that bankrolls their departure. But I also think the freelance business in general is getting very organized. Are all kinds of tools out there today, whether it’s accounting software for freelancers or tax preparation knowledge or selling tools or communities where they can share documents and contracts. They’re getting organized and when they get organized, it means it’s easier for everyone. The other thing that’s happening in the freelance business that we need to be very aware of is another way they’re organizing is much like glass door, where employees or disgruntled former employees can review agencies.

There are now starting to crop up versions of that for freelancers to evaluate their agencies. So the biggest one right now is over in the UK and it’s called The Freelance Circle. And basically if you go to The Freelance Circle, you can search for agencies, you can leave reviews for agencies based on, “Did they give me good input? Did they pay on time?” All kinds of things like that. So in general, the creative class freelance population is organizing and getting smarter and it’s getting easier. So that’s one of the many ways that we are competing for employees. Not only are we being poached by the corporate side of our world, not only are we being poached by our own clients, poached by bigger agencies, other agencies, but in many cases, our employees are actually leaving to hang up their own shingle and it’s getting easier and easier for them to do that.

So I don’t see the challenge around finding and retaining good employees getting any easier through the rest of this year. So I think we are at least another six, 12, maybe even 18 months before the pendulum swings the other way and it’s actually a buyer’s market again. Right now it is absolutely a sellers market. And the employees have a lot of power and control over all kinds of things that are related to their work. And so I think it’s really important for us to understand what matters to those employees, the employees we have today, and also what matters in terms of what is attractive about us when we’re trying to find employees.

So one of the topics, one of the key topics that employees and we’ll talk about clients in a little bit, but that employees are noticing and asking us to care about is the idea of diversity inside our agency. For the most part at least in North America, the agency business is relatively homogenous still. And so in many agencies there is not a lot of diversity inside the agency. And when I say diversity, I mean gender which I think we do have a balance of male and female, sexual orientation. And I think our industry has always been a leader in being comfortable with people of all sexual orientations being out and open and comfortable in the workplace.

We’ve always been a safe place for that. And obviously ethnic diversity, religious diversity, all of that. Particularly ethnic and religious diversity, I think it’s less common in our industry to have that kind of diversity. So it’s getting noticed in a couple of ways. Number one, prospective employees and employees are saying, “I want a diverse workforce. I want to surround myself with people from lots of different cultures and points of view,” but even more interesting is that clients are starting to notice. And we’ve had several agencies and I’ve heard plenty of other stories where agencies didn’t win a new business pitch because as the prospective client said, “You walked into this room with a bunch of white men and that reflects no diversity. And we want to work with an agency that is more diverse than that.” So diversity matters both from a recruiting and retaining employees and also from a client perspective.

And it really is getting noticed. And so one of the things that I think we have to acknowledge is that I’m not sure our industry and I’m not laying blame anywhere, but I don’t know that we’ve attracted a lot of diversity. I don’t know that we have actively gone out to seek diversity in our industry. And so I think part of it is because we are hiring the candidates that are presented to us, and we’re not seeing a lot of diversity even in that population. So it’s hard to hire for diversity when you don’t have any diversity amongst your options. Now, many agencies are actively putting programs in place to increase the diversity inside the agency itself. So they are working on internships with colleges, or even in some cases, high schools, where there is a diverse population so they can try and get more of a cross section of students to have an interest in the industry and to attract them to the agency.

Other agencies are actively seeking out internship programs and other things like that, where they are offering scholarships. They’re doing all kinds of different things to try and create a more diverse workforce. So look around your office and note how diverse you are or are not and then ask yourself, “What is possible in my market? What’s possible in my part of the country. And then what am I doing to actually actively try and become more diverse and is my culture welcoming to diversity?” So lots of discussions I can get inside your agency around this diversity topic. So one of the big things that when a prospect and when I’m speaking prospect, in this case I’m talking about a prospective employee. When they’re looking at our agency, one of the things they always ask us is, “What’s the culture like?”

And when we spoke to agency employees, we asked them, “What does that mean? When you say culture, what are you actually asking us for? What do you care about?” And here’s what they’re thinking when they say culture, number one, the very first thing that they say and the thing that they rated as most important was educational opportunities. “Is this a place where I can grow? Is this a place that will invest in me so that I can grow? Will they give me time to grow? Will they give me a mentor? Will they send me to training? How will I keep honing my craft and getting better so that I can grow professionally?” That was number one.

The next one was, “What are the incentives? If the agency does well, what happens to me? So is there a bonus program? Is there some sort of a spiff involved? Some agencies if they hit certain financial metrics take everyone in the company on a trip. Whatever it may be, I want to know what is my personal incentive for helping the agency achieve its goals?” The third thing that they really want to know, and I think this is a place where we don’t do a great job. Some of you do, but many of you really do not. And that is what is the agency’s values and how are those values woven into the culture, the behavior, the rituals of this agency? So, first of all, what are the values? Do we have any? And many of you do, but they sit inside an employee handbook or something else, and they’re not really dusted off for much more than that.

And then in other cases, some of you are great at embracing your values and they’re up on the walls. And you have peer recognition programs where your employees are calling each other out for leaving one of the values and maybe there’s awards, employee of the month, employee the quarter, whatever it is tied to the values, but they want to know what the agency’s values are and how those values inform the agency’s decision-making policies, procedures, relationships inside the agency. So if you’ve got core values and you really don’t use them for much, maybe it’s time to dust them off, make sure they’re still accurate, and then start using them as part of the conversation that you have with employees every week about how we treat each other, how we treat clients, how we treat vendors, all of that.

And if you don’t have them, maybe it’s time to think about developing them and how they can play a role inside your agency. Some of the other culture things that are important to our employees are growth opportunities. So especially if you’re a small shop, they look at your 10, 12, 20 people, and they think, “How high can I grow? If somebody doesn’t leave or die or retire, how do I keep advancing in my career?” So helping them understand that they can grow in responsibility, in pay, in opportunity. And it doesn’t necessarily have to be a title growth or a department head growth, but it certainly can be growth within their own core competency. And then again, they want to know about diversity and they as always want to know how does the agency play?

So what do you do that balances the hard work and the deadline pressure and all of that. Which honestly the play part, you’re all pretty good at for the most part, unless you get super busy and then sometimes you take your eye off that ball. But for the most part, agencies are fun places, they’re high energy places. So you’ve got the play part down, but some of the other things, maybe places where you want to invest a little bit of discussion and maybe a little bit of elbow grease.

So for most agencies, the number one issue is finding and keeping the right people at the right price inside the shop. So it is absolutely the challenge of recruitment and retention of employees. And for most of you, it is your biggest barrier for growth. So I’ve talked to a lot of agency owners who’ve said, “I have proposals sitting on my desk, or I am getting phone calls. Or we have RFPs that we should be answering that right now we’re not answering because I have no idea how we would actually get the work done if we won the business. I can’t staff up for that size project. And so I’m having to let it fly by me, which kills me, but I just don’t know how we would get the work done.”

So if you are feeling that, if you are feeling the crunch… By the way, many of you are experiencing it anywhere from 25% to 35% turnover inside your shop. So if you’re experiencing all of that and you are feeling stuck, that you can’t really grow the business or chase after the prospects that you want to, know that you are not alone, know that this is a season and this is a pendulum that swings back and forth. And right now unfortunately, the pendulum is all the way to one side. I know it’s going to come back and get more normal again, but I don’t think it’s going to happen in the next six, maybe even 12 months. So hang in there, create a culture that is sticky. Take good care of the people that you have and start recruiting far before you need someone, because it’s going to take you longer to find that employee that is the great fit.

And do not hire a breathing body just because you need a body. You know what a big mistake that is, you know what that costs you and your agency, so resist the temptation to do it. All right, next trend I want to talk to you about is clients, but first we’re going to take a quick break. Thanks for tuning in to Build a Better Agency. I just wanted to take a quick second and remind you that throughout the year, AMI offers workshops for agency owners, agency leaders, and account executives. So if you head over to the AMI website and you check out under the training tab, you’re going to find a calendar of all of the workshops we offer throughout the year.

We cover quite a wide variety of topics, everything from biz dev to creating a content machine for your agency, to making sure that you are running your business based on the best financial metrics and d