Episode 250

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In my 250th (man, how times flies!) episode of Build a Better Agency, we look at the next set of client and employee-focused trends from the 2020 Agency Trends Report, picking up where I left off in episode #245, which was me walking you through the first half of the trends. The back half of the report covers everything from employee retention and happiness to the changing needs of your clients as they respond to current events. I am hoping these trends will give you a better idea of what we can do to adapt to this complex economic climate while protecting the health of our agencies.

Every summer, I consolidate the trends that I see every day in the 250+ small to mid-sized agencies we serve and distill them down for you so you can plan for these evolutions in our industry.

With everything going on right now, it is hard to dedicate the necessary time and mental space to focus on running your agency. But, paying close attention to the health of your agency and the trends that will impact its health, is more important than ever before. We have to carve out of the time to protect our businesses and I am hoping that taking a look at these trends will help you do that.

The State of the Agency 2020 will provide tons of insights to push through these difficult times and help your clients do the same.

A big thank you to our podcast’s presenting sponsor, White Label IQ. They’re an amazing resource for agencies who want to outsource their design, dev or PPC work at wholesale prices. Check out their special offer (10 free hours!) for podcast listeners here: https://www.whitelabeliq.com/ami/

Agency Leaders

What You Will Learn in This Episode:

  • Why agency leaders had to make concessions due to employment shortages and how that trend is shifting
  • How to regain control of your agency while maintaining employee retention and happiness
  • How to take advantage of the expanded talent pool created by the pandemic
  • Why our clients are looking to get a bigger share of wallet from their existing customers
  • How agencies can capitalize on the need for cause and social marketing
  • How agencies are stepping over the line and diving into sales strategies with clients
  • Why clients are seeking out brand activation
  • Best practices for embedded employees
  • How we can help our clients create and manage private communities that are loyal to their brand
  • New areas where agencies are making great money
“Nothing has a greater impact on your agency than your employees.” @DrewMcLellan Click To Tweet “Even if you aren’t ready to hire right now—now is a great time to start planning, cultivating relationships, and putting a timeline together so you are financially prepared.” @DrewMcLellan Click To Tweet “All our clients care about right now is sales. If you’re not willing to cross that line, your budget is probably going to get cut.” @DrewMcLellan Click To Tweet “5-10% of agencies have an embedded employee to serve a client in-house, and it’s working extremely well.” @DrewMcLellan Click To Tweet “We need to find clients that are willing to speak out and take a stand. By doing that, they are aligning their brand with how their employees and customers feel. When you get all of that right, it can be super powerful.” @DrewMcLellan Click To Tweet “In 2019, the greatest barrier to an agency’s growth was the talent pool. COVID has solved that problem.” @DrewMcLellan Click To Tweet

AMI works with agency owners by:

  • Leading agency owner peer groups
  • Offering workshops for agency 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 over 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 several books, including Sell With Authority (2020) 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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Speaker 1:

It doesn’t matter what kind of an agency you run. Traditional, digital, media buying, web dev, PR. Whatever your focus, you still need to run a profitable business. The Build A Better Agency Podcast presented by White Label IQ will show you how to make more money and keep more of what you make. Let us help you build an agency that is sustainable, scalable. And if you want down the road, sellable. 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 with another episode of Build A Better Agency. Thank you for joining us. Thanks for being a part of the podcast. Particularly today, as we celebrate episode number 250. That is staggering to me. Five years ago, we launched this. And honestly, I had no idea if anybody would listen. I didn’t know if I would be able to find enough interesting guests. I certainly wasn’t confident that I would have enough to say in the solo cast to go for five years. But amazingly in a blink it seems like, we are at episode 250. So I am grateful for you. I am grateful that you listen week after week. I appreciate the ratings and reviews you leave. I appreciate the comments that you send me by email. I love when I’m at an event whether I’m speaking or it’s one of the AMI workshops, and you walk up and tell me that this is how you first got introduced to AMI. So I am grateful for the show and I am super grateful for all of you. And of course, a huge shout out and thanks to our guests. Without them, this would be a tough thing to do every week. And also a huge shout out and thanks to our supporting sponsor, our presenting sponsor White Label IQ. I’m super grateful for everybody that has a hand in this.

Also big shout out to my friends at Predictive ROI. They have produced this podcasts from the very beginning. And there are many times when I’m sure I drive them insane with, “I don’t want to have that guest on. I want to slide this episode in at the last minute.” But they are always gracious. They’re always keeping me up to speed on new technology that we can be using and new ways to make the show even better for you. So thanks to everybody who plays a role in this. Most of all though, honestly, thanks to you. This would stink to do this and have no one listen. So I am grateful that you’re out there and that you keep listening.

All right. So enough about that. Let me tell you a little bit about our episode. As many of you know, in my last solo cast. So about a month ago, five weeks ago, I gave you the first half of the 2020 trends report. Just like I do every summer. I try and break that trends report into two solo casts because it’s just too to do in one fell swoop. So this episode will be the back half of the trends report that I give to AMI agencies in the spring when they’re in their peer group meetings.

Before I get into the trends though, want to do a couple of quick things. So number one, I want to tell you that for the first time. And honestly, I hope for the last time, we will be doing our AE Bootcamps virtually. So the city of Chicago is not quite ready to host us yet. And our conference center where we normally have our live workshops, not quite ready for people to be there. So we are going to be doing both the advanced AE Bootcamp and the regular AE Bootcamp virtually. So it will be live. It’ll be me teaching just like I normally would. But instead of being in a classroom or a conference room setting together, we’ll be on Zoom like we’ve all been a million times since COVID hit.

But I’ve done several of these before, different workshops, different peer groups. And I have to say, I’m kind of surprised how well they work. People get a lot out of the contents. There’s still a lot of interaction. So if you have ever thought about sending your team to the workshop but maybe didn’t want to get involved in the travel and all of that, now would be a great time for you to head over to agencymanagementinstitute.com. Go under the How We Help, find the workshop calendar, and sign up for either of the AE Bootcamps. So the advanced AE Bootcamp, mostly for people who’ve been in the agency business for four years or more. And then the regular AE Bootcamp for anybody who has less than four or five years of experience. So we’d love to see you there. We’d love to have you join us for this once in a lifetime COVID created opportunity of the course being taught live, but virtually. All right. So again, let’s jump into the trends. And let me tell you what I’m seeing, not only over the last six months or so, but what I see around the bend for the rest of 2020 and going into 2021.

So the next set of trends that I want to talk to you about that this part of my presentation butts right up against the front half that you’ve already had exposure to. This next group of trends is around employees. So you know there’s probably no other single element inside an agency that impacts the agency as much as the employees do. And for the last several years, agency owners have really, really been in a tough position. There have been not enough qualified candidates to fill positions. So many agencies have gone months, and months, and months not being able to find someone to fill an open position. Internally, employees have been more demanding in terms of wanting not just salary increases and bonuses, but perks and privileges. There’s been a lot of talk around flexible work time, and remote work, and all kinds of things.

And honestly, for the last couple of years, agency owners have had to really bend over backwards to keep the employees happy far beyond … I think all agency owners want their employees to be happy. But I think some of the things that agency owners have had to do to keep the employees happy, they were basically being held hostage. Agency owners felt like they couldn’t say no, because there were so many jobs out there that their best employees, even their mediocre employees could go and find another job. So this has really been a challenging time for agency owners and leaders, department heads to try and staff up appropriately with a good quality team. And to keep that team intact.

Because it reminds me of when a baseball player has a great season. And all of a sudden, he wants a couple of million dollars more to play the exact same game he played last year. Sometimes the teams pay it, and sometimes they say, “Forget it, you’re a free agent.” Agencies were not in a position to be able to say, “Forget it, you’re a free agent.” So they really were paying through the nose, not just financially, but in terms of flexibility and all of those things, just to keep the employees they had.

And for many agency owners, this was really frustrating. It was hampering agencies’ growth. I had agency owners saying to me, “I’ve got RFPs on my desk that I can’t respond to because I don’t know how in the world I would staff if we got that piece of business. You can’t find enough good people and keep enough good people.” And agencies were being poached left and right. Clients were hiring employees, bigger agencies were hiring our employees, universities were hiring our employees and offering their kids free education. We just couldn’t compete.

So what I noticed in 2019 was that at a certain point in time, whatever the last straw that broke the camel’s back had been delivered. And agency owners had had enough. And what I think they were realizing is that even when they did concede to everything, people still left. So they were giving away all of the profitability of the agency. They were not letting the agency be run the way they wanted it to be run. So the inmates were sort of running the prison if you will, or the asylum. I know that’s not a great analogy. But basically, the owner of the business was not able to actually run their business anymore. So at some point, I would say in the fall of 2019, the final straw hit. And agency [inaudible 00:08:58] really universally were like, “Enough is enough.”

And so the analogy I use is we had been really well-trained by the employees to do whatever we wanted. If they wanted a foot massage at 10:00 AM, we showed up at their desk and rubbed their feet at 10:00 AM. If they wanted chair massages, or to close early on certain days, whatever they wanted, we were giving to them. And what was happening is it was impacting the way we could do work. It didn’t feel equitable. The employees that weren’t complaining or asking for stuff were starting to be resentful. And at the end of the day, it didn’t actually change whether somebody stayed or not. So what happened is the dog is starting to bite back. So agency owners had had enough. They said, “You know what, this is my business. I’m going to run it the way that I want to.” And all of these crazy requests, there’s got to be an end to this. So it’s not that I want this not to be a great workplace. Not that I don’t want to be flexible. It’s not that I don’t want to help you balance your home life and your work life. It’s not that I don’t want to pay you well. But I can’t say yes to everything that everybody asks.

So it was just getting so absurd. And for a while, agency owners went along with how absurd it was. And then finally, they realized it was just not sustainable. So they sort of put their foot down and said enough is enough. And realized that that meant they may lose an employee or two. But they were not willing to take the risk anymore, and they weren’t willing to pay the price anymore.

So interestingly, what happened is the people that were going to leave left. And the people that weren’t ever going to leave because they didn’t get a foot massage didn’t leave. And in fact, I think what we learned is really what kept employees through that season, which obviously has changed because of COVID. And we’ll talk about that in a minute. But what really changed was that the people who wanted to stay loved the agency environment, they loved the kind of work they were doing. But they also, what kept them in place despite getting other offers, what kept them in place was the relationship they had with the agency owner and/or their direct supervisor. What every agency employee wants more than foot massages, more than flexible schedules, is they want the ability to learn and get better.

We did some research a few years ago, Susan Baier and I in our Agency Edge Research Series, where we interviewed almost 1,000 agency employees. And the number one reason they gave them, and the number one reason that they would still give today. And this is proof based on what I’m talking about, is the number one reason why they stayed at an agency, a specific agency is because the have the opportunity to learn and grow. They want to better themselves. They want to get better at their craft. So if you’re doing one-on-one meetings, if you are doing some mentorship with your key employees, that’s what’s going to get them to stay. And we’ve seen that now as this trend has evolved.

Now certainly, COVID has changed all of this. And now all of a sudden, and we had said all along for the last two years, I’ve been saying right now, the employees are in the driver’s seat. When there is an economic correction and people start laying people off, in-house marketing departments get decimated, ad agencies start laying off some of their extra people. And all of a sudden, there’s a flood of employees on the street. Now all of a sudden, the course gets changed. And now all of a sudden today, the power is sitting on the employer’s side, where there are fewer jobs than there are people out there looking for jobs. So all of a sudden, this need to capitulate to every demand has been wiped out by COVID. But, I’m hoping what we learned is that … because the pendulum’s going to swing again. So yes. Right now, just like after 9/11 and just like after The Great Recession, it’s easy to find good qualified employees at reasonable prices because they’re just eager to have a job. We’re in that position right now. But the pendulum is going to swing back to the other side, just like it always does.

So what I’m hoping is that agency owners and leadership teams have recognized that giving away the farm doesn’t actually keep anyone from leaving if they’re going to leave. And that it’s better to define the value of being an employee. Whether it’s salary and bonuses, or perks, learning opportunities, mentorship. And really honoring those through good times and bad. Meaning whether there’s a glut of employees or you’re having a hard time finding employees. But really to stay true to those things. The things that define what’s awesome about working at your agency. Whether that’s a flexible work schedule or whatever it may be. And really sticking to those and not giving into every ridiculous demand that gets put in front of you. I’m hoping that that is a lesson that sticks for us. Because at the end of the day, it didn’t really save us. And it just cost us a ton of money. And it created a bunch of resentment, and it wasn’t healthy for the agency. So what’s best for the agency is for you to be a great place to work, but based on your terms, right?

So again, remember. I started giving these trend reports in February prior to COVID hitting. So what I was saying in February was at that point still the greatest barrier to an agency’s growth right now was the talent pool. That many of you were struggling to try and find enough talent. And it was literally keeping you from chasing opportunities. COVID absolutely has solved this for most agencies. Now some of you are still hiring. But hiring today is very different than hiring in January or February of 2020, or in late 2019. Hiring today is a much easier situation because there are a lot of candidates out there on the street, good candidates on the street. So again, as the agency gets stronger, as you build up your financial foundation so that you are in good financial shape, one of the things I’m hoping for many of you is that you can augment your team with some superstars at reasonable prices so that you can really fuel the growth of your agency by having a strong team.

And now is a great time for you to start thinking about, even if you’re not ready to hire right now, now is a great time for you to be thinking about what is your next hire. And how do you start to cultivate relationships? And how do you put a timeline together so that you are financially ready to hire that next position that you need? It would be great to have a plan in place, and to get executing against that plan as quickly as possible.

So on the client side of trends, this is always a place where for many of us, we want to focus a lot of our attention, our clients behaving. What are they asking for? That sort of thing. So on the client side of the trends, clients have self-identified based on both data, research data. But also what I was seeing clients actually buying from agencies. So here’s some things that clients were identifying that they wanted to buy more of. And again I’ll remind you, this was originally put together pre-COVID, but I’m here to tell you that only one of these went away because of COVID. So the rest of these are holding very solid and steady. And if anything, have been more exaggerated in the demand since COVID.

So the first one was bigger share of wallet. So one of the things that clients seem to realize in 2019 coming into 2020 was while it was great for them to be pursuing new clients or customers, it was foolish of them that they didn’t really have a program in place to try and cultivate more purchases from existing clients. That they weren’t really building up loyalty and an insider’s club. And they weren’t giving their customers enough opportunity to buy more. So they were really starting to hire agencies to help them get a bigger share of wallet.

One of the other things that was really hot coming into COVID was experiential. That of course unfortunately has completely gone away as we have been social distancing, and not going to trade shows. And there’s no man intercept on the streets, things happening right now. But I fully expect as we inch our way back to normal throughout the globe, probably slower in the U.S. than anywhere else based on our numbers. But for the rest of the world as they get back to business as usual quickly, experiential will come back. That’s been a trend for the last couple of years, and I don’t anticipate it going away anytime soon. So I would think of this as a temporary pause in people wanting to create experiential opportunities for prospects and customers, or even their own employees. But it’ll come back.

Another thing that clients are buying a lot of is community building. So this I think ties back to that first trend I mentioned, which was the bigger share of wallet. So clients again are recognizing that they have not really engaged with their customers in a way that makes them feel like they belong to something, like they’re connected to the brand. And they really haven’t done anything to try and really create an amazing referral opportunity by having customers gather together. And what they have in common is the product or service that they use that your clients sell. So we’ll talk a little more about community building in a bit. But know that that’s a big one.

Cause in social marketing. What we’re seeing over, and over, and over again is that consumers are saying they want to understand what a brand stands for. They want to understand what a brand supports and doesn’t support. So a lot of brands don’t know how to do this. A lot of brands sort of default to the give a little bit of money to everybody, and they have their logo on a tee-shirt or something like that. But they don’t really know how to build a cause marketing program with marketing dollars and marketing outcomes and goals. So I think this is a huge opportunity for us as agencies to really dig deeper into this and to help clients actually figure out one, what do they care about? What do they want to stand for? And two, how do they do that in a way that not only influences the cause? Because they obviously want to do that. But invites their customers to participate in whatever they’re doing. And, attracts to them customers who also share the love of that cause.

I always think of Avon and the amazing work they’ve done around breast cancer, which makes perfect sense. So they’ve picked a single cause that mattered lot to them. It mattered a lot to their customer base, which was 99.9% women. And probably of a certain age that breast cancer concerns were top of mind. And they invited their customers in a lot of ways. Breast cancer walks, all kinds of things. Not only did they invite their employees or their consultants, I guess they’re mostly 1099s, but whatever. They invited their employees and their salespeople, as well as their customers to participate in supporting this cause and fighting for more breast cancer research and all the other things they were doing. So I think there’s an opportunity like that for many of our clients.

Certainly right now, so I’m recording this in early July. You’re going to listen to it sometime in the month of July, probably. Certainly right now, the Black Lives Matter movement is getting a lot of our clients’ attention. And again, helping them do something meaningful rather than something that’s on the surface that they’re going to be criticized for later because they didn’t actually change anything. They just jumped on the bandwagon, I think is a huge opportunity for agencies.

Another thing that clients were asking agencies to do. It’s interesting, agencies have always been a little hesitant to step over onto the sales side of the equation. In many companies, certainly before The Great Recession and in some cases after the recession, many companies sales and marketing were separate departments. And they had separate goals and separate budgets. And in agencies, we mostly aligned with the marketing department. So we worked with them. But we didn’t really dabble too much into the sales side. And in fact, in a lot of companies, it seemed like the marketing department and the sales depart