It’s an age-old discussion. Should an agency specialize and focus on specific niches or should they be a generalist? If you’re familiar with AMI or have read the book I co-wrote with Stephen Woessner (Sell with Authority), you know that I believe there are some huge advantages to claiming your authority position and being a specialist. You don’t have to take my word for it – in this episode, I am going to show you some data to make the point.
But, even if you choose to remain a generalist, that doesn’t mean you can’t have a rock-solid sales strategy that keeps your pipeline full and attracts your best-fit prospects. It’s going to take longer but you can get there.
In this episode of Build A Better Agency, I want to walk you through the stages of an agency’s biz dev evolution and the potential power of holding a position of authority so that prospective clients hunt you down and ask if they can be your client.
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/
What You Will Learn in This Episode:
- Why agencies who specialize have a distinct advantage when it comes to sales and retention
- Why referrals shouldn’t be the only way you grow your agency
- The goal today for agencies is to be sought after
- The evolution of how agencies sell
- The importance of developing thought leadership and expertise within a niche
- The research data behind how and why agencies get hired
- How to carve out a position of authority and sell from that position
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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Ways to contact Drew McLellan:
- Email: [email protected]
- LinkedIn: www.linkedin.com/in/drewmclellan
- Website: https://agencymanagementinstitute.com/
Tools & Resources:
- 2019 Agency Edge Research Study
- Money Matters Live Workshop Money Matters Live Workshop
- Build and Nurture Your Agency’s Sales Funnel Live Workshop
- Sell with Authority (buy Drew’s book)
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.
Hey everybody. Drew McLellan here from Agency Management Institute. Welcome back to another episode of Build A Better Agency. Super glad you are here, grateful that you are carving out the time to be here. I know that you are very busy as the fourth quarter marches on, if you’re listening to this in real time. I am grateful that you’re giving me a little bit of your time today. Today is one of my solo casts, so no guests, just you and me chatting about something that, in many cases, is something I’ve been having a lot of conversations with agencies. I am in the midst of all of the AMI live peer group meetings and so been hanging out with agency owners, big groups of agency owners, 20, 25 people since August.
What I want to talk to you about today is a topic that comes up in every single meeting and this, by the way, is not a new topic, this is a topic I’ve talked to agency owners about for a long time. I have a lot of, for me, clarity and a strong position about this topic, which I am happy, of course, to tell you about and then leave it up to you to decide if it makes sense for your agency or not. But before we get into today’s topic, I want to put a couple things on your radar screen. As you know, one of the things that AMI does a lot of is we do a lot of live workshops throughout the year. If you’re listening to this in real time, this is early November of 2020. Because of COVID, we have had to cancel a lot of those events, which has been unfortunate because that meant a lot of people didn’t get the education they wanted.
We were able to do some of them virtually and others we couldn’t, but I’m excited to tell you that we are getting back on track for live events. We have two events coming up, one in December and one in January that I want to tell you a little bit about. Money Matters, two days where all we do is talk about every aspect of money that comes to an agency. Money metrics, what I call agency math, the five or six things you need to be able to look at. Within five minutes of checking a couple numbers, you will know whether or not your agency is financially healthy or not and if you’re heading towards any sort of trouble; to pricing and proposals, tax strategies, bus dev, we cover it all in two days.
It is probably, of all of the workshops that I teach, it is probably the one that gets the most… We get rave reviews for a lot of our workshops, but this is one where people will literally walk up to me and say, “I am so angry that I didn’t go to this thing 10 years ago or five years ago or two years ago. I could have saved and made so much more money.” I love teaching this workshop because literally you go back to the office, you implement some of the things you learned and before the end of the year or so, within a month, you are putting more money to the bottom line and more money in your pocket, so that’s gratifying to me.
That workshop is December 3rd and 4th in Orlando, Florida. It is on Disney property and I will tell you that I was just down there for a week doing a site check to make sure that everything felt super safe and they have not had one case of COVID originate from Disney since they opened in July. I have been in their meeting facilities. I have been in their food and beverage areas. I have been in their restaurants. I, of course, went into the parks to check that out and they’re doing an amazing job of keeping everybody safe, so I feel really confident and comfortable inviting you to join me on December 3rd and 4th for Money Matters.
The second workshop that we’ve got going on, which is also going to be held on Disney property, is called Build and Nurture Your Sales Funnel. This is a workshop we unveiled for the very first time last January. This January, January of 2021, it’s January 21st and 22nd, we got such great comments and I’m telling you, I am watching the agencies that attended in January just kicking COVID’s rear end because they put into play what they learned in that workshop in January and they have scooted through COVID because they were so prepared, their sales funnel was so strong, their pipeline was full, so we decided to offer that workshop again this January.
What’s different about this workshop is while we certainly teach you a lot of things, this is a very hands on workshop. We literally carve time out of the workshop for you to actually build out the sales plan. You’re going to leave the workshop with a full sales plan of knowing exactly what you’re going to do, when you’re going to do it, who’s doing it on your team, how you’re going to get it done and you’re ready to implement the very next week. That was really important to me because this is a workshop that’s got some heavy lifting in it, some meaty topics, some big decisions and I didn’t want agency owners to have all of that in their head and then go back to their normal work week and then trying to implement it once they got back to work. I wanted to make sure the workshop was constructed in a way that you would actually leave with a sales plan.
So again, super safe. I am absolutely confident inviting you there. I wouldn’t be there and I certainly wouldn’t ask you to be there if you weren’t going to be safe. I know that right now for many of you, travel is a very individualist decision. Some of you are back on planes or trains or cars, some of you are staying in hotels and others really still aren’t going anywhere but the grocery store yet. If you’re not ready to travel, I totally understand. And hopefully, you can catch us in a year or two when we offer these workshops again. But if you’re game to travel, here’s an added incentive that I want to put in to the mix.
I know that these are going to be smaller events, I know we’re not going to draw the normal sized crowd that we would draw pre COVID to our live workshops. I totally know that. But I also have a room block and I’ve a financial obligation that, quite honestly, I can’t afford to take another hit on the chin. I want to add incentive for those of you who are willing to travel to consider coming to these workshops. Everybody who attends the December 3rd and 4th or the January 21st and 22nd workshop, their name will go into a hat and we’re going to pull a name out of that hat and that person is going to win a year of coaching directly with me. That’s 12 sessions. You can use them all in one fell swoop, we can spend 12 hours together in one day, you could do it once a month for a year, but you’re going to get 12 hours of one-on-one coaching time with me as a thank you for attending the event.
If you want to get in the drawing for that and you want to attend one of these great workshops and you want to get out of the cold if you’re in upper half of the US in December or January, I hope you will consider joining us; December 3rd and 4th for Money Matters or January 21st and 22nd for Build and Nurture Your Sales Funnel. You can head over to agencymanagementinstitute.com. Under the How We Help navigation button, you’ll see the workshops and you can register right there online. All right. So let’s now talk a little bit about what I want to talk to you about in this solo cast.
If you have paid attention on the podcast or you are on our email list or you happen to have picked up a copy of the book that Stephen Woessner and I just wrote and it came out last January called Sell With Authority, you know that I believe very strongly that agencies should specialize. I’ll tell you, I believe this because we work with 250 plus agencies a year, I talk to a lot of other agency owners outside of that number, and without exception, the agencies that specialize in some way are the agencies that are crushing it. They’re able to charge a premium price. They’re able to much better target their prospects. So for a lot of reasons, this makes sense.
We’ve got this model at AMI that I call the Agency Profit and Growth Journey. Basically, it recognizes that there are four critical components or quadrants and that an agency has to be excellent in all four of these quadrants for the agency to really be stable, profitable, scalable and, if you want to down the road, sellable. Those four elements are, number one, leadership. Is the agency run well? Is there a strong leadership team in place? All of that. The second one is bus dev, which is what we’re going to talk about today. The third one is process and systems. Are we getting it done? Are we getting it done efficiently and effectively?
The last one, of course, is money. How are we managing the money that comes in the door? How are we making sure we maximize our opportunity to make money? And as an agency owner, how are you making sure that you get to keep more of the money you make? Those are the four quadrants and there’s all kinds of detail in each of them, which I’m not going to go into today. But the quadrant I want to talk about today is the bus dev quadrant. And here’s the deal. For most agencies, imagine the quadrant is a target and your proficiency in each area grows as you move out of the center of the quadrant into one of the outer rings. So in the bus dev quadrant, the inner most ring is that you get most of your business through walk-ins and referrals.
There’s nothing wrong with that. A lot of agencies start that way, absolutely. For many agencies though, this is where they stay, that they never exceed taking most of their clients through walk-ins and referrals. What they’ll say is, “Well, we tried this and we tried that, but honestly our best bet is when we get a referral.” Well, of course, that’s everybody’s best bet because you’re already half way to the sale. Somebody that knows you and knows the prospect has endorsed you and odds are you’re very close to the end of the sale by the time you say hello to each other. The problem is you have no control over those referrals.
Imagine you casting a net and whatever you catch in the net is what you have to eat for dinner that night. It could be a boot, it could be a bottom sucker. It could be a salmon. It could be something fantastic. But whatever it is, you have to eat it. Your body has to consume whatever is served to it, as opposed to having a spear gun and swimming out into the ocean and looking for the kind of fish that is best for your body, that has the best nutrients for your body and being able to catch that specific fish. That’s the downside of referrals is that sometimes you end up eating a boot and it’s not very profitable and it’s not really in alignment with the kind of work you do, but you’re grateful to have it because you’ve got mouths to feed and so you take the referral business. Not the ideal way to grow your business and certainly not the ideal way to grow your business if you want to sell it someday.
The next ring out in this quadrant is that you perform bus dev on a feast or famine basis. What that really means is that every once in a while you get an inkling that one of your clients is going to go away, one of your big clients is going to go away, or they do fire you and all of a sudden you go into full on panic mode. You care chasing after business as fast and furious as you can because you’ve got to replace what you’ve either lost or you think you’re going to lose. The problem is that that frenzied activity can not be sustainable longterm, so you do it for as long as you have to to land a client or two and then with a huge sigh of relief, you stop the bus dev effort and you start onboarding the clients. You have this constant feast and famine. The pipeline is never very full because you’ve neglected for a while and then you’re all about it and then you go back to neglecting it again.
The third ring in this quadrant is that agencies are doing some level of bus dev, every week they’re doing something. They’re putting some things out on social, maybe they have an e-newsletter, maybe they have some case studies on their website, but the results are spotty at best. Ultimately, the ultimate goal for bus dev is that you are so well known and you are so highly respected and I believe you are thought of as an authority, so you have established yourself as a thought leader or an expert or an authority, as Stephen and I call it in the book. And now because you are well known inside that little world, and I’m not talking about your… You’re not George Clooney famous, but you are infamous in your little part of the world, you’re known and you’re respected, that now the right fit clients actually seek you out. You are now being sought after rather than you having to go out and hunt down clients.
That’s one of the big things that’s changed in bus dev for agencies. When I started in the business a long time ago, the way we got clients is we went and found them. Why? There was no real internet back then, which I know makes me sound ancient, but it really wasn’t a big deal back then and certainly agencies didn’t have websites and people didn’t know how to search the internet to find websites to tell them about places that they might go or hire. It just didn’t happen back then. So really, you were either locally known… Again, you were at the Chamber meetings and the Rotary meetings and you were networking and you got referrals or you were known for a niche. You were an Ag agency, so you were at all the NOMA meetings or you were in whatever industry you were in, so you were at those shows, either locally, regionally or nationally, and you were known in that circle.
If you weren’t known in the circle, either locally or in your niche, you didn’t get hired because no one knew about you. What your job was at the agency was to go and find clients and try and create a relationship with them so that they would hire you. We were the hunters back then, but the internet changed everything. I’m going to show you some statistics in a minute about how things have changed on the bus dev front, but now we are not the hunter anymore. One of the ways that agencies grow is they grow in sophistication in terms of how they find clients. Initially when we all started out, we all basically started our agency servicing family, friends, former clients, anybody we personally knew. And by the way, about 20% of all agencies never get past that stage.
Then for the agencies that do move on beyond that stage, they move to the point where now they’re starting to get some referrals. Now their family and friends are introducing them to strangers who also might hire them. That agency eventually typically gets a gorilla account, an account that’s 25% or more of their AGI and about 20-30% of agencies get stuck there. So they’ve a gorilla, this 30% or more, 25% or more of their AGI and a bunch of little accounts and they spend the whole rest of their time with their agency trying, with oftentimes little luck, trying to land another gorilla to balance out the gorilla, but a subset of those do bust out of that area of growth and they do now have two or three good sized clients that are 20, 25, 30% of their AGI each. So between the three of them, they consume a lot of the AGI and then there’s a bunch of little clients, again, that balance them.
These are the agencies now that move into that feast or famine bus dev model where, again, they’re so busy servicing their two or three gorillas that they don’t have a lot of time every day, every week to be going out and looking for clients. They don’t carve that time out. They do that feast or famine bus dev where when they got a Spidey sense that a client’s about to leave, they scramble around, they find a new client and then they let it rest for a while. Now, 85% of all agencies live in one of those three spaces, so either I serve family and friends, I have one gorilla and I live by referrals, I have a few gorillas and I live by feast or family. 85% of all agencies never bust out beyond that.
The reason they don’t bust out is not because they’re not super smart, not because they’re not talented, not because they live in a big city or a small city or a tiny town, none of that matters. The reason they don’t bust out is because they never get more sophisticated with their business development. They stay stuck in the referral and feast and famine model. They don’t move into having a consistent business development program or the Holy Grail, which is they don’t become a known expert or thought leader or authority. The agencies that actually achieve that, that are known experts, they’re sought after because of their expertise. That is a small subset of all agencies.
We have several of them in the AMI ecosystem and I watched them year over year, day over day, month over month, I’ve watched them really crush their numbers because they are so sought after for their subject matter expertise. So at some point in time, you have to decide as an agency owner or an agency leader, where do I want the agency to land? I think some of this is about future planning for your agency. Do I want to get out the feast or famine? We have some gorillas, but we’re stuck. Do I want to have a systemized, programmatic, bus dev program and do I want niche down in some way? Do I want to specialize or do I want to reach even further and do I want to be a known expert? Do I want to be where 85% of the agencies aren’t?
I’ll tell you, here’s my rationale, I absolutely believe that every single one of you listening should be reaching for being a niched or specialist agency or that subject matter expert, that authority. Here’s why. The reality is businesses, our clients, they can’t afford to hire a generalist, certainly they can’t afford to do it right now. Many of our clients are scrambling because of COVID. Many of them are trying to make up for the sales that they lost during the shutdown. And even during the best of times, CMO tenure is a tenuous thing. They know that if they hire the wrong agency, odds are they’re going to have to fire the agency, but even more likely, they’re going to get fired.
For a CMO or anybody who is not the business owner, the risk for them is huge. The risk for them is their job. Now if they are the business owner, the risk for them is equally huge, they can go out of business. So in essence, they lose their job too. Understand that part of the buying decision when you’re hiring an agency is that if you get it wrong, you might lose your job. Do you really want to hedge your bet by hiring a generalist? Wouldn’t you rather hire somebody who has a depth of expertise in your industry or with the audience you’re trying to reach or in a methodology that aligns with your business or solves a problem that you need solve. There are four ways that an agency can specialize. The one we always think of is the niche, that we are able to have a subject matter expertise around an industry.
My agency is an expert is pharma products for women over 50, for example. That’s one way. Another way is an audience. We know millennial moms better than anybody else and we can reach them faster and with more influence than anybody else. That’s an audience methodology. The third one is a methodology, which is one of the AMI agencies, they have actually trademarked the term challenger brand marketing. What their methodology is, is they say to their clients or their prospects, “Look, if you’re not the market leader, so you don’t have the money the market leader does and you don’t have the market share, we’re the agency for you. We help the underdog, the challenger brand, take on the market leader and eat up their market share in a budget that you can afford, so we have that expertise.” You could have a specialty or a methodology that allows you to deliver results for clients in a certain industry or in a certain position like the challenger brand.
The fourth one is that you are an expert in a deliverable. So right now, a lot of agencies are scrambling to get really good at creating Amazon Marketplaces for their clients and to really help their clients be able to capture everything that’s happening in the Amazon ecosystem. The problem with that as a niche is you are only going to be unique in that for a period of time and then all the other generalist agencies are going to catch up to you. Now, all of a sudden, it becomes table steaks. So of the four, the first three, industry niche, audience or methodology, those three are pretty evergreen. You can ride that for decades. The, we know how to do something, we know how to deliver something that is unique, PPC, like I said, Amazon, things like that, you’re going to be unique in that for a while, but then sooner or later you’re going to lose your edge. But my point is that our clients want to hire somebody with some area of specialty, they don’t want to hire a generalist.
So in our 2019 study… So as you know, Agency Management Institute partners with Audience Audit every year and we do a piece of primary research and we bundle all of those. We call that the Agency Edge Research Series. We’ve been doing it since 2014. Our 2019 study, we looked at how and why agencies got hired. From one of the questions that we probed with over 1,000 respondents, all who had actively hired agencies, so they were all currently working with agencies and they had hired agencies currently and in the past, so over 1,000 of them… We said to them, “So when you need an agency, did the agency find you or did you go find your agency?” This goes back to what I was talking about before, about the good old days of how we used to find clients versus now.
We broke out their responses by budget. The clients who had a marketing budget of under a quarter of a million dollars, 53% of them went and found their agency. For clients that had a budget between a quarter of a million and a million dollars, 76% of them found their agency. For clients that had a marketing budget of $1 million to $10 million, 82% found their agency. And for clients that had a marketing budget of over $10 million, 85% found th