How are clients being impacted by COVID and the recession with Susan Baier

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. This is a topic that I love talking about. So I’m excited to just jump right into this episode, but first I have to tell you that I’m not the sharpest crayon in the box. So what I want to tell you is that we are going to talk in this episode with Susan Baier about the 2020 Agency Edge Research Series. And so what was interesting about that was Susan and I, every year we do this research, we’ve done it since 2014. And in late 2019, what we decided the topic was going to be was how are clients feeling about the economy, the ever pressing and pending recession that everyone thought was coming and how is that going to impact how they were approaching their relationship with agencies and their marketing budgets and all of that sort of stuff.

So we marched into 2020 thinking that’s what we were going to study. And we were just finishing up the actual research tool and getting ready to go out into the field when COVID hit the US. And so I mean, literally we were a week away from going out into the field with this research, which would have ended up being absolutely irrelevant to everybody. So good fortune shined upon us. So we obviously stopped and decided to wait. And then we re-pivoted and re-tooled the survey to really ask them, “Hey, now that COVID is here, now that we know we are in the midst of a recession, what’s going on with you? How are you feeling? What’s happening with your company? What’s happening with your budgets? How is this impacting your agency relationships?” Things like that.

So now super relevant. And I’m excited to share with you all of the details. Susan and I are going to get into that in a minute. But what you may not know is that a lot of times, the way I do these… I’m totally letting you see the underbelly of the podcast production. So normally what happens is I record the interview first, and then I record the introduction because then I can kind of tailor the introduction to exactly what the person and I chatted about. So obviously I don’t do that on my solo cast because I know what I’m going to talk about. But when you’re interviewing a guest, even though I have a set of questions and topics that I want to cover, I know they’re going to say something interesting that I didn’t expect and we’re going to go off on some tangent.

And so I want the introduction to accurately reflect what the show is about. So I always record it afterwards. So Susan and I have already recorded the interview you’re about to hear and throughout the interview because again, I’m not the brightest bulb in the box, I’m talking as though this episode is going to air on November 2nd, but it’s not. If you’re listening to this, it’s November 9th or later, I was off by a week. So throughout the interview, I keep talking about the fact if you’re listening to this in real time, you can join Susan and I for a webinar where we’re going to drill very deeply into all of the research data, stuff we can’t get into in a one hour podcast on November 4th, and I’m inviting you to go to the show notes and register for that webinar and join us.

Well, of course, it’s after November 4th, you can’t join us. It was a great webinar. I’m sorry you couldn’t be there. But I realized after we recorded it, that I was off by a week. And so I hopped on the phone with Susan and we are now going to do a webinar again on December 17th at noon. So throughout the show, every time you hear me say, November 4th, I need you to substitute in your head December 17th. So I’m really sorry. I know this is a little confusing, but I promise you I want you to have access to this webinar. So Susan and I are just going to do it again. So again, December 17th at noon Central is when we’re going to do a deep dive into all of the data of the research. You’re welcome to join us. So the way you get to sign up for the webinar is go to agencymanagementinstitute.com and under the resources tab, you’ll see podcast.

And depending on when you’re listening to this, look for episode 266. So it may be the very top episode if you’re listening to this in real time. But if you’re listening to this after Thanksgiving or early December, you’re just going to have to scroll down a couple of episodes, get to 266, click on that episode and there you’re going to get to the show notes for that episode. And down at the bottom, there’s a bunch of links. And one of them will be for the webinar on December 17th, which I have brilliantly disguised throughout the episode as calling it November 4th. But what I really meant to say was December 17th at noon Central.

So I’m sorry about the confusion, but let’s jump into the episode. I want you to hear all of the things that we learned from this research, because the research data is fascinating. And the research data for us as agency owners is actually, there’s a ton of good news in this research. So I want to get right to it. Sorry again for the confusion. Hopefully I will hear and see from a lot you on December 17th when you show up at the webinar that I foolishly called November 4th. All right. Let’s get into the episode. So without further ado, I think for maybe the fourth or fifth time, I can’t keep tracking. Well, welcome back to the podcast, Susan. Thanks for joining us.

Susan Baier:

Thanks for having me, Drew. It’s getting kind of embarrassing. I’m sure your listeners are tired of hearing my name on your podcast.

Drew McLellan:

No. Here’s what happens, if you’re not on every other episode, I get emails. People are like, “Where’s Susan? We need Susan.”

Susan Baier:

Oh, that’s good to know.

Drew McLellan:

I’m like, fine. I will just give the people what they want.

Susan Baier:

That’s good to know. Well, I always appreciate talking with you, you know that.

Drew McLellan:

So last time you were on the show, you were on the show with Steven Wesner. And we were talking about the research that you guys did around the ROI of thought leadership, which I love that study. It really aligns with Steven’s in my book, but today what we’re here to talk about is the research that you and I did as part of the Agency Edge Series.

Susan Baier:

Yep.

Drew McLellan:

And as I said in the introduction, we sort of had to do a quick kind of a dog leg to the left so we were all ready to go into the studio or out into the field with, “Hey, when are you thinking a recession might come and what are you doing to plan for that?”

Susan Baier:

Yeah.

Drew McLellan:

And then all of a sudden COVID came and…

Susan Baier:

I’m so glad we had the opportunity to make that change that we weren’t already in the field, because I think we learned some really interesting things by asking questions that we hadn’t originally anticipated asking and about things we couldn’t have anticipated that we were going to need to ask about. So I think we’re lucky that we got to make that dog leg but yeah, it was a little wild.

Drew McLellan:

Well, the whole time was wild. So it only makes sense that our research project would be wild as well, right?

Susan Baier:

Exactly, right in line with 2020.

Drew McLellan:

Yeah. So as always for folks who are familiar with the Agency Edge Research Series and the kind of research you do is attitudinal research. So can you just explain to folks who maybe aren’t familiar with that, how that differs from other kinds of research and how we get to the data that we get to?

Susan Baier:

Sure. So our approach as always has been to try to provide things that are truly helpful to agencies and figuring out what to do. And a lot of research is based on sort of how big is your company? What is your title? How many employees do you have? What’s your revenue? And unfortunately that doesn’t often yield a lot of helpful insights. So our approach is attitudinal segmentation, which instead looks at how people are feeling about things, the kind of assumptions and attitudes that they’re bringing to a decision. Because as marketers, whether we’re agency marketers or not, that inflection point is really where we get to have influence on a decision, right? Where are people getting information? What sort of baggage are they bringing to the process and how can we help them along the way? So that’s our approach. It’s, we do collect a lot of information about our respondents, but our segmentation is based on what’s going on in their heads.

Drew McLellan:

Yeah. And in their hearts. I thought this study in particular was not really just what are they thinking, but how are they feeling?

Susan Baier:

How are they feeling.

Drew McLellan:

Yeah.

Susan Baier:

Yeah. So much. And we saw attitudes that were really affected by things that had happened 10 years ago-

Drew McLellan:

In the last recession.

Susan Baier:

… in the last recession. And it’s amazing how long those things stick around and influence how people feel about things that are happening today. So the opportunity to ask about what happened last time and how things are going this time was really fascinating, I think. But yeah, that attitude, that heart, it’s all part of it. That’s how people make choices.

Drew McLellan:

Yeah. So just for the listening audience, we have great editors on our podcast, but if you hear like a high-pitched whining in the background, my dog, for some reason, Heather, has decided that she is sad not to be with me and sad to be with me. And so she’s just having a blue day and there’s nowhere in the house I can put her that you can’t hear her whimpering about absolutely nothing. She just had breakfast. She’s fine.

Susan Baier:

There’s a lot of anxiety rolling around, Drew, and you never know when it’s going to hit you hard.

Drew McLellan:

She’s having a blue day. So if you can hear that, I promise it’s not Susan or I whimpering in the background. It is my damn dog. So all right. So as always we go out into the field, we ask questions. So specifically we were asking questions around based on everything that is happening with COVID, based on the recession that we’re now experiencing, what’s the plan? How are you feeling? What do you think you’re going to be doing? And we ended up with three very distinct segments. So can you just walk us through those segments?

Susan Baier:

Yeah. You bet. So we never know how many segments we’re going to find in this research because that’s not something we predetermined and we don’t know what’s going to define them. So we sort of let it organically bubble up through the analysis. And I think what we found in this study was really interesting. As you said, three segments and really defined by sort of how they’re approaching, what was at that time clearly recession, we filled at this late June through mid July. April through June, 2020 was the worst quarter on record in terms of economic impact. And we’d formerly gotten into a recession in February. So we were in the thick of it at the point that this was field-

Drew McLellan:

Yeah. By the way, we should probably stop and just say this year unlike some of our other years, our respondents were all from the US. However, I do think that their attitudes while the timing may have been different depending on when COVID hit your country, I think the attitudes will translate well. But just for clarity, these are all folks in the US.

Susan Baier:

This is all US response. This is a 1000 B to B, B to C, a huge range of organizations, but a 1000 agency clients. So the first of the segments that we found, we called distressed and that’s 30% of this audience. And these folks are very anxious at the time.

Drew McLellan:

They are freaked out.

Susan Baier:

They are freaked out. They think that the recession is going to completely upend their industry, that it could be devastating for their organization. They say that their customers and prospects are really shifting their priorities and how they’re making choices about buying. They say finding customers is very difficult. They expect their agencies to be having trouble. And what’s really interesting about this group is that they are more affected by what happened during the great recession back in 2009.

Drew McLellan:

Yeah. They brought all of that with them. Yeah.

Susan Baier:

Yeah. It hit them hard back then and they’re expecting that it’s going to really upend things for them, both their organizations, but also their whole industry and its client. So they’re really worried.

Drew McLellan:

And even their personal life like they expect… They very much have a doomsday scenario around-

Susan Baier:

They do.

Drew McLellan:

… what COVID and the recession is going to do to their business and their home life, their life.

Susan Baier:

Yeah. And I think that to me, it’s interesting that that’s 30%, because I think a lot of us would have expected, especially given the timing of this study, a much higher percentage of agency clients that were really in panic mode like that. And this is the only group that we found. It’s really like that. It’s 30%. The second group we found, which is the largest, 40% we call pragmatic. And these folks are really interesting. They view this whole recession thing as like a normal economic cycle bump in the road. We don’t get worked up. They say that it hasn’t changed how they operate. They also say that it hasn’t affected their buyers as much as buyers in other industries. So they’re feeling fairly insulated.

Drew McLellan:

Well, in fact, this is the group that sees this as a huge opportunity. These are the guys that want to spend more money, that want to take market share. They’re like everybody else is going to go dark, so I’m going to go big.

Susan Baier:

That’s right. I mean, they’re less attached to individual providers. And if anything, they see the recession as making it easier to get the expertise and support that they want more affordably. To your point, they’re opportunists. And that doesn’t mean they’re bad people. They just sort of are viewing this whole thing through a very different lens than that distressed group is. They think they’re going to be okay and what they’re looking for is opportunities to really get a leg up while maybe some of their competitors are struggling.

Drew McLellan:

One of the other interesting things that I thought about this group is of all of the groups, they’re the ones who are regulating their news consumption best. So they have decided that too much exposure to news isn’t a great thing for them. So of all of the groups, they’re the ones who are least likely to be sort of glued to the TV or their computer soaking in all of the news.

Susan Baier:

They really see this as cyclical and see themselves as fairly well protected from any of this kind of stuff. So I think the economic news for them isn’t as critical because it isn’t impacting them in their minds the way it is impacting some other folks. So that’s 40% of our group. That’s the largest. And then the third segment, which is the final 30%, we call steadfast. These folks are very closely paying attention to economic news, but they’re not doing it from a sense of panic. They’re doing it from a position of preparation. They say their organization is well prepared to survive and even thrive in this situation. Marketing is a top priority for them. They expect to remain loyal to their trusted vendors like their agencies. They think generally that their agencies are going to do fine. They do expect some flexibility on things like payment terms from providers. But generally speaking, they feel well-prepared to weather this thing and even do better than weather it, even come out of this ahead.

Drew McLellan:

Yeah. So they were the largest consumers of the news, but again, not from a sense of panic, but just a, I want to know what’s going.

Susan Baier:

I think they’re well-prepared. I think they’re just looking ahead and they just want to keep their finger on things, but yeah, there’s definitely no sense of panic here. And the interesting thing about these three segments, and we’ve seen this over and over again in our study is true is that all of these segments are seen at all revenue levels, at all marketing budget levels. They all outsource the same levels of marketing work. They have that same sort of distribution in terms of how much they outsource. And while we see that middle group, the pragmatic group sort of more likely to have multiple agencies going on and more likely to have a full-time in-house team, you can’t tell who these clients are by simply looking at the size of their team, the revenue levels that they’re generating, the size of their marketing budget, because they exist across this spectrum which is really interesting and across all these different industries that we surveyed in this study.

Drew McLellan:

And again, just for the listeners. I mean, these are organizations of all sizes. So these are companies that have a marketing budget of under $250,000 to companies that have marketing budgets in the millions of dollars.

Susan Baier:

Yeah. Up to 20 millions and revenue up to 500 million. So it’s a big spectrum.

Drew McLellan:

Right. And what we found is you can’t say, “Oh, the little guys all feel this way,” or, “Oh, the big guys all feel this way.” There are all three of these segments in all of the different sort of the typical demographic ways you would slice and dice this data.

Susan Baier:

Right.

Drew McLellan:

So the first thing when Susan and I started walking through the results… There are times when we’ve done the studies where I’m always looking at it from how is this going to impact agency owners? Are agency owners going to react to this information? And sometimes quite honestly our studies have some unpleasant news for agency owners, right? I think about the how much do you love your agency or what are your AEs doing right or wrong? Some of those studies, data from those studies was tough to take, I think, for agency owners.

Susan Baier:

Yeah. It’s not always reassuring everything we’re doing is good.

Drew McLellan:

Yeah. But in this study, I have to say as we were going through their data, I was relieved. I was like, Holy buckets, 70% of the respondents are like, “You know what? This is normal business. Yes, the COVID part is different, but we go through a recession like this every cycles, every 10 years or so, we’re going through something like this. And we as a company are prepared to deal with it.” And the steadfast people were like, “We will just work our way through it.” And the pragmatic people were like, “We’re going to crush this. There are doors here that we are going to push our way through and take the opportunities where they present themselves.”

So 70% of the people that we are all talking to as agency owners have a very practical and not freaked out, not close the doors and lock them and shut down the budget and stop doing anything, that’s not the attitude that we saw. For the most part, the majority of people responding said, “You know what? We’re going to muscle our way through this by continuing to do business like we’ve done business.”

Susan Baier:

Yeah. Which is such good information. And it’s such a great example of how you can look at these different attitudinal groups and really think about how you need to approach them differently. If you’re approaching clients and prospects from the standpoint of it’s gloom and doom, we’ll help you figure out how to cut so you can survive, there’s a couple of segments who’re going to look at you and go like, “Yeah, that’s not how we see this opportunity at all.”

Drew McLellan:

Right.

Susan Baier:

And we want an agency that is ready to take advantage of this, support us through this, and really help us gain ground despite what’s going on around us. So it’s really worthwhile to parse these out and think about how you would communicate with somebody in each of these segments no matter how big or small they are.

Drew McLellan:

Absolutely. And this is a great time. So if you’re listening to this in real time, and it is the first week of November, there’s an opportunity for you to really deep dive into this content. So depending on when you’re listening to this, on November 4th of 2020 at 11:00 AM Central, Susan and I are doing a live webinar where we’re literally going to walk you through every single question and how people responded and give you some insights into how you can approach all of these different groups and how you can best connect with them, serve them. So in the show notes, so if you go to Agency Management Institute under resources, you’re going to find the podcast section. And for the show notes for this particular show, there’s going to be a link where you can sign up for the webinar.

If you are not listening to this in real time, don’t freak out because we also have a 30 some page executive summary that will walk you through the highlights. It’s certainly not going to be as detailed as the webinar, but it still will give you a deep dive into the data and how you can identify which of your clients… Susan and I are going to talk about this in a minute, but how you can identify which of your clients sort of fall into which categories and how to respond to them. So you can download that. And again, there’ll be a link in the show notes where you can download the executive summary. So in an hour conversation, we’re only going to be able to hit some highlights here, but you have two opportunities to really do a much deeper dive into the data. On top of that, Susan uses Tableau to sort of visualize all of this data and she’s put together a tool that will allow you actually to go in and look at the data based on whatever criteria you want to.

So if you want to say, I want to see how women responded to this, you can, I want to see how companies with budgets of 10 million and above responded to this question, you can. So there are lots of ways for you to really dig into this data, if you want to. And you can find all of those in the show notes on the website. So do not take advantage of that. So some of the interesting things about the survey, we saw some of the same things we’ve seen for decades, or I guess we’ve been doing this for decades. It feels like that decades. Agency life is like dog years.

Susan Baier:

This is like year seven.

Drew McLellan:

Yeah.

Susan Baier:

I know.

Drew McLellan:

It’s like dog years, right?

Susan Baier:

Yeah. So this is our 49th Agency Edge study then by that.

Drew McLellan:

In dog or agency years?

Susan Baier:

In dog years, yes.

Drew McLellan:

So one of the things that we’ve seen consistently from the beginning, whether it’s in dog years or human years, is that much to our chagrin, most of these respondents don’t just work with one agent. And we saw that again this year, right? So very few of them only worked with one agency and some of them were more than five agencies.

Susan Baier:

Yep. And that’s just it and I think we’ve seen that in virtually every client study that we’ve done. And for me, it’s just an annual reminder that you’re not in this alone. And being able to work well with their other providers is a key consideration for any agency working with any of these segments. We have seen some segments that are a little more likely to sort of be loyal to one, but very few just are working with one provider anymore. It’s just not the way of the world.

Drew McLellan:

So one of the things we did is we asked all the respondents, “How likely are you to do a bunch of different things?” So how likely are you to hire more in-house marketing staff? How likely are you to shift work from agencies to freelancers? How likely are you to fire your agency? All of those sorts of things. So what were some of the standout sort of ahas for you in that segment of the data?

Susan Baier:

Well, I think overall what was interesting to me is at the time that we fielded this study, so say early July, a lot of these clients hadn’t really taken a lot of action yet. I think they were still… But they definitely had plans in mind on both sides. Now on the good side, across the board, most of these clients said they’ll likely stick with existing agencies. We didn’t see sort of a wholesale I’m in a shed who I’m working with right now, but we did see some differences by segment. So that distressed group, that first very worried, concerned group, probably not surprisingly say they are the most likely of these segments to reduce some spending on specific things, events and travel, obviously, but also some media buying, some slight down ticks on marketing tactics across the board.

And they’re the most likely to say that they’re going to reduce what they outsourced to agencies as much as they can. And they’re in panic mode and they’re trying to conserve funds. So they’re the most likely to do that. But on the other hand, the pragmatic, that largest group that we have, this is a group that is most likely to make changes. They are more likely to increase work for agencies. They’re more likely to change agencies that may be give them a better deal, or they can get some specialized expertise. And they are most likely to increase spending across all of the specific marketing tactics that we asked about. And some of those, as you said, are in the executive summary, we also got a lot more of that in the webinar, but you can see specifically the percentage of them that say they’re going to increase spending and this pragmatic group, man, they’re taking advantage of this opportunity.

The steadfast group, that third group, is the most likely to basically stick with where they are. They’re the most likely to stay with their current agencies and they’re the least likely to make any other changes, including laying off in-house staff, increasing agency work, moving work to freelancers. Except for traveling events, they’re pretty much staying where it is. Now, they’re going to look for opportunities as they come up undoubtedly, but they are not as gung-ho as the pragmatic folks to really say, what can we do more? Where can we put more money that’s going to have an out-sized impact during this time? So that was interesting to see the differences for those folks.

Drew McLellan:

Yeah. And one of the other sort of heartening facts is we asked them basically specifically, where are you going to cut spending and where are you going to increase spending? And these are not people who are saying, they’re not going to increase spending. So for most of the tactical things we said, so if we said social media marketing or online advertising or digital media buying or whatever it may be, in most cases, a good third of them in all of the segments anywhere from 20 some to 40 some percent said, “Yeah, I’m going to increase spending here.”

Susan Baier:

“We’re bumping it up.”

Drew McLellan:

Yep. So again to me, this is heartening news for us as agencies that this does not mean that every client is going to shut things down or crunch the budget. I think what we saw in the spring was a lot of clients hit a hard stop on all spending while they sort of reeled through the first month or two of COVID here in the States anyway. And then by the time summer hit, and by the time we were out in the field, late June, early July, businesses had sort of figured out this is not a blip, we’re going to have to work through this. We can’t just sit and wait for this to pass. And so I think now you’re seeing the respondents saying, “Yeah. No, we’re going to spend a little more money there.”

Susan Baier:

“We’re going to do some more stuff.” And I think that when you look at the distressed, they may be doing that because they’re sort of shoring up against a bulwark of trouble coming down the road that they think is going to impact their customers. And pragmatic folks and steadfast folks may be doing it for different reasons. But the net result is when we look at plans to increase spending, like you said, social media, email marketing, website development, search engine optimization, we’ve got at least a quarter to a third of all segments saying that, spending their planning to increase.

Drew McLellan:

Yeah.

Susan Baier:

So like you said, it’s not all doom and gloom. Even among the folks who are really sort of having the toughest time, they may be shifting things around a little bit, but there are opportunities out there for agencies for sure.

Drew McLellan:

Yeah. So one of the things we also talked to them about were sort of how did they expect their agencies to show up? So on the one hand, what we just talked about was they’re all ready to spend more money, but one of the big expectations that they had and this was true of all three segments was they expected their agencies to actively work to reduce their costs without, of course, impacting marketing effectiveness. So in other words, I would like a little more-

Susan Baier:

The magic formula.

Drew McLellan:

I would like a little more for less please.

Susan Baier:

I would like a little more for less. And that’s important. That was often close to half of folks across the segments who said that was something important to them. And another one that was really big was help me identify efficiencies that we could come up with, right? Like where can we get more bang for the buck? I thought it was fascinating to see how much these clients wanted from their agencies in terms of engagement with them. We saw not only large percentage of saying, “Hey, I expect my agencies to become more responsive to us when we need something.” But we also had folks saying, “I want more meetings. I want face to face.” Right? And when we asked folks specifically like, “What do you want out of your agencies?” A lot of them were like, “You know what? We want information about how things are going for you too. We want information not just that’s affecting our account, but how is your agency doing?”

And again, probably for some of these clients as a stop gap to avoid having an agency go under when they most need them and maybe for others sort of an opportunity to say, “If those guys are struggling that much, I should keep my eyes out for some other opportunities may be.” So they really do want a lot of engagement through this process with their agencies. And yes, they do expect to get more for less and maybe they can get it.

Drew McLellan:

Well, when I looked at this segment of the research and sort of their expectations, for me, a lot of this was about, “Hey agency, you talk about being our partner, the world is in crisis, now I need you to actually show up as my partner.” So yes, I’m going to still keep spending. Yes, I think there are opportunities, but we have to all acknowledge that this is a weird moment in time and that a lot of businesses and that families are in crisis. And so I think everyone, even if their situation is fine, I think one of the things that is true at an individual level as well as a company level is there is this sense of extra weight on all our shoulders. We feel the heaviness of the time. And so I saw their responses as a look, we’re all going through a tough time together so I really expect you to show up as a partner.

So I need you to actively work with me to figure out how could I be more efficient? How can I reduce my costs, but still get the results I want. I need you. And when I need you, I really need you. So I need you to be more responsive. And I think some of the, I want to know about the agency was their acknowledgement that this is a partnership. And so I’m also worried about your business. I as a human being, I’m worried about how you’re doing, because not only because I count on you and I don’t want you to go under, but also because I think this time has made everybody Uber sensitive to how is everybody else around me doing as well?

Susan Baier:

Yeah. I think that’s absolutely true. And I think that some of what we saw was the interest of clients in their agencies sort of expanding that partnership to some degree. So for example, a lot of these folks expect their agencies to add more services, right? How can you be more helpful to me by maybe providing something that you didn’t provide before? How can you show me examples of companies that are dealing with the stuff we’re dealing with and are managing to successfully navigate that? Whether they’re your clients or not like, how can you really bring us inspiration and ideas that can help us move forward in this. And to me, those things are sort of an expansion of the typically we provide this and you pay for it kind of relationships.

So I think you’re right. I think there’s a lot of these folks that are looking for more partnership from their agencies. And certainly when you look at folks like the pragmatic, I think if they don’t get it, they’ll find somebody who will give it to them.

Drew McLellan:

Right.

Susan Baier:

Because they don’t have any hesitation. If they’re not getting what they want, they will switch more than the other two groups. So it’s worthwhile to keep in mind.

Drew McLellan:

Yeah. And one of the other things that I found really interesting is we specifically asked about face-to-face meetings and you would expect people to go, “No, we’re all staying at home. We’re all working from home.” And the reality is that’s not what’s happening out in the world. A lot of people are back in the office and back to work. And I was just talking to an agency owner out there this morning and she was like, “We’ve been meeting face to face with clients since May.” So one of the data points out of that research is they don’t want us to reduce the face-to-face meetings, that they want to have face-to-face, human-to-human interactions with their agency partners. And so we’ve got to find a way if you’re still remote and you’re not doing a lot of face-to-face means you’ve got to find a way to augment that for your clients because they’re craving that. And if you won’t give it to them to your point Susan, they will find an agency that will.

Susan Baier:

They’ll find somebody who will.

Drew McLellan:

Yeah.

Susan Baier:

I mean, I think this really speaks to the account managers out there. And I did that for years as well. And a lot of this is really on their shoulders in terms of making sure that that communication is happening, that touching base, that how can we be helpful, being creative about what kinds of things you could do to support clients and maintaining that relationship. A lot of the clients in this study do feel like their agencies care about them and care about their success. And they do want that strong relationship. And a lot of that’s going to fall on those account managers and the agency owners. We saw a lot in this study about how agency owners and that relationship is more important than ever. And that’s a trend I think we’ve been seeing for a while, but the study reiterated it too.

Drew McLellan:

Yeah. I think one of the things that I know a lot of AMI agencies did in March and April was they spent a lot of time just reaching out and connecting with clients and listening and talking about how is your business going to respond to this? How can we be helpful? And it wasn’t a sales call. It really was a, I just want to be a sounding board for you. I just want to be a resource. I want you to know what we’re doing for other clients. And I think the value of that showed up in this study. So one of the areas that we asked questions around were, as you said, do you think your agency cares about your business? Do you think the agency cares about you as a person? And agencies got high marks for those things. They really do feel like the agencies care about them. But we also said, “What do you want from the agency?” And what they said was they want more contact. They want more interaction. They want to know that they have access to that agency owner if and when they need it.

Susan Baier:

Yeah. And I think they want to know that that agency partner is in good hands. The ship is being steered properly. And one of the other things that I think is really interesting in this study is that it is clearly not possible for agencies to say, “Well, we don’t want those folks who are just going to try to squeeze us for more for less.” Because that’s everybody. Everybody out there in this study is looking for opportunities to make more of their spend. And so you’re just not going to be able to avoid that conversation as an agency. And if anything, being proactive about how you can help your clients gain efficiencies, sort of understanding where their headspace is among these segments is going to be a powerful tool in driving that loyalty and engagement and not waiting for your client to ask for it, but to proactively say, “What do we see out there that could help? Where could we make adjustments that would deliver more ROI maybe without spending more with being able to shift things around into more high priority tactics?”

Drew McLellan:

Yeah. Whenever we do one of our studies, one of the first questions people ask is okay, if I can’t tell what these people look like because they’re not a certain demographic, or they’re not a certain size, or they’re not a certain age, or they’re not in a certain industry, how the heck do I know? How do I put the right label on my clients and prospects? So we’re going to take a quick break. And then when we come back, Susan and I are going to walk you through some clues to look for to identify which of these segments your clients and prospects fall into. And then we’re going to talk about once you’ve identified that, how do you react and respond to that client? How do you solidify that relationship? What are some things you can do that are going to feel like you totally get them and that you are in alignment with them and it’s going to strengthen your relationship.

So we’re going to take a quick break and then we’ll talk about clues and what to do. Hey there. You know I am incredibly grateful that you listen every week and I want to make sure you get all of the support and tips and tricks and hacks that we have to offer. In every issue of our newsletter, I tell you what’s on my mind based on the conversations I’ve had with agency owners that week. We also point you to additional resources and remind you of anything we’ve got coming up that you might benefit from. If you are not subscribed to our newsletter now, we can fix that in a flash. Head over to agencymanagementinstitute.com/newsletter and complete the symbol form and we’ll take it from there.

All right, let’s get back to the show. All right. We are back with Susan Baier and we’re talking about the Agency Edge Research project from 2020, where we talked to over a 1000 respondents who are in active relationships with agencies about how they’re feeling about the economy, about their relationship with agencies, all as we march through COVID and all the other craziness that 2020 has brought us. So, as I said before the break, inevitably, when we present this, whether it’s when we’re unveiling in a content marketing world, or we’re doing a webinar or we’re out and about hanging out with agency owners, people want to know, okay, how do I figure out which of my clients are which of these segments? So let’s look at some of the clues first for the distressed clients. So I think of the three segments, these are the ones that are the easiest to identify because they’re freaking out, right?

Susan Baier:

They’re freaking out.

Drew McLellan:

And it’s hard to hide that you’re freaking out. So you’re going to see it. But so they are going to have really deep concerns about the recession and they are worried about how it’s impacting their customers, how’s it impacting their customers organizations, their organizations, and they’re struggling, right Susan?

Susan Baier:

They’re really struggling. And I think that what you said is really important to understand. They’re not just anxious about their company or their organization, they’re anxious about their whole industry being turned upside down and their buyers radically changing their buying decisions. So it is a wholesale sort of panic mode kind of thing. And it speaks to… It’s so important. My guess is, agencies who are listening can probably think of a client right now that they could very comfortably say, this is a distressed client. The lights are flashing and they are asking about where can we pull back? Not where can we redistribute? Not where are opportunities for us to spend more, but how can we pull back? Because things are in crisis over here and it’s probably going to get worse.

Drew McLellan:

Yeah. And odds are, for this organization, they did take a hit in sales in the second quarter. And your client contact maybe have been charged with really kind of battling back to regain those sales. So there’s a lot of pressure on this particular group of people in this cycle.

Susan Baier:

Absolutely. I think that empathy component is so important particularly with this group. It doesn’t mean you need to be running around like a chicken with your head cut off in panic when you’re in meetings with them, that’s not going to help. But I also don’t think it’s helpful to ignore their very real perceptions and concerns about what’s going on and empathize with that and as you say, be a real partner with them on helping them manage through it. If you can get them through it, they’ll be a client next year. If you can’t get them through it, who knows what’s going to happen to that organization.

Drew McLellan:

Yeah. So you’re also going to see them referencing the great recession in conversations, because for many of these people, they’re bringing the baggage of that experience into this new reality. So many of them lost jobs, might’ve lost their home, really went through a tough time personally in the great recession. And so that is really coloring how they are responding to this current situation.

Susan Baier:

And I think it’s a very interesting topic of conversation to have with a client when you’re trying to sort of suss out where things are, were they working during the last recession and how did that affect them in the organizations that they were in at the time? Because you’re going to hear these folks statistically more likely to say, “Man, that was rough. I got slammed. My company got slammed. I had to lay a bunch of people off. We had to do a lot more work with no more pay.” You’re going to hear them talk about that litany peak and they’re resonating with that very strongly now.

Drew McLellan:

Yeah. So overall, these are folks who are going to be slow to make decisions, and they’re going to be really pinching pennies and squeezing the budget at every turn. So it’s an odd juxtaposition because they’re also very anxious about making upsales because they’re being charged with that and there’s a lot of pressure and their unspoken fear is if I can’t perform at the level I’m being asked to perform at, I’m going to be let go just like last time or I’m going to lose my job just like last time.

Susan Baier:

That’s right. And I think that’s where you see these percentages even in this group that are saying, “Hey, we plan on increasing spending in some critical areas, not across the board, but where we think we can have the biggest impact to survive this.” So it’s not at all true that every distressed client or prospect is going to want to slash their budget across the board. It’s actually more likely that they’re going to want to cut certain things so that they can strategically spend in ways that they think is going to have the biggest impact on retaining their clients and getting new ones.

Drew McLellan:

Yeah. So the pragmatic folks, these are the folks who are the opportunists who see this as a chance for them to take over some market share. They’re going to show up to you and basically by sort of poo-pooing the recession and the impact of the recession on their organization and their customers, they’re going to say, “You know what? This is not our problem. This is not a problem that we have to solve.”

Susan Baier:

Yeah. I don’t think they’re going to deny it’s happening.

Drew McLellan:

No, right.

Susan Baier:

But they really see it as like sort of a cycle thing. And it’s just one of those things and they feel fairly immune to a lot of what’s going on. And what they’re really focused on is opportunities. And I think that I’d be surprised if they didn’t come to agencies before the agency could come to them and say, “What can we do? We’ve got some budget. We see some opportunities, let’s put some plans together because I’ve got money to spend. Let’s try to gain some ground during this.”

Drew McLellan:

Yeah. I think most agencies are sort of hedging their bet and not proposing a lot of big new things to clients because they’re assuming-

Susan Baier:

Nobody’s going to want them.

Drew McLellan:

That everybody’s going to be more on the distress side. And again, one of the shining moments of this study for me is that that is not the case that there are clients out there that do want you to bring them big ideas and big opportunities. You just need to look for which of those clients are going to be open to that conversation and then how do you approach it. So again, the pragmatic folks are going to be people who are actively looking for new opportunities, new ways to spend money, new ways to gain market share because they… And you’re going to hear them talking about that their competitors are holding back, that they’re cutting that-

Susan Baier:

They’re asleep at the wheel.

Drew McLellan:

They’re struggling, right? And so these guys are like, “While they’re asleep, we got to go. We got to go harder.”

Susan Baier:

We got to go.

Drew McLellan:

Yeah.

Susan Baier:

Yeah. And I think really for agencies what’s important to understand about these folks is that you can potentially be on the chopping block as well. If you are not proactive and really engaged in this effort to help them find opportunities and take advantage of them, they’re not going to want vendors, providers, partners, who are just sitting back and waiting for the client to say, we want to do this or we want to do that. They want ideas. They got money to spend. So I think the sooner you can spot these folks and then really get in front of them with some creative ideas even if they don’t go for all of them, they’re going to appreciate the effort that you made in sort of understanding where their heads are and coming up with some ideas of things that they could do that would have an impact.

Drew McLellan:

Interestingly, an interesting juxtaposition, however, with this group is, while they are ready to spend money, they are the biggest group that expects the agency to take deeper cuts to fees and things like that. So they see the opportunity in a very 360 way. So not only do they see the opportunity that their competitors are asleep so they can take market share by spending more, but they also know it’s a buyer’s market. A lot of your clients are cutting back and so you are eager to have clients that want to spend money. And so what they’re saying is, “I’ll spend money, but there’s going to be a quid pro quo here. So I want a little something for being willing to spend money and I want a shave on your fees or something. You need to show me that I’m getting a deal.”

Susan Baier:

Yeah. I mean, I think this group more than any of the others really puts the onus on the strategic chops, the creativity, the out of the box thinking that we know that agencies can provide because this group will test that. If you don’t have it in your agency, they’re going to spot it. And there are plenty of agencies out there that may have it if you don’t. So this is the time when you really need to shine the light on your niche, your specialization, but also just your strategic creative thinking about how to solve the problem that these folks are trying to solve, which is how can I get out there and eat everybody else’s lunch.

Drew McLellan:

Yeah. And the steadfast folks, they kind of fall in the middle. They’re the steady eddies, right? They are super well-informed. Again remember, they’re the biggest consumers of economic news of the three groups. And they understand the impact that the recession is having on the world at large. But again, not unlike the other folks, they believe that this is normal, that yes, it was brought on by COVID this time but we’ve all been waiting for the recession anyway, this is a normal business cycle and we just need to soldier through this. We just need to soldier all through it.

Susan Baier:

Yeah. They were well prepared for it.

Drew McLellan:

Yeah.

Susan Baier:

They think they were well prepared and they can stay well prepared. Generally, you’re not going to see these folks wanting to make a ton of wholesale changes. They’re very happy with their current agency relationships. They’re very happy with how their organization is positioned to survive this. And I think that for this group, it’s really about, like we said, everybody wants to find efficiencies and it’s a good opportunity to go in, even with these folks and say, “Look, we found some opportunities for you that are exciting that you need to think about.” And recognize that they do have additional spending that they want to do. They’re just not as sort of wholesale throw the barn door open and see what we can grab as the last minute folks.

Drew McLellan:

As the pragmatic folks, right?

Susan Baier:

Yeah. Right. Exactly.

Drew McLellan:

So in the executive summary, you’re going to actually find literally a checklist of things that you can do for each of these folks, but let’s talk through some of those now. So if you’ve identified that a client or a prospect falls into the distress category, it doesn’t mean by the way that these people aren’t going to hire agencies. So if you identify a prospect is distressed, that doesn’t mean you should bail on it. It just means you need to approach them a certain way. So this is about in your conversations, you need to be demonstrating efficiencies, both in how you work and the way you manage the budget. They want