Episode 327

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As we start to dip our toes into 2022, many agencies have been pretty quiet on the biz dev front for the last 4-6 weeks. By the time we emerge from the holiday hibernation, we’re approaching February and our pipeline is feeling a little weak. I decided to help you jump-start your agency biz dev efforts with a series of podcast conversations just between you and me.

I’ve decided to mix things up a bit. 2022 is my year to shake things up a little and why not start in January? Rather than my usual guest interviews, I’m going to spend this month with you, focusing on helping you take a serious look at how you approach biz dev. Here in episode 1, we focus on something fundamental to many agencies’ success: defining a niche.
I’m going to start by looking at why the old-school approach to biz dev no longer works and why selling has evolved into helping. From there, we’ll explore why many agencies approach biz dev backwards and the list of criteria to consider when working to find your agency’s niche.

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.

Biz Dev

What You Will Learn in This Episode:

  • Why old school agency biz dev no longer works
  • How selling has become about helping
  • Why many agencies approach biz dev backwards
  • The brutal truth about the need to niche down
  • AMI as a niche case study
  • The criteria to use when thinking about how to niche
“I feel like 2022 is a year for new things, new opportunities, new risks, and new challenges.” @DrewMcLellan Click To Tweet “The great news is that you don’t ever have to sell again. All you have to do is be helpful.” @DrewMcLellan Click To Tweet “It’s time for us to accept that the world is owned by specialists.” @DrewMcLellan Click To Tweet “You need to decide who you can delight on a regular basis–who you can knock it out of the park for.” @DrewMcLellan Click To Tweet “I know of no experts that don’t have a strong opinion about something inside their depth of expertise.” @DrewMcLellan Click To Tweet “Niching is like compound interest. It just grows on top of itself and it multiplies faster and faster the more you do it.” @DrewMcLellan Click To Tweet

Ways to contact Drew McLellan:

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About the Author: Drew McLellan

For 30+ years, Drew McLellan has been in the advertising industry. He started his career at Y&R, worked in boutique-sized agencies, and then started his own (which he still owns and runs) agency in 1995. Additionally, Drew owns and leads the Agency Management Institute, which advises hundreds of small to mid-sized agencies on how to grow their agency and its profitability through agency owner peer groups, consulting, coaching, workshops, and more.

  • 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 has 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.”

Speaker 1:

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

Drew McLellan:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The next criteria is how many other agencies already claim this position? The odds of you being the only agency on the planet that has this particular niche are pretty nil to none. But your goal is that the answer is not that many, right? O