Episode 328

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During the lifetime of an agency, how that agency/agency owner approaches business development evolves. In the beginning, an agency’s first clients are people the agency owner knows personally. From there, as the agency matures and grows, it morphs into working with people who have been referred to the agency by happy clients. Many agencies never evolve past this level of business development. It can be challenging to see options for the continuum of business development beyond the normal routine.

Today’s episode is continuing our deep dive into agency biz dev. Building up the previous discussion about the importance of finding a niche, Drew looks at the 5 stages that create the continuum of business development and explains why 85% of agencies never reach the most effective and sophisticated of levels.

You get to decide where on the continuum your agency lands. But to make an informed decision, you have to know your options.

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.

Continuum of Business Development

What You Will Learn in This Episode:

  • The five stages on the continuum of business development
  • Why offering deals never serves in the long run
  • The need to be interesting instead of interested
  • Statistics related to how prospects find their agency
  • The ideal structure for an agency
“We have to live by the know, like, and trust model.” @DrewMcLellan Click To Tweet “The buyer’s timetable wins. Always. There’s nothing we can offer that’s going to accelerate when a prospect becomes a client.” @DrewMcLellan Click To Tweet “We need to be interesting, not interested.” @DrewMcLellan Click To Tweet “Most prospects find the agency that they want to consider on their own. It’s not us picking up the phone and calling them. It’s that we got on their radar screen somehow and they followed us for a period of time.” @DrewMcLellan Click To Tweet “If you target clients that are between 5-10% of your AGI, all you need are two or three wins a year for you to double in size every three or four years.” @DrewMcLellan Click To Tweet “You get to decide where you want to be, and what that agency looks like is absolutely tied to how you view and approach business development.” @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:

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 made. Let us help you build an agency that is sustainable, scalable, and if you want down the road, sellable. Bringing his 25 plus years of experience as both an agency owner and agency consultant, please welcome your host, Drew McLellan.

Drew McLellan:

Hey, everybody. Drew McLellan. Welcome back to another episode of Build a Better Agency. If you were with me last week, you know that I am going off script a little bit. So normally the way the podcast works is there are four episodes with a guest, and then there’s one episode that I call a solo cast all by myself, just me talking to you. What I decided for January, what I wanted to do is actually to kick off the year with a series of focused conversations on biz dev. And so rather than having guests with me, it’s just going to be you and me for a few weeks while we talk about some biz dev things that I want to get on your radar screen, and I want you thinking about, and I want you taking action on right away, because we often get quiet sometimes right after Thanksgiving, sometimes by early December, but we’ve been dormant in terms of our biz dev efforts for the most part for four to six, could be even eight weeks by the time you’re hearing this if you’re listening real time.

And this is a common pattern agencies. And so I’m trying to reinvigorate your commitment and desire to get out there on the biz dev trail. There is no better time than right now. Yesterday would’ve been better, but that one has passed us by. So I want to get you back on track. Before I jump into today’s topic, I want to tell you, I want to remind you about a really amazing workshop we’re doing. It’s called Re:Think Innovation, and it is February 17th and 18th down in Orlando. And this workshop is taught by a brilliant woman, bestselling author named Carla Johnson. And Carla did a great deal of research. We are all innovative by nature. We all have big ideas when we’re kids. We can turn any, a box and a wooden spoon into whatever, a train and charge money and get our parents to pay to ride on the train, whatever. We were very innovative when we were kids, but that innovation get squashed over time and it gets boxed up and it gets contained and constrained as we grow into adulthood.

And for many people, they have a hard time tapping into it. And the reality is big ideas are our business. I don’t care how your agency specializes or who you serve. What our clients want from us is they want our expertise and they want ideas that are bigger than what they can come up with on their own. And so we have to be able to innovate. We have to be able to think bigger, bolder, and we have to be able to do it on demand. And in many agencies, the agency owner may be the only person who could do that. And when other people say, “Where did you come up with that idea? Or how did you know that that was a good idea?” It’s so innate to some of you that you don’t really know how you may be good at it, but you don’t know how to teach it.

And so what I love, love, love about this workshop is that it is sort of a one-two punch. Number one, all of the participants are going to learn how to reinvigorate their ability to think big and to create new ideas and to make connections where connections are not evident from the beginning. But Carla is also going to teach us how to teach this to the rest of our team. Every one of us in the business should be able to have big ideas. And Carla firmly believes and a research proves that anyone can be taught how to be innovative and think bigger. So this workshop, again, February 17th and 18th, come join us. If you’re interested, head over to agencymanagementinstitute.com. Under the “HOW WE HELP” tab, you’re going to find Workshops. And if you slide over to the right, you’ll find the Re:Think Innovation workshop and you can sign up right there.

We have not offered this workshop before, but I guarantee you, it is going to be one of our most popular workshops. So grab a seat, come join us, warm up if you’re up north for a couple days in February when you’ve so sick of the winter, you could cry, and come be with us. Obviously, we’re going to be following all the safety protocols that Disney has in place and believe me, they got it locked up. So you’re going to be safe. You’re going to be healthy and we are going to learn big. So I’d love to have you join us. All right. What I want to talk a little bit about today is sort of the evolution of biz dev in most agencies. And I think you’re going to see yourself somewhere along the way. And one of the things I want to stress to you is it is your choice as an agency owner, or it is your opportunity to influence if you’re an agency leader how big the agency gets and how you do biz devs.

So I’m going to teach you some best practices. I’m going to talk about growth, assuming you want to get bigger and more stable than you are today, but you get to decide. So it’s okay if you’re perfectly content the way you are now. It’s all right to stay there. But if you aspire to growth and you aspire to a more systemized, reliable, predictable biz dev model, then hang with me, because we’re going to talk about that. So in the very beginning of most agencies, the way we got business in the very beginning was we got walk-ins and referrals. And we lived on that feast or famine of if somebody walked in the door and they had a bag of money, we took their money and we did their work. And we did that because we didn’t know any better and because we were just starting out. And what that meant was we got very fragmented in a hurry.

We were doing things that we didn’t have in-house the skillset to do. We were learning as we went, which meant we weren’t as profitable, because it took us more time to get the work done. But we were always grateful for the referrals and the phone ringing when we didn’t expect it to and we took the business. And so most agencies start out as generalists. And we just worked with the local butcher, baker and candlestick baker, and it’s all right. It works just fine for a while. But then we realize that we can’t count on that, that it’s too much out of our control, that yes, it’s great when it happens, but we have no control when it happens and we have no control of who walks in the door and whether or not they are actually a right fit for our skillsets and focus.

So we start some rudimentary biz dev efforts. And so this is what I call the feast-or-famine stage of biz dev. You’re either frantically chasing new clients or you’re too busy onboarding the new client you just got to do any prospecting. So your biz dev activity is either frenetic or almost nonexistent, and you flash back and forth between those two models, which is better than just sitting around, waiting for someone to walk in the door, but it’s also super stressful. And what it does is it doesn’t allow you to nurture relationships in a long-term way. And we know that the buying decision for most clients for agencies is not super fast. They like to ruminate on it. They like to soak on it. They like to kick our tires. They like to poke around on our website for a long time before we even know they’re there.

So we need something more sustained. But honestly, this feast-or-famine is where most agencies get stuck in many cases. So the next tier up, the next level of sophistication, if you will, is the agency is doing some level of biz dev every week. You have something happening. You’re writing a blog post. You are reaching out to a prospect, but the results are spotty because they’re not super focused. And while you’re doing something every week, it’s not always well planned and it’s not always consistent. And sort of the pinnacle of biz dev is that your agency and you as the agency owner, leader are considered an authority or a subject matter expert. You have a depth of expertise in some deliverable or niche or audience, which we talked about in last week’s podcast, and your right-fit clients, people who are absolutely aligned with what you guys can do best most easily and most profitably, they literally seek you out.

And if you tell them you’re too busy and you can’t take on a new client, they will actually negotiate with you to become your client because they want to work with you, because they perceive your expertise and they don’t want a generalist. So that’s the pinnacle of biz dev activity is that. So for many of you, you’re sitting in the either still walk-ins and referrals, or you are at the feast-and-famine stage, or maybe you’re doing some things at a rudimentary level every week, but it’s not as consistent. Very few of you, very, very few of you are at a point where you are considered a known expert, a subject matter expert. So there’s this continuum. I want you to picture a continuum with sort of five stops along the way, and where you are as an agency is often in alignment with how you focus on biz dev.

So the very first stop is sort of that initial growth stage. You started the agency and you’re mostly working with what I call friends and family, people that you know personally. And that works for a little while and about 20% of all agencies stay right in that module, right there. And again, I want to stress, I’m going to tell you about all five. You get to decide where you want to be. And so please don’t misunderstand me to say… I mean, I will be honest. I think that there are stages in this continuum that are more profitable and more consistent and have less ebbs and flows and less stress than others, but it is your business and you get to decide. So that first one is initial growth, and about 20% of agencies stay there. The second module or the second stop on this continuum is oftentimes what predicates moving to this second spot is that you get a gorilla client.

Now you’re getting referrals from your clients to people you don’t know, strangers. And sooner or later, you get a gorilla that dominates your agency. So maybe it’s 20, 25% of your AGI. And that gorilla client puts you at risk, but also sort of dictates the way you run your agency because when somebody is 25% or more of all of your revenue, it’s pretty easy for you to say, well, when they say jump, I say, how high? And about 50% of agencies are stuck in those first two stops. So they’re either the initial growth or I’ve got a gorilla and I’m mostly doing work with either people I know or referrals and walk-ins. So again, 70% of all agencies are at one of those two stations, if you will. And then to elevate to the third station, the third stop on this continuum, agencies start to realize that they have to actually proactively have some sort of biz dev activity.

And so even if it’s at the feast-or-famine level or they are just doing something every week or every couple weeks, and it’s a little inconsistent, but at least they’re out there doing something, typically this earns them a couple more large clients. So they might have two or three clients that are 60 or 70% of their business. And then they’ve got a bunch of little clients that fill in the cracks around those clients. So they’re certainly more stable than the one gorilla, absolutely. So again, as I said, there are points on this continuum that feel more stable and safe and predictable and sustainable, and this third one is certainly better than the first two in terms of all of those factors. So now we’re at about 85% of all agencies are either in initial growth, I’ve got a gorilla and I’m mostly living off referrals, or I’ve got two or three good size clients and then some smaller clients around them and we’re either living on the feast-or-famine biz dev model, or we’re doing something every week or other week, but it may not be as consistent as we want.

So again, that’s 85% of all agencies live in one of those first three stations on this continuum. The fourth station on the continuum is that you have started to niche down. So you have defined some area of expertise, and you are beginning to carve out your spot there. You’ve got a consistent biz dev program. You’re creating content around that niche. You might have a webinar series, or you might have a podcast, or you might be writing every week about how to help the marketing managers or directors in that niche or people who want to know more about what you know about your teaching. If you remember from last week’s podcast, the three elements of being a subject matter expert or an authority are that you have an area of specialty or a niche, you have a point of view about that niche, and you regularly and consistently teach the audience that cares about that niche.

So that’s this fourth station is that you are doing all of that. Again, this is where people start coming to you where the sales process gets much shorter. They’ve already vetted you. They love the fact that you understand their industry or the audience they’re trying to reach, or you do exactly the deliverable that they want, and so they start knocking on your door. This is, without a doubt, a more stable, sustainable, scalable model. And about 10% of the agencies sit in this spot. So now we’re at 95% between initial growth and get a gorilla, two to three big clients with the feast-or-famine biz dev, and then the niche and consistent biz dev program.

And then the top 5% of all agencies, they are known experts. They have established themselves as an expert. They have a consistent biz dev and content program. That content and that biz dev program in terms of their outreach is laser-focused on the prospects that are the perfect fit that align with their expertise. And for the agencies in this space… I don’t think agency life is ever easy. Don’t get me wrong. But for agencies in this space, things get much easier. And honestly, you are now turning down prospects because they’re not quite right. So what I really, what I want to recommend, what I believe is best for agencies is that we’re in one of those last two stations. We’re either in the niche station or the known expert station. And that means that we’re where 85% of agencies are not. We’ve already eliminated 85% of our competition.

So (a) that’s a beautiful thing, (b) these are the two stations where prospects are starting to seek us out specifically, not because of a referral, not because we live in the same geography, but specifically because we have a depth of expertise that they want to tap into. And so that’s a beautiful place to be if you so desire. And again, not saying you have to. I’m just saying, it’s my recommendation. When you think about it, this should be so easy because we get paid to do this for clients every single day. And what we say to clients are, look, consumers are in control of the buying cycle now. They really drive the buyer’s journey. Our goal is to be present in the right places in the buyer’s journey, but we don’t offer a discount or a coupon or a white sale that’s going to get someone to buy before they’re ready. And we have to live by the know, like and trust model. We have to be known. We have to be findable.

And again, that’s where the niche or the known expert makes things a lot easier because we’re not competing with the 85% of agencies that are under marketing agencies/location or something else. But we have to be findable. They have to know who we are. Then they have to live in our content. They have to read our stuff. They have to follow our social because long before they’re ready to buy, they have to like us. And when we’re consistent in our content and we’re teaching and we’re helpful, we earn their trust. And when we earn their trust, then they are ready to buy from us. And that’s when they knock on our door, send us an email or fill out a form. That’s when they’re ready to buy. And also much of that process happens without us even knowing they’re out there. But if we’re focused and we know exactly who our right-fit prospect client, our right-fit prospects are, and we’re going at them with all guns ablazing in terms of content and what we talk about and the case studies on our website and what our website says, then we can earn that know, like and trust faster, and we can get to a buying conversation.

But at the end of the day, the buyer’s timetable wins, always. There’s nothing we can offer that’s going to accelerate when a client or a prospect becomes a client. They do it on their timetable when they need to, not even when they want to, but when they need to. But we want to be very present and we want them to already know, like and trust us, so when they need to, we’re in the short set, and then we at least get a shot. We get called up-to-bat. Especially in our world of B2B sales, which we all are doing, we’re selling to another business, we can’t really bribe the sale without giving a profit. So I suppose one way to accelerate the purchase is to offer a deal, but that never ever serves us well in the long run. It is very difficult to offer for a prospect a special price or a discount on your hourly rate or a percentage off of every proposal, and then go back and get it back later when you want to be profitable.

But sadly, so many agencies are still doing this backward. They still are just chasing after anything and everyone. So I love, love, love this analogy. Here’s the mind shift we have to make about biz dev. We need to be interesting, not interested. If we are interesting for long enough, the prospects will stick around and they’ll pay attention to us and they will engage with us until they’re ready to buy. We can keep them near us if we’re interesting and we’re valuable to them, but if we’re interested, we’re calling them and we’re leaving voicemail messages like, “Hey, just checking in, wanted to see if you had any projects you wanted to discuss,” or any of the other sort of old school sales techniques, they run. So here’s my analogy for this.

So imagine you live in a house and your house abuts a forest, and you know there are a ton of deer in that forest. And your ultimate goal is to get some of the deer to walk up onto your patio and actually eat out of your hand. That’s your ultimate goal. Well, if the deer are on the edge of the yard and you go running at them because you’re interested, what do they do? They scatter into the woods. But if you’re interesting, they stick around. So what we do is we scatter some great deer food right on the edge of our yard, right? Where it abuts the forest, and we do it on a consistent basis. And pretty soon, the deer start coming out of the forest and they start eating the deer food. And because we’re consistent at it and because it’s always the really good deer food, we’re feeding them something that they value, we’re interesting to them, and so they start getting in the habit of coming around.

And then what we do is we start moving the deer food into the yard a little bit. Not too far though. Right? We don’t want to spook them, but we move it in a little bit. And we create a trail from the first spot of where the food was to the second spot. And of course the second spot has more deer food than the first spot. So they get a little taste out on the outer ring of the yard, but if they really want a lot of deer food, they got to take another three or four steps into the yard. And we just keep doing that until they get closer and closer to the patio. Now, the mistake we make as agency folks is they get kind of close to the patio and we get so excited and we think we have to sell them something. We have to show that we’re interested. And so we go running at the deer. And what did the deer do? They run into the forest. And then we have to start all over again.

So the discipline of biz dev in today’s world is to not chase after the deer, is to continue to be interesting and keep bringing them closer and closer to the patio. And eventually, you’re bringing them close enough to the patio that you can be in the screened-in porch looking at them, and they can see you, but they see there’s a barrier in between, and you’re not looking like you’re going to rush at them. So because you’ve been so consistent in how you fed them and the food quality and all of that, that they will keep coming up closer to the yard. And then maybe after a while, you can stand out on the far edge of the patio while they eat. And then they’re moving closer and you’re moving closer. And I’m guaranteeing you, a subset of them eventually will get so comfortable with you that they’ll eat out of your hand. When? When they’re ready to, when they trust you, when they know, like and trust you.

This is the exact same thing with biz dev. We have to be interesting. We have to provide value long before we even know a prospect is out there. We just have to provide value, and then know and trust that they are eating the deer food and that they are coming closer and closer. And maybe at first, it’s a