Episode 332

podcast photo thumbnail
1x
-15
+60

00:00

00:00

Business development is a complicated and challenging aspect of agency life for many owners. The same rules that applied when the agency was new no longer apply once it starts to settle into its identity. But what is that identity, and how can it best be leveraged for business growth? And what if you want to shift that identity to better define how you want to be seen and known?

After five episodes talking about the various pieces of the Biz Dev puzzle, this final episode in the mini-series pulls it all together into an action plan. It’s not enough to want to do better; you have to do the work, identify the goals and put an accountability process into place.

Here, we’re going to explore specific, tangible steps for making Biz Dev at your agency a success.

For example — you might be considering hiring someone to manage your business development. We’ll look at the reality of that route.

We’ll also do a short recap of the topics covered in this series, and then we’ll dive into a game plan that starts with dividing the sales funnel into four sections, each with its specific approach.

And by the end of the discussion, you’ll be ready to take your biz dev plan to the next level.

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 Ideas Into Action

What You Will Learn in This Episode:

  • Thoughts on hiring new business development managers
  • Recapping Episodes 1-5 of this biz dev series
  • Steps of a Biz Dev System
  • Identify sweet spot prospects
  • The need for accountability
  • A sales funnel exercise
“It’s dangerous for us to assume as agency owners that clients want or can afford to have a generalist.” @DrewMcLellan Click To Tweet “Biz dev cannot be a casual sport. This is something you need to play every day. You need to work that muscle, and you need to play to win.” @DrewMcLellan Click To Tweet “If you’re not convinced yet that you are an expert, it doesn’t matter. What matters is that you’re putting out helpful content, and the world thinks you’re an expert.” @DrewMcLellan Click To Tweet “When I think about my core audience, does what I’m about to give them help them do their job better? If the answer is yes, hit publish. If the answer is no, do not touch that button.” @DrewMcLellan Click To Tweet “You can’t possibly form a relationship with a thousand prospects, but you can form a relationship with 25.” @DrewMcLellan Click To Tweet “You need to create something for your existing clients that makes them feel special–like they’re part of an insider’s club.” @DrewMcLellan Click To Tweet “Being a connector is a really powerful tool when it comes to biz dev and for creating a position for yourself as being an authority.” @DrewMcLellan Click To Tweet

Ways to contact Drew McLellan:

Tools & Resources:

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:

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 midsize 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 McClellan.

Drew McCellan:

Hey, everybody Drew McClellan here from Agency Manage Institute. Happy to be with you again for another episode of Build a Better Agency. If you have been following along since the beginning of the year you know that this is my big wrap up to a six week podcast or mini series if you will. Normally we do four guests in a row and then I do a solo cast and then four guests in a row but I decided to shake things up this year. 2022 for me is about looking at all the things that are working and going well and asking myself, could they be better or could they be different or is there a twist that needs to happen? And so I was thinking about the podcast and I just decided that so many of you go dormant on the biz dev front from Thanksgiving or early December and so your pipeline has not heard from you and you haven’t really thought about biz dev in a really concentrated way for almost two months.

So I decided to try and kick you in the rear end and get you going on biz dev from a perspective of, okay, it’s January, we got to get back at this. And so that’s the reason for the series. So if you’ve been following along in real time, I told you that today’s was where we were going to get down into the nitty gritty of, okay, how do you do this? How do you create a position of authority? How do you claim that position? And then how do you leverage it so that pretty soon the right fit prospects are actually calling you and knocking on your door? And I’ll tell you a couple stories about that in a minute.

Just want to remind you before I dig into this, a couple things. Number one, we’ve got a great workshop coming up in mid-March called Running Your Agency for Growth and Profit. It’s for agency owners and agency leaders. We basically take all of the back of the house operations. So money, biz dev, HR, operations, process, systems. All of that. And we teach best practices for all of those things. And we’ll literally have agency owners who’ve been doing this for 20, 25 years come to the workshop and go, “I didn’t know that. I didn’t know that.” And reality is there’s not one central place to learn all of these things. And so most of us learned it by hook or crook as we were going through our agency, or we made it up as we went, which is how most of us did it. And I know when I found AMI before I bought it many, many moons ago it completely changed the way I ran my agency when I took workshops like this one because I knew things I had never heard before. And it just completely was a game changer for me.

So I hope it would be a game changer for you as well. Again, would love to see you March … I think it’s the 14th and 15th in Chicago. Also a couple months after that, we’ve got the Build a Better Agency Summit coming up May 24th and 25th. We’re about half sold out as of this recording, which is early January. So don’t wait. We have a cap at 300 people because I want to keep it small and intimate and let everybody be connected with one another. Killer speakers, great sponsors, great attendees. I had several people say, “I can’t believe it, but this is a conference I actually don’t want to leave. I just want to stay here and keep doing this.” And I promise we’re going to deliver that kind of experience again. I can promise that because it has nothing to do with me. It has to do with the people that gather together and how committed they are to connecting and helping each other and learning from one another. So it’s really a great couple days. You will leave energized and proud of the work that you do and proud to know the people you do. And we would love to have you there.

So both of those things, the workshop and the summit, you can go to the agencymanagementinstitute.com website. The summit is the very first navigation on the left. BABA summit. And then the workshop you can find under the how we help tab and then you’ll see workshops and just scroll over and you’ll see Running Your Agency For Growth and Profit.

All right. Let’s get to this. So couple things. First of all, I had a couple people reach out to me after the first episode and they had some questions about if you’re going to hire a new business person, what does that look like? Basically it was, “Drew, I hear you. I know that as the agency owner I’m supposed to do biz dev but I don’t want to so I want to hire it out.” And I will say … I’m going to walk through the best way to do the hiring or the best way to build the compensation anyway. But first, what I want to say is understand that oftentimes a new business person is not successful. So it is a really challenging position to do if you’re not the agency owner or you haven’t been at the agency for a while. So just go into it with a grain of salt. So first of all, a lot of people ask me if they should pay finders fees to their employees if they make referrals and you absolutely can if the prospect meets your criteria for what a sweet spot client looks like.

And what that means is you actually have to have defined what your sweet spot clients look like. If you have not downloaded our sweet spot client filter yet, you can go to Agency Management Institute website and just search for sweet spot client filter and it’ll come up. We’ll include a link in the show notes. I just don’t remember what the URL is now.

But if you haven’t done that, then you need to do that first. So if you’re going to pay your employees for bringing prospects to you, you only want to pay them if they’re good prospects. So you want to make sure that you have defined for them what a good prospect look likes. And you can’t do that if you haven’t really gone through the exercise. And by the way, if you’re going to give them a cut or a finder’s fee, you want to make it a flat fee. So it’s either a flat, we’ll give you $500 if we get a meeting with someone or whatever. I’ve had some agencies where they offered a referral fee if we landed the client, and then they shared in the spoils of the agency’s new client. That did not work out well for them. It’s different when you have a new business person or when you’re doing it for just a regular employee. A flat fee for a meeting or a win is great, but don’t be promising a percentage of revenue or AGI or profits long term. That is not going to work out well for you. The math gets really ugly in a hurry.

But if you’re going to hire someone, now we’re not talking about just everybody on the team. But if you’re going to hire someone to do new business for you and this is their primary job function, then typically the way you want to pay them is you want to give them a small base and a good piece of the AGI. And a good salesperson will always take the small base and the higher percentage of AGI because they believe in their ability to sell. If you have a prospect for the job that wants a full on salary and doesn’t want any commission or whatever, you should worry about the confidence level of that person to actually do the job.

So anyway, so a small base, and then I like to recommend, and I think it’s a best practice for you to have a sliding scale based on targets. So for example, let’s say your ideal client is spending $200,000 a year or more with you. Then you might say, “Okay, so for any client that we land that spends from zero to 50K you get 1% of the AGI or from 50 to 150 you get 3% of the AGI. And from 150 on you get 5% of the AGI.” Or whatever it is. But I would have a slide scale that drives them to try and find for you the ideal client. So you don’t want a bunch of piddly little clients. You want clients that are big enough that they matter inside the agency ecosystem. And so I wouldn’t overpay for small clients. Yes, you have to pay something, but you don’t have to pay the same something as you would for a big client. So keep that in mind.

You can also say, “Look, there’s a kicker that goes in. So if you land a client from 50 to 150K of spend, you’re going to get 3% of that AGI. But if they’re in our niche, you’re going to get 4%.” Or whatever it may be. Or maybe you only get two if they’re not in our niche. So you can play with the payment schedule all you want but the point is build the payment schedule to drive the new business person to sell what you want them to sell.

And all of these payouts, all of the commissions and all that should be for one year only. Because after that, honestly, the team has earned … If the client sticks around it’s because of the team, not because of the new business person. Do not, do not, do not, do not pay out for more than a year. And be careful when you’re building this. I’ve had agencies promise 10% of gross revenue or some crazy ass number. And sometimes you’re paying out more than you’re actually earning as an agency. So being sure you do the math and be careful that you’re not creating such a sweet pot for the new business person that you’re screwing the agency. So if they do insist on a larger base and you just think they’re the cat’s meow and you need to hire them, then there’s normally a threshold that they have to hit.

So for example, yes, I will pay you $85,000 but until you sell $500,000 of new AGI, there’s no commission paid on top of that. Your salary is your commission in essence. I’ll tell you that maybe one out of 25, and I’m probably being generous, biz dev people ever pay for themselves. And you need to be ready to invest in them for 12 to 18 months before you can really count on them making some decent sales. So if you’re going to go down that route, be careful and be patient because it takes a while and they need a lot of your time and tutelage. Because they really just don’t understand our business and they certainly don’t know how to tell the stories of our agency and how we did things. So you’re going to have to sort of build all of that.

All right. So that answers the question that I was asked. So I want to go back and just quickly review what we’ve talked about for the last five weeks. Because I’m getting to the point where you have to have bought into some of this for what I’m about to tell you to be valuable. So I think we’ve agreed that it’s dangerous for us to as assume as agency owners that clients want or can afford to have a generalist. And I showed you the data points out of our research that talked about the lion’s share of clients are working with agencies that live more than 200 miles away from them and when we asked them why they said, “Because they have a subject matter, because they have an expertise that we need.” So they are willing to work with agencies far away. And if you remember that the smaller the budget … So it was under a quarter of a million, a quarter of a million to a million, a million to 10, and then 10 million to 20 million. The smaller the number of budget, the smaller the percentage of clients who were currently working with an agency more than 200 miles away.

But at the 10 million, it was 64%. At the one million to 10 million it was 63%. It doesn’t drop below 50% until you get to the under $250,000 of budget a year. So smaller clients are more likely to work with local agencies or agencies nearby. Bigger clients with bigger spends are very comfortable. 63, 64% of them said, “Yep. My agency is more than 200 miles away and I don’t care because I want their depth of expertise.” Again, I’m going to tell you that it’s tough to live as a generalist in our world today.

Another reason, which I don’t actually think we even talked about, but we’re doing a lot of succession planning at AMI and one of the things we’re doing is we’re grading what qualities about an agency might create a multiplier in terms of their value. And one of them is that the agency is a specialist or has a niche. So not only do clients value it more and are willing to pay more for it as our research shows, but if you ever want to sell your agency, you’ll sell it for more if you’re specialized, as opposed to a generalist. So there are just so many advantages to being a specialist and it’s … You know the industry already so honestly, part of the big advantage, which we haven’t talked about is it’s more profitable for you. The more industries you have to know and understand and the more people you have to have on staff that have expertise in those industries, the more expensive it is. But if you’re all on the same boat, rowing in the same direction, because you’re all serving the same kind of audience, you need fewer experts because your expertise spans out over the client base.

So you know the industry or the niche or the audience, whatever it is, you already have the specific skills and talents on your team. You can speak the language because it’s your language as well. You’re a part of that community. Which means that you can really focus on business problems because you get the business problems. And as I’ve said time and time again, clients have told us and have proven they’re willing to pay more for an expert than they are a generalist. All of that’s to say, if you’re on board with all of that, then let me tell you how to do it. Again, a reminder that the more narrow, the better, because what narrow does is it simplifies and magnifies your content. Like what you write about and what matters to your audience. It simplifies and magnifies what employees you need to go get and what skill sets they need to have.

It absolutely makes your biz dev strategy and targets and tactics easier. You know where to show up in terms of trade shows and it allows you to raise your prices. So narrow is the way to go. Another factor that we have to consider … And I mentioned this in one of the earlier podcasts about how the buyer’s journey for agencies has really changed over the years. And the good news is that that means you don’t have to live in what is considered an agency centric city like New York or LA or Chicago or Dallas to be found. That people are looking other places for agencies. And in fact, many clients don’t really care where you are. So thanks to the internet and all things digital prospects can search for an agency and they can find an agency and as long as the agency’s qualifications match and they have a conversation or however that plays out, geography is much less an issue.

I can remember we were doing work for a large brand based in Ohio and I had been there, I don’t know, three or four times. This was on the agency side of my world. And finally we were in the conference room and one of the guys said, “You’re from an I state, right? Like Idaho.” And I said, “Yes, but no. My agency is based in Iowa.” And he said, “Oh yeah, right.” Couldn’t care less. And it had been several meetings. Because we had met all the other criteria. So this buyer’s journey has changed for us and what it means is that we have to be findable, which I have been talking about for the last several weeks so I don’t want to beat that horse completely to death. But in some agency edge research that we did, 85% of the decision makers said that they found their agency, not the other way around. They went looking for their agency and found them.

And so again, that reminds us, that we have to be findable and we have to be accessible in the way that they would search for us. And when a prospect is looking for an agency, they just don’t put in advertising agency or marketing agency. Yes, they ask other people and yes, they pay attention to trade shows and where they might see you speaking. But oftentimes they’re going to Google and they are saying agency that specializes in, or healthcare agency or whatever it may be to try and narrow down the choices. I remember having a conversation with the folks at Mercer Island Group, the agency search firm. And they said a lot of times when they get hired by a brand to … And these are big brands, brands, big enough to afford a search firm.

And they say to the brands, “Okay, are there some agencies you want us to include when we send out the RFI?” In many cases the clients have no idea of a single name of agency. Or they might say, “Well, I’d like to talk to the agency that did that commercial or this commercial.” So they know the work, but they don’t know who did the work. And so again, we have to be findable. And all of that leads up to a couple things. Number one, biz dev cannot be a casual sport. This is something you need to play every day and you need to sort of work that muscle and you need to play to win. The good news is selling has changed. So there are very few agencies that successfully sell in the old way. And the old way was cold call a list or go to a trade show and slap some backs and buy some drinks.

That’s not working for most agencies anymore. What is working for agencies is what we’ve been talking all along, which is declare to the world who you are, who you’re for, what you’re about, who you serve, and then prove it over and over and over again by being a subject matter expert.

And so I now want to walk you through a very simple biz dev system or program that is not going to require an arm and a leg to pull off but will absolutely within 12 to 24 months … If you really do this and you do it well and you do it right within 12 to 24 months it will have people knocking on your door. Right fit, perfect fit clients, knocking on your door, asking if they can hire you. Not asking for a proposal. Not asking to meet with you. Just ready to hire you because they feel like they already know you. They’ve consumed your content. You’ve been helpful. You’ve helped them do their job better. And now they’re ready to hire you.

Because as I think I said in the very