Episode 426

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It’s no secret that 2023 has been a rough year for most agency owners. Between the elongated sales cycles, shrinking prospect budgets, and the need to re-evaluate some of our own expenses that have been piling up, many of you are feeling burnt out.

But it’s not all bad news. There’s still time to take a fresh look at how you want to run your agency in 2024 and pull yourself out of the trenches if 2023 has gotten the better of you. This episode will focus on what we can be doing differently in 2024 in our biz dev strategy, which will make next year a little less stressful for us.

We’re taking a look at the data that Lee McKnight Jr. and his agency have compiled from many agency owners about their experiences throughout 2023. And while many of you were plagued with lower-budget prospects, dried-up client referrals, and slowed client growth, this leaves a glimmer of hope that the pendulum will swing the other way for us next year.

So don’t miss this episode to learn how to dial in your biz dev strategy and prepare for what we hope is an exciting new year full of new prospects, bigger returns, and, of course, happier agency owners.

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 strategy

What You Will Learn in This Episode:

  • The strain on obtaining new business in 2023 and its effects on agencies
  • How agency owners have been coping with elongated sales cycles
  • The importance of staying vigilant in business development even when work is abundant
  • Shrinking prospect budgets and diminishing returns on new business
  • Keeping up with client outreach, especially in an elongated sales cycle
  • The biz dev strategies that still work to obtain new business
  • What to expect from a new business manager
  • The four prongs of biz dev that will still get you out of a rut
  • What outbound efforts are still working on clients
  • The biz dev strategies that are working and what to avoid in the new year

“75% of agencies tell us the average time it takes to move from a first meeting to close in 2023 is between one to six months.” - Lee McKnight Jr. Click To Tweet
“Clients do have to come first, but one thing I'd point out is you are going to think there are fewer opportunities if you're not pursuing opportunities at all.” - Lee McKnight Jr. Click To Tweet
“This is absolutely the time for agencies, especially in this last quarter, to really look at what they're doing and reprioritize because there are reasons to be optimistic.” - Lee McKnight Jr. Click To Tweet
“There's never been a better time when there's more efficiency than ever. I know that AI scares a lot of people, but we are embracing it, and it's something agencies need to do, too.” - Lee McKnight Jr. Click To Tweet
“Why not use every channel at your disposal? If not, you may be leaving opportunities on the table. There are still individuals that will answer a phone call, believe it or not.” - Lee McKnight Jr. Click To Tweet

Ways to contact Lee:

Resources:

Hey, before we get to the show, I just wanna remind you that we have created a private Facebook group just for you, our podcast listeners. There are almost 1500 agencies, agency owners, inside that Facebook group every day talking about what’s going on inside their shop, asking for resources, gut checking decisions, talking about everything from pricing to hiring, to biz dev. All kinds of things are happening there. We’re starting conversations. You guys are starting conversations. What I love about it is the community’s coming together and sharing resources, encouraging each other, and just sort of having a safe place to talk about what it’s like to own an agency. So all you have to do is head over to Facebook, search for a Build, a Better, Agency Podcast group, or Build, a Better, Agency Podcast.

And you’ll find the group. You have to answer three questions. If you don’t answer the questions, we can’t let you in. But they’re simple. It’s, do you own an agency or do you work at an agency? And if so, what’s the URL? What are you trying to get out of the group? And will you behave, basically? So come join us. If you haven’t been there for a while, come on back. If you haven’t joined, join into the conversation. I think you’re gonna find it really helpful. All right, let’s get to the show.

Running an agency can be a lonely proposition, But. it doesn’t have to be. We can learn how to be better faster if we learn together. 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 with 25 plus years of experience. As both an agency owner and agency consultant. Please welcome your host, Drew McLellan.

Hey everybody. Drew McLellan here with Agency Management Institute, back with another episode of Build a Better Agency. Super excited for this episode. We’re gonna talk about biz dev, how challenging it’s been in 2023, and some things, some glimmers of hope and light for 24, and some things that you can be thinking about as you do your year end planning. So another thing I wanna, I want you to be thinking about as you do, as you do your year end planning and your forecasting and planning for 24, you know, we have a one page business plan that will help you really think through what are the priorities for 2024. So we’re gonna put a link to that one page business plan in the show notes.

So head over to agency management institute.com and go under resources and the podcast, and you’ll see it right there in the show notes. You can download it. It is, like I said, it’s, it’s one page. It will allow you to think through the priorities and really get clear about you can’t do everything. You can’t fix it all at once. What you need to fix, what’s gonna make the most difference in the business, and in what order you should tackle those things. So go grab that and, and use it with yourself, with the leadership team, whatever you need to make 2024, a really banner year for you and your shop. All right? So let me tell you a little bit about our guest. He is very familiar to most of you. Lee.

McKnight works for RSW. He has been a guest many times before. And as you all know, RSW is a company that comes alongside agencies and helps them with their biz dev program. They’ve been a great sponsor at the summit. They do some amazing research every year, and actually, they just came out with their 23 research about the biz dev situation, how other agencies are faring, what’s been in the way, what’s working. And so I knew I wanted to get Lee back on the show to talk about the most recent insights that they gleaned from their, from their research. They were also just featured in Adweek.

And boy, that article made it sound like we all should just close our business and open up croissant bakeries. So the good news is Lee’s gonna give us a more balanced view of what has happened this past year and what he thinks is gonna work in 24. So, hang in there. It’s not as gloo doom and gloom as it may feel, or as the media may, may, may be making you feel it is. And Lee’s gonna help us sort of see the light in that. So I’m super excited to have him on the show. Alright, so let’s not waste any more time. Let’s welcome to the show and let’s dig into the data. Lee, welcome back to the podcast. Always good to see you.

Yeah, Drew, thanks so much, man. It’s great to be back.

So you guys just came out with the latest piece of research that you do and you do it every year about new business, and you got picked up in Adweek. And boy, like journalists sometimes like to do, they picked out the foremost horrifying factoids out of the research and sort of put the spotlight on that. So yeah. Yay for the coverage. But yes, b, when I think about the research, there certainly were some glimmers of light and opportunity as well. So what I wanna do is I wanna talk first about some of the realities of what you guys saw in the research and you’re seeing in your own work around how tough 23 was for a lot of agencies Yeah.

To get new clients and what ad we kind of focused on. And then let’s talk about what, what are the opportunities as people are starting to think about 24? So let’s, let’s start with the bad news first. What, what were some of the things you heard from agencies around the struggles of 23?

Yeah, yeah. Well, well, again, I mean, thanks for mentioning that and, and it was great to your point to get that pickup. Yeah, I, I was actually interviewed Drew, that’s how I’m, I’m up there now. Wow.

I, I’m feeling pretty, I’m feeling pretty special that you made time for the little people like me.

She should, yeah. And my wife, my wife points that out too. She’s like, oh, really? Great. Now go take the trash out. Right? But no, I mean, in all seriousness, it, it, it was good to get that pickup and, and the stats that were there are, are real stats accurate. Right. But at the same time, a hundred percent with you, I wrote that report, you know, and I wanted to make sure that it wasn’t all doom and gloom because it’s not. Right. The way I look at this is, we just talked about it offline. This is the cyclical nature of this industry and the fact that there, there is reasons for optimism. Even now at the end of the third quarter, we’ll get, get into this, seeing our own agency clients, and then just talking to agencies that it’s loosening up and we’re seeing Yeah.

Some solid closes. So I definitely want agencies to take away from that Adweek article and our report, take this as, let’s take a step back. Where can we plug holes or where can we, in terms of business development, which is where we come from, obviously, what can we be doing? And I think some of these are gonna be a little eyeopening, but at the same time, what I’ve heard from a lot of agencies, you know what I felt validated by your report. Maybe that’s a little cold comfort in some ways, but Right. I I, I do hope you take that away too, agencies listening, because it’s not just you, all of us, it’s been a weird year. Yeah. But we’re gonna get through it. And so, but let, let’s do, let’s talk about some of these. I think, you know, the, the first one maybe is the fact, and, and this is the one that’s gotten a lot of play, is that 58% of agencies said it’s been harder or a lot harder to obtain new business so far this year.

Yeah. And, and what we didn’t love seeing was in, in 21, it was only 28%, you know? Yeah. And, and then in 22 went up to 43. Okay. A little bit of a jump, but now we got another jump. Yeah. And so I think the pandemic, the log jam opened and we saw a lot of agencies get a lot of business that was sitting there.

Yeah.

And now it’s evening out and getting in a weird place because marketers are holding back. And we, we can look at that here in a minute, but I think that I’ll throw that out first. And, and some of this is not new at all. Yeah. It’s, of course it’s hard. But But it has gotten harder this year. And that’s, that’s, that’s the first big

Takeaway. I, I do think, and, and you know, we’ve been talking about this a lot with agencies in, in our content and newsletter too. You’re right. It is cold comfort, but for a lot of agencies, it is a relief to hear that it’s not just them that others are struggling as well. And you know, I think one of the, one of the things I think we’re seeing is agencies came out of Covid, many of them having a great 21 and an amazing 22. And they got, because there was a lot of demand for their services, we saw a lot of price increases. We saw a lot more sort of choosing to say no to prospects, which I’m a big fan of.

Sure. But I think some in someti in some ways, we might have swung the pendulum a little far. Right. That’s a great point. And so we were a little fat and happy and full of ourselves. Yeah. And that crashed into the economic situation we’re in the political unrest that we’re seeing and some other external factors that caused the market to go, oh, this feels uncomfortable. And so yeah. Our, our eagerness to sell at a new price point and our feeling like things were pretty awesome combined with the discomfort that the market was placing, I think made things even worse.

Yeah. I think that’s an excellent point. And you know, it, it is, and I agree with you in the sense of being picky and making sure that you are getting commensurately paid for you and your team, what you should be always, you know, the mantra. And so it’s a little tough this year, and we’ve seen some of our own clients do this and agencies where it’s like, okay, you know what? We’re gonna be willing to take this lower fee understanding that it is still in our wheelhouse. Right. And I think that’s so critical, right? It’s not just, okay, we’re gonna do this website for five grand, God, why are we doing this But? It’s okay, here’s opportunities to land and expand potentially here. Okay, we’re gonna take less. Maybe this is a paid test that we wouldn’t normally do.

And I’ve seen agencies have success with that over this past year. And maybe that’s a little tough. But I do, I I, I love the way you, you put that, that the pendulum maybe swung a little bit too far that way. And so that’s gotta be, it’s gonna be tough to take.

Well, and I, I think you’re right. I I, I do think agencies were, were more willing. So first quarter I think they sort of stuck to their guns. Yeah. By second quarter, things were getting really tight. Sales cycles were taking a lot longer. They were also getting yeses and then basically just a pause like,

Well, that’s the thing, right? You,

You said, yes, but I don’t actually have any work and I don’t have any money and I don’t have anything to invoice. Right. So, great, I won the business, but I don’t actually have the fruits of that. So then, then I think we did start to see people going, okay, we’re gonna do more project work, or we’re gonna, you know, change our pricing model, but it’s gonna take a couple quarters for that to catch up.

Catch. Yeah. Yeah. I think what’s interesting that dovetails to another stat was we had 75% of agencies tell us the average time it takes to move from a first meeting to close in 2023 to date, they were saying 75% one to six months. Yeah. Which is generally, that’s kind of what we see. Well, actually, there’s some optimism here, because last year in this, in our report, it was 85%. So it’s interesting. But where we also saw some changes was those agencies that said less than a month dropped from 11 to 7% and more than six months rose from five to 18%.

Yeah.

So it’s this rollercoaster that it, it really was kind of a weird different year where it has generally taken longer. And I, to your point, I think agencies weren’t quite prepared for that hitting Q2 and Q3. So it’s a little jarring,

I think. And, and I think, you know, you get a new client and, you know, 60 days later or so, in theory, the money starts coming in and, you know, we had agencies that the client awarded them the work, signed the contract, and then hit pause for 90 or 120 days before that first project. Yeah. So that means the money’s not coming in for six months. So again, to your point, I just think it caught everybody off guard.

Yeah. Yeah. I, I think that’s exactly right. And I think, you know, moving into two other stats that kind of dovetailed into each other as well, we had 38% of agencies that reported a decrease in new business opportunities this this year versus 26% in 22. Also, agencies said the main reason that it’s been harder to obtain new business in 23, similarly, or exactly the same, fewer opportunities out there. Yeah. At 61% up from 39 in 22. But, but this is one of those areas where I’m not taking away the real challenges agencies have been facing over the last quarter or two. But here’s where we get into some of this is in your control.

That’s right. Yeah. The pipelines were thin, but again, you were coming off this big year, you had lots of clients and lots of work. And so I think, you know, like many agencies do, they have sort of this feast and famine model of new business development. When, when the coffers are a little dry, they’re, you know, pedal to the metal in terms of efforts to get in front of prospects. And when they’re feeling a little fat and happy, then, you know, they ease up on that because they just don’t have the bandwidth to keep at it. And you know, the pipeline’s gonna show that, right?

Yeah. Yeah. And that’s exactly it. I mean, and, and I know you as well as, as, as we, small mid-size firms are, are really where we play. Right. And, and where we focus. And to your point, it’s a, it’s a singular issue and challenge. You can throw out accomplished children, whatever you want, but it’s, I hate that.

True, but Yes. Right.

I know. It’s awful. And it’s so te we have to find, I’ve, I’ve looked for a new one actually, but interestingly, agencies keep giving it back to me and they’re like, all right.

Oh gosh. Yeah. Right. We can keep going But. It’s the number one excuse. Right?

Yeah. I mean, clients do have to come first. Sure. But I think one of the things I’d point out is you are going to think there are fewer opportunities if you’re not pursuing opportunities at all.

Right?

That’s a tough pill to swallow. And you gotta look in the mirror and say, okay. And, and it, it is easy for me to say, and it’s not to be self-serving ’cause we’re a business development firm, but I’ve always said, and and I’ve heard similar from, from you and other folks is that it, it, it’s, it’s just getting a plan in place, even if it’s baby steps, but something you can follow that understandably, you’re not, if you’re a principal, you’re not gonna be able to put x amount of time against it. It’s just not possible. But there are ways to make that work, and we’ll get into hiring here in a minute. But, you know, I think ultimately it, it, it, it’s something again that I think caught them off guard

Yeah.

There in the Q2 and Q3,

You know, and, and, and yet it, I think, I think the severity is what caught people off guard. The, the pattern is the pattern, right? I mean, we’ve seen boom years and, and down years and, and it, you know, most of the people listening, you know, to this show have owned their agency for probably a decade or more, and they’ve ridden the cycle. Right. You know, it wasn’t just a covid thing and there’s always gonna be an economic downturn and there’s always gonna be, you know, political challenges. But I think the severity of all of it, especially coming off a couple really good years, the drop was significant.

Yeah. And I think that two stats that feed into each other too that aren’t gonna help other than just like, yeah, we know. But you know, they, agencies said the second most predominant reason why it’s been harder to obtain new business in 23 so far, prospect budgets not, not current client budgets, even though that, that in and of itself we can talk about, but prospect budgets are just too small. 55% of agencies said that on top of that, 41% said a dollar volume of new opportunities decreased relative to last year.

Right. Right.

That, that’s tough. Right. Obviously. Right. That’s because that’s one where it’s like, your control there is very limited. I mean, there’s things you can try to do, but with prospect budgets, like, this is what it is coming in. And that goes back to what we talked about here just a few minutes ago. Are we willing to take, are we willing take a project at, at this versus last year where we would not have considered that?

Yeah. And again, I think that’s part of what we saw in the first half of the year was, you know, a lot of agencies are saying, it’s not that we can’t have conversations, but we’re having conversations about projects and budgets that we normally would just say, you know what, we’re not the right fit. And for the first part of the year, that’s what they did until they realized the right fit budgets and prospects weren’t out there and weren’t looking. And so then they started to scramble to try and figure out how can we deliver on a $75,000 project when normally our minimum is 200,000 or, you know, whatever the scale is. Right?

Yeah. And then they’re just diminishing returns Right. At some point. Right. But I think, you know, one of the things I’ll throw out from a business development standpoint that plays into the past couple of stats that we’ve just been talking about, you know, is it’s never been more important to, at the forget true outbound for a second, and that whole process and how that engine has to keep running it all, it all does. But I think the biggest thing there is agency so often it’s that follow up piece, right. That really falls apart to where, okay, now it’s taking longer even to get in the door to your point, okay, now we’re in the door, but there’s that pause. I think a lot of times agencies think, well, I don’t wanna bug ’em, or we’re just let this play out.

Don’t necessarily in fact don’t do that. Right. I mean, figure out ways to stay in their purview in a meaningful way. Because the worst parts are these sales emails that we all get. Right?

Oh my gosh.

Right. You know, it’s, it’s junk or I’m just checking in, or Right. Recently, I don’t understand the, let me buy you a steak. I’ve got like five of these, and I, I guess I’m just gonna start letting, I’m just gonna start letting ’em do that, I guess. But I,

I, I wonder how that works, but, okay.

I don’t know. I had one that just kept adding, okay, I’ll throw in the apps and I’m like, I’m, I’m getting appetizers. I mean, obviously,

Right? Yeah. Right.

Yeah. These sales emails and the outlandish guarantees and we’re getting off track here. Apologies, but that’s bizarre. But I, I think, you know, agencies, you have it within you. It doesn’t mean you have to write the type of content Drew that, that you release ongoing, or that even We do. And, and we, we can get into AI here in a little bit. ’cause those are the last two questions we asked, and it was pretty interesting, right. The two answers we got. But I think that there are just ways to make those processes more efficient for you, where you can stick with these potential clients Yeah. Again, in a meaningful way to show them here’s what it’s like to work with us before you ever do, you can’t let them forget you. Yeah. So I, I can throw that out. I think,

Yeah. I, I, you know, I think, again, what what’s interesting is a lot of agencies are getting ghosted, everything’s taking longer. Yeah. But when the prospect is ready, they’re, they’re ready now. And so we have to be able to respond very quickly. And to your point, if the, if the window is six months or longer from first conversation to close, we better be having meaningful, valuable to the prospect conversations in between the first meeting and the six month close meeting. Otherwise we’re not gonna get to that six month close meeting.

Yeah. Right. It will. Exactly. Exactly. Yeah. What well put, and I think want to get into the hiring piece of it, but one other, you know, stat I’ll throw out is, you know, we also ask predominant methods for agencies to gain new business. You’re not gonna be surprised, nor were we for the answer. Number one, it was referrals. Sure. Not shocking. It was 69%. It has always been, that has been number one since 2010, right? Yeah. Right. And what’s interesting though is we had two or three open-ended questions where agencies were able to put one