Episode 146

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Why do some agencies seem to “get” digital transformation and others struggle to cross that hurdle? Even more puzzling – among the ones who do get it – why are so many of them struggling to make money at it?

These are some of the daunting questions I’m exploring in this episode with my guest Chris Aarons. We all understand that digital transformation is happening. Few understand this as well as he does.

What does it mean for an agency to have digital-first DNA? Chris Aarons’ book Digital Helix explores this idea and I asked him about it when we spoke. Part of this concept is understanding that everything is connected, and a digital asset is never “done” or complete. When we approach our work with that understanding, what we do for and with clients becomes less about putting out emergency fires or checking off the boxes on the latest trend. It becomes about a consistent and constant state of evolution.

Chris believes the larger value we can all offer clients is helping them recognize and embrace that reality and then together, looking out over the horizon and planning for tomorrow’s opportunities rather than focusing on today’s fires.

That’s how we add incredible value and earn our seat at the client’s table. In this episode we talk about how to make that vision a reality for your agency.

 

 

What you’ll learn about in this episode:

  • The importance of an exploration mindset in moving you and your clients forward
  • What it means to operate with a digital-first DNA as an agency
  • How to encourage digital-first DNA thinking in your clients
  • How to develop ongoing conversations with clients rather than operating from a one-off proposal framework
  • Why talking with a client’s customers is at least as important as talking with the clients themselves
  • How sales are connective moments – not a journey
  • Why identifying the current problem is not the agency’s primary job
  • How to be relentless about getting better over time
  • When and how organic influencer models can beat the pants off of paid reach

The Golden Nuggets:

“When you can see ahead and solve problems for a client, you earn your seat at the client’s table” – @Chris_Aarons explains how agencies need to evolve their role on this episode of Build A Better Agency. Click To Tweet “I call it an EXPLORE mentality. What that means is you start with your eyes wide open, looking for what you might find, what you might hope to see, and what the client may have missed.” – @Chris_Aarons Click To Tweet “You can be like Netflix, taking a dying business model and upending it into a powerhouse. Or you can be like Sears, squandering a wealth of customer contacts into an ever-shrinking market share.” – @Chris_Aarons Click To Tweet “The client wanted me to talk to her team. I want to talk to their customers. I want to really find out what it’s going to take. When you offer that, you're going to be more valuable. The solutions are going to be better.” – @Chris_Aarons Click To Tweet “Sales are connective moments. The notion of ‘journey’ is cute, but people don’t buy because of a journey.” - @Chris_Aarons Click To Tweet “If the end goal for you is to check of a ‘did social media’ box, that's not my end goal. We're not going to be good agency partners for you.” - @Chris_Aarons Click To Tweet

 

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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 HubSpot. We’ll show you how to build an agency that can scale and grow with better clients, invested employees and best of all, more money to the bottom line. 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 with another episode of Build A Better Agency. My guest today is a fascinating guy, and I think his trajectory and his career sort of reminds us how the business has changed. So one of the things that I admire about this guest is the idea of reinvention. And I’ll tell you a little bit about him in a second. But first, I want to talk a little bit about reinvention because I think a lot of you are struggling with this right now. So especially if you have been in the business for a while, especially if you are or were a very traditional agency, you bought a lot of traditional media, you did a lot of creative. And now, all of a sudden, in the last 10 years, you’re really being asked to change the game completely. And for some of you, that’s been exciting, and it’s been a challenge that you’ve enjoyed. And for others of you, it has been a challenge, but not one you’ve enjoyed so much. I have a lot of you hearkening back to kind of the good old days.

And I think one of the challenges for us, as agency owners, is the idea that the business is changing. And that quite honestly, we’ve got to either embrace the change or we need to get off the train, because the train is leaving the station and we’re either going to be on it or someone else is going to be driving our train. And quite honestly, for some agency owners, that’s not a bad plan, having someone else step in and help you with the innovation and sort of this shift in terms of the deliverables that you have for clients and the way you serve them, not an all bad strategy. So don’t think that you have to do it all by yourself.

But I think the reality is for all of us, moving in this direction, not really an option for us anymore, to avoid that or to dodge it. And when I look at the agencies, as you know, I see a lot of agencies’ financials, if they’re in the peer groups. And the ones that are really kicking it, the ones that are really making great money and building a culture and a team and attracting the right clients are the ones who have embraced the fact that the agency they were even a year ago, can’t be the agency they are today, and certainly is not going to be the agency that they’re going to be 12 or 24 months down the road. We are in a state of constant evolution and exploration. And that’s one of the topics that I want to talk to our guest, Chris Aarons, about.

So Chris, really kind of a Renaissance man in the agency business. So started his career as a PR guy, in a PR shop and then sort of moved along from PR guy, to in an ad agency guy, to an in-house guy, to a social media agency guy. And now, is sort of a digital consultant. And through all of that, has really pushed this idea of exploration, this idea that it is the agency who must be seeking new opportunities, new directions, because the clients simply don’t have the bandwidth to do it.

So Chris recently wrote a book, let me tell you a little bit about it. So it’s called The Digital Helix, and it’s transforming your organization’s DNA to thrive in a digital age. And he talks a lot about how to create a digital first DNA inside your organization, and also how you can do that for your clients. But one of the themes in the book that I really resonated with was this idea of exploration. I think we got into the business, most of us anyway, because we’re curious and we’d like to sort of figure out how things work and we like to make them work better. We also love this idea of marrying strategy and creative. So how do I understand where I need to get an audience to go? And then, how do I inspire them to go there, to want to go there? And all of that takes exploration and understanding of the audience.

And so, those are some of the topics that I want to explore with Chris as we delve into this episode. So let’s invite him to join us and get started.

Chris Aarons:

I’m glad to be here. Thanks for having me.

Drew McLellan:

Glad to have you. So give folks a little bit of background on you. You certainly have, as I had mentioned in the intro, have had an interesting and varied professional life up to this point, but give everybody sort of the highlights.

Chris Aarons:

Well, I’m a PR person by degree and by training. I run about six agencies, both on my own and for other businesses. I was one of the youngest vice presidents of Shandwick, the PR firm, which we bought up by Weber back in the late ’90s. Now, of course, they give away VP titles to just about anybody, but I was pretty proud of that. And I have started one of the first social media agencies, and now I’m doing a digital consulting thing. So I’ve had kind of a different path than most agency people. And it’s kind of bouncing in and out between corporate agency work and it’s kind of kept me on my toes.

Drew McLellan:

Well, you’ve certainly seen the evolution of agencies. So as we sort of enter into our conversation, talk a little bit about sort of how you’ve seen the evolution of agencies. And where do you think we’re headed next?

Chris Aarons:

That’s a great question. I think that there’s really kind of two kind of agencies. There is the core agency, whether it’s a digital agency, a web agency, PR agency, advertising agency, that kind of does the same thing, maybe with some different technology, maybe with some different flavor. And then, there’s more of a consultative agency. And I think that’s where we’re moving. And you can see that a lot in some of the bigger consulting firms, McKinsey [crosstalk 00:06:23] and people like that.

Drew McLellan:

Yeah, buying up the agencies.

Chris Aarons:

Buying up and adding these things because they see that the agency model is a really great way to get some different fingers in the pie and there’s budget there. There’s problems to be solved there. And so, I really see that there’s these two types of agencies, these core traditional agencies, that’ll probably be around forever and a day, but does the same thing, just a slightly different way. And then, there’s this consultative model that looks at the problem, the challenges, the drivers for the client, and really tries to understand what they can do from a core foundational knowledge base or from a partner base, where they kind of come in and solve the problems for the client.

So I think that’s where we’re moving to, because digital has shifted things and we see that clients need more than just an ad or a website or something like that, because everything is connected. And when everything is connected, your one problem that you’re solving cannot solve the 32 that come after it unless you know where they’re going, where they need to go.

Drew McLellan:

Right. So do you think that consultative agency also is the one that’s doing the actual work and making this stuff? Or do you think that there’s going to be this division between, in essence, agency consultants who build strategy and agency executioners who make this stuff?

Chris Aarons:

Well, I think it depends. You look at McKinsey and some of the other big consulting firms, they have partners and divisions and everything. I mean, literally they can do everything from identifying the data, to figuring out where the data is going to go, to serving up the ad, to running the digital site and then taking that data back in and then putting it all through the machine one more time, under their purview with the client, hand-in-hand, kind of this partner model.

But with that said, one of the things that strikes me with this whole conversation is that you really got to understand where things are going with your client, where the drivers and challenges of your client take you. And if I can, I’ll give you a couple examples.

Drew McLellan:

Yeah, that’d be great.

Chris Aarons:

We were doing a messaging project for a client in northern California, high-tech company, very great technology, right? And they call us, said, “Hey, listen, we’re just having trouble describing what we do and getting people to get excited about it. Because it’s so leading edge, that we just can’t figure out a way to put it in a non-techie way to get the people to understand that we’re in this ballpark and not completely confuse them.” So most agencies would have come in there and said, “Okay, no problem. We’ll charge you X and we’ll do this branding project. And then, maybe can help you out with some other stuff.”

But the first thing we started with, is we starting interviewing their customers that really latched onto this technology and got it. And then, we had a knowledge base to start our branding project, first and foremost. But we learned so much from that, that we saw that there were 15 other things that were going to need to change. Otherwise, if we changed the messaging for this client, their sales motions weren’t going to be right. Their web delivery wasn’t going to be right. Their direct loans wasn’t going to be right. So we really started down a path with just one little hook in the client. And it was like, “Okay guys, we’ll do this, but you’ve got to look at these 15 other things. Otherwise, you’re not going to be any further, you’re just going to have a new headline on your website.”

And when they saw that and they realized how this was going to change. All of a sudden, we became a real trusted advisor to them and we were doing things on the web, with direct, and we’re not a direct agency. We weren’t doing direct. We weren’t doing a lot of web stuff, but we identified the problem, we saw what needed to be done. And then, we marshaled the forces to get it done and make sure the client was going to get where they wanted to go, because we understood their challenges better than they did. They saw it as a messaging problem. I hope that helps.

Drew McLellan:

Yeah. So I’m sure a part of the listeners are going, “Okay, but how did you price it? How did you talk about it?” So when you walk into a project like that, when you really don’t know what you’re walking into, how did you frame that up for the client so that both of you… Because no client is going to just say, “Yeah, come on in. I don’t care what it costs.” And you don’t want to say it’s going to cost a buck when it might cost $15. So how did you frame that with them, so that they understood you were sort of walking into the room to do some discovery with talking to the customers and doing all of that, and from that was going to come something, but you weren’t sure what it was going to be?

Chris Aarons:

So I’m going to turn that around just a little bit. So first of all, we went in just like any agency would, with our messaging project. But we started out with this kind of, what I call, and it’s in the book that we just published, it’s called an explorer mentality. And really what that is, you start with your eyes wide open, looking for what you might find, what you might never hope to see and what the other people may have missed.

So we just walked in and said, “Okay, we’re going to do our core project. But part of that is us talking to your customers, because we want to understand where they got to where they are, from your really busted up messaging.” Then we went back and said, “Okay guys, if we do this, you’re going to have to attach and fix these five, 10, 15 things,” I think is the number I was using. And I didn’t wound up being about 15 things. And then, “So let’s talk about what that requires. And then let’s talk about the budget for each and the pilot groups.” So it wasn’t really kind of going in with SOW.

It was an ongoing conversation. And when the client saw the onion peeling back, and if they saw, “Oh yeah, crap. You’re right. We will have to fix that. Well, we don’t have an internal team to do that.” We had a partner do that last year, but they didn’t really do what we want to, we kind of kicked them to the curb. We have a web team, they can do that. So then it became a conversation of what are we best to do? What is best to do internally? What do you have other partners do, that maybe we can kind of dive a little bit and get you to where you want and they want? And they’re going to get you there now.

And so, the pricing and the budgeting really wasn’t like it normally is, where you walk in and, in an RFP situation, where you’re constantly just like, “Hey, we can do X, Y, and Z.” It became a conversation with a partner. Not all 15 were natural, but I’d say about eight or nine were natural.

And so, I was like, “Okay, let’s get the budget for that.” And we were going to do some web development. “So we’ll just carve that out for you guys to work with our web team.” And so, it became an incremental growing of the original SOW, as opposed to proposal after proposal and then having it run up the food chain because the senior leadership team and marketing team saw the need. And once we kind of walked them through it, it was painfully obvious to them. And if they didn’t address it, they were going to be grossly negligent in their job.

Drew McLellan:

Right. So this whole idea of being an Explorer is a fascinating one because on the one hand, it’s sort of why people got into the agency business in the first place. We’re naturally curious, we like to solve problems, we like to learn new things. We’re sort of wired that way, most of us anyway, in the agency business. But on the flip side of that, we have concerns like scope creep and efficiency. And so, we create these systems and processes to do parts of our work.

And sometimes, I think those systems and processes, while in theory are exactly what we need to have. They often squelch the explorer in us. So talk to us a little bit about how do you balance the business necessity of system and process and accountability in terms of budgets and scope work and scope creep and all of that. But how do we also, in our agencies, create this permission? Because I think sometimes our employees feel like they’re not allowed to explore because that might take two extra hours here or an hour here. So how do we create this spirit of exploration and yet still be profitable?

Chris Aarons:

So, a great question. So first and foremost, I think that you can’t be a slave to your systems, period, full stop. So if you have these systems, and one of my favorite examples, because when we started talking about this podcast, it just popped in my head, I don’t know how many times that I’ve been on the client side or I’ve been on the agency side and they’ve had a digital advertising web agency come in and say, “We’re going to redo your website.” And they come up with three examples; the one they want you to choose, the one they think is kind of close to give you a couple of ideas, and the really ugly one to push you towards the original one. And I’ve seen that so many times and I’m not even a client that often, but I’ve seen it as another agency in the mix here.

And so, when you start down that road, I think you really have locked yourself into the non-explorer mentality. And the explorer mindset or mentality is we’re going to go in and figure out what really needs to be done. Again, I’m going to go back to it, it’s challenges and drivers. What are the challenges that the client has that are unique to them? In the book, we talk a lot about DNA and what it takes… Every one of us, every company has its own DNA. Every individual has their own DNA. And with companies, the DNA is marginally what they are. We’ve talked about and we’ve seen companies dramatically change their DNA, like with Netflix. But in general, the company’s DNA is kind of consistent. It’s going to evolve and maybe become revolutionary over time.

So you got to look at that and say, “Okay, what does this client really need? What does their customer really need? What can I do to push that envelope?” And I would say nine times out of 10, we get what we want. And then that 10th time, when the client pulls back and says, “That’s just not what we want.” I don’t think I want to work for that client.

And so, going back to your original question, which was how do we deal with scope creep, well, if you don’t have scope creep baked into everything you do, then you are just literally living on a razor’s edge and you can’t explore. You said it best, how can I donate two hours to this cause, to get something miraculous, if I’m line item then time sheeted to death, to the last 15 minutes or five minutes, whatever it is. So you have to have scope creep in there.

And so, what we tend to do is we build projects on what we think it’s going to cost, knowing the core value that we’re providing and the core amount of hours it’s going to take. We don’t do time sheets. No agency that I’ve owned has ever done time sheets, because I have seen from Shandwick days and from others, that 20%, 30% of the time, that just calculating that is a nightmare. And then, you have to go back for the AP people. So we really do a X price for a deliverable or for a project. And then, you go in, starting with a great mindset. “Okay,