Episode 135

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If you’ve ever hung out with me for more than 10 minutes, you’ve probably heard me say something like “there are no bad clients. But there are bad clients for YOUR agency.” I do believe that there’s an agency out there for every client. But it very well may not be yours. One of the most critical skills an agency owner/leader must develop is the ability to discern if a prospect belongs on your client roster.

Many of you have been emailing me lately asking me questions about problematic clients. And in some cases — they’re clients you never should’ve taken in the first place. You either haven’t yet developed the processes or the spidey sense to sniff out a bad prospect or even worse, you ignored that spidey sense.

We’ve all seen the money on the table and thought to ourselves, “Okay, I’m going to ignore that nagging feeling in my stomach and I’m going to take that client.” I’ve owned my own agency for 23 years and believe me, I’ve made that expensive mistake more than once. Every time I’ve ignored that little nudge saying, “Don’t do it Drew…don’t do it” — the nudge was right and I was wrong. I regretted taking that client and I’m guessing you’ve had the same experience.

The wrong clients, even if they have buckets of money, can literally kill your agency. A client that is not the right fit for your agency is almost impossible to make happy. So what do we do? We run around scrambling trying to make them happy. We do extra rounds of revisions that we don’t charge them for, and in the end, they’re still not happy.

Now we’re underwater and have lost money. We’ve literally paid for the privilege of serving that client. Or worse — the client berates your employees. They micromanage your team. They call or text 24/7 with no respect for boundaries.

And when you don’t step in to negate the situation because the client is giving you a lot of money, you’re at risk of losing your employees. In today’s tight labor market, your employees don’t have to stick around to work for in that environment.

Everyone thinks about “How do I find clients that make me money?” — but quite honestly, the first thing we should be thinking about is “how do I get rid of the clients that cost me money and how do I avoid them down the road?”

That’s what this episode of Build A Better Agency is all about. How you can find and keep clients who don’t cost you money. You can absolutely do this for your agency. And I’m going to show you how.



What you’ll learn about in this episode:

  • How agency profitability begins with attracting the right fit clients
  • How to identify the tangible and intangible things that make a client fit the “sweet spot” of your agency
  • Why you should rank every prospect whether they are knocking on your door, or you’re putting together a prospect list, or you’re getting ready to respond to an RFP
  • Why you should consider creating a “Biz Dev” committee within your agency to decide which prospects are the right fit prospects to pursue
  • How to put the “Sophistication Level Factor” to work inside your biz dev process
  • A specific process and tool you can use to kick-off your agency’s relationship with a new client in the right way — so it feels like a celebration and everyone is on the same page
  • How to provide a new client with the proper orientation of what it is like to work with your agency and the team they will be working with on a daily basis
  • The two key pieces to effective client communication and why staying in touch by email is not the answer
  • How a weekly status update can help your AEs gently nag a client so they stay focused on what they need to be doing and providing to your team
  • Why and how you as the agency owner should be spending time with the top 50 percent of your clients — demonstrating how much you love them and how committed you are to their success

Drew McLellan is the CEO at Agency Management Institute. He has also owned and operated his own agency since 1995 and is still actively running the agency today. Drew’s unique vantage point as being both an agency owner and working with 250+ small- to mid-size agencies throughout the year gives him a unique perspective on running an agency today.

AMI works with agency owners by:

  • Leading agency owner peer groups
  • Offering workshops for 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 those 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 two books and 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.”

The Golden Nuggets:

When a client doesn’t do their part, doesn’t give you a budget, doesn't make time for your team and share the right information — they cost your agency money. That’s why you need to attract clients that are the right fit. - @DrewMcLellan Click To Tweet The wrong fit clients cost you money because projects exceed timelines and you spend a ton of account service time trying to get you what you need. Instead, define who your agency’s sweet spot clients are and stick to it. - @DrewMcLellan Click To Tweet Have a list of 8 to 10 tangible and intangible traits that the right fit client for your agency would possess and rank every prospect according to this list – no matter if they’re knocking on your door or if you’re pursuing them. - @DrewMcLellan Click To Tweet Your agency should create a handy guide to give each new client when you kick-off the relationship so they know your team, contact information, rules and methods for communication, billing process, and other important details. - @DrewMcLellan Click To Tweet You need to spend one-on-one time with each of your clients, doing something they love to do, and then asking them to share their perspectives on how your agency is doing and what you and your team can do even better. - @DrewMcLellan Click To Tweet


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We’re proud to announce that Hubspot is now the presenting sponsor of the Build A Better Agency podcast! Many thanks to them for their support!

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. Welcome back to another episode of Build A Better Agency. Today’s episode is one of my solocasts. So as you know, that’s when it’s just you and me, no guest, just the two of us talking about something that I think you need to be thinking about. In this case, the topic came to me through several questions from you by email. So before I dive into the topic, a couple of quick things, a couple of quick comments I want to make.


  First of all, and foremost, thank you. Thank you so much for hanging out with me every week. Thank you for your feedback. Thank you for your suggestions of topics or guests. Thank you for your questions. And most of all, thank you for writing to me, or pinging me on social, or whatever it is, and letting me know when you have put something we talked about on our show into action and letting me know how it went. It is incredibly gratifying to know that you are listening, that you are testing some of this stuff out, or at least considering it, and that for some of you it’s working. So I am so grateful for that. Thank you.


  Also, speaking of social, if we are not connected on LinkedIn or Twitter or Facebook or Instagram, those are my big four, so if we’re not connected there and you feel inclined to be connected, I would love that. So please don’t be shy. Reach out, send me a friend request or whatever the verbiage is for that particular channel. But I’m happy to connect with agency folks and get to know you a little bit and let you get to know me a little bit. So please do that if you are so inclined.


  Couple of other things. We have some really great workshops coming up in September that I want to make sure you know about. So September 24th and 25th is our AE Boot Camp. So as you know, in the spring, we do the advanced AE Boot Camp. So this AE Boot Camp is what I would call entry-level. So for employees who have been in the agency world less than five years. So they might be an account coordinator. They might be an associate account executive. They might be an account executive. They might be a project manager. Anybody who’s in sort of that client-facing role with your agency who has not had more than five years experience. I will say, because of timing or whatever, we often get people who have more than five years of experience and they find it challenging as well. But the content is specifically geared towards people who are just building up in their career. So that’s September 24th and 25th in Chicago.


  And then the same week, September 27th and 28th, we will be having the owners’ workshop, the Best Management Practices of Agency Owners. And that’s a two-day immersion in what I think of as agency owner hacks for the back of the house. So finance, operations, systems, employees, biz dev, marketing. All of the things that I know are working for other agencies, I will teach you and I will share with you, and I will give you tools. So both of the workshops, very practical, very hands-on, lots of small group activity, lots of discussion, and hopefully tons of learning and tons of hacks that make either you or your account executives better at your job. So put those on your calendar. If you’re interested, you can go to agencymanagementinstitute.com. Go under, I think it’s training, and you can find all of the workshops and you can register right there online.


  The other thing I want to remind you is that we give away stuff every week. So our podcast guests are super smart and super productive. So they write books and they teach courses and they coach, and they do all kinds of other things, or they have software as a service. And many of them give us free stuff to give you. And we’re going to be giving away a free seat to the AE Boot Camp. We’re going to be giving away a free seat to the Best Management Practices For Agency Owners. But you know what? If your names are not on the list, I can’t give it to you.


  So here’s how you do that. Super easy. Go to agencymanagementinstitute.com/podcastgiveaway. If you’ve already signed up once, you do not need to go again because we keep your name on the list. But if you haven’t done it, go once and sign up. We’ve got some great things to give away, some great new books, some other things to give away. And again, like I said, we’re going to be giving away in the next month or so these seats to the workshops. So go sign up so you might win one.


  All right. So let’s talk about today’s topic. So today’s topic is clients. Many of you have been emailing me lately asking me questions about particularly problematic clients. And when we get into it a little bit, it’s pretty easy to see that in some cases, these are clients you should have never taken in the first place. And we are all guilty of that. Don’t get me wrong. The wrong clients can cost an agency money, employees, status, all kinds of things. But we have all done it. We have all seen the money on the table, literally or figuratively, and thought, “Okay, I’m going to ignore that nagging feeling in my stomach and I’m going to take that client.”


  We’ve all done it. And I don’t know about you, but every time I have done that, where I have ignored that little nudge that said to me, “Don’t do it, Drew. Don’t do it.” You know what? The nudge was right. I was wrong. And I regretted taking that client. And I’m guessing you’ve had the same experience. Clients, the wrong clients, can literally, even if they have buckets of money, can literally kill our agency.


  First of all, when you have a client that is not the right fit for your agency, they are almost impossible to make happy. And so what do we do? We run around scrambling trying to make them happy. We do extra work. We have extra rounds of revisions that we don’t charge them for. And in the end, they’re still not happy. And now we are underwater on the project and we’ve lost money. We have literally paid for the privilege of serving that client. When they don’t do their part, when they don’t give us a budget, when they don’t make time for us, when they don’t share what’s going on internally with the politics of their organization, whatever it is, whatever their part of the role is, when they don’t do that, they cost us money. Why? Projects go over timelines. We are chasing after them. We’re spending a ton of account service time calling them and trying to cajole them into giving us what we need. And at the end of the day, once again, we lose money.


  Or you have a client that is a bad client to your employees. They berate your employees. They micromanage your employees. They’re rude to your employees. They’re not grateful. They don’t give your employees a chance to do their best work. And in today’s market, especially, you know what that costs you? Money and employees. Your employees don’t have to stick around to work for a jerk of a client. And when you don’t sort of negate that situation, when you don’t step in and make that better because the client’s giving you a lot of money, you’re going to lose the employee. So, number one, it’s going to cost you an arm and a leg to replace that employee. And number two, what it does to the morale in your agency takes years and years to fix.


  So if there’s a theme to my little solocast today, it is how do we find and keep clients who do not cost us money. Everyone thinks about how do I find clients that make me money. But quite honestly, the very first thing we should be thinking about is how do I get rid of the clients that cost me money and how do I avoid getting them in the future? Because you absolutely can. And that’s what I want to talk about today. And it all starts with attracting the right clients. And you say, “Okay, Drew, what is the right client?” Here’s the deal. There is no one right client. And a right client for you might absolutely be the wrong client for another agency. So you’ve got to define who your agency’s sweet spot clients are.


  You’ve heard me talk on the show before about our sweet spot client filter. I’m going to include a link to the PDF of that in our show notes. But what the document does is it walks you through a process of identifying the tangible and intangible things that make someone a great client for you. And there’s going to be no list that, if you take any two agencies on the planet, your lists are not going to be exactly the same because every agency is a little different. The kind of clients that we can delight on a regular basis, different. The experiences that we have as a staff, different. Geography, different. Size of agency, different. Services offered, different.


  So all of those things mean that every agency should have a unique, sweet spot client filter. And what I mean by that is I want you to download that document and go through the exercise and identify both the tangible and intangible things that make someone a great client for your shop. So tangible things might be industry, might be size. It might be how big their marketing department is or isn’t. For some of you, you like a client that has no marketing department. You like to work directly with the agents or the business owner. For others, you like to have a marketing department of five or six people so they’re churning out a lot of projects. Others of you, it might be a geography thing, or it might be how often they need you kind of thing. Is their work seasonal and does that work fit in well with your other clients? So there’s going to be a lot of tangible things.


  And then there’s going to be some intangible things, some things that are not something you can find out about them on the internet. They’re not something that you’re going to read about them in a magazine. These are things that you’re going to have to get a sense of, and some of them are going to be best guess things. So it might be how they work with their agencies. Are they collaborative? Do they like to hang out with their agency folks? So having conversations with them about that is important. It might be things like are we their first agency and are they really ready for an agency? Some of you would love to be the agency that breaks a client in. Others are like, “Oh my God, no. I don’t ever, ever want to work again with a client who has not had some agency experience. It’s just too steep a hill to climb.” So again, everybody’s list is going to be different.


  But what I want you to do is go through the exercise, and you’re going to come up with a big list of things. And then you’re going to need to narrow them down to the most important tangible and intangible things. And I want you to have a list of between eight and 10. And I want you to then rank every prospect, whether they’re knocking on your door, or you’re putting together a prospect list, or an RFP comes in, I want you to rank those clients, or those prospects rather. And I want you to agree as a leadership team, as a biz dev team, as just an owner in your own head, however that works, I want you to agree that let’s say you have 10 things on your criteria, anyone who gets less than a seven out of 10 is likely not a great client for you. And you should pass on that opportunity. And for you, it might be six. It should not be less than six. Can’t be 50/50.


  But let’s say it’s seven. So seven out of 10. And if somebody doesn’t get to seven out of 10, then you need to, and you’re the person that wants to go after it. So let’s say you have a small biz dev committee of five people, and you’re the one that wants to go after it even though they got a six. You have to convince the other four why the risk is worth it because you are now taking a risk. This is a client or a prospect who does not fit the profile of your ideal client. And you’re willing to risk all of the time and effort both to win the business and then keep the business because you think there’s something in it that is so valuable that you’re willing to do that.


  So you have to convince them of that. And I’m telling you, just the discussion and the discipline of going through the ranking and then discussing it and then deciding whether or not you’re going to honor your own rules, even that discipline alone will keep you from taking a lot of jerks as clients, or a lot of bad fits. They might not even be a jerk. They might be an awesome client, but tha