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 that doesn’t mean they’re an awesome client for you. So I want you to have your sweet spot client filter. By the way, this will also help you put together your prospect list and decide who to go talk to at the next trade show and all of those things. It narrows the field to your best shots. Not only are they going to be better for you, but you have a better shot of winning the business.


  And with that, it seems like a really great time to take a brief pause and then we will get right back to the show. I get that sometimes you just can’t get on a plane and spend a couple of days in a live workshop. And so hopefully, our online courses are a solution to that. Lots of video, hours and hours of video, a very dense, detailed participants’ guide and all kinds of help along the way to make sure that you get the learning that you need and apply it immediately to your agency. Right now, we’ve got two courses that are available. We have the Agency New Business Blueprint, and we have the AE Bootcamp. So feel free to check those out at agencymanagementinstitute.com/ondemandcourses. Okay, let’s get back to the show.


  All right. So let’s say that you’ve got the sweet spot client filter. That’s awesome. But I want you to have another factor on that filter. And that factor is what I call the sophistication level factor. So we have all worked for clients who were at the top of their game, and maybe they were a bit bigger than some of the clients we work with, or that particular client contact person just really was rock solid in what they did. And we were running around chasing our tail, trying to catch up, trying to be able to lead them, because quite honestly, they were too sophisticated a client for us. Their needs were bigger than what our agency could match.


  We have also served clients who quite honestly were kind of not so bright. They were as dumb as a box of rocks, as my mom used to say. And it was frustrating to try and bring them up to speed and to try and educate them all of the time. We have to educate all our clients, don’t get me wrong. But sometimes clients are either too unsophisticated or, and this is where I think we mostly make our mistake, we’re better at ferreting out the ones that are not sophisticated enough, but where we often make the mistake because we love the brand name, or we love the marquee value of the client, but the truth is we can’t really make them happy.


  Our job is to delight our clients every single day. And by the way, if you’re one of the agency owners that tells me that the reason you can’t get out of day-to-day work is because none of the other AEs in your shop are able to manage your clients, they’re not strategic enough, they’re not sophisticated enough, you have too high of a sophistication scale problem. You are taking on clients that your agency, not you, your agency cannot serve.


  So for a lot of agencies, their sophistication scale might be between a four and an eight, or a five and a seven, whatever. I don’t care what yours is, but I do care that you know what it is, and that you recognize that there are some clients that are either too big or just too complicated, too intricate, too deep in their own knowledge of the business or marketing, that your agency, as it exists today, simply cannot delight them. And if you cannot delight them on a regular basis, they’re too sophisticated for you. And it’s okay to admit that and acknowledge it and take a pass. Hard to do because of our ego, not anything else. Hard to do, but super important if you’re going to really use that sweet spot client filter.


  So let’s say that you had used the sweet spot client filter, and you’ve run somebody through the sophistication level check. And because they are a great fit for you, because all of those criteria were in place, you won the business. So now what? Well, winning a great client and a sweet spot client is just the first step in the longevity of that client relationship. Now you have to kick it off and you need to kick it off well. And what I love are the agencies who have developed a tool. Might be a brochure. It might be a PDF. It might be a video. It might be an app, whatever. That is basically what I call the agency care and feeding manual.


  And what that does is that allows your client to get to know you and how you work and have this handy guide as a reference for when they forget all the stuff that you told them and they need to go back and find it. So, first of all, you want to create this tool. Then you want to sit down, ideally in person, with your client. And it’s probably your whole account team and their whole team. And you’re going to walk them through this manual of how to care and feed for their agency. So it’s going to include things like who’s their team. So bios of the team, contact information for the team.


  One of the really important things around the team is how do you get ahold of us. So are you an agency that shares cell phones? Are you an agency that it’s okay for them to call you at nine o’clock at night? So be really clear about the rules and the methods by which you want clients to contact you. Obviously, if it’s an emergency, it’s something different. But for the most part, here’s how we like to be communicated with. Here’s how you can do that. Here’s our email, here’s our Slack. Whatever it is that you use, you tell them, “Here’s how we communicate. And by the way, here are the hours of our communication.” If you don’t establish this stuff on the front end, it’s very hard to go back and change the rules.


  Also in there should be the billing contacts, both for your agency and asking them who their billing contact is. In many cases, our client contact is not actually the billing contact. Our client contact may have to sign off on a bill and then give it to someone else. But we need to know who to call when the bill hasn’t been paid. And it’s really great to have someone in an accounting department rather than calling the client contact. So you want to exchange that information. In this tool, whatever it is, there are probably some sample invoices. There are probably some sample scopes of work. There might be some history or funny things about your agency that you think they would find interesting or would make them connect with you. But the important thing is to kick this off properly. And it should be a celebration. It should be information gathering. It should be information sharing. But it should also be something where you demonstrate how excited you are to have them as a client.


  So now you’ve won their business. You’ve welcomed to the agency. You’ve onboarded them well. Things are going. So then how do you stay in communication with them? There are many pieces to client communication. We talk to them on the phone. We email them. Again, you might have a Slack channel, whatever it is. But there are two specific tools I want to call to your attention and I want to remind you about. One of my favorites, which seems to have fallen out of favor with a lot of agencies because we do everything by email or text, and I’m not a fan of that. So I am a huge fan of the weekly status update.


  And what that is, for some of you, you use project management software that spits out a report. Fine. Others of you, it’s a simple Excel document. And basically, it’s going to list all of the projects we have for the client, what the next step is for that project, who’s responsible for that next step, and when that next step is due. And then it might go a couple more steps out into the document. But there’s a couple things about this that make it really powerful for both the client and for your agency.


  First of all, you are going to send this document, this weekly status update, on Thursday right after lunch. And you are going to train your client to expect it always on Thursday after lunch. So you’re going to say, “But Drew, we do status calls on Tuesday.” Great. Give it to them on Tuesday, but send it again, updated over the last couple of days, on Thursday at one. And here’s why. It gives you still more than a full day to get some things wrapped up. So let’s be honest. Most of the time, when our projects are not on time, it’s because the client is not doing something they’re supposed to do. So the weekly status update is a great way to nag at your client to let them know that some things that are due at the end of the week are not going to get done if we don’t get the budget, or their approval, or their edits, or whatever it is that next step is.


  So the weekly status update is a great way to gently nag a client. And by the way, putting past due deadlines in red and their name in red makes it very clear at a glance who is slowing things down. So number one, it’s kind of a cover your rear end. Number two, it’s a great nagging tool for clients. Number three, like giving it to them on Thursday at one, they have the rest of the day on Thursday and all of the day on Friday to wrap up some things, or you do too if it’s on you. But in most cases, not on you. But it’s going to give them time to get things back on track, which allows you to start the next week at a better pace.


  The other thing that this does, and the reason why clients love this, and when we sit and talk with clients when we’re doing research, this is one of the things they ask about. They want you to communicate more with them. And that does not mean they want to talk to you more. I know you want to talk to them more, but they want more data. So if you have a client that’s micromanaging your AEs or you, or your client is always calling and asking where something’s at, it’s because they feel unsure of the progress. And this weekly status update, when it is delivered on time, every single week, just it takes a burden of worry off of your client and it allows them to breathe and relax and get off your back.


  It also reminds them and gives them a tool so that when somebody sticks their head in their office and says, “Hey, where are you a