How to Grow Your Book of Business

Transcript: How to grow your book of business

Welcome to the Agency Management Institute Community, where you’ll learn how to grow and scale your business, attract and retain the best talent, make more money and keep more of what you make. The Build a Better Agency Podcast, presented by White Label IQ, is packed with insights on how small to mid-size agencies survive and thrive in today’s market. Bringing his 25+ years of experience as both an agency owner and agency consultant, please welcome your host, Drew McLellan.

Hey, everybody, Drew McLellan here with another episode of Build a Better Agency. As you know, if you’ve been following along in real-time, I’m in the middle of a series that I just decided on a whim to start. Normally the podcast goes for four guests and then a solocast for me and then four guests and then a solocast for me. But 2022 for me, is the year of challenging the status quo. Really asking myself, even if something’s going really well, could I do it differently or better? As I was asking myself that question around the podcast, I was thinking about really the holiday hibernation that most agencies go into either from Thanksgiving or Christmas on, where you’re literally going four to six, sometimes eight weeks into the middle of January with very little biz dev activity, and the pipeline gets super dry. That’s always concerning for me, and I know it’s concerning for you when you have a slow or a flat first quarter.

So I decided that I would do something different, that I would kick off the year with a series of podcasts just with me talking about a specific topic, and this topic is biz dev — and more specifically for this episode — how to grow your book of business. We’ve already done three episodes. I think there are probably another three coming up, and then we’ll get back to our normal cadence. So this episode hopefully will give you a little bit of relief. Biz dev — and growing the book of business — is for the primary part for most agencies, it is the primary job function of the agency owner. Unless you have a sales team, you are the person who’s going to be doing most of the sales, and so 50% of your time should be spent on biz dev.

I’ve been pounding that home for the last couple of episodes. I thought I would give you a little bit of a break and talk about an aspect of biz dev that really isn’t so much on your shoulders, although you’re going to have to guide it, but it really is not your core part of your job but still a critical part of biz dev.

So before I tell you what that is, let me tell you a little bit about a workshop we have coming up in mid-March. It’s called Running Your Agency for Growth and Profit. What we did was we took all the best practices of all the operational areas of the agency, so basically all of the back of the house stuff … So money, HR, operations, process, hiring, biz dev, all of those things, leadership growth, leadership teams, took all of those and put together a two-day workshop on the best practices that cover all of those topics. So it really is sort of a primer on how to run your agency well and growing it.

I think that folks that attend that workshop, they leave with a notebook full of ideas of things to do, things to stop doing, things to think about. One agency owner said to me, he said, “This was awesome, but it was like drinking from a fire hose. It was so much information.” So I guess that’s my promise and my warning is there’ll be a ton of information for you. I’ve had agency owners attend this workshop after they’ve run their agency for 20 years and they still found a lot of best practices or things they hadn’t heard of. So whether you’re a novice at running your agency or you’ve been doing this for a long time, I think we have something to offer, and we would love to have you join us. I think it’s March 14th and 15th. Don’t trust me on that, check. But head over to agency managementinstitute.com under the how we help tab, scroll down to workshops, and you’ll find Running Your Agency for Growth and Profit. So we’d love to have you there.

Learn more about how to grow your book of business by attending the Build a Better Agency Summit — go here for details.

Not on the Agency Owner’s Shoulders: How to Grow Your Book of Business

All right. So let’s talk about this aspect of biz dev that is not on the agency owner’s shoulders. One of the things I find many agencies don’t think about or factor in when they’re setting their new business goals … There’s two things they don’t factor in when they’re setting their new business goals. The first one is, so let’s say you’re a $4 million agency, and I pick this because it’s easy math for me. So you’re a $4 million agency and you want to grow by 25%. So you want to add another million dollars to the bottom line by the end of the year. How much of that million should come from existing clients? How much of that net new income should come from existing clients? That’s the number one thing that most agencies don’t factor in when they’re figuring this out.

When they say we want to grow by a million dollars, they think they have to go get a million dollars, and actually that’s not true. In the best-run agencies, 60 to 70% of their net new revenue comes from existing clients. Let me say that again. In the best-run agencies, agencies that are really cooking with gas, that really have great relationships with clients, have well-trained AEs, have a plan which we’ll get into in a minute, they grow their book of business significantly, and 60 to 70% of their net new revenue year over year comes from existing clients. So that’s the number one thing that we don’t factor in when setting our growth goals or our new business goals.

The second thing we don’t factor in when thinking how to grow your book of business is attrition. The reality is that even the best of agencies is going to lose a client now and then. So a healthy agency is going to lose 10% to 15% of their AGI on average year over year. So again, 10% to 15% of your AGI lost year over year, even if you’re doing it all right. It happens for a million reasons. It happens because there might be a merger or your client contact takes a different job or gets fired. You have a lot of changes internally on your side and that freaks the client out. There are a lot of reasons why we lose business. During COVID there were certain industries that didn’t advertise or didn’t market because A, nobody was buying from them or B, everybody was buying for them and they didn’t need to market. Know that attrition doesn’t mean you’re doing something wrong. It just means that’s the reality.

All right. So if we don’t factor in those two things, if we don’t factor in that we should be growing our own existing clients’ book of business by 60 to 70% of the net new revenue should come from existing clients … I’ll talk about what the book of business should look like in a minute … And attrition, you can see how our new business goal numbers are immediately wrong. So what I want to cover today is what’s reasonable in terms of growing your existing clients, how do AEs grow their book of business, what are some things that you can talk to your AE team about so that they can grow their clients, and what’s your role as an agency owner or leader in growing your client’s AGI. That’s what I want to cover today.

Learn more about how to grow your book of business by attending the Build a Better Agency Summit — go here for details.

Biz Dev Math: How to Grow Your Book of Business

Your AEs should look at their book of business, so all the clients they serve, and they should add up all the AGI or your CFO should do this for them. So let’s say you have an AE that is managing $400,000 of AGI. It’s very reasonable for them to grow their book of business, their entire AGI that they manage by at least 10%. So they can go from 400 to 440. Every AE should be able to do that. It doesn’t mean that all the clients that under that AE’s watch are going to grow by 10%. That would be lovely, but it’s not realistic. Some are going to slide backwards, some are going to grow by 20%. But what you want your AEs concentrating on is, “I started January 2022 with $400,000 of AGI on the books. My job is to grow that 400,000 to at least 440,000, whatever that looks like. It doesn’t matter which client it comes from or if it comes from just one client. But my goal is to try and grow all of the clients so that I have put at least another 10% to the bottom line.”

But I’ll tell you that does not happen without a plant. Sometimes it happens through serendipity, but that’s the rarity, not the norm. It’s certainly not going to happen year over year if you don’t have a plan. So as you are setting your new business goals, again, I want you to keep in mind two things. Number one, attrition. So again, if you’re a $4 million agency and you want to grow by 25%, that’s a million dollars. By the way, 25% is a very aggressive goal, so I’m not encouraging you to do that. I think it’s too aggressive, and I’m going to show you why in a minute.

So the $400,000, if you want a million dollars in net new income, the first thing you have to do is figure out attrition. So at $4 million, 10% is 400,000, 15% is 600,000. So now your go-get is now 1.4 to 1.6. You’ve almost doubled your go-get, which means that 25% becomes a much larger percentage. So again, I want you to be mindful of when you set these goals that you factor in attrition. But you also need to say to yourself, “Okay, so if I want to get a million dollars new business, I have to replace the 400,000 I’m going to lose if I’m being optimistic and saying we’re only going to lose 10%. So now I have a $1.4 million go-get. 60 to 70% of that should come from my existing clients.” So again, more than half of the 1.4 million that I think I have to go get should come from existing clients. This makes how to grow your book of business easier and more effective long-term.

So again, that’s not going to happen if we don’t have a plan, and your AEs won’t know what to do to grow that. What do your AEs need to know or need to know how to do to grow their book of business? First of all, they have to understand how agencies make money. They have to understand what I call agency math, and they have to understand that gross revenue is meaningless. They have to understand how to subtract the cost of goods to get to the AGI and then understand how they manage to the AGIs and their goal is to get 20% profit to the bottom line of that AGI. By the way, you’re going to have to tell them this stuff more than once. This is not a teach at once, this is a rinse and repeat kind of teaching. So they have to know agency math, but they also have to know the AGI of their current book of business, and they need to get real time updates in order to best understand how to grow your book of business as a whole.

So what that means is at least every month, for sure every quarter, they need to be told, “Okay, your book of business in January was $400,000. We know you’re pushing to a 440 at the year end. Right now, you’re on pace to get to $320,000. You really need to kick up the paces in how you grow your book of business,” or, “Based on the orders and the projects we already have booked, you’re already at $500,000. You’ve already accomplished your goal,” whatever it is. They need to know their AGI and they need real-time updates so they can manage their book of business as effectively as possible.

Learn more about how to grow your book of business by attending the Build a Better Agency Summit — go here for details.

How to Help Setup Your AEs for Success

One of the other things, and I think this is really hard in our environment today is they … And you know this … You can’t be thoughtful about how to grow your book of business or how to help a client if you don’t have room to think. So when your AEs are super overburdened and all they’re doing is putting out fires and taking orders, it’s really hard for them to think about their client’s business and for them to invest time in learning more about the business or in writing a plan of how to they’re going to grow the book of business. They need time. They need room to think about those things. You’ve got to figure out a way to give them that time and also to give them some structure around how to do it because most of your AEs don’t know how to do it.

They also need a documented and measured plan that someone is holding them accountable to in terms of working for the client. So you need to give them time to think about their client’s business, you need to give them time to learn more about the client’s business, to ask better questions, to go on a site tour, to do all the things they need to do to get really well-versed in the client’s business. But then you also need to give them a process, a planning process. For each of you, this may be different, but you have to figure out what’s your agency’s way of thinking about your client’s business and how to grow it, and then make sure your AEs are well-trained in that methodology or that thinking.

Then at the end of the day, what they need to come back to you with or back to their supervisor with is a documented plan that you can measure and that someone’s going to hold them accountable for how to grow your book of business. They’ve got to have a plan, and they’ve got to have a timeline and all the things because otherwise it just is not going to happen. Your AEs, we talk about this in the AE Bootcamp, but your AEs, their greatest advantage is their outside perspective. They bring a fresh eye. No matter how long they’ve worked on the account, they’re to just not inside the organization, and so they bring a fresh eye to your client’s business and they can ask questions that are different.

They need to be a student of the client’s industry. They need to be studying trends and tracking what competitors are doing and things like that. But there’s no substitute for what I think of as sort of firsthand observation. So touring a factory plant, doing ride-alongs with sales people, hanging out in trade show booths and listening to the conversations that happen, secret shopping your clients. There’s lots of different ways for your AEs to get firsthand, get their hands dirty sort of observations about your client’s business. But they, again need to have permission. They need to have room in their schedule. They need to have time. They need to probably have a little bit of coaching about how to do it. But these are the kinds of things that they need to be doing if they’re really going to grow that book of business.

One of the other things that your AEs need to do, and I love this insight, your AEs need to know how their client contact, the person they deal with every day, how that person is being evaluated. So when we understand that our clients get a bonus or get a raise or get accolades when something happens inside the work that we do together, it’s easier for us to make sure that thing happens and to say to the client, “Hey, look, I know that you get a bonus if you don’t spend all of your budget. So we’re going to make sure that we never exceed your budget and we never spend all of the budget. We might spend most of it. But I know that it’s important to you personally for us to leave a little money in the kitty, because that’s when you get your bonus.”

Your AE needs to say to the client, “You know what, we’re working on this new campaign or the marketing plan or whatever it is, and it occurred to me. I don’t really know how you are evaluated at your work. What goals are being set for you? How do you get a raise or a bonus or a promotion? How do you get pats on the back from your boss?” Because we’re going to want to make sure that our plan helps make those things happen.

The beautiful thing about that is your client will tell you, number one, so you can actually help make those things happen. But number two, what you’re saying to the client is, “Yes, we represent the brand, but we also care about you and your own personal growth and reward. We want to make sure that we are a great partner to you, not just in helping you do your job, but also helping you get rewarded for doing your job.” I’m telling you, nobody asks them this and you have to be careful, but you have to also ask the question.

The other thing that your AEs need to do, and again, some AEs are better at this than others, but they really need to understand the organization’s overarching goals and objectives. In some cases, our clients, depending on how low in the totem pole we’re working with, they may not even know what the organization’s overarching goals and objectives are, but somebody in the organization knows. We need to keep asking until we get it, which makes growing the book of business faster and easier.

Learn more about how to grow your book of business by attending the Build a Better Agency Summit — go here for details.

AEs Need to Understand Your Clients: How to Grow Your Book of Business

Another thing that your AEs need to do to grow their book of business is they need to be mindful that it’s their job to help your clients get smarter. So that might be by doing a little bit of research, that might be sharing some trend articles, whatever it is. But part of our job as an agency is to help our clients be better at their job. An AE’s job is partially that.

I think another thing your AEs need to do if they’re really going to grow your book of business for your clients is they really have to understand how the sales side of things work for your clients. Oftentimes there’s this dotted line between marketing and sales and as agency people, we always come in on the marketing side and we think, “Oh, I should not cross over onto the sales side,” especially if it’s run by two different people. Typically, those two people don’t get along so I’m going to stay loyal on this side to my client. But if we don’t understand the sales side, if we don’t understand the questions the sales people get asked, if we don’t understand what kind of tools the sales team needs, then we are not going to be effective in our job. But if we can cross over that line and we can cultivate a relationship with the sales side as well, and we can drill deeper into the sales funnel, now all of a sudden we have the opportunity, I think, to really be able to be more insightful, ask better questions and provide better guidance for our clients.

Another thing your AEs can do when learning how to grow your book of business is they can stay in touch with people who have left, continuing to cultivate that relationship with a marketing manager who went to a different company or who got fired and is still looking for a job. Doesn’t really matter what their circumstance is. Sooner or later, they’re going to land somewhere, and they’re either going to be a great referral source or they might be a client again, but they’re not going to be either of those things if once they left the client, however that happened, or they maybe they left us, maybe it was a client of ours that fired us or decided to go dormant, so whether it’s a person who left or an entire organization who left the agency, cultivating those relationships, maintaining those connections and chasing those lost opportunities can be a huge win for us.

Those are some of the things your AEs can be doing to grow their book of business. So what’s your role in all of this? Well, first of all, your role is to help the AEs understand their role in all of this because they don’t. On the existing client side, they think their job is to make the client happy. When I ask them what their job is at AE Bootcamps, it’s to keep the clients happy. While that’s certainly part of their job, I’m not disagreeing with that, it’s not the core of their job. The core of their job is to provide great marketing counsel and to help the clients grow their business and to solve their client’s business problems with them, to be their client’s thinking partner. But they don’t think of it that way.

So first and foremost, you have to help them understand what their role is by having really clear expectations, by having great job descriptions and things like that. But even more organically, what you need to do is you need to teach them the thought process you want them to go through to figure out the client needs this year that maybe we’re not selling to them. How do I talk to the client about it and how do I present it to them in a way that they’ll find compelling? Again, whether they work with us or someone else should be secondary to you. We just want to help them grow their business. We just want to show up as a great business partner. So you’ve got to teach them how to do that. First of all, you need to tell them that’s what they’re supposed to do. That’s their job. Two, you need to teach them how to do it. That’s going to be a lot of your time, in this particular area of biz dev is going to be coaching and mentoring AEs.

Now you may have a director of account service or someone like that, so it may not be you. But someone in the leadership level is going to have to reach down to the AEs and help them understand what their job is and then help them craft a way to get through all the tasks to get that done as part of how to grow your book of business. So giving them the framework and the thinking and the encouragement and the accountability so you’re checking in with them, super important.

Another thing you need to do is you need to maintain your relationships with the clients at the level that you would engage with them. So your AEs might be talking to a marketing manager or a VP of marketing, but you as the owner or a leader in the organization, you have access to the CEO or the owner or the rest of the C-suite, and you need to maintain your relationship with those folks.

So while the AEs are working at it from the bottom and the side, you need to work at it from the top. Then what we’re doing is we’re sort of cocooning that client with support, with ideas, with love, with gratitude, with appreciation. So we want them to feel us all around them. Your job is to make sure the CEO or the owner is feeling the love. That’s you taking them out to dinner or golf or whatever it may be. It’s you checking in with them once a quarter just to see how they’re doing and is there anything they want to chat about. So it’s not about you selling at all. Absolutely not. It is about you helping. “Hey, we haven’t talked in a couple months. Want to check in and see how things were going. Is there anything I can do to help? Is there anything you want to kick around a little bit?” It’s that kind of a conversation.

Another thing you have to do to make this work, to be able to allow your AEs to learn how to grow your book of business is obviously they have to have access to the information they need. First of all, they need to understand agency math, but they need to know what the AGI is of the book of business they’re managing. They need to know historically how those clients have grown or not grown. They need to know how they’re doing in as real time as possible. So if you’re closing the books by the 10th of the 15th of every following month, they need to get that report around then. No later than the end of the month so they’re only a month behind. So these are some things that you can do to help them.

Then as I said earlier, the other thing you have to do is you have to give them room and space to think about and create and then work the plan. So you can’t bombard your AEs with so much work that they don’t have time to actually engage in a real conversation with their clients. Right now, I think a lot of AEs feel like they’re running so fast that all they can do is grab the order and put it on the wheel and spin it into the kitchen and then they’ve got to run and grab another order. They don’t have time to sit across the counter from the client and talk about things. They don’t have time to ask great questions.

The clients don’t make that easier either because they’re hard to get a hold of so your AE has to be even more flexible. So make sure you think about how do I find the balance between billability and utilization and right seats on the bus and everybody’s busy and happy versus I’m supposed to be doing these new business things and I need some support, and I don’t know where to go to get it. So you as the owner have to find a way to sort of balance those two for your team.

Learn more about how to grow your book of business by attending the Build a Better Agency Summit — go here for details.

How to Grow Your Book of Business: Stop Selling

All right. So I think the other thing to think about when considering how to grow your book of business, and I think this should be an agency-wide held belief, but it certainly needs to happen in the AE realm for sure, and this is that whole idea of we’re not selling, we’re just helping. If some of the ways we help mean that we can literally help them by getting paid to do so, then great. But in a lot of cases, how we can help a client is just having an idea or making an observation or asking a great question or even suggesting that they hire someone else to do something because it’s not our area of expertise.

Our job is to advocate for the client and help them grow their business. Our AE’s job is to advocate for the client and help them grow their business. Now, in both cases, you have an equal obligation back to the mothership, of course, but this is not the time. This is not the time to sell. I promise you. It is a time to be super helpful. It’s a time to be very engaging and engaged, but it’s not a time to sell. So I really think it’s that simple.

I think if the AEs know, they understand that their job is to grow their book of business and the reason why we’re growing their book of business is because it’s going to be a side benefit of them actually caring and learning more about the client and helping the client come up with new ideas and initiatives, whether they involve us or not to grow their business, that’s their core job. When that happens, we will grow our book of business, we will grow the client loyalty, we will get more testimonials from that client because we are demonstrating that we are in it for the right reasons. We are in it to be helpful. We are in it to serve them and boy, do they feel it. They absolutely feel it.

That’s it. This is a short one, but I want you to really think about how you can help your AEs grow their book of business. It is an underserved question. It’s an underserved reality of how we should be growing our agency, and it takes some burden off of you and the rest of the new business team because again, if the goal is a million dollars, you don’t actually have to go get a million. You have to, in the worst of scenarios, get half and in the best of scenarios, get 30%.

Now, if your agency gets no recurring revenue from existing clients and you’re not upselling them at all, this is not going to happen overnight. So your goal for 2022 should be that all of your AEs grow their book of business by 10%. That’s it. Then work with and teach them, and here’s critical, listen to them about what they need to do that, and then get them the training, the tools, the checklist, whatever they need so that they can go and sell more because that relieves the burden for the biz dev team and for you. It is just more reflective of how we should be growing our agency. So again, 60 to 70% of net new income should come from existing clients. I hope this was helpful. I know it was a short one. Maybe that’s a good thing. I just want you to get thinking about it.

This would be a great podcast to play for your AEs and to get them to listen and ideate how to grow your book of business and come up with these plans together. Maybe they support each other in that and you or someone else above them, you’re sort of the supervisor or supporter or the cheerleader or all of those things. But I highly recommend playing this episode for them and saying, “Okay, how are we going to grow the book of business? For those of you that are doing it,” because some are naturally probably doing it, “What does that look like and how do we teach everybody else? What’s the agency right way to do that?” That’s it. I’m encouraging you to go build your book of business, and also don’t forget to factor in the attrition number when you set your new business goals. So I’ll be back next week with another biz dev offering.

In the meantime, I want to remind you that we should all say thanks to our friends at White Label IQ. They’re the presenting sponsor of the podcast. Whitelabeliq.com/ami will get you to a special offer they have just for you where you can get some free hours on a project. Great folks. Serve many, many of my agencies and have worked with my agency, and I can’t say enough good things about them. So make sure if you bump into any of those folks online or in person that you say, “Thank you for sponsoring the podcast,” because they’re pretty awesome to do that. So, all right, you guys. You know what, I will be back next week with another episode to get you thinking and I promise you, it’s going to be biz dev focused.

Learn more about how to grow your book of business by attending the Build a Better Agency Summit — go here for details.

Now we’re going to get into the weeds of this. So we’ve been talking theory. Next week I want to talk a little bit about how do we get to this place as agencies, but then I want to still drill down into some theory and best practices. I want to do the same thing in the following week. So sharpen your pencil. Now we’re going to start working on the plan. We’ve talked about why and how and all of those sort of things, but now we’re just going to get to work. So I’m looking forward to it. I hope you are too. I’ll see you next week. Thanks for listening.

That’s a wrap to this week’s episode of Build a Better Agency. Visit agencymanagementinstitute.com to check out our workshops, coaching packages and all the other ways we serve agencies just like yours. Thanks for listening.