The ideal salesperson for your agency already works in your shop with Drew McLellan

Speaker 1:

It doesn’t matter what kind of an agency you run, traditional, digital, media buying, web dev, PR, whatever your focus, you still need to run a profitable business. The Build a Better Agency Podcast, presented by White Label IQ, will show you how to make more money and keep more of what you make. Let us help you build an agency that is sustainable, scalable, and if you want down the road, sellable. Bringing his 25 plus years of experience as both an agency owner and agency consultant, please welcome your host, Drew McClellan.

Drew McLellan:

Hey everybody, Drew McLellan here with another episode of Build a Better Agency. Thanks for coming back if you are a regular listener, and welcome if this is your first foray into Build a Better Agency. Happy to have you with us. A couple of announcements before we get into today’s solo cast. So a solo cast, for those of you that have been around for a while now, is an episode where it’s just you and me chatting. No guests this time. Just something I want to talk to you about that I’ve been chatting with other agency owners about as I travel across the globe, and I want to make sure you’re thinking about as well. But a couple of things before we get there. First and foremost, I’m hoping that you’ve all heard by now, but Agency Management Institute has announced that we are launching an annual conference.

The very first one, the inaugural conference is May 19th and 20th of 2020, which seems really far away, but it’s not. And there has been an absence in the marketplace for a conference that is truly built for small agencies. I’m talking 2 employees, 5 employees, 10 employees, 100 employees. But agencies that are still actively run by an owner that everyone’s wearing a lot of hats because you’re small and nimble, and there’s really not been a conference to help you, the agency owner or leader, think about how to run that business better, how to grow it, how to scale it and how to make it more profitable every day. And so we’re going to really focus on the business side of the business. So no sessions about how to sell branding, or PR, or PPC. That’s not our shtick.

Our shtick is, how do I help you build a more successful and profitable business? And so that’s what this conference is going to be all about. Super excited about it. There are a couple of reasons why I would really like to encourage you to register sooner rather than later. First, my own blood pressure. So signing a contract to do a conference like this is astronomical. And so I want to make sure that we fill the house because I don’t want to eat ramen noodles for a year. And I know that’s selfish, but I’m being honest with you. That’s one of my concerns is I want people to be their. Number two, we’re already 25% sold out. So I don’t want you to miss out. We have a cap because of the space we’ve reserved at about 200 to 225 bodies. And I don’t want you to miss out on it.

Number three, it’s never going to get less expensive than it is right now. So you know how conferences go, the closer you get to the conference, the more expensive the tickets go. And I want you to get a bargain. Another reason is it’s May 19th and 20th, which is also restaurant week in Chicago, which is where the conference is being held. So hotel rooms are going to be hard to come by. We only have so many rooms reserved. I’m sure you’ll be able to find another room, but I think it’s going to be super expensive. So get your ticket, get your hotel room, and then settle in and relax and wait until May comes around. So, amazing speakers, amazing topics. Go over to agencymanagementinstitute.com, and right in the nav bar you’ll see BABA Summit, so Build a Better Agency summit. Click on that and you can read all about the remarkable keynote and breakout speakers we have.

We’re going to have lots of round table discussions where you are both there to learn, but also to teach what you know about everything from succession planning, to growing leaders, to tax strategies, to the best in artificial intelligence, and how you’re using it and how you should be using it. We have all kinds of topics there for every agency owner and leader to dig their teeth into. So hope you show up. Couple other things. Number one, remember that we give away free stuff every week. So our podcast guests are so smart, and a lot of them have written books or have courses. At AMI we have courses and workshops, and so we’re giving away something from either a podcast guest or from the AMI vault, if you will. And all you need to do to qualify for that is going to agencymanagementinstitute.com/podcastgiveaway.

Put your name in there once and you are eligible to win. And we’re giving away AMI workshops, we’re giving away books, we’re giving away other folk’s courses. So why not sign up for that and get something for free? Speaking of giving away things for free, we also are rewarding people who are leaving us ratings and reviews. So if you are kind enough, and it can be a good or bad review, I’m not saying only the good reviewers win because we do it by random, if you leave us review, whatever the review may be, take a screenshot of it and email it to me at [email protected]. So you can leave that review on iTunes, on Stitcher, wherever it is that you download the podcast. And the reason why we’re asking you to do that is because that escalates us on all of the lists and it makes it easier for other agency owners and leaders to find us.

But anyway, take a screenshot, email it to me. The reason I’m asking you to do that, as you know, is because many of you have usernames that are your first name or something you love, like Dodgersrocks1962, or whatever it is, but we don’t know who you are and we don’t know how to get ahold of you. So take a screenshot, email it to me. And you go in a drawing, and every month we are giving away a free workshop. So you can either take one of our on-demand courses for free, or you can come to one of our live workshops. And this month, Glen, who is the founder of Marketing What’s New, is our winner. So Glen, I’m going to be shooting you an email, and letting you know that you won and that you can go to any AMI workshop or take one of our on-demand courses for free. So don’t miss out on that.

All right. That’s enough of the announcements for today. Let’s talk about selling. So for many agency owners, you hunger, I mean, literally underline it, hunger for what I call the mythical mystical sales guy. And that is someone who will relieve you of the burden of selling your agency services to prospects. And you’ve heard me say over, and over and over again, that 99 times out of 100, those people never earn their first salary. So they often get fired or they leave on their own before they’ve even sold enough to pay for themselves. And so the question I got from a listener, and actually I get this from you all, but I see you, whether we’re at a conference or wherever I may bump into you, is how in the world can I find a good sales person for the agency? My first response is and will always be, there is going to be no one who is as good at selling what your agency does as you are.

I believe that you will always be the best sales person. Even if you hate sales, you are the best salesperson. I also believe that the way for an agency to sell their services best is for the agency to niche down, to have some subject matter experts on their team, and ideally the owner is one of them, and to build a position of authority around that agency owner, so that they can be out teaching and sharing what they know. You layer that expertise or that niche, you layer that with a unique point of view, and now you build an authority position and you sell from that authority position. So without a doubt, the agency owner being held up as an authority in a niche or niches, or in a deliverable, or in a problem that you solve over and over for clients, you teaching from that point of expertise and having a unique point of view around that niche and around how you help clients solve that problem, there’s no better way to sell than that.

However, I know that many of you still want to have a sales person. And so, what I want to talk about today is what it takes for someone other than the owner to be a great salesperson inside an agency. So I want to deconstruct why an agency owner is the best sales person. For most of you, it is not because you’re good salespeople, because let’s be honest, most of you hate it. You don’t enjoy it. You don’t have the discipline for it. And you are sort of successful at sales to spite yourself. So let’s look at what it is about you that makes you so good at sales, even though you don’t like it, and you don’t do it as often as you should and you don’t do it in as disciplined a way as you should.

And I think there are three elements that make agency owners great salespeople that we have to replicate if you are going to hire someone to do sales for you. And for many of you, this person is going to be a supplement to the agency owner. And then I’m going to talk about what it takes inside your agency to allow this person to be successful. So first let’s look at what it takes. What does this person have to be able to do to be successful? And the first thing is they have to understand two businesses. They have to understand the agency business, your business, and what it is that you do better than anybody else. So what are the skill sets inside your shop? And what are the success stories? They have to be able to talk about what you’ve already done. What are the case studies? What are the things that you knocked it out of the park for with a client?

And they need to understand what it is you sell. And I don’t mean the stuff, I mean the solutions. How do you solve problems for clients? How do you help them generate more leads? How do you help them connect tighter to their audience? All of those sort of things. So step number one, or trait number one is, they have to understand the agency’s business. Trait number two is they have to understand the client’s business. So this is where having a niche comes in really handy. So somebody who understands the business of your clients. So in the broadest sense, if you’re a generalist, they have to understand business in general, which I think can be really challenging today. But ideally you’ve got some niches.

So if you’re a pharma agency, or if you’re an Ag agency, or you are an agency that works with manufacturers, a great salesperson, and this is why agency owners are so good at it, a great sales person has a depth of knowledge and experience in that industry and that vertical that they can speak to, so that when they are talking to the CMO, or the business owner, or whoever procurement, whoever it is that they’re talking to, they can speak the language that is that business, that is that niche. And the third thing they have to be able to do is they have to be good at sales. They have to be good at sales regardless of the environment. So whether they’re on a trade show floor, whether they are on the phone with someone, whether they are taking an inbound inquiry, they have to be good at the sales followup. And what I mean by that is they have to be able to ask great questions.

Which by the way, the more they are good at the first two things, which is they understand your agency’s business and they understand the client’s industry or business, the better they’re going to be at the very pinnacle of sales success, which is asking great questions. They also have to be good at the follow-up, and the staying in touch and their relationship building. Another aspect of what will make a person a good sales person inside your agency are not is actually more about your agency than it is about the person. So if you’ve listened to my solo cast where I talk about whether or not you want to be a Wonder Bread factory or you want to be the artesian bakery, that plays a factor in whether or not someone is a good salesperson. So if you are more of a Wonder Bread factory, if you’ve productized a lot of what you sell, and a lot of what you sell into clients is sort of packaged, and that there’s a consistency in the work that you do.

So for example, if you’re a PPC shop versus a brand shop, if what you sell is more Wonder Bread factory, so you sell the same kinds of services or products over, and over and over again, without a doubt, that’s going to make it easier for someone to come in from the outside and sell what your agency does to prospects, rather than you, the agency owner, having to sell them. The more custom your work, the more you tailor everything to exactly what that client needs, and no two clients get the same mix of products or services, that makes it much harder for a sales person to sell into that organization, because they have to have a much higher level of marketing expertise and a depth of experience and energy around helping the client really figure out what the problem is and what it is you’re going to do to solve that problem. The conversations are very, very different.

And so, as you’re thinking about whether or not you can be successful at having an outside sales person come in and help you augment your sales efforts, understand that how your agency is built and what you sell is absolutely going to be a factor in the success rate of someone else being a good salesperson. So what I’m saying to you is, for this unicorn that you’re going to find who is great at agency sales, they have to know and ingest the agency business. They have to have it sort of soaked into their soul, like an agency owner does. They have to understand the vertical that you serve or all business, and understand not just the marketing of business, but everything from the challenges that your clients are having with recruiting staff, the challenges your clients are having with distribution, the challenges your clients are having selling against Amazon or some other new source of competition, all of those things they have to be great at that. And they have to have the mechanical skills of a good sales person.

So the question asking, the follow-up, the relationship building, understanding that a sale may happen in a day or a decade, and being able to nurture that relationship for all of that time, whatever that time is. So that’s what it takes to be a great salesperson. So if it’s not you, or if you want to supplement what you are doing as an agency owner, how do you find that person? Because that’s a very unique skillset. I will tell you that for some of the agencies that actually have a successful sales person, what they have done is, so here’s what happens. In many cases, agencies will either hire someone from inside the agency who understands, or from another agency, who understands agency life and how agencies work, but they’re not great salespeople. So they are great relationship builders, they’re great talkers, but they’re not good at closing the sale. Or they hire a salesperson who is great at sales, but doesn’t understand either the niche you serve or the agency side of your world. They don’t understand how to talk about agency and what an agency can deliver for a client.

So a lot of times you’ll hire someone who has half of the equation, but not the whole. So when I look at agencies, and again, there are few and far between, but when I look at agencies that actually have successful salespeople, often that person has grown up in the agency. So they’ve either been a great account service person, or they have been involved in some aspect of the agency business. So they’re not somebody you’re hiring from outside. It’s really about retooling someone who is already inside your shop and who already knows how to sell because they’ve been selling maybe to existing clients. They already know what your agency does, and how you serve and delight clients because they’ve been doing it for a while. And they understand the vertical that your agency is in because they’ve already been working in it.

And so if you’re going to hire a sales person, my first recommendation to you is look inside your own shop. Is there someone, typically it’s somebody on the account service side, who has been very successful at growing your client’s business, who maybe is bored with account service or wants a greater challenge? Or maybe you don’t have any room for them to grow anymore, and you want to keep them and reward them financially, but they’re already kind of at the top of your account service scale, that person might be a great salesperson. Or it may be somebody who has worked in an agency in the past, maybe not yours, but has worked in the agency environment, went over to the client side in the particular vertical that you specialize in, and is now looking for a new challenge.

So they understand both the agency life, and they can learn how you’ve served your clients. They already understand the industry that you’re serving, and now they want a greater challenge. They are someone who can A, help you create that authority position I’ve talked about before, and B, can speak the language of both the industry and the agency. One of the challenges, one of the reasons why you are so good at sales and why it’s so hard to hire someone who is equally good at sales is motivation. You, as an agency owner, are uniquely motivated to drive sales, whether you like it or not. And I know for many of you, it is not your favorite thing. But you have a motivation that is very hard to replicate in an employee. And that motivation is, you are very aware of the bottom line. You are very aware of what the consequences are if you don’t sell.

And that may mean that you have to downsize, or you can’t get folks raises, or whatever it is. But you really have your back against the wall. One of the reasons why you’re good at sales is because you don’t have much choice. You have to be good at sales if you want to keep the machine running. And so the other thing is, how do you compensate a new business person if you are going to hire someone outside of you to do sales? So you have to create a motivation for them that allows them to feel that same fire that you feel around selling. So in most cases, a good salesperson wants a smaller base and a higher percentage of the sale. So again, let me say that again. In most cases, a good salesperson believes in their ability to sell, and so they’re willing to take the gamble of having a smaller base and having a higher percentage of the sale because they believe that they’re going to make a lot of sales.

So if a salesperson comes to you or you’re in negotiation with a potential salesperson and they want a really high base, know right now what they’re saying to you is, I am not particularly confident in my ability to sell. So if someone is going to have a high base, so let’s say they have a family situation or something where they have to have a guaranteed income, and I’m not talking about the first year, because obviously you’re going to front load their salary the first year, but their base is going to get smaller and the percentage of their set of the take they take on sales is going to get bigger. By the way, your salesperson, if it’s not, you, odds are is not going to make their first significant sale for almost a year. So if you’re going to hire someone to do sales for you, the very first thing you have to do, and then I’ll get back to the compensation model in a second, is you have to be willing to commit to paying them for a year with very little ROI.

Because it’s going to take them that long if they’re not coming from inside your agency to learn your agency, to learn how you serve clients and what they can sell, and how to price it and all of those things, and also to learn the industry if they don’t have that knowledge. So know that in many cases, most cases, your salesperson is not going to pay for themselves this first year. This is a long-term investment. So you’ve got to have the money to ride out that first year, knowing that you’re not going to get much ROI at all. So that’s number one. So let’s go back to the compensation. So if they need to have a big base for whatever reason, family situation or whatever it is, then that means that they should get a smaller percentage of the sale. Now let’s talk about that percentage for a second. First of all, it should always be based on AGI, not gross sales.

Remember, what the gross is is irrelevant to us. It’s how much we get to keep, the adjusted gross income, that matters. So again, you have your gross billings minus all of your cost of goods, including your 1099 contractors if you’re using them, and what’s left is your adjusted gross income. That’s the money you, the agency owner, get to spend on people, on overhead, and hopefully there’s some leftover for profit. So all commissions should be based on AGI. If they have a high base, then I would say they should have a very small percentage of that AGI. And it should only, this is true for everybody, their commission on the sale should only be for the first year of sales. After that client, that new client that they have won for you has been in the house for a year, the new business person should not be compensated on that anymore. Because if you’ve kept them for more than a year, it’s because your team has earned the right to keep serving that client.

The new business person should be out of that relationship, and so they should not continue to be compensated for a sale that they made more than a year ago. Number two, I would recommend that you build a sliding scale of the commission. So you want the commission to reward the salesperson in a way that is commensurate with how valuable that client is going to be to you. So if it’s a project or a smaller piece of business, they should get a smaller percentage of the AGI. Why? Because that’s not a very valuable client to you. That’s a one and done. So what I would do is I would set AGI goals. So if the AGI for the first year is going to be from zero to X, and for every one of you this X is going to be different so I can’t use real numbers. Then they’re going to get 2 or 3% of the AGI for that first year if it is between X and Y.

So it’s a middle size client for you, and it’s going to be something that’s ongoing, then maybe they get 4 or 5% of the AGI for the first year. And if it is from Y to Z, and Z is sort of what would be almost a gorilla client for you, so this is a really big win, then you could give them maybe 7. I’m not going to say most of you should go to 10, but 7 or 8% of the AGI for the first year. And the reason why I’m saying don’t give them more than 7 or 8% is, remember, your adjusted gross income, if you are a machine of an agency and you’re running according to all of the best practices that AMI teaches, that AGI gets broken up into 55% loaded salary of your people, 25% of overhead, and ideally, and I’m underlining this word verbally, ideally 20% profit.

But for many of you, you are running … So the average agency runs at about a 10% profit margin. The average AMI agency runs at about a 16% profit margin. But somewhere in between those two numbers is you. And so if you give away 10% of the AGI, in many cases, you are literally giving away all of the profitability of that client for the first year. So A, that’s why you don’t do it for more than a year, and B, that’s why I don’t really want you to set up a profit sharing in terms of commissions to be 10%, because you’re literally giving away all of your profits for that first year. That’s not smart. So again, I want you to have a sliding scale, but the top of the scale should be 7 or 8%. If the employee is willing to take a much smaller base, that’s the only way that I would ever recommend that on the sliding scale it ever gets to 10%.

So if they’re making 30 or $40,000 and you want them to be somebody who’s ultimately being rewarded at 100,000 or higher, okay, then maybe the commission structure is a little different. It still should be tiered so that you’re rewarding them for bringing in and working on bigger clients. Because we all know that a bigger client, unless it’s just a weird, lucky strike, extra moment, a bigger client takes longer to land. So what you don’t want is you don’t want a flat commission structure, because then what’s going to happen is that salesperson is going to go after the easy win over, and over and over again because they get paid faster. That’s great for them, that is not great for your agency. What you really want is more clients in that middle tier and upper tier.

And so you want to incent the salesperson to go after those bigger fish that are harder to land. The other thing I want you to think about when it comes to a salesperson is, the other thing they need for you to be successful is they need your agency to have its act together. And what that means is that you are producing content around your subject matter expertise. And again, ideally that’s both a niche and a point of view. But any way you’re out there talking about yourselves, you have to give them things to point to. They also have to have assets that they can send to prospects. So whether that’s case studies, or tip sheets, or checklists, or something that demonstrates again, as you’ve heard me say many times, hey, prospect, I want to help you be better at your job today. Here’s a tool, or a hack, or an insight that will help you do that. It’s not about me. It’s not about the agency. It’s not selling. I’m just being helpful.

So they need this sort of toolbox of assets that they can use to send to prospects over time to nurture that relationship, because remember, it could be a day, it could be a decade. And then the other thing that they need, so they need you to be out there creating content in a thought leadership position, a position of authority, that’s number one. Number two, they need assets, they need stuff that they can share with prospects that helps that prospect be better at their job. And this is where being niched is really helpful, because then those tools can be very focused and be uber helpful. So number one, they need you to have an authority position. Number two, they need assets that they can use to nurture the relationship, because it might go for a day or a decade.

And number three, what they need is they need the agency owner’s time. So if you’re hiring a salesperson so you don’t have to think about sales, I am sorry, my friend, but that is not how that works. One of the things, when I talk to agency salespeople who are not successful, one of the things they say and that is a common theme, is one of the reasons why they were not successful is because they could not get the agency owner’s time and attention. At a certain point in time, they need to be able to bring you into a meeting. They need your help closing the deal. They need to be able to say, you know what? At this next meeting, I am going to bring Babette. And you know what? Babette’s been doing this for 30 years, and you’re going to be so amazed at how much she knows about your industry, and selling and marketing inside your space. I’m so excited for you to meet her, but you’re going to be amazed at what she knows and how she and the agency can help you get where you want to go.

You have to be someone that they can sort of trot into a meeting and make it be a big deal that you’re there. But they also need your time behind the scenes. They need your time to talk through the prospects, to help them put together their list of who they’re going to go after, to help them think about the strategies and conversations they need to have. They also need you to hold them accountable. They are not going to be accountable to anyone but you, the agency owner, or if you are an acting president or COO and you’re driving the day-to-day operations of the agency, maybe you. But they need to be held accountable by someone in authority. So you can abdicate all responsibility around sales even if you hire a salesperson. This is a complex role inside your agency. This has got to be somebody who has your ear and your attention, and has all the assets that I talked about before. So if you’re going to hire a sales person, understand that this is someone that you should look long and hard for.

And as we said in the beginning of the podcast, they need to have the traits that matter. They have to be able to talk about with authority and confidence, how your agency solves problems, like the ones they are uncovering in their conversations. So they need to be fluent in what the agency does and what the agency is good at. They also need to be fluent in what the industry, or the client, or the prospect that they are going after, what does their world look like? What is the problems? What are the problems that the industry is facing? What are the problems that that prospect is facing? And what is unique about that niche or industry that they can really lean in and demonstrate that they understand? Number three, they’ve got to have those sales skills. So that’s creating relationship, asking great questions, hanging in there for the day or the decade, whatever it’s going to take. Those are the things they need.

They also need to have your agency positioned in a way that makes it easier for them to sell so you’re not generic and you are not just the general practitioner. They need assets, things to send that prospect to keep nurturing their relationship. And they need your time, the agency leader or owner’s time. All of those things have to be in play and in place if you are going to have someone other than you be successful at selling the agency. Couple things before we go. Again, please show up at the conference. I would love to see you in May. If we have not met in person, I would love to meet you. And a huge thank you to our sponsor, White Label IQ. They make it possible for us to come to you every week with these insights, and they’ve put together a really cool deal for you. So if you want to visit them, go over to whitelabeliq.com/ami. And they’ve put together an amazing deal for podcast listeners.

But what they do is they augment your staff. So many of you have decided not to have programmers on staff. Some of you do have programmers on staff. But these guys will augment your team in a way that is really amazing. So on the agency side of my world, we had a client who had a ridiculous deadline for a website. We do not have programmers on staff. I reached out to White Label and they knocked it out of the park. They were so easy to work with, and they just over-delivered at every stage of this website project. And so, not only am I telling you to go check them out because they’re generous sponsor of the podcast as our presenting sponsor, but I am telling you agency owner to agency owner, they crushed it. They made our clients so happy. They helped us make the project profitable. They were easy to work with. So go check them out and see what they do, and let them know that you appreciate the fact that they are bringing you this podcast week after week.

So many thanks to our friends at White Label, and many thanks to you for listening. I am so grateful that you’re here. I love meeting you in person. I love meeting you at conferences and talking to you about your agency. So thank you for listening. Hopefully this was super helpful for you in thinking about if you’re going to augment your sales staff, here’s what you need to do to be successful. And I will be back next week with a guest to get you thinking differently about your agency. In the meantime, if you need to reach me, it’s [email protected]. As always, I will see you next week. Thanks for listening.

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