Episode 39: Scaling your agency with Jason Swenk
Jason Swenk shares how to scale and sell. If you got a call with an offer, would you be ready? It happened to Jason Swenk. But, he had a plan and shares the details in this episode of Build a Better Agency.
Jason Swenk calls himself the defender of truth, justice, and effective business practices. 16-years ago, he founded a digital agency and they worked with clients like AFLAC, AT&T, Coca-Cola, and LegalZoom. He sold that agency and is now working with agencies, teaching them to use cutting-edge business strategies to defend themselves against the competition. His website, www.jasonswenk.com, has a plethora of information dedicated to educating agency owners including Agency Insights, his weekly newsletter.
What you’ll learn from Jason Swenk in this episode:
- How Jason prepared his agency for sale
- The importance of systems inside an agency
- What to do when the systems you put in place make you nonessential for day-to-day operations
- Lead generation: why Jason believes this is the biggest pain point for agencies and what can be done about it
- How agencies can deliver exceptional value to clients willing to pay a premium price and how to get those clients in the first place
- How to recognize which clients to seek out and which to avoid
- Jason’s “Agency Playbook”
- Things agencies do to get in their own way
- Agencies and niche: why you need to start very, very small
- What can agencies do right now to take action on the ideas in this episode
The Golden Nugget from Jason:“The difference between successful and struggling agency owners are their systems.” – @jswenk Click To Tweet
Ways to Contact Jason Swenk:
- Website: www.jasonswenk.com
- Playbook: jasonswenk.com/playbook
- Podcast: jasonswenk.com/category/podcasts
Jason Swenk: Full Interview Transcript
One of the goals of many agency owners is to build a business that has enough value that someone will want to buy it from them down the road. If you got a call with a cash offer for your agency tomorrow — would you be ready? Would your agency be? That’s exactly what happened to my podcast guest, Jason Swenk and because he had a plan — he was ready.
He calls himself the defender of truth, justice, and effective business practices and he knows what he’s talking about when it comes to agency value. In his opinion, the only difference between an eight-figure agency owner and someone who is struggling is their systems. It’s not about how smart they are or their experience. It all comes down to having the right systems in place.
This is just one area that Jason’s expertise can help you in building your business/agency with the future in mind.
Here’s the full transcript of our conversation.
Drew: Welcome to another episode of Build a Better Agency. I am your fearless leader, Drew McLellan, and my role is to introduce you to guests, ideas, and best practices that help you minimize the risks of agency ownership while making the most of all of the rewards possible.
As you know I work with over 200 small to mid-size agency owners every year, and I know today’s guest has something you’re all gonna wanna hear. Jason Swenk is, as he calls himself, the defender of truth, justice, and effective business practices. Jason has spent a lot of time in our world. Several years ago, 16 years ago, he founded a digital agency, and over the course of 12 years as CEO worked with clients like Aflac, Lotus Cars, Hitachi, AT&T, Coke, and LegalZoom.
He then sold his agency in 2011 for seven figures, and is now working out of his own home office in Atlanta, Georgia helping agencies and other businesses use cutting edge business strategies to help them defend themselves against villainous competition. He does a lot of content creation. His website is a plethora of great content for agency owners. He also creates proprietary business tools, does some coaching and podcasting. I highly recommend his podcast for the few of you who have not already found it and are listening to it. So, Jason, welcome to the show.
Jason Swenk: Introduction
Jason: Thanks for having me, Drew. I’m happy to be on here. And I fly in with my cape, right?
Drew: I love that. So does it have a big “S” on it? Or is it…?
Jason: Oh, it has to have an “S” on it for Swenk, right?
Drew: Of course, of course. So talk to us about, things are cooking and are going great in the agency world, and obviously you’re working with some great marquee clients. What prompts someone…and for those of you that don’t know Jason is a relatively young guy, what prompts someone at your age to sell the agency and decide to do something different?
Jason: You know, I got into the agency business really young. I literally got into starting my own agency, and it was more of a web shop, when I was 22. So, you know, I learned a lot quick and I loved what we were doing and we did it for so long, but it was just the right time and the right offer, right? You know, so many times over the years we kept getting approached, but the stars didn’t align, and this time it did. And so, you know, it was one of the best decisions I’ve done in my business career and I’m glad I did it.
Jason Swenk: The Agency Owner’s Dream of Selling
Drew: So, many agency owners sort of long for the day that someone will walk in and offer them money for their agency, but in many cases their agencies aren’t really in shape to be bought or sold. So what did you do and how intentional was it when building your business so that it was an asset you could sell and you could step away?
Jason: Yeah. So it was kind of… Things change throughout the years, right? So when we started in ’99, it was right around the dotcom era, and everybody was selling their business for a gazillion dollars. And so when we got into this, we were like, “Hey, we’re going to sell this business.” And then when the dot bomb happened, right, everything changed. And literally I was just like, “Let’s just create an amazing lifestyle business that we have, and where we can do whatever we want.” And when we started doing that, then a lot of people started saying, “Well, the business doesn’t really need you to do all the day-to-day operations,” so it’s a little more attractive to us. And we started putting together the right systems. You know, the only difference between an eight-figure agency owner or someone that’s just really kind of struggling is really about the systems. It’s not about how smart they are or their experience or anything like that. It really comes down to having the right systems.
Drew: So, agency owners, as a general rule, are a little system adverse. It feels bureaucratic. It feels that they’re constrained. How did you create a culture where systems were not only accepted but embraced?
Jason: You know, it was just… I told people… I mean, and when I talk about systems I’m not just talking about technology, just for, you know, the listeners out there. I’m talking about just a process for everything. Right? A process to do better work. A process to get the ideal clients calling you, you know, a process in order to make sure that we were profitable. You know, I was just chatting with a couple agencies, and they were really pretty big, but they’re not making any money. Their margins are so small and I’m like, “Why are you doing this?” I was like, “It’s not worth it.”
Drew: Yeah, why are you working so hard for so little?
Jason: Yeah. And so when we started implementing systems then, you know, and we were all frustrated, right? Because, look, when we started out I didn’t even know what an invoice was. So, I mean, there was a lot of learning, you know, that I had to do. And our first websites we sold were like $500 dollars. I mean, it was just ridiculous. And then we wound up turning and selling $300,000 websites toward the end and even more. So there was a lot of learning curve. And we were all just frustrated with where we were, and we knew there had to be a better way. And so when we started implementing processes and systems, people embraced it because they were not happy with how things were going at the current state.
Drew: So if an agency…what an agency owner will say is, “Well, we have systems. We do things a certain way,” but it’s all sort of tribal knowledge, right? So they all sort of…everyone in the shop sort of understands how it’s done, but it’s not recorded. There’s no sort of process documents. How detailed did you get in creating all of that?
Jason: Oh, very detailed. And I’m not just talking about on delivery or the sales process. I’m talking about like, you know, when I got… The funny story is how I got involved in this is actually I owe all my success to Justin Timberlake, even though I don’t know him, but one of my friends looked just like him. And so I designed a website called NShit to make fun of NSync, and it got popular, and people asked me to design websites. And so a lot of us have gotten, especially in the agency world, have started an agency with no clarity or vision of where you’re going, right?
Jason Swenk: Why Systems Matter
Drew: I think most agency owners are accidental business owners.
Jason: Exactly. Almost all of them. And so, like when I talk about systems I’m talking about, even the clarity system of like, “Where do you want to go? What do you want to turn down? What does your 90-day plan look like?” versus just your revenue goals every year, which you never hit, right? Or like, “Who do you wanna specialize in? Or how do you attack the market? How do you attract?” And so I always looked at systems as like that old game, I don’t know if you ever played it. It was popular maybe 10 years ago or maybe 20 years ago, I can’t remember. It was called “Age of Empires.”
And so how the game worked is you had to get so much wood, so much water, and so much food in order to get to the next level and go from the stone age to the industrial age, or whatever. And so I always looked at kind of, there’s 12 systems that every business or agency needs to do in order to get to the next level. And then you almost have to kind of reset and readjust and you will go through some systems quicker than others, because you’ve already gone through it, but you still have to go through it. Because there’s different levels, as you know.
Drew: Absolutely. So how did you learn about those 12 systems? And if there’s one that’s more important than others, which one would you say is the vital one to start with?
Jason: So when building your business, two of them are kind of the foundation for everything. And one of them is really understanding and getting that clarity of what do you want to build? What does that look like in the next couple years? What type of people do you want working for you? What type of services do you want? What are you going to say no to? Right? That’s kind of the foundation. And then after you know that, then it’s all about finding your specialization.
When we started jumping into a specialization, that’s when everything exploded, in a good way, right? Because everybody, especially agencies, what do they say? “We’re a digital agency, full service digital agency.” I’m like, “That’s just not cool to say anymore,” because you’re a generalist. And when we started specializing and becoming the best in the world at certain technology or certain industries that we were going after, then people all over the world were reaching out to us, versus just us winning that business that was local because our competitive advantage was local.
Drew: Right, right. So, all right, let’s fast forward. You’ve got all the systems in place and all of a sudden Jason isn’t doing the day-to-day stuff anymore. I think one of the things agency owners struggle with is sort of understanding what their role is when they’re not working in the business all the time. So, after you got the systems in place and you started having key people sort of developing and delivering different services, things that you had normally been doing, how did you spend your days?
Jason: So I looked at it as, as a CEO I needed to do a couple of things as my role. And I went kicking and screaming because one day I remember going to my wife, I go in, “Man, I am so sick and tired of doing all this stuff I don’t want to do anymore. I really need to create a system and process to do that.” And she said, “Well, why don’t you go do it?” I’m like, “Okay, I’ll go do it.” And so I did it. And so it literally took maybe three, maybe five months, if I can remember right. And I remember coming home one day and my wife saying, “Well, what’s wrong, Jason? Because you look like shit.” And I was like, “You know, I’m just…the business doesn’t need me anymore.”
Drew: Right. “Unfortunately, I got what I wished for.”
Jason: Yeah, exactly. And so then I realized that I needed to… my role morphed. I didn’t need to do all the other stuff. So, here’s my vision of what an agency CEO or a co-founder needs to do. You need to set the vision and direction of the agency, okay? You need to be the figurehead of the agency. You need to support sales. You need to look at the financials. And you need to coach and mentor the people directly one level deep under you, and then they coach and mentor the people directly under them, not everybody reporting to you. And when we did that, that’s when really we had a lot of exponential growth.
Drew: So let’s fast forward now to the work that you do today. And, again, you keep creating a lot of great content and you are coaching folks. If you could identify, if you could put your finger on the pulse of the biggest pain point of agencies today, what is it?
Jason Swenk: Lead Generation is Critical
Jason: It’s lead generation, right? I just got back from Miami yesterday. I met with 20 agencies. And I was meeting with a couple that they were looking up to this one agency, and we were talking through and they were just like, “You know, I don’t know what…” They had like a million problems. And so we just kept asking the right questions, and it all stemmed down to, they weren’t charging enough. Their margins were so small. And I said, “Well, that’s easy to solve. Just double or triple your prices.” They go, “Jason, we cannot do that.” I was like, “Why not? It’s easy. If you’re gonna say it’s 10,000, you say it’s 40,000.” That’s more.
Drew: Right. Change the number on the proposal.
Jason: Add a zero to it, in the back not the front. And they go, “Well, Jason, that’s nice. That’s really easy for you to say.” And everybody listening to this podcast, all gazillion of you, right, are like, “Well, how do you…? Yeah, I agree with them.” Well, all your existing clients are going to say no. All your existing prospects are going to say no because you’re going after the wrong people. The problem is that you don’t have a lead generation system, where you have a lot of people coming to you, that you can pick the ideal client. You can pick the perfect client, right, or pick the perfect prospect.
I have a motto that there’s no such thing as a bad agency client. And all of you listening are probably like, “You are absolutely crazy.” Right? There’s only a bad prospect or a bad process, and most of you have a bad prospect. You let the bad prospects in, and they’re gonna beat you up on your time. So think about it as a stock. If you had a ton of people, right, coming…you know, buying this stock, what’s gonna happen? Stock price is gonna rise. That’s what you want. Now you have to make sure you deliver more value than what they’re paying you. That’s assumed already. But, you know, most of the time people are not charging enough because they don’t have the right ideal prospects coming to them. That’s, I think, one of the biggest problems I see with all the agencies I worked with, all the agencies I’ve talked with all around the world.
Drew: So, let’s talk about delivering enough value when building your business. Because, you know, as you know a lot of what an agency does, the stuff we make, has been commoditized. So, how do you believe an agency delivers an exceptional value to a client where the client is willing to pay a premium price?
Jason: Yeah, it all comes down to having that specialization and having that ideal prospect that they know better than themselves, right? So understanding what are their desires, what are their challenges? Like, for my business and your business, right, we understand that agencies struggle with cash flow. They’re constantly trying to figure out how to get to the next level, reach the seven, eight-figure mark or position to exit one day, right, or increase their valuation. So, we intimately understand our audience and we just dive deep into it, right?
So they need to do the same thing for their clients and understand what are their client’s client’s desires and results, and then put out that kind of information and provide…try to help before you sell. That’s the biggest difference, right? All the stuff I put out, my whole goal is my free content to be better than anybody’s paid content, right? And you probably have the same value, right? And so we obsess over that, and that’s why people constantly come to us. And if agencies did that, they would separate themselves so much. Or, even if they ask questions, right, you know, agencies, I love them to death, because I did all this stuff wrong for years and years until I could get out.
Drew: That’s how you learn, right?
Jason: Yeah, until you can get out you’re like, “Okay, now I know what I need to do.” So, agencies always talk about themselves, which the client could care less themselves or about the agency. They only care about themselves. So if an agency can start asking questions, which directs the attention to their prospect, they’re gonna be so much more successful.
Jason Swenk: Attract a Different Level of Prospect
Drew: Yeah. So harkening back to something you said earlier where it’s about attracting a different level of prospect, so back when you were still inside your own agency, how did you guys do that? How did you…? What honey did you put out to get the right bees to come to you, or whatever the analogy is? How did you get the right folks at the right level, who were willing to pay what you wanted to charge, to pick up the phone and call you?
Jason: Yeah, one of the ones that we did was through strategic partnerships. So, we became the best partner in the world for a company called Sitefinity. It was an up and coming CMS at the time, and a lot of the big brands were looking at that. And then we did the same thing with Microsoft around Sharepoint when that was popular, okay? So then we had clients like LegalZoom, and Hitachi, and all these major clients coming to us because we were the best with this particular technology that we could do amazing design and amazing marketing solutions around. And so that’s what made us different from everybody else. And we also, you know, looked at the sales approach differently, where we were asking questions versus just telling people how good we were, how many awards we won, and check out our portfolio.
Drew: Right. So, do you believe it’s the quality of the question that invites you to the next level with a client?
Jason: Always, always. You know, I have a motto where…I call it the three I’s. You know, whenever I would tell my sales people or I would say “All right, what’s their biggest issue? What’s the impact that the issue is having, both positive and negative, if they go with us or if they don’t, and how important is it to them?” And then asking the right questions to have them come up with the impact, which is the value. And when you do that, I mean, it’s really a no-brainer. It never comes down to price. It’s all about urgency.
Drew: Because the price to them of not doing it is greater than whatever you’re gonna charge them to fix the problem.
Jason: Yeah. Because most agencies, you know, like when Lotus Cars came to us, and they talked to us about a micro site, every other agency they were talking about, and I saw their proposals, that’s kind of a funny story, but they all started talking about all the work that they’ve done for all these other brands and all that, versus, we said, “We’re gonna change the conversation. Find out really why they want this micro site, and then we’re not gonna pitch marriage right off the bat.” We’re gonna pitch a discovery session with them, where we can help them out first, identify any other things, and then we can, you know, make that lifetime value of Lotus a lot bigger than it really would have been for other people.
Drew: So where do you stand on…? Thinking about the discovery session or the discovery process, did you charge money for that?
Jason: Oh, of course, always.
Drew: Right, okay. So, but as you know, a lot of agencies give that sort of first phase of interaction away for free.
Jason: It’s crazy, isn’t it?
Drew: Yeah, it is crazy. But how did you get to the point culturally where you knew that that discovery process, in essence they’re paying to be pitched, right? And it’s not that you’re not helping them, because you are helping them as well. And you’re really…it’s sort of like paying for a first date, right? In some ways it’s like, “Well, if you pay me we’ll go out on a couple dates and you’re gonna see how much you love me and then we can get married.”
Jason: Well, so, I look at it where they weren’t paying me to pitch them because I would lay out a detailed plan that they could go do without me, or pitch, you know, lay it out for someone else. So we were providing value, even though we weren’t gonna make money on it. It doesn’t matter if you make money on it. Because I understood that if someone pays me money, they’re 20 times more likely to pay me more money.
Drew: Absolutely, right.
Jason: And I like that motto. I like my odds. And so, you know, I would always position it, saying, “Look, we’re going to identify the huge gaps that you have, the huge opportunities that you have in front of you, and give you a roadmap of what you need to do. And, you know, we’re not making money on this discovery session, we’re just doing it as a mini commitment so you can see how we work, and we just need to recoup our costs. And if you’re not that serious about it, totally understand, we may not be the best fit for you.”
Jason Swenk: Who’s a Good Client and Who Isn’t?
Drew: Right, right. Yeah, I have several of my agencies who have sort of a discovery process, whether that’s 30 days or 90 days, and it’s not really about making money as you say. It’s about controlling the cost and the risk. And I think it’s also a litmus test about, as you said, “How serious are you about this? Because if you’re not gonna give us X for the 30 days or 90 days and a complete blueprint of what you need to do, which you’re welcome to take to another agency, or have us do, or do yourself with an internal team, however you wanna do that, then odds are you’re not gonna be the kind of client that we want to work with long term.”
Jason: You got it.
Drew: Yeah. How did you get over the idea that anybody with a buck was a good client? Because I think a lot of agencies struggle with that. They see, “Anybody’s got a dollar on the table, that’s a dollar that I wanna have,” as opposed to not every dollar’s a good dollar.
Jason: Yeah. You know what? When I started looking at kind of the opportunity cost, right, and the amount of pain they were causing my team or myself, and, you know, it kind of goes back to the old saying, motto, “Whatever you say yes to, you’re saying no to the right stuff sometimes.” If you don’t really have a no list or you just take on anybody, because you’re getting a loan, right? I mean, you’re like, “Oh my gosh, I gotta make payroll, so I need to take this on.” And so you’re making a decision based on money for the short term versus the long term, and that’s a bad situation. Now, you need to get out of that hole, and usually how you get out of that hole is just making sure you increase your odds, which, you increase your odds by getting more traffic, getting more leads, getting more opportunities.
And then being picky and having that, you know, “Hey, this is my ideal client.” Because I started looking at going, you know, “I’m charging someone $10,000 for this website, for this one,” and I’m doing two a month, which is nice, it’s 20,000 a month. Anybody would say, “Yeah, that’s good.” But I’m charging for one other website, I’m charging $100,000 and I’m getting one of those. So why don’t I put more…I mean, my opportunity cost in that is 90,000. So if I could get two more, that’s 200,000, and I’ll maybe be working less and I won’t need as much staff anymore.
Drew: Yeah. So one of the products that you’ve created is the Agency Playbook. Tell our listeners a little bit about that.
Jason: Yeah, you know, it’s really…after I got out of my, running the agency, I really kind of looked back at when we were unsuccessful to when we were really successful, and reverse engineered it. Saying, “If I had to redo this all over again, with all the new stuff I know, all the stuff that worked for us, all the stuff that didn’t work, I wanted to put something down where it gave someone, like me at that time, an exact road map to follow.” From, you know, the delivery part of designing websites or SEO plans or pay-per-click campaigns, to who to hire, how to manage, how not to give your employees ownership, but how to make them feel like they have ownership, you know, what KPIs to look at, how to attract the right clients, how to generate leads, how to attack the market for outbound, who to partner with, you know, all of that.
I basically put it all together, including all my agency documents just so someone could have an exact road map to follow or a reference that they could use when they were having a particular problem. You know, it’s been a really rewarding experience to see the people that are actually taking action and then, you know, reaching back out to me on their own accord and saying, “Man, this changed everything.” And that’s why I did it, you know, and that’s why you help out agencies. I mean, it’s just the most rewarding thing. I think we both get it. We’re not trying to be successful, we’re trying to be significant, which is making other people successful.
Drew: Absolutely, absolutely. So let’s go back to the whole idea of…hang on this, let me circle back around. So, Agency Playbook, if somebody wanted to track that down, they just go to your website to find that?
Jason: Yeah, so if you go to jasonswenk.com/playbook, you can check it out and you will see a video of everything on it. And then you can always e-mail me any questions you have with it, too.
Drew: Okay, great. So let’s go back to the lead gen conversation of building your business, because that does seem to be most agencies’ pain points. But it seems like a lot of agencies don’t really have…well, it is their greatest pain point. It’s also where they expend, in some cases, the least amount of energy. So how is it that agencies sort of get in their own way when it comes to lead gen and new business?
Jason Swenk: Why Agencies Need to “Eat their own dog food.“
Jason: They don’t eat their own dog food. I mean, they really don’t. They don’t…they’re so afraid of scaring people away for being a specialist that they keep being a generalist. And all of their blog topics are how to rank higher in the search engines, rather than being specific on who it’s actually for. Or, they’re just using Adwords versus using, you know, Facebook marketing or the tools that actually work, right? Where their company is just relying on inbound marketing, right, for the SEO, which is totally dependent on Google.
Then you have to write like a…you know, you don’t know what’s going on just in order to attract Google. And so I never liked that. So I always just paid for traffic in order to get it to a particular landing page that offered something of value for free, and then use your technology and your auto-responders in order to build trust and authority, and then position for a conversation later on.
Drew: So do you…? When you are talking to agencies and you’re talking to them about lead gen and sort of the idea of specializing, which, as you can imagine, is a conversation I have as well, what’s your philosophy around, should an agency have a single niche? Should they have multiple niches? What do you teach in that arena?
Jason: Yeah, you have to start small. I mean, you could go after multiple niches in the beginning but it’s multiple work, right? And so I always looked at the model of…you know, the funny thing is agencies look at the big agencies, and they try to duplicate that, but they didn’t duplicate where they started, which they should. Because they duplicate like the agencies, like Huge or Moxy or Razorfish. And they look at their websites and go, “Well, they work with all these big clients, so this must obviously work.” Well, I’ve talked to all the owners there and all the execs. They don’t get any leads off that website, right, because it doesn’t work. They’re not doing it correctly. I literally was working with a website agency and they couldn’t get their own website done. I said “Guys, this is getting ridiculous.”
Drew: Yeah, it’s embarrassing.
Jason: And I was like, “Just put up a webinar registration page. Offer something that’s of value every week and you cover it as your home page.” They got a hundred leads a day from that. They didn’t have a portfolio, didn’t even have an about page or contact page. Literally, webinar registration page.
Drew: Which, by the way, we are not recommending. That is not a good long-term strategy for your web presence, right, not to have contact information, so I just wanna be really clear about that.
Jason: That’s right, but it was gonna solve something really, really quick. So, they have hence changed and added the additional pages, like the about and contact, but it was just like, their existing website was killing them. And they were so scared. Or like, when you work with an agency, you’ve probably seen this, and their like, you know, “Drew, I can’t pick a specialization. I’m gonna scare people away.” I’m like, “Okay. Well, I see your point, but how many leads are you getting now? Zero. That’s not gonna hurt.”
Drew: Right. Well, a lot of what I hear too is, “You know what? I’m a small agency in a small market and I can’t afford to specialize because there’s only one fill in the blank hospital, bank, whatever in my town or only a few. So, I’ve gotta be a generalist.” You know, what I always say is, “Well, the whole point is this is a way for you to get out of that one town and to be geographically irrelevant to your clients. That they don’t care where you live or work because what they care about is that you have a deep expertise in what they do for a living.”
Jason: You got it, exactly right.
Jason Swenk: The Lack of Resources
Drew: But it’s scary and I get it. You know, it’s one of those things where, I think, agencies not only do they not eat their own dog food, but they suffer from their own sort of lean mentality of, they only have enough bodies on staff to get the client work done. And so what they’ll say to me is, “I know I need to do all of that. We don’t have the time. I don’t have the resources.” So, how do you answer that objection?
Jason: I tell them it’s never a time issue, it’s a priority issue. And I paint the picture of saying, “If you don’t change, how is it going to look in the next couple months? How is it gonna look in the next year, if you don’t get any more leads and you keep losing money on projects?” And basically it all stems down to them going out of business and working for someone else. I’m like, “How does that make you feel?” You know, we all make decisions based on gaining pleasure and avoiding pain. That’s really it.
Drew: Yup, carrot and the stick.
Jason: Yeah, and it’s about which one do you give m