Episode 190

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Figuring out which prospects align with your sweet spot and then doing the work necessary to earn their business are the difficult tasks of agency ownership. It starts with understanding what your sweet spot is. Who do you serve best? Where do you have a specialized knowledge that gives you a competitive edge?

As you have heard me say time and time again, for most agencies, being a general practitioner is neither desirable nor practical. It’s tough to compete on anything but the price when you look, sound and act the same as all of the other agencies out there. The brain surgeon is always more sought after and gets paid more than a general practitioner does.

That’s why I talk so often about positioning your agency. It’s how you find the right clients and focus on the right activities to attract and best serve those clients.

In this solocast, I spell out some of the options you could consider as you think about how to niche your agency. I walk you through the steps to take and areas on which to focus so that you can position your agency as a standout leader in whatever niches you are best suited to serve.
How do you discover your sweet spot clients? How do you hone in on your point of view? How do you demonstrate subject matter expertise that will win the business? In this episode, you’ll get some answers and perhaps come away with a few questions to ask yourself and your team as you move towards that goal.

What You Will Learn in this Episode:

  • The importance of defining who you serve and whom you don’t serve
  • The 4 ways to think about niches
  • Ways to narrow your niches
  • How to position your agency by solving a particular problem
  • Why POV is so important in positioning your agency
  • How POV helps you stand out and focus on activities with the highest payoff
  • Why you must not only claim but also demonstrate subject matter expertise
  • Why walking away from a big bag of money is sometimes the right call

The Golden Nuggets:

“If there is a way for you to be a specialist, be a specialist. It will help you grow your agency, will help you with recruiting and will make a difference to the bottom line.” – @DrewMcLellan Share on X “POV is crucial. What is your point of view as an agency? What is it that you believe is unique and that you bring to your niche clients?” – @DrewMcLellan Share on X “Positioning your agency is an evolution, not a revolution.” – @DrewMcLellan Share on X “You don’t have to be chasing after 100 new clients. Your biz dev goals can be a lot more manageable than that.” – @DrewMcLellan Share on X

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

AMI works with agency owners by:

  • Leading agency owner peer groups
  • Offering workshops for owners and their leadership teams
  • Offering AE Bootcamps
  • Conducting individual agency owner coaching
  • Doing on-site consulting
  • Offering online courses in agency new business and account service

Because he works with those 250+ agencies every year — Drew has the unique opportunity to see the patterns and the habits (both good and bad) that happen over and over again. He has also written two books and been featured in The New York Times, Forbes, Entrepreneur Magazine, and Fortune Small Business. The Wall Street Journal called his blog “One of 10 blogs every entrepreneur should read.”

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Ways to contact Drew McLellan:

Speaker 1: Are you tired of feeling like the lonely lighthouse keeper as you run your agency? 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 is now in our third year of sharing insights and help small to mid-sized agencies survive and thrive in today’s market. Bringing his 25 plus years of experience as both an agency, owner and agency consultant. Please welcome your host, Drew McLellan.


Drew McLellan: Hey, everybody Drew McLellan here with another episode of Build A Better Agency. Like it or not, this is one of my solo casts, so I have no guests with me today. I am on my own, ready just to whisper in your ear about something that we’ve talked about many times before tangentially, but I really want to just dive right into it in this episode and really get you thinking about how you’re positioning your agency. But first, before we do that, I have just a couple things that I want to remind you about. And a couple of announcements I want to make. I promise I will make them quick. So the first one is just a reminder that every month we are going to be giving away a seat in one of our trainings. So, you can choose one of our live workshops, or you can choose one of our on demand courses.


  Either way every week … Every week, sorry, I lied every month we’re going to be giving away one seat to one of those workshops. And the way you get into the drawing for that is by leaving us a review on the podcast. I don’t care where you leave it. I don’t care if it’s on iTunes or Stitcher or Google or wherever you happen to access the podcast. But I will say this, I need you to send me an email and send me a screenshot of the review that you left. So, if you’ve already left a review and you haven’t sent me an email, please go ahead and do that. Take a screenshot and send me an email drewatagencymanagementinstute.com because quite honestly, it’s really difficult to figure out who fuzzyboots311 is when we read the reviews. A lot of you, your handles or your screen names don’t necessarily match your agency or your name and trying to find you has been really challenging.


  So, if you’ve already left a rating and review and you want to be put in the drawing, go grab a screenshot, send it to me. If you have not left us a rating and review, please do that. Even if you don’t want to win the contest, I would really appreciate it if you did that. It’s how folks find us. It’s how we show up on the search engines, all of those important things, but this month’s winner is Nick Heckman. So Nick, I’m going to be reaching out to you and letting you know by email that you won and offering you an option of a seat in one of our live workshops or our on demand courses. So, thanks for the great review and congratulations. A couple of other things. We have built an assessment that will help you figure out where, as an agency owner, you should be focused on and spending your time.


  So, if you go to agencymanagementinstitute.com/assessment, you will find the assessment there. It’ll take you about six minutes to answer the questions, and then you will immediately get your results and you will also get those results by email. And what we’re going to do as we get more people to participate in the assessment is we’re going to start giving you some comparison, some comparative data to show you where your agency is showing up versus other agencies that are taking the assessments. So, please go do that. Hopefully that’ll be super helpful for you. All right. So, that’s it for my announcements. So, what I want to talk about today is this idea of how do you position your agency? How do you niche your agency? How do you define your agency? It fascinates me that we do this for clients every single day, and yet is so hard for us to do it for ourselves.


  And so I’m going to walk you through the core elements that are a part of sort of niching your agency, just to get your brain kind of cooking. I can’t tell you the answer, but I can tell you what the answer will look like. So, first of all, I want to remind all of you that I am not a proponent of an agency going all in for one vertical, unless that vertical is very dense and very recession proof. I saw a lot of agencies during the last recession who had specialized in, for example, home building and home building products that either went out of business or were knocked to their knees during the recession. So, I am a huge advocate of not sitting on a one legged stool. I know there are other folks out there who push for that. And I understand from a philosophical perspective, why that would be awesome and easier, but from a practical, like you want to keep paying your mortgage point of view.


  I do not think it’s a good idea. I do not think it’s a best practice. So, I am a huge advocate of the three or four legged stool. And what I mean by that is two or three niches. And then all of you are going to have what I think of as the kitchen junk drawer, which are clients that you’ve had forever, that don’t fit your niches, but they’re profitable. They’re a legacy client and you’re not going to make them go away just because they don’t fit the new model of you, or maybe you will, but not in the beginning. And by the way, that’s another great point. As you begin to define your niches, and as you start to really develop content and biz dev efforts around those niches, this is not a snap your finger and things change. This is an evolution, not a revolution.


  So, you’re not going to fire all your clients. You’re not going to fire all your employees who don’t have subject matter expertise in whatever niche you decide to serve. You are going to grow the agency and keep kind of course correcting the agency to get it into the right niches. So, let’s talk a little bit about that. So again, three or four legged stool, I want you to have two to three niches and that have some sort of connective tissue between them. And I’ll talk about that in a minute, but first let’s talk about the kinds of ways that you can niche or define who your agency is about. And remember that a lot of this, when you’re doing this and many of you give this speech to your clients, so it’s not new to you, when you define who you are all about, who you serve, you are also defining, and in some ways I think it’s more important, who you don’t serve, who you are not a good fit for.


  And understanding that and really thinking through who can we delight every single day is a critical element to your agency’s sustainability and scalability. So, there’s a couple of things I want you to do before we get into what your legs of the stool are or what those niches look like. The first thing I want you to do is I want you to go to the show notes and I want you to download the Sweet Spot Client Filter. I want you to go through that exercise that we have put together that will help you define what your ideal client looks like. This may or may not be about a niche, but it’s certainly going to help you define who you love to serve, the size of businesses, how they’re constructed, your point of contact, how large they are, what their billings are, what their geography is, all of those sorts of things.


  So, do that. And then what I want you also to do is I want you to think about, and this is a difficult question to answer, I want you to think about how sophisticated a client is best suited for your agency. And what I mean by that is there are some clients who don’t understand marketing at all, who really are at a very rudimentary level. So, we’re going to call them a sophistication level of a zero or one. And then there are other clients who are big, robust machines that have very sophisticated, very smart directors of marketing or VPs of marketing and sales that have a very high and very savvy sophistication level in terms of understanding marketing and data and sales. And every agency, somewhere on the scale of one to 10, there’s a range of those clients that your agency is best suited to serve.


  Many agencies understand sort of the lower level. We really can’t work with somebody who doesn’t have at least some basic knowledge or who has never worked with an agency before or whatever. So, we want somebody who’s at least a three or a four on the sophistication level, but oftentimes what we do not do is we don’t set the ceiling for that. And in fact, many times we chase after, because it’s a big brand, a big budget, a big name, a recognizable name. We chase after clients who sophistication level is so high that we’re going to have to chase our tail off to make them happy. And honestly, I don’t think that’s good business. You want to have clients that not only are your sweet spot in terms of their size and what they do, but also in their sophistication level. So, you might say, you know what, we want to be somewhere between a four and a seven.


  And here’s what that looks like. Here’s how I can define that sophistication level in terms of what they have internally, what they’ve done in the past, or, you know what, it may be that you have a bunch of PhDs on your staff and that you guys crunch data like nobody’s business. And you only want clients that are an eight, nine or 10 on the sophistication level. I don’t really care what your number is. What I care is that you have a number and that you’re mindful of it as you go out prospecting. And you’re mindful of it when people come in the door through referrals or however they’re going to come in. I want you to be thinking about not only do they fit our Sweet Spot Client Filter, and by the way, at the end of that exercise, you’re going to make it a little criteria or a checklist that you can grade every prospect against to see if they really are an ideal client for you.


  And where do they fall in this sophisticated level? So, once you’ve done those two things, now we can start thinking about niches. And I want you to think about niches in four different ways. The first kind of niche that some agencies gravitate to is really a geographic niche. And so that’s a, we live in Washington State and we understand Washington State better than anybody else. And so if somebody is a Washington State based business, where somebody wants to bring a business into Washington State, and by the way, it doesn’t have to be a State, it could be a city. Then that’s our niche. We are born and bred here. We understand it. And we can speak the language that is this geography. That is different than having no specificity at all about what you do. So, a generalist agency literally is we will serve any butcher, baker or candlestick maker.


  I am the general practitioner in the medicine world. I am not the brain surgeon. I think if you’re going to claim a geography as a niche, you have to figure out what it is you know or can do, the connections you have, whatever it may be that actually makes you the brain surgeon version of that. So, this is not a, I want to be a generalist and only serve a local market. To me, that’s no niche at all, which by the way, is a fine choice. I’m not saying that you shouldn’t or can’t choose that. For some of you that makes sense. But for most of you, what that means is on the scale of desirability, on the scale of pricing, you’re going to be at the general practitioner level, not the brain surgeon level. And what I mean by that is no one’s going to drive by six or eight or 10 general practitioner offices to get to you.


  They’re going to stop at one of those ones that is more convenient and closer for them. But if they need a brain surgeon, they will drive past a bunch of general practitioners to get to a great brain surgeon. So, this is about how sought after are you, can you transcend the geography that you live in? So, if you either serve the butcher, the baker or the candlestick maker, or you decide that your niche is geographic, then the reality is all of your clients are going to be within a certain radius of your office. For some of you, that’s a great decision to make. I will say that the geography niche really only works if there’s something really unique about the State. So, if the state is … So, as many of you know, I am from Iowa, and I’m going to argue that it is really difficult to say, look, we know Iowa better than anybody else.


  If you want to do business in Iowa, if you’re based in Iowa, or if you want to bring your business to Iowa, then we’re the agency for you. There’s just not enough that is so unique or challenging about doing business in my home state to make that a great niche. But for many of you, there is something very unique about your State or your region that you could claim. You also have to look around the office and make sure that actually most of the people in your office can lay claim to that, that they are native sons and daughters of that State or that area, and that they can speak to it with authority. So, that’s niche number one. Niche number two, which is the one everybody thinks about first is an industry or a professional vertical. So, we are a pharma agency. We are a rural health care agency.


  We are an agency that serves higher education. We are an ag agency. First of all, all the things I just listed other than maybe rural health systems are too broad. That is not a niche. So, we are a health care agency is not a niche. Every agency on the planet probably has a hospital or a doc in the box office or some sort of medically related client inside their roster. So, if you’re going to pick an industry, either pick a crazy narrow industry that people go, can you really make a living just serving that industry? That would be a way for you to know that it’s narrow enough or you have to sub-select. So, for example, let’s take the healthcare in healthcare. You might be the agency that serves rural health systems, rural not-for-profit health systems. You might be the agency that works with experimental medical devices.


  So, again, find a way to narrow, narrow, narrow. So, financial or banking, not a niche. Everybody and their brother has a bank on the roster. So, if a generalist agency can serve them, well, then you have not narrowed your niche far enough. But nonetheless, so for some of you, again, thinking about your three or four legged stool, the three specialty legs of the stool, other than the kitchen junk drawer could be different industries. And ideally they are tangentially related. So, for example, we do pharma for women over 50. We do urban health systems in distressed markets. We do medical devices for women over 50. And you can see how those three things are tangentially related. They have some connective tissue between them, where you could be able to talk about your authority position in a broad enough way that it would cover all three of those.


  And you can also narrow down into any of the three. So, that’s the second option for your niching. The third option for your niching is, and this is another place that several of you, or many of you sort of lean into and that’s the deliverable or service. So, we are a crisis communications agency. We are a content agency. We’re a storytelling agency. We’re a web dev shop. We are on SEO, SEM shop. Whatever that may be. The challenge with that is that odds are you picked it because it was something that you had grown up doing in the business, you have a subject matter expertise in it and you know it’s in demand. The challenge though, is that even if it’s something that most agencies don’t do today, much like content used to be much like SEO used to be, odds are agencies are going to gravitate towards it.


  And it’s going to become more of a table stakes offering than something special. So, be really careful if you go down the services or deliverable path, that it really is something that most agencies are not going to embark on or that for some reason they can’t do it well. So, for example, there are several agencies inside the AMI ecosystem that are media planning and buying agencies. And in today’s world, as complicated as that’s gotten, as sophisticated and expensive as the software has gotten, that’s a pretty safe niche, because a lot of agencies are actually abandoning their in-house media buying. And they’re choosing to partner with a media buying and planning shop. So, if you’re going to do that, just make sure that it is something that’s not going to go mainstream and you’re going to lose your point of difference. The fourth way you can define your niche or one of the legs on your stool is that you solve a specific problem.


  So, for example, we are an agency that works with companies who have a complex sales system through a dealer network. So, no matter what the product is, you understand the delivery channel, the sales channel, and you help solve that for our clients. Or we are an agency that works with family owned businesses that are in the middle of transition between generations. So, we help them build out their marketing, especially if the brand has been built on the departing family member, the grandfather, the grandmother, whoever it may be and they’re stepping out of the business, we can help rebrand you and make it more of a broad appeal. But we work with family owned businesses. And we understand the nuances of that. Or another example is we work with industries that are highly regulated, where there is a lot of c