I think it’s easier to get carried through a day, like a leaf on a river, and get nothing of substance done. Our typical interruptive, distracting environments ensure that something can always be done, whether it really moves us forward or not. I am disgusted by my own lack of progress in certain areas, and I’m sad for you as well.
Let me nudge you about where I wish you would spend more…and less…time making those better business decisions.
Say that you’re a tightly positioned marketing firm but that your service offerings for that vertical or that demographic or that type of business are broad. Should an account person be capable of speaking intelligently about each of your offerings? Do you need different SMEs for each service line? Would your clients even pay for that? How do you make sure that your front-line client interactions aren’t getting lost in translation?
While there is no simple answer to these questions, there are some clear guidelines around the fringes. As you solve this for your particular firm, keep these six principles in mind:
Inevitably a new client will ask, “So how do we compare with the other firms you’ve worked with?” Some of my clients make astounding amounts of money and I’d never want to work there. Others are brilliant but struggle with the killer instinct that puts space between their performance and a peer. Others do remarkable work with good people but nobody has heard of them.
But the most interesting aspect of that question is around their positioning. I’ll tell you how I answer that, and then I’m going to tell you how my two primary competitors....
First off, let me say that I’m not a huge fan of growth for growth’s sake. You can have a great firm and be that same great firm at the same size for as long as you want. But there are some advantages to being a bigger firm, and growth might be on your radar. So if it is, but it’s not happening, why is that? I’m going to give you the five most common reasons I see.
There are some great tools for growing existing accounts (like this webinar, $160). Decide how big you want to be and make it happen. You might be the only significant obstacle.
Marketing firms do this all the time. Most of them don’t put it front and center, instead describing what they’ll do for a client and then giving them a price (e.g., $140,000). But then the hourly rate will sneak into the small print when they talk about what will happen during scope creep: “After seeking your prior approval, we will bill additional work beyond the scope of this estimate at $xxx per hour.”
Here’s why you don’t want to talk about your hourly rate:
That’s a very confusing statement on the surface, so let me explain. The global economy is sending mixed signals these days and so salary load is top of mind for principals. Let me walk you through the decision matrix so that you can make a smart business decision about that. (Please forward this to your controller if you need help following this.)
First, figure out your salary allowance. Look at your fee basis for last year. Look at total revenue ($4M in our example firm) and subtract cost of goods sold ($1M) These COGS capture outside expenses like media and freelancers but not employees on salary–put employee salaries in here and you’ll get it wrong. That leaves us with $3M in agency gross income, gross profit, or fee revenue, which all refer to basically the same thing. You can afford to spend 45% of that on unburdened compensation, including your own. So add up what people make ($36K + $78k + $128k, etc.) and see where you stand. Our example firm can afford to spend 45% of $3M, or $1,350k. It turns out that they are spending $1,620k. It appears that folks are overpaid, but not so quick.
Second, normalize the allowance. There’s a calculation here that you cannot skip, and that’s to calculate....
I recently keynoted a conference on UX and before and after taking the stage I made a point of asking as many of your clients the same very specific questions about how they hire agencies. Two newer trends quickly became apparent, and it would be good to keep these in mind.
You’ve had some new business success recently and now it’s time to staff for it. You might be too quick to hire people, and when you do hire, you may be hiring the wrong ones. So let’s see if I can help you out a little with some principles that might preserve the momentum at your agency and keep you out of trouble:
What do you do with smaller clients, especially the legacy ones? The acquisition cost is behind you, but should they occupy a spot on the roster? It's one thing to hire for additional capacity when you land a new client, but there's also a good argument for cleaning out your client base and freeing up existing capacity first.
Start by getting all the data together that you need, which is primarily cost accounting. If principals and key leaders aren't participating in the timekeeping system, estimate their time to cover that. This is important because legacy clients have outsized relationships with principals because of the way accounts were handled in the past, before you grew. Next, score each client in five categories:
Most of you would like a prospect--in the early stages--to assume that working with you will be a fit. Then you want the opportunity to move them along during the sales process until the check clears. You don't want them making any early decisions on their own, deciding that it's not a good fit, possibly, and looking for a different firm to work with.
We know this is true by looking at your website, which is welcoming, friendly, and sometimes full of those faux tests that help a prospect determine the fit. "Here, take this four question test and see if we should work together: First, do you want a true partnership. Second, do you want good value for your money. Third, do you want quick results. Fourth, do you want lasting results." And then, after a drum roll, they learn that it's a good fit! Surprise, surprise.
Your website should help a prospect make an honest decision about whether it's a good fit to work with you, and they should do this on their own, before they ever talk to you, for these two reasons...
There's nothing quite like an empty pipeline to get your attention, right? In those times, panic overcomes inertia and you find the time to do the marketing. But what about the long periods between those bouts of panic when you push your marketing to the back burner and joke about the cobbler's son who never has any decent shoes? What's a realistic amount of time to spend on your own marketing? Here are seven ideas to get more with less of your time:
I recently did some repeat consulting for a client, and I was surprised at how little things had changed since I worked with them a few years back. Working with any advisor is a painful process, but it's designed to be a good investment rather than a fair bit of pain for just a little bit of gain.
She initiated the re-engagement, so I presumed that I wasn't blamed for the lack of progress, but I can't help the introspection. Did I misread her situation? Did I not work hard enough to suggest a solution that she could realistically implement? Was everything good except that I wasn't present enough during the implementation period?
Each of those reasons has been true at one time or another in a consulting career that spans decades, but it's rare and I nearly always catch it in time and make it right, where appropriate. This time, though, I decided to chart out the simple...but profound...reasons why change might not take root at your firm. Why you keep trying different things and can never seem to get rid of those weights that keep you from soaring above the average firm around you. Why you might wonder if you should call it quits and go work for someone else, and maybe make more money with...
