There are 5 competitors’ boutique professional services firms must defeat to grow.
Mark Riggs, CEO & Lead Strategist for Pemberton shares insights to win.
Sean Magennis [00:00:16] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. Our goal with this show is to help you grow, scale and exit your firm bigger and faster. I’m Sean Magennis, Collective 54 Advisory Board Member, and your host. On this episode, I will make the case that there are five competitors boutiques must defeat to grow. I’ll try to prove this theory by interviewing Mark Riggs, CEO and lead strategist for Pemberton. Pemberton helps liberate marketing, PR and communications agencies, as well as consultants across a variety of industries from the dreaded RFP. Turning over clients and chasing RFP doesn’t have to be that way. There is a better, smarter, more sustainable and satisfying way Mike counsels clients and growing their business by focusing on the clients they already have, rather than continually wooing new ones. Check out his podcast Agency Insurgents. Mark, great to see you. Welcome.
Mark Riggs [00:01:29] Thank you, Sean. Thanks for having me.
Sean Magennis [00:01:31] It’s a real pleasure. Mark, let’s start with an overview. Can you briefly share with the audience an example of how you’ve experienced and overcome competition?
Mark Riggs [00:01:43] Yeah, I mean, you know, it’s so funny when I read the Chapter Chapter three in the book, you know, we talk about the cost of inaction. You know, for us, when we first started this company, that was a real challenge and that we, you know, it was it was a nice to have, you know, but we had to we had to find that pain pill, right? So for us, we came up with the cost of inaction calculator. Very good with now with agencies and say, Hey, listen, this is the actual amount of money that you’re either leaving on the table, especially the small and mid-sized agency Sean, that we work with. Yes, you know, those agency owners have a horizon in their mind, right, that they have a time horizon and they have a number in mind so we can ask just a few questions. And we’ve developed this calculator and say, Hey, listen, this is how many, you know, new clients over the course of your five year horizon, you would have to win per per year per month. And it just becomes an overwhelming number. And once you’ve illustrated form that way, their eyes really bulge. You’re like, you know, I didn’t realize, you know, we can’t get there along with new business, and we say, Well, hey, how? How do we get there? And it’s in as revenue expansion.
Sean Magennis [00:02:56] Fantastic.
Mark Riggs [00:02:57] So that’s the way we wrote it out.
Sean Magennis [00:02:59] That’s obviously become a major competitive differentiator for you, Mark.
Mark Riggs [00:03:04] Yeah, it has I mean, we’d like to think we’re a category one child, but, you know, I’m sure that we haven’t been able to pinpoint just yet. Yes. Other companies who do what we do, I don’t think they do it the way we do it. But you know, whether it’s the number of new clients, you would have to win about a thousand. All right. You’d have to win every opportunity that you find. You’d have to find the opportunities have no attrition. Yes. Over the course of time. But then when you calculate attrition, they really they realize like, you know, gosh, I’m not going to get better with net new business alone. And it has become an advantage for us. And since we’ve been able to develop this calculator, I can ask a potential client for questions and illustrate to them, you know, we can come up with what we call the prime number here based on the percentage. This is how much faster we can get you to your horizon goal with revenue expansion and taking that approach and really making it a priority as opposed to happenstance. And when we do that, it’s it’s definitely increased our win rate for sure.
Sean Magennis [00:04:10] Outstanding. That’s a brilliant example, mark. Thank you. So I’d like to get your thoughts and some of the best practices we recommend in this area. We’ve identified five competitors in order of importance based on the frequency they show up in sales campaigns that we’re aware of. The first is do nothing. So this is a project that went away because of a competing client priority. The second is internal resources. So this is an internal client staff who think they can do what you do better than you do it and for free in inverted commas. The third is boutiques. So these are firms like yours in size and specialty, the fourth are market leaders. So these are the mega firms that have the offerings in your niche. And then there’s other. So this is the other ways clients can solve the problem. Often there’s more than one way to skin the cat, obviously. So I’ll walk you through them one by one and get your thoughts on each. So the first one do nothing. So this is, you know, 40 per cent of deals, whether you know it or not. And the way to beat do nothing is to calculate the cost of inaction. And you said this earlier, this dollar figure will prove to the client that your project deserves their full attention. It’s a priority. So what do you think of this concept?
Mark Riggs [00:05:33] Its spot on in the especially in our industry when it comes to public relations advertising agencies, right? We’re all busy all the time. There’s never a good time to start any sort of focused initiative. And so early on, what we found is, you know, this sounds great, guys, and this would be awesome to have. But you know, right, right now is not the time where we’re really busy with new business. We’re really busy with onboarding clients, et cetera. So we had to find, you know, that pain pill and the pain pills pointing out to them, I know you have business goals. You know, we’re in business too, especially in the agency business. We typically have this subservient attitude towards our clients, right, that we work for them when we’re in business too. We’re here to make money. And so we try to point that out to them. And that cost of inaction calculator allows us to do that. But we had to come up with that because it really poured people’s attention. And yeah, so. So doing nothing will get you nothing right? And so we try to point that out.
Sean Magennis [00:06:36] Thank you. So the next one is internal resources. So as a reminder, it’s internal client staff, and I realize it’s weird to think about the client as a competitor, but they are about 30 per cent of the time. And the way to defeat them is to establish a deadline that the project needs to be completed by. So what’s your opinion of this?
Mark Riggs [00:07:00] Well, you are giving them that, you know, defining the horizon, right? You know, when do you want to walk out of here? When do you want to sell? When do you want to pass this on to your children, whatever that may be? That’s one way. Yes. The other way is, you know, every agency we speak to, Sean says, Oh, we already do that. You know, we grow our business, right? But when you take a hard look at it, a lot of that happens through happenstance. You know, in our joke is that we’re a society of liberal arts vendors. You know, unless you’re the CFO or the CEO, you really don’t know how to rub two numbers together. And because you’re really good at churning butter, they eventually plate. you’re in charge of all the butter turners, so you get the VP level in the agency world. And all of a sudden you’ve got all these business you are responsible for. No one’s taught us that. Mm hmm. So our whole concept is let’s teach people the business of the agency before they’re in a position of responsibility. Right? And so if we can take that action, it becomes a very purposeful thing. And then, you know, most agencies have those handful of what we would call hunters. You know, typically we have hunters and farmers in our business. Yes. And you know, I encourage CEOs and COOs or get their senior staff as an investment portfolio. You know, you have assets and you have liabilities. Yup. The assets are the ones who are generating revenue. Hmm. The liabilities are those SDP EVPs, who have gotten to a position because they were really good at something. But are they generating revenue for your business? And we all know when you look at your investment portfolio, if there is a liability, those are things that are easy to cut. So as opposed to having five assets in the portfolio, let’s create a portfolio of 10 15 assets, right? Let’s teach people to grow business. And so we like to think we bridge the gap between hunters and farmers.
Sean Magennis [00:08:51] I love that, Mike. I love that concept. You know, we have a concept, you know, where every member of your team should be an asset on your balance sheet, particularly when you’re thinking of selling your business one day. So what I took away from that is defining the horizon and look at every member of your staff as an important portfolio asset. I love that. So the third one is boutiques. So these are firms like yours in size and specialty. And our recommendation is offering your client a money back guarantee for any reason. No questions asked. Have you seen that? What do you think of that?
Mark Riggs [00:09:28] We don’t do that. It’s a tough one right there. Yeah, we like to. We haven’t gotten there yet, but we are confident guaranteeing results. You know, when we first started this business, the tip of the spear was organic growth. Let’s grow the revenue. Yes, right? And as a byproduct of that, what we saw was personnel growth, human growth, executive growth rate. So as we’ve grown, we’ve kind of twisted that approach a little bit to let’s focus on the growth of the person in the in the team. And if we can focus on their growth as an executive, as a hunter, right, the new business will come. Now there are opportunities to come along and say, Hey, did you hear something? This is the this is an opportunity. Yes. But you know, we we feel like if we can do that right, what helps us differentiate ourselves from different boutiques that might do something similar to us is we don’t do train the trainer we don’t do. And after a full day training, as you and I probably both step in those trainings and you learn something great. Yeah. And then 48 hours later that it hits the fan and muscle memory takes over. Mm hmm. So our differentiator is we will only work with agencies who are willing to invest three to six months, at least in working with these executive, these teams, to change the muscle memory that makes them. Yeah, because we’ve been taught and account management to bend over backwards. Right? You know, do whatever it takes to keep them happy. So we got to change some of that muscle memory.
Sean Magennis [00:11:04] That makes total sense. The fourth one is market leaders. So these are the mega firms. They have offerings in your niche. You’ll run into mega firms only we we see about five per cent of the time. However, these are sizable deals and they can make or break a year. So what do you think of this?
Mark Riggs [00:11:25] Honestly Sean, in terms of what we do, we haven’t run into that a lot. I think where we run into that is the mega holding companies, right? The IPG is the the omni columns. They have some of these resources built in. Yes. And so it’s it’s the idea of convincing them that we can help mitigate attrition because to them, their businesses are going to grow. They’re moving so fast from a new business perspective. But if they’re having to replace 30 or 40 percent of their business every year, you know, I can help get you. Pemberton can help get you to a spot of, you know what? Maybe it’s going to be five percent attrition because we’ve grown the existing accounts. So you’re not starting out so far back every year, year over year. So there are agencies or companies out there who who touch organic growth, that type of thing. Mm-Hmm. But we really haven’t run into that Bain or McKinsey, and I’m sure they may do some of this right. Their focus is on the marketing communications industry. And so it’s kind of wide open for us. It’s just a matter of getting in front of the right people and pointing out their pain and saying We’ve got a pain pill.
Sean Magennis [00:12:35] And knowing distinctly your market, which I’m hearing clearly from you. So the final one is other. So this is the other ways clients can solve the problem. So clients often think they can solve a problem by firing somebody recruiting new talent, and we recommend beating other by doing a postmortem. So highlighting to the client and you’ve shared some of this the last time they took this approach, it didn’t work. So what else in this area can you share with the audience?
Mark Riggs [00:13:06] Well, it’s very easy to look year over year, quarter over quarter of the impact of a client, especially if you’ve had a client for more than 24 months, right? I’ve had a client for more than 24 months, and I can I can identify the trends, the ebbs and flows. And were we able to fill in some of those gaps? Some level it out, right? Yes. Well, the other thing we were able to do from a postmortem standpoint is in the very beginning of our engagements, we do a senior leader. Scorecard. Mm-Hmm. So we have five criteria that these senior leaders have scored on, and we also do a proactive mis appraisal. Well, like that. So in our in our business, oftentimes we’re very reactive to the to the client. We have up the order taker type role and really that’s our fault and we let that happen. So for us from a postmortem, it’s either I can look distinctly at the revenue it has. The revenue changed as a number of opportunities with that client changed. Mm-Hmm. And I can score your people based on the senior leadership scorecard and the prior fitness appraisal and say, you know, here’s where they were deficient or we’re not confident, right? And we can go back and look, say after working with them for six months. Has that changed? And so it’s revenue, but it’s also the human growth because for us, it’s about sustained growth. Mm-Hmm. When they start working with Pemberton, we walk away from them. We want to be able to Sure progress and leave them in a good place. But what we have found is right. So when we started this, we said, Hey, three to six months of wear out, right? You know, but as I’m growing a company that I would like to sell next Sunday, yes, you know, how do I get recurring business? And so someone pointed out to me that, you know, hey, listen, after six months, an agency’s problems are not completely solved. They constantly have problems and challenges. So what we have done is we have morphed into other avenues that really the organic growth, the human growth is our Trojan horse. Yes, we can get in there. We can make an impact. We’re pleasant to work with. We develop deep relationships over the course of working with somebody, you know. Yes, we try to show them exactly what we’re preaching, which is deepening relationship with clients. And what that allows us to do is get into other challenges.
Sean Magennis [00:15:22] Outstanding, Mark. Really, that’s you know, these additional insights to what we’re seeing is as recommendations are exceptional. So, Mark, thank you. This takes us to the end of the episode. Let’s let’s try to help listeners apply this. So we end each show with a tool. We do so because this allows the listener to apply the lessons to his or her firm. And our preferred tool is a checklist, a style of checklist as a yes, no questionnaire. We aim to keep it simple by asking only 10 questions in this instance. If you answered yes to eight or more of these questions, you’re on your way to defeating your competitors. If you answered no too many times, lack of a strategy to defeat your competitors is likely getting in the way of closing more business. So Mark has graciously agreed to be our peer example today, and I’ll ask Mark the yes no question so we can learn from his example. Let’s begin.
Sean Magennis [00:16:23] Number one. Can you calculate a client’s cost of inaction?
Mark Riggs [00:16:29] Yes.
Sean Magennis [00:16:30] Number two, can you find a compelling event that puts a deadline or horizon on the client’s project?
Mark Riggs [00:16:39] Yes.
Sean Magennis [00:16:40] Number three. Are you confident enough to guarantee your work?
Mark Riggs [00:16:46] Yes.
Sean Magennis [00:16:47] Number four, can you establish credibility in the eyes of the client?
Mark Riggs [00:16:54] Yes, and I will expound on that one just Sean. You know, it’s we don’t hire any consultant who hasn’t been the agency business for more than 20 years. It’s hard to walk into any agency without some sort of gravitas, yes. And say, Let me show you how I’ve done it in the past, I’ve taken accounts and grow them into multimillion dollar accounts. So the answer is yes. But there’s there’s some specifics there.
Sean Magennis [00:17:19] Excellent. Excellent. Number five, can you signal quality to the client by delivering a best in class proposal?
Mark Riggs [00:17:29] Yes.
Sean Magennis [00:17:30] Number six, can you deliver much faster than the market leaders in your niche?
Mark Riggs [00:17:36] No. But let me expand there again. You know, like I pointed out, this is about sustained growth. Yes. This is about changing muscle memory. So while someone else may come in and immediately point out an opportunity and they’re upselling, our approach is solved dont sell. On solving problems, should take care of itself. So for us, it’s not about speed. It’s about sustainability.
Sean Magennis [00:17:59] Excellent. And every situation is different. Every client engagement is nuanced. The services are different. So thank you. I get that. Number seven, can you earn healthy margins and still be 25 percent less than the market leaders?
Mark Riggs [00:18:16] We believe so, yes.
Sean Magennis [00:18:19] Are you more enjoyable to work with than the market leaders?
Mark Riggs [00:18:24] Yes, we are in fact pointing that out every time we start working with a new client, the we’re going to have a lot of fun. We’re going to do a lot of laughing. We get to know them very well. And again, we like it. You know, you have to have empathy for your client. They have lives, they have things going on, too, so but but but yes, we have a lot of fun.
Sean Magennis [00:18:43] Fantastic. Number nine, do you understand the alternative solutions to the problem you’re addressing?
Mark Riggs [00:18:51] Yes, assets versus liabilities, happenstance. Attrition. Absolutely.
Sean Magennis [00:18:58] And number 10, will a postmortem revealed to the client that these alternatives have a poor track record?
Mark Riggs [00:19:05] Yes.
Sean Magennis [00:19:07] Mark, fantastic. In summary, a boutique must win a high percentage of the time they are not in enough deals to allow for many deals to be lost. No one wins every deal, but that should be the goal by establishing a competitive playbook. You can make sure you can beat the competition. Huge thanks again, Mark, for sharing your expertize today. If you enjoyed the show and want to learn more, pick up a copy of the book The Boutique How to Start, Scale and Sell the Professional Services Firm. Written by Collective 54 founder Greg Alexander.
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