Tag: Chapter 8

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Episode 143 – The Basics of Doing Business with the Government – Member Case by Frank Tsamoutales

Uncle Sam is the world’s biggest client. Yet, many boutique service firms do not do business with the government. This session is for firms who do not do business with the government but wonder if they should. We will cover the basics such as why elections matter, understanding legislation, and partnering.

TRANSCRIPT

Greg Alexander [00:00:10] Hi, everyone. This is Greg Alexander, the host of the Pro Serve podcast. Brought to you by Collective 54, the first community dedicated to the boutique professional services industry, and on today’s episode, we’re going to talk about doing business with the government, and the reason why I picked this subject is most of our members are focused exclusively on the private sector, and there is an opportunity potentially to grow their firms by learning how to do business with the government. And on this episode, we’ve got a role model and expert in this area. His name is Frank. Frank, I always mispronounce your last name. Would you pronounce it for me, please? 

Frank Tsamoutales [00:00:58] Tsamoutales. 

Greg Alexander [00:00:58] Tsamoutales. I don’t know why I can’t get that, but I’ll commit that to memory. So. Would you please introduce yourself and your firm to the group? 

Frank Tsamoutales [00:01:08] Sure, Greg. Thank you very much. Before I introduce myself, I just want to say I’ve always been a huge fan and believer in mastermind groups and collaborating with people that bring different frames of reference to the conversation. And I just want to congratulate you on the team on collective efforts. In the short time we’ve been involved, we have picked up many gems that are already having greater moments for our firm’s growth and value. And I want to thank you and everybody, a collective, collective 50 for including all my fellow members who have been very open and candid and provided a lot of those gems along with yours. So thank you for this opportunity as well as in terms of an introduction, we we are a government relations business development firm. We’re unique in a couple of ways. And I know that sounds probably a little maybe not so authentic of a statement to make, but but I’ll explain why we feel that way about it. But we really focus on solving problems that keep leaders up at night, whether it’s a founder, a CEO, CFO, or even government officials or community leaders. And we’re pretty open minded about the range of those kind of problems. But what we’ve learned time and time again throughout our 40 years of doing this, the intersection of business and government can have a tremendous positive and negative impact on a business. So we try and avoid those pits involves for our partners and clients and at the same time are available to them when in fact they do get blindsided that there’s an issue they just can’t quite tackle, whether they’re regulated or whether they are selling goods and services to the government or exploring opportunities in that regard as you as you opened up this podcast. 

Greg Alexander [00:03:14] Perfect. Well, again, thank you for being here. You’re going to be a wonderful guest today in preparation for our time together. I spoke to some members and I asked them, you know, what they would want to hear about. So I’ve got a few questions and I’m going to jump into those. And these are going to be in the category of kind of the basics, the starting point for our members, as is. Many of them don’t even know, you know, how do you even get started? The first question that I had from a member was, you know, what does a advocacy group or a lobbying firm actually do? And is it wise for somebody in our community, which is, you know, the founder of a small services firm, is it wise for them to, you know, approach one of those firms and and ask to partner with them? 

Frank Tsamoutales [00:04:03] I think that’s a good question. And I’m going to I’m going to just say not so fast. So let me just maybe frame up kind of the the environment a little bit, but the little time that we have, I’ll do my best to be suspect and then and then answer, but hopefully it’ll help answer the question as well. First and foremost, elections matter. Underline Circle asked her to highlight that. And so what a small professional services company or mid-sized professional service company has to be careful of is not to investigate purely opportunities that may be born from a new administration, something that is unique maybe in the world that we live in today. There are very opposing views of how to serve the taxpayer and communities. And so for a small company, and as risky as it is, as it may be, you’re much better off in taking a look at what your current ideal client profile is, what your core competencies are, and then doing in this, you know, without engaging a firm at this point, really just investigating on one’s own. These founders, as we know, are very, very bright, very resourceful and and look for opportunities that are more insulated from the election cycle. And I think I think the founder and the founders team are probably capable with technology today, too, you know, because they’re keenly aware of what they do, what problem they solve, what value they bring, and then look for maybe some at this point is hunches and instinct, maybe educated kind of guesses before they walk into a lobbying firm. And why do I say that most lobbying firms, not all, are generalists, not specialists. They’re obviously exceptions. And they’re the type, generally the type of personalities where they’re extremely hard working, they’re very bright, they’re relational capital is extraordinarily useful to a founder, but if you don’t point them or help point them in at least a specific direction, what you what the founder may discover 6 to 8 months down the road, and after investing a significant amount of money or a modest amount of money, depending on on the scope that they engage with, is that they’ve met a lot of important people. They’ve met, they’ve walked the proverbial the halls of a county complex or a state legislature or state agency or even a federal agency, only to find out they’ve met a lot of people with big, important titles. But when they look at their PNL, there’s really nothing to show for it. And so you’ve got to really help point that government relations expert in the right direction, and it will also help the founder. Find a firm that aligns. Best with at least what their what their thesis might be. As I said, most of the firms are generalist, but they often have, like our subject matter experts across a wide range of of areas. And it’s good to to come to a firm with at least a little bit of some understanding of where the low lying fruit is. 

Greg Alexander [00:07:48] Excellent advice that’s going to save all of us lots of money and frustration. Okay. My next question was. Understanding legislation. So, you know, our members are reading and watching TV and they see, you know, big bills get passed like the Infrastructure Act and all that. And they’re trying to figure out how to understand it and capitalize on it. So what advice would you give a member when they’re trying to understand a piece of legislation and find an opportunity? 

Frank Tsamoutales [00:08:22] A couple of things. Was it? Mark Twain said to things you don’t want to ever watch being made sausage and laws. It’s rough and tumble environment and their legislation is generally a, you know, a manifestation of a lot of influence. Advocacy groups and special interests all have something at stake. And so by the time a piece of legislation passes, generally it has what we like to refer to a lot of stakeholders fingerprints on it. So in terms of doing, you know, how can I how can I as a founder exploit? And I mean that in a moral and ethical way, a piece of legislation to to build my business. What you don’t see at that point, once the legislation is passed, is all the folks that have had impact have written the language. Every line, every word is coming from somewhere, whether it’s a staffer in a cubbyhole with a light bulb hanging over their head you’ll never meet, or one of the usual suspects, whether it be an industry player or a government relations firm, and certainly the legislators and their staff as well. So it’s it’s better to get out front. It’s. Particularly for a founder just delving into this. Quite a risky proposition to react to a large piece of legislation that that on the surface appears to be a great opportunity for them, only for them to find out that, you know, it’s it’s what we call in the south home cooking. Hmm. Having said that. As a founder, a good approach can often be to partner with one of those usual suspects. And I and what I’ve learned from collective 54 and interacting with some of the founders is that they do business for large and medium sized. Firms that have quite robust business pipeline with the government, whether it be state, local or federal. And so approaching them is a good idea to see if they could bolt on to those opportunities so they don’t have to try and sort out all all the details and just provide it, you know, as part of a solution. Now, one of the risks in that is that typically not always the and this is a broad generalization, but it’s something that needs to be sorted out. Is when you’re interfacing with a private sector that will say a client, a founders and was one of their. They’re typically going to be talking to somebody that’s in the commercial side of the business. And one of the things that we focus a lot on, it’s actually become a product that we’ve developed. And I don’t know, but I would imagine other firms do this, too. McKinsey certainly done it, and several other firms that have done some interesting research on this is those commercial practices are not necessarily tied off or reliant or what we say integrated with the public sector side of that firm. So you may have some issues going from, you know, whoever the typical contact is. That you deal with on a day to day basis and transitioning into, you know, partnering with them on a on a government on a government project. But I think knowing that up front informs the founder what questions to ask and if if that firm is not integrated, if that if the prospective partner is not doesn’t have government relations integrated into the private sector sales, then you’re going to have to navigate that. But that’s another way to maybe faster, more efficiently, more effectively get into the market, particularly because you’re leveraging, you know, relationships that are at this point for the founder based on trust and experience a track record and they may be more likely to the client may be more likely to bring you in on some opportunities. 

Greg Alexander [00:12:56] So partnering, that’s a great recommendation. And you know, you mentioned the word relationships, which leads me to my last question here, which is members are wondering, you know, should they get involved with elected officials? Should they try to build relationships with, you know, the people that represent them? Any advice in that area? 

Frank Tsamoutales [00:13:19] Yeah, absolutely. I mean, you know, I said earlier, elections matter and relationships matter. We all know that business, right, is no different and maybe even more so in in politics and in government is, you know, get involved, get engaged, be prepared if you do for the elected officials when they enter campaign season to reach out and ask for your help, whether it be volunteering or providing financial assistance and that sort of thing, which is another reason why I wouldn’t want I wouldn’t recommend a founder start there just because it could get very expensive and work more, maybe risk more risk associated with saying no to too many of them, only to come back later and ask for some help. So there’s a lot of information to. I gather, before doing something like this. So I would want to know, you know, who historically has been behind that candidate or that elected official, because there could be some unintended consequences. You may find out that they have a long standing relationship with a firm that might be a competitor and they might be less inclined to help. So there’s you know, there’s a lot of due diligence upfront. The other you know, the other piece of that that’s related to that is there’s ways to. Ascertain what competitors are spending, both in donations to elected officials as well as what lobbying firms they’ve hired and how much they’re paying them. So you can get a good analysis of the landscape and make sure that, you know, you’re not talking to somebody, that at the end of the day might be a competitor or a friend of a competitor. 

Greg Alexander [00:15:18] So this is fantastic. I mean, today’s short session was just to talk about some broad ideas, and we were very successful in doing that. You know, I’m left with the feeling, as I’m sure our listeners are, there’s so much more to that. So when we have Frank on as our weekly role model and we do our private Q&A session with him, our members will be able to ask frank questions directly regarding this because as you can see, this is multi-layered. But Frank, on behalf of the membership, this is unique. You started off by saying you are unique. I believe that you are. You certainly are to us. You know, many of our members have expressed interest in expanding their firm into the government and they don’t really know how. And just a few things you share with us today have been very helpful. So thank you for being on the show and contributing to the collective. 

Frank Tsamoutales [00:16:06] Well, thank you, Greg. I know with the economy taking, we just had the Fed meeting out here in Jackson Hole. You know, there’s some potential black swan events on the lake that are on the horizon. Whether they’ll come to passed or not, who knows? But government is the largest purchaser of goods and services in the country and they’re not going to stop. And this could be a great opportunity for your members to shore up their PNL and even grow their business at a time in an uncertain time. 

Greg Alexander [00:16:37] Yeah. Okay. All right. So for those listening, I’m going to give you three calls to action. First, if you’re a member, attend the Q&A with Frank. Look out for the invite. If you’re a candidate for membership, you want to become a member. Go to collect 54 e-commerce site on application, and the app committee will get in contact with you. And then if you just want to learn more directed to my book, The Boutique How to Start Scale and sell a professional services firm, which you can find on Amazon. But with that, I wish everybody good luck and we’ll talk to you soon.

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Episode  123 – How a Pioneer from the SaaS Era is Jumping on the AI Wave to Re-invent his Firm – Member Case by Jeff Pedowitz

Jeff Pedowitz, CEO of The Pedowitz Group, was one of the pioneers of the SaaS era by driving adoption of marketing automation technology from Eloqua, Marketo and others. This allowed his firm, The Pedowitz Group, to dominate his niche for almost two decades. Now, Jeff sees the next big wave, AI, and he shares with Collective 54 how to ride it all the way to the bank.

TRANSCRIPT

Greg Alexander [00:00:10] Welcome to the ProServe Podcast, a podcast with leaders of thriving boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community focused entirely on the unique needs of ProServe firms. My name is Greg Alexander. I’m the Founder and I’ll be your host today. On this episode, we’re going to talk about A.I. artificial intelligence and its impact, in particular around B2B sales and marketing and overall revenue generation. And we have a fantastic role model today, and his name is Jeff Pedowitz and he’s fantastic for a reason, and are many reasons, I should say. But the one that is relevant to today’s topic is the last time we had a major tech wave was the SaaS wave, and Jeff was a pioneer in that space. He and a very small number of people I believe, can claim attribution for the mass adoption of marketing automation. And having gone through that entire journey all the way from a nascent industry to maturity, which it is today, his perspective is profound, and I think he can take those lessons and apply them to AI because it’s early, early days there, and he maybe more than most, can probably share with us where this might be headed. And what we hope to accomplish today is by listening to that story and applying past lessons to new tech, maybe we can get ahead of the curve, learn to learn a few things, and maybe profit from them. So, Jeff, it’s great to see you. Would you mind introducing yourself and your firm to the broader audience, please?

Jeff Pedowitz [00:01:59] Sure thing. Greg, good to see you too and thank you for having me back. So I own the Pedowitz Group and we are a sales and marketing consulting company. We work with sales and marketing leaders who want to drive more revenue and we specialize in digital channels. And of course, AI is probably the best emerging digital channel we’ve seen in quite some time.

Greg Alexander [00:02:21] Yeah. And I understand that you just did a bunch of homework on a new book that you got coming out in just a couple of weeks. What’s the title of the book?

Jeff Pedowitz [00:02:27] It’s called The AI Revenue Architect. Great.

Greg Alexander [00:02:33] So why don’t you kind of give us the outline of what’s in the book and maybe we can use that as a framework for our talk today?

Jeff Pedowitz [00:02:39] Yeah, absolutely. So. Well, my job, my company’s job is to follow technology because that’s what our customers want us to do, is to implement technology so they can scale their sales and marketing engine. So AI and various components of AI have been around for several years now. It’s just this whole emergence now generated by AI and what that Open AI platform are doing are bringing it into the mainstream and really starting to help a lot more people visualize the tremendous possibilities. As I start to think about this and the problems that my company and I have been solving for the last 16 years. There are still systems are still siloed. There’s data that’s everywhere. And people spend more and more and more on technology and data, but they still can’t run sales and marketing any more effectively than they could 15 years ago. They just have a lot more tech now to deal with it. So as I started thinking about the potential of AI, the first thing I wanted to do was really just help companies solve their problems better. And so the book introduces a concept called Rain, and that name was chosen intentionally because in sales, of course, we’re always trying to make it rain. But in this case I took Matt and it really stands for a Revenue Artificial Intelligence Network. And what it does is it connects all your systems and processes both inside and outside through AI. So you can actually, through one single interface, actually start to direct and manage your revenue engine. So it controls scale.

Greg Alexander [00:04:15] Mm hmm. I love the acronym. So let me make sure I understand that. So Revenue Artificial Intelligence Network.

Jeff Pedowitz [00:04:23] Yes.

Greg Alexander [00:04:24] Okay. And the way that you just described it to me, I find myself wanting to apply past frameworks to it. So is it is it middleware in your perspective or is that an incorrect analogy?

Jeff Pedowitz [00:04:39] Well, in some ways, yes. Right. So it’s it could be taken into something like a Boomi or Mule Sox or automatic or any of these integration in all areas. But combining it with AI so that you can train the systems that you have. So even some of the routine, mundane tasks can be done quickly. But as that starts to supplant, you can actually be a lot more productive. So just some typical use cases we scoring, which is something that we had Eloqua pioneer back in 2004 for the first time, largely has not changed dramatically. Most of the input for sales marketing is made, scoring is manually derived. Well, I think we should get ten points for a website, visit it five points about an email or 17 points of view or a demo. And then the models are relatively rigid, and then we send over what I suppose to be qualified ways to scale sales based on this framework, grade spec and prioritize. But with A.I., you don’t actually need an artificial or an arbitrary model. It can actually analyze the real activities, the demographic data that customers really did to come up with a scientific data, factual-based model that will continue to sell, learn, and even more importantly, become more predictive. Wow. So that’s just one example of where AI can play a major role. There isn’t a sales and marketing person I know that loves cleaning up data. We love getting more data, but we don’t actually like going in and cleaning out fields and systems and building new segments and doing all that well. That’s another way that AI can actually do that, because once you train it on what data standards you want for your company, you can start doing that automatically. Content creation and response. No matter what sales methodology is in today’s modern B2B selling environment, our customers are 90% and 95% of the way through the sales cycle. This is not like what, Greg, when you and I are personally, I wish we could control everything. So that inherently puts us at a disadvantage. So if you can use AI to do more informed research on your prospect customer, write better correspondence, look at their content, come up with unique differentiators, anticipate possible objections your buyer might have, and be ready with response to be more proactive. You’re now starting to get ahead of the game.

Greg Alexander [00:07:09] Those are fantastic use cases. It’s causing me to creatively think about how to get them implemented. What I want I would like to do speak to you about a question I have here in my notepad is, you know, selfishly, I’m trying to help the members of collective 54. I know what you’re doing is much bigger than that. But in this particular case, about 85% of a proserve income statement. The expenses are labor. And so if you can replace labor with tech in theory anyways, you can significantly increase profit margins. Now, some people view that as a negative, you know, and a lot of the stuff you read about AI right now is all these scare tactics. But as a capitalist, I view that as a huge plus. I mean, if my members could take their workforce from 110 and keep the revenue the same, I mean they’re going to make a lot more money and scale a lot faster. So is that hype? Is that real? I mean, do you see the tech replacing humans?

Jeff Pedowitz [00:08:05] Well, it’s a little bit of both. I mean, it doesn’t outright replace humans. And it should be noted that we talk about AI as a general category. AI in its truest sense, means artificial intelligence, sentience, self-awareness, emotional awareness, what we’re all talking about, this general of AI, ChatGPT. It’s not that, it’s machine learning. Now it can take large amounts of data and it can learn quickly in a process to make decisions. But it’s not self-aware and has no emotional understanding. It doesn’t understand context. It doesn’t understand nuance. It is still just a tool in the hands of a skilled practitioner. So I view this as the third major generational change since I’ve been in the workforce. The first, of course, being the rise of the Internet. The second, the introduction of the smartphone. And now this. Now, when the Internet first came out and I got my first marketing job in college, I did catalog marketing the bank. There was no email. There was no Internet. There was no nothing. Did catalog marketing go away? No. Did two new digital channels come into play? Yes. Some people that were very skilled in direct mail moved over into email, digital channels and developed new skill sets. When the smartphone came out, it also introduced the whole new apps and mobile advertising and all new ways of doing things. So I think if you’re just doing simple, repetitive tasks and you’re not willing to adapt like any other moment in human history, if you don’t evolve, sure you will get left behind by an unknown space. AI doesn’t replace the human. It can’t because it’s not a human. It can make us a lot more productive. It can make us a lot smarter. And it can process things faster. So sure, it will introduce new margin providing that professional service owners can really think about how to apply it in the best way for their business. So let’s talk about some immediate practicalities. Almost all of us in professional services are doing research with our clients. We’re doing interviews, we have transcripts, We provide some kind of report or presentation that, well, today that takes a lot of manual activity. It requires our senior and junior people to crunch data and do that. Those tasks can be replaced by AI and done in seconds, which will free up more value added time for those professional people to add more quality insights based upon that data back to the client. Mm hmm. And you use AI. to automate the data gathering. So if you’re doing a subjective in-person interview today with your client and you have them, just go to a site, they fill out a survey,  AI processes all that information in real-time, speeds up that discovery period, adds more value. Yes. So there are a lot of different ways that AI can enhance it, but I think it gets a little overhyped to say that it will replace.

Greg Alexander [00:10:55] Okay. So if I’m listening to this, my first thought is I need an AI strategy for my firm. I’m intimidated by that because it’s evolving. I mean, just just in the last 10 minutes, you’ve dropped more things on me that I knew were possible and that I’m imagining that pace of change is going to continue. So what do I do? I mean, how do I develop a strategy for myself and how do I keep it up to date?

Jeff Pedowitz [00:11:24] Well. Try not to make it bigger than it is. Right, because it’s going to keep evolving and changing. So if you can appreciate that this is a way of streamlining and take improving analytical capability processing. Make a list of your business today. Look at your operational things that you do, your sales things, your marketing, and then look at whatever your professional service on or whether you’re on an architecture firm or a law firm or you are on a consulting firm. What are the things that you’re delivering to your clients? Go back and look at your recipes, your statements of work, and say, okay, if I was going to just add AI to my things, what would that look like? How can I just improve my offering? If I was just to AI enable. Many of us have some type of maturity level, some type of tiered offering with our clients, could you take your top tier and introduce AI to it bigger and more advanced? Or conversely, could you introduce AI to your basic tier and make it more palatable for your prospects and clients and thereby lowering your cost of delivery and acquisition? And I would just start there. So build a simple spreadsheet and go through and that’s how you start to frame out a strategy. Don’t sweat about whether or not you got the right tools or not. Start off with something simple like ChatGPT or Bard, which are conversational and generational. Don’t get some. I mean, there are literally since the time you and I talked about doing this podcast, there’s been 500 applications that have hit the market, but only in the last month or so. But a lot of them are crap, you know, and a lot of them are just small little widgets. Don’t get to fall into that trap of getting consumed. Like you’ve got to go out and buy all this stuff. That’s not necessary. Use the free stuff.

Greg Alexander [00:13:15] If you think back to the two previous key changes of your career, the Internet, the smartphone, and now this. What did you with retrospection now, what did you learn from those two previous major moments that you think you can apply to this moment and allow you therefore to take advantage of this moment, maybe more than you did the previous two?

Jeff Pedowitz [00:13:36] Well, as an investor, I definitely wish I would have added that on some of those .coms, not the ones that last, but the ones that I really I, you know I think that I would have gotten involved sooner and incorporated it even much faster in the business. Well, the benefit of hindsight, I think, always makes us all more prescient. But in light of that. I reflect back on the earliest part of my career, I did not understand truly what the Internet was going to become. I had no. I mean, again, this is we’re talking early nineties, mid nineties here. There was no Google, no SEO. We had dialing with AOL and.

Greg Alexander [00:14:18] No one had any.

Jeff Pedowitz [00:14:19] I decided to hear that we got mail. So I’m certainly not going to claim I mean, certainly with the revision I could be a futurist, but at the time, no, I didn’t know. But I think I would have embraced it more and seen seeing where it’s gone. Same thing with a smartphone. I mean, when I first came out, I was I love my BlackBerry like everybody else. I was just like I was reluctant to switch over and what actually got me to do it is a good friend of mine, Dave Lewis, owned a rival firm. We were at some conference up in Toronto and he was showing me all the stock prices of his clients, his public clients that he was helping since he got involved on his smartphone. And I thought that was just the coolest thing, you know what I mean? Basically saying, Hey, what’s going on? Since we got involved this is what my clients are doing. So I went out and got the phone the next day, haven’t looked back. Yeah, but even then, you know, this first couple of years, you think about us here in the States, we would not even think about using it for banking. I know. And working out. I’m not going to have my information out there. I still got to go to the bank like everybody else and deposit my checks. But today, do any of us think twice about just aiming our phone somewhere? Those of you that are listening, I’m like aiming my virtual phone here. Now. I mean, so it’s changed, you know, we get it and it’s proven over and over again that as consumers, we will trade privacy for convenience. Yeah. So at first, what we’re reluctant to until we realize what we’re ever afraid of. So, yes, I mean, the concerns out there right now are real. And I don’t mean and I don’t want to minimize it in any way. I mean, there are definitely ethical concerns. There’s definitely a built in bias to some of these systems and tools. But that doesn’t mean that they still can’t be highly productive. And you just you know, you exercise with some common sense and some caution but today’s fears will be abated by tomorrow’s gains and productivity and the things that we’re going to be able to do because of AI are going to be mind-blowing. In fact, just like I mean, even though I’ve thought about a lot of things, there are so many things that we haven’t even possibly contemplated yet that are going to happen in the next 2 to 5 years because of this change in technology. And that’s the great thing about the human race, is our endless ability to create and to innovate.

Greg Alexander [00:16:33] Yeah, I agree. I mean, if you just think about the health implications of what we’re going to be able to do medically because of these tools, I mean, it’s amazing. And I’m with you. I think the the pros outweigh the cons tremendously. Okay. Well, we’re out of time here. So, Jeff, thanks for being here. Give us the name of the book again, because by the time this airs, we should be able to buy it. And I’m assuming you’re going to sell it on Amazon.

Jeff Pedowitz [00:16:55] You got it. The AI Revenue Architect.

Greg Alexander [00:16:58] Okay, very good. So I encourage everybody that’s listening to this to pick up a copy of that. Jeff is a qualified author, to say the least, so I’m sure it’s well-researched and well-written. Couple other things for you. Obviously, members, you should make sure you attend the Q&A session we’ll have with Jeff when that gets scheduled. You can ask your AI-specific questions to him at that point. If you’re not a member, of course I encourage you to do so. Go to Collective 54.com and apply and one of our reps will get in contact with you. If you want some more content, check out our newsletter Collected 54 Insights. You can find that on the website. And of course our book is called The Boutique: How to Start Scale and Sell a Professional Services Firm. You can find that on Amazon. But until next time, I wish you the best of luck as you try to grow, scale and exit your firm. Take care.

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Episode 77 – How a Founder is Scaling Her Marketing Agency by Getting Prospects to Come to Her

Ali Schwanke

Invest in your marketing and let your customers come to you. In this podcast episode, we interviewed Ali Schwanke, CEO & Founder of Simple Strat, to share how this professional services firm elevated its inbound marketing strategy and improved win rates.

TRANSCRIPT

Greg Alexander [00:00:16] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that aren’t familiar with us, Collective 54 is the first mastermind community to help you grow, scale, and exit your firm bigger and faster. 

My name is Greg Alexander, and I’m the founder of Collective 54, and I’ll be your host today. Today we’re going to talk about defining a market. And let me set this up by suggesting why this is important. You know, many like to say, and I agree with this phrase, the riches are in the niches. And as founders of boutiques, our members have to pick the right market. It’s got to thread the needle a little bit. 

It’s got to be big enough to matter but small enough where you can dominate. So we’ve got a great role model with us today, someone who’s got some experience with this, and she’s willing to share her learnings with us. Her name is Ali Schwanke. And Ali, I would love it if you would give a proper introduction to the audience. 

Member Case Study: Ali Schwanke, Simple Strat

Ali Schwanke [00:01:19] Absolutely. Well, thanks, Greg, for being here. Yeah, as Greg said, I am Ali Schwanke, and I’m the founder of a business called Simple Strat. And we are a HubSpot consulting agency that started about six years ago. And we have worked with folks all over the nation in helping them get more out of their HubSpot instance, which is a marketing technology and software platform.

 And also increasing the effectiveness of their content on that platform once they get their bearings under them. So we’ve been doing that for the last six years, but myself, I’ve been in marketing for almost two decades now. 

Greg Alexander [00:01:51] Okay. And Ali, what’s a typical client look like for you? 

Ali Schwanke [00:01:56] Sure. So our clients that have the most success with us are between about five and 200 employees. And they have a strong propensity to grow efficiencies with their business. And they are primarily B2B because they have the need to track information inside of a technology platform and then eventually get the most out of the reporting and analytics that come with that function. 

Greg Alexander [00:02:18] Okay. Very good. So the reason why I wanted to speak to you this morning is I understand that you and your team have been redefining your target market a bit and yet that answer you just gave me was very crisp. You should be proud of that answer. That tells me that you really have given this some thought. 

You mentioned an employee count range, etc. So why don’t we start with what first made you think about maybe redefining your target client and redefining the market that you’re going to compete in? 

Scaling a Business: You Need to Define Your Target Client and Market

Ali Schwanke [00:02:48] Sure. Well, a lot of professional services firms and agencies are not excluded from this. They’re kind of like that  story of the E-Myth, where they have someone who’s really good at a craft, and they just start an agency or start a company. And you go from being able to do the work to thinking about building a company around the work. And once you do that as an agency, you realize that you are competing with everybody and their mother and their son who went to college for social media. 

And the word marketing is so vague, and I think it is for a lot of folks. So when we started saying initially, when Simple Strat started, we were going to focus primarily on helping folks with marketing strategy because there weren’t as many strategy firms out there. What I failed to realize at the time was that strategy is something that is not defined just by marketing. You’re now competing with firms that do business strategy and all these other things. 

So as the firm developed, we found a specific line of success in helping folks navigate HubSpot. And what we realized is, if we can get really, really good at that platform and know it better than any of our competitors and focus only on that platform, we have a competitive advantage of simply focus. And that focus allowed us to then narrow that target market to teams that really appreciate our expertise and have the value and a budget defined for engaging someone like us. 

Greg Alexander [00:04:11] Okay. So the path to getting to it towards this new focus of HubSpot, it sounds like, but I don’t want to put words in your mouth that you were looking at where you were having success and then said to yourself, maybe that’s where we should focus. Is that how it happened? 

Ali Schwanke [00:04:28] It did. I’ll say it happened in a little bit of a backward way. We said initially we became a HubSpot partner. There are lots and lots and lots of those out there. We did that about five years ago, and at the time, I think me and my inexperienced mind was thinking we become a partner. That’s our niche. And we go. 

Well, what happened is we did a lot of things to try and promote that partnership. And I’ll tell you, Greg, nobody cared. Nobody cared. So very similar to the story that you published in Chapter eight of the market when we started publishing content around our competitive advantage and demonstrating that expertise online, that’s when things changed for us and the focus became real. So it’s very interesting. I would do it all over again the same way. 

Greg Alexander [00:05:14] Yeah. So let’s talk about that a little bit, because it’s easy to fire up a spreadsheet and say, “Okay, so there’s 5000 companies to go after. And these are the vertical industries and the geographies and the job titles and the sizes that we want to focus on.” But sometimes, we often forget we have to figure out how we’re going to reach them. 

You know, there’s the TAM (total addressable market), and then there’s the percentage of that TAM that you can reach in boutiques like yours, like the one that I had, like our members. It’s not as if we have a 10,000-person salesforce that can go out and reach all these folks. 

So you started producing content and that content started getting out there. That was your reach. Instead of salespeople, you were using content as to extend your reach. And then that content was attracting people to you. That’s how it was working. Okay. Right. And that must be some great content because there’s a lot of content out there about inbound marketing in HubSpot, etc.. So how did you develop content that kind of penetrated the noise? 

How Simple Strat Brought Prospects to Their Firm Through Great Content

Ali Schwanke [00:06:26] Yeah, I think what we found is there was a lot of companies that are writing similar things. And to be frank, when you become a partner with HubSpot, they do their due diligence in helping you sort of build your business plan and your approach. But I’ll say that I’ve been in this long enough to see that at first they were encouraging you to be called an inbound agency, and then they were encouraging you to position yourself as a growth agency and now position yourself as a robot. 

Well, if you think about this, they’re telling all of their partners similar advice. And so great, we’re now in this sea of competing with each other in these same terms. And we did a little bit of analysis of the market of looking at this sort of unserved population. And that was there are a lot of things you can do in HubSpot, but the number of instances that I have seen where the first thing I say when I open up the portal is what’s going on in here. They don’t want to admit to their agency that they don’t know what they’re doing. 

And so we found if they can find content that’s very basic things like, here’s how to set up your lifecycle stages or, here’s how to have here’s how to do a portal audit. There was no content online for that because that is content you have to see. And we already had an advantage of being able to produce video tutorials. So we just leaned into that and that lesson was people, if they see your expertize online first, they trust you before you even make a sale. 

Greg Alexander [00:07:56] It’s so true. I mean, you just referenced one of the chapters in my book, and a book is a version of content marketing, and people read it. And if it resonates with them, they reach out to us and hopefully become a member. I mean, that’s how it works now. 

You mentioned video. I want to go there just a little bit because a lot of our members, I think, aren’t using video as well as they could. And these days, you know, people are consuming content on their phone. Video tends to lend itself really well to that, particularly short clips. So tell me a little bit about what you’re doing in the video bucket. 

Ali Schwanke [00:08:30] Yeah. So I’ll tell you what we did wrong first. I was a firm believer of video back when I started in 2016. I said, we need video. I hired a videographer. I had planned on selling video services to folks as well. And I’ll tell you, Greg, I think I made a whole $5,000 off of this video person. 

Mostly what they did is produce video for us. And in doing that, what I learned was two things. One, there’s two types of video. One is video that is thought out on how to do something. And then there’s video that’s entertaining and kind of what I would call rabbit hole video. You find yourself watching clips after clips, after clips. 

And so for us to go lean into that video piece was we learned that the video content that was out there, people were talking about themself a lot. They weren’t actually thinking about the viewer first. And so we said if we just create short to the point videos that were well-produced and highly searchable, I think we can win. 

So we put a small bet out. We put a certain amount of very, very low production value videos first and saw those succeed. And then we invested in a full channel and it was about six months until we saw that really kind of transact for us. But once we started getting traffic, then we started talking about how to convert the traffic.

 We didn’t  have this like grandiose thing all at once. We grew as we learned. And I think that’s one piece that makes a lot of folks nervous about video is they want to see results after two videos or three videos. And it’s a cumulative effect that we now dominate the YouTube channel for the search of HubSpot. 

Greg Alexander [00:10:00] Interesting. So a boutique like yours is the dominant player on YouTube. 

Ali Schwanke [00:10:06] If you type HubSpot into YouTube, my face will be on at least four or five of the ten results. 

Greg Alexander [00:10:12] No kidding. Wow. That’s quite an accomplishment. 

Ali Schwanke [00:10:15] At the moment. Like, let’s hope that that continues, right? 

Greg Alexander [00:10:18] Yeah. That’s a little bit of an arms race for sure. Yes. Okay. So you mentioned the next stage was learning how to convert once you started getting the traffic. And that’s a big component about defining your target market, which is what our subject is today. 

You know, sometimes we realize that we have to reach this large market and we’re going to do it through content marketing in all of its forms. And you throw the content out there and all of a sudden you start getting lots of inbound interest. But you’re catching the wrong fish. You can’t win. So how did you learn more about your target market based on what was coming to you in response to this content that you were creating? 

Scaling a Consulting Business: How Simple Strat Learned More About Its Target Market

Ali Schwanke [00:11:01] Yeah, I’m a big believer in constantly observing your audience in the way that they talk. So what a lot of teams I would  think miss when they’re looking at their total addressable market. So for instance, if I said I believe my total addressable market needs rev ops because that’s the buzzword right now. I will tell you in having conversations with sales and marketing leaders, rarely do I ever hear the word rev ops. 

And even right now, if I run a keyword search report on that, the volume is low. And that’s because it’s a word we use to describe it in the marketing industry. But the actual thing folks are looking for is, can I have a function that’s accountable for sales and marketing in my organization? So when we’re looking at the way that your total addressable market talks about their products and their needs and their pains, that’s the content to create. And then you have to sort through and say which one of those is closest to a sale? 

So in our case, if they’re having issues with their sales reporting, that’s a problem they’re looking at solving immediately. If they just want to figure out how to optimize their blogs better, that’s longer to revenue for them. And so they might not be willing to pay as much. So we focused on the content that you see immediate gain and then we’re continue like we have a next thing that we’re rolling out that helps address some of that stuff higher on the. 

Greg Alexander [00:12:23] So some of our listeners right now members are going to say, this is fascinating. I’ve never met anybody who can dominate the YouTube channel like Ali has. And it’s hard to do. And what I’m taking from our conversation is how incredibly focused you are on the client and how you’re outward in and everything you think about. 

That example of rev ops is a great one. I mean, that’s industry lingo, but the clients don’t use it. So it’s not valuable. It’s valuable to the other HubSpot partners, but it’s not valuable to the client. I have some members who say, “I don’t have time for this. You know, I’m super busy. I’m a young growing firm. And who’s got time to do this?” I’m sure your to do list is just as long as theirs. So why do you make time for it? 

Ali Schwanke [00:13:11] So I didn’t have a business that existed when we all saw each other a lot in person. Like, I definitely have been to conferences and I’ve networked and I’ve had a lot of success in that early in my career. But we now live in an environment where you don’t go to one master trade show a year and build all of your leads. We now live in a world where that’s happening every single day, and to say you don’t have time for that is like saying 25 years ago that I don’t have time to go to the largest trade show in my industry. 

And if you don’t have a mindset of value, you will not make time for it. But I will say if you do not create content based on what your audience finds valuable, and you talk a lot about this in the book and we talk about a lot about it in the Collective. If you do not create content based on what your audience is interested in and just what you want to say, it will not convert for you and you will have a failed experiment. 

Greg Alexander [00:14:04] And for those that say I don’t see a client spending thousands and thousands of dollars with me, that came through a social media channel like YouTube. What would your response be to that? 

Ali Schwanke [00:14:19] Sure. Some of this comes down to education of marketing and what it is and how it’s defined. I will say the majority of founders that I have worked with in the professional services industry, their initial perspective of marketing and marketing spend is what I would call direct response. Yeah, I have a coupon. I turn in coupon. I see that coupon led to sale B2B sales. And especially when you’re involving a human in their expertize, there is a high degree of trust. There is a lot. 

It’s actually not marketing at all. What you’re doing is psychologically driven and we are complex beings and we make decisions with our level of logic, which sometimes is zero and it’s all feeling. So if you make them feel that they’re learning things from you and trusting you, you can sell them sometimes whatever you want. That’s not a good practice, but once you gain that trust, then you are simply depositing additional coins in that bank that keeps that trust for a long time. 

Yeah, and that’s again, it’s a mindset. I will say conversion wise though, you do have to have a content offer that brings them value and actually shows a small piece of what you can actually do. It has to be tied to the overall value. And if it’s not, then it’s just a fancy download. 

Bringing Clients To Your Door When Scaling a Business: Knowing Them is Key

Greg Alexander [00:15:34] This has been a great conversation. And just to summarize, you know, Ali started and she had a really large definition of a market strategy which can mean a lot of things to a lot of people. And it was outside of her niche and then she narrowed that down by becoming a HubSpot partner. And then even within the HubSpot ecosystem, if you will, she got even tighter by focusing on a specific type of company to go after. 

And then really what I learned today, which was really fascinating, is the code that she’s cracked, if you will. She’s figured out how to reach this tightly defined market in a cost-effective way with a high conversion rate. And she’s doing that through content marketing, in particular on YouTube. And if you type in HubSpot into YouTube, I mean, she’s going to be the dominant provider there, which is quite a thing for sure. 

So, Ali, we’re at our time commitment here, but the way the Collective works is that we all contribute to the collective body of knowledge. You know, every time a member contributes, the other members benefit. And that’s the give and take nature of this. So on behalf of the membership, I want to thank you, because that was a big contribution. I learned a lot today. 

Ali Schwanke [00:16:42] Yeah, thank you. I have learned a lot from the Collective and I know other members have as well. So thank you for what you’re doing. 

Greg Alexander [00:16:48] And members I’m sure many of you are anxious to speak to Ali because if she’s doing this for her firm, she can probably do it for your firm. So feel free to reach out to her via the member portal and have a follow-up conversation with her. 

Okay. And for those that are interested in this topic and others like it, you can pick up a copy of our book, The Boutique: How to Start, Scale, and Sell Professional Services Firm. And for those that are listening to this and are not members and are interested in meeting fascinating people like Ali consider joining our mastermind community which you can find at Collective54.com. Thanks again, Ali. Take care. Ali Schwanke [00:17:24] Thank you.

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