Founders of boutique professional services firms can increase their rate of growth by professionalizing their marketing and sales approach. On this episode, we will discuss how by interviewing Dan Bernoske of Cortado Group.
Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that don’t know us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. I’m Greg Alexander, the founder of the place. And today I’m going to be your host. And joining me is a long time friend and member, Dan Bernoske. And today we’re going to talk about sales and marketing and go to market for your professional services firm. So, Dan, good to see you.
Dan Bernoske [00:00:49] Good to see you, too. Good morning.
Greg Alexander [00:00:51] If you would not mind, could you introduce yourself and your firm to the group?
Dan Bernoske [00:00:57] Sure. Yeah, I am. Dan Bernoske, the founder of the Cortado Group and we are a boutique consultancy serving companies that are owned by private equity firms.
Greg Alexander [00:01:09] OK, very good. So, Dan, today we’re going to talk about sales and marketing specific to boutique professional services firms, in other words, how you take your services to market. And given that this is what you do for your clients. I would imagine you’re an expert and doing it for yourself. So I’m going to ask you a few questions, and they’re meant to just kind of stimulate thought and get the conversation going. So the first thing I want to talk to you about is that you have a close rate of 65 percent, which is incredible. And that number says and means a lot of things, and I’m not sure our membership is tracking close rate as diligently as they should and when they do track it and they have the number how to interpret the number. So first, tell the audience how you got to 65 percent and then interpret that number for us.
Dan Bernoske [00:02:04] Well, I mean, the first thing is targeting the right, the right companies. It’s starting out with the ideal customer profile or client profile keeps us super super laser focused on calling on the right accounts. That’s probably the biggest contributor. And then, Greg, you know, buyer personas. OK, so there’s one thing to get into the right company, but a whole other thing to be talking the right person, the decision maker. So those two things combined contributed to that.
Greg Alexander [00:02:37] Yup. And what I love about that is that, you know, people like yourself that are running these high growth boutique professional services firms. We’re resource constrained. There’s only so many hours and day, so only so many people on the teams, only so many, so much money in the bank account. So if we’re wasting our resources by not being as targeted as Dan is or are is, I guess is the way you would say that, then you know, you’re closer. It’s going to be 20, 30 percent. And sometimes people think that’s good. It’s not good because what that means, let’s say closer rates 30 percent. That means you’re losing seven out of 10 times. So think about all the effort associated in those pursuits and you’re losing seven out of 10 times. It’s just eliminate that and you’re going to recapture all those resources. Now, I advocate Dan, that the close rate should be 50 percent, and I would I would suggest that 65 is too high, which sounds almost counterintuitive. Like why? I mean, maybe closer. It should be 100 percent. But when I hit 65 percent, I think maybe you’re not in enough deals or, you know, charging enough for your services. So what do you think about the 65 percent number and how do you interpret that?
Dan Bernoske [00:03:47] This is so glad you brought it up, and that is a huge debate for us around one of the points of pricing. So are we pricing ourselves? We’re trying to weigh the balance of not pricing ourselves out of our target market. I mean, I’m going toward the small and mid-market company. So weighing that balance, so I suspect maybe we’re price people too low and then we may be, you know, the other thing driving is maybe our ICP is a little too tight. So to your point that if we’re not getting into enough deals, are we constricting ourselves from other opportunities if we’re just not seeing.
Greg Alexander [00:04:25] Yeah, and you’re right, and that’s how you interpret that number, so there is such a thing as a close rate being too good because again, that might be restricting your market opportunity. So the most important thing is what we’re learning from this is to really be super crystal clear on two things that Dan is teaching us today. Number one, who the ideal client profile is. And I know right now everybody’s rolling their eyes in the back of the head because they say, I hear this from Greg all the time. Yet many of us still don’t have that done correctly, and that’s a dynamic document, not a static document. It changes over time as your firm evolves. And then secondly, once you pick the clients who want to go after, who’s the individual or group of people in those accounts that you want to sell to? And Dan, in your case, you’re selling sales and marketing effectiveness improvement. So are you selling to the CMO or the head of sales or who are you selling to?
Dan Bernoske [00:05:18] Yeah. If we were up in the enterprise, that’s exactly where we would be great. But we sell to companies. So our ICP the ideal client profile 10 to 500 million in size earned by private equity. So we’re selling to we’re selling to the private equity operating partners and the CEO level like that’s that’s really our sweet spot.
Greg Alexander [00:05:40] OK, so let’s apply this concept of buyer personas to to those two particular individuals and operating partner in a shop and a CEO of a portico. So first, there might be some folks listening that don’t know what a buyer persona is. So give us a quick definition of that.
Dan Bernoske [00:05:56] Well, think of it as a fictitious representation of your buyer. And what does that mean? That means I’m going to know how are they motivated to do their job right? What are the obstacles standing in their way of doing their job? How are our success measured? There’s a whole bunch of things that go into that, but you need to get this psychographic profile of your buyer. So you really understand how they think and how they act. Yeah.
Greg Alexander [00:06:20] OK, perfect. All right. So let’s start with the first one. The CEO of the Port Co. So maybe give us two or three things that you know about that buyer persona as an illustration or an example of what what should be on a buyer persona?
Dan Bernoske [00:06:37] Well, first of all, they have their piggybacks, so we know that they’re going to want to exit in three to five years. So that maximum exit valuation, huge objective.
Greg Alexander [00:06:48] OK, so let’s stop there, because that’s a great one. So you know that this CEO is the CEO of a portico owned by PE, which means are selling in three to five years. So his motivation is to get to that successful exit, correct? Oh, absolutely. Okay. So then when are positioning your services just to connect the dots here for the audience? You’re connecting it to that priority, that goal.
Dan Bernoske [00:07:13] Absolutely. You know, it’s going to resonate with it’s going to mean something.
Greg Alexander [00:07:17] So so how do you do that?
Dan Bernoske [00:07:20] Well, we do that like how we actually execute has on multiple levels, but let’s just take the the proposal. Yeah. Is that what you mean? Yes, exactly. Yes. Yeah. I mean, if you think about how we frame up our solution, it has to really satisfy that, that objective for him. So all of our solutions have to point in that direction. So for example, yeah, we’re going to help improve the revenue on your company. But what we’d like to do is show a case study that demonstrates the fact that in three to five years, the lift that we’re going to provide today is actually going to lead to a two or three x multiple on their on their exit, for example. So always, always tying everything back to that, that objective there.
Greg Alexander [00:08:06] That’s a great example. I mean, that’s a that’s a built in cost justification for your project. You know, you’re putting you put a proposal on the table and then instead of just leaving it in isolation, you connected to this objective. And you say, if we’re successful with this project, here’s what it means to you in dollars and cents expressed as a multiple and even though correct?
Dan Bernoske [00:08:26] Yeah, absolutely. Yeah, absolutely. You know, kind of get to go on a rabbit hole here. But it highlights the fact that when we think about go to market, I think there’s a long overlooked tool and that is the proposal is actually your most important piece of marketing and sales material. I’ve got a website, fabulous research reports, but the rubber meets the road on this proposal. So all the more reason why it has to speak to that percent of that objective?
Greg Alexander [00:08:57] Yeah, yeah. And sometimes these proposals are kind of template sized or they don’t put the firm’s best foot forward at times, which I agree with you. The proposal is often overlooked, and that’s a good piece of advice for the members is to take a fresh look at their proposal and make sure it’s connecting to the motivations expressed in your buyer persona and within your ideal client profile. OK, let’s go to the next big thing as it relates to go to market strategy for a boutique professional services firm, there’s three things we talked about. One which is to close rate. We had an interesting conversation around your remarkable 65 percent. The next is average deal size. So if I’m winning five out of 10 deals and they’re worth 50 grand, that’s a lot different than winning five to 10 deals. And they’re at five and a grand. So how are you optimizing for deal size?
Dan Bernoske [00:09:51] Oh, man, that that is a that’s a tough one, because what what I’m what I’m finding is, well, it boils down to willingness to pay.
Greg Alexander [00:10:02] What does that mean?
Dan Bernoske [00:10:04] Well, what what is the perceived value of your solution to the buyer and what are they willing to pay? Yeah. So you know what, what, how much of their money is going to come out of their pocket into mine? Yeah. So that’s I think you’ve got some great sale pricing experts in the collective that could probably speak to that one. Yeah.
Greg Alexander [00:10:27] So what what Dan’s referring to, there is a way to optimize for deal sizes is that you put a proposal on the table. You’re going after mission critical, urgent problem. And if the problem is not solved, there’s a real cost. Or if the problem is solved, there’s a real reward. And quantifying those in hard dollars creates a perceived value. Let’s just say, I don’t know, it’s $5 million as an example. So then the conversation is what percentage of that gain that you deliver to the client is a client willing to share with you 10 percent, 20 percent and then you back into your price there. And that’s how you optimize for a deal size. And then you’re in the management consulting industry. That’s your sector and you specialize in sales and marketing. So I’m assuming that your model is one where you want to have, relatively speaking, a small number of clients, but you want each one of those clients to spend a lot. Is that correct?
Dan Bernoske [00:11:21] Absolutely. Over them, over served clients.
Greg Alexander [00:11:25] So therefore, you’re staying away from clients who. You know, might need an act of God to spend 25 grand.
Dan Bernoske [00:11:35] Absolutely. Yeah. Yeah. But you know, what’s interesting, though, in terms of deal size is that we’ve also found that this size client, they do buy and bite size chunks. So there’s another lever I really pay attention to, and that is what’s the customer lifetime value that you are given the size of 500 out of the 10 to five hundred million dollars. They’re not going to buy that $1 million deal. But they will buy maybe the equivalent of that over time. Right. And that’s when you really have to think about is what how is it that they buy? It’s huge.
Greg Alexander [00:12:14] So that’s interesting. So lifetime value is a great concept. I’m glad you introduced it. You can get to the same dollar amount and that example a million bucks, but instead of one deal, maybe it’s for $250000 deals. So that raises another interesting question regarding go to market. And that is expansion revenue from existing clients vs. new revenue from new logos. So do you have a a different sales approach when trying to grow an existing client than you do opening up a new one?
Dan Bernoske [00:12:44] We we do the reason why is because you’re embedded with the client. So the behavior is a lot different in your interactions with them. They’re you’re kind of uncovering needs as you’re as you’re going along. And so therefore the the reception on their side is much more open minded so that that approach is very different than going in on a new logo.
Greg Alexander [00:13:06] Sometimes I hear sorry, sometimes I hear from clients. However, if their consulting company is always looking for the next deal while they’re working on the current project, it can be a turnoff. How do you how do you handle that?
Dan Bernoske [00:13:20] Yeah, that is a that’s a big balance. But we’re not selling. It’s always framed up around making sure that they’ve got a problem that needs to be solved. I just very, very much in problem focused, always, always not solutions focused. I can actually, Greg, you know, I come out of a product background, which I’ve applied to my approach for building our solutions. And there’s a great saying in that space that says, don’t be in love with the solution, be in love with the problem. So the more that I enforce that with my people. So seek out that problem. It actually doesn’t feel like selling. It really feels like trying to help out the buyer persona as much as possible. That that’s a really small point, but it does make a difference.
Greg Alexander [00:14:07] Yeah, that does make a big difference. It’s a big point, actually, not a small point. I’m glad you mentioned it. Just one more question regarding expansion sales from existing accounts. Let’s say I’m a delivery person on your team. I’m not held accountable to growing revenue and I get deployed on a project and I going to get done in 90 days and I’m on a project plan and I get to issue X amount of deliverables. And then, are you also asking me to be a salesperson or am I just focused on that project? Like, who’s doing the expansion selling?
Dan Bernoske [00:14:45] So right now, it’s the partners who are we’re small enough where each partner can have a set of of clients that they’re overseeing. So we’re really trying to push that over to them. The job of that of the consultant is to find the evidence and bring it back to us. I see. And just enlighten us because, you know, the other important is what you brought up a great point. I want them focused on delivering good work because good work actually is. The other big piece that sells you more is if you just do a good job that’s that gets you there. But also the partner will have the overall strategic viewpoint of how that that evidence actually fits into the bigger story. So that’s the approach that we always
Greg Alexander [00:15:27] I think that’s a great division of labor. So the delivery team does have an eye towards growing revenue, but they’re not held accountable to the sell. They kick over the evidence to the partner and then the partners get enough skill and probably enough savvy to to re approach the client and say, Hey, my team has uncovered this additional problem. I want to talk to you about it, that type of thing.
Dan Bernoske [00:15:52] Absolutely.
Greg Alexander [00:15:53] Yeah. And that’s working well for you.
Dan Bernoske [00:15:55] It works real well. Yeah. And also think about the delivery. They’re good at delivery. That’s going to be they’re very good at selling. Yeah. So get everybody focused on their skill set.
Greg Alexander [00:16:07] Okay. So then the third kind of leg of the stool as it relates to go to market excellence in selling professional services is the length of the sales cycle and that rounds out the other two, which is the average deal size and the clothes rate. One thing that kills boutique owners is the sales cycles are just too long. Back to my earlier comments around pursuit cost, you know, and if it takes forever to sell a deal, I mean, it’s just a constant, right? Now you’ve got two markets, you’ve got a channel, the PE space, and I’m assuming that takes a little bit longer. And then you’ve got your portfolio company, the portfolio company of the firm, which I’m assuming takes a little bit longer. But is that true? Are those two different lengths of sale cycle?
Dan Bernoske [00:16:51] Yeah, 100 percent. Very different.
Greg Alexander [00:16:54] How long is the PE sales cycle?
Dan Bernoske [00:16:58] Is nine to 12 months.
Greg Alexander [00:17:00] Wow. And you’re willing to hang in there that long. How come?
Dan Bernoske [00:17:04] Yeah, it is. Because once you’re in, I mean, basically, it’s a hunting license and you do a good job in the first portfolio company, earn their trust and then you become a part of their toolkit. I see. So that that Greg, I mean, saves a lot of a lot of selling time alone. So it’s worth getting in.
Greg Alexander [00:17:22] So you get it. You spent a year to get into a shop, but they might own 20 companies, so that’s worth it.
Dan Bernoske [00:17:28] Yeah.
Greg Alexander [00:17:29] Okay. Very cool. And then the portfolio company, what’s the sale cycle there?
Dan Bernoske [00:17:33] Well, quite a bit shorter, around 30 to 45 days. Got it for those.
Greg Alexander [00:17:38] Yep, interesting. So listeners, what that’s known as is a sell through model as opposed to a sell to model. And you might learn from Dan and say to yourself, Do I have any partners that I can sell through that if I establish a relationship with, they could grant me access to a much broader prospect base. And it’s a very interesting approach and probably a topic for another day. All right, my man. Listen, we’re out of time here, but that was a great session. I appreciate you dropping your wisdom with us. If you don’t mind, explain to the audience how to get a hold of you if they have some follow up questions.
Dan Bernoske [00:18:19] Sure, cortadogroup.com, cortadogroup.com online or yeah, just fill out a form. Reach out to me and we’ll go from there.
Greg Alexander [00:18:32] All right, awesome. All right. And for those listeners that might want to learn more about this topic and others, you can check out a book. It just became an Amazon number one bestseller in our category. Yeah, I’m really happy about that. It’s called the boutique how to start, scale and sell the professional services firm, and again, you can find it on Amazon and other retailers. And if you liked this, then you want to meet other great people like Dan, consider joining our mastermind community. You can find that at Collective54.com. Dan, thanks a bunch. Take care.
Dan Bernoske [00:19:04] Thank you, Greg. I appreciate it.