Episode 78 – How a Consulting Firm Underwent Organizational Redesign toSuccessfully Deal with Pricing Pressure 

Member Case with Jeff Pedowitz

Labor is the biggest expense for a boutique and has the biggest impact on profitability. On this episode, we interview Jeff Pedowitz, President & CEO of The Pedowitz Group to discuss how they creatively redesigned their organization to solve increasing pricing pressures.


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 not 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. I’m the founder and I’ll be your host today. On this episode, we’re going to discuss organizational structure, and this is a very important topic for boutique pro serv firms because we are people businesses. And how you organize your labor dictates a lot of things such as your profit margin, your client satisfaction scores, your employee engagement scores, etc. 

So it’s a really big subject and we’ve got a great member to be our role model today. His name is Jeff Pedowitz and he has a company called the Pedowitz Group. And Jeff’s with us today. Jeff, how you doing? And please introduce yourself to the audience. 

Jeff Pedowitz [00:01:12] Thanks, Greg. Definitely glad to be here. Hello, everybody. So I am Jeff Pedowitz. I am president, CEO of the Pedowitz Group. We build digital revenue engines for our customers. So for all those businesses out there, we’re constantly trying to drive revenue in the digital world. That’s what we specialize in. We do strategy, technology and execution and end-to-end shop. 

Determining the right organizational structure

Greg Alexander [00:01:35] Okay, very good. So, Jeff, the reason why I asked you to be on the show today is that your firm has scaled to a very nice size. You’ve been at it for a long time. And you’re on the journey now of restructuring organizationally and leveraging different talent pools. And I would love to maybe start off at a high level and have you explain to the audience, you know, why you decided to come up with a new organizational structure. What led you to that? And then we can dive into, you know, how you went about determining what the right approach was for you. 

Jeff Pedowitz [00:02:11] Sure. Well, I wouldn’t necessarily call it new because I’ve had the relatively same hierarchy in place for a while. You know,we promoted some people and moved some things around. But one of the things I started doing a few years ago was really developing a core team around me and delegating the day to day responsibilities, including sales.

 So today I have a full executive team. I have a technology officer, I have a marketing person. I have chief strategy officer, chief financial officer, Chief Services Officer and they are all essentially running the business and providing the guidance and the leadership and the vision. But I can step away. They can run the business now and all the tools to do so.

 So that was really an important part of our scale, was really getting me out of that entrepreneur organization where everything that you run for me, we still we’re dealing with some, some legacy issues and married people and working at it for a long time. But we’ve really turned a corner on that.

 So even before the great resignation hit,because we work with technology now, our resources are in high demand. I mean, for years we recruited they command very high salaries and a premium. And up until last year, we actually had very, very low turnover. We were running about 5% per year, which in the consulting advertising industry -that’s fantastic. 

Greg Alexander [00:03:33] That’s best in class for sure. 

Jeff Pedowitz [00:03:35] But last year it caught up with us. Solast year we and our services team, we ran about 40% turnover. And most of that was just great resignation combined with some of the bigger technology vendors who are also our clients like Salesforce, Adobe, werepaying ridiculously high salaries, things that even at our size we just could not compete with. And we were already paying our people very well.

 So while we certainly have, I would say now year over year, our average salaries increased 30% from where we were a year ago. As you know, growing in professional services, you know, where you don’t just have 50% less margin – want to just want to double the salary in a low cost format- well we had a resource last year that was making 100,000 and my client was paying me 200,000 an increase into 130.

 Maybe they’ll pay to 60, but they’re not going to pay much more in that. And they’re not going to pay 300,000 for the same person that was doing the same job. Now, if we redesigned the services and added more value, of course they won’t. So it’s a matter of we’re trying to rebuild the plane while our client  -I have existing market conditions that enterprise customers for discerning and they also know they can get the labor if they need it to, by going offshore. 

So we’ve had to retool and strategically rethink how we want our labor force to be. So what we decided a year ago was for the lower end type of work, the execution work, data management, reporting, research, execution type of activities. We’re going to move those offshore. So we’ve been setting up resources in Colombia and then we want the people that are here to be the architects, the strategists, the engagement managers, the account managers, the people that are very client facing to be very versatile. And we will happily continue to pay them even more money than they’re making now because the value proposition will be there and then we’ll be able to kind of bifurcate.

 So we’ve been able to continue to be a competitive -pay the people that are really delivering value really, really well. And more than that now. And at the same time, move some of the other labor that we’re overpaying for because we’re able to turn that around and get value living out offshore.. 

So the net effect is we’re already doing pretty well with our gross margin. We’re running about 52%, but we should be able to get up over 60% by the -by the end of next year. And then we’ll be able to take some of that free flowing capital from the margin and reinvest it not only inthe employees, but into additional sales and marketing that will fuel our growth. 

Strategy versus execution 

Greg Alexander [00:06:12] Great story, great rundown and so many things to ask you about. The first question I’ll ask is when does when deciding what is kind of high end strategic work versus low end execution work, drawing that line and therefore determining what could be sent offshore? Sometimes our members struggle with that. They tend to think that everything is strategic. Even the tactical execution is super important, and oftentimes it is, but sometimes the clients aren’t willing to pay for it. So how did you draw the line between what to keep onshore and what to move offshore? 

Jeff Pedowitz [00:06:49] It’sthe very last thing that you said. It’s what are the clients willing to pay for custody? It doesn’t matter what we think t -he client is, what makes the market and the client who determines what the value is, not us. So if the client says, I’m only going to pay – I’m not going to pay more than $50 now for email execution. We can think it’s as strategic as we want to be, we can talk about deliverability but the client is still oing going to pay us $50 an hour

So we’ve been able to get pretty good information from our customers. And just seeing as the deals come in, what clients want, pay for what they’re not. Yes, because we work with a lot of technology and we now support over 600. 

For new technology. And it comes out like, let’s say some of the new ADX technology comes out for things like Snowflake or merchant platforms. Clients will pay a premium for that, for a short period of time, right. Until they get up and running. And then they view it more as a commodity. Then they will then want to drive the cost.

For ongoing OpEx to support and maintain technology in our business. Clients do not consider that to be strategic. Architecture isstrategic, Figuring out what systems to invest in, how they should fit together, how data should flow , business processes ,t he math, the technology – that is strategic. Running and supporting the technology itself is not strategic. 

Greg Alexander [00:08:11] Interesting. And sometimes clients might not know, but they think they know. So they might say to you, Hey, Jeff, I’m only willing to pay 50 when? Because it’s not strategic, but you know it is. Do you let the client stub their toe or do you -do you speak up in that scenario? 

Jeff Pedowitz [00:08:30] I think it’s it depends on the situation and what else we’re doing with the client. And it’s a bit of a give and take., But I think there’s a healthy  -we want to be respectful. We challenge our clients and let them know, know ultimately we’re trying to build a long term relationship.. 

And it’s also about the people and the personnel over doing the work. Even more important than the work itself.. You know, in consulting and such a relationship business, actually, one of the biggest challenges we have is a resource gets assigned to that project. And the client, they want that working really well, but the client doesn’t like it when that resource changes and gets to account because they become very attached and they’re convinced that nobody else in our team could possibly do that, even though that’s not true. 

But it’s just that trust and that bond gets built. So I do think that in so much it’s not just the type of service, it’s the person and the skill and the value of your trusted advisor to your customer. Then the client will tend to pay more for someone that they trust versus someone, of course, if they don’t.. 

Choosing offshore regions

Greg Alexander [00:09:32] Yeah. Now, once you decided what needed to be moved offshore, there’s a lot of choices there in lots of parts of the world. What part of the world did you choose and why did you choose it? 

Jeff Pedowitz [00:09:44] So we deferred to last year, so we started trying out different contractors in different parts of the world. So India was definitely an area that we know and we’re still using a bit more as a partner. Costs are higher, but we know what we’re getting. We work with ad some firms over in the Asian region, particularly in Cambodia, which is an emerging market, there’s a lot of strong tech talent that people are very good. But the time zone challenge was was difficult. 

We work with a lot of marketing teams in our business and it’s a little bit different than, let’s say, I.T. projects. The collaboration is more in real time. It’s not a follow some type of approach. But we can start something, we send it offshore, they work on it while we’re sleeping and come back the next day. The clients wanted me today and use time zones and collaborate, so we were having difficulties getting the resources over in Cambodia to work on our time zone – the costs were fantastic work and labor. At 15 or $20 an hour., highlyskilled, college educated, smart people, but not the time zone. We had been familiar with Colombia and the Latin America market for a while. We have a couple of our competitors that work down there. We’ve caught some good things, so we started looking into it. 

And then the more that we talked to different resources, we became more convinced that that would be a good market for us to enter into. It’sbilingual, college educated, good culture, hard working family values, which are very much in line with our approach and our value system. So, you know, this has not been without its challenges. Our original goal was to get this up and running in the first quarter of this year. We had a very good recommendation from-  from one of our investors and he was going to work full time for us.

 He had set up an 800 person shop down in Colombia over the last five years. So he was an expert down there, you know, unfortunately had a personal family situation. So he had to opt out after just a week on the job so that we were scrambling. But we were able to, through our professional networks… We reached out, people were great. We actually got eight referrals on different resources to use down in Colombia. We interviewed them all. We selected one and we’re now working with this partner account to set us up. So by the end of this week, we’ll have our first two full time people hired and our plan is to have 20 people by the end of this year. 

Deciding on direct hire

Greg Alexander [00:12:10] Wow. That’s an aggressive plan. And did you decide to hire a firm and partner with a firm? And did you decide to hire directly, you know, one at a time kind of thing? 

Jeff Pedowitz [00:12:23] We split it so that we – we are working with a firm called SolvoConsulting. So they are basically doing all the recruiting and it’s they are technically managing all the employees or their employees. We pay them and then they pay the employees. But we employees are fully white label so they are notworking for anybody else but we don’t have to deal with the benefits or paying taxes in Colombia or doing any of things we pay them. 

However, we also have the option as we start to build our practice areas to convert any of these people into actual TPG employees at any time. So we thought this gave us the best of both worlds. It gave us expertize down in there and mitigating our risk at the same time. 

That way we don’t have to set up a Latin America LLC. We don’t have to deal with paying taxes and doing all that stuff in a foreign government. But we still get the talent and the labor and the partnership and all the resources as if they were our employees. So obviously, check back in with me in 3 to 6 months as we get this up and running, because its still relatively nascent,. I certainly don’t want to tell everybody that we’ve cracked the code. We’re really just getting started on our journey. 

Learning to ask for help

Greg Alexander [00:13:31] Yeah. Yeah. Well, the reason why I wanted you on the show is sometimes many people need to be doing what you’re doing, but they’re not even getting started on the journey. I mean, most of our boutique founders are in similar situations where they have clients that are willing to pay a premium for some services, but commodity prices for other services. 

And unless you get to some version of this, then you’re going to have a tremendous margin squeeze and it could put the business at risk, especially in this high inflation, high wage inflation, great recession environment that we’re in. My last question, Jeff, regarding this particular avenue here is, you know, you said you got a bunch of people to go talk to and you interviewed them all. What did you learn during that interview process and what advice would you give to a founder who’s starting on this journey about how do you even know what good looks like? 

Jeff Pedowitz [00:14:21] Well, first of all, I was pleasantly surprised at the sheer response that we got, because at the time that the person opted out was one of these things where I at -at that moment, I certainly was not an expert in offshore labor or working with Colombia in particular. 

Whether or not whether we go there, you know, this is still really important. Where do we find resources? So yeah, I suppose it was a momentary situation, where am I? But I think like any entrepreneur, that faded pretty quickly. Right. Okay. But this is still the right decision for us. Let’s move forward. Let’s just start reaching out and asking for help. And I think one of the first things I was surprised, pleasantly surprised about was how much help there was – just by asking the question.

 And I think that’s one thing I’ve learned. I wish I would’ve learned this earlier in my career as a CEO – how and when to ask for help? You know, I was on my own a lot. I made a lot more mistakes that were made because I didn’t think that there was anybody I could turn to. 

So having networks like Collective 54 is great because I realize there’s a lot of people out there, that can help. You just have to be willing to ask the question and to listen., Sso myself and my business partner, who’s my chief service officer, we listened. We took copious notes, we interviewed and we learned that there’s… We learned a lot. We learnedthat much like the states, there are different ways to do this. You can go the route like an ADP, you can hire direct. 

We learned about different parts of the country and what each country, not just Colombia, but different countries and what they brought to the table. And I learned that there’s four different taxing authorities within Argentina and it’s incredibly complicated. I learned there certain provinces to stay away from and certain not to. And so, I mean, it was very, very educational over the course of two weeks.

 And so ultimately, you know, given everything else that we have on our plate right now, we decided going with someone that already knows how to do this and do this well, even though we’re going to be paying a little bit more – like if we were to go down and hire people directly in Colombia ourselves, we would probably pay them an average of 18 to $20000 per year for a college graduate. That person that has similar skills to what we have here in the US that’s maybe making 120,000. With the service we’re usingsing the margins areup 30 to 50%. But it’s still very, very cost effective. We’re still be able to make great margin, but may take care of all the headaches for us. 


Greg Alexander [00:16:59] Yeah. Yeah. Very good. Awesome. Well, listen, we’re out of time, but on behalf of the membership, I just wanted to thank you for your contribution today. You know, the way ollective works, as you got to contribute to the collective body of knowledge. And you have, you’re always doing that. Today is another example of that. So thanks for being a great member and being here today. 

Jeff Pedowitz [00:17:17] Thank you. I appreciate it. Greg Alexander [00:17:18] Okay. And for those that are interested in this topic and those like it, who can pick up a copy of the book, The Boutique, How to start scale and Sell the Professional Services Firm. And for those that are interested in meeting great people like Jeff, founders of scaling professional services firms, consider joining our mastermind community, which you can find at Collective54.com. Thanks.

Episode 73 – How a 63-Year-Old Ad Agency Stays Relevant by Launching New Service Offerings – Member Case with Marc Cooper

As professional services firms scale, developing new service offerings is critical to staying relevant with your clients. In this episode, we hear from Marc Cooper, President and Partner at Junction59, to learn how his firm uncovers new client needs and develops new service offerings as part of a business scaling strategy.


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 the founder. My name’s Greg Alexander, and I’m also your host today. And on this episode, I’m going to talk to Mark Cooper, and we’re going to talk about designing new services. So, Marc, welcome to the show. 

Marc Cooper [00:00:47] Thanks for having me today. 

Greg Alexander [00:00:49] Would you mind properly introducing yourself to the audience, please? 

Marc Cooper [00:00:53] Absolutely. I’m Marc Cooper, and I’m the president of Junction 59. We’re a Canadian integrated ad agency based out of Toronto. We like to say that we work at the intersection of people and points of view where ideas meet to make a better tomorrow. 

Greg Alexander [00:01:10] Okay, very good. And what types of clients do you serve, Marc? 

Marc Cooper [00:01:15] So we’ve a broad range of clients actually that reflect, I would say, the Canadian landscape. But for the most part, we divide up into three different categories: B2B clients and B2C clients who are interested in reaching their clients throughout the journey. So a lot of direct marketing and journey marketing. And then not-for-profit  clients. 

Greg Alexander [00:01:41] Okay. 

Marc Cooper [00:01:42] All about fundraising. 

Greg Alexander [00:01:43] Very good. Okay. So the topic today is about designing new service lines as a way to scale your firm in the common-sense explanation. It’s pretty basic. And it says if you have one thing to sell and deliver, scaling a business  is going to be hard. So at some point in the journey, you know, firms invest in additional service lines so that they can go back to their happy client base with new things to talk to them about and potentially earn expansion revenue. 

So let me start with kind of a 30,000-foot  question, which is, how many service lines do you have today? And how has that evolved since the founding of the firm many years ago? 

Marc Cooper [00:02:25] Well, it’s an interesting question because in a marketing and communications business, you know, you could bucket all of our services under marketing communications and say we have one service. Yeah, but of course, you know, as the industry has evolved and different platforms have come to life, you know, there are lots of agencies that specialize just in digital, just in traditional print or television or out of home. 

And then across that, you’ve got some that have a strategy and some that don’t. So if you start to look at all of the different service offerings that we have at a much more sort of focused level, I would say we have upwards of 30 to 40 different services that we’re able to offer. 

Greg Alexander [00:03:14] And you’ve been around for how long? 

Marc Cooper [00:03:17] We’ve been in business since 1959, which is where the 59 and Junction  59 comes from. 

Business Scaling Strategy: How to Identify the Need for Additional Services

Greg Alexander [00:03:21] No kidding. My goodness. Well, okay, so 30 to 40 different offerings, I guess, unique services. And I understand bundled together into a solution that you might sell a client. 

So since your firm has been around so long and developed so many services, what advice would you give those listening that might have one or two things that they sell and deliver? How would they go about identifying the need for additional services? And then how would they go about developing those into something that could be sold and executed against? 

Marc Cooper [00:03:56] Sure. Well, we have a number of different ways that we do it. One of them is quarterly business reviews. At the end of every quarter, we sit down, and we look at the work we’ve done for a client over that past quarter. Then we look at the work that their competitors might have in the market, and we look for opportunities, including any trends that are happening in the marketplace with their customers. 

Then we sit down and talk to the client about what we’ve done, you know, all under the guise of how could we get better at what we’re doing for them, but also to point out opportunities where they might do things a little different when going to talk to their customers. And it’s usually at that point that a service offering that we have that we may not have been offering to them comes up in discussion. 

And I think for us, over the years, what would happen is the same service offerings were coming up over and over again with particular clients. You know, we do group our clients into like-minded  sort of buckets across those three buckets we serve. So it’s not surprising to learn that, you know, a high-tech company and a telecommunications company might start to see the need to do a particular type of marketing. 

And when we didn’t offer those services, we would always find a partner we could work with to offer them a service. But as they came up over and over again, we decided it was time to bring those services in-house and offer those services directly to our clients. So it created a whole new service offering. 

Greg Alexander [00:05:33] Interesting. So the quarterly business review, the QBR, so that’s done between your team and the client. And it’s a review. It’s always a best practice to do such a thing, and it naturally comes up during those QBRs  where the client would express new needs. Is it my understanding that correctly? 

Marc Cooper [00:05:52] That’s right, yeah. Or we would suggest new needs based on what we see their competitors or the market doing. 

How to Develop Additional Services Internally When Scaling a Business?

Greg Alexander [00:06:00] Okay, very good. Now, let’s say that you spot a trend, you know, and you’re hearing the same thing enough times where you say, “Jesus, there’s something here.” At first, you service that need by partnering with others, and that makes total sense. But then it’s a substantial enough business that it might be worth investing in that capability in-house. 

Let’s for the purposes of education today, let’s assume we’re at that point. So you’ve made the decision to bring this service in-house, and you’re going to develop it internally. How do you do it? 

Marc Cooper [00:06:33] Well, you know, being an entrepreneur, there’s always that leap of faith. Right. But you go out, and you’re hiring  for the role. And honestly, instead of working with the third-party  service provider that you were bringing in, you work with your internal team. 

Our clients tend to care more about the partners in the agency that are delivering their service than they do about the individuals that are actually working on all the different components. So they gladly accept a new name on a call or in a meeting that’s going to be helping to build out their solution. 

Greg Alexander [00:07:18] Yep. And the focus at that point of the new service line that you’ve developed, is it to bring it to the existing client base and therefore expand the revenue stream from the current clients? Or are you also taking it out to new pursuits? 

Marc Cooper [00:07:35] Yeah, I think it’s like everything we do, right. About 70% of the business is servicing the existing clients. But then you’re always thinking, you know, maybe you hit that break-even  point where it makes sense to bring them in and sell them off to your existing clients. 

But now how do you make that incremental revenue and use  it as a way to go out, reach new clients and new prospects, you know. Ss maybe a new foot in the door to build a bigger relationship with those new clients is always sort of top of mind. Yeah. 

Greg Alexander [00:08:04] What I love about this approach is it’s outward in, you know, you’re listening to the client and then responding. Sometimes, owners of professional service firm boutiques that are trying to scale, they do the opposite. 

You know, they’re educating themselves in their domain, and they get excited about the new hot thing. And they put forward all this effort to hire some people and design methodologies and automate with tech, etc. And then they go, and they take it to their customers, and it doesn’t sell. And they can’t understand why. I’ve made that mistake myself in the past, and it’s painful when it happens. Have you been able to avoid that, or from time to time, does that happen to you as well? 

Marc Cooper [00:08:44] No, I think like everybody we’re human that we think we know better and we try a few things. But I would say the majority of the time, it’s because we’re listening to our clients. We’ve heard them ask for something, and we do it. Yeah, you know, but every once in a while, you try to also be ahead of the curve. And if you’re going to be ahead of the curve, that’s when you have to try 

I think an experiment. Maybe even if you haven’t heard as many clients say they want something. Yeah. But you know, most of the time, it’s listening to your clients and delivering on what they’re looking for. Okay. Biggest payoff. 

Tactics for Developing New Service Lines for Your Professional Services Firm

1. Client Advisory Board

Greg Alexander [00:09:22] You know, there are  a few other tactics that members are using to develop new service lines, to listen to the clients, to see what the need is. We talked about your example of the quarterly business review. Another one that I’m seeing gaining traction is the Client Advisory Board. 

And just to simply explain that you collect a few clients of yours, you meet with them maybe twice a year for a day and a half or so. And in this particular case, a client is saying, you know, here are the challenges that I’m having in my business right now, now and in the future. And they’re giving feedback into kind of what your roadmap may or may not be. What are your thoughts on a client advisory board? 

Marc Cooper [00:10:00] You know, I love the idea, and it’s something that we’ve talked a little bit about but haven’t really pursued as much as we should. But, you know, one of the things that we do like to do is bring clients together for social events. 

And when you see each, you know, your clients actually interacting with each other and talking about what they’ve learned, you know, outside what’s necessary of the agency relationship, you can see that there’s something really powerful happening there where those clients are sharing their own experiences with each other. So to tap into that and get them to focus on how we could get better delivering against their needs, I think it would be well worth exploring even deeper. 

Greg Alexander [00:10:46] Yeah, it’s something that I’ve done in my past and in what I would suggest is it’s a way to formalize it. You know, the informal way of getting clients together and socializing is very beneficial for sure. And I’m glad you’re doing that. This would be the next logical step. You know, you would formalize it. 

What I always liked about it is, you know, it’s one of the only times where the client’s presenting to you. So imagine yourself in a conference room, and you’re sitting there, and the clients walk you through their deck, which is a really, really cool thing. Okay. 

2. Client Satisfaction Reviews

Greg Alexander [00:11:12] Another thing that we hear is client satisfaction reviews, or sometimes people use NPS as an example, and there’s a way to structure those survey tools to collect ideas for new service lines. Do you do any type of client satisfaction reporting? 

Marc Cooper [00:11:31] So we have a scorecard that we make available to clients after every project and now after every significant project. We have a lot of projects as an ad agency where we might be changing an offer in a banner ad, and we don’t necessarily seek big feedback on that. But on the more significant projects we seek feedback, and the feedback is really a lot of it’s about process and creativity, making sure we’re bringing the right ideas to the table. 

So there are a few times, especially when it comes down to were we being proactive for their business, where we bring in the latest and greatest ideas to the table. That’s where some of those new service opportunities pop up when they think they indicate maybe that, you know, we did a seven out of ten on something. 

It  inspires a conversation, but we don’t have a formal spot to actually ask, was there anything else that we could have delivered that we didn’t or anything like that? And I think as I’ve been researching this more, I think that’s an area where I want to spend more time. Yeah. 

Greg Alexander [00:12:39] You know, it’s a pretty easy fix. You know, you add a sentence or two or a question or two to a survey and send it out. And and when I’ve used that before in the past, it was, it was the origination of some really good ideas. And what I love about it, it’s easy to execute. So that’s a good idea for the audience to kick around. 

3. Win-Loss Reviews

Greg Alexander [00:12:56] Okay. Kind of a kissing cousin to that would be win-loss  reviews. And what this is is that for new pursuits, you mentioned 30% of your business comes from new clients. You know, after the sales campaign for those that you’ve won and for those of you lost. You know, some type of feedback mechanism with the prospect that went through the sales campaign to understand why you won and why you lost. And sometimes, that can be a fantastic way to identify new opportunities for service line extension. Have you experimented with that at all? 

Marc Cooper [00:13:24] Yeah, we have. You know, every time we do a pitch, especially in a formal RFP, we ask for a debrief afterwards, win or lose, and we sit down. Sometimes it’s with the procurement manager. Sometimes it’s with one of the review panel. But we’re always looking to figure out why did we win and why did we lose. 

There was one instance where we actually won a very large client. They’ve been with us now for 12 years. Fantastic relationship. And we discovered that we won for a reason we had never anticipated. It was because, during our pitch presentation, we put an emphasis on the great quality we put into the production of the end product. 

And we’re a creative agency, but we still talked a little bit about the production that goes into the end product, and that was what differentiated us from the others in that particular pitch. So since then, we’ve been actually able to monetize the fact that we have better standards or put a bigger emphasis on the production there. And so it actually helped us make that a bit more of a service offering than just a table stake  that we thought it was. 

Greg Alexander [00:14:41] That’s a great story. I appreciate you sharing that. That’s a real pragmatic implementation of that technique, and it’s working really well for you. So now inspire many others to do the same. Okay. 

4. Conferences

Greg Alexander [00:14:51] And the last idea I want to get your opinion on is, I guess before the pandemic, we would all go to some conferences. There’s lots of industry conferences, and I always found those very interesting to go to stimulate creativity or new things. 

We could bring up everything from just the agenda to see what the topics are, because normally whoever’s putting on the conference surveyed the audience to see what should be discussed. I also liked walking the trade show floor to see what all the other vendors are doing. Did you use conferences as a way to stimulate ideas for new services? 

Marc Cooper [00:15:25] Yeah, we still do to a certain extent in the virtual conferences. You know what we like to do. I mean, we attend all the marketing and advertising conferences that we should that are, you know, in the marketing and advertising field. But we also like to attend conferences that are in our clients’ industry. 

Yeah, a lot of them have an industry association that  put on an annual conference. So not only do we attend, but where we can, we try to present, we try to get a speaking role, whether it’s on the main stage or in a side room. And it gives us an opportunity to explain to our clients that not only do we care about their business, we care about their industry. And we want to learn as much as we can so that we can be a true extension of their team. And while we’re doing that, of course, we open ourselves up to a whole new audience because we come across as experts within that particular niche. 

Greg Alexander [00:16:23] It’s a great idea. I mean, it’s such a subtle thing, but if you’re going like in your case as a marketing agency, if you go into just the shows for agencies, it’s a little bit of, you know, everybody talking about the same thing, right? It’s a little of an echo chamber. 

But if you go to the conferences of your clients, it’s now a step beyond that, and you’re hearing how other people in that industry might need your services. And that can be a great source of inspiration for new service lines. Awesome. 

Marc Cooper [00:16:54] Absolutely. We also have in the past acted as judges for those industry associations when they have their own marketing awards. And so that opens us up to other, you know, our clients and their competitors even at those associations ceremonies. 

Greg Alexander [00:17:13] That’s a great idea for sure. Plus, it has lots of credibility. If you’re judging American Idol, you know, you’ve become a celebrity, right? Alight, Marc. Well, listen fantastic input today. Thank you very much for that. If the audience members would like to get a hold of you to continue the conversation, what’s the best, best way to reach you. 

Marc Cooper [00:17:33] If they can head over to Junction59.com,and there’s a lot of information there about us and including all my contact information. 

Greg Alexander [00:17:42] Okay, fantastic. And for those listening, if you want to learn more about this subject, how to develop new service lines, how to develop a business scaling strategy, and many others, you can pick up a copy of our book called “The Boutique: How to Start, Scale, and Sell A Professional Services Firm,” which I’m proud to say just became an Amazon number one bestseller in our little niche. 

And then also, if you’re interested in meeting great people like Marc, you might consider joining our mastermind community. And you can find us at Collective54.com. But Marc, thanks again. It was great to say hello to you and to listen to how you’re implementing this particular business scaling technique. 

Marc Cooper [00:18:18] Great. Thanks for having me on today, Greg. Really appreciate it. 

Episode 72 – How an E-commerce Consulting Firm Developed Multi-Year Client Relationships – Member Case with Bart Mroz

Firms that focus on delivering a great client experience along with their high-quality work reach scale. In this podcast episode, we interview Bart Mroz, CEO at SUMO Heavy Industries, to discuss the client experience and trust-building to develop long-term client relationships.If you wish to grow your consulting business, you must understand how to navigate client relationships.


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 the founder, Greg Alexander, and I’ll also be your host today. And on this episode, we’re going to talk about client experience, and our guest today is member Bart Mroz. Bart, good to see you. 

Bart Mroz [00:00:45] Hello there. How are you? 

Greg Alexander [00:00:46] Pretty good. Would you mind properly introducing yourself to the audience? 

Bart Mroz [00:00:51] Sure. I am the CEO of SUMO Heavy Industries. We are an e-commerce consulting firm. We’ve been around for almost 12 years and started as a web development shop. Grew into a lot more consulting work then than just, you know, development. 

Greg Alexander [00:01:09] I’m looking at these sumo wrestlers behind your shoulder, and I can see the name of your company. So I have to ask, where did that originate from? 

Bart Mroz [00:01:19] I wish therewas a crazier story, but it’s actually our Director of Marketing and myself have known each other for almost 20 years now, and the SU is actually him in it. And the MO is me. And then we didn’t want to have a company name that’s like web development or anything like that and everything in Japan is heavy and industries. 

And ironically, our little tagline sometimes says surprisingly agile, which sumo wrestlers are. So we build a work on big things, but we’re also a really small team, and we’re surprisingly agile. Very cool. So it kind of fit. 

Greg Alexander [00:01:54] Yeah, it does fit . Yeah. Excellent. All right. So today, we’re going to talk about client experience, and I’m going to set this up a little bit. So it’s my opinion that when boutiques are trying to scale, they need to get more sophisticated in the client experience and understand the difference between quality and service. 

And most of our members are true domain experts as you are Bart , and they focus entirely sometimes on the quality, meaning I delivered what I said I was going to do. But the experience of the client goes through along the way is equally important because usually, clients are doing this for maybe for the first time, and they’re engaging with you and building a relationship. 

And there are all kinds of emotional feelings that are happening as we go through the engagement. And clients can become long-term  clients if they literally feel good about the relationship, and that feel good is in addition to the results that you produce. 

Sometimes professional service firms don’t scale because they just produce great results, and they wonder why they don’t have longstanding client relationships. They’ll hear things like, “Greg, I’m doing a great job, and I got fired.” Or, “Hey, I’m clearly the best service provider, but I didn’t get hired.” And that’s because sometimes clients can’t tell. They can’t recognize your brilliance. And what separates the fast-growing firms from the average firm is  this dimension of client experience. 

So, I guess, let me start with my first question Bart,  and  that is just maybe a broad overview of what your thoughts are regarding client experience. And you know, have you documented it or how do you think about that with your firm? 

How to Grow Your Consulting Business: Pay Attention to the Client Experience

Bart Mroz [00:03:39] It’s a huge part of our firm. So in our almost 12 years, we switched to a full retainer kind of company. So it’s a long-term sort of process. I think our longest client has been with us for 11 years now. So our shortest is two months, but we just signed a few new clients. 

So there’s that average like five years right now, which is yeah. So it’s a long term. We are there all the time. We happened to be in an industry that’s e-commerce that’s longer. But it’s all about…For us, sure, we produce awesome work and work with clients, but it’s helping them understand it. 

So I know this is like a long round about thing, but it sets up the whole course of this. It is like half our clients are about 25 million dollars and under online sales, and half of them are one hundred and over. Two different versions and two different things you have to do with them, right? 

The smaller client needs the hand-holding and being them with them at all times. And it could be anything right, they are  like we’re trying to get a new vendor, and we have nothing to do with it. We’re not going to make money off of that, but we’re helping a client get through that process. And it makes it simple for us too. Um, because then we know what the vendor is. 

We can help them with that on the largest client. It’s having those relationships where they’re just longer for us. And the way I can kind of describe that, if it is ever a technical sort of engagement you always have the internal technical team come to the table, right? Oh my God, they’re bringing you consultants and what’s going to happen. And it eventually becomes where they tell most of the senior staff to leave and let the developers talk because it’s the idea of like making relationships that way. 

So for us, to grow your consulting business, it’s about the relationship. It’s about being friendly and just kind of hand-holding a lot of times at the beginning of the relationship, and eventually, it becomes a long-term type thing for us. 

Navigating Client Relationships: How to Work With a Client and Their Team

Greg Alexander [00:05:39] You know, that example you just gave us about the internal team coming to the table, and they’re like, “Oh gosh, how come the consultants are here?” You know, it’s a great story for us to maybe pick on a little bit because I think sometimes we forget that external consultants, whatever type you are, it’s a threat to the internal team. 

The internal team might think, “Hey, this is my job, I know what I’m doing. What do we need these guys for?” So when you’ve dealt with that, and clearly you have multiyear relationships with your clients, how do you overcome that particular concept of they’re threatened by you? 

Bart Mroz [00:06:16] We don’t sit in that meeting, but for us, it’s always been understanding that our job is to walk in the client and make them better than we left them. But that means most of those answers are going to be with the people that been there forever. So, in reality, as a consultant, our job is to take those people’s  sort of answers and present them to the management and go, “Hey, this is what’s had to happen.” 

By the way, we’ll work with your team because they know better how to implement them. So that’s kind of like a weird way of looking at it, but it gets us on the same page with the people actually doing the work. 

Greg Alexander [00:06:52] Yeah. So we’re talking about client experience and how emotionally charged client relationships can be. We just discussed one of the emotions, which is threatened. Another one that I run into all the time is clients can be worried. And what I mean that is they can be worried that you’re going to make them look bad in the process. 

So in that example that you just gave us, you’re working with the team, and you uncover an answer to a problem. You present it up to management. Does the team ever feel like you’re going to make them look bad? And how do you get around that? 

Bart Mroz [00:07:20] I think it’s more of they might. But we don’t feel that just because we tried to make that relationship with that team very solid and the knowledge between the two. I don’t. It’s a weird way of looking at it, but the teams kind of jive really well within the first few weeks. We go through a we call it… We have what we call our discovery process, a weight-in, and it’s a longer process, but it’s that whole relationship building at the same time while we’re actually learning the client’s business. 

It’s a part of that and I think just being in the trenches of with people and going, we can help you. That’s where it doesn’t. It’s the trust factor. Eventually, I think that from many years of doing this, we have this weird knack of being very friendly and making sure those guys are together because we know where some of that work comes from. 

Greg Alexander [00:08:22] Yeah. So this process you just mentioned the weight-in which obviously works very nicely with the name of your firm. Is this like a formal process to try to overcome some of these trust issues? 

Bart Mroz [00:08:35] Yes, it is what we start our relationships with every time or our projects. It’s a two-month  process. It’s very structured, with a lot of phone calls and a lot of Zoom calls, and it’s spread out between, it depends on the client. We work in e-commerce. The ferocity they’re looking at includes, what the client needs, what the business looks like, what the tools are, and code reviews. Those kinds  of things are very important. It’s very structured on purpose. It’s also very long. It’s not your typical discovery. 

Greg Alexander [00:09:03] Yeah, I love it. I think it’s a great idea. And what I like about it is that it’s built for scale, meaning every client goes through the way. And so all of your employees, after a while, are going to get really good at conducting the weigh-in, and you’re hardwiring the client experience right into the delivery of the work. 

And that’s probably one of the reasons why your client relationships are so long and tenure. Okay, let’s talk about another emotion, which is ignorance. You know, you’re clearly an expert, and you go into your clients, and they might not know as much as you know about this particular thing. And you know, they might feel stupid at times. So during the weigh-in  process, how do you help them open up and not feel dumb? 

Bart Mroz [00:09:43] It’s asking those questions and making sure my sort of employees, my staff, all the management understand it’s not. It’s asking questions, right? And no question is wrong. It’s about their business. So, in reality, the way we walk in is like, “Sure. We know how to solve a problem.” But, the client knows their business, right? 

They might not know what kind of tools they need to solve that problem. But our job is to kind of get that from them. So I feel like that’s the weird reverse. Like, that’s where it kind of reversed that is that we’re just curious basically about the business itself. And then we work through, “All right. Hey, listen, you know, you have an old system, you’ve been in the business for a while. Let’s help you go through that.” And that’s asking questions. 

How to Earn Client Trust When Growing Your Consulting Business

Greg Alexander [00:10:28] Yeah, OK. All right. Then one more emotion that I’d like to share with you and see if the weigh-in process, which is your client experience journey, addresses this, and that is this issue of suspicion. You know, sometimes relationships get destroyed because people are suspicious, like, who are these guys? And can I trust them? You know, it takes time to earn trust. And even though the weigh-in process is long, by most standards, it’s still short. It’s only a couple of months. So how do you earn trust that quickly? 

Bart Mroz [00:11:01] So a lot of the clients we have now are coming from people who left and went to other places. And some of them, I think, would just find a client that the guy that the person that brought us in, he’s on his fourth. So you just bring us in. But this is just over the years working through sort of the process of learning people, understanding them. And then, in reality, it’s having a good reference network. 

I mean, that’s you know, and I know that’s may be a cop-out , but it isn’t. If it’s a brand new, we’ve never seen a person before, that is just making sure that we are  making them comfortable, making sure they are comfortable. And we had sort of one. I think we’ve had weigh-ins  where we do for just two months, and we get to a point where it’s like, “Guys, this product is not going to go anywhere. Or, you can take it. It’s too small for us to actually execute. You can take this whole plan with you and go ahead. And people had come back to us or went somewhere else. So that’s our trust, but that’s the trust we built. 

Greg Alexander [00:12:06] Yeah, that’s fantastic. All right. Well, I love it. I mean, this is a best practice here. So for those listening to this, challenge yourself to do what Bart does, which is document your client experience, not just the quality of your work. Think about the emotional context of your client and how you build trust quickly. 

Maybe come up with your version of the weigh-in , and it will go a long way as you try to scale a business. And Bart’s an example because his client relationships are measured in years, not weeks and months, which most of us are. 

Well, Bart, thanks again, man. I appreciate you being here and dropping mad wisdom on us. And for those that want to learn more about this subject or others like it, you can find our book called “The Boutique: How to Start, Scale, and Sell A Professional Services Firm” on Amazon. I’m proud to say I just became a bestseller in our niche, and if those of you who are interested in meeting bright, capable people like Bart, consider joining our mastermind  community, and you can find us at Collective54.com. Bart, thanks again. I appreciate it. 

Bart Mroz [00:13:09] Thank you so much. This was great. Greg Alexander [00:13:10] OK, take care.

Episode 70 – How a Consulting Firm Invested Successfully in Business Development Management

Member case with Ken Yager

As a firm scales, it must make a significant change to its sales strategy. On this episode, we interview Ken Yager of Newpoint Advisors to understand how he invested in business development management, coaching, and training to scale his firm.


Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54 for 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. 

My name’s Greg Alexander. I’m the founder, and I’ll be your host today. And on this episode, we’re going to talk about business development during the scale stage, and we’re going to do so with one of our members, Ken Yager. Ken, welcome to the show. And would you please introduce yourself? 

Ken Yager [00:00:50] Thanks, Greg. Glad to be here. I’m Ken Yager. I’m the founder of New Point. We are a nine-year-old turnaround consulting firm exclusively focused on small, distressed companies trying to address a problem in our industry, which was that it was unaddressed – that problems with small companies were unaddressable by the industry structure that we were in. 

Greg Alexander [00:01:11] Interesting. So so who hires you? Is it the banks that are doing the work out or how? How does it work? 

Ken Yager [00:01:18] You’reu right to the point? I like that, yes, our industry is a two step sort of thing. We have to have it. We tend to work off referrals. Lenders will send us to companies and companies will hire us, and then we have to find a balance where we’re representing all parties. Okay. 

Greg Alexander [00:01:34] So can I have to tell you the only member that I’ve met so far that I hope I never do business with? Because I’d only do business wtih youyou if I were in trouble? 

Ken Yager [00:01:42] Yeah, exactly. You don’t want to see me darken your door. But and I never wish our services on anyone, but we’re there when you need us. 

Balancing new and existing clients

Greg Alexander [00:01:49] Yeah, that’s a good point. OK. So we were talking about business development, which is a very particular thing. Those two words during the scale stage. And I’ll set this up briefly and then I’ll ask Ken some questions. So when you’re a young firm – not like Ken, nine years into his journey- you don’t have any clients. So all of your business development efforts are spent on acquiring new accounts because you have to, as you establish yourself. When you enter the scale stage, which is typically somewhere between years six and tenor so life gets easier and it gets easier because you have happy clients. 

You’ve done work with them, they’re referring their friends, you’re getting some word of mouth. So the sales effort gets easier. It’s never as easy as you want it to be, but it’s easier than in the early days. However, it does require a change in the way that you sell because again, you have these clients that you can go back to and you can get expansion sales from them as opposed to going to new clients. 

Now, I’m not saying that you don’t need new clients. Of course, every boutique owner needs new clients, but the mix changes. Personally, I believe the mix should be about 80/20 at this stage, 80 percent from existing accounts and 20 percent from new accounts. Particularly if you can hold on to your clients for a while. Sometimes it doesn’t always work out that way. Maybe it’s 60/40, you know, existing to new. But the point here is it should be. The majority should be revenue from existing accounts as opposed to new accounts as you’re starting to scale. And that’s a good barometer. So let me start there with you., Ken. If you were to maybe speak in percentages in terms of mix, what’s your pie chart look like right now between revenue from existing accounts versus new accounts 

Ken Yager [00:03:38] It’sgoing to be 80 percent existing accounts. And of course, the twist here for us is that we are talking about referral sources, people who are sending us these potential new clients to work with. But yes, it’s really consistent. 

Greg Alexander [00:03:53] So in that scenario, a lender is your client and they – they’ll have a portfolio of loans. They hire you to help them with one situation that goes well. Next time they have that situation, you’re the first call. And I understanding that correctly, 

Ken Yager [00:04:07] That’s pretty close to it. Yes, it’s sometimes you have to live with a list of three, but if you’re sort of a favored son and you get an extra nudge into – into the crowd. All right. 

Investing in relationships

Greg Alexander [00:04:17] So when you think about your efforts as a leader of the organization and you’re going to direct your time, your people, your budget towards generating business, given the fact that it’s an 80/20 split for you. How do you invest in those existing relationships in order to grow them? 

Ken Yager [00:04:36] Well, it’s sort of a time management. It’s well, we like to teach everyone. Yes, definitely a time management skill, which is to be consistent and constant and not coming and going. Typical consultant things are to get real busy. Forget the client for a while. The referral sources then wake up one morning in a wee bit of a a panic and go back. Yeah, so we work very hard and making sure everyone knows this is a weekly exercise and this is how you intentionally fit it into your schedule with all your client duties. 

Greg Alexander [00:05:03] So it’s a weekly exercise. 

Ken Yager [00:05:05] Yeah, you know, it’s there are certain people you will touch for a whole quarter, but every week there’s someone you can be reaching out to on a list of people that you should be talking to. 

Greg Alexander [00:05:14] And you as a leader of the firm, how do you inspect or make sure that that’s happening because I love the frequency of that. And that’s probably a reason why you guys are doing so well, but that’s a lot. How do you make sure it’s happening? 

Ken Yager [00:05:27] We work also. Well, first off, we have a CRM system. We work off Zoho. We have a – we have retained a part time sales manager that helps coach everyone to make sure that they’re on that system. And then we constantly train people on how to use the system so they get past the awkwardness. We have a lot of professional service people who for years didn’t use a CRM, and now they’re using one. It’s a bit of a trick, to get used to it. 

Greg Alexander [00:05:53] Yeah, that is a new behavior for them to learn. I want to explore this part time sales manager. That’s an innovative approach. So what led you to that? 

Ken Yager [00:06:03] Well, we couldn’t afford a full time person for sure, not of the caliber we wanted. So part time is a way to sort of sip at it, if you will, and take that take as much as we can, but bring the professionalism at the same moment to people. So they kind of went -one of our teammates is struggling with the sales issue. They’re going to someone who they can really trust and feel like they’re a senior person. Yeah, and we treat that person as a senior person. Everyone kind of gets the sense that they’re a person to go to. 

Greg Alexander [00:06:28] Yeah, that’s really interesting. I hadn’t heard that example in this use case, and I like it quite a bit. So the thinking was was pretty basic. You couldn’t afford a full time person, but you wanted to – you wanted somebody to play that role because it was that important to you. Now I’m assuming that those dollars that you’re investing in, that part time sales manager are, I mean, there’s no billable hours to place against that. So that’s a true investment. Is that correct? 

Ken Yager [00:06:57] That’s exactly right. So it needs to pay for itself. And so those people that we’ve given sales duties to need to find deals and convert. Yeah. 

Investment courage

Greg Alexander [00:07:06] And. I’m curious as to how you had the courage to do that, sometimes when faced with the decision I can, I can pull money out of the business and stick it in the front pocket of my jeans, or I can invest it in a part time sales manager. It requires courage to make the investments so, so think back to when you didn’t have the part time sales manager and you made the decision to do it. What? What was your decision making process and how did you finally say, screw it, I’m going to make this happen? 

Ken Yager [00:07:36] This is a classic. I was feeling pain. I was at a pain point, and it was that the sales were, you know, as much as I knew, we had to build a sales force. I knew I couldn’t put all the pennies and dollars into it. I was watching it literally slip through my fingers, trying to manage it myself. And so I said, nNo, no, this task has to be broken off to someone else or I’m never going to get there. And so that’s – that pain started and it kept growing and I finally listened to it one day. 

Greg Alexander [00:08:05] That’s excellent. OK. Part of that pain, of course, is in most process firms. They don’t have a dedicated sales team at this stage. They’ll have kind of producer types who also happen to sell. And that time management, which is an item that you brought up that I want to dive into now a little bit in more depth, which is OK, o I have X amount of hours. I’m trying to get to a utility utilization target. Let’s just for today, say at 75 percent that I need to build myself out at – that remaining 25 percent, that non billable time. Some portion of that needs to be invested back into these relationships. Was it that formulaic for you? And are you measuring time that precisely or is it more guidelines, gut instinct? 

Ken Yager [00:08:54] The precise side of it was a bit of gut, which is to say, I’m going to trust you to know how to apply your time. But we sell people like we would like you to be will be able to build 30 hours a week. We want you to dedicate 10 hours a week to our call admin and team meetings and stuff. We can’t build a clients for training and things like that. 

And when you’re at full capacity, I want to see you at 10 hours of marketing a week, orup to, trying to do research or trying to talk to people. And if you just give him that, that sense of the precision of like, Oh, I can now look at my calendar and say, Oh, 10 hours, where do I put the 10 hours in? Or Coach teaches them how to put that on their calendar. So it’s actually there when they show up to that time slot in their – in their week. And then we also kind of build a model that shows them if you put – if you make so many touches, it converts eventually to so many leads to so many deals when you got to go back to those hours you had available. And so they kind of can do the math off of that, it helps. Yeah. 

Allocating for relationships

Greg Alexander [00:09:54] Listen, I absolutely love what you’re doing. Sometimes we forget that non billable hours is a budget.. When I talk to members, sometimes they say, Well, I don’t have any market – I don’t have a marketing budget. I suggest you do. You’re already spending money on it right now and you just don’t know it. 

So a portion of people’s non billable time is going towards developing these relationships. Do you know what that portion is? And can you track the fact that it’s consistently happening and is equality? So in your scenario, you’ve compartment – compartmentalized everybody’s time, you’re directing the hours in quantity and quality, and you’re providing them a coach to make it happen. That’s absolutely fantastic. It’s a lot for us to learn today on that example alone. 

Sometimes this is a tough question to answer, but I’ll ask it anyways, because as many things that can contribute, but that approach that you’re using. What have been the results? Can you point to anything specifically? 

Ken Yager [00:10:54] Yes. I’d say four years ago, so right about that five year mark, I was 100 percent of our sales. And now about 25 to 30 percent of our sales.. So it’s starting to happen, and a lot of that group is loaded in very late. Unfortunately for us, came in during COVID, which had a couple of twists and turns for our team, our team in our industry. So some of those people really haven’t even had to flourish yet. So a lot of investment at this moment that we’re waiting to kind of see what happens. I think it’s going to break out pretty nicely here the next year. 

Greg Alexander [00:11:23] So congratulations on that. I mean, the fact that you’re cutting it in half. So the business continues to grow, but your personal selling efforts have been cut in half, which is great because some day if you want to retire and sell your firm down the road, you’re going to have to prove to a potential acquirer that you’re not required in order to generate revenue. There’s other people in the company that are doing it, and they’re doing it well. And because you’re tracking it in the way that you’re tracking it, you’ll precisely be able to say to them, just like you did to me – Hey, at this date, here’s what happened. Here’s a before and after results. Do you ever foresee in the future you representing zero percent? 

Ken Yager [00:12:00] Oh yes, I have a stated mission that I aim to get fired from marketing projects and admin at various stages in the -My career, so I’m working very hard getting fired, I –

Getting conulstants into sales 

Greg Alexander [00:12:12] those sound like your three favorite activities. Yeah, that’s funny. That’s fantastic. One  – one last question for you. Sometimes consultants. They don’t like the word sales. They’re slightly more willing to accept the term marketing. But when they when they get asked to do this type of activity I’ve seen in some scenarios, I don’t want to say they think they’re above it, but they don’t think it’s part of their job and their job is to execute the work once it’s been sold. Have you run into that and do you have any advice for those that are listening on how to deal with that? 

Ken Yager [00:12:48] Two pieces that come to mind. One, we actually go even further than networking and marketing. We talk about networking and just telling your  -we’re talking about telling your friends about what you do, which is a very it kind of simplifies it for construction and for people who are more professional service kind of driven. 

And we also talk about instead of territories, talk about tribes. So it just your friends, the people that you like and be with them and try to make it as natural as possible. And – and then the last it is…. I’m trying to think. Pardon me, choking on my words here. 

The other part is some people don’t make it, you’re – you’re really not going to turn it. Here’s the first thing. You’re not going to turn someone who isn’t totally motivated to sell into, you know, into a selling machine.  Maybe over time, a long time, maybe their careers, their lives change. We’ve had one or two of those moments. Well, you’re talking about changing someone 15, 20 percent. So if they’re not going to do it, don’t torture themselves or yourself. 


Greg Alexander [00:13:53] Yeah, that’s good advice. I love progressive past marketing networking, and I love moving from territories to tribes. That makes it approachable for the people that we just described there. It makes it more doable for them. All right, Ken, we’re running out of time here. But listen, that was awesome. I mean, you shared some brand new insights for us. Not surprised that you’re having as much success as you are. I appreciate you being a member and making a contribution today. 

Ken Yager [00:14:21] Thank you, Greg, for the time today and I enjoy being a part of Collective 54. It’s been a really great ride. Greg Alexander [00:14:26] Great. OK, for those that are listening, if you want to learn more about this topic, business development during the scale, stage or others like it. Pick up a copy of the book The Boutique How to Start, Scale and Sell a professional services firm, which I’m proud to say, just hit number one on Amazon in our little niche. And if you want to meet great people, I can consider joining our mastermind community to find us a collective54.com. Thanks again. Take care!

Episode 69 – How a Challenger Brand Advertising Agency Won the War On Talent

Member Case with Mike Sullivan

As professional services firms scale, the culture erodes. Bureaucracy creeps in and employees shift from serving the client to serving the boss which stalls scaling. On this episode, we discuss scaling culture with Mike Sullivan, CEO of Loomis. 


Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders. A 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. I’m the founder, and I’ll be your host today. And on this episode, we’re going to talk about culture and we’re going to do so with our friend and member, Mike Sullivan. Mike, it’s good to see you. And would you please properly introduce yourself to the audience? 

Mike Sullivan [00:00:48] Yeah. Hey, Greg, good to see you too. So I’m Mike Sullivan, president and CEO of the Loomis Agency here in Dallas, Texas, and I’ve occupied this seat for 20 years, if you can believe it. 

Greg Alexander [00:01:01] Wow. And what doesthe Loomis agency do? 

Mike Sullivan [00:01:03] Well, we call ourselves a challenger brand advertising agency. And what that means specifically is that we specialize in the unique needs of challenger brands. And Challenger brands are defined as really classically any brand that isn’t number one in its market, but it goes well beyond that, too. And we can have a discussion around that if you like, but that’s – that’s what we do. 

Culture and scaling

Greg Alexander [00:01:27] Great. So you’ve been around 20 years, which is fantastic, and that’s proof that whatever it is you’re doing is working. What role has culture played for you over the years in growing and scaling and sustaining your for – your firm’s performance? 

Mike Sullivan [00:01:42] Yeah. So the firm has actually been around thirty-five years. So my partner Paul Lewis, I joined him in the year 2000. I came in as president and culture was something that I think Paul, you know what he thought about culture and he thought about yogurt. You know, I mean, nobody was talking about culture. You know, nobody was talking about the team member experience, if you will. And that’s no slight on Paul. I mean, nobody was really in the 90s. It just wasn’t the topic du jour, but it is now, obviously. 

And so when I came in, you know, the agency was in a very different place, it was much smaller. There was no intentionality behind hiring and bringing the right folks in. It was just, can you do this job? Good, go do it kind of thing with no guidance beyond that. And I began to slowly shape and shift that based on my own guiding principle for the agency, which was simple. 

I just wanted to create the kind of employment environment where people look forward to going to work on Monday morning, you know, no Sunday night blues and so on. So that’s kind of where it started, but it’s obviously become far more than that. I mean today, where I think we’reseven time best places to work. Morning News Dallas Business Journal. I think culture is a real differentiator for our agency, and we can talk about that. But there’s your short answer. 

Fighting “the way things are” 

Greg Alexander [00:03:11] Congratulations, you know, and the the agency world, unfortunately, I would say over the years has earned a reputation for not having great cultures. It can be a little transactional and lots of burnout. But clearly, if you’re winning these types of awards, that’s not the case with you. And maybe that’s why you guys are standing out the way that you are. When I think about culture, I think about everything you just said for sure, and it’s mission critical. 

But I’m always putting it in the context of how does how does it help me scale my firm? And one of the ways that it does is that when you get to a certain side size the founders, the partners can’t be everywhere at all times and there has to be this thing called “this is the way we do it around here”. And I know that sounds crazy, but you know, things get done a certain way without, you know, bureaucracy like procedures and policies. It just “this is the way we do things”. Has that happened at your firm? 

Mike Sullivan [00:04:05] It absolutely has happened. And Greg, it starts with identifying the kind of team members you want to have inside your organization, really, if you back it all the way back up to, you know, sort of vision, values, mission, that sort of thing. And then you go and you find people who fit that and you don’t get it right – you know, right off the start and you may you may get one that works well and maybe one that doesn’t, but you tune that over time. 

And because culture is, yeah, it’s all the things that we say and write down and talk about. This is what we stand for, but it’s really even more than that. It’s – it’s all the unwritten, unspoken, unsaid things. And so that – that creates that replication that I think you’re speaking it. So good things get replicated in aculture. Bad things get replicated in a culture. So the intentionality around that is really important. So when you’re applying that to the hiring environment, it’s  really important to get that right. And I keep coming back to hiring because I just think it obviously it all starts with the people, you know, creating the culture and sustaining it, rebuilding it. It’s a living thing. It’s not static. 

Connecting vision

Greg Alexander [00:05:11] Yeah, you’re right. It does come back to the people. And you do your best in the interview process to select the right people based on a set of values. But it is an imprecise science and sometimes you’re going to get those things wrong and the culture has to accept or reject people as they come into the organization. So it stays consistent. And you know, you have a strong culture when that’s happening. 

You know, you mentioned the word vision, which is a favorite word of mine, and that is, you know, you’re creating a vision of the future, the aspirations of the firm. Sometimes I think our members, which are partners and founders of boutique firms, you might even call them challengers Mike in your world. Sometimes they failed to connect the vision with an individual. So if I’m an employee, how do I contribute personally towards the accomplishment of the vision? And when I do so, you know “what’s in it for me?” Yeah, sometimes that’s missing from these vision statements. What are your thoughts on that? 

Mike Sullivan [00:06:09] No, I agree completely. You know, team members need to, and that’s why this just such a big, big part of what we do. Walking in the door, we’ve got this little actually little purpose book. But you know, I talk about this in terms of, oh, it’s got our vision, our values, our mission, all that stuff. You know, we like to say we are, let’s see, using creativity and service of capitalism.

 And so what is it that our folks are doing on a daily basis to help advance the… And help create the business impact that we’re trying to create for our clients and getting them connected to that, tTalking about this, getting me excited about this, like we’ve got a series of workshops, challenger workshops that we do in the agency. We get people enrolled in it. 

They need to understand that, you know, our agencies positioning is connected to our vision and that is helping challengers win. You know, I don’t think the – don’t outspend the competition, outthink them you know, kind of thing. But but yeah, people on the team need to understand it, which I think is, you know, the first objective making sure that everybody has a shared understanding of what the vision is and then understand how they can contribute to it. 

You know, at the end of the day, in a good high-performing culture, people feel like A) they belong and B), they have a purpose and they’re connected to. And sometimes I think we think in terms of purpose, like it’s a bit grandiose purpose. No, my purpose in this organization is to help do these things so that we can accomplish this on behalf of our client. 

Self-governing culture

Greg Alexander [00:07:45] Yeah. You know, utopia, which are perfection, which none of us obtain, but this is what we’re shooting for, is this concept of a self-governing culture, a self-governing team. And what that means is that the culture is reinforced through behaviors that get rewarded, behaviors that get punished. 

But it’s not this kind of top-down, you know, dictator driven, founder driven way. It’s almost bottoms up where people are policing themselves, so to speak, which makes the job of the founder or the partner so much easier. Has your firm reached that level or have you gotten close to that? And what are your maybe general thoughts on this concept of a self-governing culture? 

Mike Sullivan [00:08:29] OK. So, yeah, absolutely. Self-governing, I have a little trouble with because I think it’s a rule, because maybe it implies to me a little bit of tuning out for leadership, which can never happen. Leaderships really got to be tapped into and connected to the culture. Leaders are so important for setting the tone and the pace and culture. 

Again, it’s what said, what’s done. If I am being congruent with the things that I say, believe me or are watching that? But yes, definitely. Once your culture becomes, I think, good and stable and sound and consistency across time is important and you invite the right people in to help you continue to perpetuate that. Yeah, it becomes self-sustaining in that respect. Absolutely. 

And it’s amazing. You know, when you – even the healthiest cultures, we’ve got 65 people. I think when you just get one higher rung, you know, it’s – it’s amazing the disturbance that that causes, you know? And again, it becomes and I like to say, look, if it’s not a fit, you’re going to glow in the dark, you know, and you do. And so it becomes a self-selecting culture in that respect, too. 

Greg Alexander [00:09:39] I love that – if it’s not a fit, it’s going to glow in the dark. It’s a really great way of saying that, for sure. And you’re right. I mean, one or two people out of 65 can make a difference, surprisingly, but it does, because it’s just a ripple effect. This is really something.

 Another topic onculture I find intriguing, particularly for boutique firms – firms like yours is… Sometimes it tends to be a dominant department or dominant function, like in my Old Firm, the rainmakers they – they kind of ruled the place and everybody else took – took the lead from them and that. It was the right thing for us, it’s not the right thing for everybody, but it was the right thing for us. Is there a function in your firm that is kind of the lead horse, so to speak, and sets the tone? Or is it more kind of, you know, democratic? 

Mike Sullivan [00:10:28] You know, that’s a great question, Greg. I believe in our firm that we’re pretty even with respect to that, that there’s that very often in the ad agency world, you’ll find a shop that is, it will say it’s a creative driven agency,  the creatives sort of rule the roost.. Many agencies that have that kind of reputation or as an account driven, you know, and it’s just, you know, the account people are running the show – sales driven organizations. 

That, too, is a culture that that is the culture. I don’t believe that we’re oriented in any one particular fashion, but that’s always something to check in on. And you know, you don’t want to overweight one group at the expense of another because again, that creates disharmony. 

You know, if you’re not optimized… a lot of times and I think this is really true for founders, you know, my background, for example, is account service and strategy. And so early in my career and early when I started doing this, I really did. You know, I was a little heavier on that side of things and maybe appreciating more what the account team was delivering and how hard their job was? Well, I had to even that out my own approach. I had to check in and go, Wait a minute. My media group, my creative group, you know, the folks working production. All of thesethings makes the band work. It’s not, you know, any one component of it. 

Maturing in the developmental cycle

Greg Alexander [00:11:52] So my own journey is something similar. You know, I was I was in the Rainmaker Group and I hired in my image and the Rainmaker Group became the dominant group. And I ran into a scalability problem because most of my team at that point didn’t truly understand what was required to scale. And what I mean by that is we would just go out and sell work, and we wouldn’t think about how we were going to deliver that work and the impact that had on profitability. 

And it wasn’t until those people got promoted to the partnership tier and they were equity owners, and they understood how things flowed through a PNO. Did they change their opinion on things? Oh, I don’t want to sign that piece of work because that actually is going to cause us harm. But that type of client and that piece of work makes a lot more sense to us. So maybe, maybe, maybe sometimes that’s just a function of maturity and where a firm is in their developmental cycle. 

Mike Sullivan [00:12:46] I think so, Greg. And within the leadership, I was very much like that – new business guy. It’s like, gosh, you know, I mean, just go up, get new business. It’ll, you know, revenue takes care of everything. It can cause a lot of challenges. And and thankfully, my executive creative director Tina Tackett, who’s been with us for  – she started the same day I did 20 years ago. She’s has tamed me appropriately. You know, and I have a complete and I think kind of respect for the process, as it were – that younger Mike Sullivan just never would have comprehended. It took a while, but I definitely got. 

Priority of culture

Greg Alexander [00:13:26]Yeah.  So your firm is winning awards for a great place to work. You know, you have cultural artifacts like your book you just showed me, which is great. I would suggest to the audience that you have an advanced perspective on culture, which is probably the reason why you’re having so much success. How do you – this would be my last question. There’s only so many hours in the day and you’re running a substantial firm. You probably have a to do list the size of Texas, and you could just only get to so many things. So so where does culture fall from a priority perspective and – and how do you allocate time towards it? 

Mike Sullivan [00:14:06] You know, Greg, honestly, for me, it’s number one. I mean it all, it really is number one. In fact, here’s the other book you know The Voice ofthe Underdog: How Challenger rands Create Distinction by Thinking Culture First.

 I’m always thinking about this stuff, you know, because I believe that if you get culture right, it does allow you to scale. For instance, you know, we our average tenure among our employees is almost three times the industry average. As a result, our average client tenure is three times the industry average-  that creates instability, stability, it a smoothness in the organization that you don’t always find in the agency world. And I think there is just so many cascading advantages that spill from that. And it’s like I said, it’s the number one thing that I think I think about. 

Greg Alexander [00:14:57] Yeah, that’s a bold statement. I know you got a lot to think about the number one thing that’s really strong. So give us the name of that book again. And if people want to read more about this, how do they find it? 

Mike Sullivan [00:15:06] Yeah, it’s the voice of the – Voice of the Underdog: How Challenger Brands Create Distinction by Thinking Culture First. 

Greg Alexander [00:15:13] And they can find it online?

Mike Sullivan [00:15:14] Mike Sullivan and Michael Tuggle. Yes, on Amazon, you know, like good stuff. Yeah,.Yeah, yeah, 

Greg Alexander [00:15:21] OK. And if members want to find you personally and reach out to your read about you, where can they do that? 

Mike Sullivan [00:15:28] So they can certainly shoot me an email at [email protected] That is our URL. Theloomisagency.com. And yeah, I’d love to talk to folks about this. This is one of – like I said, it’s my favorite topic from a business standpoint. 


Greg Alexander [00:15:45] So, all right. Well, listen, you’re a great member. We’re lucky to have you. Thank you very much for being here today. I really appreciate it. 

Mike Sullivan [00:15:51] Thanks so much for having me on. I appreciate it. Okay. Greg Alexander [00:15:55] And for those that want to learn more about this subject and others, you can pick up our book called The Boutique How to Start, Scale and Sell a professional services firm, which I’m proud to say, just hit bestseller status on Amazon and our little niche so you can find it there. And then if you want to meet other great people like Mike, consider joining our mastermind community, which is Collective54.com OK, thanks everybody. Thanks again, Mike. Appreciate it.

Episode 66 – The Hero Syndrome: A Dirty Little Secret About Professional Service Firms – Member Case with  Marc Beattie

The Hero Syndrome if left unchecked, will prevent you from scaling your firm. On this episode, we discuss how to overcome this problem by interviewing Marc Beattie, Founder & CEO at Wainhouse Research. 


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 exert your firm bigger and faster. My name’s Greg Alexander. I’m the founder, and I’ll be your host today. And on this episode, we’re going to talk about how a founder slash CEO owner replicates him or herself in his team so that they can scale. And joining me is one of our members, Marc Beattie. Did I say that correctly? Marc Beattie? 

Marc Beattie [00:00:54] You did Greg. 

Greg Alexander [00:00:54] OK, very good. I second guess myself there for a moment. So, Marc, if you would mind give the audience a proper introduction. 

Marc Beattie [00:01:04] Yeah. So currently I run a market research firm. So what that means, basically, is that we focus on sizing markets, forecasting markets specifically in the enterprise communications space, all the stuff that you’re familiar with Zoom, Microsoft Teams, things like that. And my background is coming from from tech, basically. I spend a bunch of years up in the Boston 128 area in the late 1980s and 1990s out in San Jose. 

Greg Alexander [00:01:32] So this is going to sound familiar to you, park your car and Harvard Yard. I grew up in Peabody, Massachusetts, so you probably have heard a lot, lots of guys with my accent, you know? 

Marc Beattie [00:01:43] Yeah. 

Greg Alexander [00:01:44] All right. So let’s set this up a bit. So many times professional services organizations don’t scale as well as they could because there’s a bottleneck in the bottleneck sits with the leader of the organization. He or she feels as if they have to be in every meeting and do everything themselves, or it won’t get done right. There’ll be mistakes, et cetera. And at some point, scaling or scaling an organization is just too much work for one person. So this knowledge and skill that the leader has has to be replicated in other people in order for the organization to scale. And it’s not an easy thing to do. It sounds easy, but it’s not an easy thing to do. But if it’s not done, then the firm is going to scale as much as leaders going to scale. And eventually that’s that’s not going to scale at all because only 24 hours in a day and it’s one person. So that’s how we’re going to discuss today this concept of replication. So Mark, let’s start off with maybe just an explanation around this issue from your perspective. Have you run into this issue before and what are your general thoughts about it? 

Marc Beattie [00:02:56] Well, I think for many professional services firms and then specifically Sure hours, it’s an overwhelming issue. Yeah, it’s overwhelming from the standpoint that quite frequently you found the firm based on who you know, your expertize and they know you and they trust you as an example. And then when you go out to solicit business, it’s you out there, so to speak, that they’re buying at least initially and then trying to replicate that, that that reputation, trust and quality becomes a challenge when you take on people who you don’t know. And that’s that’s the from my perspective, that’s the only way you can scale. You run out of people, you know, pretty quickly. And then you have to start sourcing other people in the organization and that that process of, you know, qualifying them, training them and then subsequently trusting them just becomes a constant issue. Yeah. 

Greg Alexander [00:03:51] You know, one of the solutions to this problem is this concept of employee certification, which is a big topic. I’ll do my best to summarize it. Basically, what the goal there is to certify an employee that they have two things. They have the knowledge and skill to be successful and let me distinguish between those two. So knowledge is knowledge of my domain. So for example, if I’m in accounting, you know, I understand the the gap requirements on accounting generally accepted accounting principles. That’s knowledge. A skill is something different, which is, let’s say I’m a consultant and I need to be able to interview an executive. Well, there’s a skill in doing that. You know, how do you open the interview? You know, how do you not lead the witness? How do you summarize your interview notes? That’s a skill, and there are two different things. And breaking down the requirements of a job like in Mark’s case, market research and everything that that might mean into knowledge and skills and certifying others is one way to solve that particular problem. It can be a lot of work, and if it doesn’t go right, it can be dangerous. But if it does work, it can liberate the firm and allow them to reach new heights. Mark, have you experimented with this concept of employee certification at all? 

Marc Beattie [00:05:04] I wouldn’t say certification. You know, we have a process in which we keep on refining over time. And the concern that we have is that other firms much. Larger firms than ours will typically hire students right out of graduate school, and then they’ll train them to run them to that program that you’re referring to. And we’ve taken alternative route whereby we take product managers in the industry and we pivot their careers to become an analyst, which means that in your frame of reference, they have knowledge, but they don’t have skill and they have industry knowledge. They have product knowledge, technology, knowledge, competitive knowledge. But what they don’t have is they don’t have the skill to write and execute products associated that were remain with clients, meaning market intelligence reports and then custom research. 

Greg Alexander [00:05:50] So that’s an interesting take. I can see why you would do that, especially in the context of what your competitors do doing something different. So then it sounds like they they walk through the front door with the knowledge and then you teach them the skill. 

Marc Beattie [00:06:05] Yes, exactly. Exactly. And it’s combination. It sounds strange, but it’s a community effort as far as teaching the skill. And so what happens is when a when a new product manager comes into our firm, there’s a group of other analysts that join alongside and want that person to be successful. And you can see them on the messaging other teams application as an example, where they’re always sharing best practices as an example. And then what happens is depending on where they come for about six months or so, they’re always paired, hit up with somebody else in all of the briefings that every single piece of work that they do. And so what happens is we’ve got programs and processes and then we’ve got templates. There’s places that they can go. They don’t start from the beginning at all. But still, it’s it’s a whole new career. It’s holding skill for them. Yeah. 

Greg Alexander [00:06:49] Sometimes when I have this conversation with folks like yourself, they say they issue an objection to me and it’s some version of Greg. I can do this myself. I can do it fast. It’s free and I know I’m going to get it right the first time. So why would I pay somebody to do what I can do? It’s going to take them forever to do it, and it’s probably not going to be high quality. I’m going to have to micromanage them anyways. What do you say to that? 

Marc Beattie [00:07:18] Well, there’s been a lot of work out there, so it’s tough to say no to a job just because, you know you can’t do it as an example. And you know, it’s much more fun to work with a larger group of people. So unless you’re willing to kind of give something up, you’re going to end up working by yourself or with a limited number of people. So I actually view it in a strange angle. I enjoy the community. I don’t want to work by myself. And it’s a matter of fact. You know, if I was to work on a project for a client as an example, I almost grabbed. I must always grab somebody and bring them along. I’m not trying to do it by myself. I will tell you there is that concept of, you know, it’s got to be the standard as an example. And therefore, there’s peer review for everything that goes out of out of our organization, whether that’s somebody else or that’s me as an example. And so I mean, you know, I continue to remain in the loop from the standpoint of, you know, stepping in and monitoring the work as an example. And it’s hard. Sometimes you have to push back on somebody who wants to move forward and say you’re not quite ready or you don’t have it yet as an example, or you have to be super aggressive when you’re you’re editing it out with the day off. 

Greg Alexander [00:08:25] Yeah. So I agree. I love the community aspect. In fact, Collective 54 is a that’s what it is. It’s a community. And I think human beings are social animals and we get more fulfillment and job satisfaction when we work in teams, for sure. Plus, we can just do a lot more to your earlier point. You know, you don’t want to walk away from work because you don’t have enough capable people to do the job. I love the concept of the peer review. I want to I want to pick on that a little bit because I’ve never I’ve never heard that applied to this situation of replication. So as if I am a four year old, explain it to me very simply. 

Marc Beattie [00:09:01] Sure. So there’s there’s two primary products that we put out and what is syndicated. Market Intelligence basically reports that you build won’t sell many as an example. You put out a market sizing and forecasters state of the market report or landscape report of what’s going on in the industry as an example. And then many clients subscribe to a service that continue to receive those reports. It’s almost always each individual report is almost led by a single analyst, meaning they’ll do all the research around the report and then they’ll write that report as an example. That report can’t be published on our content publishing portal Intel. Another analyst, Sure, reviews that and says, Did you think about this or you know all the questions that you would expect, you know? Well, I didn’t see that in the report. That sounds like an assumption and not data as an example. And then there’s a grammatical structure, and a lot of times what happens is you’ll see the analyst pushing out the copyright ed because I don’t want to get beat up by a peer as an example. See that pushed out to a copyright editor for the grammar and the spelling first and the structure of the narrative. And then what happens is the peer review comes in and beats them up from the standpoint of, you know, is this clear thinking, you know, is this this narrative doesn’t seem to connect to this other piece as an example, there’s a second piece of work that we do, which is custom research. Think about things like a market entry analysis client has a hypothesis of a new product they want to put out as an example, the same thing. Usually one or two analysts will work on that, but the deliverable, which is often, you know, a presentation plus a PowerPoint presentation or, as an example, a market size and forecast opportunity analysis. None of that goes out until one of their other analysts peer reviews that and once again goes that exact same process. You know, are you thinking clearly and have you have you put forward a distinct message that that holds value as well? 

Greg Alexander [00:10:48] It’s a great, great idea. I wasn’t anticipating stumbling on this, but I’m fascinated by it. What I love about it, I’m always thinking about how our members you in this case can scale. And if you have to review every piece of work yourself before it goes out the door, that’s a limiting factor. It sounds like you’ve you’ve been able to push that down to the peers, which means you don’t have to do it all yourself. You have help. And what I love about that, it’s appears are probably I don’t want to say better than you at doing it, but it’s maybe their critique is more appropriate because it’s peer to peer. I mean, I know myself, I learned a lot more from my peers than I do from people who aren’t my peers. My tactical question to you would be, what’s in it for the peer? So if I’m the person who has to do the review, I’m busy. I got a lot of work to do. Why would I take the time to do this? 

Marc Beattie [00:11:40] I thought, You’re going to go there? So on and market intelligence. So each of the analysts has about 10 to 12 reports that have to publish each year. And so therefore, they’re looking for peer reviewers. So there’s there’s a requirement of every single analyst that they have the peer review 10 to 12 pieces from other people every single year, meaning that I won’t get my publication schedule out unless I get help from others and I won’t and others won’t get theirs unless I help them. So that’s of the incentive there. And then on the custom research, that’s a separate sort of big pay schedule versus the compensation that you make on the syndicated research and the. It might be a $500000 project as an example. And so the lead analyst is peel off money for the peer review. So you’re being paid dollars, pretty significant dollars to peer review that. 

Greg Alexander [00:12:29] That’s interesting. Well, so there’s actually monetary compensation tied to it in that particular case. That’s brilliant, that’s a that’s very, very wise way to do that. I want to go back to one thing and this will be the last thing we’ll talk about today. But the one thing you mentioned earlier as a new analyst comes in and for six months, it sounds like they’re being incubated in some capacity. When do you know? And how do you know that it’s time for that analyst to be let loose, take the training wheels off and get going? 

Marc Beattie [00:13:00] There’s a couple of leading indicators. One is one of the things that we focus on is when we’re with clients, whether it’s a briefing or it’s a client engagement as an example on the topic that we’re talking about, that we, you know, we should know about that we’ve often been hired to cover. We should be the smartest person in the room. And I can tell pretty quickly if somebody has a command of their their domain, it’s pretty easy. You know, they they either know it or they don’t know it. And a lot of it is that concept of I brief with, you know, 50 or 100 companies. And I’ve come to my own belief structure about this as an example. I’ve got enough data right now that I’m not buying the marketing angle at all. So when the product marketing manager comes on and says this, I’m not quite sure. I believe that because I’ve heard this from 20 other companies as an example. But here’s what I do believe. So it doesn’t have to be critically, you know, mean or bad, but it has to be critically reviewed as an example, as far as my knowledge base. So that’s that concept of what they know comes out pretty quickly. I just spent a week with a brand new analyst, which I normally would do in Santa Barbara at a client event, and it is becoming clear to me that they’re in their seventh, eighth month. They’re really they’ve got their own domain right now. Now the second piece of that is is, do they? That’s knowledge, you know? And then the other one is, is the skill. Can they execute that to a product that our clients want to consume as an example? And that’s just through the peer review process. I’ll I’ll get as we have a research, we have a valuation let out in Ohio as an example. And here’s my researcher will come along and say, you know, I did an evaluation with this. Other analysts and I had to raise some flags here because he’s concerned about the quality, the product that he’s putting out as an example. And so what happens is it’s not as though they’re telling one another, but they’re saying this is maybe this person needs someone to come alongside of them as an example. And I get that all the time. And I think other analysts get that as well. Can you help this person, et cetera? And I think that’s that’s that’s a very, you know, healthy organization that they’re able to come up and say that and then subsequently do that. 

Greg Alexander [00:15:01] Listen, this is fantastic. I mean, this is new knowledge for our community. The peer review idea is a brilliant scaling tactic. And I encourage everybody that’s listening to this to try to implement some version of it. Marc, if they have questions about how to do this, what’s the easiest way for them to get hold you? 

Marc Beattie [00:15:20] I just my email address [email protected] through waimhouse.com

Greg Alexander [00:15:29] Okay, perfect. Then I’d ask the membership not to abuse that. Appreciate you sharing that to all of us and and hopefully the group will get in touch with you and try to implement this. OK, so for those that are listening, if you’re interested in this topic or others like it, pick up a copy of the book The Boutique How to Start, Scale and Sell a professional services firm. You can find it on Amazon. I’m happy to report that just became a bestseller and our little niche. And if you want to meet brilliant people like Marc, consider joining our community and you can reach. You can find us at Collective54.com and Marc on behalf of the members, just a big thanks for your contribution that you made today. Made a deposit in the knowledge back. I learned something and we’re lucky to have you, so thanks again. 

Episode 63 – Pricing: The Quickest Way to Scale – Member Case with Chris Neumann

Changing your pricing strategy is the quickest way to scale. On this episode, we interview Chris Neumann, CEO at Cro Metrics to discuss how evolving his pricing strategy has allowed him to scale. 


Sean Magennis [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. I’ll go 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 a change to your pricing strategy is the quickest way to scale. I’ll try to prove this theory by interviewing Chris Neumann, CEO at CroMetrics. Crowe Metrics drives revenue growth through strategic, data driven experimentation. They optimize your website for conversion, boosting key metrics such as revenue and engagement while you learn more about your customers. You can find Chris at CRO metrics that CROmetrics.com. Chris, great to see you and welcome. 

Chris Neumann [00:01:19] Thanks for having me on the show. 

Sean Magennis [00:01:20] It’s such a pleasure. So, Chris, let’s start with an overview. Can you briefly share with the audience an example of how changing a pricing strategy can impact scale? 

Chris Neumann [00:01:32] Sure, actually, this is a core strategic advantage for us a year or two ago, I set up a biweekly meeting that anyone in the company could attend called the pricing console. Culturally, we’ve created a safe pay, safe place for people to bring up pricing issues and people from all levels do. So the issues surface of this meeting have led to some pretty big competitive advantage for us and we’re always looking to it’s coming from a place of always trying to deliver more value to the customer through pricing changes, and it’s even actually led to a wholesale change in how we price our our services. 

Sean Magennis [00:02:05] I love to hear that, and let’s go a little deeper on that because you know your concept of creating a pricing console I love because in my experience, tackling pricing is a very loaded and can be a difficult conversation. Is that what you find? Is that why you started the pricing council concept? 

Chris Neumann [00:02:26] Absolutely. I think that actually the right strategy is to always be playing with pricing. So the accountants are one group that are not so enthusiastic about that, but everyone else, including most importantly, the customers, is. So I think another part of this is, you know, we’ve you talked about in the intro, we run revenue optimization and do a bunch of experimentation and some of the most impactful experiments we’ve ever run have been pricing experiments. So why not do that for ourselves? 

Sean Magennis [00:02:56] Exactly. It makes complete sense. And so, Chris, what I’d like to do is get your thoughts and some of the best practices that we recommend in this area. You know, I understand from you what you think about them. I’ll go through five specific things. I’ll walk through each, get your thoughts and feel free, you know, to share whatever your experience is in these regards and add to them. So the first one is a pricing change does not require an investment to implement. There’s no staff to add or service offering to develop, and the benefits can be immediate. So charge more today than you did yesterday. What are your thoughts about this concept? 

Chris Neumann [00:03:37] Yeah, I mean, people’s time is always an investment, so there’s maybe a little bit of cost there, but it’s not a hard cost. And so conceptually, I totally agree. I think some of the biggest impacts have been empowering the team to contribute to pricing. Yeah. So with my pricing council bringing it just helps us understand more what the customer actually wants. And so we’re always examining this and trying to just deliver more value to those so totally agree that you can just make a whole bunch of small and incrementally changes with almost no direct cost. 

Sean Magennis [00:04:06] Excellent. The second one that we find as boutiques often do not know what their services are actually worth to their clients, and they’re often unaware of what clients are willing to pay for those services. Many firms cannot even logically explain to prospects why they charge what they charge. And worse, they cannot quantify the amount of value a prospect receives from an engagement. What are your opinions about this, Chris? 

Chris Neumann [00:04:34] Well, I guess there’s a bunch of hard won experience that I don’t ever speak to. One thing we always do is calculate the ROI in our services, and we do that in conjunction with the client. So it’s not just our calculation, it’s the one that they agree with you. Mm-Hmm. Ideally involving their CFO and those sorts of folks. Yes. And we do that and we present it to the the staff at the customer in a quarterly business reviews. So we make sure we’re all on the same page. Before we were doing that, we’re often, you know, why was I calculate it was much easier for them to and our engagements. The other thing we’ve done is we’ve looked at a number of different pricing models because of that. You know, the value thing you talked about a second ago, we ultimately landed on hourly because in our industry, performance doesn’t really work, and the unit of value is an experiment for us. And so the cost to deliver an experiment varies watch to wildly to warrant a fixed price, which is what we are doing. And that was a very painful lesson to learn since the sort of scope creep on the bigger ones just sort of ate us alive on margin. 

Sean Magennis [00:05:34] You know, that’s such an important thing, and we have had several episodes. And then in our book, we talk about that. But making sure that you clearly manage the scope that you’ve priced well and that you don’t go into the red on on a particular project and only pricing is a way that you have fun to get there. I love your point about the ROI calculation that the client agrees with and involving the CFO. Brilliant. The third recommendation that we would make is to develop a pricing strategy that matches your business strategy. What I mean by that, for example, is if a firm sells to small businesses, the high volume, low price model makes sense. If you sell complex solutions to larger companies, a higher cost, lower volume approach is best. What do you think about that, Chris? 

Chris Neumann [00:06:27] Yeah, I think it ties to your business model in general. Right, so we actually sell to a wide range of customers, but our engagement model really isn’t that different. So larger complex organizations just require more hours because there’s different departments and, you know, bigger meetings you have to have. But the core engagement model and pricing really isn’t that different. So I think there’s like a maybe a yellow flag you might see if you’re starting to like, try to go for a low volume price or start to get out of your lane. It might cause a problem, right? Like a law practice that does patent litigation will be high cost regardless of client size, whereas an IT offshoring will probably all have low cost, high volume engagements. 

Sean Magennis [00:07:08] Yeah. 

Chris Neumann [00:07:09] Is that about your experience? 

Sean Magennis [00:07:11] Absolutely. Maps to my experience and really good points. So another recommendation is to focus on price positioning as it affects perception and in this context. Perception is reality, so the price you charge sends a signal to the client. If you price too low, your work will be considered, which can be considered low quality if you price too high. You may be perceived as being difficult to engage. So if you price the same as your competitors, you may be perceived as undifferentiated to maybe unpack some of those concepts with me Chris. 

Chris Neumann [00:07:48] Sure, so we’ve definitely struggle with this as well. I think the big temptation is to try to sort of win on price, and I would recommend that you not do that unless your core you have a know you have a core cost advantage over your competition, and that’s like your main value proposition. Yep. Instead, what we do is we try to price the value. So I talked about that ROI calculation. Yeah, we do the ROI assessment in the sales process. We’re trying to I don’t want to take people’s money unless I know I’m going to give them a really good return. Yeah, I tell them that at the very beginning. And so we priced towards value because at that point, the conversation is about the parameters of value of the customer versus like how much as a unit of work cost an hour or whatever. A of value pricing is key. 

Sean Magennis [00:08:32] I love that. And then going back again and reinforcing do the ROI in the sales process, which justifies your price to value? I love that. The fifth one. So one more, you know, there may be an understanding of what the client’s value at the attribute level is. So a mistake often owners of processor firms make is they think in the aggregate. When it comes to pricing, we advocate being Sure to understand what attributes of your offering are valued most and influence the perception of your performance in the specific area. This will result in the ability to charge more because there’s more perceived value. Do you do you agree with that? What are your thoughts on that? 

Chris Neumann [00:09:17] Sure. Yeah, I totally do. And you know, as we’ve grown, we’re about 75 people now, so I find myself increasingly sort of almost in an ivory tower. And that’s where the pricing council’s incredibly valuable right. We we talk of the people doing the work and talking with the customer, and they get a real sense of what the client cares about. So like one example specific for us is we were doing this thing. We were selling at a lower rate after a number of hours, using a month to be sort of a bulk discount and, you know, procurement and maybe the people we were working with on the sales process like that. But it turned out there was no behavior change in our clients. They didn’t value it. No one there was no behavior change whatsoever. So we moved away from it because it was basically a sales gimmick. Yes, I mean, this could be fine, but I really want to drive customer value. 

Sean Magennis [00:10:04] Ultimately, that’s a fantastic example. And you know, you said something, you know, it’s 75 employees. You’re feeling that you’re potentially or you you are. You feel sometimes that you’re an ivory tower and you’ve used your pricing counsel to help you stay connected to your client, I think is phenomenal to share with me why it’s important that you really have your finger on the pulse of what the client is doing, thinking, feeling. 

Chris Neumann [00:10:32] I just think that that’s the way you get value, right, understanding the customer ultimately through all of our experimentation we do for them when you get to understand those customers better. So while I might be talking to a more senior person, the engagement, the actual people doing the work or talking to my people. And often there’s a weird power dynamic where if I come to a meeting, it’s causing things to be different. So I need the folks on the ground to be talking to me. So I know what’s going on. It’s just almost impossible for me to, you know, there’s too much observation by us. If I show up to I on tactical meeting, 

Sean Magennis [00:11:06] I think that it’s well said Chris. And you know, our listeners, please take take that to mind, particularly if you’re the founder of your business and avoid that ivory tower mentality by by getting in and really listening. And also this bias that could creep in when you’re the maybe the highest paid person in the room, you’re the founder of the owner or you’ve got the lead intellect. Is give yourself an opportunity to really get to that real insight. Fantastic, Chris. Thank you. These are great Real-Life examples that you’ve shared, and this takes us to the end of this episode. And as is customary, we end each show with a tool. We do so because this allows the listener to apply the lessons to his or her firm. Our preferred tool is a checklist, and our style of checklist is a yes no questionnaire. We aim to keep it simple by asking only 10 questions in this instance. If you answer yes to eight or more of these questions, your pricing strategy is working for you. If you answer no too many times, pricing is more than likely getting in the way of your attempts to scale. Chris has graciously agreed to be our peer example today, and Chris, I’ll ask you the the yes, no question so we can all learn from your example. So let’s begin. 

Sean Magennis [00:12:27] Number one, do you know what your offering is worth to clients? 

Chris Neumann [00:12:33] Yes. 

Sean Magennis [00:12:35] Number two, can you quantify the value of your work in hard dollars? 

Chris Neumann [00:12:42] Yes, that’s the ROI calculation. Yep. 

Sean Magennis [00:12:44] Number three, do you know what clients are willing to pay for your services? 

Chris Neumann [00:12:51] Yes, we do. 

Sean Magennis [00:12:52] Number four, can you explain the logic of your pricing in a way that makes sense to your clients? 

Chris Neumann [00:13:00] We can now if we didn’t use you. But so yes, we turned that from a no to a yes. 

Sean Magennis [00:13:05] Excellent. Number five, does your price illustrate to the client the link between price and value? 

Chris Neumann [00:13:14] Absolutely. That’s the ROI. 

Sean Magennis [00:13:16] And I loved your point about involving the client in that and where possible, the CFO. So they they own it. They’re invested together with you. I love that. Number six, do you charge the most for the service features that your clients want the most? 

Chris Neumann [00:13:31] I think so. I don’t know for sure, but I’ll go with you. Go and check off to really know. Yeah, definitely. 

Sean Magennis [00:13:38] Number seven, do you charge the least for the service features that your clients don’t care about? Similar thing, right? 

Chris Neumann [00:13:45] Yeah, I think so. But it’s hard to hard to know for sure, but definitely a good thing to bring back to the pricing console. Yup. 

Sean Magennis [00:13:51] Number eight, do you allow for clients to choose their price by presenting options? 

Chris Neumann [00:13:57] Absolutely. We learned that lesson very early on. Correct. You want to choose between multiple options versus just yes, no. 

Sean Magennis [00:14:04] Like that. Number nine, is your sales team skilled at overcoming price objections? 

Chris Neumann [00:14:11] Absolutely. You have to be. 

Sean Magennis [00:14:14] And number ten, have you built into your system an annual price increase? 

Chris Neumann [00:14:20] Just yes, only recently, though, so it’s good we’ve got that coming up. 

Sean Magennis [00:14:24] And have you found it? Have you had enough time, you know, to run? 

Chris Neumann [00:14:28] So yeah, it becomes really easy, you know, a couple percent increase for some engagements and then another others we reevaluated. 

Sean Magennis [00:14:35] Yeah, outstanding. So in summary, taking what Chris has shared with us, our listeners really, please understand your worth. Don’t undervalue yourselves. What each of you do is exceptional. Price accordingly and scale quickly. Chris, a huge thank you 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. And for more expert support, check out Collective 54, the first expert community. For founders and leaders of boutique professional services firms, Collective 54 will help you grow, scale and exit your firm bigger and faster. Go to Collective54.com to learn more. Thank you for listening. 

Episode 61 – Yield: The Ultimate Measure of Productivity – Member Case with Aaron Levenstadt

Yield is the ultimate measure of productivity for professional services firms. On this episode, we interview Aaron Levenstadt, Founder and CEO of Pedestal Search and discuss how he uses yield to manage his firm.


Sean Magennis [00:00:15] 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 yield is the ultimate measure of productivity. I’ll try to prove this theory by interviewing Aaron Levenstadt, founder and CEO of Pedestal Search Pedestal, is a marketing technology company and data driven search engine marketing platform founded by former Google employees. Pedestal create systems and processes to help businesses better leverage internet search engines as a growth channel. You can find Aaron and his business on pedestalsearch.com. Aaron, great to see you and welcome. 

Aaron Levenstadt [00:01:17] Thanks, Sean, it’s good to be sharing this conversation with you. 

Sean Magennis [00:01:21] Likewise, it’s great to have you. So today we’re going to discuss one of the most often looked at metrics in all of professional services, yield. A reminder to our audiences that the definition of yield is simply the average fee per hour, times the average utilization rate of the team. For instance, if a boutiques average fee per hour is $400 and the average utilization rate is 75 percent, then the yield is $300 per hour. Aaron, let’s start with an overview. Can you briefly share with the audience an example of how you think about and manage yield? 

Aaron Levenstadt [00:02:02] Yes, certainly. So we keep track of yield, but we don’t obsess over it. And by keep track, I mean, we look at utilization for our team members individually as a collective, as a company. Yes. And also on a per account basis, we think of yield attributed to an account. And although we know that it actually should be the most looked at metric, I want to start off on this piece, we don’t obsess over it. Rather, we focus on and we think a lot about how to source technology and actions from our team members that are value drivers for our clients. So that yield becomes less of a focal point. And we’ve found that over time, focusing too much on yield can lead to some inherent scalability gaps. On the other hand, If we can shift our focus to where we can open up value, that can allow us to create a significant gap between each counts of utilization. Yes, and value created. 

Sean Magennis [00:03:08] Outstanding, I mean, that makes a lot of sense to me. So what I’d like to do is get your thoughts on some of the best practices that we recommend in this area. So there, four specific things, I’ll walk you through and then have you share your thoughts on each. So the first one is the typical boutique runs of an assumption of a 40 hour workweek, a 48 week year that equates to nineteen hundred and seventy two hours per employee, and using our early example at $300 per hour. The boutique will do five hundred seventy six thousand in revenue per employee, a 100 person firm. Let’s say with this yield, we’ll do fifty seven point six million in annual revenue. So understanding yield means you understand how much you can scale to. It establishes a ceiling. What are your thoughts on this concept Aaron? 

Aaron Levenstadt [00:04:00] Yeah, so that exactly where we last left off on the ceiling, so the way that we think about it is instead of sort of focusing on the ceiling, which is defined exactly by the yield equation, if you think about it from that perspective, yes, we think instead of us deploying program stocks as opposed to hours or manpower that generate value, tech driven by great people. And in that way, yield becomes less of a focus and we shift the focus to how to drive value throughout our engagements. 

Sean Magennis [00:04:39] I like that. So deploy program stack and shift to the value rather than exclusively focus on yield. Have I got that right? 

Aaron Levenstadt [00:04:49] That’s exactly right Sean. 

Sean Magennis [00:04:50] Excellent. So the second one is we contend that most firms, when they try to scale, they’ve reached a point of sort of diminishing returns on utilization rates. And we feel this way because there’s only so much juice to squeeze out of the 40 hour workweek and the 48 week year. What’s your opinion on this? 

Aaron Levenstadt [00:05:12] So I think I think, you know, you’re exactly right in how how we’re thinking about this, because the economics and the way that we think about it is the economics around what we do in the way we’re working with a client. They have to work for the client. Most importantly, they also have to work within our our rubric, and we think about it that way. They can allow for scalability. Yes. In a different way than thinking about yield on the, you know, hours and then and then person in the equation. So there’s that, you know, there’s that parable of the chemist that gets called into the factory, right? The factories sprung a leak. Yeah. And the chemist walks in and looks around. He’s taken a look at the machines and he scratches his chin and he thinks, you know, he sees where the leak is coming from. He sees it. He identifies the problem. He quickly creates a chemical compound, using his knowledge to patch the leak in the factories, able to resume production. And then the factory owner calls the chemist, you know, some time later, and he says, Hey, I got your invoice here. It’s for thirty thousand dollars, but you were only here for ten minutes. And the chemist replies, Yeah, that’s right. That’s $10 for my time. And 29 990 for knowing how to fix your problem in 10 minutes. Beautiful. We try to apply that same philosophy. 

Sean Magennis [00:06:34] I mean, that really hits the nail on the head. I mean, and you know, how have you learned that lesson? I mean, you know, that’s a great parable. You know, give me give me a practical example of how you’ve done it. 

Aaron Levenstadt [00:06:47] Yeah, we’ve learned this lesson the hard way. So like, you know, I think like how a lot of us, maybe all of us learn through experiencing pain and a lot of it. And early on in the life of our business, we accepted some engagements where our clients asked bill by the hour and we we took those on those early stages of our company. You know, from a financial perspective, they weren’t. They were great. They were not great. But they also, more importantly, they were not great from an internal morale perspective because the conversations with our clients shifted to, you know, our teams were talking to our team members or talking to clients about why sixteen point three minutes was spent on that and an hour and 12 minutes was spent on this. And they just they weren’t productive, fulfilling conversations. So endured some pain learned the hard way, and we don’t do that anymore. 

Sean Magennis [00:07:46] And to your point, earlier, when you focus on value, you know, when you’ve created this, you know and deployed this program stack, you don’t have to get into that nickel and diming conversation, which is soul sucking. I agree with you, it’s it’s just not productive. So let’s turn to fees. The key to scaling in this context is to figure out how to become more valuable, which is what you’ve said. And remember, this is an equation with only two variables. Utilization rate dollars per hour. So owners of boutiques have a lot more juice to squeeze out of the dollar per hour. And in your case, maybe the value of the dollar value per stack and then impacting the dollar per hour variable. It’s just not as easy as raising prices. Clients will pay more for boutiques that bring more value to them, and this is because they turn to boutiques for specialization. What do you think about this? 

Aaron Levenstadt [00:08:45] I think it resonates very well with our experience in the sense that it resonates so much that today what we do when we’re first meeting with the client, when workers starting that conversation before we’re engaged and working with them, we try to have this conversation openly and candidly at the outset. So very early on and speaking to a potential client, we will communicate and that we’re we’re a specialist, we’re not a generalist and we are going to do the way that we think about our engagements is really by how much value we can drive. 

Sean Magennis [00:09:19] Yes. Yes. Excellent, and then, you know, I guess there’s a lot of things that come into that in terms of variability. You know, and it’s really working to change sometimes the client perspective, right? 

Aaron Levenstadt [00:09:35] Yeah, you want to. You want to change the client perspective, and I want to do it early on in this conversation, so it will we’ll see things in these conversations. You know, like what we do is we help you generate more productive traffic from search. Yes. As importantly, will also say what we don’t like and we’ll say things like, We don’t make pizza, we don’t shoot.  

Sean Magennis [00:10:02] Right? Yeah. Your expertize are search and by the way, with the resume of of you and your team. I mean, that would appear to be, you know, a no brainer. But reminding them of that specialty is key to creating the kind of value that will drive the fees and drive the recognition and obviously get you more business. I get that. That’s really great. So the fourth aspect in our experience, we see five forms of specialization that translate to higher fees, and they are industry specialization, function, segment problem and geography. And in our view, if you’ve got at least three of those, you truly are a specialized firm. So in your case, where are your areas of specialty? 

Aaron Levenstadt [00:10:54] Yeah. So this is an area that we give a lot of thought to. I it’s an area that we’re continuing to refine as our business evolves and grows. And there’s the three that I think that stand out at sort of top of mind would be the function of the problem and the segment go function. Having worked at Google and worked on the search engine algorithm itself, we really understand that world and that’s the functionality that we want to be operating on and what we specialize in. Yes. The problem in a kind of stemming from that. So the second prong problem is really about how to unlock search discoverability, and we’ll see if things are going our conversational, the clients we don’t we’re not here to help you solve 50 different kinds of problems. We we are going to help you solve the problem that we specialize in. We know how to do how to solve for. Yes. And then the third one on our world is is segment. And the way that we think about this segment is really in terms of a profile, psychological to a certain degree, in the sense that our potential client, our partner who needs to know what they’re looking for and know that they have had some success with search and they really want to invest in building and bringing systems and processes to drive that search engine optimization motion more. 

Sean Magennis [00:12:16] Outstanding and that’s again for our listeners. You know, take this from from Aaron. When building your your firm and thinking about your specialization, be really clear, like Aaron is in terms of what what your service can offer the specific problem and don’t try and be all things to all people, I think is the ultimate lesson. Would you agree, Aaron? 

Aaron Levenstadt [00:12:38] Yeah, 100 100 percent. Even on going back to a little bit about what we were talking on earlier is will remind the client when we’re talking to them both before we work with them and while we’re working. Yes, there are lots of things that we are not good at. And if you ask us to do those things, we’re going to say, no. We will fuel you with those things. I think by reminding the client of that, it reaffirms the fact that we’re not a generalist. We’re not just going to do anything that the client’s willing to pay us for. Yes, we’re nationalist and that’s what we’re here to help them with. 

Sean Magennis [00:13:18] That’s such a key point. And I’m I’m assuming that during the course of your journey, you found that at some point it was difficult to say no to client coming you for two for business, right? So scoping is important and really having the professional integrity to say no is key. What do you think about that? 

Aaron Levenstadt [00:13:36] I cannot agree more. Also learned through enduring pain and pain. 

Sean Magennis [00:13:45] Exactly, you learn. That’s how we learn. 

Aaron Levenstadt [00:13:48] Yeah. So yeah, we’ve taken on some work that you know early on that we should not have diverged from our land of expertize from, you know, the thing that we’ve done hundreds of times in doing successfully. And now we’re more careful about that. 

Sean Magennis [00:14:03] Outstanding. And this is so helpful. Thank you so much for spending time with us today. I’ve learned several additional aspects to the importance of managing yield. I like the way you presented your business in terms of the technology and the value aspect. So this takes us to the end of this episode. And as is customary, we end each show with a tool. We do so because this allows the listener to apply the lessons to his or her firm. Our preferred tool is a checklist, and our style of checklist is a yes or no questionnaire. We aim to keep it simple by asking only 10 questions. And in this instance, if you answer yes to eight or more of these questions, you’re running a tight ship with excellent yield. If you said no too many times you have a yield problem and this will be an impediment to scaling. Given the proprietary nature of Aaron’s business, I’m not going to put Aaron on the spot with these, but I am going to read off the questions for the benefit of our listeners. 

Sean Magennis [00:15:09] So the first one is are your average utilization rates above 85 percent? Number two, senior staff above 70 percent? Number three, mid-level staff above 80 percent? Number four, junior staff above 90 percent? Number five, are your average fees above $400 per hour? Number six, are your senior staff above $750 per hour? Number seven, mid-level staff above 500? Number eight junior staff above 250? Number nine are you assuming a 48 week year and 40 hours per week? And number ten, are you distinguished from the generalist with three to five forms of specialization? 

Sean Magennis [00:16:04] So in summary, yield is the ultimate measure of productivity for professional services firms. Watch out for the trap of over rotating to utilization rates and under indexing the second variable in the equation, which is dollars per hour. Drive up your fees like Aaron, by becoming more valuable to your clients by becoming hyper specialized. If you do so, the sky is the limit on your scale potential. Aaron, a huge thank you for sharing your wisdom with us today. It’s a pleasure having you. 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 a Professional Services Firm. Written by Collective 54 founder Greg Alexander.

And for more expert support, check out Collective 54, the first mastermind community for founders and leaders of boutique professional services firms. Collective 54 will help you grow, scale and exit your firm bigger and faster.

Go to Collective54.com to learn more.

Thank you for listening. 

Episode 60– Create Wealth by Converting Client Relationships into Balance Sheet Assets – Member Case with Mike Stern

C54 member Mike Stern, CEO of Connected, shares insights on how to convert client relationships into appreciating assets to attract buyers for your firm.


Sean Magennis [00:00:15] 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 a key to attracting a buyer to purchase your firm is your ability to prove you have healthy client relationships. I’ll try to prove this theory by interviewing Mike Stern, CEO at Connected. Connected is a software product development firm founded in 2014 and headquartered in one of the most beautiful cities in the world. Downtown Toronto Connected was born out of the belief that a new category of firm was needed to help ambitious companies leverage the power of product, not a dev shop or a design agency or a strategic consultancy, but a uniquely integrated product development firm built for the long term and driven by a singular focus on realizing business impact through software powered products. You can find Mike at www.Connected.Io. Mike, great to see you and welcome. 

Mike Stern [00:01:41] Likewise, Sean. Thanks for having me here. 

Sean Magennis [00:01:43] It’s such a pleasure. So let’s start by getting you to give us an overview. Can you briefly share with the audience an example of how you have built a really healthy client relationship? 

Mike Stern [00:01:57] I think my favorite example is a client that we’ve been working with for six years now, so we’re a seven year old firm. And that means that they’ve been with us for the lion’s share and they’ve grown with us. They’ve seen us from our infant stage all the way to, you know, whatever we’re at today. Yes. And that’s that’s one of the reasons that that I like them. But let me just tell you a little bit about them. They are a consumer electronics company. We don’t share the names of our clients. Absolutely. I can assure you that the vast majority of your listeners own at least one of their products, and they have a long, long history of excellence in hardware engineering. But as software showed up and the internet showed up and connectivity and IoT showed up, they started to look around for some help to accelerate their learnings and help them compete in this kind of new software powered product world. And we were, I think, lucky to be at the right place, at the right time to start partnering with them early in their journey. And again early in our journey. And I think this particular client relationship is so special to us because they pushed us to get better and better and better, just as we pushed them to get better and better and better. And I think that is kind of quintessential about what great professional services client relationships are all about. Sometimes both clients and agencies think that it’s just a one way street. Yes, but really we’ve we built something symbiotic with them and and that’s been very fulfilling and it’s been, you know, profitable and helped us grow as a business as well. 

Sean Magennis [00:04:16] It’s outstanding, and I can only imagine that the reference ability of that client because you’ve developed so much and I would, I would probably say a very authentic because if they’re pushing you and you’re pushing them, that relationship that you’ve developed is is really a co-creation relationship in a way. Does that does that resonate? 

Mike Stern [00:04:37] Yes, it does. Yes it does. Some of our service offerings that we now go to market with today are the result of this client and and our team looking at new problems and coming up with creative solutions. Yes. And then, you know, allowing us to take those new service offerings to market and as we make those service offerings in the market even better than we can bring it back to this client and help them even more than than we did before. So it’s a great virtuous cycle 

Sean Magennis [00:05:12] Brilliant and congratulations. That is a perfect example to kick us off. So what I’d like to do is get your thoughts on some of the best practices that we recommend in this area. I’ll walk you through them one by one. Get your thoughts on each. And if you want to expand on them, just feel free to do so, Mike. So the first one is we contend that when getting ready to sell a boutique professional services firm, a buyer is purchasing your assets. One of your assets is your client relationships, and like all assets, they should be proactively managed and cared for so that they appreciate in value. What are your thoughts on this concept of the client as an asset of the business? 

Mike Stern [00:05:56] Well, first of all, I think it’s important for me to say just in case my team or my clients are listening. 

Sean Magennis [00:06:05] Absolutely. 

Mike Stern [00:06:06] I want to be clear that connected’s goal is not to sell. Yes, we have a uniquely long term vision with no plan of selling. But for all the other listeners, if you’re considering joining the collective, you know, I want you to know that I get so much value from this group, just simply helping me build a better firm. Yes. And and so I’d really recommend it. Thank you. Now, you know, of course, I can’t rule out that being part of another firm in the future won’t help us achieve our vision even more or help us achieve an even bigger or more exciting vision. But that’s not the plan. Yes. And so I think that’s important to. To state up front, but onto the question, so when I first heard this advice, I was actually really intrigued. You know, I think it makes sense conceptually, but like from an accounting and reporting perspective, like I was wondering, like, do firms that take this advice actually translate that into their balance sheet in terms of how they report? Like, of course, our clients are an important asset, just like our people or our IP. But I was intrigued and then I went to my CFO and I asked her about this and she hadn’t heard about it before. Yes. And so, yeah, frankly, you know, we we have not done this, but I’m curious to learn more about it, and I’m looking forward to conversations in the collective about it. 

Sean Magennis [00:07:50] Yeah. You know, and you bring up a really interesting point. You know, it’s not so much from a it’s not so much a financial putting it on the balance sheet as a financial category because that that’s not commonplace. It’s a it’s a mindset shift so that when you are creating the kind of value that one day whether you decide to sell your firm or not, but to create enterprise value, if you’re a partner model, you decide to bring in other members of your management team into it. It’s clearly being able to articulate an inventory. What are the value props behind your? Your business could be your service line, your product, your uniqueness, your specialty, the way that you go to market, the example that you just gave of the six year relationship. So you’ve articulated that really well, and I want to challenge our listeners. It’s not so much to put this in your in the financial context on your balance sheet, but truly think of your clients from an industry inventory perspective as assets and not just as you know, numbers on a balance sheet because there’s far more to it than that. There’s relationships, nuances, the push on both sides that you’ve articulated so well, Mike. So that’s great. I mean, you’ve expressed that really well. The second area that I’d like you to give your thoughts on is many boutiques have really good looking financial statements. However, when you peel the covers off, some generate most of their revenue and profits from a very small number of clients. So if one of those clients were to leave the, you know, the firm or the boutiques, financials would not look great. In fact, some of them would fall apart. So we recommend being sure not to have any single client concentration equal to more than 10 percent of the billings of a firm. What do you think of this idea? 

Mike Stern [00:09:43] 100 percent agree. And I think it’s very related to the earlier point you made around clients as an asset in your mindset. Yes. Maybe not on your reporting. Like I said, we’re a seven year old firm. And I’ll share that at one point. Not too long ago, we had 85 percent concentration in just two clients. Wow. The one I spoke about before was one of them. Yes. And. In those early years, building up to where we are today, which is about one hundred and sixty five people, we were kind of fooled into thinking that we had grown up as a firm because even back then we were already, you know, over 100 people. And so we had reached that scale quickly. And a lot of folks on the outside, friends, family, they would be so impressed. But I knew that we still had so many eggs, so to speak, in just so few baskets, right? And again, this was only three years ago. So we we grew up through, you know, four years. But with that much concentration and of course, like I said, even though we looked kind of bulletproof from the outside, I hardly slept at night, you know, thinking, Oh, I know that feeling. What if? What if one or or God forbid, both clients went away? Yes. Now what’s interesting is that as an owner, I think it’s actually pretty easy to understand and feel this risk, whereas for an employee, it’s not always that obvious. Yes. And in our case, not only did we. Not only did we need to figure out how to diversify and build a scalable growth engine and build a scalable service model. We actually had to fight kind of an internal cultural inertia. Yes, as we look to diversify it, we had we had some even senior leaders who liked just having a couple of clients. Right. And that was as hard to overcome as as everything else. So, you know, on balance, we also had a lot of practitioners who wanted more from connected than just to clients to get exposure to actually. And like I said, also before we had, you know, those two clients wanted us to be more scalable to to be more sustainable and so that we could be able to bring more of that knowledge back to them, too. So working with multiple clients across multiple markets and across multiple technology platforms, I think is a big reason employees want to work at connected versus, you know, one of our our client organizations, and it’s a big reason we get hired in the first place. So long story short, I 100 percent agree that creating diversification discipline is essential yes, to creating a sustainable firm. Yes. And I think it’s also about realizing a lot of other benefits for our people and our clients. And so for me, at least right now and in my stage of business, I think it’s the most important organizational capability that matters. And the trick is to, you know, make sure you’re treating your existing clients like assets, not just always looking at the new client because diversification doesn’t mean getting good at landing new logos. It means getting good at doing both, keeping existing clients happy and helping them and getting better and better with them and landing new clients. And so that’s what we’re really focused on right now. Connected. 

Sean Magennis [00:13:37] You know, that’s brilliant, and you’ve touched on a couple of things that we’re going to get to in some of these other questions that I’m going to pose you and you know, you’ve articulated so well some of the, you know, the luxuries of only having two or three as you get really used to working with those clients, they become familiar. The risk is, is that, you know, you have relationships, maybe not at the institutional level and all of the things that you’ve just driven. So the third example and you led with this is tenure of relationships. So boutiques that generate billings from clients for years are very attractive. So this suggests that the client relationships are strong. If the boutique did not deliver value, clients would churn. They’d go elsewhere. And so a rule of thumb that we recommend is that the average client tenure should be three years or more. What is your opinion on that? 

Mike Stern [00:14:30] Yeah, another hundred percent agree. You know, and and I think it’s a it’s it’s a good principle. Yes. And of course, you want long term partnerships, not just financially, because it’s a better way to build a long term business and it’s more fulfilling. Like I said earlier, I mean, if you look at your life and you take stock of the relationships that have been most meaningful, they’re usually those that have lasted and the benefits have compounded in mutually beneficial ways. And so I think it’s the same in in professional services. There’s a little bit of nuance, of course, in that are firms. You know, I remember when I heard this, I was thinking she would like some of some of the current clients that I, you know, I think, are really the future of our firm. We’ve only been with them for one year or two years. And so I think younger firms need to figure out who they are and they need time to figure out who they are and who their ideal customers are. Yes. One of the patterns of great professional services firms that I’ve looked at is that they’ve they’ve, you know, they’ve they’ve had some stumbles figuring out who not to work with. Precisely. Yeah. Trial and error. And so, you know, I think it’s a great principle. But the exceptions are, you know what, what maybe proves the rule and you know, you shouldn’t you shouldn’t try to make every client a three year plus relationship. You should try to make the right clients three year plus relationships. And yeah, and that’s that’s something that you know again, you know, it’s very much part of what we’re what we’re working through right now, connected because we want to we want to keep our current clients for the very long term. Yes. And I think we finally found out who they they ought to be. 

Sean Magennis [00:16:39] And, you know, helping them, like you’ve said with identifying their ideal customers, helping them go through that, maybe giving them some benefit of your experience with the pain of other clients when they had similar challenges? That’s what I know you were getting at as part of your, you know, co-creation symbiotic relationship. Because you know what we have found at Collective 54. You know, we can help owners of boutique professional services firms not pay what we call the dumb tax. You know, share with you through a peer based, you know, methodology. I’ve been through this. I’ve been through at this particular pain. You don’t have to go through it quite the way I did to still get the learning and the and the benefit of the wisdom from it. So yes, thank you. That was great. The fourth one and this is also in the context of creating enterprise value for a boutique professional services firm that may one day consider selling is another meant measure of client relationship is what we call client quality. So, for instance, if your boutique generates its billings from start ups or new companies that haven’t quite figured it out, it may discourage a potential buyer from, you know, making an offer on your business. Start ups typically have a higher failure rate. Revenue from that segment may be unreliable as they figuring things out. In contrast, if you’re boutique generates its billings from the Fortune 500 or from larger enterprise players, it would encourage buyers and large enterprises are unlikely to disappear overnight. Revenues from that segment can be and are typically more reliable. What are your thoughts about this? And I know it’s a nuanced question. 

Mike Stern [00:18:26] I agree. You know, rapid growth start ups can look great from the outside or even not rapidly growing startups try to make themselves look great from the outside. Yes, but they’re usually, you know, really chaotic and less reliable than not. Mm-Hmm. And I say usually because statistically, they usually are more chaotic and less reliable. But of course, a few of them, you know, a few percentage points of all start ups, you know, of course, become, you know, the biggest companies in the marketplace over time. And so I think firms get getting a lot of trouble here if they try to work with too many startups or if they try to get too fancy on choosing the right startup or even taking equity, getting into, you know, our accounts receivable troubles. Yes. And so I’m not totally against it. Connected work with some startups usually past Series A Yes, but I’m I do want to express caution to other boutique owners are probably running startup boutiques themselves that you should tread carefully and read and make sure you’re not concentrating too much of your your your energy in that segment. And that personally, I found it. It is a segment where it can be a great place to learn, a great place to try out new offerings and to work at a clip like at a speed that is maybe faster than what larger clients might be used to. And so there’s those benefits in a number of other ones that I found from working with really, really early stage companies. But unless unless you really figured out how to, you know, pick the right ones and address a lot of the inherent issues with with that segment of customer, I think it’s important that you tread carefully and you don’t put all your eggs in one basket. 

Sean Magennis [00:20:58] Yeah, I completely agree. And then finally, a risk that, you know, again, in the context of somebody looking at the value of a firm, a key driver is employee turnover. Sometimes a key client relationship sits with a key employee. And so even from managing a firm, you know, I would want to know that these relationships are with the company, not necessarily with the employee. What do you think about this concept? 

Mike Stern [00:21:29] Yeah, I think I think it’s a really important point, and especially right now, we’re in this moment that people are describing as the great resignation. 

Sean Magennis [00:21:39] Yes, I’ve heard the term a lot. 

Mike Stern [00:21:41] Yeah. So every leader I speak with is experience experiencing more turnover than ever and up and down the organization and a lot of places where they didn’t expect. And I think it’s exposing a lot of cracks and a lot of fragility. Yes, in a lot of places, but one of them is certainly in client relationships. And so, you know, I think I think it’s really, really important that boutique owners and operators are thinking very hard about this. This advice. Yes. Sure. When I when I heard this advice, I was torn, you know, I kind of, on one hand, felt that, yes, you know, institutionalizing client relationships and diversifying the key contacts across different places in the organization is important and creating systems and CRMs and all of that great stuff to to to, you know, to to to de-risk, you know, this aspect is important. But on the other hand, you know, I think it’s really important, especially in technology services. Yeah, that you remember that you know, you’re in client service and and it is about relationships and you want, I think, as an owner and operator to advocate for deeper personal connections with clients and that that’s really, really important. And great relationships drive firm value to exactly and create more meaningful work for practitioners and more meaningful long term career relationships for practitioners. And so I think it’s another place where there’s nuance and balance and, you know, it’s a bit of art and science. It is to encourage and empower. This is closeness while doing it in a way that doesn’t lead to single points of failure. 

Sean Magennis [00:23:32] Yeah. And it’s a great risk mitigation strategy. And, you know, things like culture and, you know, the kind of environment that you set up and all of those things play in. Mike, this has been phenomenal. Your insights have really added to, you know, what we have found to be recommended practices. So this brings us to the end of the episode. Let’s try to help listeners apply this. I’ve prepared a 10 question yes, no checklist. And I ask our listeners, ask yourself these 10 questions. If you answer yes to eight or more of these questions, you can prove you have healthy client relationships. Mike’s graciously agreed to be our peer example today. So, Mike, just simply answer yes or no to each of these questions as I take you through them. 

Sean Magennis [00:24:18] So, number one, are your client relationships. This is nuanced, an asset on your balance sheet, or I’ll add in your mindset? 

Mike Stern [00:24:28] Not on our balance sheet, but yes, in our mind set fantastic. 

Sean Magennis [00:24:32] Number two, is this asset appreciating in value? 

Mike Stern [00:24:38] Yes. 

Sean Magennis [00:24:40] Do you have a diversified client base with no one client worth more than 10 percent of revenue? 

Mike Stern [00:24:47] We are on our way, but we’re not quite at 10 percent yet. 

Sean Magennis [00:24:52] But that’s I mean, I heard everything you said, that’s a goal and I commend you for it. That’s really key. Number four. Does the tenure of your client relationships exceed three years? 

Mike Stern [00:25:05] Yes, some of our best clients. Absolutely, and we hope that our current ones as well. 

Sean Magennis [00:25:13] Are your clients business stable? 

Mike Stern [00:25:18] Yes. 

Sean Magennis [00:25:19] Number six, are your clients end relationships stable, so are their clients stable? 

Mike Stern [00:25:25] Yes. 

Sean Magennis [00:25:26] Number seven, do you have account plans? 

Mike Stern [00:25:30] Yes. 

Sean Magennis [00:25:31] Number eight, have you institutionalized your client relationships into a customer relationship management system? 

Mike Stern [00:25:39] Yes. 

Sean Magennis [00:25:40] Number nine, the client relationships with the firm and not with the key employee? 

Mike Stern [00:25:48] They are with the firm and with the employees. 

Sean Magennis [00:25:52] Excellent answer. Number ten, will the billings from your client relationships stay when the key employee quits? 

Mike Stern [00:26:01] We would hope so. 

Sean Magennis [00:26:03] We would all hope so. So thank you. If you answered yes to eight or more of these questions, you’ve got an excellent client relationship. This will make you extremely attractive not only to hire employees to a potential buyer as well as to your clients. So client relationships are an asset. Like other assets, some relationships appreciate in value and others depreciate. Appreciating client relationships will increase the value of your firm. Depreciating client relationships will decrease the value of your firm. So when trying to build value and or exit for a great price, please bullet proof your client relationships. I cannot emphasize that enough. Mike, thank you for sharing your wisdom. It’s always great to be with you.

Thank you for being part of Collective 54 and for our listeners, 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.

And for more expert support, check out Collective 54, the first mastermind community for founders and leaders of boutique professional services firms. Collective 54 will help you grow, scale and exit your firm bigger and faster.

Go to Collective54.com to learn more.

Thank you for listening. 

Episode 59 – Competitors: The 5 Competitors Boutiques Must Defeat to Grow – Member Case with Mark Riggs

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.

And for more expert support. Check out Collective 54, the first mastermind community for founders and leaders of boutique professional services firms. Collective 54 will help you grow, scale and exit your firm bigger and faster.

Go to Collective54.com to learn more.

Thank you for listening.