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.

TRANSCRIPT

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.

TRANSCRIPT

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.

How a Learning and Development Firm Retains Key Employees

renee safrata
renee safrata

Episode 71 – How a Learning and Development Firm Retains Key Employees – Member Case with Renee Safrata

There is a direct correlation between employee loyalty and the valuation of a professional services firm. In this episode, we interview Renée Safrata, CEO & Founder of Vivo Team, to discuss employee loyalty and the invisible balance sheet.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. Collective 54 is the first mastermind community to help you grow, scale, and exit your firm bigger and faster. I’m Greg Alexander, founder, and today I’ll be your host. And on this episode, I’m going to talk to Renee Safrata, and we’re going to talk about employee loyalty. So, Renee, it’s nice to see you today. Welcome. 

Renee Safrata [00:00:43] Thanks, Greg. Nice to see you as well. 

Greg Alexander [00:00:45] Renee, you’re one of the more interesting members that I’ve come into contact with. I understand we’re speaking to you, and you’re in Barbados. Is that correct? 

Renee Safrata [00:00:53] That’s correct. I am in Barbados. I am doing a digital nomad trial, and I don’t know if I’ll go back to Canada, but I probably won’t go back home. But I will go back to Canada at some point. 

Greg Alexander [00:01:03] Wow. So are you one of the folks that when COVID hit you decided to make changes? Is that how it came about? 

Renee Safrata [00:01:11] No. You know, it’s actually a bit different. We’ve been doing digital for ten years. Everything digital. My husband and I were always thinking of a digital nomad lifestyle. We were probably planning on doing this just before COVID hit, which, by the way, isn’t it odd? It’s almost like two years exactly this week, right when we all got thrown into lockdown? 

It’s crazy, but we got thrown into lockdown, and so we thought, OK, let’s take that. We’re here; we’re at home. Let’s take the opportunity to clear out our home. So we cleared it out down to two laptop bags and two carry-on bags. And we left Canada, and we don’t want to go home. We’re very happy here. 

It’s fantastic. And you know what? I thought, Greg, I thought we’d meet a lot of retired people, but we’re just meeting people doing the same thing. And so it’s really exciting. 

Greg Alexander [00:02:02] It is exciting. It’s a new world we’re living in. Good for you. Taking advantage of this new world and doing exciting things. OK, so let’s jump into this concept of employee loyalty. And I’d like to start by maybe having you explain to the audience a little bit about your firm and what you do. 

Member Case Study: Who are the Vivo Team?

Renee Safrata [00:02:19] Yeah, sure. So first of all, we create just winning companies and we do that by inspiring leaders. So our mission is to help increase competence, motivation, and collaboration in the pursuit of outstanding results. That’s what we do at Vivo Team. 

We have been doing it digitally for ten years because twelve years ago, we took two years to research the workplace of 2020, and we didn’t expect a pandemic. But we did understand that teams would be coming in from distributed teams from all over across multiple time zones and that leaders wouldn’t be necessarily in contact every day, all day with their teams. 

So we recognized that the learning and development space was not going to participate in that because gone would be the days of going into a classroom, face to face learning, and development. So what we do in Vivo Team is we use behavioral science to understand and diagnose how leaders are connected to their teams against the six key indicators of highly functioning teams. What’s the gap between the leaders and the teams? 

And as well, what we do is what we call space learning. So it’s in the flow of the day. It’s an on trend learning style one hour per week so that you learn something, you take it away, and you apply it. You come back, you learn something more, you take it away, and apply it. 

So what we’re doing is we’re actually selling learning development paths for leaders and teams. And what we’re doing is we’re providing to the C-suite a measure of evidence-based performance, which is really exciting as well. 

Greg Alexander [00:03:54] Okay, fantastic. Appreciate the introduction. Okay. So when I talk about employee loyalty, I think about it through the lens of an investor, which is my day job at Capital 54. And if I’m doing diligence on a pro serv firm, I’m always asking about employee turnover. 

The reason why that is is because when you buy a professional services firm, the assets are the people. And if they’re turning over, then there’s not a lot of assets. And unfortunately, at the time of this call with you today, we’re dealing with the Great Resignation and turnover has spiked, which is devastating when that happens. 

So the work that you do with clients, does any of it address this specific issue of employee turnover? 

How to Address Employee Loyalty and Turnover as a Professional Services Firm?

Renee Safrata [00:04:37] Absolutely, absolutely. And I’m going to be perhaps a bit provocative and say that maybe we need to shift the word of employee loyalty into really looking at what does the employee want? Because you’re right, the pandemic has created this paradigm shift where that invisible balance sheet, the assets of the people, they have more choice now. 

And just like you said in the introduction, I’m working from Barbados. I have more choice. So does employee loyalty actually exist? Or should we actually be focusing as investors, as you’re saying, on the intellectual capital of the knowledge workers and how tight our invisible balance sheet is? 

I think a lot of employers recognized that they were using only the traditional balance sheet and that their invisible balance sheet was extremely weak going into covid and it started to fragment and employees now have way more choice. So they are going to be the ones who are determining what’s going on. So unless you figure out what they want, it’s going to be tough. I’ll stop there. 

Greg Alexander [00:05:45] I love the idea of the invisible balance sheet. I’m going to blatantly steal that and I’ll give you attribution, I promise. But that’s a great way to think about it. If I think about your firm in particular and the digital nomad lifestyle that you’re living in, I’m assuming that your employees are living something similar to that. How do you retain your key staff? 

Employee Loyalty: How Does the Vivo Team Retain Key Employees?

Renee Safrata [00:06:09] Yeah, it’s a great question. And you know what, again, it hasn’t just happened in the last couple of years. Again, we’re Canadian, so our employees have been right from the East Coast to the West Coast in British Columbia, Ontario, and Nova Scotia, Halifax for ten years. 

We have attracted great employees because of our values, our vision, and their desire to be better,to contribute, and to bring innovation to the table. So good people can work anywhere. They also want to be held to account. So if they have good leaders and managers that are connected with them tightly around their accountabilities, now we’ve started to get a great equation. 

And by the way, Greg, you’re not stealing anything from me because the invisible balance sheet started in 1988 in Sweden, so it’s not my thing. We just talk about it a lot. Yeah. 

Greg Alexander [00:07:07] You know, you just talked about your mission, the vision, the values. That’s something that I advocate for. And I think those three things in particular: mission, vision, and values — that’s what makes up the employee value proposition. 

My belief is that each boutique needs two value propositions: a value proposition for clients (why they should buy from you, and why they should hire you), and a value proposition for your employees. You know why they should work for you. Because you’re right, they can work anywhere. They’re making a choice to work for you. 

So let’s start with the first one mission. So what is the mission of your firm? 

What is Vivo Team’s Mission?

Renee Safrata [00:07:45] Yeah, the mission of our firm is really to develop competence, motivation, and collaboration in the pursuit of outstanding results. So I always think of the mission. You’re right be for what’s external to my customers. But I also want my employees to be able to achieve that as well in their day-to-day and in their career achievement with us. 

Greg Alexander [00:08:07] So you were able to answer that question very succinctly and immediately, which tells me it’s real. And you’ve given some thought to this. So how did you develop that mission statement? 

What is Vivo Team’s Mission Statement?

Renee Safrata [00:08:18] With our team. So our team has participated in all of the core values, the vision, and the mission. And what I say to our team on a regular basis is the Vivo team is the vehicle for your career. Get on the bus. Be with us as long as you feel like you’re contributing, and you can be held to account, and you can get great career achievement. But get off it and go somewhere else when you’re ready for that. 

So again, to the beginning of this conversation, I think that kind of disrupts employee loyalty. But if we can think about that invisible balance sheet as people bring their innovation and their contributions to work and wanting to be here, what we as leaders and companies really need to understand is the platinum rule. 

What do they want? Like, what are they looking for in their career? And if we can connect to that and by the way, the leaders and the managers are really the front lines for that, aren’t they? They’re the people that are connecting with their people every day, and they have to understand those nuances of what is important. The soft skills, essentially, because hopefully they’ve got hard skills. What are the soft skills of how that intellectual capital is going to keep growing? 

Greg Alexander [00:09:37] So what we’re learning from Renee is that the mission is real. It’s not some academic exercise that nobody pays attention to. It’s created with the employees. It’s lived every day so that employees jump out of bed every morning and they can’t wait to go to work. 

And when you have a mission like that, a compelling reason to work at a firm, then you’re going to have, you know, very strong employee engagement. And I would say lots of employee loyalty, although it sounds like maybe that’s a little outdated concept, but it will keep retention where it needs to be, which is obviously very important. 

OK, let’s move to the vision side of things, and I think your vision is a picture of the future, something inspiring that says, you know, this is the goal that we’re shooting for. You know, if we’re successful, this is what it’s going to look like for everybody. So have you codified your vision as well as you have your mission now? 

What is Vivo Team’s Vision For the Future?

Renee Safrata [00:10:26] Very simply, we want to create winning companies and inspiring leaders. And if we can do that around the globe, we’re happy. 

Greg Alexander [00:10:33] OK. Sometimes when I hear vision statements and I love that and that is inspiring, there is numbers associated with it. You know, we want this much revenue of this many employees or this many clients, et cetera. And it sounds like you chose not to include that. Was that a deliberate choice? 

Renee Safrata [00:10:50] Yeah. I think of those sitting in our strategies and in our objectives for the years. Making smart, strong strategic decisions and smart tactical decisions. Smart meaning, Specific, Measurable, yadda yadda yadda. 

When I think of vision and mission, I think and I try to get all of our people to think of it like this as well. Your vision when you go to sleep at night is something you want to dream about. Your mission when you’re in the shower in the morning, that’s something that you want to think about doing every day. 

Greg Alexander [00:11:21] Yeah, that’s a good way to think about it. Ok, kind of the third pillar here is the values. And you mentioned that earlier that you’ve thought about this and the way that I think about values for what it’s worth is, how am I going to behave? What are your firm’s values and how were they developed? 

What Are Vivo Team’s Company Values?

Renee Safrata [00:11:42] Yeah. So I’ll start with how they were developed. They were developed online with all of our team together in a brainstorming session. We use storyboard. We thought about what are the behaviors that we demonstrate on a regular basis and what is of high value to us. 

We prioritize those. We had discussions around them, came up with a series of words that represented those core values. And then we essentially curated it down to three: we’re creators, we’re leaders, and we’re champions. 

And again, Greg, I’m going to say that what’s important for me about that as leader of the company is I want to make sure that everybody — going back to employee loyalty, employee engagement, and the intellectual capital of our organization — everybody can embrace that, that I too want to be a creator. I want to be a leader. I want to be a champion. And if they can have that excitment. Again, we’ve got something to build on. The vehicle gets more exciting. 

Greg Alexander [00:12:48] You know, members at Collective 54 are professional services firms and boutiques that are growing. Some of them have hit the scale stage and some have grown so much and scaled so much that they’re at the exit stage. And I often ask them this question, which I just asked you which you answered with the three values. “What are they?” And then I say, “how are they used?” 

And I hear sometimes that they’re used to make hiring decisions. They’re used in employee evaluations. They’re used to determine promotions when they’re available. And unfortunately, sometimes when people aren’t living the values, they’re used as a reason to separate from an employee. 

Do you believe in that concept of using values in that way? Or do you have a different perspective on things? 

Renee Safrata [00:13:30] Absolutely. Absolutely. And what I would say, in addition to that, is that I’m sure a lot of the companies that we’re talking to are utilizing Slack. That Vivo, what we do weekly is we speak to what are the behaviors that I or others demonstrated in alignment with those values. 

So we have a Slack channel that comes every week and at the end of the week, if you haven’t done it by Friday, it comes up and it says, “Hey, where have you seen creators, leaders and champions this week?” 

And so we’re activating that peer-to-peer feedback, which is as well important. I think you mentioned in your chapter about annual performance reviews. Well, that’s too long these days. It is too long. We got to have this as a regular feedback and feed forward have to be a regular thing across our organization. 

Greg Alexander [00:14:25] So that’s a brilliant strategy. You’re reinforcing the values every week through a modern communication channel like Slack and its peer-to-peer, which means it’s believable. You know, it’s not artificial, it’s bottoms-up. Organic, authentic. That’s a brilliant idea. I love that very much. 

Renee Safrata [00:14:42] And it’s behavioral-based, right? We ask this question all the time, “how can I make sure on a regular basis that I am behaving in behaviors that demonstrate what we have articulated as our values?” 

This, by the way, Greg is really, really easy then when we give this idea to leaders and managers and they look at behaviors, they can give people feedback on the behaviors that they notice that are not in alignment with getting great project results or finishing great, you know, great tactics and great strategies in the company. 

Greg Alexander [00:15:20] If members are listening to this, if they want some help and they want to talk to you about it, how do they find you? 

Renee Safrata [00:15:27] Easy. Renee with two e’s. R-E-N-E-E at vivoteam.com or on WhatsApp. 

Greg Alexander [00:15:36] OK, fantastic. Well, Renee, on behalf of the membership, thank you so much for being here today. It was wonderful. You really do an exceptional job in this particular area. And we’re lucky to have you in the membership. So thank you very much. 

Renee Safrata [00:15:48] Greg, can I say one thing about what I really appreciate about this whole membership? 

Greg Alexander [00:15:53] Sure. 

Renee Safrata [00:15:54] I appreciate from the beginning of reading your book to every day you show up online. You have a positive spin that all of us can do this. That’s exciting. Thank you. 

Greg Alexander [00:16:09] Well, thank you for saying that. That’s inspirational because I do believe we can all do this. And that’s another way to make me happier than to see our members reach their goals by, you know, employing some of these concepts. So thanks for saying that. 

Renee Safrata [00:16:21] Thanks, Greg. Greg Alexander [00:16:22] OK. So for those that want to learn more about this topic and others, you can find our book, The Boutique: How to Start, Scale, and Sell a Professional Services Firm on Amazon. If you’re interested in joining the community, you can go to Collective54.com. And with that, we’ll wrap it up and we’ll see you on the next episode. Thanks, everybody.

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.

TRANSCRIPT

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. 

Conclusion

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. 

TRANSCRIPT

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. 

Conclusion

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 68 – How to Disrupt a Large Market with Innovative Services

Member Case with Scott Conard

The service offering is how firms deliver value to their client. Designing it correctly is mission-critical. On this episode, we discuss how to re-think innovative services design by interviewing Scott Conard, Founder of Converging Health. 

TRANSCRIPT

Greg Alexander [00:00:14] 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 from bigger and faster. My name is Greg Alexander. I’m the founder, and today I’ll be your host. And on this episode, I have the pleasure to talk to Dr. Scott Conard. 

And today we’re going to talk about how to apply innovation to your service offering. And Dr. Scott’s got a great story around that. So welcome. Thanks for being on the show. And would you please provide an introduction about yourself andyour firm to the audience? 

Scott Conard [00:00:55] Yeah, thank you, Greg. My name’s Scott Conard, my firm is Converging Health, we’ve been in business for the last seven years and we do ITconsulting for broker consultants and directly to corporations to help them decrease the costs and increase the value. 

The Cost of healthcare

Greg Alexander [00:01:17] So, Scott, one of the things that the reason why I want to talk to you about this particular subject is that you’re going after a big problem, which I’m not going to do it justice, but the cost of health care for lack of a more precise term. 

And you’ve been able to combine three interesting things, in my opinion, and I’d like you to explain this because there’s a point in all this and that is obviously human capital, expertise, technology and data to bring an innovative solution to market. So would you – would you explain to everybody about what your solution is and what it does? 

Scott Conard [00:01:53] Absolutely. So, Greg, probably the best way that they can – those listening can relate to it is every year when you get your health benefit bill and they say, Oh, it’s going to be five, 10, 15 this year could be 15 to 25 percent more than it was last year, which honestly for manufacturing and service companies could destroy their bottom line. 

And in fact, it has destroyed some companies. Bottom line. There’s this primordial scream. We’ve got to do this different. We’ve got to do it better. And I remember experiencing that back in the 90s when they would bring you my bill of the year. So what’s happened is that the health care industry has become 20 percent of the GDP. It’s gotten incredibly complicated. 

Only 30 percent of the money that’s paid into health care is actually paid for care. The other 70 percent is middlemen in some way, shape or form  -or fraud, waste and abuse. And so to get access to this and to understand what’s actually happening to your money, you’ve got to have technology, you’ve got to have the ability to analyze and look at how your money is being spent, which requires data analysis. 

So being a doctor, having grown up in this environment, seeing all these perversions of what should be, you know, an employer paying money to get the employees andtheir family members excellent care. I developed an IP platform that takes the claims, pharmacy and eligibility and zeroes in on what companies are paying. And itelucidates where they’re being taken advantage of and what they can do to decrease their costs. So it’s it’s a minimal human capital, but you have to have human capital to go do the evaluation, but then technology and data to reveal what’s going on. 

Innovation in services

Greg Alexander [00:03:35] It’s fascinating. And I mean, when I hear those statistics on, you know, 15 to 20 percent price increases anda small percentage of it actually go into care. I mean, I literally want to get sick when I hear those things. 

But you’re right. I mean, I’m experiencing that myself, and it’s incredibly frustrating. So to me, this is an opportunity to disrupt a legacy industry and do something better, faster and cheaper than what is being done today. And I believe that you’re a disruptor, and that’s why I wanted to have you on the show. 

And very often people don’t put the word innovation or disruption into the service bucket. You know, they want to talk about, you know, Elon Musk and Jeff Bezos or somebody like that. But here you are innovating in a very real way, in a very disruptive way. What – how did you get to this point? Because some of our members, they want to do this, but they don’t even know where to start. They think it’s so daunting that they they kind of give up on it. So what led you to this point? 

Scott Conard [00:04:34] Well, Greg, the thing is, to be honest, I mean, I’m a family doctor, I’m practicing medicine, I’m watching the industrial – medical industrial complex put barrier after barrier afterbarrier in front of me is a doctor trying to care for people, and I’m seeing the price go up higher and higher and higher for the people paying for it. It doesn’t make any sense. 

So for me, I started to dive into being a businessman and entrepreneur. I’m like, Well, wait a minute, this is crazy. There’s got to be a way to dissect this and understand it. And so my career was practicing medicine, becoming frustrated, building a group, trying to get leverage. That group got as big as 500 doctors at one time and still getting an appointment with, you know, Blue Cross, Aetna, Sydney United Healthcare was difficult. 

We were doing $500 million of the business and they wouldn’t talk to me. But when that sold and I became the chief medical officer of a mid-size broker firm all of a sudden I could get their attention and they’d come talk to me. And – and so I realize now I was buying a couple of billion dollars worth of health care for the corporation.

 So I, you know, started off as a doctor who figured out what to do. Then I was a leader of the physician group and figured out how traumatic the system was on doctors, both personally and trying to manage them, and then realized that the broker consultant world has tremendous leverage if they woulduse it properly. 

And corporations through the broker consultant can do it. But unfortunately, the sophistication of health care has left behind the, I don’t want to say, intellectual abilities- , because there’s a lot of very smart people and brokerage consulting firms, but their model is very relational. 

You know, let’s go play golf, let’s go to the club. Gosh, I love you, man. You’re my best friend. They’re going to have social IQs that are off the wall, emotional IQs that are really strong, but the analytic, scientific exploration they’ve had in their past, let’s just say there’s not that high. 

So the broker consultant world has gotten left behind, and so they’ve turned to these really strange perversions to increase their bottom line. And that’s where we’re at today. So you’ve got these big brokerage houses. I give you an example, Greg, we just heard about last week is another example of the hundreds I’ve already known about. So these big consulting firms will say, Hey, if you want a transparency company or if you want a second opinion company, here are the three we recommend. 

And little do both companies realize, but they make those three companies pay them a quarter of a million dollars to be on that list. And then when the bid comes through for those services, guess what? They’re raised to cover the broker consultants, you know, firms, you know, rider,kicker, if you will, and the broker consultant firm that is supposed to be representing the company and protecting the company is actually getting these other flows of income that have nothing to do with defending the company. 

Greg Alexander [00:07:45] I mean, it sounds like an incredible conflict of interest. Is that is it even legal? 

Scott Conard [00:07:51] That’s the rule, now. It’s not the exception, whether it’s insurance companies, you know, again, we could go through 50 examples for how insurance companies are doing very similar things to – to find revenue inside the flow. And the amazing thing is they won’t give people their data to look at it frequently, so they won’t even let you see what’s going on. 

The broker consultants, some of them are pure consultants where they actually take a fee and they will not take these, you know, the –  the broker part of it is where you get a lot of these perverse incentives, not the consultant side. So you can be very sure that you need to be careful about that. And then you know, you’ve got all the other middlemen, all these vendors point solutions. Literally billions of dollars of “quote-unquote” innovation health care, which actually at the end of the day ends up being additional fees to corporations. And that’s why the non-medical part of this has gotten so large. 

The Converging Health solution

Greg Alexander [00:08:52] Hmm. OK, so your innovative solution, particularly in the data side, does what exactly? 

Scott Conard [00:09:01] Very simply, we look at the contracts for a corporation with these different than, you know, the PBM. The insurance company and other contracts that are there and understand the flow of money, follow the money, you’ll figure it out. So we understand the flow of money. That’s my – that’s the people I work with. They’re the – the people who are more the… It will be divided into eight principles on each side. So they have the – each side that is the contractual and the fixed cost side of it. 

I do the clinical evaluation to see are the people receiving good care? Do they have access to excellent providers? Are they using those providers? And are the incentives in the system set up so that they encourage people to engage in their health and to get taken care of? Or what we see more often than not now is if you actually lean into trying to take care of yourself, you end up getting hit with the big bills repetitively. 

And so people withdraw from care and then they have things go a long time before they get intervened on. And then it’s very severe and very expensive. So I’m the clinician that’s looking at everything. We have the contractual fixed cost side that looks at everything, and we put that together and come back to the company and say, Here’s what’s working. Here’s what’s not working. Here’s what you can do about it. 

And… I would say that 90 percent of the time, maybe 95 percent of the time, there’s 10 percent of what a company’s paying that can be fixed within the next enrollment period or the next cycle. You can get rid of 10 percent of costs. 

With the clinical side of it, that takes a little longer within two years, two and a half years. You’re talking about another 10 percent of costs that can be removed, so you can think about the fact the average company is spending 10000 to 12000 dollars right now for their health benefits. And we are able to save 2000 of the 10000 over the next two years. It’s a tremendous value (per employee). Yeah, that’s per employee. 

Greg Alexander [00:11:08] Yeah. I mean, that adds up in a hurry. That’s a big number. OK, so 

Scott Conard [00:11:12] straight to the bottom line. So. 

Convincing the corporate customers

Greg Alexander [00:11:14] Yeah, exactly. OK, so obviously incredibly innovative thing combination again of expertize data tech to go after this big, big, big problem in trying to disrupt it when taking something that innovative to market and calling on the end customer in this case, the big corporation. Are they… Is there a big kind of evangelism or education that needs to be done, or do they get it right away? 

Scott Conard [00:11:42] No, well, the thing is, if you were t…o this is – this is the catch 22. If you were to meet with the CEO and CFO and you were to share what’s happening, how to figure it out, it’d be a relatively quick meeting. What happens, though, is they delegate everything to H.R. and H.R. Folks… I appreciate them. But they are not part of the C-suite. They do not get rewarded for innovation. They do not get rewarded for taking any chances.

 And so you get a lot of – literally the first question I usually get is what is everybody else doing? How many clients do you have and who are they? Because they’re more concerned about job preservation than they are actually doing what’s right for the corporation? So you have to literally – the CFO wants to save money just as hard as they can. The H.R. wants to be no disruption, and the CEO wants to be very popular and make as much money as possible. 

But what happens to me frequently I will be with the CEO or CFO. They’re like, We got to do this. They delegate me to the H.R. and you can never get it over the finish line, like no matter how hard the CEO or CFO told them to do it. It’s not the business they’re in. But most companies don’t realize, they’re running a health care business inside their business. 

Greg Alexander [00:13:00] Yeah, it certainly sounds like it.. 

Scott Conard [00:13:03] Yeah. 

Health Convergence early adopters

Greg Alexander [00:13:04] OK, now you’ve had some success. I know it’s whenever you’re bringing an innovation like this to market, there’s lots of obstacles to overcome andwalls to run through. But share with the audience a little bit about, you know, the early adopters or the innovators that you’ve been able to sell to. And and where does a firm stand right now? 

Scott Conard [00:13:22] Okay. So we have about 40 companies that we’re working with. We’re working with a number of broker consulting firms. So the converging health is providing the clinical and IT support for a number of consulting firms, one in particular. And so we, you know, our growth, we’ve been 30 to 40 percent growth over the last two years. COVIDreally, as you can imagine, took some wind out of our sails. 

We thought we’d be 40, 50 percent growth two years ago and go up from there. What we find is once we start working with somebody, we have incredibly high retention and they telland there areother people. So it’s very much growing dramatically as we get in and get things going. 

So right now, we’ve got about 40 companies. We are the thing that’s fascinating to me, Greg, is Istarted off thinking, I’m going to serve self-insured companies in the mid-market where I get a YPO type leader who’s able to make decisions and we’re not delegated and we can make things happen. And that’s the segment that I’ve been focused on. 

Believe it or not, I just got hired by a huge health care system in New York City, and because they said, what you’re doing is going to help us with our Medicare and Medicaid risk contracts. And so now I have a contract for one hundred and seventy seven thousand lives that the same I.T. analytics is serving. Ihave a captive of smaller companies that has hired us, that we’re doing that we’re doing their I.T. analytics. 

And so what’s happening is that, believe it or not, the amount of pain, even at ten to twelve thousand dollars per employee that corporations are serving, they’re not willing to spend the energy to get it done frequently, even 40 of them. But that that’s a we would like to be 400 or 4000 and other segments are coming to us and saying what you’re doing matters and it makes a big difference. 

So the federal government right now is forcing hospital systems to take financial risks for Medicare and Medicaid, and they’re like, Holy cow, we’ve got to figure out how to have people be healthy and spend less money and your system does that. 

And so it’s an interesting life for me right now because those with whom I thought I would be serving, I think what’s going to happen is this year when they get told, Hey, it’s going to be 15 percent, 25 percent more next year for health insurance, they’ll they’ll, you know, there’ll be a premier, you’ll scream and maybe another 40 or 50 will come on board. And at some point in the next three years, this is just so unsustainable that the marketplace is going to there’s going to be ready to act and not just hear about it, get excited about it delegated and then come back a year later and say, Yeah, we should have done that. 

Breaking assumptions

Greg Alexander [00:16:00] Yep. So, audience member, there’s there’s a lesson here that I want to underline through Scott’s  fantastic example. When you truly are innovative ,and he isand you’re going after really large problem, which he is, you got to hang in there because sometimes the original assumptions proved to be incorrect and there’s new things that happen that represent wonderful opportunities, as we just heard with the federal government. So the lesson here is to remind ourselves on the adoption curve and the great Jeffrey Moore once wrote about the adoption curve. 

And I’ll briefly summarize it here. Think of a bell curve, and whenever an innovation hits the market in the first place, it goes is the innovators meaning. And customers who like to be first. And they are willing to take a risk and experiment. Then it moves past innovators to the early adopter community, and these are people who also like to be early but not necessarily on the bleeding edge, but they see such a tremendous win that they’re willing to take a chance. 

Then once you get solidified in that group, you make it to the mainstream market and then that’s when all the great things happen. And that early majority and that mainstream market is when things really kick into gear. So if you want to be an innovator, as Scott is, you’ve got to make it through those cycles. 

And the way you do that is you just listen, you push as hard as you can into the market and you let a thousand flowers bloom because you never know where it’s going to take you. And that’s what it means to be an innovator. And so there are audience members who are trying to innovate their firms and disrupt other firms, larger firms and go after big giant problems, which as a percentage of our group, you got to hang in there as you go through those stages. 

And hopefully you’re hearing from Dr. Scott today an inspiring story. I mean, he got to 40 companies, right? That’s a lot. You know, sometimes early firms get to one or two, or three or four, and they don’t get past that – I mean, 40 issubstantial. And now he’s got this new wonderful market segment to go after,g iven the recent success story of New York. 

So, Scott, thanks for sharing your story. Today was inspirational. Every time I talk to you, I find myself rooting for you, and I hope that you keep pushing and you and you make it happen. And I hope those that are listening to this are inspired with by what what you’re trying to do. 

Conclusion 

Scott Conard [00:18:16] Well, Greg, thanks so much. And you know anybody listening to this. We do a free 30 day assessment where we take your contracts. We take your reports from Blue Cross United Cigna from last year. We do a bunch of work and then we come back and educate you. 

And it may not be the first year that you get that, that you engage with. There’ll be a moment where you go, Thank God, I talk to them and I know and understand what’s going on, because that made us an additional X million on the bottom line, particularly when you sell and you get a multiple of five to 12. There’s no reason to be decreasing your EBITDA because you’re paying too much for health care. 

Greg Alexander [00:18:52] So somebody that wants to take you up on that offer, how do they how do they get it? 

Scott Conard [00:18:58] [email protected] Just say, hey, I want an assessment done and we’ll reach out to you. We’ll get it done. I have a team around me that that does the basic work and that I lean in and have the final meeting with you that we’ll show you and educate you at what’s going on. 

Greg Alexander [00:19:13] OK, awesome. OK, so for those that are interested in this subject and others like it growing and scaling a firm, check out the book The Boutique: How to Start, Scale and Sell a Professional Services Firm. You can find it on Amazon.

 And for those that want to meet really interesting people like Scott, consider joining our mastermind community. You can find it at Collective 54.com. Scott, thanks again and enjoy the rest of the conference, and hopefully I’ll see you soon. 

Scott Conard [00:19:42] Yeah, Greg, it’s been great being a part of Collective 54, it’s added so much to our corporation. I’d really encourage everybody hearing this to think about it and join. Greg Alexander [00:19:50] Hey, thanks for saying that. I appreciate it. Be good.

Episode 67 – How a Consulting Firm Began to Productize It’s Offering– Member Case with  Adriaan Bouten

Professional services firms have more intellectual property than they may think. On this episode, we discuss how to monetize and productize your intellectual property by speaking with Adriaan Bouten, Founder of dPrism. 

TRANSCRIPT

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 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 to Adrian Bouten. And today’s topic is going to be about intellectual property. So, Adrian, it’s good to see you. Would you please provide a proper introduction to the audience? 

Adrian Bouten [00:00:49] Thanks, Greg. My name is Adrian Bouten. I’m the CEO and founder of Digital Prism Advisors. We help our clients with digital growth and digital transformation. 

Greg Alexander [00:01:00] OK, very good. How are things in beautiful Charleston, South Carolina right now? 

Adrian Bouten [00:01:05] Nice and sunny just came back from a morning walk and go, it’s 75 and sunny and in March. I’ll take that any day. 

Greg Alexander [00:01:13] Yeah, no question. You can hear it in my voice. I’m from Boston and March in Boston is not pretty. So I’m looking forward. I’m going to be there for Easter weekend, so I’m looking forward to it. OK, let’s jump into it. There’s a lot of confusion around this concept of intellectual property and comparing it to intellectual capital. And sometimes boutique owners either don’t think they have any or they think they have some, and it’s really not. So I want to just maybe start with an overview of what it is. So boutique owners are in the knowledge space, so they’re generating knowledge that has some value. Some of it is protected through intellectual property such as patents, copyrights and trademarks, and some of it is not protected but still valuable. That’s intellectual capital. So for example, if you’re able to charge more for your services and somebody down the street, the person’s paying you because of that additional intellectual capital that you have. And the reason why it’s important is someday when you go to sell your firm, part of your valuation is going to be tied to whether or not you have a little or a lot of this. You will literally be a number will get assigned to it as you go through the valuation. So Adrian, I wanted to just get your your thoughts on this to start out with maybe a little bit about your firm. Do you have do you do you find yourself in the category of IP or IC? 

Adrian Bouten [00:02:37] I find those to be in both. There is a lot of intellectual capital in methodologies and artifacts, but those are not protected. But we also have digital maturity assessment that is trademarked. We have been running for the last six years. 

Greg Alexander [00:02:57] OK, great. And this let’s start there because for those that haven’t been through this process before, tell me why you decided to get that trademarked and what was the process? 

Adrian Bouten [00:03:13] So the process was lengthy, but let me first hand why we trademarked it. The digital maturity assessment that we have prospects and clients complete is a methodology that helps us quickly understand where they were. That company currently is on a scale of one to five and digital maturity in different aspects. And it quickly helps us understand what they should be thinking about doing. How do they get to the next level of maturity? And it’s a whole methodology that way, and that’s more of an intellectual capital until we trademarked it and said, this is unique to us. We want to make sure that nobody can copy us on what we do here. And that’s how why we made that made it IP. 

Greg Alexander [00:04:01] Yeah, which is a great story and a great example, because that it solidifies the fact that you are different and somebody was willing to trademark what it is you’re doing, which is a validation point. So the process of getting a trademark, was it long? Was it expensive? Was it easy? Tell us a little bit about that. 

Adrian Bouten [00:04:21] It was longer than it should have been because we did it wrong as far we went through our general law firm and asked them to handle it, and they weren’t paying it because it’s not a. Not a good billing scenario for lawyers. So we ended up finding a stand alone trademark attorney that does nothing but and that about various mostly and it was inexpensive, took only a few months. 

Greg Alexander [00:04:52] OK, so that’s the advice then, is to hire an attorney that this is what they do. 

Adrian Bouten [00:04:58] This is what they do. And that’s probably true for most attorney type specialty things that you need. But it went very smoothly once we had that individual doing it. 

Greg Alexander [00:05:09] OK. And this digital maturity offering, do you charge clients for it or is it a giveaway? 

Adrian Bouten [00:05:18] It’s a giveaway because it’s a initial assessment. And then we go in business, a specialty consulting engagement. After that, we are talking about following it up with a more in-depth assessment that doesn’t involve consulting. That would be a charge for assessment of a few thousand dollars. So we don’t have anything in between to give away. And the Ford specialty consulting engagement.

Greg Alexander [00:05:47] OK, got it. And the and the reason why it’s it’s worth it to you to give it away is because if the client takes the time to go through it, it’s revealed some gaps and that would lead to consulting projects, right? That’s correct. Yeah, OK. And has it been kind of quote unquote productized or does it still require labor on your behalf to perform it? 

Adrian Bouten [00:06:09] We just finished product touting it. It is now we’re in testing trial testing. They’re going to release it this month, where it can be taken by somebody to automatically get the results. We get notification that somebody is taking it so we can follow up to its proper sales perspective. 

Greg Alexander [00:06:26] Fantastic. So audience, this is a great example, right? So you have this consulting company. They had this ability to assess an organization which most consulting companies have some form of assessment in their domain. It got turned into a maturity model, which then got trademarked and was monetized because it led to consulting work after the assessment was taking. Because it’s trademarked now, it’s protected, meaning people can’t can’t steal it from the prism and it’s not created value. And someday down the road, if this firm decides to sell itself, they’ll sit across the table from a potential acquirer and be able to point to, you know, this client originated from that assessment. This client originated from that assessment and so on, and you’ll be able to tie dollar dollar values of those client engagements back to this individual tool. And that’s a demonstration and proof in the eyes of a potential acquirer that this isn’t a body shop. There’s real intellectual capital into intellectual property that people are willing to pay for. And that’s really the big distinction here is that if you’re a body shop and you and you don’t have any of these methodologies, tools, systems and they’re not monetized, then it’s tough to sell that firm. If you can sell it, you going to sell it at a discount, which is what we don’t want to do. OK, the next question I have for you, Adrian, is because you have this intellectual property and plenty of intellectual capital behind that that you use for consulting engagements. Is that reflected in your rates and would would clients specifically attribute what they’re paying you to the methodologies or tools your eyes see? 

Adrian Bouten [00:08:14] So yes, it is reflected in the rates, but the client never sees our rates. We do everything. Fixed price, OK? So it’s more of a qualification that we know what we’re talking about. Once we do the assessment and have the conversation around it, that is in the client visible rates. 

Greg Alexander [00:08:34] Yeah, OK. So I’m going to leap to a conclusion there, but can correct me if I’m wrong. So you’re selling on fixed bed, which is great so you can get away from the hourly rate card thing, which is not where we want to be. And you put a proposal on the table that’s fixed bed and said, Mr. Client, you pay me, you’re going to get x y z. The client’s going to say, Well, how are you going to deliver x y z? And then you walk them through your your methodology that’s going to deliver. And therefore they have confidence that you can actually execute the project and you win versus the guy down the street. Is that correct? 

Adrian Bouten [00:09:03] That’s correct. Right. We actually quite often go down to the level of, let’s say we are talking about a 12 week engagement. We laid out week by week, what are we going to do? What are they going to see and what’s the value? 

Greg Alexander [00:09:16] Yeah. Another great example of how intellectual capital is used and monetized. In this case, it’s not. It’s monetized, but you’ve got to you have to really know what you’re doing in the monetization. Meaning because he has it, he’s able to charge fixed bed and fixed bids are a lot more profitable than hourly work. And that’s a subtle thing, but it’s a very important thing to distinguish. And if he didn’t have the methodology, the clients would ask questions like, What are you going to be doing? Why does it take 12 weeks? Who’s going to be on the team? You know, they’re going to try to negotiate down on an on an hourly rate basis, which is not where anybody wants to be. And because of the IC, Adrian’s able to avoid that. OK, let’s go to the next level of this. Some firms are quote unquote tech enabling themselves, and they’re taking these methods that you have, which you are deploying through consulting engagements. And you probably have now for many, many times over and over. And they’re turning him into software tools of some kind and they’re lacing licensing them to the client, either as part of the engagement or as kind of a leave behind. It’s a lot of work to pull that off. If done correctly, it can be very lucrative. But if done incorrectly, can be very costly. Have you considered that? 

Adrian Bouten [00:10:33] I have. I don’t feel I’m at the scale yet. To be able to do that because that takes an investment, but you’re talking about here, Greg. Yeah. And but I definitely am planning to do that. 

Greg Alexander [00:10:47] You are. And what is it about that that you find attractive? 

Adrian Bouten [00:10:54] Number one, profitability because it makes it more efficient and more profitable to do the engagement for our clients? Yeah. Right. And scalability. Yeah. 

Greg Alexander [00:11:06] You make it once and then you sell it delivered a thousand times without any labor. Right? 

Adrian Bouten [00:11:10] That’s right. 

Adrian Bouten [00:11:11] Yeah. 

Adrian Bouten [00:11:11] Totally. 

Greg Alexander [00:11:12] Yeah. Which is the big, big benefit. OK. Another area of intellectual capital and intellectual property I want to talk to you about today is this concept of certification. So you you go and you do a project for a client. Part of that project is you’re transferring knowledge and skills to that client so that when you do eventually leave, they can run or implement and whatever it is that you developed. Sometimes that requires some type of training or skills transfer, and a way to systematize that is to certify the client. Have you begun to experiment with that at all? 

Adrian Bouten [00:11:48] I have not. That is not something I’ve gotten into, which again, it’s something we’ve talked about as an option. But no, I have not. 

Greg Alexander [00:11:58] Yeah, that’s an interesting one. Sometimes clients ask for it, sometimes they don’t. What I find in my old business is. We would leave the engagement in like a year later, they would call us up. Something didn’t go right and then say, Hey, can you come back and train my team? And then we would position certification to them as part of the training initiative to say, OK, so let’s make sure this doesn’t happen again. We’re going to train your team there and have to prove to us that they can do X Y Z and they’ll do that through their certification. So audience members, this is an interesting thing to consider. Take some investment for sure, but it can generate a recurring revenue stream for you because most times certifications, people need to be recertified on some frequency. Like, for example, imagine if you’re an attorney, you know you’ve got to maintain continuing to maintain your license, same thing with accounting, etc. So that’s another idea. 

Adrian Bouten [00:12:47] And go ahead along the same lines. What we are planning on doing, probably in 2023, is to give the client a portal. To do self-assessment on a continuous basis, so that takes the last two things together a little bit. It does. It takes both technology enablement and the certification education training. Was that portal a client of us could choose to do a quarterly cycle? A daily cycle doesn’t make any sense, but they can. Due to self assessment around the organization themselves, and that will be an annual subscription fee. 

Greg Alexander [00:13:28] That’s a great idea. That’s tech enabling the certification. That’s the one punch right there. Yeah, that’s a great idea. Have you started exploring the cost in the effort associated with pulling that off? Is that is that easy? Is that difficult? 

Adrian Bouten [00:13:45] We ended up with a few hundred thousand dollars of investment needed for that. It’s more it’s six figures, yeah, but doesn’t have to be seven figures. 

Greg Alexander [00:13:54] Yeah, OK. That’s that’s good to know. So it might be approachable, you know, at a certain point in scale, sometimes tech enabling services outside of this idea can run into the many millions, and it’s outside of the the capability of a boutique to do it. OK. What are the types of intellectual capital do you have like, for example, sometimes people are collecting data and they ask a consulting firm, You know, how am I benchmarking against XYZ? Have you guys just as a natural course of doing your work? Do you collect data? 

Adrian Bouten [00:14:28] We do. And one of the most common things we do with our clients is doing what we call a market assessment and a market map. We collect data. What we do is we go to our clients customer and find out. Not just what they buy from our clients. But from who else do they buy, what adjacent products and services? And that whole methodology helps look from the end customer’s perspective back into our clients and that we then turn into an innovation cycle. 

Greg Alexander [00:15:09] Tell me about the innovation cycle 

Adrian Bouten [00:15:12] That innovation cycle is we look for whitespace in that market map that is adjacent to our client’s current product or service so that that have the brand right to step in to their. And then we do typically sometimes just because executive teams and sometimes with executive teams plus other select people from around our client, we do workshops as to where we apply successful innovation tools like examples of successful innovations in other industries, etc. and go straight up as our clients. From that, we usually end up with a couple of dozen opportunities, we now or we prioritize it. And then we start working with our client on one or two of those, maybe three. 

Greg Alexander [00:16:02] Interesting. So the market map, that’s another great example of intellectual capital and the ability to look into adjacent markets and bring back whitespace whitespace opportunities for clients. That’s a great example of IC. You know, body shops can’t do that kind of thing. They don’t have the method. Their talent is not capable of doing it. That’s a that’s a high skill service, and that’s why Adrian’s company is able to do what they’re able to do. So that’s really the lesson team today is intellectual property. Legally protected property is where we all want to get to. But there’s interim steps along the way which is commercializing monetizing your intellectual capital, and we saw several examples from you today and how to make that happen. And as he continues on his maturity, models, et cetera, et cetera, you know, those will lead to more highly scalable revenue streams. So, Adrian, it was a great episode today. Your examples were outstanding. What I loved about him was is that is that you’re in flight with this, you know, you’re clearly no longer a body shop and you’re on your path to building this highly scalable professional services organization by by, you know, monetizing and protecting all this knowledge that you’ve gained. So I appreciate you very much for being on the show. 

Adrian Bouten [00:17:23] Thank you Greg. 

Greg Alexander [00:17:24] All right. 

Adrian Bouten [00:17:24] Appreciate the opportunity. 

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. 

TRANSCRIPT

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 65 – The Go-To-Market: How to Market and Sell Like a Pro – Member Case with Dan Bernoske

Founders of boutique professional services firms can increase their rate of growth by professionalizing their marketing and sales approach. On this episode, we will discuss how by interviewing Dan Bernoske of Cortado Group.



TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that don’t know us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. I’m Greg Alexander, the founder of the place. And today I’m going to be your host. And joining me is a long time friend and member, Dan Bernoske. And today we’re going to talk about sales and marketing and go to market for your professional services firm. So, Dan, good to see you. 

 

Dan Bernoske [00:00:49] Good to see you, too. Good morning. 

 

Greg Alexander [00:00:51] If you would not mind, could you introduce yourself and your firm to the group? 

Dan Bernoske [00:00:57] Sure. Yeah, I am. Dan Bernoske, the founder of the Cortado Group and we are a boutique consultancy serving companies that are owned by private equity firms. 

Greg Alexander [00:01:09] OK, very good. So, Dan, today we’re going to talk about sales and marketing specific to boutique professional services firms, in other words, how you take your services to market. And given that this is what you do for your clients. I would imagine you’re an expert and doing it for yourself. So I’m going to ask you a few questions, and they’re meant to just kind of stimulate thought and get the conversation going. So the first thing I want to talk to you about is that you have a close rate of 65 percent, which is incredible. And that number says and means a lot of things, and I’m not sure our membership is tracking close rate as diligently as they should and when they do track it and they have the number how to interpret the number. So first, tell the audience how you got to 65 percent and then interpret that number for us. 

 

Dan Bernoske [00:02:04] Well, I mean, the first thing is targeting the right, the right companies. It’s starting out with the ideal customer profile or client profile keeps us super super laser focused on calling on the right accounts. That’s probably the biggest contributor. And then, Greg, you know, buyer personas. OK, so there’s one thing to get into the right company, but a whole other thing to be talking the right person, the decision maker. So those two things combined contributed to that. 

Greg Alexander [00:02:37] Yup. And what I love about that is that, you know, people like yourself that are running these high growth boutique professional services firms. We’re resource constrained. There’s only so many hours and day, so only so many people on the teams, only so many, so much money in the bank account. So if we’re wasting our resources by not being as targeted as Dan is or are is, I guess is the way you would say that, then you know, you’re closer. It’s going to be 20, 30 percent. And sometimes people think that’s good. It’s not good because what that means, let’s say closer rates 30 percent. That means you’re losing seven out of 10 times. So think about all the effort associated in those pursuits and you’re losing seven out of 10 times. It’s just eliminate that and you’re going to recapture all those resources. Now, I advocate Dan, that the close rate should be 50 percent, and I would I would suggest that 65 is too high, which sounds almost counterintuitive. Like why? I mean, maybe closer. It should be 100 percent. But when I hit 65 percent, I think maybe you’re not in enough deals or, you know, charging enough for your services. So what do you think about the 65 percent number and how do you interpret that? 

 

Dan Bernoske [00:03:47] This is so glad you brought it up, and that is a huge debate for us around one of the points of pricing. So are we pricing ourselves? We’re trying to weigh the balance of not pricing ourselves out of our target market. I mean, I’m going toward the small and mid-market company. So weighing that balance, so I suspect maybe we’re price people too low and then we may be, you know, the other thing driving is maybe our ICP is a little too tight. So to your point that if we’re not getting into enough deals, are we constricting ourselves from other opportunities if we’re just not seeing. 

 

Greg Alexander [00:04:25] Yeah, and you’re right, and that’s how you interpret that number, so there is such a thing as a close rate being too good because again, that might be restricting your market opportunity. So the most important thing is what we’re learning from this is to really be super crystal clear on two things that Dan is teaching us today. Number one, who the ideal client profile is. And I know right now everybody’s rolling their eyes in the back of the head because they say, I hear this from Greg all the time. Yet many of us still don’t have that done correctly, and that’s a dynamic document, not a static document. It changes over time as your firm evolves. And then secondly, once you pick the clients who want to go after, who’s the individual or group of people in those accounts that you want to sell to? And Dan, in your case, you’re selling sales and marketing effectiveness improvement. So are you selling to the CMO or the head of sales or who are you selling to? 

 

Dan Bernoske [00:05:18] Yeah. If we were up in the enterprise, that’s exactly where we would be great. But we sell to companies. So our ICP the ideal client profile 10 to 500 million in size earned by private equity. So we’re selling to we’re selling to the private equity operating partners and the CEO level like that’s that’s really our sweet spot. 

 

Greg Alexander [00:05:40] OK, so let’s apply this concept of buyer personas to to those two particular individuals and operating partner in a shop and a CEO of a portico. So first, there might be some folks listening that don’t know what a buyer persona is. So give us a quick definition of that. 

 

Dan Bernoske [00:05:56] Well, think of it as a fictitious representation of your buyer. And what does that mean? That means I’m going to know how are they motivated to do their job right? What are the obstacles standing in their way of doing their job? How are our success measured? There’s a whole bunch of things that go into that, but you need to get this psychographic profile of your buyer. So you really understand how they think and how they act. Yeah. 

 

Greg Alexander [00:06:20] OK, perfect. All right. So let’s start with the first one. The CEO of the Port Co. So maybe give us two or three things that you know about that buyer persona as an illustration or an example of what what should be on a buyer persona? 

 

Dan Bernoske [00:06:37] Well, first of all, they have their piggybacks, so we know that they’re going to want to exit in three to five years. So that maximum exit valuation, huge objective. 

 

Greg Alexander [00:06:48] OK, so let’s stop there, because that’s a great one. So you know that this CEO is the CEO of a portico owned by PE, which means are selling in three to five years. So his motivation is to get to that successful exit, correct? Oh, absolutely. Okay. So then when are positioning your services just to connect the dots here for the audience? You’re connecting it to that priority, that goal. 

 

Dan Bernoske [00:07:13] Absolutely. You know, it’s going to resonate with it’s going to mean something. 

 

Greg Alexander [00:07:17] So so how do you do that? 

 

Dan Bernoske [00:07:20] Well, we do that like how we actually execute has on multiple levels, but let’s just take the the proposal. Yeah. Is that what you mean? Yes, exactly. Yes. Yeah. I mean, if you think about how we frame up our solution, it has to really satisfy that, that objective for him. So all of our solutions have to point in that direction. So for example, yeah, we’re going to help improve the revenue on your company. But what we’d like to do is show a case study that demonstrates the fact that in three to five years, the lift that we’re going to provide today is actually going to lead to a two or three x multiple on their on their exit, for example. So always, always tying everything back to that, that objective there. 

 

Greg Alexander [00:08:06] That’s a great example. I mean, that’s a that’s a built in cost justification for your project. You know, you’re putting you put a proposal on the table and then instead of just leaving it in isolation, you connected to this objective. And you say, if we’re successful with this project, here’s what it means to you in dollars and cents expressed as a multiple and even though correct? 

 

Dan Bernoske [00:08:26] Yeah, absolutely. Yeah, absolutely. You know, kind of get to go on a rabbit hole here. But it highlights the fact that when we think about go to market, I think there’s a long overlooked tool and that is the proposal is actually your most important piece of marketing and sales material. I’ve got a website, fabulous research reports, but the rubber meets the road on this proposal. So all the more reason why it has to speak to that percent of that objective? 

 

Greg Alexander [00:08:57] Yeah, yeah. And sometimes these proposals are kind of template sized or they don’t put the firm’s best foot forward at times, which I agree with you. The proposal is often overlooked, and that’s a good piece of advice for the members is to take a fresh look at their proposal and make sure it’s connecting to the motivations expressed in your buyer persona and within your ideal client profile. OK, let’s go to the next big thing as it relates to go to market strategy for a boutique professional services firm, there’s three things we talked about. One which is to close rate. We had an interesting conversation around your remarkable 65 percent. The next is average deal size. So if I’m winning five out of 10 deals and they’re worth 50 grand, that’s a lot different than winning five to 10 deals. And they’re at five and a grand. So how are you optimizing for deal size? 

 

Dan Bernoske [00:09:51] Oh, man, that that is a that’s a tough one, because what what I’m what I’m finding is, well, it boils down to willingness to pay. 

 

Greg Alexander [00:10:02] What does that mean? 

 

Dan Bernoske [00:10:04] Well, what what is the perceived value of your solution to the buyer and what are they willing to pay? Yeah. So you know what, what, how much of their money is going to come out of their pocket into mine? Yeah. So that’s I think you’ve got some great sale pricing experts in the collective that could probably speak to that one. Yeah. 

 

Greg Alexander [00:10:27] So what what Dan’s referring to, there is a way to optimize for deal sizes is that you put a proposal on the table. You’re going after mission critical, urgent problem. And if the problem is not solved, there’s a real cost. Or if the problem is solved, there’s a real reward. And quantifying those in hard dollars creates a perceived value. Let’s just say, I don’t know, it’s $5 million as an example. So then the conversation is what percentage of that gain that you deliver to the client is a client willing to share with you 10 percent, 20 percent and then you back into your price there. And that’s how you optimize for a deal size. And then you’re in the management consulting industry. That’s your sector and you specialize in sales and marketing. So I’m assuming that your model is one where you want to have, relatively speaking, a small number of clients, but you want each one of those clients to spend a lot. Is that correct? 

 

Dan Bernoske [00:11:21] Absolutely. Over them, over served clients. 

 

Greg Alexander [00:11:25] So therefore, you’re staying away from clients who. You know, might need an act of God to spend 25 grand. 

 

Dan Bernoske [00:11:35] Absolutely. Yeah. Yeah. But you know, what’s interesting, though, in terms of deal size is that we’ve also found that this size client, they do buy and bite size chunks. So there’s another lever I really pay attention to, and that is what’s the customer lifetime value that you are given the size of 500 out of the 10 to five hundred million dollars. They’re not going to buy that $1 million deal. But they will buy maybe the equivalent of that over time. Right. And that’s when you really have to think about is what how is it that they buy? It’s huge. 

 

Greg Alexander [00:12:14] So that’s interesting. So lifetime value is a great concept. I’m glad you introduced it. You can get to the same dollar amount and that example a million bucks, but instead of one deal, maybe it’s for $250000 deals. So that raises another interesting question regarding go to market. And that is expansion revenue from existing clients vs. new revenue from new logos. So do you have a a different sales approach when trying to grow an existing client than you do opening up a new one? 

 

Dan Bernoske [00:12:44] We we do the reason why is because you’re embedded with the client. So the behavior is a lot different in your interactions with them. They’re you’re kind of uncovering needs as you’re as you’re going along. And so therefore the the reception on their side is much more open minded so that that approach is very different than going in on a new logo. 

 

Greg Alexander [00:13:06] Sometimes I hear sorry, sometimes I hear from clients. However, if their consulting company is always looking for the next deal while they’re working on the current project, it can be a turnoff. How do you how do you handle that? 

 

Dan Bernoske [00:13:20] Yeah, that is a that’s a big balance. But we’re not selling. It’s always framed up around making sure that they’ve got a problem that needs to be solved. I just very, very much in problem focused, always, always not solutions focused. I can actually, Greg, you know, I come out of a product background, which I’ve applied to my approach for building our solutions. And there’s a great saying in that space that says, don’t be in love with the solution, be in love with the problem. So the more that I enforce that with my people. So seek out that problem. It actually doesn’t feel like selling. It really feels like trying to help out the buyer persona as much as possible. That that’s a really small point, but it does make a difference. 

 

Greg Alexander [00:14:07] Yeah, that does make a big difference. It’s a big point, actually, not a small point. I’m glad you mentioned it. Just one more question regarding expansion sales from existing accounts. Let’s say I’m a delivery person on your team. I’m not held accountable to growing revenue and I get deployed on a project and I going to get done in 90 days and I’m on a project plan and I get to issue X amount of deliverables. And then, are you also asking me to be a salesperson or am I just focused on that project? Like, who’s doing the expansion selling? 

 

Dan Bernoske [00:14:45] So right now, it’s the partners who are we’re small enough where each partner can have a set of of clients that they’re overseeing. So we’re really trying to push that over to them. The job of that of the consultant is to find the evidence and bring it back to us. I see. And just enlighten us because, you know, the other important is what you brought up a great point. I want them focused on delivering good work because good work actually is. The other big piece that sells you more is if you just do a good job that’s that gets you there. But also the partner will have the overall strategic viewpoint of how that that evidence actually fits into the bigger story. So that’s the approach that we always 

 

Greg Alexander [00:15:27] I think that’s a great division of labor. So the delivery team does have an eye towards growing revenue, but they’re not held accountable to the sell. They kick over the evidence to the partner and then the partners get enough skill and probably enough savvy to to re approach the client and say, Hey, my team has uncovered this additional problem. I want to talk to you about it, that type of thing. 

 

Dan Bernoske [00:15:52] Absolutely. 

 

Greg Alexander [00:15:53] Yeah. And that’s working well for you. 

 

Dan Bernoske [00:15:55] It works real well. Yeah. And also think about the delivery. They’re good at delivery. That’s going to be they’re very good at selling. Yeah. So get everybody focused on their skill set. 

 

Greg Alexander [00:16:07] Okay. So then the third kind of leg of the stool as it relates to go to market excellence in selling professional services is the length of the sales cycle and that rounds out the other two, which is the average deal size and the clothes rate. One thing that kills boutique owners is the sales cycles are just too long. Back to my earlier comments around pursuit cost, you know, and if it takes forever to sell a deal, I mean, it’s just a constant, right? Now you’ve got two markets, you’ve got a channel, the PE space, and I’m assuming that takes a little bit longer. And then you’ve got your portfolio company, the portfolio company of the firm, which I’m assuming takes a little bit longer. But is that true? Are those two different lengths of sale cycle? 

 

Dan Bernoske [00:16:51] Yeah, 100 percent. Very different. 

 

Greg Alexander [00:16:54] How long is the PE sales cycle? 

 

Dan Bernoske [00:16:58] Is nine to 12 months. 

 

Greg Alexander [00:17:00] Wow. And you’re willing to hang in there that long. How come? 

 

Dan Bernoske [00:17:04] Yeah, it is. Because once you’re in, I mean, basically, it’s a hunting license and you do a good job in the first portfolio company, earn their trust and then you become a part of their toolkit. I see. So that that Greg, I mean, saves a lot of a lot of selling time alone. So it’s worth getting in. 

 

Greg Alexander [00:17:22] So you get it. You spent a year to get into a shop, but they might own 20 companies, so that’s worth it. 

 

Dan Bernoske [00:17:28] Yeah. 

 

Greg Alexander [00:17:29] Okay. Very cool. And then the portfolio company, what’s the sale cycle there? 

 

Dan Bernoske [00:17:33] Well, quite a bit shorter, around 30 to 45 days. Got it for those. 

 

Greg Alexander [00:17:38] Yep, interesting. So listeners, what that’s known as is a sell through model as opposed to a sell to model. And you might learn from Dan and say to yourself, Do I have any partners that I can sell through that if I establish a relationship with, they could grant me access to a much broader prospect base. And it’s a very interesting approach and probably a topic for another day. All right, my man. Listen, we’re out of time here, but that was a great session. I appreciate you dropping your wisdom with us. If you don’t mind, explain to the audience how to get a hold of you if they have some follow up questions. 

 

Dan Bernoske [00:18:19] Sure, cortadogroup.com, cortadogroup.com online or yeah, just fill out a form. Reach out to me and we’ll go from there. 

 

Greg Alexander [00:18:32] All right, awesome. All right. And for those listeners that might want to learn more about this topic and others, you can check out a book. It just became an Amazon number one bestseller in our category. Yeah, I’m really happy about that. It’s called the boutique how to start, scale and sell the professional services firm, and again, you can find it on Amazon and other retailers. And if you liked this, then you want to meet other great people like Dan, consider joining our mastermind community. You can find that at Collective54.com. Dan, thanks a bunch. Take care. 

 

Dan Bernoske [00:19:04] Thank you, Greg. I appreciate it. 

Episode 64 – The Revenue: A Practical Guide to Monetize Professional Services – Member Case with Jamie Shanks

Boutiques often think there is only one way to charge with limited revenue sources. On this episode, we interview Jamie Shanks, CEO at Sales for Life to discuss the 9 common ways to make money in the professional services industry.

TRANSCRIPT

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
boutiques constrain their growth by thinking too narrowly about monetization. They often
think there is only one way to charge and only a couple of revenue sources available to
them, when in fact, there are nine common ways and probably more to make money in the
professional services industry. I’ll try to prove this theory by interviewing Jamie Shanks,
CEO at Sales for Life. Sales for Life enables sales organizations and teams to produce
sales generated pipeline at scale. To accomplish this, they have evolved into a tech
enabled service with a product called the Scale Pipeline System. This system helps
customers grow their sales pipeline by 25 percent within 90 days, and you can find Jamie
and his team on sales for life, all one word, dot com. Jamie, great to see you. Welcome.

Jamie Shanks [00:01:44] Sean, thanks for having me.

Sean Magennis [00:01:45] Oh, it’s such a pleasure, and I’ve been so looking forward to
chatting with you. I love your energy and I love what you’re doing. So let’s start with an
overview. Can you briefly share with the audience an example of how you’ve developed a
new revenue stream?

Jamie Shanks [00:02:00] Yeah, actually, we not only generated a new revenue stream,
but spun it out as a secondary company called pipeline signals. Essentially, we had or
have a training business for the last eight years that has various sources of revenue
streams. What was happening upon finalizing certification with our customers? We needed
a reinforcement mechanism when we created a managed service that actually mined
signal intelligence on behalf of sellers and created that revenue stream as a spin out from
sales for life.

Sean Magennis [00:02:34] I love that, you know, it sounds easy, and I’m sure you know it
wasn’t as easy as you make it sound, but having that knowledge that you needed a
reinforcement turning that into a managed service, what a great example. So, Jamie, what
I’d like to do is get your thoughts on some of the best practices that we recommend in this
area. We’ve identified nine of the most used sources of revenue in professional services.
I’ll walk you through each one and then get your brief thoughts on each as we’ve got quite
a bit to get through. So the first one is hourly. Billings charging clients an hourly rate has
the benefit of being easy to implement. However, it limits how much revenue you can
generate. There’s a fixed number of hours. There’s an upper limit of how much you can
charge for each hour. What are your thoughts on this concept?

Jamie Shanks [00:03:25] And all the context I provide, I’m going to talk from a training
perspective in a managed service. Great. I completely avoid the hourly billing because I
only have whatever is six hundred or two thousand hours in a year, and I’m trying to create
leverage per those hours and trading time and materials. My my personal opinion I
avoided at all costs.

Sean Magennis [00:03:51] That’s Jamie in your context. Excellent. Number two is a
retainer. This is when a client pays you upfront to secure your services when needed. This
has the benefit of getting paid in advance and of a predictable cash flow. However, there
are only so many retainers a boutique can handle at one time. What is your opinion about
this concept?

Jamie Shanks [00:04:14] We had that separated. We actually had a retainer program
where we have what’s called a daily coaching hotline, and it granted our customers
unlimited access to coming into think of like Professor Class Time at university. Yes. The
challenge is then what? Again, it became a utilization rate exercise of constantly trying to
figure out what is the percentage chance the people will drop into that call? Will we
spreading ourselves too thin? We then had to break out if some people get individualized
call times versus a public enrollment of allowing multiple people on the same call. So we
eventually migrated that revenue stream into more of a fixed fee bid and utilized
subscription, so we no longer touch the retainer model.

Sean Magennis [00:05:07] OK, excellent because the next question is fixed bid. So this is
using a flat amount regardless of the amount of hours worked. It is profitable work for
boutiques if they can scope projects correctly. So if a firm struggles with estimating the
level of effort, it can be a money loser. So what do you think about this? How have you
dealt with that?

Jamie Shanks [00:05:28] This is essentially our go to market. Over time, we’ve discovered
our gross margins. Our gross margins are north of 80 percent. And so by understanding
that and also developing a service that is scalable, tech enabled services you described
upfront, it allows for predictable delivery. Our delivery really doesn’t change customer the
customer outside of a few hours here, a few hours there over the course of a year. Yes. So
all of our customers for sales for life in particular are on annualized subscription contracts
that are fixed fee bid. And it is up to us to live within the means of the people and process
that we’re deploying against that.

Sean Magennis [00:06:14] Brilliant. And staying disciplined and not going out of scope,
right?

Jamie Shanks [00:06:19] Correct. Fantastic and going to school. I think the important
piece here is not customizing. I mean, this is a lesson learned. Don’t play the game of let’s
throw everything into the deliverables and outcomes section of your statement of work.
Yes, design something that is a repeatable service. The one offs, you will get clobbered
because there will be scope creep that happens every time.

Sean Magennis [00:06:47] Absolutely. So well said, the fourth one is performance based
contracts. So this is where goals are established. And if the firm is successful, they get
paid. And if they fail to deliver, they don’t. Get paid, it does allow a boutique to capture
upside as they’re usually uncapped. The risk, of course, is if you don’t produce, you lose
your shirt. So what are your thoughts on performance based contracts?

Jamie Shanks [00:07:13] This is actually something we want to experiment in the future
with a company that we have an idea of launching, but its sales for life, we have not had
the retained earnings or there the risk profile willingness to take on those type of
customers now. I’ll give some caveat the customers and sales for life are global enterprise
global mid-market. They may not be as apt to to running a model like that because for
them, they’re pulling money out of our backs. It’s predictable. It’s being sold to a director or a VP of a business unit or a line. So we haven’t done it. I have interviewed and met many
CEOs that are experimenting or are doing it successfully. And it actually has been the
growth driver for their business. I unfortunately, have not tried it out of fear.

Sean Magennis [00:08:05] No, and that’s important to recognize, and it’s important to
have the means to carry that risk from a cash flow or from a cash reserve standpoint. The
fifth one is member dues, and it’s a business we know well and it’s a business you’re
getting to know well. So this is when a client pays the boutique, if they see a value in being
in a group or community with other clients, the annual dues grant access to people of a
similar nature and similar jobs dealing with similar issues. It’s profitable for boutiques as it
scales nicely. Small amounts of staff can manage large numbers of clients. The risk,
however, is you have. If you have unhappy clients, the word is going to spread quickly. So
what are your thoughts on member dues?

Jamie Shanks [00:08:49] This is essentially a form of what sales training companies do.
Yes, they originate typically in project based one time revenue. But our business after
eight years, it is a form of a member do. Essentially, it’s an annualized subscription. It
began where there was quarterly deposits up front. Then we became comfortable and
asking for annualized membership dues. That’s essentially what it is and then now with
three and five year contracts. But essentially, what they are getting is a series of
deliverables throughout the year, and it’s this is what I like about it. It’s value based
outcomes. So all that you’re basically saying to people is over the course of X, let’s call
that one year. Yes, I’m going to move you from ground ground floor to Mars. And on that
journey, don’t come to me every month about where we are on our way to the space
shuttle and then on the way to the Moon and the way onto the Mars. Let’s focus on what
we’re trying to accomplish over a year and keep paying your bills. So we are a form of a
member service and it’s the best way, especially again if you understand your gross
margins.

Sean Magennis [00:10:03] I love that example. Well, well, well said. The six is licensing
revenue. It’s a it’s an area I know well. I was in a licensing revenue business for 14 years.
This is where a licensing fee is paid by a client to a boutique for the use of intellectual
property. Many boutiques have methodologies and tools that client want unlimited access
to. They pay a license fee or a royalty for this right. And the risk to a boutique with this is
an inability to productize their service offering. So if every project is a snowflake, it doesn’t
work. So what are your thoughts on this concept?

Jamie Shanks [00:10:41] Yes. And so that’s what makes up our annualized subscription,
and I’ll talk about what we’d like to do in the future with a channel model. But essentially, if
you were to reverse engineer, our average sales price annualized sits between 80 and
100000 U.S. dollars per customer. If you were to break that down, a percentage of that
from an accounting perspective is counted as an annualized license that is then deployed
in one twelfth across a year when you use accrual accounting. Yeah. And then there’s a
service that’s also applied to that as well. And what we try to do is make the annualized
license worth 70 to 80 percent of the total fee. And then the services work on top of the
licenses has more enterprise value than the services themselves. The services again have
been productized. The onboarding process is the same for every customer, right? The
moment of the learning, it’s the same for every customer. The quarterly business reviews
with the customer the same. So in essence, they’re all like that from all. The customer
sees one licensing price. Some will ask for that breakdown because they need to account
for what percentage is a license. Now where we want to bring this in the future is being
able to develop a channel ecosystem in that channel ecosystem. Our customer then does

not become the end user. The customer of ours becomes the channel partner. They pay a
licensing fee and then they resell it to their cash, the end user, and it will come to one of
your other models. It’s a form of a royalty.

Sean Magennis [00:12:22] It’s right now that makes a lot of sense, and I think you’ve
keyed in on something I think our listeners need to know. That’s really important when
you’re looking at licensing revenue, the documentation, the playbooks making it very, very
standard that you can replicate is really critical for the success of this model.

Jamie Shanks [00:12:39] Yes. Yeah. And if you if you look at like a training business, we
would straddle the line between a shot. It has the it should have the margins of a software
company. Mm-Hmm. But the human element of services, I wish it had sat on for multiples.
That’s what it has. It’s very akin to it where you create the intellectual property and the IP.
One time you put it in a learning management system and you sell it a thousand times.
Yes, to a thousand companies. Yeah.

Sean Magennis [00:13:13] Oh, very nice. The seventh one is subscription, and these are
all sort of, you know, aligned in some way. So subscription is paid to boutique by a client to
gain access to an asset. For example, many boutiques have proprietary benchmark data
and clients who want access to this data pay a subscription. The risk is managing the
asset, keeping the quality of the data well. So, you know, if the data ages, it becomes
worthless. Clients, you know, disappear. What are your thoughts on the subscription
model for revenue generation?

Jamie Shanks [00:13:49] It’s basically all of our revenue, and we it took us a while to have
the strength and the tenacity to ask for the annualized subscription fee paid in advance of
the calendar year that it’s going to be deployed. Yes, and we try unless it’s the Microsofts
of the world that is always the case. Collect the money upfront. Yeah. And from from that
moment, I work within that, that gross margins itself. And we really worked hard to ensure
that DSO were based sales outstanding, if possible, under 30 days that we’re not experts
at it. But that means that you are taking a year and of revenue and deploying it in the same
month of an operating expense of one particular month. It’s an incredible way to accelerate
the growth of your business if you can sell 12 of those over the course of a year.
Absolutely.

Sean Magennis [00:14:53] Yeah, it’s brilliant. Well, well structured and a great example.
Number eight is events in this current environment. This may not be a particularly good
revenue generator, but this is where clients buy a ticket or tickets to be granted admission
to an event or a seminar or a three day that boutiques put on can be very profitable. And
typically, you can get sponsors to cover the cost of the event and the ticket sales then or
all profit. The risk, of course, is that if no one buys tickets and no one shows up, then it’s a
bust. What are your thoughts on the event concept?

Jamie Shanks [00:15:32] I have a couple examples on the event, so as part of my
business, a quarter million dollars of revenue for five years up until COVID, with speaking
engagements and workshops. So this also comes to your first question. Yes, which was
around hourly. When I began speaking on stage, I made many mistakes and that was
thinking that the hour that I was on the stage should be charged for that particular hour,
only to come to realize that when your car leaves the driveway to get to the airport, live in
Dubai for two days and then come home, you need to equate for this. And then you also
need to wait for the value creation, not the hour spent, because you also spend a lot of
time building the presentation and so forth. So my speaking fees went from five hundred to

a thousand dollars incorrect thinking of like the hour of that deployment to on average
between 20 and 40 thousand dollars really under what I was going to go. COVID changed
that when COVID happened, the world tried to revert all of US speakers to ensure that our
Zoom calls were a cost per hour and that how much the calls were cost per hour. So what
happened is those who that was 10 percent of our revenue and reduce the size of sales
for life. Right. If you look at that, those that had speaking and workshops as like 80 percent
of the revenue just crippled crush because the customer was saying, Well, I’ll pay you five
hundred dollars to do the same thing virtually, I don’t know. Again, you tried to drive it back
to the value creation piece. Now you could obviously discount saying, Well, I’m not going
to spend two days in Dubai market out of pocket. So, you know, speaking of fees on virtual
have typically landed four in my world for three to five three to five to maybe ten thousand
dollars. Mm hmm. Maybe that kind of helps answer the first part, which is how do events
change and you get away from that hourly? Yes. Also then ran our own conference. We
put together a conference six years ago. Assess a quarter million dollars to put this thing
all together, and one of the things that I’ve learned is that the gate fees or the to calling
these events ticket fees three or five hundred dollars is not the way to make money, nor is
even the sponsors the best practice from my understanding, my limited experience. My
wife’s in that industry has been that the people that you bring in the future equated
revenue of those people measured over the next one to three years should be your return
on investment thinking and the gate fee and the ticket fee and the sponsorship fee. Will
hopefully bring you to a brief break even. Yes. And your cost of customer acquisition
hopefully became zero unless you equate the time and energy it took to build the
conference itself.

Sean Magennis [00:18:49] So and thats brilliant. I love that thinking, and that means that
your strategy for events has to be extraordinarily well conceived, very well thought
through. Because if you’re reliant, then on those individuals, either as prospects or as a
land and expand if you have them as existing clients, is this an opportunity to up sell or
cross-sell? There needs to be a very specific engagement strategy from what I’m hearing
from you to unlock the value long term from the investment in events.

Jamie Shanks [00:19:20] Correct. And I think the events world is now permanently
disrupted. Yes. And if you were trying to put on a $100000 event, let’s use a round
numbers to try to recoup in $100000 in gate ticket fees and sponsors might be a tall ask.
Now you have to deploy a sales team to even get those. That level of people in the door?
Correct? Think about it. Think about it from the perspective that if we can at least break
even, what would five of those hundred people who became customers? What would that
mean to our business? Yeah. What is the lifetime value of five new accounts?

Sean Magennis [00:20:02] Absolutely.

Jamie Shanks [00:20:03] That’s probably the best way to look at it.

Sean Magennis [00:20:05] I love it. That is so clear, and thank you for being so candid in
Airplane because a lot of people are thinking, Do I go back to events? Is it going to be a
hybrid model and how can we truly extract an hour away from it? The final one is royalties,
so this is when a boutique does not monetize the client, but instead they monetize other
boutiques. It’s often used by boutiques of training products like you and your bag. They
allow other firms to use their training material. They collect a royalty every time they do.
The risk with this is that somebody steals your IP, you know, and and dresses it up and
creates their own. So a boutique who chooses this strategy really needs to understand
paywalls, royalty agreements and IP protection. What are your thoughts on this?

Jamie Shanks [00:20:52] Well, if you look at my industry, those that have scaled and I’ve
had this conversation with Greg many times, and he’s made it very clear. If you look at the
few great global sales training companies, they have one thing in common they have built
a channel ecosystem. Sandler in my industry decided to do it through a franchising model.
Most do it through a ten ninety nine contractor channel model. But it is this the singular
commonality to scale and intellectual property is that in my industry, typically the OEM, the
designer of the –

Sean Magennis [00:21:29] which is you,

Jamie Shanks [00:21:30] which is me, would take on average 30 to 40 percent of the
deal. And the boutique that actually sells, wins and then delivers the service is somewhere
in the 60 to 70 percent range, and that’s a common model. We experimented with it and I
learned the lesson of trying to become pregnant. We got halfway there, had a few hits and
misses. It will be a focus of ours over the next five to 10 years. And it is the obvious path to
scale that we will focus on.

Sean Magennis [00:22:08] Great. Thank you for that, Jamie. So there you have it. Nine
ways to monetize professional services, some amazing insights and really practical, real
time examples from Jamie. So going to market with a single revenue source, in our view,
is a mistake. The important lesson here is to have multiple revenue sources. Therefore,
the question our listeners should be asking themselves is what is the right mix for you? If
you have one, try to get two, if you have to try to get three and so on. The opportunity is
often right under the nose of an owner. You just need to know where to look. OK. This
takes us to the end of the episode. Let’s try to help listeners apply this. We end each show
with a tool. There’s going to be a simple 10 question checklist and a yes no answer to it.
We keep it very simple. So, Jamie, I’m going to ask you these questions and just simply
say yes or no, and I’ll run through them quickly.

Sean Magennis [00:23:15] The first one is, will the client pay you more than $500 an
hour?

Jamie Shanks [00:23:22] Yes.

Sean Magennis [00:23:23] Will a client pay you in advance to secure your services on
demand?
Jamie Shanks [00:23:28] Yes.

Sean Magennis [00:23:29] Number three, can you scope your projects with precision?

Jamie Shanks [00:23:34] Yes.

Sean Magennis [00:23:35] Number four, can you prove direct attribution of results in your
project?

Jamie Shanks [00:23:41] Yes, I mean, sales were quite easy, actually.

Sean Magennis [00:23:44] Number five, will your clients pay you for the privilege of
speaking to your other clients?

Jamie Shanks [00:23:50] Never tried.

Sean Magennis [00:23:52] Number six, will your clients pay you for the right to use your
intellectual property?

Jamie Shanks [00:23:58] Yes.

Sean Magennis [00:23:59] Number seven, do you have proprietary data that clients would
like to subscribe to?

Jamie Shanks [00:24:04] Yes.

Sean Magennis [00:24:05] Number eight, do you put on events and our clients willing to
buy tickets to attend?
Jamie Shanks [00:24:11] Had in the past.
Sean Magennis [00:24:13] Number nine are other boutiques willing to pay you a royalty to
distribute your intellectual property?

Jamie Shanks [00:24:19] Hopefully in my future.

Sean Magennis [00:24:21] And number ten, does your business model include at least
three sources of revenue?

Jamie Shanks [00:24:27] Yes.

Sean Magennis [00:24:28] Jamie. Fantastic. So in summary, there are many different
sources of revenue available to boutiques. Develop a clever monetization strategy. Think
about a mix of revenue, not just one source. Jamie, a huge thank you for your expertize
today, and I look forward to seeing you again. 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 54will help you grow, scale and exit your firm bigger and faster.

Go to Collective54.com to learn more.

Thank you for listening.