Business Growth: Making professional services agencies scalable

Erik Zambrano and Greg Battle from Bricolage: Growing Revenue For Services Agencies

ERIK ZAMBRANO: I’m Erik Zambrano and I’m with Bricolage.

GREG BATTLE: I’m Greg Battle, I’m also with Bricolage.

ERIK ZAMBRANO: We partner with professional service firms to help them on revenue and customer discovery. On the revenue side, a lot of these companies are used to word-of-mouth marketing, which translates into lumpy revenue. And on the customer side, a lot of their services have become commoditized over time, and there is no differentiation.

So we’re ultimately partnering with these companies to help on revenue and customer discovery, and we do have deep expertise and some repeat cycles working with tech innovation firms such as mobile app agencies, design thinking firms, and business model innovation firms as well.

GREG BATTLE: The idea of revenue and customer discovery is actually two phrases that come from Steve Blank’s book Four Steps to the Epiphany, when he’s talking about how a lot of startups have to do these two things at the same time.

For a lot of these smaller to mid-sized agencies, they’re also startups. Even if they’ve been around for a long, long time, if they don’t actually have a repeatable process of generating revenue, then you’re still a startup. You’re still trying to make that discovery.

So if you’re continually relying on referrals for your revenue, you’re not actually building a true business. You’re relying totally on word-of-mouth, which really may or may not scale. Most of the time it doesn’t.

For the last nine years we’ve been on a bull run, which is great for the economy. But the thing is that, when this bear cycle comes in and word-of-mouth dries up, a lot of these things, a lot of these businesses are actually gonna fall to the wayside because they don’t have the ability, the sustainability, and they haven’t built the right architecture to generate this type of revenue, to generate these type of leads.

ERIK ZAMBRANO: And when that happens, these customers that they’re hoping to get are gonna be a lot more … They’re gonna have a lot more scrutiny for these agencies, they’re gonna be evaluating them on what their differentiation actually is.

So if they’re got three agencies that they’re considering on the table, and there’s really no differentiation among the three, it’s a hard decision for them to make. Versus if one really shines and has a unique value proposition, and that differentiation really speaks to the client’s problems, that agency is gonna be in a better position to win the business, but then also charge more premium rates and really start to develop expertise and history on solving that particular problem.

So that’s what we really mean by revenue and customer discovery.

GREG BATTLE: The framework is a pyramid. A pyramid like this. It’s split up in three sections. That top section of the pyramid speaks to the vision. This is the vision of a client, the vision of the agency. What is the vision? The vision is those immutable principles that characterize you and differentiate your company from any other company. And that could be along a number of factors. Your people, prior work, speaking engagements, thought leadership, whatever it could be. That usually stems from the founder of the agency.

And then beneath that, the middle tier is going to be the goals. What are the ways that I can quantifiably express that vision? If you say, “I wanna be the number one IOT development firm that focuses on beacon technology as it relates to grocery stores.” Something along those lines. That’s a very, very definitive thing. But I wanna be the number one. What ways can I define goals, quantitative goals, that express that vision? There can be a number of things.

And then the bottom tier, the widest tier, of your pyramid is really the tactics. What are the ways, what are the experiments that we’re going to go through together, collectively, to achieve those quantitative goals that express that vision?

That’s where a lot of the things that Erik and I come in and help you define, but we have to start from the top. We can’t start doing experimentation unless we have goals. We need to have a target that we’re actually going to shoot against, and that target has to be defined by what we believe is the essence, the immutable essence, of your company.

ERIK ZAMBRANO: Let’s take the case of a mobile app agency, we like working with those. They have this idea, they have this hypothesis in mind that says, “Hey, we’ve developed some IP at the organization that we think is gonna solve a lot of problems for a lot of big enterprise companies.” So they come to us and they say, “Hey, we have this vision in terms of what we’re trying to do.”

What we can do in terms of experiments to find out if there’s actually a home for that value proposition out there in the market, is really putting out there the right messaging, understanding the audience … If you’re gonna say we’re gonna go after the aviation industry, and the people that are building these planes, fine. We have to understand what are the pain points of that industry, what keeps them up at night, who are the people within those organizations that matter and are ultimately gonna be making decisions about this hypothesis that the agency has?

And then we go out there and do some cold email, with the right messaging and an interesting offer, and see what type of response we get from the industry. If we come back and hear that, “Hey, this is not something that I’m in charge of,” great, we now know that the person that we targeted is not the right person within the organization, and then we can recalibrate from there.

Or if we don’t get any sort of responses from this outreach, then maybe our idea for how to solve this problem that keeps this audience up at night isn’t really that pressing. And then we have to go back to the drawing board and potentially find a new industry or a new set of companies that this matters more for.

So these are the types of thinking that we like to instill in our clients, to really go out there, start putting your messaging in front of the right people, and seeing what type of feedback you get from the market.

GREG BATTLE: Another way of saying that, it’s the same way, following on, is that we’re trying to do product market fit. Your product, meaning your work product, and the market, in terms of your potential customers. So there has to be some experimentation before you can actually find that product market fit, your work product, your differentiated work product, and those potential customers who you’re trying to attract.

Like Erik said, outbound is one way of actually doing this. SEO, podcasting, blogging … The list is immense. Social media. But it really is, and has to be, tailored, not only for your differentiated vision in terms of services and work product, but also for, like Erik said, the hopes, needs, dreams, and desires, and problems of your potential customers.

ERIK ZAMBRANO: This is where we go back to the importance of the vision. If the vision is that this is a new area of focus for the company, then even just getting in the room with one potential lead is a win. Obviously we wanna go wider, but sometimes in the earlier phases, especially as these professional agencies, professional services agencies, are looking to work with big clients, it’s really about getting the early cycles and having some sort of interaction with that target audience, to then take those learnings and come back on.

So those are some of the things that we like to keep in mind. Really it’s about the vision, and then if we’re interested in a quantifiable goal then yes, we can look at open rates, we can look at how many booked meetings we have in a month, how many qualified sales conversations we have. We can look at the velocity of how we went from targeting someone on cold email to how quickly we were able to put together a scope of work for that particular firm.

So there’s a lot of quantifiable things that we can look at, but ultimately we like to focus on the vision, and if the goal of the agency owner is to penetrate for instance a big market, and it’s the first time they’re doing it, then at least getting some experience will be more of a qualitative goal that we’re interested in measuring as well.

GREG BATTLE: Yeah, there’s gonna be different metrics and OKR’s for when you’re in a discovery phase of things versus when you’re in an optimization phase.

Often there can be a mismatch between what you believe your service offerings are and what the client is actually expecting. Does your service portfolio, all the services that your company offers, does it match up with that differentiation? Does it express that differentiation? Or is it just you have this idea that you’re differentiated, but what people are actually buying into isn’t differentiated?

What can we say? If you go out there today in 2018 and say that, “I’m a builder of mobile apps,” well, hello, there are about what, between the two app stores, six, seven million mobile apps?

ERIK ZAMBRANO: Somebody had to build them.

GREG BATTLE: Somebody had to build them, somebody had to build them. The idea that that technology is now novel in terms of a service is just not the case. A lot of technology services, design services, business development services, are kinda commoditized on a global scale.

So if you’re presenting yourself as something generic then you’re competing on a global scale, and if you’re competing on a global scale then it’s a race to the bottom in terms of your pricing, in terms of your pricing and differentiation.

So what we wanna make sure of is that your services portfolio truly represents in authentic fashion your differentiation, and that you have pricing that matches that.

A lot of things that we try to transition, we help companies transition away from, is let me go away from this area of massive, generic/competition area into something that’s very specific and that you can hold true to your value proposition, to your value proposition and your pricing scheme.

There’s a great anecdote that I love to talk about, Erik’s laughing, it’s about Picasso. Picasso’s at a café in Paris, many moons ago obviously, he’s sitting there drinking by himself. A woman walks by, walks up to him and says, “Oh my gosh, you’re Pablo Picasso.” He says … whatever. And she says no, she insists, she says, “No, you’re definitely Pablo Picasso.” And he says, “Okay, yes I am.”

And then she says, “Can you draw me?” And he defers, he says, “No, I would not like to draw you, I just wanna have my coffee.” She insists, “I’ll pay you.” So he says, “Okay, I’ll do it.” And so he pulls out his sketchpad, pulls out a piece of charcoal, takes 15, 20 seconds. It’s definitely a Picasso, it has the stroke, it has his signature on it. He looks at her and says, “Yeah, that’ll be 500 francs.” And she says, “Oh my gosh, 500 francs? That took you 20 seconds.” And he says, “No it didn’t. It took me my entire life.”

The essence of that entire anecdote is that if, in the organization, the same people who are negotiating the pricing and the business development aspect of your small agency are the same people who are actually doing the execution, more likely than not you are going to argue against your own pricing. You’re gonna start trying to price things based upon the amount of time it actually takes versus the value that it delivers.

And that whole Picasso anecdote is, “Never undermine the value that you present in terms of all of your wisdom.” The sum total of your entire organization’s wisdom is incredibly important to how you sustain yourself through these different times.

So how does that translate into something quantitative? That’s where you start talking about average contract value over time. You want your average contract values to increase, such that I’m going after larger and larger clients, delivering more and more value over time. Versus going with smaller and smaller clients and trying to go and compete and sustain on volume. Sustaining on volume is just as bad as trying to sustain and compete on low prices.

ERIK ZAMBRANO: We got our first client … We’ve always been doing consulting on the side, and we were often tapped by our future clients without the premise of the company in place yet, and they would say to us, “Hey, I know you did marketing at this former employer, we’re thinking about starting our marketing function over, can we talk? Can I pick your brain?”

We had worked together before, at a former employer, and one day we met up and we said, “Hey, are you getting these companies coming at you and trying to either hire you on a full-time basis or on a consultative basis?” And we’re like, “Yeah, I actually get those LinkedIn emails pretty frequently.”

So that was the genesis of Bricolage, and the way we discovered our first clients was really morphing those people that were coming to us for consultation and saying, “Hey, now it’s not just myself, it’s myself and Greg, it’s a more complete package. Let’s discuss what you’re going through, both from the marketing and business development perspective, and also the services perspective. What services do you have?” And ultimately that was the package that we offered to a lot of these people initially that were coming to us on a more one-to-one basis.

GREG BATTLE: Yeah, people would come to us with a pointed problem, each one of us individually. I did a lot of business development in prior life, and they’d come away with that problem, but then I’d see, “There’s actually more of a marketing problem, or a vision problem, or a brand problem, that vision aspect is wrong. I could try and go through some experimentation and solve the problem with your leads and sales development, but the problem is really up top.”

And so the two of us team up in terms of superpowers, it’s actually worked out kind of well because now we can see it across the whole value chain. I love to close business, I’m crazy about closes in business. He knows this only too well, I’m jazzed about helping our clients close business, close bigger business, bigger business than they’d ever thought of, because that is actually, again, like I said, increasing average contract value, you’re gonna go after bigger fish, you’re gonna put yourself in a different kind of tax bracket in terms of what you’re going after, and you’re gonna increase your sustainability.

The great thing is that, because we’ve actually seen people come in with a pointed problem for us, we show that there might be something that’s holistically different, and then the great thing is that, because we build up the right kind of referral relationships with these clients, now it’s rather than having a referral business through my clients, it’s referral network.

We have a number of different very, very pre-qualified agencies and consultancies that we’ve worked with previously. We can funnel business across them. We can actually take on larger business. Although we have both the two of us, we can do much larger projects, we’ve bid against much larger projects by leveraging the network of people that we’ve worked with previously.

And we believe that that’s actually the hidden value. They find that value out well after we start working with them. We’re fixing one problem, and then they said, “Oh wow, you guys are solving a problem we didn’t know we had.”

ERIK ZAMBRANO: The number one strategy that works well is that vision alignment up top. We don’t like to work with clients that are gonna try to boil the ocean and accomplish nothing by doing so. It’s really about setting that vision up front very early on, and then defining your differentiation. What are you gonna be known in the market for?

What that allows is for the client to then say, “All right, let’s go find potential clients that have this need that we solve. Let’s get the messaging right, let’s get the value proposition correct, let’s understand how these clients are potentially buying these services, how they think about the pricing of these services,” and once we have that vision alignment up top then it becomes a lot clearer for us to then go into the goals in terms of how we quantify our execution against that vision.

But it really begins with the vision. For instance, I’ll give you a story, we have a client right now that had engineers that were some of the world’s best engineers, and they were solving really, really complex problems on mobile. However, the market caught up to them. There were more developers that were entering the market that were accruing the same type of knowledge and expertise that this firm had, and it was becoming more competitive to differentiate on purely mobile expertise.

However, that expertise led them to develop some IP. This IP was very specific to this company, it wasn’t going to be developed anywhere else, it was just that intellectual property. What we said to them was, “All right, let’s figure out the vision. What is the vision for this IP?” And then we came up with a whole mantra, a whole North Star, about how mobile development could be done differently through this IP.

And then, by setting up that vision, it became crystal clear for us to then say, “What companies are spending too much time, too much money, on mobile? How can this IP help them?” And then we were able to go through a very structured approach in which we looked at I’d say about 30 industries.

GREG BATTLE: Yeah.

ERIK ZAMBRANO: Thirty industries, and measured them against a certain set of criteria that dovetailed perfectly off of that vision. What we had at the end of that was two key industries that we said, “There’s a lot of companies here, they’re spending money on the types of services that we have for this client, let’s go out there and start putting the word out in the market.”

And that has translated to this company now going from an organization that was super dependent on word-of-mouth marketing, its destiny was controlled by what friendlies they had in their network that would introduce them to new clients, they’ve transitioned from word-of-mouth to now being able to go hunt on their own. We like to use hunting terminology, back from our marketing and business development days. But the idea is now they’re in charge of their destiny.

But it would not have been accomplished if it wasn’t for our approach that we have with clients in terms of being very strict, being very focused on one vision, and then everything else coming from that. So that’s probably the best strategy that we’ve seen work for our clients, and that’s why we’re such big proponents and really focused on setting up the vision for these professional service agencies.

You’re gonna have your LinkedIn social posting, you’re gonna have your outbound. The one thing I will say with outbound is that it has to be short, to the point, and it has to solve a problem for the person that’s receiving that email. If you’re just saying, “Hey, would love to chat,” the lead … You’re banned from ever communicating with that person again. So that’s my little quick tidbit on outbound.

Events are great. How do you use your network of past clients to bring them back into the fold and say, “Hey, we’re doing an event, we wanna give you a platform. Will you come and speak at this event?” Then using the popularity and the professional history that those clients have to then attract new people into your fold, and you start building your network on the events side. We have multiple clients that run some pretty big conferences, and it’s a huge revenue and business generating activity for them, not on the ticket sales, but on the connections that they make at the event.

And then there’s always gonna be your website. Your website has to be super to the point. If you’re looking to work with big companies you have to have n industries tab on your website, and it has to explain why your services matter to financial services, healthcare, insurance. So really specializing your services and at least having messaging on your website that speaks to that is super important.

And then lastly, hiring the right business development people with the right networks. If you wanna go into a certain space, into a certain industry, and you as an agency owner are looking to hire the right salespeople to come in, then you wanna look at people that have experience in that industry. What have they done? How have they moved that needle in the industry to ultimately use their network to help your company’s network?

So those are some of the things that really move the needle in terms of proven strategies for us, for our clients.

GREG BATTLE: Yeah, extending it out further, the idea of business development people. Because obviously the reason why they’re hiring us in terms of doing sales development and managing growth for them is because they may not have that capability in house just yet. But we want to get people to maturity such that they can start building up that capability internally.

Historically there are two types of business development folks, and I would say there’s one … A very good friend of mine characterized it, and I’ve adopted it … Is that there is the racehorse style, there’s a racehorse style.

What does that mean? This is a business development person who is very, very seasoned, has every single thing around them that’s going to be supporting them, has an entire staff of people getting pre-qualified and qualified leads for them, has sales development staff, has engineering support staff, sales engineers, has everything such that their only job that they ever do is run around the track as fast as possible. That’s a certain type of salesperson. When you talk about any of the larger SAS companies and stuff like that, they have these type of people.

Then on the other side are people who, I would say, are more bushwhackers. This is a person who I hand them a machete, I throw them in the jungle, and … “Find something to eat.” This is a person who’s like, “I have no idea what I’m actually trying to do or find or whatever, but I’m gonna do it. I’m gonna find something out there.”

And the thing is that a lot of what Erik and I are trying to do is translate your business from … Let us formalize how this actual bushwhacking actually should work, especially if you’re trying to extend or trying to find a new business line, attacking a new industry. You need people who understand how to do that such that you can then hire the thoroughbred, the person who’s gonna run around that track.

But until those things are actually set up for you, A, you’re not gonna attract that right person, and B, you’re not gonna be sustainable before that.

ERIK ZAMBRANO: Or you run the risk of hiring a thoroughbred but throwing him into a forest and not knowing what to do.

GREG BATTLE: Yeah, it’s not gonna work.

ERIK ZAMBRANO: My email is ez, the letters E and Z, ez@bricolage.work, and bricolage is spelled B-R-I-C-O-L-A-G-E. And then Greg’s email is gbattle@bricolage.work. You can also visit our website, bricolage.work, and we’ll be happy to have any discussion about marketing, business development, revenue, and customer discovery if you’re a professional services agency owner.

Bricolage

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