How to Grow a Happy & Healthy Digital Agency

Clodagh_S.Higgins_Dec_2016

Clodagh Higgins, author of A Happy & Healthy Digital Agency: 6 Pillars to Build a Profitable Business with Ideal Clients and Digital Agency Coach/Consultant for GROWIT GROUP, consults with digital marketing agencies and provides them with the resources they need to make wise business (financial, hiring, and recruiting) decisions. Her company, Growit, targets agencies new to inbound marketing or looking to accelerate team success, analyzes their goals, evaluates current go-to-market strategy effectiveness, and builds strategies aligned with the desired results. Growit has clients in Canada, the U.S., the UK, and South Africa.

In this interview, Clodagh explains that digital marketing entrepreneurs and their employees are two distinct kinds of people. Marketing entrepreneurs open their businesses because they love marketing, marketing strategy, and exploring new ideas. Given training, they may learn the intricacies of sales, marketing, and software technologies, but often have little idea of how to scale, how or when to hire, or even how to evaluate profitability. Employees of marketing entrepreneurs choose to work for entrepreneurs, but they want to know their career paths and the work process . . . and need structure and support to do their best work.

The most prevalent (and deadly) problems Clodagh sees in agencies are:

  • Chasing sales and not paying attention to services
  • Failing to hire a “traffic manager” when the service department gets beyond around 4 employees.

Clodagh emphasizes the importance of and reasons for a company to:

  • Define its 5 core values . . . and post them on the its website
  • Understand the DNA of the purchaser and the lifetime value of a customer
  • Mine current customers for more work . . . and for referrals
  • Time-track services and target 70% utilization of a services team
  • Post a page, “We are always hiring,” with 5 core values in sentence form
  • Make sure that clients are aware of an agency’s value add

Clodagh provides guidelines determining expertise, so agencies can offer higher value to their clients . . . and charge more for their services . . . because they are experts. She also recommends several software solutions to help agencies make operate more effectively.

Clodagh believes, “The future of agencies is all in the value and insights that they bring to clients” and an agency needs to remind its clients every single month of the results it has produced.

Clodagh can be reached by email at: Clodagh@GrowitGroup.com or hello@growitgroup.com

The company website, where Clodagh blogs about agency life, challenges, ups and downs is https://www.growitgroup.com/. Her book, A Happy & Healthy Digital Agency: 6 pillars to Build a Profitable Business with Ideal Clients, is available in paperback on Amazon and on Kindle.

ROB: Welcome to the Marketing Agency Leadership Podcast. I’m your host, Rob Kischuk, and I am excited to be joined today by Clodagh Higgins. She’s the author of A Happy and Healthy Digital Agency, and she’s also a digital agency coach and consultant with the Growit Group, with clients in Canada, the U.S., the UK, and South Africa. Welcome to the podcast, Clodagh.

CLODAGH: Thank you, Rob. Loved that introduction. You gave me goosebumps. [laughs]

ROB: I should’ve made it shorter so we could get to your lovely voice sooner.

CLODAGH: Oh, thank you. [laughs] It’s the Irish thing. I’ve lived in a few different countries, so you might get a few Aussie-isms through my voice.

ROB: That’s cool. You’ve got a little bit of a mashup of an accent. I love it. You have written this book, A Happy and Healthy Digital Agency. Why don’t you tell us a little bit about what brought you to the point of writing that book and some of the things that we should know so we all want to go buy it?

CLODAGH: Super. I’ve been in the digital marketing industry for 12 years. I started an agency in Sydney, Australia when I was living there, and I moved back home 6 years ago and started the agency again – just a small web shop, website, and a lot of outsourcing.

My business partner took it over, while I was very fortunate enough to start off in HubSpot EMEA as employee number 40. There’s about 400 of them there now. Through that career, I was speaking to hundreds of digital marketing agencies in their onboarding process as they took HubSpot into their business.

Through the course of the few years that I was there, after a few months we got to a point where they knew what they were doing with sales and marketing, they knew what to do with the software, but then they were running into issues like how to hire, how to scale, when is the right time to bring a new person onboard, “Am I profitable?”

I started a search for improving my knowledge so that I could help them, and I came across Marisa Smith from The Whole Brain Group and realized that she was implementing EOS as a system in her business. I started my journey of becoming a business consultant to digital marketing agencies, to give them the more rounded knowledge of finances and hiring and recruiting. Hence, over a few years I had the idea for the book.

ROB: Very, very interesting. Implied within the title of the book is that there are ways in which many agencies are perhaps not happy and not healthy. What are some of the common sicknesses, if you will, of a digital agency?

CLODAGH: Yeah, I did toy with the idea of becoming Dr. Clodagh. [laughs] But I’ll stick to what I know.

Many agencies that I’ve worked with did something typical in the beginning. They chase a sales number. Now, sales obviously is extremely important. If you don’t have sales coming into your business, you’re pretty soon going to run out of gas. However, when you start to take on sales that aren’t a good fit, that you can’t service, or you cannot actually make the client happy, then the servicing starts to pull back on the sales.

If you don’t have a strong and healthy services department, you are then not going to have a sales team who are confident in selling. Things grind to a complete halt. Clients leave, sales stop.

I think the biggest realization I’ve come across in the last few years is many digital agency owners open a business because they love doing marketing. They love doing websites. They love doing strategy. They want to talk onstage. But the reality of running a professional services business is that you end up with a team of people that need help, need structure. They need support, and they need a manager to help them with their day-to-day operations.

That would be two of my biggest revelations there, about too hard chasing sales and not enough attention to services, and then when the services team gets to a size of four or five people, they need a people manager to manage them and their day-to-day work.

ROB: Right, probably a people manager and, to an extent, also somewhere in there a process manager. Is that one of those key hires you see? People come in and they’re creative – and many agency owners are accidental entrepreneurs, has been my observation – which may lead them away from structure, and that may even be in the entrepreneurial spirit a little bit. But where do you see people getting stuck if they don’t make a key operational hire?

CLODAGH: Generally, around that. They have four to five services people or more, and they realize that they’re looking for structure and they don’t know how to start. These agency owners open a business and nobody gives them a handbook on how to do it.

Actually, the first chapter in the book is around the relationship between entrepreneurs and employees. As entrepreneurs, we will go out and figure it out, we will make things, we will work at the weekends, we don’t need a career path, we don’t care what our holidays are – we’re different types of people.

Employees love structure. They want to know their career paths. They want to know the process. They want to know the start, middle, and end of something.

The dynamic is that employees do not need to work for an entrepreneur. They choose to work for an entrepreneur. They can go and work at a bank or a store or anywhere else, but they want to work with the entrepreneur – but the entrepreneur needs to give them the structure so that they can do the best work.

ROB: Right. They want to work in that entrepreneurial system, but maybe don’t want to be exposed to – every person on their own, I think, is a little bit crazy. In an entrepreneurial organization, you can be exposed to the full crazy of the founders and owners. Most people I think might not want that.

What are some other choke points in the growth of an agency where you see people get stuck? Beyond that four to six, that initial problem of process and people.

CLODAGH: The next big area that we work with people on is their profitability. There is an illusion of what agencies think is profitable and what is actually the potential of being profitable.

A lot of that comes down to time tracking of the services team. If you don’t know how much things cost, if there’s an over-focus on the topline, going “we got in a ten-grand retainer,” however it’s costing you nine and a half to deliver it, you are pretty soon going to run out of profitability, then run out of money. That is not a great way to do it.

So again, another thing about looking at the topline – sales are great, but the structure of how you’re delivering that service. Perhaps it’s a balance of having people in a local country, but outsourcing in another country where things are cheaper. Or starting to look at artificial intelligence so that you can make the most out of the team that you have and make them super profitable.

We’ve tried to go for a 70% utilization of a services team. That would mean if you’re billing them out, it should be 70% of their time is billed out to the client. Many agencies we go into, we see numbers of 40% and below because they’re not time tracking correctly. That can make them extremely unhealthy.

ROB: For sure. Implied within that utilization and time tracking, I think it also leads to a discussion around rates and rates that you’re billing to the clients, and are you billing hours and that sort of thing. That’s a pretty key lever in profitability. How do you think about structuring pricing and value out to clients?

CLODAGH: Most of the agencies I work with now are quite mature, so they’ve been around the block a bit of a while, and they have done a lot of the best practices of inbound and things like that. So now they’re in a state of what they know is good.

I make them ask four questions to look at the actual services that they’re delivering:

What are they good at?

What do they like doing?

What gets results for the clients?

What is profitable?

When you sit down and answer those four questions and you start to make packages for the business with add-ons, you start to work in another different way, because you become an expert. Then you can charge more based on the clients that you’re going after, because you’re offering high value.

These cookie cutter packages, the clients are seeing through them. They’re looking for experts in a certain field, in a certain industry. The rates have to be based on going after a specific industry that you’re an expert in, and then your specialization around, “this is the results we’ve had for clients in the past, and this is what we would like to get for you in the future.”

Very much around the lifetime value of a customer is how we work with the agencies today.

ROB: I feel like the specialization differentiation can change over time. For instance, I would say at one point being a B-to-B agency or being a HubSpot agency was a differentiation, and now probably not so much.

What are some of the interesting examples of specialization you’ve seen recently that is maybe that next level after just a platform specialization or a very broad verticalization?

CLODAGH: I definitely don’t agree on the too broad, if you like, going after B-to-B when it could be anything, but getting them into a specific area.

We reflect back on the last 10 to 15 clients, projects, retainers that were successful, and one of the things I like to do is actually look at the personality style of the people that they were working with. Was that managing director open to sales, open to new ideas? Was that sales director a particular person that they got on with and had a common interest with?

People want to work with people they like. So, we start to look at the DNA of the purchaser. Did that marketing director have an interest in marketing AI, or have an interest in the buyer persona workshop the way you were delivering it? What were the personal elements?

You know when you meet someone, Rob, and you get that “click” with them because you’re like, “I think we’re going to get on”? That’s about core values, and that’s an area that we work with very much in the agency. What are the core values of an agency? Five topics, five words that are intrinsic. They are honest, they are experts, and they’re a team player.

We look then at the core values of the people that they want to work with, because sometimes a retainer can be really high, great money, very profitable, but the core values of the people that work in the business are soul-destroying to the agency. So, it is about looking at, who do you get on with?

And going back out to that person, to that marketing director, and going, “We love working with you. Can you recommend anyone else? Who do you like working with? Can you recommend us to anyone?” Or get deeper into the account. Doing workshops with the stakeholders and going, “You’re spending 15 with us. We want to do more work with you. We don’t want to go and spread ourselves. We’d like to get deeper into your account.”

Having an honest, open business conversation about you like working with them, you’re choosy about who you work with, and can you do more? “By the way, here’s all the other things that we can do.”

ROB: You mentioned the four questions that people can ask to almost reflect and identify within themselves what they are prepared to excel at. Do you feel it’s similar on the core values front? That is, are those something you can aspirationally define, or are they almost in some ways defined and you really just have to understand yourself and understand who it is that you are together?

CLODAGH: We started asking the agency owners to go off – hopefully they’ve got two people in the business. Just recently I figured out I’m working with a lot of husband and wife teams. Something that just sort of gravitated towards me.

So, starting off first, the owners of the business have to reflect on why they opened this business. What are their core values? Because 99% of agency owners can shut the doors and go and get a job, and it’d be a lot less hassle. But, why are they in this business?

Once they get their core values, then the next step is to reach out to the team, like do a team workshop and get the team to write down their core values. Then you might end up with 20 up on a board, and then you together decide, “What are our five?” Those five are agreed by the team, they’re up on the website, “This is what we believe in.”

There should be artwork up around the office. A lot of agencies, you go into them and there’s nothing on the walls. It’s bland. Like, go to IKEA, guys. [laughs] Get a few nice pictures. Or put your core values up there, and remind people why they’re coming to work. That’s what everyone’s looking for today, to belong. Employees want to belong to something, and the core values are a big part of that.

And then another area to use it is you would take that into your hiring process. You would have a “We are always hiring” page, which makes a sentence out of your core values. “We are passionate experts in our field who believe in getting results for our clients. We’re results-focused, we’re competitive . . . whatever it is.” Ask people to send in a video and their résumé, and have that up all the time. Always be hiring and always be looking for good fits.

ROB: I think that’s interesting, because, as business owners, it can be hard to feel like you’re hiring sometimes. Going back to the profitability discussion, people don’t really want to be obsessed about money, a lot of them, but profitability and the margin of error and the margin of comfort in that – it’s a pretty big element of being happy in your business. Not worrying about paying the bills and paying the people.

CLODAGH: Absolutely. Your employees, again – okay, they want their wages and they want to get paid, but many times employees want to be happy at work. They want to be relaxed at work. The agencies that we work with, some of them provide lunch for their staff. That saves them a bit of time and a bit of money. They take them on team nights out. They have bonding exercises, or they have spa days or nail polish experts coming into the business and doing manicures and pedicures.

That’s beautiful to have because the agencies are profitable. They’re making enough money to spend. We do an exercise with the agencies and their employees to go, “Okay, we want to look after you. We value you. We want to help you achieve your goals. In order to do that, if we can do things more profitably and time track everything and we can be super productive, we can give you these perks.”

Then when people understand, “Oh, this time tracking thing that’s been bugging me is actually going to give me these benefits,” it’s amazing how quickly people will take to time tracking again.

ROB: Once they understand that it’s not about being watched, because nobody wants to be watched, but they do want some of the side effects of health that come from operational excellence, if you will.

One thing that seems thematically true, whether you’re talking about the business that people are specializing in or whether you’re talking about core values – and I’ve seen this a lot – there’s this exercise we go through in the entrepreneurial world of putting out a shingle and starting a business and thinking about all the expectations that people have upon us. It almost feels like there’s this process of stripping all that away and getting back to the truth of where who you are meets the market and where your team meets the market.

CLODAGH: Yes, exactly. As entrepreneurs as well, we want to be challenged in new things, but the employees that we’re with want reliability and stability. They don’t want to hear about your brand new idea or your new business venture or your new shiny software that you’re interested in, whatever it is. They just want you to be there for them.

And if you’re not that person, you need to hire an office manager, a team leader, a stable person who’s willing to be there all day, every day to give them that structure. Then maybe once a month you come in and do a presentation about all the new things that you learned, but it’s in a confined element. Not flying in the door on a Tuesday afternoon with a fabulous new idea. [laughs]

ROB: If you look ahead to the next couple years, what are the things that you think are trends that agencies will need to continue to adapt to and evolve past?

CLODAGH: One of the big areas – and I don’t know if you’ve seen this recently – Scott Brinker, chiefmartec.com is his website, and he works in HubSpot. Probably one of the best talks I’ve seen. I saw him at Inbound – both Partner Days, actually. He talks today about the Martech 6,000. I remember a time, Rob, when the martech world was on one sheet and you could see every logo and you knew who everyone was. Or you knew about 70% of them. I’m showing my age there.

But today, it is possibly the most overwhelming situation to be in, even as a person in the digital agency world.

I think the big thing that we have to remember now is our communication skills and our insights as digital agency people, we now have to navigate this very overwhelming landscape for clients. We have to first take a stand ourselves and say what we’re going to be an expert in, and then we have to diffuse that for people.

We need to really up our communication, our psychology, our empathy. We have to stop using too much jargon with people, because they’re not on the same speed as us. There’s people out there who still haven’t got their head around how to do Facebook properly. Meanwhile, we’re up here thinking about artificial intelligence.

So, I think the first thing we’ve got to do is remind the rest of the world that it’s okay. We can get you there, and we’re going to help you. A little bit of slowing down to speed up, as it is.

The next area I see is, a lot of agencies are going to have to get super organized with their time tracking, with their productivity. Is it a time to get some outsourcing happening? Are you employing staff, and is the best use of their time doing those social media schedules? Possibly not. Should you be upskilling them so they can be out in front of customers? Are their communication skills top-notch? How do they speak to clients? How do they explain things?

Because really, the future of agencies is all in the value and insights that they bring to clients. Clients need to see that on a monthly basis. Every month, all the time, you need to be able to go, “You had these challenges, Mr. Client. You hired us because we’re the experts. And by the way, here are the results that we’re getting for you.”

If you don’t link that every single month and remind them and get complacent in a 6 or 9 or 12 month retainer, it’s game over for your agency.

ROB: Yeah, or that client may just be unsophisticated. It may not be 9 months. They may not fire you, but they’ll fire you when someone who does know what they’re talking about and does know how to draw those linkages crosses your path, I think.

CLODAGH: Absolutely.

ROB: You mentioned time tracking, you mentioned outsourcing. I think implied within that – not to dive into the 6,000 companies, but are there some common practices? For somebody who’s not doing anything, are there some good best-of-breed tools that you feel like are just baseline necessary? Both in terms of the categories, like time tracking, as well as maybe some platforms that are doing that particularly well.

CLODAGH: Definitely at the moment the one that I’ve seen – I know I have been through the project management washing machine a few times. In fact, one of the chapters in the book, I think I list about 25 different platforms based on the size of your agency.

Where we’re at now, the agencies that I’m working with – 10, 12, 15 people and above in a location at a time – definitely Accelo is looking extremely good because you can see the capacity of your team. A big area that agencies struggle with is, when do I hire? How much do I have to sell, when do I have to close it, and when should I be hiring in order to deliver the services?

We’ve been looking at Accelo for a long time and I’ve been speaking to agency owners who are very experienced, and it seems to be leading that way. So I definitely recommend looking at that platform as an option for capacity, time tracking, and managing projects as they get quite complicated.

The other one, I think one I would really recommend – again, it’s more around the people side of things – but you’ve got to know what’s going on with your team. The number one job that I do when I go in the door for an agency is I do an assessment of the team. I basically ask them how they are. It’s a big form, it’s 30 questions, but I have to find out where they’re at.

It’s so amazing what comes back. Tips about how the agency can be run better, problems they have, happiness that they have, career aspirations that they have. So many times, agency owners don’t know the health of their team. So I start there.

But if you have a team of anywhere six, eight, and above, a tool called Officevibe which asks a question every week of the team. You can gauge the health of your business pretty quickly. How healthy is the team? Are they up, are they down? Are they stressed? What do you need to do?

As an agency owner, if that’s your natural call – and to be honest, I’ve yet to meet an agency owner who loves this job of talking to their people, personal, human side of things on a routine basis. I’m not saying they don’t like talking to their team, but to have a one-on-one meeting, to have a team meeting, to have a client services meeting every week for all of the team, that’s generally not the agency owner.

So having a client services manager to really keep the team buoyant and healthy and moving along in the right direction.

ROB: For sure. Earlier in the conversation you mentioned EOS, which is probably also something for people to look at when they’re thinking through what the healthy rhythms and cadences should be of their organization. How to have more of the right meetings, less of the wrong meetings, and to make them very effective. Is that a fair quick take on EOS?

CLODAGH: Without a doubt. I’ll be honest, Rob, when I read it the first time I had tears in my eyes. [laughs] I’d had had an agency for 8 years at that point, and I’d finally found a handbook to help me with all the mistakes I’d made in the past. It gives a really good set of templates.

Traction by Gino Wickman is the opening book, and it just gives you those templates going, okay, reality of running a business. You have to have meetings, but making those meetings super productive and giving them a cadence. The reality of a business is you need to know the numbers, so it gives you a hand with helping everyone have a number, get a scorecard.

So, without a doubt, if anyone was thinking, “I could do with some help here,” you don’t need to hire a full-blown consultant. You don’t need to spend a lot of money. You can start with Traction and make a decision to implement one new tool every month. By the end of a year, you’re going to be really on a different page.

ROB: Got it. I think that’s great to think about. Accelo that you mentioned, is that A-C-C-E-L-O?

CLODAGH: That’s right. A couple of Aussie guys actually started the business and are working in the States now. Definitely want to check out.

ROB: Excellent. We will get that one in the show notes as well. You mentioned also artificial intelligence. For an agency, where is AI actionable and relevant right now, and where do you think it’s maybe still a step too far ahead for most?

CLODAGH: My prediction here, just having worked in this space for a little bit of time now, is that we have an opportunity as digital agency owners to find a couple of tools within the next 6 months that are going to increase the productivity of our staff. Because if we don’t find them and bring them into our business quickly, our clients are going to find them and make us redundant. We have to be ahead of that curve.

I’ll take the one that I really enjoyed, and it’s quite a coincidence with the Marketo Adobe news today. I’ve seen that Adobe Sensei have a tool that helps you make an inbound marketing campaign really quickly because it helps to source images more specifically for you.

Let’s say that an IMC, an inbound marketing consultant, one of their jobs every week is to make an inbound campaign for one of your clients. Let’s say it takes them 4 hours from start to finish, but a good hour in that is finding images online that are in the brand guideline. With Adobe Sensei and other products that are going to be out there, artificial intelligence is going to cut that hour down to 10-15 minutes.

If you can put that across your whole agency, you are starting to save an absolute load of time, which then means you’re more productive – which means maybe that account manager can now take on seven clients instead of six.

So first of all, it’s the expectation of our clients. We have to figure out this AI for ourselves. We have to become more valuable to our clients, and there we can be more profitable. And then we have staff that are doing really challenging, meaningful work.

I see it as a huge opportunity for a lot of that grunt work, a lot of that keyword research or those image searches or those jobs that just take forever. Imagine we get that done, and then we’re using our brains, our expertise, our knowledge, our history, everything into a good strategy call with a client. That’s more interesting than spending hours and hours and hours doing work that now artificial intelligence can do for us.

ROB: Really, really good thoughts, Clodagh. As we wrap up our time, when someone wants to find you a and perhaps even buy your book, where should they find you?

CLODAGH: Well, growitgroup.com is the website where I blog about agency life, challenges, ups and downs. The book is available on Amazon. It’s on Kindle and paperback worldwide. As soon as I get around to it, I’ll get into a studio and I will do the Audible. [laughs]

ROB: Wow. Very, very cool. Thank you so much for your time and your perspective from your book, your perspective across your clients and giving us a broader view than I think a lot of us get in any of our own businesses.

A special thank you today to Greg Williamson with Concentrate, who referred us to Clodagh and got us into this conversation. We love great referrals. Thank you so much for your time, Clodagh.

CLODAGH: Thank you, Rob. This is fantastic. As you can tell, I just love talking about this topic. If anyone gets some nuggets and some gems to help them in their agency life, that makes me even happier. Thank you.

ROB: Fantastic. We’ll catch you soon. Thank you, Clodagh.

CLODAGH: Cheers.

ROB: Thank you for listening. The Marketing Agency Leadership Podcast is presented by Converge. Converge helps digital marketing agencies and brands automate their reporting so they can be more profitable, accurate, and responsive. To learn more about how Converge can automate your marketing reporting, email info@convergehq.com, or visit us on the web at convergehq.com.

Leave a Reply

Your email address will not be published. Required fields are marked *