The Art of Leveraging Agencies: Tips for Success

0:00When it has not worked as well is when we brought in an outside person to essentially run a segment of our team, working with our team, and they were never integrated integrated into our team. organization. If you're going to do that, which is how most people work with agencies, you kind of need to treat them like an employee. How much more successful would you be if you had lunch once a week with insanely successful entrepreneurs who shared their biggest secrets on how they think and achieve success? Grab your seat at the table because this is Business Lunch with Roland Frazier and Ryan Dice.

0:42Welcome to another episode of Business Lunch. And today's a snackable episode with Roland where he's going to get into some more tactical strategies that you can start using to live a rich and happy life. If this is the first snackable episode you're hearing, I'd encourage you to go back and listen to some of the other episodes that Roland has put out. And if you want to get notified every time we release a new episode, go to the new businesslunchpodcast.com website and we'll send you detailed notes along with every episode. That's businesslunchpodcast.com, www.businesslunchpodcast.com and you can sign up for the free email newsletter where you'll be able to get all the highlights and resources from the episodes.

1:17Hey, everybody, Roland Frazier and Ryan Dice here with an episode of The Business Lunch, where we like to have lunch and you're not here. No. Anyway, what we're going to do is we're going to give you a seat at the table, as always. And we're always talking about really real life things that are going on in the businesses. And Ryan, we were just talking about agencies a minute ago. I think maybe we talk about agencies today. What do you think? I agree. I think it's a good idea because we've been working with a lot of agencies. Like earlier this year, I know you made the decision at some of the one of our divisions to really kind of double down on bringing on some outside help.

1:58It's a way to ideally get people there and making an impact much faster than you would if you have to go through a full recruiting, hiring, training, onboarding process. us. But I think it's safe to say that the results we had were mixed. It is very safe to say they were, they were about, they were probably slightly skewed against good. I'd say that we, I think we brought on five agencies. I'd say two of them worked out well. One of them was kind of, yeah, it's good. I'm not sure. Still jury's still out. And two of were definitely failures. Yeah. So I think it's, you know, I just think it's worth, you know, obviously we don't need to name names.

2:40Don't want to necessarily disparage any individual businesses because it could have just as easily been us as it was them. So, right. I want to, you know, acknowledge that it's not that they are the panacea cure-all for all of the inefficiencies you've got in your business. Yeah. So, but I do think a discussion about maybe some lessons learned from that and, and just some, you know, in the future, what are some ideas that we have for working a little more wisely with agencies might be a good discussion. But maybe if you could just kind of give a little, without going into too much detail, but perhaps reveal like, I remember us having a conversation, we might've even done an episode on it, talking about just the importance of getting A-level talent.

3:18Like get those A players, people who are proven commodities, stop screwing around, stop wasting time with B players, like go out there and get the best. And that was sort of the vision behind going out there and bringing in some of these folks. It twofold, twofold one that, and the second that what we found is that shared services for marketing never works, but not only that within a company, like, like that's inter company, but even intra company within one company, one team per value ladder is definitely something that I think is, is the way to go. because you're always going to be cheating.

3:56If you've got two products that are two different value ladders, and so the importance of understanding the value ladder might have four products in it. But if you've got two value ladders for like kind of different things and you're trying to have the same team do it, then both value ladders will suffer. And so that lesson learned the hard way from dozens of times of you and me pounding our heads against the wall because, you know, why, you know, But this was basically a way to solve that, to get those extra value ladders in, to get A players without necessarily going and having to have four CMOs.

4:35And so we've tried fractional people, multiple agencies as fractional marketing people, and then also experts in particular things like a particular vertical of, say, or medium, say, newsletters or YouTube ads or whatever. And I do believe it's kind of hard because you do want a separate team per value ladder for marketing and sales, I believe. You do want an A-level person. You maybe aren't ready to hire full, expensive$200 ,000,$300 ,000 a year positions for those multiple things because they're kind of up-and-comers. but they're never going to get the chance if they're always choked out by the one thing that's making money as you're trying to launch new things.

5:28So this was kind of like a way to try to figure out how to do that. So we brought in a whole bunch of agencies that were all doing top work for top people, had great reputations, great people. And I still think they're all great, by the way. It's just whether they worked out for us or not. So looking back, what would you do differently? Like what, like, why do you think it didn't work out with most of these folks? Because I think the theory holds, right? I mean, I, and I want to make sure that we're clear on this. A lot of people, a lot of entrepreneurs are quick to throw the baby out with the bathwater.

6:00We still do believe that you should have a dedicated focused marketer per value ladder. And so if you think about Apple, right, they would have a value ladder in their MacBook. They would have another value ladder in their iPhones. They would have another one for, you know, maybe AirPods odds or peripherals. So think about a value ladder from that perspective, as opposed to just like, you know, one marketer to rule them all. Because invariably, these value ladders get orphaned. The one that is generating the most gets all the focus and attention. And so you don't ever get growth across the company.

6:34You just kind of get iterative growth and the other things down the find. So let's, that, that made sense, right? It absolutely made sense. And that's why the decision was made to go and bring on these folks. What, without changing the strategy, because we say the strategy is good. What, what do you think we do differently next time? Well, a couple of things. One, I was just talking to, to one of our, our business partners, that's an operator earlier today. And, um, one of the things you and I talked about, so two, two things, one, one, you and I talked about, which is what you, what you might not want to do is say, let's do this gung ho, uh, and you know, damn the torpedoes.

7:17We're going to just hire them all this month and, um, and add on 50, 70, a hundred, you know, okay. It was a hundred thousand dollars a month of extra costs without phasing them in for a few reasons. One is that that's an instant hit to your profitability, but two, you're not going to give them all that they need because they're coming in cold. They don't know your business. They haven't been there for one, two, five, 10 years doing it. So they've got some get up to speed time. And I did allow 90 days for them to come. So basically June, July, August, June hired everybody, July, August, September, kind of let everything season, October where we are right now, seeing kind of how they're doing and, and seeing who was going to perform a couple of them, like one performed well, but the benefit, it was more of a branding play than anything else, not a profitability play.

8:19So that was just kind of money that I knew was going to be spent and not really come back in a direct response kind of ROI. It was going to come back in a longer term branding ROI. And I still would do that. But the problem was that also revenge travel, economic craziness, turmoil in the world, and interest rates up and everything, inflation up. I think everybody that I talked to had a pretty rough August. And so we brought them in and kind of put them all in at the same time without having the time to work with them individually to really focus on let's dial all this stuff in and kind of just hope they would perform at the amazing way they had for all the other people.

9:04And, um, you know, I think, I think they didn't get enough help and support because I wanted to do everything all at once because I want to do everything all at once. So, um, so that I think would be on me. The, the next thing would be trying to, I think maybe move them too fast. So, uh, one thing would be sales. So I'm, you know, we're, you and I are sharing our companies are sharing an outside sales company that we like, and that has done a good job. And, um, both the salespeople that we hired and that team coming in we made the mistake of taking our best performing thing and putting the new sales team on it.

9:48And I didn't really realize that was what was happening until the conversation I just had right before you and I got on here. We took a$200 ,000 follow-up to a monthly event that we have, something that generated$200 ,000 in profit because all the costs were already amortized. It was all basically, you know, these extra sales go straight to the bottom line and there's not really any cost of fulfillment. So we took that and gave it to the new sales team to learn on. And and it dropped by 80 percent. So we lost about$160 ,000 a month of sales that we had been getting for the past three months, because ever since July, it was, well, let's give the best things to the new sales team so they can learn and have success.

10:40but not only did that add on about 15 % of gross costs, but it also is on significantly less well-performing stuff. Whereas what I really should have done, and if I had it to do again, I would, and we did just make this change, is, hey, sales is supposed to be on new stuff. I don't wanna take away any of the old stuff. Once the sales team proves itself on new sales, then we'll move them over to the wonderful, beautiful, easy, you know, sales that are doing well. And that way we'll have them already up to speed and performing as opposed to say, you know, okay, here's one of our most profitable things.

11:18Hope you do well, you know? So I just found that out and I'm very encouraged because I was like looking at the numbers and just like, man, what the heck is going on? Um, and it's, you know, obviously a stack on effect over a few months of losing 160 K of extra profit, it adds up. So we're, you know, half million dollars or so down that we would not be down. So we're going back and putting the people that were selling very well before back on those sales and having the external team, the agency team focused on the new stuff, which is the main reason I wanted them in there anyway. Once they prove themselves, then I'll put them there.

11:57So that's a very long way of saying, I think you've got to be careful how you sequence it. And I know you guys have done a lot of agencies that way over at scalable as well. I say you guys, it's all the same, but, um, I know scalable has done that as well. Um, what are your thoughts on all that? Yeah. I mean, specific to that, to that point where if you have something proven that is working, um, cause I think there's scenarios where you bring somebody in from the outside to amplify what's already working. Uh, and there's scenarios where you bring somebody in from the outside to fix something that's broken.

12:28And there's scenarios where you bring somebody in to do something completely new. Yeah. In where you're bringing somebody in to kind of optimize to scale, like we've got this thing that's working, but we want to be able to do more of it. Maybe you got one person on the team and they're crushing it. They're doing great, but they're one person. And so let's bring in some more, you know, to to expand this. Yeah, I think I think the mistake a lot of times that one person, depending on the role that they're in, they're very happy to offload stuff. And so the pendulum swings really, really quickly and you lose the benefit of that one person.

13:02And these people either make the new folks either make or they don't. So I think a phased in approach is going to be important. Let's have them initially the first month take 20 percent so that if they produce zero, we're only down 20 percent. And if they are 50 percent, we're only down 10 percent. I think that that is anytime you're bringing somebody in to optimize something that is already working, you've got to do a phased in approach and tell the other person, keep doing what you're doing. We're going to get you some help. But the first 30 days, it's going to feel nearly identical to how it has.

13:36Maybe even a little bit worse because you're both helping to get these new people up to speed while also kind of doing the same amount of stuff. So I think that's the first thing. But the tendency is, and I've seen this happen with a lot of outside groups, they want to perform. They want to show well. And so when they come in to fix something that is broken or they come in to do something new, it's pretty common for them to realize early on that this is going to be harder than we thought. They were selling you on this whole idea of, oh my gosh, you're only converting at that, or you're only getting this result.

14:11We can do so much more. And they get in, they get in, and that all sounds very good on the front end. It certainly helps to close the sale. I think everybody is incentivized to believe that story. Then they get in and it's like, oh crap, well, we didn't know about this. Oh, you are actually doing this thing that we didn't think you were doing. God, that's kind of something we were, and they realize it. And it's very rare to have somebody go, you know what, we realized that all the stuff that we thought we were going to be able to do, we're not going to be able to do it. So instead, what they do is they kind of start to creep into the other areas that are working, and they want to sort of lay claim to those so that they can help.

14:48And so where this comes from that I think can be an important deal, we talked about phasing in, but the other piece is clearly defining the scope of work. Yeah. What specifically are you going to be responsible for? What results are you going to deliver? And this is important. We demand a 30, 60, 90 from any, and we do this with new employees too, if they're an executive level, manager level and up. But also if you're, if you're bringing in an outside agency, fractional person, consultant, they're effectively an executive level type position. Yep. So we want to make sure that they're treated the same way.

15:22So they've got to have a 30, 60, 90 plan. this is what we're going to do in the first 30 days. This is the result we expect to achieve, the milestones. This is what we're going to do days 31 through 60. These are the milestones. Day 90. Now, they can change the plan. They can come in and say, whoa, we knew something, we're going to change it. But they have to come and let us know. Yeah. Right. Because it's now a deviation from the plan. And when we've seen it not work, it's when essentially we were taking making somebody's sales presentation, which let's be honest, it's a sales presentation. And we were turning that into the plan with no specifics, no scope, no commitment, no nothing.

16:03So phase in, 30, 60, 90, those are some things that we've done that have helped. Any other kind of looking back lessons, things you do differently? I think for me, it's always, I guess, I think that long term, you don't want outside people. And so really, the ideal thing would be interview and go through that process to find the person that's going to hopefully be sitting in the role for one of those value ladders, or if it's a bigger role for the company, you know, for CFO or CEO or something like that. And then what we're doing, like we have another company where we are having the couple of people submit the 30, 60, 90 day plan.

16:55We're paying them for the work of submitting that plan and then kind of seeing what they're going to do so that we can then hold them to it. I think it's just paying more attention. You know, I want to, I'm a good delegator, but not maybe the best at laying out, here are the things that we need you to do. And then I never, and it's on me, but it's just every organization I'm in, I never get enough data. And you know that from the companies we own, even on the financial side, it's there. But getting people to give you the data that you need to make decisions on a regular basis, I almost feel like I need somebody that's just hounding people for that all the time.

17:38Because if I get it, if I get the marketing data, you know, three times a week on the dashboard, or three times a day on the dashboard, as we're trying to iterate through something, I won't be getting it after that unless I'm hounding for it. The financial statements and all the ratios, it's like, you know, it just seems really hard to get people to give you the level of data that you want. And, um, and so in the agencies in particular, if you're going to be measuring their performance and keep in mind, they're generally more than that full-time high end person you would hire because they've got to make a profit and they've got to pay their team and all that stuff too.

18:15And they're a business. So they're, you know, the agency cycle is typically we're giving you all our best people until we have to sell the next thing. And then we're giving you the tier two people, maybe the tier three people, and you actually have to go back and kind of push them to get the A team back. So, um, so ultimately I think that then an agency to supplement the people that you've got, which is kind of how we did it, um, is, is a great way to go, but ultimately you, your agency should really be just an, a, um, a supplement to the team that you've got, not a replacement for the key positions, if that makes sense.

18:57Yeah, it does. I mean, when I think about the ways that when we've had third party agency fractional relationships work, it has worked the best when we hired an agency or a consultant to come in and teach our people how to do their voodoo. And when we can come in and say, what would you normally charge for this. Okay. We're going to pay you that for the first 90 days, but we want you to, um, to do it while our people watch. Yep. And you're essentially going to train them how to do that. And if they're not willing to do it, then, you know, cause we don't want a black box, but when it's gone in with that, and it's where, this is a 12 to 16 week engagement.

19:37When, when we're done, we're going to now know how to get this result that we want to get from you. And then afterwards, we can look at some kind of ongoing retainer if our people need help. That's when it's worked the best. Yeah. And I think also because most agencies have a bag of tricks. That's their great bag of tricks. And it's a 90-day learning. And once you got that bag of tricks, there's not really anything new they're bringing. And so having new people come in with their bag of tricks, your team basically assimilating all of the bags of tricks is a pretty good way to go. So I think for this business, what we really need is we need that high-end,$300 ,000 a year marketing person to come in to take it and make it go.

20:25And that's where I think we're going to go with it. And then that person can be supplemented with agencies. but um but in the interim the good news is like one of the branding agencies that we're using they're they're doing a great job love love love that uh and another one as well and then one of the um one of the fractionals so i'd say so it was i think it's six now that i think about agencies that we had come in so we're going to keep three of them and we're going to let uh we're going to let the other three go one of them we talked with already and they basically said look, we'll work for free, which I really, really liked.

21:02We'll work for free because it hasn't gone the way we want either. And so we'll work for free based on performance only until we get this right, or at least until to the end of the year. So basically three months, October, November, December, rather than$20 ,000 a month that we were paying them. They're like, don't worry about it. We believe in what you're doing. We believe that we can do it. It's just been for whatever reason, not focused on the way that we would like to have it. So we're going to do that. That meant a lot to me to see them say that, especially after investing$60 ,000 for three months with them.

21:40So that's pretty good. Yeah. I would say just like a couple more tips for people who you want to do this. If you can get them to train your team, even better. if you don't have somebody there right now who can do it and take it over, then I would ask, is what they're doing a core critical value driver in the business? And one thing is, I don't want to have a core critical value driver of the business that this is something that really, really matters. It's not a commoditized kind of service anybody could do. This is critical to the creation of value at this company. I don't want that owned outside.

22:21So I'm going to hire the person first and then hire the agency, or maybe go to the agency and say, can you help us find somebody or consultant and bring them in to do that? But I really want that piece to be there. The other way that we've had when we've worked with agencies and outside folks where it worked is when they owned the complete project themselves. So it's something truly new. They were building it completely outside of our organization in coordination, but in general, they were doing it. And then we sort of received it as a package. That's worked well. When it has not worked as well is when we brought in an outside person to essentially run a segment of our team, working with our team.

22:59And they were never integrated into the organization. If you're going to do that, which is how most people work with agencies, you kind of need to treat them like an employee. You really do. You need to onboard them like you would an employee. And that's kind of what you indicated when you brought all these folks on at the same time, they didn't all get the love they would need in the same way if you hired a bunch of people, you know, but failed to teach them what to do. So you've got to onboard them. They need to get integrated into your scorecard and data system so that they don't have a separate set of, you know, books or metrics.

23:30And then there's another one over here. And now you get people arguing over what is, is it gets integrated into this. I think they need to be in your team meetings. They need to be functioning there in those team meetings, especially if they're partially leading some members of your team. They need to get fully integrated into the rhythms and rituals, or it just will not work. It needs to be the other two. They either need to be taking a dedicated project, or they need to be just training your team. But if it's not one of those three, I would pass. I think so too. And so I'm pro agency, and I think that they serve a valuable purpose.

24:07And I think that, um, that these things that we've talked about can help really to make it, to make it better, but you really do have to keep your eye on the ball. I think that you can't assume they're just going to come in and do it. Um, you can't make the mistake that we made by bringing in too many people at, at once, because it's not really fair to them or you, um, or your team for that matter. And, um, and, and even though we were trying to do that, like, here's the newsletter marketing person, which was an agency. Here's the newsletter writing person that's an agency. Here's the shorts person that's an agency.

24:39Here's the long person that's the agency and so on and so forth. It's just too much. And they do need things from you and you will ultimately be a bottleneck that stops it, which means you're not going to get from your money, your investment in them, the ROI that you should, because you're just trying to do too much at once. But that is something that, you know, learn from, learn from our mistakes. It is something that you're, that you want to do because you're like, well, that's a separate thing. That's the newsletter. And those are shorts and this is this, but it still requires time and effort.

25:09And then I think also the last thing would be just prioritizing for us that I think of all the things that would be the most important would be how do we get a new sales channel? Cause we're really trying to get outbound sales down. And that is absolute money at a multiple of the investment that we're making in it. So I think the other thing would be to be careful when you're prioritizing what you want to do first agency-wise, since you can't do it all at once, or you shouldn't, ask me how I know, you should think about what is the thing that's going to move the needle and generate the ROI the most, the fastest.

25:46And then, as you said, constraining it because don't let them creep into your super profitable stuff because they're trying to make a good show. And that's something that, that, you know, we, we made a mistake with as well. So keeping an eye on that really carefully, I think helps. So yeah, I think that's, I think that's pretty good stuff. Yeah. Hopefully we've helped some folks out. We love, we love agencies. We love consultants. We do it ourselves. But it is not a just, there's a difference between outsourcing and abdication. And I think the mistake that entrepreneurs make is they abdicate responsibility to these third parties, because let's be honest, if we could do it ourselves, we would have done it.