Ensuring Your Agency Thrives in a Recession

What should you do in a recession and what should you be focusing on right now to ensure that your agency is recession proof? Why is it a bad idea to rely on referrals? And what should you be doing when you've got time blocked out in your diary to focus on business development? Why is building a brand more important than lead generation? Well, these questions and more we're going to answer in this really broad ranging discussion in today's episode of the Agency Accelerator Podcast. And I'm really excited to have with me Oli Duffy Lee, who is the founder of the Authority Agency, the growth agency company that supports agencies business development strategies. Now I love it when I have guests on the podcast that have a different view to my own. And while Ollie and I agreed on many things, he definitely has a few different opinions to me on business development. So this is a really intriguing episode, full of value and let's get on with the show. I'm Rob Da Costa and this is the Agency Accelerator Podcast. As someone who has stood in your shoes, having started, grown and sold my own agency, I know just how it feels in the ups and downs of agency life. So this podcast aims to ease your journey just a little by sharing mine and my guests experiences and advice as you navigate your way to growing a profitable, sustainable and enjoyable business. I'm really excited today to be joined by Oli Duffy Lee and we are talking about a potential recession and whether it's going to happen, how we need to be best prepared for it and all that good stuff. So we'll dig into more of that. But first of all Ollie, welcome to the show and I just wanted to get a sense from you what you feel like right now. We are recording this in August 2022. What now should agencies be focusing on?

Hey Rob, really, really great to be here. So yeah, right now, today I don't think agencies need to change their focus from what they should be focused on really all the time.

Right.

And on a, from a very, very simple standpoint in terms of their marketing in the sales, it's finding new clients and keeping them and growing them. Right. And so that's just as important now as it ever is. There's one thing that I think is quite scary for agencies at the moment. So I entered the world of work, the agency world about 2009. So just off the back of the, you know, the 2008 recession, these two recessions are going to be very, very different I think. I mean that was characterized by house prices, being crashing, unemployment, that sort of thing. This is characterized by rising cost of. So we will be different. But one thing we saw was referrals and repeat organic business basically dried up. And so if I was an agency that had that relied on referrals for over 50% of my new business at the moment, that would be scary for me. And I think, if, in answer to your question, one thing to focus on right now is manage creating systems to generate new business regularly from outside of your existing network.

Yeah, it's funny, isn't it, when I meet a client for the first time and I'm talking to them and I ask them how they get their business and they often, very proud, proudly say, well, I get all my business from referrals and word of mouth. And I say to them, that's fantastic. And of course you want to encourage that. But referrals and word of mouth isn't really a strategy. It's more of a kind of good luck. And of course, yeah, you nurture your network and that results in referrals and word of mouth business, but it isn't really a solid, repeatable, scalable strategy. So I think like you say, especially if people are relying on 50% of their business coming from that, then they're in a precarious situation regardless of what the economy is like. But especially if we're heading to a recession. Now, one thing someone might say to you in response to that is so Ollie. Yeah, I get that, but I'm so tied up in client service at the moment that I don't have much time to do business development. And that's why it's so fortunate that we get all of our business through referrals. What would your response be to that?

So many responses to that, Rob. So first thing is it's amazing that you're doing a great job servicing clients because another thing that's really, really important, there was another thing to focus on in going into recession, it's retaining clients. Because the thing that will hurt agencies will not be not being able to find new clients because they're not doing loads of that already. It's losing their biggest clients that have been great with them for the last five years. Plus. Okay, so no, no bad thing to be service, giving your clients a really good service. But I think the harsh answer to that is we make time for what we think is important. And a lot of people, I've found with our clients, they're not spending time on new business. Yes, they're very, very busy, but they're not spending time on your business because they don't really know what activities to do. And if there's an element of uncertainty around whether this will work as a strategy, you'll come up with any excuse you want to not commit to that strategy and not do it consistently. Unfortunately, on top of that, laid on top of that, in 2022, we are obsessed with things that happen instantly, want things to happen. Now, I put out a LinkedIn post. Why didn't it get me five clients? That sort of thing. And so that layer, that cultural layer of instant results, instant gratification coupled with I'm not sure if this is going to work, actually creates, is actually, I found the reason people don't put their time and effort into new business, not always because they are stacked with client work. Now, that may seem harsh. Do you think that's harsh, Rob?

No, I think that's true. I think we're all like elastic bands and we ping back into our comfort zone. And yeah, I was just talking to a couple of people who were being promoted to a joint MD role and I, I gave them that word of caution yesterday. I said you have to step into that role and there are aspects of that that you're going to be scared about and you might not stepping into it because you're really busy serving clients, but the reality is unless you make the time, you'll never step into it. And it's exactly true with business development as well. And I think you've nailed two very important points there, which I want to emphasize. One is that we live in this instant gratification world where we want results instantly. And it doesn't help that we see, you know, ads telling us, you know, some guy standing in front of a expensive yacht that isn't even his telling you that he can make you millions overnight. Because we all know that's not true. And the really robust business development and a marketing strategy is always deliver in the medium to long term. So what I always tell my clients is that you may not be able to see that far forward, but if you don't start today, you will never get to that, that mid to long term point.

Yeah, the exponential curve is the best visual representation of, of how that stuff works. I have another question for you though. So when I hear someone say that as well, it indicates a couple of things to me. Maybe pricing is a little bit too low, which is meaning they can't hire the right people to really to remove them out of it or could be culturally, from their point of view, they're a bit of a perfectionist and they don't Want to let go. So I haven't got time for new business argument. I see it as flawed in many, many different ways and it's unpicking why the thought is there, not why the situation is there. Does that make sense?

Yeah, for sure, totally. Two things, if I'm really busy and I've, you know, I've got all these referrals coming in and I've got no time to breathe, then yeah, look at your pricing, that's one thing. And second of all, I think a lot of the clients I work with who are the agency owner who would probably have responsibility for new B, they are not just perfectionists, but they're also very controlling. You know, why did, why did most people start their own agency? Because they want, they want flexibility and freedom, but they also want control that they may have not had in their last agency exactly when they were an employee. So that's why they start and so they find it very difficult to relinquish control. And of course they think, they run this belief that no one will do it as well as them, as quick as them, as thorough as them, and so they don't want to let go. And they also run this belief that if I hand a client over to a member of my team, the client will be unhappy and leave me. And of course we have to, like you say, we have to unpack this and challenge all of those, all of those beliefs. So just tell. Let's go off a bit of tangent here because I'm just really interested to know whether you're aligned with my thinking around like what are some of the smart, non negotiable strategies that people should be putting in place if they want a consistent flow of new business.

So I'm, I'm a massive believer of brand over legion. I think lead generation as a concept in 2022 is flawed and I think it's as a mindset lead gen is really damaging to your brand. So when we say, when we ask ourselves the question how do we get more leads? That's probably the worst question we could ask ourselves because a few things happen. One is we start picturing potential clients as numbers on a page. But the worst bit, well, there's two other bad things. What the other bad thing is that it puts us into chase mode. We really want to be in the tracks mode. Now that's not that easy, especially if you're a startup. But you want to more in attract mode, attracting the right people than chasing. So that's not a good thing. But the worst pit rob is that when we go after leads and we put in this Legion strategy and then a referral comes in, we stop because we're like, oh well, we did it. The strategy didn't work, but we got a lead from somewhere else. So the leads come in and then we're going to service it. So it's a very up and down temporary thing. So I don't really like Legion as a strategy. So then you've got to think, ask a question. How do I build a cool brand around me as a founder and around us as an agency? And non negotiable today is how do I build a really cool brand around me as a founder? The main reason why is because it, it's never been easier. So we've got wonderful, wonderful channels like LinkedIn for example. If LinkedIn was a physical place, I would spend all my time there. I think it's a wonderful place. But also emerging channels like TikTok, I just, I don't think you can call TikTok emerging anymore. But maybe it is for B2B. YouTube is another great channel where it's really, really easy to target your exact audience and show them through good value based content that you know your stuff. So non negotiable. There's loads of other things to layer on top of that. But non negotiable is building a personal brand around you as the founder.

Yeah. So that's really interesting and that is quite. Whilst I completely agree with that, that's not quite the message I give to my clients. I love having guests on the podcast because I learn and evolve my thinking. So let me ask you this. So I've worked hard building my personal brand. I've created some amazing content, some great videos I'm targeting on YouTube or LinkedIn. What do I want the person at the other end to do when they've watched that video if it's not about lead gen? So traditionally I would have said, okay, so you're promoting this, this brand for you. You want to have a call to action in now and that call to action might be download my lead magnet or join my workshop or something. But that's perhaps not what you're thinking. So what would you in your view be the next step?

So actually I think there's a midpoint. So there's, there's a ton of people out there who are really, really chasey and they're really in that Legion space. They give no value in the chase. Yeah, there's a ton of people up here who are so giving, they give loads and loads of value, and they never ask. Both of those people will end up not that profitable. So it's about taking the good elements of both and sort of molding them over each other. But I think there's a few things in your, in your content, backing up your content. We call this thought leadership marketing. I mean, that's not a new term, but the way we take that is to take really snackable thought leadership pieces, whether it's high value lead magnets, whether it's events, we love running events and so do our clients. And off the back of them, when people opt in for those things, is offering a meeting through really nice neat funnels. Now this works so well for us that we encourage people to have new lead magnets every single month. Therefore it's new gated content every single month. And therefore it's new funnels every single month. The reason, the theory behind this is I don't know if you've heard of Dean Jackson. Yeah. So Dean Jackson's story of 100 leads.

Right.

So 50% will never buy. Of the 15% that do, there'll be 85% of those that are buying the net in the future, 90 to 100 to two days, to two years. And these other ones who are buying now, a lot of people, what we need to do is we need to set opportunities for those 15% to say, you know what, I'm ready for a meeting now. And that's where these sort of funnels come in. That's where a nice conversion post with a DM Me, if you want to hear more, might come in as well. Yeah. Does that answer your question?

Yeah, no, it's great. It's really good. And there's a lot of good value in that. So I always tell my audience, serve, not sell. But I also say exactly what you said, that if all you do is serve, then everybody will love you as a place to learn from, but they will never have a mindset of buying from you. And if all, and if all you do is sell, then people are going to get fed up and leave pretty quickly. So I always talk about the 8020 rule here, that in your content, 80% of the time served, but you have to have a 20% selling and you have to work out what that is. And I also, the other thing I say a lot is if someone says no to you today, that doesn't mean they're saying no to you forever. It just means they're not ready today. And your job is to be in their world at the point when they're in enough pain and they're ready to reach out and buy from you. So that really backs up what, what you said. So that's, that's really interesting. What's your views on one of the. I'll caveat this with so it doesn't sound too loaded a question, but I'm always going on to people about the importance of building their email list. I'm always saying it's one of your business's most valuable assets because you own your list. You don't own your social media. What's your views on that?

Essential, I think email. So one of the two crimes that agencies make when it comes to their email list is one is they don't build one. But the worst one is they have one, they don't email them. So I don't know, I don't know what they think is going to happen.

But we're too polite. They think, I don't want to bother my contact. And I tell people, you should be emailing your list at least once a week. And often people fall off their chair. I mean I've emailed my list once a week for years. And yeah, sure, people unsubscribe, but you've got to stay in their world and they'll forget about you if you don't. So that's what I think it is. I don't know what your view is.

I mean anyone that, anyone's from, from my network who's in my, on my email list that's listening to this will be laughing right now because we send about ends which list you're on. But we Send up to 5 a week on our list and it's a big mixture of things. Another, another thing that I see people missing with when it comes to email marketing is too much broadcasting and not enough chat starting. So if, if we're broadcasting all the time with content and things like that, that's great case studies, that's really important. But we like to employ things that, and I learned this from a coach of mine, but what we call spur emails, so short personal expecting response emails. So just really short individual emails in a, in a way to start a conversation because that person who is now become a night now buyer, like you said, they don't set a thing in their calendar, say I need to go and tell Rob and Ollie that I'm now a now buyer. Right? They don't say that. So the more opportunities we can give them to present themselves as a now buyer, the better. And starting conversation like that, something like if you're an E comm agency and you're targeting D2C brands. So an email like, hey, are you still looking to grow your DTC sales from Ollie? That's a great email to send sometimes. So sending personal emails to people I think is really, really good at scale. But I mean, yeah, yeah, I, I.

Actually, and it's funny, I can just see one's pinged in now. But when people download my book, yeah, like the second email they get from me is, hey, Ollie, what kind of agency do you run exactly, Rob? And, and people reply and then I'll, and if they do reply then I'll personally reply to their that email. That's part of the sequence. Let's get back on track. So, because I think this is a whole other podcast episode on his dev and hopefully people, I'll put a link to Dean Jackson because I'm obviously aware that you and I know who he is, but other people may not and I, and if people fell off their chair when Ollie said he sends five emails a week, then get back on your chair because if you've got genuinely good content to share with the world, why wouldn't you share it? So let's just talk a little bit about once we're in a recession and times start getting tougher, I think a lot of agencies believe that their only choices are to over service their clients to keep them or to start discounting their services to keep them. What is your view about that when times are getting tough?

I think that's a bigger question. It's a really interesting point. I think there is a big, a big mistake agencies make a lot is that they aim too low with the clients they go after. Okay. Now I think one of the big opportunities, I think this recession is a massive opportunity for agencies, honestly. So imagine you're an agency that a sort of a big small agency, right? So in the small spectrum, a big agency in that small spectrum and say you charge 5,000amonth for a marketing retainer. So it's not huge, but it's not tiny and you're used to working with mid sized companies. Now there are a lot of companies out there, bigger companies, some of them national, some of them international, that right now, today are used to paying 15 grand a month to an agency for a marketing retainer. The question you need to ask yourself if you're that agency is are those companies going to stop marketing? Of course they're not. Absolutely not. Are they going to question whether they want to spend 15 grand a month on marketing? Probably now that presents a massive opportunity. And what you're saying there, when it comes to what should agencies do, should agencies sort of add more? That is a defensive tactic. And I think the agencies that defend, the agency that defend might survive, but they might not. But the best they can do is survive. The agencies that attack actually are going to thrive because they're going to end up with clients that they were miles out of reach before, clients that wouldn't even have looked at them because they were paying three times as much and they just thought, why would I work with an 80 like that? Those companies, close clients are now in your eyeline and you are now a really viable candidate for them. So should you focus on over servicing current clients or reducing prices? No, I think you should actually be looking at what, what are these new clients that used to be completely out of reach, that now could be open to working with. What's your, what's your view on that though, Rob?

Yeah, it's, it's, I think it's mindset at the moment. I mean, I'm no, I'm no economist and I'm no crystal ball gazer, but at the moment I'm telling my audience to be careful about talking themselves into recession. Like the behaviors, as if we're not in a recession yet. Yes, it looks like we might be heading towards one. Like you say, it's going to be very different. So who knows what, what it's going to look like, how long it will last. But you know, it's funny you said what you said. I started my agency back in 92 during the first Gulf War and there was a recession then. And then I, when I sold that agency and I started DaCosta coaching was in 2007 at the same time as you in the financial crisis. And you know, I always thought to myself, I can survive in those times. I can survive in any time. So I think we have to be careful that we don't talk ourselves into this. And I think a lot of what you're saying is around belief in your own abilities and the mindset and you need to make sure that you at the moment, business as usual and of course make sure you deliver great value and you communicate really well with your clients and your focus on business development. But yeah, I, I completely agree with you. I think it does present a fantastic opportunity and I think either the client or the agency that starts cutting everything is the one that's going to disappear. If a company is saying, oh no, we need to slash our marketing budgets, then they're the ones who are going to have problems because marketing should be the last thing we cut, not the first thing we cut in a recession. So I, I completely agree with you.

Only thing I'd add to that, Rob, sorry, just to just add is the. If I would, I think if you're an agency and you're seen as a safe pair of hands to your clients, as a pair of hands, you're vulnerable. If you're seen as a strategic partner, you're going to be safer here. So the one question I'll be asking is, do my clients see me as a safe pair of hands, people that deliver brief takers, or do they see us as a strategic partner, a brief making partner who's constantly thinking about their reality. If you're down the hands area, you will be vulnerable and those are the clients you're risking losing. So if that's where you are now, think about how you can move yourself more towards the strategic end and become a strategic partner because then you're better value for money.

Yeah, that's great, great, great point. And let me, this is perhaps a big question to answer in 10 minutes, but what does an agency need to do to be seen as a strategic partner and not a safe pair of.

Hands that's so easy. They've got to think for their client. So if you're a, if you, and this is, this is a sort of agency crime that lots of people committing, they don't realize. And the worst thing about it is you don't need to. So if you are a brief taker, I look at brief taking, brief making. If you're a brief taker, what that means is you're very reliable and you sit there and you wait for the clients to think and then for them to tell you what to do. If you're a brief maker, you can take that thinking piece off your clients so you can look at their business, look at their industry, look at the way the world's going and say, looking, looking at everything I know about you, I have been doing the thinking for you. And what I think is that we should do this. There's a crucial element that makes this a good strategy or a bad one and that is the level of insight you have into the client's business and their industry. Because if your insight is weak, then your ideas will be poor and that strategic thinking will be pretty valueless. But if your insight is good, you've got good level of insight into their client, their business, their industry, you'll probably come up with some good ideas. And that is what A strategic partner does.

Yeah. I love that. That's. I'm really glad you could give a succinct answer to that question. I talk about this all the time and I talk about how we need to set ourselves up to be a strategic partner from the very first conversation we ever have with the prospect. Right the way through to all of our delivery and retention strategies. So now we're. Let's fast forward and assume that we are in a recession. Do you think agencies need to do anything differently or change internal structures in a recession than they would do when.

We'Re not in a recession? Internal structures. Do you. Are you referring to team and service delivery or are you just talking about the way they run as an agency?

Team, service delivery. Yeah, but those things really. And I guess, you know, cost cutting and all that kind of stuff.

Yeah, I mean, I don't. I think like, I think you nailed it when. Don't talk yourself into a recession. But if we, if we did find ourselves there. Look at the same metrics that you're already looking at. I don't think you should look at like recession metrics. Make sure your profitability is good and you're happy with it. Make sure that the revenue is stable or it's going up. And make sure the. Your new business metrics. So the amount of appointments you're having, the amount of clients you're getting each month are looking healthy as well. I'm massively of the. Of the opinion that we should be more aggressive in our strategy than defensive. And so I'm sort of very hesitant to talk about defensive strategies. However, Rob, I would say that may not be the most amazing recession advice if we were actually in it. So what's your view on that?

Yeah. Thank you for. Thank you for asking. I think obvious things. I think the number one thing I would say is know your data, because I don't think enough people do. So you need to know you need to be on top of cash flow. That's probably the biggest thing. You need to be hot on, on debtors and you need to be hot on getting your invoices out on time and not missing the end of month, which so many do because they're too busy doing other stuff. You need to get really good at that. You need to know your data so that you are looking at your numbers. I think you need to have a robust plan that you are really focused on delivering and that you are nimble about changing because, you know, every day we know something today that we didn't know yesterday. And Plans fail when they get cast in stone. But yeah, I think it should be, you know, business as usual. I, I think the worst thing you could do is panic and start cutting everything because then you're doing what you don't want your clients to do, which is cutting all your costs. I mean, some other things that, that could come into play, like getting rid of an office, which probably a lot of people have done anyway, if you do need to cut costs. But I, I want to come back to the say, don't talk yourself into a recession. And when we're in a recession, don't talk yourself out of clients. Like, don't start projecting what you think the client is thinking and how they might behave. And then you start acting as if they've already behaved like that. And then you've created yourself fulfilling prophecy.

Exactly. That's exactly right. And people will pick that up and in your service delivery, that will that come across as well. I should caveat. One thing that I think is really important and I think a lot of agencies struggle with this. If you want to be aggressive in your strategy, it helps to have a good buffer or warchest in your bank account. And so if your profit margins are, say, a little bit lower, but you're on a scale mission right now, it might be a good idea to just increase your margins a little bit and stack a bit of money in your bank account so that if something did happen, you could still be aggressive. I think this is one of the areas where smaller agencies in particular struggle. And so that coupled with really focusing on your cash flow. Well, if you do those two things, you'll be fine actually.

But yeah, let me just do two difficult. Well, one easy one, perhaps not so easy question. But if. What would be a good war chest for a client to have? What would be a good goal for them?

Ask your accountant. I don't know. I think, I think you, you want to have a good Runway. So if you're looking at your monthly expenses, I think you want to have at least four months. Probably if you could have six, that would be great. Another way of looking at it is through is working with your accountant or your financial people about how much you can extract after a certain amount without having too much of a tax liability. So I don't, I also don't think founders pay themselves quite enough either.

So.

And I understand why, but yeah, make sure you.

I always say three to six months. If you didn't earn any money for three months, could you survive? So that's.

Yeah, I think that's minimum, right?

Yeah, that's a starting point, but then go for six months. Let me ask you another really probably a difficult question to answer because it might be how long is a piece of string but what is a good margin that an agency should be working towards?

I think about this question all the time. So I think it depends on what, what are your aims? Are you trying to scale really, really fast or are you trying to stack cash in the bank and just have a nice life? So if you want to, if you want to stack cash, you can go anywhere over 50%, maybe 60% margin. If you want to scale fast, I wouldn't even mind seeing like a 15 or 20% margin on, on most projects it really depends on what you want to do. But you know, having might be conscious about it and hit your margin, set a margin and hit it. Is that aligned with what you think?

Yeah, I think if someone was hitting 50 or 60% they would be absolutely delighted. I would say the average margin is somewhere between 20, 25 and 35%. But I do see some clients I work with whose margins down as low as 5 or 10% and I'm sort of saying you're almost running a charity here, so got to look at what's going on and unpick that to work out what is it your pricing, is it your servicing, is it your internal costs? What is the cause of that? But really interesting conversation that we could carry on talking about. We kind of meandered all over the place. But I know that this is a really action packed episode with lots of great insights from you, Ollie, and some great reminders as well that I know the audience will find really useful. Let me ask you a couple. Let me ask you the question I ask all of my audience which is if you could go back in time and give your younger self just starting out in business a piece of advice.

What would it be? I know I saw Tom Hanks said this a while ago around table and he was talking about this, this too shall pass. And he was saying just remind, I wish I could remind myself, this too shall pass. So when, when stuff was really bad, this too shall pass. And when stuff is really, really good, this too shall pass. And I think I try really hard to remember that now. And I had no I, when I first started I just thought that the lows, that was just going to be how they were for the rest of time. So that would be the advice I would give myself and any people starting out now.

Yeah, what a great piece of advice. And I'VE had. I must have 50 or 60 guests on, and I don't think anyone's ever said that before, so I. That is really great.

What's your piece of advice?

Have a plan. You know, have a. Have a plan. Have a. Have a goal in mind. Because I think, like many people, I started my agency through, like, an opportunity. I was not going anywhere in my job. I was a marketing manager. There was. We couldn't hire a good. I worked in tech. We couldn't hire a good tech agency. So I thought, I know, I'm going to start my own agency. I did that, ran it on my own for a year, then hired my first member of the team and then grew it to 25 staff. And it all happened in a blink of an eye and I had no control over it. So I. I don't know. No one's ever asked me that question before, but I think it would be, yeah, have a plan and enjoy it a bit more. Yeah, like, I live a very different life now to the one I led back then. I had a lot more money then, but I'm much happier now. And I don't think I enjoyed everything. It was, you know, you know, when you're in your early 20s, it's. I don't know, I wasn't even that materialistic, but I. I don't know. Anyway, I just wish I enjoyed it more. So maybe it would be, Rob, stop and smell the roses and enjoy where you're at. Because, you know, I always think we should be born 18, get younger because. And retain all the wisdom we have, because that's true. We would enjoy everything so much.

Very helpful. Yeah.

Now let. Before I go rabbiting on about that, if people wanted to find out more about you and get in touch with you, Ollie, where would they?

Oh, I think, like I said, I live. Live most of my life on LinkedIn, so please just reach out and connect with me on LinkedIn. We've got a newsletter which we put out every week, all about agencies and agency growth. So, yeah, reach out, say hi, say, say you'd listened into this podcast and I'd love to chat.

Great. I will put a link to that in the show notes and just want to say a big thank you for giving up some of your time and sharing your wisdom with the audience today. I know this is going to be seen as a really valuable episode, so thanks again.

Thank you very much.