Agency Unfiltered - Spencer Powell from Builder Funnel

Going All-in with Specialization

Spencer Powell, CEO of Builder Funnel, and his team have gone all in on specialization—all the way up his agency’s name. He walks us through the decision to align so tightly to an industry, the benefits he sees across his agency’s flywheel, handling prospects with competing businesses, and the impact specialization has on team development.

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Episode Transcript

We are joined today by Spencer Powell, CEO of Builder Funnel, who comes on the show to talk about specialization. Builder Funnel has gone all in on specialization, all the way down to their name. Spencer talks to us through his decision about aligning so tightly to an industry, the benefits he's seen across his agency's flywheel, how he handles prospects who compete against his client base, and the impact specialization has had on team development. Agency Unfiltered begins right now.

KD: Spencer, hello there. Welcome to Agency Unfiltered. We're psyched to have you today.

SP: Hey, I'm excited to be here. Thanks, Kevin.

KD: Obviously an unusual season for us, but we're going to try and make this work remotely. But I mean, looking at your setup and it looks like that won't be a problem at all for you.

SP: Yeah, I think we can manage OK, so it's all good.

KD: Psyched to be talking about this topic in particular. I think it's something that a lot of agencies, a lot of HubSpot partners have to think about, especially in the early days of who they want to be and how they want to grow. And that's the topic of specialization, or aligning yourself to a particular industry or vertical, right? And obviously, Builder Funnel definitely made their decision a while ago, all the way up to the name that you go to market with. And so, why don't we just start off by explaining, well, who you are, Spencer, but also how did the decision making process go around specialization and why?

SP: Yeah, I mean, it was tough. And I'll kind of get to that in a second. But yeah, I mean, I don't know. I got out of college. And it was kind of during the Great Recession. I was bouncing around the internet and was like, oh, this social media thing, I think I could help some businesses figure that out. So I started my own deal and ended up merging with my dad's direct mail business. And he was looking to transform because he was like, hey, direct mail is going to go off a cliff. I got to change-- go digital. And so we kind of teamed up and started trying to figure some things out. And as we did, one of our first clients was-- you always turn to friends and family, right, for those first clients. And it was my uncles were running the family construction business at the time. And spec home building went to zero, if anybody remembers that the new housing market just went to nothing. And so they got into remodeling, and they used that to kind of support them during that recession. And that was our first client. And we just kind of were testing and playing around and started to see some results and ultimately took them from about $2 and 1/2 to $10 million over several years. And a lot of it was through digital and through all the inbound stuff that we talk about today. But you were kind of having to convince these construction guys back in the day that this was a thing. So that's a little bit of my background.

And then we kind of picked up a handful of clients in different industries. And as we kept going along, I just kept sitting there, going, there's going to be a million inbound marketing companies one day. We got to do something to be different. We're just this little division of some random company in Colorado Springs. We've got to stand out. And so, it took us a few years, and then we finally were like, we're just going to commit. So that was actually when we formed the brand Builder Funnel. It wasn't until maybe three years in.

KD: That's great. And so, when you have to decide an industry-- I don't know if you had to weigh other options. It sounds like kind of the path towards remodelers. It came pretty naturally. But is there a balance between, OK, we already have built some success stories here versus passion or interest? Is there a balance that you have to find? And were you lucky enough to thread the needle for both?

SP: Yeah, it's a good question. It's one I thought about after the fact because we kind of-- we did have the family tie-ins. We had the knowledge of the industry. And then just because of the initial results and kind of success story, we picked up a few more clients. So we had maybe several industries. But that one we had maybe four or five clients in. And so, it just kind of felt like, yeah, let's just commit to this one where we have the most experience, the most knowledge, and the most case studies around. Looking back on it, would I have picked maybe B2B? Maybe, because there's more opportunities with ABM and Prospect and some of those things. We don't even-- we pretty much ignore all that because these guys are going after end consumers. And so, I think the one area that really helped us was, it is a big ticket considered buying process. So it's still, hey, I'm going to buy or build a custom home for a million bucks. Or I'm going to do a remodel for $200,000. So that person is going to do a lot of research. So content does play a huge role. In terms of the excitement, I think you can find excitement in a lot of places as you dig into the weeds. So I don't know that I would make my decision totally on that. Maybe if it really sounds boring, or you just have no connections to it all all, maybe steer clear. But I think if you have success, you have expertise, and there's growth opportunity for you as an agency, personally, I would maybe put how passionate I am about it lower on the list.

KD: Sounds like knowledge and experience would surpass. I would say the exciting piece is closing clients and seeing revenue come in, right? It's regardless of--

SP: Yeah, I mean, when you start delivering results for people, that's exciting, regardless of the industry. And then, yeah, if you have to write blogs about the same industry, it would be nice if it wasn't something super boring. But sometimes that's where the opportunity is because no one else wants to do it, so.

KD: That's fair, yeah. So obviously, let's file you under pro specialization, right? And so here's your chance to sell the nonbelievers on the vision. What would you say-- and there's probably a handful, but what are the primary benefits of specialization? What's been the most impactful change for your business as soon as you or once you align to your entry?

SP: Sure. Everything got easier. We'll just leave it at that, yeah.

KD: All right, done. Done, yeah.

SP: That's a wrap, folks. It was a really hard decision. I remember that moment, just going-- and I've been going to Inbound. I've been going to the conferences, and there were a few people that were very pro specialization. And we had kind of been toying around with it, like we had that client base. We were still saying yes to other industries. And finally one day, I said, we haven't committed. We just got to do this. I know it's the right thing. And it was so hard to just say, OK, we're going to create a brand around it. We're going to say no to everything else. But as soon as we did it, it was so freeing because suddenly, all of our content creation was way easier, right? Now I'm writing a blog. I'm now trying to figure out which industry am I writing for. Who am I trying to-- I know exactly who I'm writing to. I'm writing to a remodeling business owner that does between $2 million and $8 million in annual sales, and they're struggling to get leads off the internet and their own website. So now I have this person in my mind. Everything gets easier. I know what conferences to go to. I know where to network. I don't have to decide between a million different things. Like, oh, these are the top five conferences? Great, let's start showing up at those. Let's start networking.

So I think just from a positioning and marketing perspective, the world is so big. And we think picking one industry is going to be limiting. But usually, most industries are massive. And there's-- I don't know. I hear it all the time on sales calls. They're like, I was talking to a local company and you guys, and I love how you guys focus on the industry. I literally hear that exact phrase on 25% to 30% of my sales calls. And so I know that yeah, it just got easier. And then I think you pick up a lot of efficiencies on the delivery side, too. So campaigns that worked-- we just recently, a couple of years ago, figured out how much does kitchen remodeling cost in location. That was top performing content. Great, roll it out for our 50 clients across the country.

KD: It's templating.

SP: And now they all are seeing success with that campaign—and you're writing unique content, but you're saying, oh, this theme, this topic of cost in a location works. So let's adjust it and rewrite it for that location and for those numbers that make sense for that area. And people are succeeding. So I like that idea of taking campaigns and templating. Downloads-- you can rebrand downloads. Obviously, you can't clone blogs and stuff like that. But you just get a lot of efficiency across the board of those types of things, too. So I guess those would be my top few plugs for go specialized.

KD: Well, you know HubSpot is all about the flywheel. So if I think about sales, marketing, and service, well, you're like, OK, well, sales, that acts as actually a point of differentiation in the sales process. People call out your specialization. It sounds like marketing, your strategies get more focused. They're more efficiently produced or created. And it sounds like, again, once you find something that works, it's rollout-able, if that's a word, but replicable for other clients as well, yeah?

SP: So yeah, I would say, just think about it. So just put some serious thought to it if you haven't committed to an industry. And there's a lot of pros.

KD: In regards to the client experience element, obviously, they select you because they view you as the experts in the industry. Do you ever find that that comes with higher expectations from the client side? And if so, how do you kind of like balance that?

SP: Yeah, that's a good question. I think there is an elevated-- I don't know-- I guess, expectation from the client. But I think you're able to deliver on it easier than you'd think just because you get so many reps. And just from the fact that your strategist is talking to the business owner, and they're speaking their language because they're in it all the time, too, it just sounds so different from the random local agency that they were thinking about working with as well. And then when you come right out of the gates and you say, hey, because this worked for this client, this client, and this client, we want to start you with this campaign, they're going, awesome. And then, as you start to move forward, they start to see those results. But I think you can lean on all those other clients and kind of the industry experience. And they start to just actually feel it. Obviously, we're not going to retain 100%. That just doesn't happen. But I feel like we've been able to keep clients longer and churn less definitely since we changed over to specializing.

KD: That's great. I would find that for a lot of the smaller agencies or folks that are still kind of scraping a little bit, still trying to figure it out, still trying to grow, they're going to be hard pressed to say no to business, even if it doesn't fit into the specialization they've circled. When did you guys start feeling comfortable to do that? Or do you guys turn away business that doesn't fit into that core persona? Any words of wisdom for folks that just don't feel comfortable saying no yet?

SP: Yeah, that was a tough moment. I'm trying to think back. It was probably a few years in. I don't know. We were doing a few 100,000 probably in revenue or something annually. Had a couple of people on the team. And yeah, when you have to go, hmm, that's not in our wheelhouse and say no, that's tough. However, all that time that you would waste spinning your wheels and trying to relearn a whole new industry and figure out new systems, that is productive energy that can be used towards prospecting, towards mining that next deal. And so, I would say it's worth the tradeoff. And I think it's just, it's tough in that moment, but then if you just keep pushing forward, it quickly comes back to you with another opportunity that's the right opportunity. And to your second part of your question, yeah, today, I mean, we don't accept any work that's outside of the industry. I mean, it would have to be a really unique situation. And people have asked. They're like, hey, I know you kind of only work with these guys, but would you do this? And most of the time, I entertain the discussion, and I just don't think we would do a good job. And part of it is I look at it, and I go, this is exciting, or this looks fun, but man, we're going to have to put in a lot of time upfront to relearn everything. And if I just go land another client within the industry, we already know what we're doing. And so, actually, I want to turn it down because it just sounds like a lot more work.

Where we actually end up turning down work, too, is with competition just within our client base. And so we won't work with two competing remodelers in Atlanta or two custom builders in Seattle. And so, those are the two areas we actually end up turning quite a bit of work away.

KD: Do you find-- how frequently or how often does the competitor situation come up? Does it come up frequently? Or is it a rare case when it happens?

SP: It's becoming a little more common the last two years. The first six, seven, eight years, it pretty much was a non-issue. But yeah, as we've gotten a little bit more brand equity and we've grown, it comes up. I think we've probably turned down probably 200 or 300 grand worth of work this year, which is significant for a company like us. But it just solidifies with those other clients because every time-- I have a client in Atlanta, so it's a bigger metro market. And we've had a few competitors come up. And so I email them, and I say, hey, these guys reached out. They want to work with us. Are they a competitor? If I look and they're 15 minutes away, they're both remodelers, I pretty much know. But I always reach out. And then, he's like, yeah, they are. So I tell them, well, great, I'll tell them that we have a conflict, and I'll turn them away. And then, he's like, awesome, right? I'm working with these guys that are committed. And-- I don't know-- I feel like that brand equity is worth a lot, too. And it just doesn't feel like the right thing to do to be competing SEO-wise with two companies that are 15 minutes apart and going after the same clients.

KD: Yeah, there's only so many views, or clicks, or shares. There's only so many pieces of that pie. And so if you start competing against yourself, that's difficult. But it sounds like actually looping in your existing clients, letting them know who reached out, and asking for their input on whether it's a competitor, yeah, that must build a ton of trust with your existing clients. And it sounds like you do the secondary research just in case because I'd be hard pressed to say, any design build remodeler in the state is a competitor of mine. But it sounds like you validate.

SP: Yeah, we definitely validate. And we're starting to hit a point where we need to figure out territories or exclusivity. And it's been pretty loose to this point. So we just honor it for all of our existing clients. And then moving forward, we'll probably have to start breaking some areas down that are pretty populated. But I would say generally, it hasn't been a monster issue. It comes up, but it seems worth it.

KD: But it's safe to be proactive about establishing some ground rules there. Going back really quickly to the types of businesses you say yes to, say no to, obviously, we're talking about design build remodeling companies, right, or design build remodelers. But what about, are there ever fringe cases? I'm thinking about someone that may do HVAC installation and service or something as it relates to remodeling a home. Where do you draw the line between that gray area of technically, it's not the bread and butter, but it's still relevant to the industry. You know what I mean?

SP: Yep, yeah, it's a good question. And so we kind of went into it with builders and remodelers was kind of our initial target, and then kind of said, well, it's kind of residential. Remodeling also includes some specialty trades-- like you said, HVAC or a roofer or a fencer or some of these specialty trades. And so we will work with anybody kind of under that umbrella. But I will say, it feels like we maybe are going to go a little more narrow because even within those sub-sectors, like the guys that are in roofing, they just need highly volume-- people that need it now. They need a roof replacement. And so it's different than trying to educate people on all the different kinds of roofs. And it's a different sales process than--

KD: It's not that considered buying process, right? It's not a sizable-- yeah, it's more emergency, off the cuff, yeah.

SP: So we're seeing design build remodeling, where custom building is a very similar process. You're just going from the ground up, but it's still that kind of design build. And then we had some experience with more, I would say, your community builders, where they have a couple of models, and they're operating out of several communities. So we do have some clients in that space, but more and more, the percentage of our client base pie is design build remodelers and custom builders. And I think just the deeper you go, then you kind of keep marketing to those people. You keep going to those events. And they are even different from the roof and fencing events. And so, yeah, I wouldn't be surprised if that just becomes like 80%, 90% of our work one day, is just kind of continuing to just specialize and figure out what works, how can I get to the fastest path of success for this client. And that just gets more and more exciting, I think.

KD: That's great. Let's talk quickly about people. So I'll let you in a sec confirm how big the team is. But when I'm thinking about sourcing, hiring, growing, investing in a team, how much of it comes down to expertise as it relates to speaking the language of remodelers? And is that something you look for in the sourcing phase, or is that something you go ahead and teach inbound marketers or sales folks? How do you balance marketing skill versus industry knowledge and expertise?

SP: Yeah, good question, Kevin. We have taken the train up approach. And so it's a bonus if somebody has prior knowledge of the industry. And we have just created a lot of internal training videos and walking people through, like, hey, these are custom builders. These are design build remodelers. Here's their process. Here's the language they use, like common terms, common industry tools, things that they use. And so, we kind of-- I mean, we just are generally a core values first and then marketing skills next, and then industry knowledge would come after that. And so, depending on the position we're hiring for, we may want to see more in the marketing arena or less and just figure. And we'll kind of train the rest of it. I think it would be tough for us to find people that already have that knowledge. I think that would limit our hiring pool pretty significantly.

KD: Yeah, I agree. Yeah, that's fair. So it sounds like soft skill and alignment of core values is priority homebuilder custom building knowledge as part of your onboarding or training program. Quickly moving over-- I think this might be my last question or two for you, but moving over to the marketing activities for Builder Funnel. Obviously, we've talked plenty about the audience that you look to serve the persona, the ideal fit. I know that you guys have a podcast. So how did you align-- did the persona and audience come first, and then you knew that, oh, I think a podcast would reach them? Or was that a strategy you piloted first, and it ended up being a fit for your audience? I guess, maybe a better way to ask that question is, how do you find communication channel and marketing assets fit when you have a very specialized or verticalized business?

SP: Yeah, good question. I think we could have put more thought into it than we did, now that you asked the question.

KD: Hindsight, man, is always, what, 20/20.

SP: Yeah, it's always 20/20. So, honestly, the way we were just-- we've always been blogging. And we struggled really to get into the video piece. I don't know-- we couldn't ever wrap our head around getting it done on a consistent basis, like who's going to record all this. And it was like, well, maybe a podcast. And podcasting was kind of on the rise and still is, for sure. But I was thinking about it. I'm like, a lot of our guys are driving around between job sites. So they're like, oh, maybe audio is a better way for them to consume information than just reading blogs at night or trying to figure out their marketing. And so it was a hypothesis, I guess, and we just jumped into it and just said, hey, we're going to commit to podcasting for a year before we decide if it's worth it or not or if we can tell if it's working. And once we started to do it, we saw the numbers going up. And people were mentioning it on sales calls. And it took some time, I would say probably six to nine months before we kind of felt like, OK, I'm feeling the impact of this. I don't know if it's a total-- we've gotten our ROI on it yet, but at least we knew we were closing deals tied back to it. And then we just kept pushing and pushing it. And we kept hearing it more and more. So we've tripled down on the channel. We actually do three weekly shows, all through the same feed, just varying formats and hosts and stuff like that. But yeah, I guess we probably should have put a little more thought into it, but it worked out for us.

KD: Sounds like it's working out all right. So just to confirm, let's just say, I'm a HubSpot Solutions Partner or agency. I'm thinking about starting a podcast. Tomorrow is going to be day one. Sounds like I should let my experiment run, what, six or nine months before really looking at the measurables to see if it's working or not?

SP: Yeah, and I mean, I know the space has gotten more competitive today. So you might even give yourself a year. However, if you specialize, then suddenly the podcasting path is a little more open because there's probably less podcasts in your space especially that are marketing focused or marketing and sales focused. And so, I think that's why we've been able to grow it the way we have, is, if we were just general marketing podcasts, that's a noisy space or competing with podcasts like yours, where you guys have a large audience. And I think it would have been really tough. I think we would have actually bailed on it, and we would have stopped because we just wouldn't have seen the traction. And the other benefit is, we do record it, and you get the video out of it. So you kind of get the best of both worlds.

KD: Sure, yeah, it's all about repurposing content. You mentioned that you're starting to hear the podcast come up in sales conversations. I think calculating the ROI of a podcast is like the golden egg of podcasting. Is there any other measurable? Is there anything else you're looking at? Or do you find that, I mean, that's the best way to gauge performance or success sales calls in referencing it? Are prospective folks referencing the podcast?

SP: It's really tough. Yeah, I mean, as you know--

KD: I don't even know if this is a question for my listeners or me personally.

SP: Yeah, yeah, we'll just riff on this one for a while. It's really tough. That was the indicator that kind of told me, OK, this is working in a dollars way. I'm actually connecting the dots to business. But there's lots of other things that you can kind of feel. And this was an area where I've always been a diehard numbers marketing person. And I was like brand, eh, I don't know if I believe in brand. It's just kind of this pie in the sky, something out there. But with the last several years, I've really come around to the power of brand and the impact of brand. And I think you can start to feel some of those brand things with a podcast. So I do hear it on sales calls, but then all the social content that you can clip up, pop a 45-minute interview into seven social clips, and now you've got all that that goes out on Instagram and LinkedIn, et cetera. You can put the full one on YouTube, just, like you said, repurposing content. And then, some of the times, you hear people mention the podcast directly on a sales call, but some of the times, they'll just go, I've been seeing your face everywhere.

KD: That's equally as good, right?

SP: Yeah, and they're like, OK, perfect. And the podcast is producing that content for us that they're seeing everywhere. And so, for us, those are the things that we're kind of evaluating, is, are we hearing it in those micro moments? Are we seeing the stats go up in terms of just downloads, listens, plays, and that sort of thing? But yeah, I mean, it only took a few of people, like, yeah, I've been listening to your podcast for six months and figured I'd reach out. And you're going, OK. And then the sales process is super easy because you've literally been in their ear for 45 minutes every week. They know you. So yeah, it took a little while, but those are the things that we kind of look at now.

KD: That's great. No, that's super helpful. Spencer, last question for you. We tend to wrap every episode with this question, so it's a little bit of a curveball-- interested to get your thoughts. What is the weirdest part of agency life?

SP: Weirdest part of agency life. OK, for me, again, being a numbers person, being an agency owner, we're in this business where we're selling something where the client wants a desired result or outcome. And I can sell the same thing to client A and client B. And client A does awesome, and client B flops. That is really weird and really tough to grapple with, whereas sometimes, man, if we were just making widgets, you just make a widget and you make another widget, and they both work the same, but man, that one's tough, you know? So I don't know if that quite fit into your question, but.

KD: No, that is a strange aspect. They can be absolutely the same thing for client A and client B, but yield completely opposite results. Yeah, that's totally weird.

SP: Right, because you got varying power of websites, different market areas, all kinds of other factors, different sales skills on their end. You don't have control over a lot of stuff. So yeah, that's my answer.

KD: You know what? I think that's a great answer. Well, I think that's all I have for you. Again, I appreciate you dialing in all the way from Colorado Springs. I think we're pretty much wrapped. So this has been another episode of Agency Unfiltered.

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