Episode Transcript

Today, we have Noah Berk, co-founder of OBO, on to talk about consolidating his agency's focus areas and service offerings, as he saw their full service status hindering growth. He talked about the employee experience and of the client experience. And we dive into when he knew it was time to consolidate his agency's menu, how to identify what to focus on, the implications this had on people, process, growth, and the client experience. Agency Unfiltered begins right now.

KD: Well, Noah, hello there. Welcome to Agency Unfiltered. Thanks for dialing in.

NB: Cool. Well, thanks for having me. I appreciate the opportunity to share our experiences.

KD: Yeah, man, excited to dig into it. Just quick question-- where are we dialing in from today?

NB: I'm out of Columbia, Maryland. So we actually have two offices. One's in Columbia, one's in DC. But obviously I'm not in the office today. I'm in my home office, given COVID, as I'm sure everyone else who's watching this probably working from home these days.

KD: Yeah, I mean, same thing happening over here. We record these throughout the day and different time zones and different times of day. So you can tell here, at least on my end, it's the evening edition of Agency Unfiltered here, so.

NB: Well, we have a unit that faces west, so we get sunlight all throughout the rest of the evening. So we probably have it through the rest of this conversation luckily.

KD: Yeah, I mean, so I had one earlier today. And I don't mean to go down a rabbit hole, but I have a window right here, so I have the sun just shining right on my face here, trying to find that pocket of natural light, but. Well, man, let's just go ahead and dive right in. I think there's an interesting perspective that you and your team have, and it's probably something that a number of agencies are thinking about or considering or trying to do right now. So I'd love to pick your brain and learn more about the process. And let me know if this sort of label does the trick, but it's this idea of, let's say, consolidating your agency's focus area and service offering. And if you have a better way to explain it, I'm all ears. But if we can start there, how do you identify the need and the timing to consolidate your agency's focus area and service offering?

NB: Sure. I think ultimately, you want to look at what are you the best at doing? A lot of agencies out there, you get started. The client comes to you and says, hey, can you help me out with X, Y, Z? You're like, sure. In the beginning, you're really taking whatever business you can get for the most part because, well, you need to put food on the table and pay your employees. And it's a great way to get started, especially if you're trying to figure out where you want to really focus as an organization. Because not everyone who goes into business or who starts an agency really knows what do they want to do. And so, in the beginning, you're probably going to be taking on a lot of work from a lot of different opportunities. And you're going to start figuring out what you like doing versus what you don't like doing over that period of time, and not just what you like versus what you don't like, but what are you really good at? You may have started your agency, saying, hey, I'm really awesome at X, and you start doing Y. And next thing you know, you're doing X, Y, and Z. So, over time, I think what you start doing is start developing, OK, this is where I want to focus as an agency. It could be functional. Maybe you focus on a particular service, or you focus on a particular software offering. It could be niche based on industry. So there's a lot of different ways you can focus on where you want to eventually be and eventually become as you continue to grow your agency.

KD: So it sounds like in the process of how, it's being introspective. What am I good at? What are we the best at? I would imagine what yields the best results for our clients, what yields the happiest clients. But a number of agencies are, for better or for worse, hey, we're full service, and we provide whatever our clients ask for on whatever systems they need it done on. What's the polite pushback on that type of approach?

NB: Well, I think you're always constrained as an agency, especially during these times, to say, well, I don't want to turn anything down so I'm just going to take what's coming my way. And unfortunately, what can end up happening is several-- one, you can have unhappy clients because you're delivering services that you're not really sure how to deliver. And unfortunately, that can get you in trouble, both with your clients and your employees. You can have not just unhappy customers, but you can have unhappy employees who are being asked to do things that they really don't want to do. And so, over time, as you're looking at your agency, and you're looking at, hey, what are these things, and I think you said earlier happy clients, that's actually a great place to start, is, I would love to say every single relationship in an agency is always happy clients. But it's inevitable you're going to come across a situation that you don't have someone happy. On the flip side is you want to see, well, where are our best results coming from? Is it based on the industry? Is it based on the service? And also, where are you hearing the loudest feedback and positive feedback? And you want to start thinking, do I want to focus there? Is there enough business for me to focus in that particular area? I also think a lot of agencies and I think anyone who's run a business, you say, OK, I just simply want the reoccurring revenue. And I'm all focused just on the business that's recurring revenue. But maybe that's not what you're the best at. Maybe you're great at building websites and you get some recurring revenue from hosting and maintenance, but it's not going to be as significant as search engine optimization revenue or pay per click revenue.

But what you tend to find out is if you're the best at that particular aspect of the business or that particular service, business will start coming to you. And you don't have to necessarily worry about where is that next deal coming from if I don't have that recurring revenue stream, but know for a fact if you're the best at what you're doing, they're going to find you, and they're going to come to you to deliver on that service or that promise or that industry that you're working in. So don't be so stuck on this concept of I must chase the reoccurring revenue. It will come. You'll figure out how to monetize it. But instead, really think to yourself, what can we do better than anyone else that our clients keep saying, wow, this is the best experience we ever had? Because once you start going down that direction, now you can start building process. Now you can start setting both client and employee expectations about the type of company you want to become. And it becomes much more enjoyable to run the organization versus trying to do 50 things for 10 different companies and really being master of not. So something to consider.

KD: Great point. Right, jack of all trades, master of none. That holds true in this regard. You mentioned people, and I want to revisit people in a minute, but let's put a pin in it for one second. You kind of alluded to this, but just to dig into it. So let's just say identify this service is what I'm best at and what yields the best clients. But this secondary service, this thing over here I'm OK at, I'm good at. Does that mean I should never bring that business in? How do I fold it in? Where do those services that fall outside my best work, like what do I end up doing with those?

NB: So there's always going to be services that kind of align with what you're doing as your primary. And you may say, for example, OK, I'm going to focus on the primary. But I will take on a client who hires us both for the primary service as well as a secondary offering. But I won't just chase that secondary offering as a primary service. One, you know you're getting a really happy client based on the primary offering which you're fantastic at, but two, there can be periphery services that you want to provide that isn't such a leap from both process people's skill sets that you might as well begin to offer. Where I think companies are getting in trouble is they really start going wide. I mean, unless you're like a huge agency, hundreds of employees where you can have divisions and people who are experts across the board in all these different areas, most likely, you're not in that position at this moment. You really want to think about, OK, of the services that we're providing, what do we really, really want to focus on? I mean, can we be everything to everyone? Probably not. Now what you may find out is you can be everything to everyone within a particular industry because you just know that really well, and maybe that's your focus. Rather than being functionally good at a particular piece of marketing, instead, you're really good at a particular industry. You just know them that well that you can help them with their digital campaigns or websites. You're not trying to rethink how do we develop content. You have a base understanding of their sales and marketing processes. Well, that's a little different. In that particular case, you may go wide in services, but you're really narrow in focus. Yeah, go ahead.

KD: No, I was just going to say, so it sounds like as we're doing this refinement process, yes, it's services, but it sounds like the verticalization or industry alignment should and probably does oftentimes factor into this as well.

NB: Yeah, absolutely. And I don't necessarily think you should just say, well, we're just going to be a pay per click agency. And maybe you want to be a pay per click industry. You're going to be the best of the world of pay per click. That's great. You're going to take on anyone in the B2B industry when it comes to pay per click. That's fantastic because that means you're focusing all your energies on being the best pay per click. You know all the ins, you know the outs. That's all you're reading, that's all you're studying. When you go ahead and make a sales call to a client, you say, well, great, Mr. or Mrs. Client, go ahead, choose the other company. But is this all they do? Is this all they know? No, this is all we do. We live, eat, and breathe this. I can promise you we're going to get you the best results because we're the best at this. We're not going to take on your website. We're not going to-- and you can even begin explaining to the client all the things you're not going to do. But you may be surprised it actually entices them to do business with you versus the other way around. That won't be for everyone. But in those situations, partner with another company. Find a company who you can bring in and be thought of as a value-added partner, a trusted partner to the client, and say, hey, bring in this other company. They're going to help you with this area. They're going to help you with this area. We're going to stay in our swim lane, and we promise you we're going to get the maximum ROI for this particular service that we're providing.

KD: So there's a handful of things to unpack there. It sounds like, one, once you have your peripheral services set, it's not like you're abandoning them forever. But it's basically contingent on the primary service offering first. So they're peripheral to that, but not necessarily offered as standalone. Sounds like the second piece here, too, is there's an element of partnerships as well. And that's a way to supplement skill gaps or things that you are identifying or not in your swim lane. So I think that's worth noting.

NB: Absolutely, yeah. And I think as entrepreneurs, you always want to chew off more than you can probably handle at first. And you're like, man, do we really need to partner with that company, or can we just do the work ourselves? A lot of entrepreneurs have been like, oh, man, let's just go ahead and get it. That's great revenue coming in, but now you've got to go hire people to focus on it. Now you have to invest the training to focus on and develop processes to focus on it. And at that same time, are you taking away from the core service that you could be growing? And those are things that you need to really be thinking about. And so when you look at partnerships, partnerships can be a great way to fill out your service offerings without necessarily giving up the true offering to the client by being a really valued partner to them.

KD: Now that's a really great point. I know we put a pin in people, but that's a perfect segue. So let's just say I come from a full service agency. I'm everything to everybody. Per the recommendation of this episode, we're narrowing down our focus. So what do you see, for better or for worse, what are the implications of that refinement or consolidation on the people on my team and the processes that they follow?

NB: Well, if you're hiring the right people to begin with, if you're hiring people who are flexible, who love to be problem solvers, who love complex challenges, you may find out a lot of people don't like to be pigeonholed. Especially in an agency world, they like to have interesting problems to solve. On the flip side, as you may have built your agency, you've got a web designer, you've got a developer, you've got a PPC guy, you've got an SEO guy. You've got one person in each and every one of those individual roles. The challenge is, how do you scale that? On the flip side is you may find out that web designer actually enjoys doing the pay per click work more than you thought because you've had to use overflow because you've had more of that work coming in. And that developer actually likes building out all the analytics. And the other individuals on your team really like it. So on the people side is also taking a look at your team and saying, hey, as a team, where do we want to focus? And that really means you're over communicating. You're really kind of finding out they're also seeing kind of what's happening. They're beginning to see where the happiest clients are. They're also giving you the feedback. Like, I really enjoy this type of work. I really, really want to do these type of assignments.

And you can start letting the team know, hey, this is where we're focusing. We're not necessarily-- you don't want to necessarily abandon overnight all the revenue. One, you may not be able to afford to do that. So you've got to continue doing that. But at the same time, you can start transitioning people into the roles that you're looking for them to accomplish. And so, it's really about communicating the vision why. Why do you want to go this way? Why do you think the opportunity is there? What's the growth opportunity? This is going to be more exciting, happier clients, happier employees, build a growth path. So, when it comes to your team, especially kind of making, whether it's a transition or just kind of focus, is continue to communicate to the team why. Now this doesn't mean on a daily basis or a weekly basis or a monthly basis. As an entrepreneur, you can move much faster than your team can. I'm blessed to have the best business partner in the world. And we're truly opposites in a lot of ways. And we take baby steps when we move along. Now I want to sprint ahead, like most other entrepreneurs, but he's like, let's build the foundation as we go along. Let's make sure we do things right. And let's not go head first into doing X, Y, Z. Now sometimes I still may bring us to X, Y, Z head first. But he's able to kind of build out along the way. So the communication can happen monthly or quarterly, but this isn't something like, you come in on a Monday, and you're like, team, this is what we're doing. You've got to start giving some breadcrumbs along the way and letting them know where you're headed towards so they can start following you there. You don't want to just pull your team because that's going to lead to disaster overall.

KD: Yeah, that makes a ton of sense. I mean, it's a really vital exercise in vision setting, right, and communication. In your experience-- and maybe that's not the case, but have you ever found somebody not on board with the vision that you and your partner have set, or has there ever been misalignment that seemed too much to overcome or wasn't going to be overcome?

NB: We're blessed by having an awesome team. We really have almost no turnover of employees at OBO. And I'm really proud of that. And I think it's because we've been really good at communicating what the vision is and where we're headed. But we also were in a transition period for, like, a year. This was not a small transition period. This was long. Because you're kind of trying to figure out your way through this force. Like, there must be light at the end of this tunnel that we're going towards. And it takes a while because let's say you decide to start really focusing on a particular vertical market industry. Well, you still need experience around it to start getting some sort of scales, really seeing that flywheel effect where, all of a sudden, clients are coming in. You're building a reputation. And that can take up to 6, 12, 18 months. Because you have to have that experience under your belt. It may take you 6 to 12 months just to prove you're that good at what you do in that area that you can then devote the business to doing it. So when you're in that transition period, you're still taking on work that you may not want to take on in the future. But you know that won't always be the case. And you've got to communicate that to your team. Like, hey, as we get better at this service line or this niche or this focus, we need to keep the lights on. So we're still going to take on some of this work that we otherwise may not take on in the future. But that will become less and less of the total number of assignments coming on board. You know you made it when you start saying no, when you start telling clients, no, I'm not going to do that. That's when you know you really began to find something that works for you guys. And I can tell you from experience the number of leads you'll start generating will just start going up to the right. One, you'll start getting more leads from partners. Two, your sales message will be more in sync. Three, your marketing will be aligned with what you're selling, and it's easier. Four, you'll probably have developed a process and approach that's really easy to explain that people buy into.

This is what happens when you start focusing on a particular area as you grow your business. So people are important. You've got to communicate. And they'll also tell you what work they want to do. You may be surprised. Now, obviously, you don't want to lead your company by committee. This is not a vote what are we going to do. You're still the leader of the business, and it's still, ultimately, what do you want to do? What are you great at doing? In my case, I looked at what does my business partner love to do? He's really in charge of operations, technology, and running those teams. And ultimately, I want to align what we do around what they want to do because they're the ones delivering work. And that's really a primary focus. Don't forget about what you love to do, as well as what you're the best at doing. And revenue will follow. There may be some dips during the transition period. You may and all of us could become distracted by this top line revenue number, saying, oh my God. But while you're in the transition, keep an eye on your bottom line. Keep an eye on your profits. Make sure you're still profitable through this transition. This is not a period that you should be going negative. Just make sure.

You may not be as profitable, but what's going to end up happening as you start focusing, all of a sudden, your profitability is going to start rising very fast, higher than the profitability you had before. Easier relationships, easier clients-- everything across the board becomes a little bit more refined. Even how you hire people, the expectations you have for your team. We have about 27 people. Smaller agencies can really suffer for when the fact is, as they try and grow, it's kind of hard to tell people what's the next stage. What are you growing into? People want to know there's a future. Well, when you really had a focus, it's easy to tell them, guys, this is what we're great at doing. This is how we do our work. And by the way, this is how you can grow inside our organization. And then hiring becomes easier. Setting the expectations become easier not just for, obviously, your clients, but for your employees as well.

KD: Yeah, that's great. Again, a handful of things, a handful of nuggets there. I think that one of the first ones there was, it can't just be a light switch. You mentioned on Monday, you can't come in and say, this is the direction of the business. Everything's changed. It sounds like it's transparency in the run-up to the decision.

NB: That's right.

KD: So I think that's super helpful to know. But if anything, it's going to have a real tangible impact on profit margins when you finally are able to make the switch. Can imagine that things are being produced more efficiently and quicker. And it doesn't require as much cost or input from the business. And it's going to yield better results, happier clients, and folks that stick around long term, as working with your team. Is that fair to say?

NB: Absolutely, and we have a business development team over here. And there's nothing more difficult for a business development person to be selling everything.

KD: Yeah, it simplifies the sales process and much more clarity, I can imagine.

NB: Clarity, it simplifies the entire process. It makes it easier to set the client expectations. On the sale side, our job is not just to bring in the revenue, but our job is to make sure the expectations were set correctly for the clients so that our team that actually delivers the work, they don't have to worry about missing those expectations or dealing with unhappy clients. Well, when you have a focus and you have a process and you have something you can sell around that process, all of a sudden, things become much easier. Developing new business, you can start hiring salespeople without trying to teach them everything underneath the sun about what you do, from, hey, SEO websites, technology development. I mean, that's a lot to absorb, and it's difficult and expensive to find someone who knows it all. But if you can sell a process around a set approach, all of a sudden, you can start increasing sales. You can start really focusing on that bottom line, ensuring that these projects are profitable for you, as well as delivering great results for your clients.

KD: That's great. Just real quick on process, you've identified what you're really good at, and you want to continue leaning into that as your primary service offering. How much of that process carried through to this new world? Did you have to redefine a lot of processes? Finally, you had to extrapolate out the processes that already existed? How did those translate over?

NB: I think you used the word extrapolate out those processes. Any time you're kind of working in a particular area, you're always refining. Like, when you first get started, and it's just you and maybe your business partner, you're kind of doing things on the fly. You know how to do everything in your head, and that's how you're applying it. But as you start scaling the business and you start bringing more people on board, you need to start defining those processes. Those processes come as you start doing more and more of the same type of work, either for services or that industry. And now you can start saying, I have a proven process that leads to results. Because, obviously, over a period of time, you're going to be able to go back and say, this is the results we're going to get from these type of engagements. And that's why you should hire us. So, developing those processes happens over time. And I mean, you're constantly refining. We're constantly refining.

KD: I think that's a good rule of thumb, regardless, right? The more real world clients you put through a process, the more informed you are at the things that go well and the points that are friction potentially, right?

NB: I 100% agree. And that's commonplace. And so, I don't think it's an ever-- hey, you got it. You have your process down. We're good. You may have your high level bullet points about your processes. But once you get into the weeds of the detail of each and every one of those bullet points, you're going to be refining what do we do in this stage, what do we do in this stage, what's our client communication, what works versus what doesn't work. So all of these things are going to-- you're going to learn it as you go along, and you're going to refine it as you go along.

KD: Now let me ask you this. If I'm an agency or a services provider that's early in this process, based on your experience or things that you've seen, are there any pitfalls, roadblocks, things to try and forecast, and do you have any tips on how to navigate or triage those?

NB: I think the number one thing is yourself, making sure your own expectations have been set correctly, knowing that this is not overnight, not saying, oh my God, I've gotta do this by the end of the year between-- this is November, what, 19th today, and I gotta get this done by December 31st. And we're going to make this entire transition because the number one thing that can affect entrepreneurs is missing their own expectations. You're your own worst enemy most times. And so I think one of those things is make sure you have a plan. Do you have a way of operating your business, first of all. How do you communicate? How do you share with your employees? I think some of the pitfalls is really making sure that the team is supportive of the idea. Because people may have to shift roles. They may have to shift positions. They may have to shift what they're doing on a regular basis. And you also need to then still continue to service your existing clients who you're providing these other services to without dropping the ball on those because they're paying you to do good work, and you should still continue to do good work for them. Instead, you should really think about, moving forward, what does that client look like? Moving forward, what does that service look like? Who do we need to hire along the way? What does the future of the company begin to look at? Because you got to paint this vision for them.

So I definitely think in the standpoint of what you need to be able to look out for is, really making sure that the communication is happening and also making sure that you're charging the right amount of money for the services you're providing. We talked about earlier, don't worry about this recurring revenue versus project revenue. Obviously, everyone wants the recurring revenue streams. It makes life a little easier, and you can sleep better at night. But instead, I think one of the pitfalls is quickly abandoning it or getting in your own head and saying, I can't do this. I need the reoccurring. I can't do just websites on HubSpot because it's just a one-time project. Is it really? Are there other things your clients are going to ask you to do that kind of align or whether in the periphery of the services you're providing? And so, I'd say don't be your worst enemy. You are, because, also, the other pitfall is reverting back to bad, old practices of just saying yes. Yes, yes, yes, yes, yes. Oh, I still to this day sometimes I hear an opportunity, I'm like, oh, man, that's sweet. I know how to do it. I know we could do it. But should we do it?

KD: It sounds like the anxiety is normal. But if you do remarkable work, even if it's not in a recurring revenue model, then additional service opportunities will follow. It really just comes down to doing the thing you do really well and doing it really well, and revenue will follow per your experience.

NB: Absolutely. I mean, I give the example of website companies. You can look at the large branding, website design. What are things that kind of fall within that category that you can do? And you start finding out there's other little things that you can be able to provide clients that either additional project-- maybe you're not getting the recurring revenue, but you're getting a consistent project revenue. And by bringing on that client, sure, it's not necessarily a contract, but hey, they're coming back to me once a month or once a quarter or once every six months to have me do more work. So now I can kind of anticipate that this will be here. Because let's face it. Recurring revenue is not guaranteed. At any moment, they could fire you, despite what your contract says. I mean, sure, you can fight them all day long, but are you going to do that with a client who's totally unhappy with your services you're not delivering? No. Oh, you may. I don't know. But really, you've got to be performing day in and day out. There's no difference between project and recurring revenue when it comes to that. But I can guarantee it's a lot easier to get work coming in if you're the best at what you do.

KD: I think we're coming up on time here, so one final question for you. We ask all of our guests. This is how we try and wrap every episode. What would you say is the strangest part of agency life?

NB: Oh, strangest part of agency life. Yeah, I think we've been in situations where sometimes what you tell-- I guess, it's an interesting question. I'm trying to think, what's the strangest thing in agency life that I've been dealing with? It's honestly strange, but I think it's also what I enjoy about agency life, is some of the "unpredictable-ness" of it, the complexity of some of the engagements that we have. I know this is not the most interesting answer I'm giving at this moment, But I would love for you to ask that question another time when I could think through the strangest part about agency life.

KD: We'll make sure to get a follow-up of your craziest story, too, but.

NB: Yeah, I would love to see what other people say. And probably, I'd be able to relate, upon seeing their answers. But what I can tell you about agency life is, it's great working with the people you have. You're always dealing with fascinating projects, fascinating clients, interesting scenarios. And let's face it, we're vital for these companies' growth and the services that we provide our clients. And so, keep your head high. Figure out what you're going to be the best at doing. And continue working at it, and you're going to be successful.

KD: Awesome, man. I wouldn't classify that necessarily as strange, but motivating, nonetheless.

NB: I think that's probably a better way of thinking of it. It's more motivating than anything. And I will absolutely think what's the strangest part of agency life and get back to you an answer there.

KD: Hey, I'll still say that's a great answer, regardless. So I'll certainly take it. But hey, man, listen, thank you so much for coming on. We're out of time. So I appreciate you joining us. Very insightful. So thanks for sharing your experiences with us.

NB: Awesome, it's been a pleasure. Thanks for having me.

KD: All right, folks. For all those tuning in, this has been another episode of Agency Unfiltered.