Agency Unfiltered - Bob & Verity from B2B Marketing Labs

Navigating Your Critical Scale Points

Bob and Verity Dearsley, the Chief Executive and Managing Director of B2B Marketing Lab, join us to talk about scale points: the times where you must invest, revamp, or pivot to properly scale your growing agency. Learn how to focus on the customer, invest in marketing, build an HR arm, and more.

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Episode Transcript

Hi folks, My name is Kevin Dunn. And welcome to Agency Unfiltered, a bi-weekly web series and podcast that interviews agency owners around agency operations, growth, and scale. Nobody knows how to scale agencies better than those that are already doing it, and they're happy to share an unfiltered look into what has worked and what hasn't. In this episode, we have Bob and Verity Dearsly, the chief executive and managing director of B2B Marketing Labs, an agency with offices in London, Singapore, and Germany. Bob and Verity discuss scale points, for the times in your agency's growth trajectory, where you must invest, revamp, or pivot to properly scale. We discuss how they revamped their marketing strategy, prioritized their internal admin, built an HR function, and more. Recognize your own scale points with Agency Unfiltered, starting now.

KD: Bob and Verity, hello. Welcome to Agency Unfiltered. We're excited to have you.

BD: That's very kind.

VD: Very excited to be here.

KD: We're going to have a very interesting discussion today. I think what we were talking about earlier was this idea, as an agency looks to grow in scale, and for your team it was, you know if you're a partner program to become a diamond partner beyond in plus plus. There's a number of scale points or pivotal moments in that growth trajectory where you have to make particular investments and dedicate some time, effort, resources—I’d love to unpack that. So maybe would the best place to start be, if you just want to give a landscape of, how do you define scale point, and then in your trajectory, what was the very first thing that you took a hard look at, adjusting, updating, or investing?

VD: I think for us, it started with the wonders of being an agency. The customer, the client always comes first, so you know, we do inbound. It's what we sell. It's what we're really, really good at. We were really bad at doing it for ourselves, and I think that became the very first, kind of, pivot, come to the light moment when we realized that, we talk about the cobbler's children, but effectively we weren't eating our own dog food. We weren't drinking our own champagne, whatever the phraseology, you want to use.

KD: I think I prefer champagne over dog food.

VD: I think most people do.

BD: Dog food can be very good.

KD: I'll take your word for it.

VD: Yeah, I was the main one for us that first pivot point was going right. We, whenever we, however we tried to cut it with our own account teams, creating content or treating ourselves, we tried very hard to treat ourselves like a client. But inevitably, the paying clients ended up stealing time, because they, they have to come first.

KD: Which feels justified, right?

VD: One hundred percent, and for us that first kind of grown up scale point was to take, one of our, honestly most experienced account managers within our team, and fully take them out of client services and put him fully into our own marketing activities. It was kind of painful for the delivery team to lose—

BD: And expensive. You suddenly, you suddenly got one person who's offline from that process and to start with it felt painful. Over time, it's delivered what we needed, a clear focus. We had to double down on our own content.
VD: Quadruple down in the end.

BD: Yeah, and we were poor at it. You suddenly realize that you're advocating a whole stack of content on behalf of your clients. It's a key thing.

VD: And you look at your own website...

KD: It's collecting dust.

BD: So, we went through a period in the run up to actually making diamond, which we did in the May and then in the previous October was the point at which we pushed Matt. God bless Matt, into the front line as it were, and he quadrupled the amount of content that we had. Quadrupled the number of convergent points on the website itself.

VD: He quadrupled the leads. He quadrupled the traffic. It worked.

BD: Who'd have thought that this inbound thing worked. So, We were just lagging behind, and we've carried on with that. And that's kind of spurred on the sales activity. One of the things he's doing is driving that sales activity and managing that salesperson—so we had just basically Verity and I selling.

VD: Whilst wearing twenty-seven other hats, and running around and running the business.

BD: A dedicated BDR who that we had also got trained up, and I put myself through Dan Tyre’s bootcamp. God bless you Dan.

KD: Yeah, we're big advocates of the bootcamp here.

VD: I feel like we need a little sales lion on the set.

BD: I wanted to go through that to kind of understand what sort of people I was needing to hire myself. And also, kind of also feel that if you're gonna ask people to, whatever you're gonna ask them to do, you need to have done it yourself. It made a huge difference. With that focus and with the focus on content, the focus on sales, and our sales picked up, kicked up. And I think the classic cycle you get into in the earlier stages is your always conscious of the fact that, that big deal that you had, that you just, deal that pushed you out to the next level, you've only got eleven months until that kind of drops off the end of the conveyor. You've got to keep putting more on the top there the whole time. And, it's very easy to run up to that point, and then, oh damn, he just lost that last one off the edge before you got to the next level.

KD: Can't ever rest on your laurels in that regard, right?

VD: And also, doing that without totally stressing your services team, so making sure that you're spending enough time as an organization, focusing on the people that are keeping those accounts afloat, 'cause the other thing to get to that scale point is renewals and, you know, happy clients, happy life, larger retainers, moving away from project, I know is something that a lot of the agencies talk about from reaching that scale point, 'cause it's very hard to reach that scale if you don't have long term relationships where you can continue to grow with your clients.

BD: It’s a hard thing to know what that trigger point is. But from our organizational perspective, it was very clear. At around twenty-five people that you move into a phase where your HR is, well sucks basically, you're just not putting the time in.

VD: We weren't doing a good job of it.

KD: It's hard to balance that with everything else you have going on, I can imagine.

VD: Things like appraisals and check ins with, you know, your internal admin tends to be the first thing that drops off, because you'll always focus on the clients, and focus on the deliverables first.

BD: And you put, you shed your reviews going ahead, but just while your reviews are in place, then a prospect pops up, and the only time they can do it is when you've got those reviews—what do you do? The employees come second, when they have to come first. And I think that that was a significant piece for us. It's a luxury that comes with scale, because there are certainly times, early on, and I've on a number of occasions about, agency life is tough. And we are all brought together, all bonded, by the fact that you've got to make payroll every month. And if you can't make the payroll, then that's a real stress. But you reach a point, hopefully, which becomes slightly less of a stress, cash flow is managing itself. But if you're gonna carry on and build a business through that, you got to reinvest some of that. And our reinvestment was in Matt from a marketing perspective. We put a large chunk of money and effort into putting a sensible HR system in place, something that would give us a framework to manage people, manage our reviews processes, manage all of our employee engagements processes. And those two are pretty key planks in that process. Try and build up the sales. Try and get away from the point where sale is entirely dependent upon the principles, as it were, to a point where we had a structure, initially a BDR, then a couple of BDRs, and then using those guys to actually take away a lot of the early stage process. So, what we're at, still and always will be a thing, actively involved in the sales process. And the consulting end of bringing people on board. But you got somebody who's effectively managing your sales conveyor belt.

KD: Exactly. You come in later in that process, yeah, once, but only speaking to the people obviously that have kind of fit the bill—

BD: —who are qualified enough, are far enough down the cycle to actually be valuable to, or to, warrant that really important resource atop --

VD: Well, we effectively come in as, it's the presales consultancy piece which is, what's the right program building, that is isn't the going in and selling inbound or like the purpose of why we're all here, it's the piece of the jigsaw puzzle of, okay, what's the right program? What are the right elements for us to put into, to the program for what you're here.

KD: Let me just ask one qualifying question too. I think you mentioned for the dedicated HR hire, twenty-five people felt like the point at which that was a resource that was required, what would you say was the team size for when you had Matt do dedicated marketing? And then for the first BDR hire, when you scaled that out? What are those team sizes when you realize it was time to make all those investments?

VD: That's really, it's a tough one, because I look back at it now and realize that we probably should have done it sooner. So, I would say, as soon as you can physically afford it, get it in there, but I think—

BD: It was about a dozen people.

KD: But you're saying, there was an opportunity, may off, to do it earlier?

BD: Actually funny enough with Matt it was, it was a kind of trigger point was he'd been with us for three years. And I kind of feel like anybody deserves, after three years, it's kind of like saying to somebody, okay, you're probably thinking about your career and moving on after three years, so why don't we just imagine that you have resigned.

VD: Tell me the job you'd like to apply for.

BD: Exactly. So, how we gonna fit you into the business, 'cause you're a really valuable commodity to us now. You're part of the business, you understand more about it, don't want to lose you, and that was, it fit in really well for us both, to make that transition.

KD: So, he helped shape that title of the role, the responsibilities, kind of what that would look like.

BD: Yes. Yes, very much so. As anyone, as anyone does. If you're the marketer in the middle of a bunch of marketers, gee are you under the .

KD: Let me ask you this, this is actually going back to something I think we were talking about earlier, but there was a beer reference that you made, and I thought this was really interesting. I'll just leave it at that, I'll just, I'll try and tee it up like that, but how do you guys view yourselves, which beer do you align with? Personally or professionally.

VD: Depends on the day of the week.

KD: It's Stella Artois. It's an important aspect for us, and I've always admired Stella Artois' tagline, which is “reassuringly expensive”. And the point is that you have a, at every agency, a very finite amount of senior talent in the business they can engage with from a consulting perspective, and that's the bit which will bottleneck the fastest. And if you, if you push a price down in your engagements, so that if there is a tendency to try to win the deal, at any price, and you're depressing your prices accordingly, you can probably win the deal, but—

VD: You won't retain it though.

BD: The issue is that if you start to drive the price of this very finite commodity, for the whole of the channel, you try to push that down and start to race towards the bottom, the worst thing that can happen is you win that. And my view is purely based on the fact that it is good for the whole marketplace if we try very hard to maintain that value of the highest level consulting work that we do, and the vast majority of that, that Verity and I do, is I will, I will with the chief exec or a marketing director, who values that advice, and if you sell that cheaply, they're probably not gonna value it as much. And you're certainly not gonna do yourselves any services in the process.

KD: Right, and you mentioned too, yeah, if it just so happens that you do eventually win that, sort of deal, by no means is it ever gonna renew, because you're gonna learn very quickly that the price point is not profitable for your agency, right?

VD: It was, it kind of ties in I think with the other scale point for us is when you can start to be slightly pickier with the types of clients that you can work with, and I'm very aware this one is a luxury, because at the beginning of it, you sell to every man, and his dog, and his neighbor, and his neighbor's best friend, and we did.

KD: Yeah, how can you say no to revenue.

VD: Exactly. There reaches a point though when those start to scale up, where from a servicing stand point, often the people who've haggled on price, and who you know you've really driven to the bottom, and you've, you know, really worked out those deals, they don't understand the value of the program. They won't stick around for long enough to see inbound really take shape. Because it isn't an overnight quick win from a success standpoint. And often they are the clients that drive our teams absolutely dually. They want everything. They want it now. They want it cheap. They, yeah I've got, I've had some very upset account managers over time who, you need to protect, and the value of those people versus the value of being run ragged by some of those clients, every now and again, you just got to stand up and go, enough is enough. This is a poor fit. We shouldn't work with you any longer. We need to go and work with people who are a better fit. So, as soon as you can get to that point, within your organization where you can start to evaluate some of the clients that you’re with, and work out if you want them in your future, it's a huge piece to be able to look at.

KD: How would you identify when the timing's right where you can start like, what's the threshold when you race, not all the way to the bottom, but when you're open to lowering price, but then also being able to say yes or no to revenue, does that make sense? Like, we mentioned it's a luxury point to be able to be pickier with clients, so how do you find like when you should be comfortable sticking hard to a price point, whereas in the early days, you'd have to have more flexibility, but you also have a hard time saying no to revenue if you're just getting started and are desperate for business. Where's that tipping point?

KD: You talk about if you're gonna give something away, get something in return.

BD: Sure. And that's, whether that, if there's a discount involved, and occasionally one has to then, you're pushing for payment terms, payment terms would be a key part of that.

VD: Less revenue, better cash runaway.

BD: Yeah, I mean, very often it's a case of, sorry it's going away from your point, but very often you get to a situation where you've won the deal, and you've effectively shaken hands on a deal, and now it's going to legal. Now in the price, I've agreed with you today when legal come back and say, we want sixty day terms, my view would be, well actually no, because we agreed to this price, which by those terms are strictly thirty days. If you want to push it to sixty days, I have a different price. Now, you know, those start to be tough conversations. But early on, in the process, you pretty much take anything that gets offered. I can't answer your question. There isn't, it isn't—

VD: There's no set number.

KD: It's not black and white, right.

BD: No, no, I mean, I think there's a feel point.

VD: You feel and it will depend upon how many times a day you check cash flow.

BD: Yep. I've had daily cash flow projections for the vast majority of the time we've run an agency, 'cause you have to keep a careful eye on these things.

KD: So, it sounds like, though, if anything there's the negotiation aspect to a price point, and you're saying that the concession and price you're working in more advantageous terms for the agency.

BD: Certainly it's a balancing act at a point, with a larger organization. We deal with a lot of larger businesses now. And when procurement gets involved, you go to bear in mind that most of the procurement team are on bonuses for what they can negotiate on the price, so you're, the position that you were in at the outset, when you thought you'd agreed to the deal, you're going into another round of negotiation with those guys, and you've just got to be careful and weary of that. I think I've, most of the people watching this will either think we're nuts if you're talking about actually firing a client, or they will have appreciated that, they're maybe battling with that particular feeling at the moment. And what's worse for you, in many respects, what is worse for you, having to go out to a recruitment agency to replace the account manager that—

VD: That's literally wanted to jump out the window from the last three months --

BD: Client broke for you, not, wasn't your effort, was the client effectively who broke your account manager. And trying to find an account manager right now.

KD: Difficult, that's tough. So, there's a ripple effect for just like, having just these bad fit, wrong fit clients sticking around right? It's not just the revenue that you put up with, but it's, you know, you're losing team members, you're losing staff, and then, how hard is it to replace that, right?

VD: I think regardless of the size of your agency, whether or not there's three of you or thirty of you, the value of your people, making sure that you spend time to check in, understand what their career development goals and requirements are, spend time, in our organization, buy them a beer, or a non-alcoholic soft drink, whatever, whatever's your choice, but the value of our people is essential to us. However busy you get, carve out that time. We still try and fight for more time with our team as frequently as we can. We're still looking at different ways to reshape, restructure, you know, how do we solve, you know, everything around, is about solving for the customer, but also how do you solve for your team? And how do you solve problems inside your agency to make sure that you're valuing the right people, people are getting what they want and what they deserve.

KD: How far out are you forecasting your org chart?

BD: We just did a butcher hole process now, which changes and upgrades through October and into our end of year, which is 31st of March next year. So, I can't see any further than that. That feels like nine months is about, the right sort of span.

KD: Any more investments in another, non delivery role? What's the next step for you?

BD: We'd probably, we'll probably, at this stage, sales. I mean, we'd, we're at the right level, in terms of diamond, but, I'm sure about to introduce another tier or two.

VD: Spoiler alert, coming soon I'm sure.

BD: So, we've got to, we got to make sure that we're on the front end of that. We made diamond first in the UK. I need to make sure that we have a decent chance of getting to the next one.

VD: You want to be the first each time.

KD: Challenge extended.

BD: And, I don't know, that's a hard one. We hired an operations director—

VD: December she joined.

BD: December, and we used her as an external consultant for the first three months to look at what we were doing. And then she's coming to us, she is not directly client facing, but effectively manages what I would call revenue management. So, all of the contractual engagement pieces. She's not a salesperson, but all of that...

KD: Service, contract renewals.

VD: Yeah. The process elements of that sales piece.

KD: Do you find, I mean, was the motivation there taking it off the account manager or inbound strategists

BD: It's a different mindset-like thing for a really good account manager who's active in an account. If they're doing their job right, then their client is their best friend. And they're really very close, but you need a commercial aspect associated with that, so she has a healthy commercial attitude.

VD: I think that's the kind of summary point as well. As an agency, I know, when you started it from the beginning in your teeny, teeny, tiny, you cannot be precious about the way that you're doing things, and the way that things have always been done. The very first inbound we went to, you sat on a panel and someone, very small agency owner, asked you the question how do I hire more “me’s” to put into my business, and everyone was being very polite, and you literally took the mic and said don't be so ridiculous, don't hire more “you’s”. Figure out what you're bad at and hire people who are good at that. And I think, for us, you know, we've been doing this a long time. We think we're doing a great job, bringing in someone at a director level for operations, someone else's point of view to sit and look at our business. What are we crap at? And it's not an easy mirror to look in all the time. But it's a mirror. Come and look at the business, and that's the reason for using her, a new hire in that situation, as effectively a consultant.

BD: She had to learn how we do things. And they talk about the first hundred days, so take the first hundred days to understand what we're about, and then at the end of that here's a scorecard. Give us a scorecard view on how we're performing, and at that point, make your changes. Help us to operate what we do and improve, and get better at it.

KD: That's great. What did she ask were you worst at?

BD: That's an interesting one.

VD: Process documentation she'd probably say. I think that's probably the other big scale thing.

KD: Written documentation?

VD: Yeah, again you scale and you grow, and the way that we sell is kind of in his brain and partly in mine, and the way that we deliver services is partly in mine and partly in my account directors' brains. That's the other big thing, that we've done.

BD: The appreciation that there were points of solo knowledge, and that, and people also being asked questions, and “oh, yeah, I got that, that's what you should use”, but actually somebody else has been through that.

VD: Slightly different versions of the truth.

BD: And honestly, that was slowing us down, so yeah, she did call us out on that. And then she picked up the task of rectifying it. Full scale, methodologies, process documentation. Which is great. In order to give us the opportunity, because we're trying to internationalize, and what we're trying to do is, to be able to do things the same way in different countries. And that's a challenge in itself.

KD: That'll be our sequel episode, to dig into the internationalization process.

VD: World domination.

KD: One final question for you, before I let you split. Asked this in every episode. What would you both consider the strangest part of agency life? Weirdest part, so any anecdotes, anything you have for us.

VD: Outside of working with family? Because that's pretty bizarre.

KD: Yeah, that's right, yeah. That's a pretty good one.

VD: In the agency, I just think, like, every day is different. The things some of the clients come up with, honestly. We love them though. I don't know. I think the madness is what makes it fun.

BD: And it's, yeah, I mean, it has to be fun.

KD: Yeah, right. You guys have been at it for long enough. I hope it's fun, right.

BD: Yeah, I've been at it for a very long time. And I wouldn't do it if I didn't still enjoy it. So I'll turn it around and say that the employees are the weirdest part of what we do.

KD: In all the best ways.

BD: And I was going to qualify it by saying that they bring so many different aspects to, of their experience into what we do. And I find myself, actually you called this out the other day—

VD: You just called the whole team weird by the way, nice job.

BD: They bring so much, and we laugh a lot. You come into the office and find our clients services director howling with laughter.

VD: Quite literally howling. Have a lot of fun going on here.

BD: They are having a good time doing what they're doing, and helping their clients. And it's not, I kid you not, it's not a, it's not that we don't take our work seriously, it's just that when you take yourself too seriously that's when the problems occur.

VD: So true.

BD: So maybe I didn't quite answer your question.

KD: Guys, I appreciate so much. Seriously thank you. We'll wrap there.

VD: Thank you very much.

BD: Thank you very much.

KD: You bet. All right guys, that's another Agency Unfiltered.

Thanks for tuning in to another episode of Agency Unfiltered. If you like what you saw, heard, or read, make sure to subscribe to our playlist on YouTube, our podcast on Spotify, or Apple podcasts, or our newsletter on agencyunfiltered.com. Alongside episode launch notifications, the newsletter also comes with a ton of other helpful strategically curated agency content from yours truly. And if you want to keep the conversation going, or provide a counterpoint to this episode's discussion tweet me at @kevin_dunn. I'll see you again in two weeks, but in the meantime, keep it unfiltered and let's all grow.

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