As an agency CEO, Bob’s story is an interesting one: in 2016, Bob had an employee embezzle three hundred thousand dollars from his agency’s payroll account. In this episode, Bob shares this story in full and how he was able to rebuild his agency by refining his services, building more structured processes, and updating the way their source and qualify candidates.
Agency Unfiltered's Tour of America moved from Dallas to sunny San Diego where we sit down with Bob Afsari, CEO of Campaign Creators. Campaign Creators is a platinum agency partner who specializes in lead generation and lead nurturing services. Bob's story is an interesting one. In 2016, Bob's agency had an employee embezzle $300,000 from their payroll account. In this episode, Bob shares this story in full, and how he was able to rebuild his agency by refining his services, building out more structured processes, and changing the way they source and qualify candidates. It sounds too crazy to believe, but this is a true story. Agency Unfiltered starts right now.
KD: Well, hello Bob, thanks for joining me. Very excited to be in San Diego for this episode.
BA: Welcome, thanks for joining us.
KD: I think this is going to be a very interesting episode. Obviously, with Campaign Creators, you've made a ton of updates or changes to your internal processes and the way you go to market, but before we get into all of the details and to exactly what's changed and why, there is a reasoning—and it's actually a pretty wild story. So maybe first to start off, give us some context into what happened with Campaign Creators. Then we can use that to get into the rest of the discussion, how's that?
BA: Sure, I'll start back when we first started our agency back in 2011. We were called Business on Market Street, we were a full-service digital marketing agency and we provided pretty much everything under the sun. If a client came to us and wanted something, we had a very hard time saying no. And so over the course of the next five, six years, we built out a service menu of the 30, 40, 50 different things that we did. And I would say that during that time frame, we began to scale, but we really didn't have processes in place for everything that we were doing. And so our profit margins were pretty depressed, it was very hard to actually grow profitably, and every single time it seemed like we brought on a new client, we'd have to bring in more help to help with that client, right? Which is not the best way to scale, because you want to keep your overhead and the manpower nice and tight while you're being able to bring in more work. So we knew that we always wanted to change, but we were always a little bit terrified to change because things were going in a decent direction and we were making money. We were a three person agency back in 2011, and I think by 2014, we had about 20 to 23-24 people.
So we were growing, and we felt like things were going in the right direction, but then, come to find out, it was in 2016, the very first employee that we brought on ended up embezzling a whole ton of money from us. I would say to the tune of over $300,000, specifically from our payroll account which made it even more difficult because that money which was intended for payroll is now still owed to the IRS. So, you just double it and it was like a $600,000+ hickey on our neck. Which as a small business with low profit margins, it's not like you have that money just lying around. It was brought to my attention that we were probably not going to make it. And it was pretty apparent when we were staring at our ledger and at the hole that was created. So there was an option, two options: close the business and deal with the ramifications of what we were up against personally, or try to use the business as a vehicle to pay down this additional expense that was incurred. And so the discussion that I had with my business partners at the time was: we've always wanted to make change, now's the time more than any that we can make change with very little repercussions, because we were already below ground zero and we were pretty much toast. So, it's like when you're at ground zero or you're toast, making change, what more harm can it do for you? And that was really the birth of Campaign Creators. We sat back and identified the three or four things that we felt we did really, really well, and we got rid of every single service aside from those three or four things, and built a company around specializing in what we provide now as an agency. And that was really the onset of Campaign Creators.
KD: It's an unbelievable story, right? It's crazy that you would have to try and navigate those waters, but to your point, it sounds like your back was against the wall, so now is our opportunity to really drive home the change we wanted to see. And we will circle back around to the ending of the embezzlement story, because there is, and I don't want to spoil, but there seems to be a happy ending, at least for Campaign Creators. But you identified, okay, out of our whole menu of services, this wildly robust set of services we were offering to every client, you really trimmed that down. And so what did that look like after you trimmed it down, and how did you identify the services that you’re going to start offering from here on out?
BA: That's a really good question. It was a lengthy discussion and debate between my business partners and I as to what survives and what does not survive. I think the biggest question, too, was what did we do really well, what impacted the bottom line of our clients, and what are the services that we just did not enjoy doing? I'll give you an example. We used to write 300-400+ blogs every month for our clients, and blog writing for clients, for us, was not a profitable venture. It was very difficult. We found that writing for our clients and other companies just has a lot of inherent flaws in it. So that was an easy, okay, we're no longer going to be writing blogs for people. So we went through and we started scratching off items like that, where this is not enjoyable at all. However, there were items that we did thoroughly enjoy and that we understood really well, and that we did a little bit differently as a service and provided it to our clients in comparison to other agencies out there. And so we circled the three or four things that were important to us. One, we always had a deep root in search engine optimization. So we decided to keep that, because that was where a lot of our strengths lied. The second was the consumer behavioral process, specifically the consideration stage of the buyer's journey. We enjoyed playing in that realm. We would build out very sophisticated lead nurturing workflows and sequences, and really had a good time trying to crack the code of how do we have that parallel conversation with our client's consumers, in order to help provide them with what they need in order to make that decision in becoming a client for our customers. And to be quite frank, we could monitor and measure our results based upon the revenue that was generated by our clients. So we stuck with lead nurturing as a really strong primary effort. And then in addition, I think conversation rate optimization which really ties in a variety of UI UX and then we were doing web design and development, so those things kind of stayed true to us. And so really those three elements are the things that we carried forward, and we've built processes around those items. It was still difficult to build process around three, four, five different types of services, but you could imagine when we were full-service agency, we had 40-50 different services that we were providing. It's almost inherently impossible to build processes that will drive not only client satisfaction, but how you manage it internally. How do you make sure that your employees are actually going to be successful in what they're doing? Provide them with a work, love, life balance, not make somebody wear 10, 12, 13 different hats. So, the process of going through and truncating was a journey for us, and it was actually for me, very difficult, because to be quite honest, I am responsible for a lot of our business development and sales activities, and also being an owner in the company, it's very hard to say no to revenue. But I will say that saying no has actually helped us generate more money, because our profit margins have been directly impacted in a positive way by specializing, versus what was happening prior.
KD: It makes sense. It's always going to be difficult to say no to revenue, but you've seen a positive impact by not only just saying no to the clients or prospects, it might not be the best way, but obviously saying yes to those that will, right? And that goes back to the shrunken down menu of services. But to your point on processes, process development is never going to be easy, and then for 50 plus services, it can feel impossible, right? But we’re able to build processes just for the four or five services that lead nurturing, middle of the funnel, SEO-based services. My question for you though, you mentioned that blog writing just wasn't a fit for what Campaign Creators wanted to be for their clients. So if a client asked for that, is it just a flat-out no, or how do you navigate those waters if a client, either current or new, wants a service you don't offer? Is it just turning them away and letting them find a new partner?
BA: Yeah, I think at times it's a flat-out no depending on the relationship, obviously, of that potential lead or that client. But often times, if it's something that's going to be important for what they're looking for and we have a relationship, or we have someone else we can bring on board, we try to help educate them on where they can potentially find this as a solution elsewhere. Or we can bring in a partner, because as an agency that specializes, there are gaps that we don't provide, and there are a lot of people that are looking for, we're aware that there are a lot of people looking for full-service solutions because of the convenience factor of it. However, when you specialize and you're having a sales conversation with someone and they say, "Well, you only provide these couple of things, "but I really need everything," it does put us, to some degree, at a disadvantage in certain situations. So we've developed really strong partnerships with other agencies, cause to some degree, we really don't compete with a whole bunch of other agencies. Even other in-bound marketing agencies don't really compete with what we do because what we do, is so highly specialized. We don't provide the other services that they do. And so we do look out and reach for other partners to come on board and to help us provide services for those clients that are looking for services that we don't provide such as blog writing. And I think, for example, there are elements that we believe that the companies and clients that we work with should probably take certain activities on in-house, because they're just going to do a better job with it. Such as writing blogs, we just find that who better to write articles and content about their business, than the people in that business?
KD: Especially if it's like a highly technical or wildly specific or niche industry.
BA: That's correct.
KD: You mentioned that your services tend to be more complementary to other agencies in the area, versus always direct competitors, right? So if you're able to loop these other partners into deals or engagements with your clients, how did you begin building those relationships with the other agencies in the area, or that you partner with?
BA: It's kind of just general outreach, right? And so I think a lot of agencies, owners, and employees, we have relationships with other agencies and employees, and we network, and we see each other. I think it's just general outreach of explaining to people what we do. I have relationships with other business owners in the area that own agencies, and just say, "Hey, this is what we provide and this is our specialty," and go to lunch, go grab a drink, and just explain it to them, and oftentimes, they sit there and they scratch their head and they go, "wait a second, we absolutely do not provide that, but that is something that we think our clients could wildly benefit from.” And now there could be opportunities to work together. And I think good relationships happen seamlessly without a whole lot of friction. If you really have to work hard to build a partnership, it's probably not going to be the best partnership in the end. So those that complement us, they've been pretty natural to build.
KD: I would say it probably comes down, too, as long as you hold up your end of the bargain, right? If you're able to deliver good results, or if they're able to deliver good results on their end, then it would probably be naturally organic to continue building engagements, or co-building engagements.
BA: Yeah, absolutely. I think that adds value on both sides of the fence. So we generate leads in a whole variety of different ways, but the leads that I love generating the most is when I get a call from an agency owner that says, "hey Bob, we're in the middle of a conversation with XYZ company, and we brought you guys up to them and it's something that they want to listen more about. We think it's a perfect fit. Why don't you come into the next pitch with us and we can explore how we can work together." Oftentimes, those discussions and meetings become very successful.
KD: It's like a whole new pipeline for leads, right? If you just frame around, "we actually can work together on this" versus always being lined up as competitors.
BA: And once you start having a few wins, then all of the sudden, you almost can't do without the other because you're not logging leads back to them, you're having other conversations, you're expanding your whole entire network, and then when you have multiple partnerships with other agencies, it makes things a little bit easier.
KD: Yeah, it amplifies, right?
KD: So as you, going back to your services, you shrink the menu of services you offer, saying “this is what we're going to specialize in, this is what we're best at, this is what we enjoy doing”, I anticipate, or I would imagine, that on the flip side has an impact to the way you have your team organized, or the way the team delivers this work. So by going through that specialization motion, what did you see as the impact from the internal processes routine perspective?
BA: You know, that was a tough one for us. I think typical agency model, especially five, six, seven years ago, I think things across the industry in general are rapidly changing, right? But one of the things that we had implemented before we had specialized, so you have your account manager who's in direct communication with the client—that account manager is the one that's communicating and kind of getting the direct orders, and providing updates, etc. Then that account manager communicates with the project manager, that project manager then goes and communicates with the team, and the team goes and does the work, and then the flow of information then goes the other direction.
KD: I's the game of telephone, they relay the information back.
BA: Exactly, and we've played that game before, right? And so what happens to the message? It gets deprecated in both ways. And we've also found through experience, that when clients are hiring us and they want to spend their time on the phone, they're spending 20 minutes, or 30 minutes, or an hour with an account manager, we've had them even directly tell us and call me up and say, "Bob, if I'm going to spend 45 minutes on the phone with somebody, I want it to be somebody that has knowledge as to what it is I'm paying for. I don't want to speak to someone who's just going to be taking notes and then coming back to me.” And I always am going to say, 'I'll get back to you on this, because time is valuable." So we heard that. And we heard them loud and clear. So one of the things we did in the transition was eliminate the account manager and the project manager roles entirely. And so we now have what's called a strategist. And that strategist is the person that's going to eventually depict and create the strategy for these clients, and they're going to manage that process. In addition, they are the direct line of communication with the client, so they client has a direct end to our strategist, our strategist will manage anywhere from seven to ten clients depending on the support they have, and they act as an account manager inherently, as well as a project manager, because internally, they have a support staff, and that support staff is made up of a variety of differently individuals depending on the type of work product that needs to be delivered to the client. So we have what's called marketing technologists, we have junior marketing technologists, there's copywriters, there's developers and designers, UI UX individuals, and then there's even other agencies and other partners that can get brought in underneath the strategist. So it really begins to develop what we call a pod, and that pod is something we introduced a couple of years ago, and in the beginning, it was working really well, and it still works well. But as you begin to scale, you begin to also realize there are things that need to happen to even evolve that structure, which is what we're working on.
KD: I feel a number of agencies use the label "pod" and they've sort of outlined it the way you've mentioned. It sounds like your account strategist is that marriage or blend between project manager and account manager as it exists today. How do you, as you bring in new clients, it sounds like you're in charge of business development for the most part, as you bring in new clients, how do you balance the workload or capacity of each pod?
BA: Yeah, that's been a challenge for us that we're solving. And imagine this, when we first introduced the pod structure to Campaign Creators, we did so in kind of a static format, meaning you have a strategist, and then you have the team under the strategist, and that was a pod. And it was almost cemented, right? Because it was easy to say strategist supports staff, here you go, and then seven to ten clients, when we reach that, new strategist, new pod, new service. But over time, due to whatever reason, right? Clients come and go, it could be a project's finish, we have an influx, one pod might be imbalanced. But it's also fascinating because the strategist develops pretty strong relationships with the client. So when you take a strategist and you try to move a client from one strategist to another, it actually becomes problematic, and they go, "wait a second, I love so and so, please don't move me away.” But we're like, "well, we're trying to balance things.” And then they're like, "we don't really care what your internal problems are, we want to keep it how it is." So to solve this problem, we brought in what's called a client services manager. And our client services manager actually oversees the client services team and really acts for the lack of a better term, as air traffic control when it comes to incoming opportunities, balancing the different pods, and I think part of this process also helped us evaluate that static pod structures are really not the best, we believe that dynamic pod structures actually work really well, where you may have three or four or five strategists, and each strategist may be balancing anywhere from seven to ten clients. But the support staff, meaning the martechs, the developers, and the designers, and whoever else you have, if you have 5, or 10, or 15 or 20 of them, rather than having them be cemented to a pod, they now swing from strategist to strategist, and they're getting assigned to clients or accounts versus a strategist. So a martech or developer may be working with 2 or 3 or 4 different strategists based upon bandwidth, based upon the industry that the new client's in, based upon where they need to go for balancing, and so now this gives us the opportunity to even out the playing field, allowing for the long term relationships with the strategists and the clients to be maintained, and then having that air traffic control-type situation be closely monitored.
KD: Does the air traffic controller, the client services manager, have any clients themselves? Or is it strictly just capacity management, client assignment, team building, etc.?
BA: So it's what you just said, right? It's all internal predominantly, right? They're the person that is managing all the internal activities of the pods and of the team. That individual is also doing one-on-one's with each of the client services members to make sure that work product and everything else is being maintained, and also finding out where there are gaps to be filled. In addition to that, what we've done is extenuated the, let's say for lack of a better term, the line of business aspects to the client services manager. One of the things that we found is when you have a strategist develop a relationship with a client, inherently, when we're on a retainer model, so our clients will hire us 20 hours, 30 hours, 50 hours a month, but those retainers sometimes fluctuate. Sometimes a client needs more, sometimes they need less. Sometimes they want to add a project onto it. But strategists, they don't necessarily want to talk sales, or BD, right? It gets tough when you start introducing the aspect of dealing with new, like money matters, money-related matters when it comes to that relationship, it's always difficult, but that's where sales comes in, too, right? So we have the client services manager act as that first line of, let's say, defense or offense when it comes to business-related issues.
KD: Contractual, up-sale, cross-sale, budgetary.
BA: Any of that, it goes straight to the client services manager. The client services manager will then identify how to appropriately redirect it to BD, and then come back and then reintroduce it into that particular client, we shield the strategist from trying to have those conversations anymore because we found that it started to produce some problems over time. And then in addition to that, the client services manager is actively participating in trying to solve those issues ongoing for both parties.
KD: Got it. So I guess my original question was, was there any account ownership from the client services manager—but it sounds like they're the first line of defense when something money-wise or budgetary comes up.
BA: It's funny because you'll also find that a client may have a problem with their strategist, or they may be unhappy with the work, but they won't tell the strategist directly because they have this relationship and it may linger for a while, but then it bubbles over and becomes a big mess when it gets too late, because they're not having that conversation. So we do these wellness checks every quarter with our clients, and that is, the client services manager has wellness checks directly with clients saying, "all right, talk to me about how things are going. Tell me the honest truth, be brutal with me. because I have to go back and I want to make my team better for you.” So we give an opportunity for our clients to be able to be very critical and brutally honest without hurting someone's feelings.
KD: Right, that's like the form for real, candid, raw feedback with no repercussions on the relationship with their account strategist, right? Especially if it's about that person.
KD: We've talked about specializing and shrinking your menu of services. We've talked about some internal reorganizations. Was there anything else that you looked at and changed, or took a new approach or updated, with, obviously, your back against the wall with the embezzlement issue of 2016?
BA: You know, we really flipped the entire company on its head, even down to how we hire, to our sales process, to saying no to a lot of things including potentially new opportunities. But I think finding the right individuals to join our company is really important. We're looking for a marriage of a whole variety of different elements. So for example, our hiring process, it has five different steps to it, and there's the first telephone interview, and then there's the first in-person interview, that in-person interview we actually have a practicum where we give them a question and they have to, we're the client and they're going to be our marketer and they have to solve it, and they have to provide us with a pretty sound answer on the whiteboard, and explain to us how they're going to get there.
KD: Is it like, here's our challenge, build us a strategy? Or how would you approach it?
BA: That's precisely what it is. And it's a really good opportunity to actually, I hate to say it, but you sort of crack someone's head open and get an idea of where do they stand right now when it comes to marketing, marketing technology, for us, I want to understand do they know the consumer behavioral process well, how well do they know lead nurturing, people can say a whole lot of things at an interview. But when you give them an opportunity to actually demonstrate it, you can now talk to them on their level, and then it will give you an idea of what to expect when they come on board with you, right? And so the practicum, or that challenge, is that next step. If they pass that, they go into a technical practicum where they're literally behind the computer and we give them a scenario on the board and they have to implement it into HubSpot to show their prowess within the software. And then if let's say everything checks out, and we're like, "look, this could be a great addition to the team,'' we have a cultural interview where that individual then goes and speaks to the rest of the team depending on the department they're coming into, and if the team comes back and gives a thumbs down because they're just not a cultural fit, we're precluded from providing an offer letter. But if the team comes back and goes, "this person would be a great fit," we then send out the offer letter and hope that person joins.
KD: So there's a lot of weight in the team interview round and whether they're going to be a culture fit, culture rad, because they've checked all the boxes to that point, but the team almost has the final say on whether or not they'll receive the offer letter.
BA: That's correct.
KD: And did you purposefully put the team interview after those two practicum stages? How intentional was the layout of the order of those interview steps?
BA: Yeah, it's completely intentional in the sense that we may have dozens of interviews and we don't want to tie up the team with candidates that may not be a good fit. Cause someone may not make it past the second round or the third round, we only try to have this cultural team interview on a limited basis for those that we truly feel are the individuals that we want to bring on board.
KD: Too early in the system, you're sending people on team interviews too often.
BA: Yeah, taking them away from work, so we try to make sure that we respect that time.
KD: So right at the one yard line, and then this is the final check in, that's great. So flipped the business on it's head, made all these organizational changes, what were the results? What was the impact? How did things turn out for our Campaign Creators?
BA: Yeah, so the future is still untold. So living in this agency world, we know the ebbs and flows. I would say that when we take a look back at the Business on Market Street days when we were full-service, we'd be lucky to be clipping 5%, 10% profit margins. It's brutal, it's a grind. I would say that in our first year, second year of Campaign Creators, we're consistently seeing 50-60+ percent profit margins which is great. And it also, it's a testament to kind of all the change that we made, and in addition, it allowed us to cure a lot of the problems that we had with that embezzlement. It essentially allowed us to write our ticket to pay the whole thing in a matter of a year, year and a half.
KD: That's crazy.
BA: Which is unbelievable. Because it's a situation where you're staring down the barrel of a gun where you're like, "wow, I may have to live with this for the next 15 to 20 years.” Like, I don't know how I'm going to pay this off or how I'm going to deal with it. But then to have a vehicle to help you navigate through it, and then essentially pay for it, and then also provide real, different opportunities for the people that work here. As when we were full-service, I would say there was really little work, live, life balance. I don't think people really enjoyed what they were doing as well, because they were forced to wear ten different hats, there is no process, it's chaotic, and now it's a lot different. The work, live, life balance is there, people are specializing in a handful of things, and they can contribute in a manner that they probably wouldn't have been able to under the different structure that we had before.
KD: Well, it's great to hear that you were able to turn things around so quickly under the Campaign Creators name and kind of the whole new go to market, all the new processes. Now obviously, the embezzlement, if a small business goes through that, it's obviously devastating. So, hopefully nobody watching or listening has to go through that themselves. But were there any takeaways, lessons, things that you could instill as education to prevent it for anybody else out there?
BA: Yeah, so I'll share with you that I think that I made some really big amateur, rookie mistakes early on building a business. This is my first business, I started it with $500, like 8-9 years ago. I really had no idea what I was doing. I still think sometimes today I still have what I'm getting myself involved in. But as you're building a company, one of the things that I had to learn the hard way was you have to let go in order to scale, right? And so for us, when we went through the embezzlement, I think it was at a time where I had let go maybe a little too much, I didn't have the right processes in place for oversight. The individual that was in charge of helping us with our finances was a very, very close, personal friend of my business partner, and became a close, personal friend of myself and my family. There was no reason not to trust that individual, but I've learned that reasons why you shouldn't trust actually is not a good reason why you still should not put into place certain oversights, right? And so business owners that are beginning to scale and they start to allow other people into the system, you have to do it with a fine balance, but you should really do it with the right structure in place. So now, for example, I have multiple oversights on how my accounting and my banks are set up, right? I have a monthly audit versus never auditing before, so I have a bookkeeper that comes in and audits our books every single month just to make sure everything's fine, and then in addition to that, we have our CPA, right? We believed in the beginning, that we were too small to have an external payroll company like an ADP or a Paychecks or whatever, cause we were 2, 3, 4 people, like, oh, well just handle payroll in-house. You are never too small to have an external payroll company. I would say even if you're a solopreneur, you should just have a payroll company because it'll help in a variety of different ways. And then as we were also kind of growing and building, I found that keeping your operating account with your savings account in the same bank. Cause like for example, you have a bank account, and I don't know if you have this as your personal checking-
KD: Yeah, I think I know where you're going.
BA: Your bank, your savings, and your personal checking and savings, you can easily cross money back and forth. And so there's really no true point to having a checking and savings at the same bank. And so one level of oversight that we also did to put in some protections, is the operating account lives in one bank, and then certain people have view access to this because they have to help with accounting and everything else, but then we have a totally separate banking institution that has our savings. We only keep one month burn in the operating account even though it's protected, the savings account, I look at it as like our vault. And so the majority of our money and everything else that we have is locked away. So it would be very difficult for someone to come in and replicate what had happened three years ago.
KD: So it sounds like agency or any small business, right, you're never too small to have the layers of protection, the oversight, right, the security built into the processes. And I would say every agency's going to have that third employee, fourth employee that comes in early, has a lot of trust rightfully so, but again, doesn't matter of the relationship, there always should be that line of oversight that you never bend on.
BA: That's right.
KD: But I'm glad to hear everything is going well and I really appreciate having you here, but that's it for me, Bob.
BA: Yeah, thank you so much Kevin for having me.
KD: Thanks a bunch, and that's it! That's another episode of Agency Unfiltered.
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