Much of the economy appears poised for growth over the next 3 quarters — are you prepared to capture it?
Speaker 1 (00:08):
You’re listening to Rattle and Pedal. Divergent thoughts on marketing and growing professional services firms. Your hosts are Jason Mlicki and Jeff McKay.
Jason Mlicki (00:19):
Let’s talk about girl’s baby.
Jeff McKay (00:22):
Oh gosh. Yeah, it’s funny. We just finished a typical Jason and Jeff phone conversation spending 45 minutes talking about big thoughts and nothing before we actually produce a podcast.
Jason Mlicki (00:36):
Jeff McKay (00:38):
We covered everything in current affairs, didn’t we?
Jason Mlicki (00:41):
We did. We covered everything we could think of and our views on it, good or bad. So we’re going to try like heck to transition to a business conversation about growth, and I picked today’s topic and I picked it purposely because I’ve been thinking a lot about this whole mantra of survive to thrive that’s been floated around since the earliest days of the COVID pandemic. And I also read a really nice piece that Bank of America put out about. This was I think more about markets than the economy itself, but the idea that the second quarter, they saw as a bridge towards, maybe it was second and third quarter, bridge towards, maybe fourth quarter, growth.
So the sense that we’ve maybe, you’ve seen the market do that V and it’s bounced back, although I would argue that’s not where the economy is, but it seems that either third quarter or fourth quarter, there’s going to be more growth opportunities for a lot of firms than maybe they saw in the second quarter and in parts of the first. So anyway, what got me thinking was you’ve got this really nice growth readiness assessment tool that you leverage. And I wanted to talk a little bit about that in the sense of every company has growth goals, but the question isn’t, “Do you have ambition and goals to grow?” The question is, “Are you actually prepared and tooled to do it?” That’s what I liked about your assessment and your model. So I thought we should just dive into that to talk about, “Hey, are you ready to grow as the market is getting healthier and better, and there’s more commerce happening?” I’ll put it that way.
Jeff McKay (02:03):
Yeah, I think it’s a relevant time in place, the middle of the year, as you said, and what’s going to happen in the second half. And in my experience, a lot of firms don’t think about growth outside of their industry growth rate, if you will. They rise and fall. If the whole market that you play in is growing 20%, they try to make sure they get 20% worth of growth. And I do think that that’s going to happen for a lot of professional services and SAS companies and other B2B companies. There is going to be a rebound, but I think the growth rates among firms is going to be very different, and I think there’s going to be a wide distribution of growth across given industries or professional services discipline.
And I say that completely anecdotally. I’m not saying it because I have my arms around some kind of empirical research, although I have spent the last eight weeks or so talking to partners and leaders of firms, and it really is fascinating to hear the stories about what they’ve been doing to their own firms and what they’ve been doing for other firms. I think if you’re a confident firm, we talked about what that means, and you are a high performing firm and you’ve used this opportunity, the downtime, if you even had downtime, to get stronger, you’re going to be performing at the outer, upper side of that bell curve, I think. So anyway, that’s, that’s just kind of, my take is I’ve been talking to firm leaders.
Jason Mlicki (03:58):
I have two things I wanted to say about that, actually. I really like the confidence one. It’s really interesting. We have a client that’s a consulting firm that got hit pretty hard early because a lot of consulting firms, not a lot, not all, but many of them, their model had been predicated on in-person consulting service delivery. So really coming onsite into a client’s office and working hand in hand with the leadership team or the management team on whatever they do, and any client that we had that had that type of delivery model obviously took a pretty big revenue pinch because they literally couldn’t go deliver services anymore.
And clients said, “Oh, I’m not going to pay you for services that aren’t being delivered,” and they’ve postponed services maybe into Q3, Q4, Q1 of ’21. I guess as listeners can tell, I am still working at home and one of my children is now practicing piano in the background. So I guess we’ll be accompanied by a concerto at the moment. Sounds like maybe my 10 year old. I’m not sure. So anyway, where I was going with that was what was interesting about that is that one of those firms in particular that took a pretty big revenue haircut, as I would have been calling it, 30, 40% revenue haircut, they’re starting to see their pipeline recover in the second half, but what’s also interesting is they never adjusted their plan. So the plan for the year remained fixed.
It didn’t matter what was happening in the market, didn’t matter what was happening in the economy, “The plan’s the same. We’ve got to get creative and figure out how to deliver on it,” and so when you talk about confidence, I think that that’s part of it is I think there are firms that are just taking this lying down, saying, “Well, the market’s off 50%. And so we’re going to be down 50% and there’s firms that are just going to try to get creative and innovative and push through it one way or another. And I agree, there’ll be rewarded on the high side of that wide curve. So that was my comment number one, and I have a comment number two, but before I give my comment number two, I’ll let you just comment on comment number one.
Jeff McKay (05:45):
That’s a great example. I had dinner with a big [inaudible 00:05:50] partner this past weekend and he said something very similar. He said that because their experts couldn’t fly around and they adapted via video conference, their experts, that upper tier of global thought leaders, their utilization leaped because the buyers understood the dynamics of, “We can’t have any face to face,” but they still wanted the interaction. And these thought leaders that are billing out at $1,000 an hour, even though this firm is focused on fixed fee or value billing, all of those experts were now fully utilized because they weren’t flying around. They weren’t wasting time in hotel rooms or cabs or anything like that. They just sat in front of a camera and went from client to client, to client, to client, talking about problems, selling, building relationship.
So they’re making money. They’re deepening client relationships and they’re positioned now, when it comes time, even if they decide to do it that way, to jump right back in and they didn’t miss a beat. And I think it’s those firms that saw it as, “Well, man, this is a great opportunity for us. Now we can take these experts who really build our brand and spread them and influence the market even more because it’s scalable.” So I think you’re spot on.
Jason Mlicki (07:34):
Yeah, weighing into your point, what’s interesting is that we’ve always known that. That’s how we’ve delivered services for, geez, I don’t know, 10 years or more now, but in some instances I don’t think that those clients were willing to accept that. They, “No, I want the expert here. I want that person to come to my office. I want to talk to them face to face,” when all of a sudden this artificial constraint pops up and they can’t, and in the end, it’s probably going to help those firms, to your point, because that behavior is not going to go back. They’re going to have the same [inaudible 00:00:08:02], “Well, I don’t really him to come here. I just need to talk to him, and Zoom’s good enough.” Or her. Talk to her, I should say as well. So the other thing, I was just going to throw some data in for you.
I guess we’ll call it telemetric data, [inaudible 00:08:13] analytics data. So I’m doing a digital marketing webinar later this week. It’s the last webinar in our series on marketing through the pandemic and the other side, and so what I did is I literally took a full sweep of all of our client’s analytics from all of our client websites to look at where traffic is up, where traffic is down, where conversions are up, where conversions are down. And it’s a pretty interesting distribution of data. So we’ve got, across all of the firms, sites that we have analytics access to. We have traffic growth ranging from 32%. So the firm that got the most lifts during COVID, and the way I bound this was I took from March 23rd to June 7th. So loosely when the pandemic started to become this big real thing.
And I compared it to the period right before that. So it was a comparison of data in the window in which the pandemic was really hitting people hardest and then before that. The firm at the far right was 32% up in terms of traffic, and the firm at the far left is 42% down in terms of traffic. And then a search followed a similar distribution. So search traffic on the far right was up 18%. Search traffic at the far left was down 53%, because my hypothesis going into this was that all search traffic would be down, just because people were distracted. They weren’t searching for the types of issues and problems that many professional services firms solve on Google. They were more likely to be searching things about their own family, their own situation, protecting their livelihoods.
So [inaudible 00:09:48] using McKinsey’s language, they’re more interested in protecting their lives and their livelihoods, [inaudible 00:09:57]. And of course the single biggest factor in those swings was exactly what you’d expect. It was which firms are doing the most aggressive, high value thought leadership and marketing in this window, versus the ones that aren’t. So the ones that were really stepping in and adding value and helping clients, and just being there, being a voice in the noise of reason, they were growing marketing, growing visibility, growing leads, versus those that weren’t. So my belief system rooting this down the line for you is that that marketing activity yields leads and visibility, which ultimately yields conversations and revenue in the future. So my belief system is that those firms that were really pushing the envelope of value in the pandemic are going to get more rewards on the other side, in the third and fourth quarter, from that effort, because they were there providing value and giving help. It’s not revenue data, but I consider it leading indicator data, personally.
Jeff McKay (10:52):
I love that I may actually have to attend one of your webinars.
Jason Mlicki (10:57):
Your long standing reasons not to, right?
Jeff McKay (11:01):
No, that’s not true. So well, you’re going to record it, right?
Jason Mlicki (11:04):
Yeah. So the webinar, this’ll air after the webinars, so the webinar will be live so you can go and record, download it now.
Jeff McKay (11:12):
Yeah. Yeah. So go back and listen to it now. I’ll be there. I’ll be there, because that is really cool stuff. That’s really cool stuff.
Jason Mlicki (11:19):
Yeah. It was interesting to go through it and see, plus I know the firms, obviously I know all of these firms personally, so these aren’t like some vague benchmarking data. These are all firms I know personally that I know what they’re doing, what they’re doing with us, what they’re doing on their own, so I had a sense of what’s happening in the firm from a marketing perspective, maybe not a revenue and lead perspective all the time. So it’s interesting to see that.
It was also, I guess I would just say rewarding to see, because I know we spent all of April and most of May just literally, head down thought leadership development for clients, even clients that we historically weren’t contracted to that work. That’s what we were doing, diving into the void, like, “You got to get some things out, some valuable content out there,” and so it’s rewarding to see that that has yielded for them in the moment, even if it hasn’t led to real hard revenue yet, but I’m confident it will, a simple idea. You need more visibility and you need more people in your database in order to sell work down the line, right?
Jeff McKay (12:17):
Jason Mlicki (12:17):
It’s simple [inaudible 00:12:18].
Speaker 1 (12:18):
You’re listening to Rattle and Pedal, divergent thoughts on growing your professional services firm. Your hosts are Jason Mlicki, principal of Rattleback, the marketing agency for professional services firms, and Jeff McKay, former CMO and founder of strategy consultancy, Prudent Pedal. If you find this podcast helpful, please help us by telling a friend and rating us on iTunes. Thank you. Now, back to Jason and Jeff.
Jason Mlicki (12:44):
So I want to change gears because I really wanted to talk a little bit about conditions for growth. Let’s say the economy is, let’s just assume it’s going to be healthier. There’s going to be more commerce just in general, in Q3, Q4 and Q1, the next three quarters. What are some of the things firms should be doing right now to make sure they’re poised to get the growth that they want, either growth they’ve lost, or new growth they’re looking for. And obviously I’m leaning right into your assessment model. And I want you to just talk a little bit about the strategy box. There’s five or six things in that strategy box, but let’s just pick out one or two of those and talk about them.
Jeff McKay (13:20):
Are you going to ask me a question about one of them? Or are you saying, “Hey Jeff, which one of these do you think people need to really focus in on?”
Jason Mlicki (13:28):
Yes, that’s what I want. That’s what I would [crosstalk 00:13:34], curious, given everything that’s played out, where do they need to put their energy? Because there’s six things in that box, ranging from culture and market focus to core capabilities, client lifecycle, intellectual capital. So it’s a lot to take on. It’s a lot of different moving parts. So if I’m a firm, where do I maybe need to be thinking about right now? And maybe it’s an impossible question and that’s okay.
Jeff McKay (13:50):
Well, I don’t think it’s impossible. In my view, all of these are always things. Whether you’re in a crisis or you’re not in a crisis, you’re always going to set these as core priorities as a leader, if you want to drive growth, so you’re always monitoring them. They’re like spinning plates, if you will, and you have to keep touching them to keep them spinning.
So culture, for example, if you’ve noticed that your firm panicked in this situation and didn’t really get its sea legs and he is worried about what’s going to happen coming out of this, then your priority probably needs to be on building some confidence in your firm, because if you’re not going to be confident and you’re not set up to reward the types of behaviors that are going to drive growth, you have to start there because culture drives everything, and you need to understand that culture and how it’s inhibiting you, or it’s enabling you.
But you have to think the way forward in terms of what your culture is capable of delivering against. So that’s, I think, an important thing to point out. And we talked about that in the confidence podcast, but I think in terms of the way forward from here, number one is you got to be very clear about your market focus. There are going to be some markets that are going to rebound. Some that are not. Some are going to rebound faster than others, and I don’t think that coming back as business as usual is going to be an effective strategy. There has to be some prioritization because markets are going to grow at different rates and they’re going to have different demand needs. So taking a step back and rethinking what’s our focus? Markets or types of clients or specific solutions, but you have to hone in on that.
Jason Mlicki (15:52):
Yeah, I like both of those a lot. I think, piggybacking your culture one real quick, one thing that’s coming to mind for me is that my sense is that when everything shut down and companies, most of the people that listen to this podcast were probably fortunate to keep running, keep the business running virtually, people working from home. They weren’t shut down and their revenue model didn’t completely disappear. But I also get the sense that in that window of time, things that maybe normally would happen in a typical office environment went out the window.
It just became about getting the work done, doing what has to be done, but things like professional development or one-to-one interactions or knowledge development, things that maybe would be deeper conversations about individuals and their careers and where they’re going and where they’re headed, went out the window. It just kind of became, “Let’s just get through this moment and then we’ll deal with those things again later,” and so there’s probably some workforce culture building that needs to start happening again, that may be went away for a little while. And so that would be another piece of that, that I would suggest firms might need to be thinking about right now, is making sure that they’re tending to longterm efforts of their leadership teams and their employee base.
Jeff McKay (17:05):
Jason, I want to say something about that because I think that is an incredibly astute observation, and I had an email exchange with a senior leader at a big HR consulting firm. And we were talking, I got a group of C level execs, and I think I might’ve said this. C level execs together, when this crisis started, on a Zoom, different industries, different functions and-
Jason Mlicki (17:34):
This was the notorious Friends of Jeff event where I was-
Jeff McKay (17:38):
Friends of Jeff.
Jason Mlicki (17:39):
I was conspicuously [inaudible 00:17:43] definition, not Jeff’s friend, just his co-producer on a podcast, I guess, a transaction. So anyway, moving on.
Jeff McKay (17:52):
But we were talking about real estate and office space and those types of things and becoming a more virtual operating model, and he astutely pointed out that the world of professional services, and culture in particular, is really formed and disseminated through an apprenticeship model. It’s about being on client assignments together. It’s that time on the airplane, that time having dinner, that time in a client locale that builds relationship and creates those teachable moments.
And firms have an opportunity to get back to that. You have to get your people back together and allow them to reconnect on a relationship basis. It’s critical. The other thing that’s important though, is that one of the cements or glue for a culture in my experience is shared experience, and the fact that your firm has gone through this COVID-19 experience together and gone through the Zoom interaction together and adapted and addressed client issues together, you want to solidify the gains of that experience. Because in your firm’s history, it’s going to be historic, “Do you remember when…” And that shared experience is going to be really important and you don’t want to lose that. And it’s an important marker in a firm’s history. So, get them back together, but don’t lose that shared experience.
Jason Mlicki (19:38):
And of course, social distance and follow all the rules associated with that [crosstalk 00:19:44] always have to say. Everyone’s got to make those disclaimers. Before you wrap today, I want to talk about one more of the elements in that strategy bucket within the growth assessment model. And then I’ll do a shameless plug for the growth assessment model at the end. The client life cycle, I want you to talk about that one, because I think that’s a really important one right now, because I think firms have to recognize that whatever life cycle some of their clients was in three months ago, they’re not in that anymore, some of them. So let’s talk about that and what that means, if I’m thinking about the concept the right way, and I might not be.
Jeff McKay (20:13):
No, no. I would have pulled that out as one of the key elements right here and now, because it has changed. There are life cycles that are going to be, in life cycle, I’ll say, I’m going to talk about buying new services right now. The buying cycle is going to be really compressed for some solutions because there’s pent up demand and people are going to want to move and they’re going to want to move quickly, and they have probably been doing due diligence proposals reading and assessments or whatever. And as soon as they’re able to spend the money and get people together, they’re going to go and you need to be prepared to act on those, to either win them or be prepared to move on because you’ve lost them. But I do really think there is going to be some pent up demand that’s just going to explode.
By that same token, I think there are going to be some that are really going to be drawn out as people try to keep their powder dry, try to solve some of these problems in house or reevaluate allocation of scarce resources. You may get back to some of these engagements and the people that were driving the possible new business no longer have jobs. They were cut in some kind of cost cutting or something, so that whole dynamic could change. So taking a step back and really doing an assessment of your pipeline, which I assume high performing firms were doing all along, and we talked about that with Mark Wainwright on earlier podcasts, that pipeline cliff, I’m assuming every firm in the world listen to that podcast and now has that discipline, [crosstalk 00:00:22:18].
Jason Mlicki (22:16):
The data surely backs that up.
Jeff McKay (22:18):
Yeah, so I think taking a step back and saying, “Okay, what has changed?” There will be stuff in the pipeline that will have changed, either compressed or delayed, but every life cycle and buying cycle starts with some kind of trigger event. It behooves firms to go back and rethink what are the trigger events for the solutions that we can offer and how have they changed? If you just think about virtual working in mass, that’s just one of hundreds of things to look at and to think about how that would cascade across how people demand or buy solutions. It makes a lot of sense.
I’ll throw one more thing in here, and this will be important for firms to be smart about, because I know this is happening out there. Firms have serendipitously fallen into a successful client engagement as a result of the conditions that exist right now. And there is going to be some partners or practice leader that is going to want to productize a successful client engagement. We had one or two clients that did this engagement. Now we have to turn this into a product and name it and promote it and launch this whole new solution. Be careful with that. And we’ve done a podcast on that one as well. Just be careful, because there’s going to be pent up demand for that, I’m sure, as well.
Jason Mlicki (23:59):
That’s good advice. So I’m going to take us to wrap, and I’m going to do it this way. So Jeff actually made you step back three times in this episode, three whole times you stepped backwards. So I’m going to suggest that as listeners, now you take one step forward and you download the growth readiness assessment that Jeff’s put together from his website. It is a really good, useful tool just to help you think about if you’re going to unlock growth in the second half of the year, where do you maybe need to put some energy in order to make the number on the plan actually a reality, which is a lot of times easier said than done, right?
Jeff McKay (24:36):
Oh my gosh, yes.
Jason Mlicki (24:38):
So on that note, I’ll talk to you next week.
Jeff McKay (24:42):
See you, buddy.
Jason Mlicki (24:43):
Speaker 1 (24:45):
Thank you for listening to Rattle and Pedal, divergent thoughts on marketing and growing professional services firms. Find content related to this episode at rattleandpedal.com. Rattle and Pedal is also available on iTunes and Stitcher.