Speaker 1:
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:
All right, Jeff. So we are going to start this episode off a little differently than we usually do. We are going to start by taking a step back. Last time I said we were going to do this series on intellectual capital, and I wanted to kind of dive into your intellectual capital framework. But then when we started prepping for that series, I realized we needed to take a step back above that before we went there. We are going to start with a really kind of ethereal question because it really came out of our dialogue about this. That question is, what is the purpose of professional services marketing? That’s our topic for today. Go.

Jeff McKay:
Oh gosh, what is the meaning of life?

Jason Mlicki:
What is the meaning of life?

Jeff McKay:
If one equates the meaning of life with the meaning of marketing, call me, you have issues.

Jason Mlicki:
That’s a very valid point.

Jeff McKay:
My 18-year-old daughter, who has made the decision to attend my alma mater and study marketing. Can you believe that? She is-

Jason Mlicki:
So, real quick, your daughter has issues, have her give me a call. Teasing. Go.

Jeff McKay:
Oh my gosh, she’s going to be so good. As a matter of fact, I think we should have her on-

Jason Mlicki:
Oh boy.

Jeff McKay:
To talk about, not me, not talk about me. That’s probably where your mind went, but to talk about marketing and why she’s getting into marketing now. Because I think it would be really insightful hearing from somebody in her generation. I just think that’d be a fascinating conversation to have. But we have these conversations around marketing more and more. So she’ll be a fourth-generation kind of marketing person. So it’s fascinating. Fascinating.

Jeff McKay:
The purpose of professional services marketing, I would say it’s the purpose of any marketing of ideas or expertise. I wouldn’t limit this to professional services. But the purpose of marketing for me and those who listen to this podcast will know this, is to build the firm and its brands’ relevance and to do so as quickly and as cost-effectively, both in the short term and the long term. We’ve had podcasts about what brand relevance is versus brand awareness, but essentially it’s the permission to play. Marketing’s job is to enable the line to play in the markets that are going to offer it the most opportunity for growth, both in the short term and more importantly in the long term. Because that relevance is evolving daily, quarterly, yearly. But yeah, I think it’s to build brand relevance.

Jason Mlicki:
The reason I wanted to start here was that when we were setting this sequence up, what you said to me, you said, “Well, Jason, most firms go about marketing from a big B brand standpoint. And it’s about building awareness.” But ultimately when you’re talking about relevance, that’s where intellectual capital does come in.” I want to step back again and just talk about awareness. We’ve talked about this before, but I think it’s important we talk about it again. What is the difference between trying to build awareness versus building relevance? What is the difference for the marketer?

Jeff McKay:
I think there are several differences, and how you get to awareness versus how you get to relevance in terms of investment of time and resources are very different. They’re not mutually exclusive, but they are very different.

Jeff McKay:
Awareness to me is getting a name out there. It’s easy to get a name out there. More money will allow you to get the name out there. Yes, I’ve heard of Accenture, I’ve heard of Bain or BCG. That’s fairly easy. But building relevance is very, very hard and takes a very different approach, particularly for firms that don’t have Accenture-like resources. If you were to take, for example … I don’t want to pass judgment on any firm in terms of their approaches to this because they know what they need to do for where they’re trying to get to … But when you see some firm’s name on a hat of some golfer during a golf tournament, you may or may not know what that firm does, but you’d be aware of it. “Oh yeah, isn’t that the brand that sponsors such-and-such player?” That’s good, but it’s not moving the ball in the way that firms need to move the ball.

Jeff McKay:
It may be the first step, but with firms that don’t have the resources, it’s never going to be the first step to kind of do that. Most firms have to play small ball. They need singles and bunts and stealing bases in order to generate runs because they’re not hitting home runs like that. They don’t have home run hitter type of resources so they have to manufacture runs. Every time they communicate with the market, it needs to be building brand relevance. Brand relevance, in its simplest terms, like I said, is the permission to play with a certain buyer around a certain issue that that buyer is having. Does that make sense or did I just ramble?

Jason Mlicki:
It makes sense. When you put this in the minds of the client … I’m trying to kind of do it in classical marketing terms for a second … It’s almost like that central brand question that’s asked in consumer-type brands studies. When you think of this type of service, who is top of mind? That’s sort of like a research question you would add to measure awareness. A total random comment real quick. Years ago, I did some work with Ashland, the chemical company. At the time Ashland owned the Valvoline brand, so the pretty well-known oil brand Valvoline. They were trying to launch these products into the collision category, so collision repair centers. They did a brand awareness study to understand the awareness of Ashland and understand the awareness of Valvoline, some of the brand assets they had in that category.

Jason Mlicki:
What was kind of funny was there was like twentysome percent of buyers that believed that Valvoline had products for use and for sale in that category, even though they didn’t. That’s a sort of an example of awareness, I think. There’s awareness. The awareness of Valvoline is so high that the assumption was that they would logically have a product for me.

Jason Mlicki:
I think what you’re saying though, is that’s a very broad umbrella marketing approach, building out awareness at such a high level that the assumption is that there probably is a service there. Whereas, relevance is about someone saying … Well, it’s not just about awareness, it’s about … Asked a similar question, which would be what firms are top of mind in the area of strategy execution? Or what firms are top of mind in the area of operational due diligence? Or some very specific issue that clients are always thinking about. What are the top firms? So it speaks more to a little more cognitive thought process around well, who is the best in this space? Who’s got expertise here? Whose got the best expertise? Whose got the deepest expertise? And kind of drawing out … I mean, that’s relevance. That’s sort of the difference.

Jeff McKay:
Great point. So I’ll add another word here. I do think it’s a continuum because it’s not either or, it’s and. There is definitely a progression, but depending on the situation and the resources and the culture of the firm, and the strategic objectives, how you go about this as different. That’s what really differentiates, I think, strategic marketing from just conventional marketing where you do what everybody else has done. I’ll explain why this is so important in just a second.

Jeff McKay:
But first, brand awareness. Really important. Have I heard of you? That’s brand awareness. Brand relevance is do you have permission to play in the space you want to play? Relevance assumes some familiarity with a capability. Using your Valvoline example. I know Valvoline does petroleum products. It would make sense that they would have a petroleum-based product that would do these types of things, particularly maybe in an automotive space or a marine space, but some kind of engine-based space. Because they have permission to play, and I’m familiar with that.

Jeff McKay:
I think what you’re describing and what is even more important is just because you are relevant doesn’t mean that people prefer your brand. You want to go from awareness to relevance to preference, where I prefer Valvoline over a Pennzoil or Quaker State because they have these attributes or do these things. We did a podcast on this, I think. I definitely have a blog post on it.

Jeff McKay:
There are three drivers of brand preference, and they are expertise … You’re smarter than me and everybody else. I’m willing to pay you a premium for that expertise because I don’t have it.

Jeff McKay:
Results. You have demonstrated your ability to apply that expertise to produce the result I’m looking for and do it on time and on budget and in the way that you said you were going to.

Jeff McKay:
Then the third, and I’ve kind of switched up my thinking a little around this word. I used to call it relationship. But I think a word that describes it much better is simpatico. That being in sync with me as a buyer, that you understand my business, that you share my world view, that you see IT as strategic or tactical, or that you see the economy in this way or that way, or we share the same value system. Then on top of that, you’re just easy to do business with. Your systems and our systems sync up, how you do business and I do business sync up. You don’t nickel and dime me. You’re the type of person I’d love to stick around and drink a beer with. You’re in sync with them.

Jeff McKay:
Those three things are really important, and marketing can really emphasize the expertise and the results because those two are intertwined and have a huge impact. I’m going to explain why in just a second. The simpatico is so important and it’s really the key differentiator. The best firms with the best brands get this. Simpatico is really a reflection of how you show up in a room. When an Anderson person or an IBM person or a McKinsey person shows up in a room, you know that they are from that firm. You can’t put your finger on it, but you’re just like, “He’s a such-and-such person.” To me, that’s the manifestation of simpatico, the secret sauce of a firm’s culture and its expectations and its recruiting. Most firms don’t have that, but the firms that have it and know it and know how to manage it are really, really unique firms.

Jeff McKay:
But when we’re talking about the marketing for the purposes of intellectual capital, it’s the expertise and results that are really important.

Jason Mlicki:
It’s interesting because I kind of had a brief moment where it all clicked for me. Awareness is, “I’m aware of that firm. I’ve heard of them.” Relevance is, “That firm has expertise in this area in which I have issues to solve for.” They’re in the consideration set, if you will, if that issue is something I’m dealing with. And then preference is, “Well they’re the firm that I would most logically go to, to solve that type of problem. They are the firm that I would trust the most to solve that type of problem.” Or maybe, “I’ve worked with them and I trust them the most to solve that type of problem because of that experience.” Is that sort of the latter?

Jeff McKay:
Yeah. Yeah, in my mind. I think you summed that up really well for an Ohio State guy.

Jason Mlicki:
Well, we are champions. Anyway, the intellectual capital. Let’s jump into intellectual capital here. Intellectual capital slides into where? It basically is the fulcrum, it is the lever for establishing relevance and turning relevance into preference.

Jeff McKay:
It is important, I think, in building awareness and relevance. It’s very important for preference too when you start getting intellectual capital down into client service delivery and how it manifests at that point of actually producing that result. I’ll say yeah, all three, all three. It permeates it. I mean, I see it as the lifeblood of a professional services firm.

Speaker 1:
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:
Let’s talk about what is it when we say intellectual capital, what are we talking about? What do we mean by that?

Jeff McKay:
So to me, intellectual capital is nothing more than a commercialization of ideas. Professional services firms, software firms are filled with big idea thinkers attacking any number of problems. While academicians can generate ideas, but they don’t necessarily commercialize them. What professional services firms do better than anyone is to commercialize those ideas. We’ll talk about, I think, in more detail what exactly is intellectual capital when we talk about the strategy, because to me, there are components of demand creation to ideas, and there are elements of supply creation to intellectual capital. Let’s just table that for now. We can talk about that in maybe the next episode.

Jason Mlicki:
Yeah, I have one last thing I want to talk about before we wrap for the day and this episode sets the table for the next one. That is, you had a really, really interesting discussion with me setting up this about the inherent tension inside of a firm and the tension between sort of the core capabilities of the firm and the things at the peripheries, the adjacencies and the new opportunities in the firm and the relationship of that with intellectual capital. I want you to actually just kind of talk about that for a few minutes, because that will sort of lay the groundwork for why having a strategy for intellectual capital is critical. So talk to me about that.

Jeff McKay:
I tell you, it is one of the most important things for leaders, well, everyone in a professional services firm to understand because it is a natural and positive tension that exists. But it is seldom managed well. It is this tension, and a mutual colleague of ours, I think has done some really good thinking on this, David Coleman. He worked with us on a project you and I collaborated on. But he uses the term … I like the term, it’s not the only term … This concept of the performance envelope. The performance envelope is the revenue engine, if you will, of the firm. Because a professional services firm is nothing but people commercializing ideas and work, the firm will almost organically develop to feed that revenue engine. That revenue engine is that core service, and you generally know that revenue engine very clearly because you’re immersed in it every day.

Jeff McKay:
But more importantly, it is the most profitable business, it is the most scalable business, it is the established business, and it is the business that the whole firm is set up to feed. The recruiting and the training and development are all built to feed that revenue engine as efficiently as possible. Generally, that revenue engine and the service provided is very well-established. And it’s so well-established, and you can tell that it’s a core business because the market fully understands it. It’s why you get RFPs. People know what it is, they know how to buy it, they know what the requirements and attributes of it are. So even the marketing system is set up to support the core engine.

Jeff McKay:
But the problem with the core engine, like any business, there’s always these external pressures as it matures. You’re going to get more competition coming in, just basic supply and demand. That’s going to pressure prices downward. Because it’s so codified, you can begin to start to replace that work with technology, software. We’re starting to see that with AI coming into a lot of these solutions and the growth begins to slow. That’s the natural life cycle of a core engine in a professional services firm. But what happens is in these firms, as you’re dealing with customers or clients, you start to move outside of that core revenue engine, and you start to break down those systems that are designed to help it run efficiently. You start breaking processes, and you start hiring people or training them in different areas that are outside the scope of the core engine as you try to help clients. Maybe they’re new types of clients or they’re different buyers in those clients. But when you start to move to those adjacencies, I call them peripheries, you start to recognize a totally different set of attributes.

Jeff McKay:
These things are undefined. They aren’t as profitable because you’re kind of making it up on the flow and you have trial and error. They’re really unstructured. They’re really not scalable because you’re needing lots of thinking to come in. You’re not focused on some solution as much as you are understanding an issue and just trying to solve it, not codify the solution. So you’re moving in this category. To me, that’s where the marketing and the growth of the firm is going to come from. But you don’t know exactly which ones of these issues you’re going to solve. Intellectual capital plays at this periphery. It’s sorting through these issues, it’s identifying them, it’s communicating them to the market because most people that are suffering from these issues don’t even know what to call it or what the cause is.

Jeff McKay:
Intellectual capital coming out of professional services firms help buyers sort through and define those problems at the periphery. If it’s done right, those peripheries then become the new core engine, if you will, for the firm so that firms are constantly evolving these kind of steps along this life cycle. So that the firm’s capabilities are stepping up, but that marketing is building its relevance and permission to play in these new markets as it stepped up while, while … Man, I’m on a tangent here, I’m sorry … While maintaining that overarching simpatico, how you show up that transcends the evolving areas of relevance in the issues that you solve. That to me is the art and purpose of professional services marketing. Is guiding and equipping the firm to build relevance as cost-effectively and as quickly as you can in the short term and the long term.

Jason Mlicki:
You brought us full circle. At the end of the day, that’s why intellectual capital matters. It comes down to, it is, I’m using the word lever again and again, but it’s the lever that you use to drive relevance. It’s the lever that you use to drive growth. I think that’s the other thing that’s really interesting in what you’ve been talking about is this idea that there’s always this tension between where should thought leadership resources go. Should it go to, I’ll use simple terms, the cash cow or the growth star? Where do you put the resources? There’s always an argument inside the firm about that. But at the end of the day, I think you’ve been pretty clear in this episode that really intellectual capital operates at the periphery, which means that it really exists to catalyze growth in the areas of future opportunity and make the firm relevant there.

Jason Mlicki:
I’m going to wrap us right here. My goal with today’s episode of course, was to just get at why intellectual capital matters, what it is and how it fits into the sort of the brand-based marketing model of a firm. And then next episode, we’re going to go into some of your strategy models around intellectual capital strategy development. What does intellectual capital strategy look like and how does it differ from other elements of strategy, marketing, brand, whatever? So that’s what’s on tap.

Jeff McKay:
Well, I hope I didn’t bore everyone. Man, I didn’t realize how excited I can get about this subject. But I mean, this really is the core of professional services growth, sales, marketing, client service, delivery. So yeah, I kind of get fired up on it. So, sorry audience. Sorry, Jason. I’ll have to tighten that up. But yeah, this is fun stuff, and I hope people will come back and this is where it is happening and it’s what separates the top firms from all the others.

Jason Mlicki:
Well, I’m looking forward to digging into that. Good call, good chat. We will dive into IC strategy next week. Looking forward to that.

Jeff McKay:
All right. Thanks, buddy.

Jason Mlicki:
All right. See you.

Speaker 1:
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.