Transcript

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:
So Jeff, this morning we invited a guest, a peer story guest, Mark Wainwright. We’re going to talk about the pipeline cliff. And I don’t know what that is. Is that some type of surfer methodology that we’re going to talk about? The pipeline? I don’t know, but it sounds cool and I’m really excited about it.

Jeff McKay:
Once again, you demonstrate why you’re an agency.

Jason Mlicki:
Wait a minute. I’m an agency? I’m a person. I need to clue you in, Jeff. I am a person. I do have feelings. I am not a monolithic entity that represents my business.

Jeff McKay:
That’s what I love about you. That’s what I love about you. And this one’s going to be a good one. I like Mark. I like Mark. Hi Mark.

Mark Wainright:
Hi. Good morning.

Jason Mlicki:
So Mark, before we go into the pipeline cliff, why don’t you give us a quick just backstory on you? As someone who’s a sales professional, I expect you to do this in 3.7 seconds at the loudest voice you possibly can because that’s how sales works, right?

Mark Wainright:
Right, right. Right. So funny. So funny. Guys, thanks for having me. I’m a huge fan. You guys have something fun and special happening. You’ve had some recent episodes with Brian Caffarelli and David Ryan that I’ve, I think, listened to two or three times each. So you guys are doing something good here. Here’s my 3.8 seconds, right?

Jason Mlicki:
Yeah, no, thank you. And we’re excited that you’re on because we both love this topic that you’ve framed up and you’ve written an article about it. It’s really, really just a great way of looking at us. So we’re excited about it. Yeah.

Mark Wainright:
Good. Yeah. I’ve been involved in professional services for about 20 years. I can crazily say that at this point. And I worked with some crazy folks in one of those marketing agencies for a little bit of time. Most of it was with architects and engineers. And recently I worked with a guy named Dr. John Kotter who [inaudible 00:02:09] from Harvard Business School. A really wonderful guy to work with. And now I am doing my own thing right now. I call myself a part time sales manager for part time salespeople. We can get into that a little bit or not, but I think it’s an interesting offering to professional services firms, specifically firms who are growing and can’t stand that word sales and don’t know what a sales manager is. But at the same time, lack the sales acumen that they need to survive in a competitive environment like we have.

Jeff McKay:
I don’t know any firms like that. Jason, do you know any firms like that?

Jason Mlicki:
I can’t even relate. Can’t relate. Never seen it before. I love your positioning in general. When we first started talking, that’s what actually caught my attention is there’s so much sort of outsource business development available in the marketplace. But I thought it was a different take on this. This idea of being a part time sales manager. And it made me think of the classic dotted line and the matrix organization. But this idea that you’ve got this, this dotted line outside the firm to this external person who’s sort of a specialist and an advisor. So I do think it’s worth talking about that before we dig into the notion of the pipeline cliff because I do think it’s an intriguing way of looking at this for firms.

Mark Wainright:
Yeah. Well, thanks. There’s a handful of folks out there that I’m aware of that are offering this. So it’s not a completely unworn trail, but it’s very interesting. These are folks that architects, engineers, analysts, economists, all different types of folks that really haven’t developed the important sort of foundational sales skills. So sometimes these organizations choose to sort of bring in a rainmaker, a person that does nothing but full time sales or business development, however you want to call it. But your client really doesn’t want that. Your client doesn’t want sort of a third party injected into their relationship. Clients specifically, in these really complex professions, really want to be working directly with the practitioner. So what the practitioner really needs is just some basic foundational skills. And then they need a wing man. They need a sidekick. The Robin to your Batman. And that’s the rule that a sales manager plays, but they’re not going to hire a full time sales manager. It’s a costly venture. It’s also just hours that are unused. So this fractional or part-time approach is pretty cool. I’m loving it and the people that I work with are really enjoying it as well.

Jason Mlicki:
Let’s jump into this pipeline cliff, because I love this idea of the pipeline cliff. When you first posed it, I remember, this is probably seven or eight months ago we were chatting, I said, “You better write that article because if you don’t write it, I’m going to write it.” And I kept pressing you to write it until you wrote it.

Mark Wainright:
You did. And it’s funny, when the three of us were talking a little while ago and you both mentioned, “Well, sure. You’ve got a blog post written up on this that we’re going to refer to and draw from.” And I said, “Of course, of course I’ve got that. Of course.” So maybe it was like late Friday or a Saturday or a Sunday or whatever it was and I’m scrambling sort of putting thoughts to paper. So I’ve got it down, it’s there. I’ve got my thoughts down on a recent blog post and we can pull from that.

Jeff McKay:
So we’ll link to that in the show notes. Jason, this reminds me of the podcast we just did a couple of weeks ago I guess it was where you were fleshing out some thought leadership ideas, your concept of how thought leadership should be generated and how it’s evolving. It sounds like we’re going to have another one of those today. This’ll be fun.

Mark Wainright:
Right.

Jason Mlicki:
When we talk about the pipeline cliff, what are we actually talking about? And I don’t even know if that’s the right phrase. That’s just the catchy phrase I put on it to title the podcast, but what are we talking about here?

Mark Wainright:
So there’s two parts that I’m referring to. Right now, for this discussion and referenced in that post I wrote, one is your backlog or your contracted work, the work that you’ve got under contract right now that it’s going to extend from today into the future at some point. Over time, if you’re picturing this graphic, closing your eyes, seeing this X, Y graph, that that work tapers off over time. So today, let’s say, the economy is in good shape. You are at a hundred or there’s a lot of firms out there who are at 110, 120% capacity, achieving your revenue goals, things are good. But as you look out into the future, that backlog contracted work starts to taper off. Right? I mean, that’s the situation with most professional service, or I would say all professional services firms.

Jason Mlicki:
It’s funny, I was thinking of a former client of mine and a really good friend, a guy by the name of Jeff [Colda 00:07:05]. He ran business development for Fitch here in town, the big retail and product design firm for years. And he liked to say, he’s like, “Fitch is the largest business on the planet that could be out of business in 90 days.” He would talk about that all the time. That’s the nature of this beast. That was always the pressure that he was talking about.

Mark Wainright:
Right. I totally agree. That brings a level of urgency to the next part, which is the pipeline. Right? Firms that really bring a good level of rigor and urgency to developing their sales pipeline, their work, their future non contracted work, their prospective work, firms are successful when they take that seriously. When they have a really clear view of it. When they have a pipeline that consists of prospective opportunities, projects or clients that they want to work with that are meeting their various revenue goals, increasing the average value of per contract revenue, meeting their overall quarterly or annual revenue goals. So the pipeline is what extends beyond your contracted work. Right? And there’s a lot of firms out there. It’s a fog. There could be six people chasing after different things. There’s some RFPs in the mix. There’s some contract renewal pending. There’s six referrals out there that people aren’t tracking down. It’s kind of a mess. Firms pay a ton of attention to their contracted work. How are we going to get this stuff done right now? But their pipeline is a bit of a mystery.

Jeff McKay:
Why is it a mystery so frequently?

Mark Wainright:
Because it takes that extra time, energy and focus to not just deliver on the work that you have today, but be looking ahead. I feel like it’s human nature. I think there’s people that are just focused on the here and now. They’re so busy, particularly in these types of professional services firms where these are people who are practitioners as salespeople. The industry uses the term do or sellers, right? So the majority of their time they’re spent practicing their craft. So they’re worried about delivery, right? That is their focus and the future falls by the wayside. And these folks, week in, week out, will review their workload, how they’re resourcing certain projects, but they don’t bring the same level of rigor and attention on a week in, week out basis to the future work because they’re just scrambling around trying to get this stuff done that they’re under contract to do.

Jeff McKay:
This is rhetorical. Do you really think that’s the reason why, Mark, that they say, “Oh, I’ve got to get this work done,” and their focused on their utilization? Isn’t that just an excuse for fear or ignorance of sales?

Mark Wainright:
Sure. Most of these service firms are very reactive in their approach. A lot of them think that the way you get new business and new clients is through a competitive RFP process and they don’t think that time spent investing in client relationships or projects that aren’t really there yet, but are developing in the minds of their prospective clients or even their current clients, they don’t think that that time is as valuable as time spent scrambling around writing a proposal that’s due in 72 hours because that’s how we’ve always done it. So they don’t take a long view. There’s a short view there. Does that get where you were going, Jeff?

Jeff McKay:
I think that’s a part of it. Those people that do do sales traditionally are conditioned through some kind of steps of a sales cycle. And that first step, to some degree, is qualification [vant 00:11:12]. Do you have the right buyer or the authority, the timing of the purchase? And it’s like go, no go based on vant. And to a large degree, people neglect the nurturing of not just the relationships, but the opportunities. To me, it’s like throwing away money. Hey, I can look at my own work at Prudent Pedal and there are clients that probably took four years, five years before they started working with me.

Mark Wainright:
Absolutely.

Jeff McKay:
Yeah. But I didn’t write them off cause they weren’t ready when I was ready. I mean, they were great people, they had other business priorities. I just tried to be there and help them along the way with related issues or even unrelated issues if I could help them and just stay in touch. I don’t think most people think that way because they are… I liked the way you said it really is a short term thinking phenomenon. Right?

Mark Wainright:
I’ll come at this a little bit different way. And I think this is probably a more objective way to look at it. There’s this thing called capability maturity models that was started by the Department of Defense back in the 80s. I know that sounds crazy and you don’t know how the heck I’m bringing that into this conversation. You’re like, “Oh boy, [crosstalk 00:12:37].”

Jason Mlicki:
Hey, anything that came from the DOD, I’m excited about.

Mark Wainright:
Right, exactly.

Jeff McKay:
Or from the 80s.

Jason Mlicki:
Or from the 80s. Even better.

Mark Wainright:
Right. Totally. So the 10 seconds on that is that the Department of Defense has a gazillion different processes and they have to figure out how to sort of grade them. All the way from we’re running around like chickens with our heads cut off to this other process over here, we’re applying very advanced six Sigma process improvement methodology to it. We’re getting better and better at it. And there’s a five step grading in between those two. The level one is that initial level and processes are ad hoc and activities are fluid. There aren’t any fixed processes in place. There’s no rigor.

Mark Wainright:
To answer your sort of question there, Jeff, or the statement you made about firms just don’t know, I think most firms are just operating at a very basic sort of ad hoc level when it comes to selling their services. That’s the reality. It’s no fault of their own. These are good, smart people, but they just don’t understand that there is in fact is a process and that they can improve, move through these five different levels of process improvement, because there are professional services firms, more sophisticated, generally larger firms often found in kind of accounting and management consulting, et cetera, that are operating at an extremely high level in their sales function. They just are because they understand that they need to bring some urgency and rigor and organization to this process. And there’s other smaller firms that just don’t see it. They don’t see it.

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.

Jeff McKay:
My sense is that there is a unhealthy self fulfilling prophecy that plays out in a lot of firms. A lot of firms, the conventional wisdom is that our best source of new business is referrals from the existing clients or referral paths. That belief system is so deeply indoctrinated into everything that they do that it gives them license to not essentially be as proactive in the process of marketing and selling as they need to be. I kind of have this belief that there’s a flip. There’s a flip in time when a firm is really good at marketing itself through thought leadership, when all a sudden their best source of new business is no longer referrals. It actually becomes their marketing efforts or thought leadership efforts. And when that happens is when they’ve finally fully taken control of that and said, “Well, wait a minute, we need to take a proactive stance on our future revenue.” And if we’re just going to hide behind this cliche that referrals are going to magically show up, then we’re not taking any responsibility for that future revenue. I’ve always been a believer, yes, referrals are great, but I’m not a believer in that you have as much control over referrals as you do on other things. You should focus on the things you can control first and foremost in terms of marketing and selling.

Jeff McKay:
Anyway, that’s one thing that comes to mind for me is that there’s this… And there’s a couple of other dimensions to that too, but just this notion of these things that we tell ourselves, especially in smaller firms, that block us from being smart. The other one I think is interesting is I’ve bumped into this, people that just don’t believe that there is any process to selling in a professional services firm and imposing one is not only not possible, but it’s unhealthy. [inaudible 00:16:28] as well.

Mark Wainright:
It’s an excellent point. They feel it’s constraining, particularly with people who are exhibiting the right behaviors around selling their services. If you bring a process, it starts to put a bind on those folks. But the incredible thing that I have found is that, particularly in highly technical, very complex organizations, you have a number of very smart, skilled technical practitioners who do not see an entry point for themselves in sales. They just don’t get it because they think it’s left for the networkers and the extroverts. The reality is the opposite is true. If you’re able to introduce a good, rational process in sales and invite the people who are introverts or ambiverts, a little bit of both, into a structured process, they get it. They start to understand how it works. They start to understand sort of these milestones or these sort of gates that they move through through discovery, through all these different steps in the sales process. So they start to understand it.

Mark Wainright:
So lo and behold, you end up with these technical professionals who are starting to develop these great sales skills. Oh, and by the way, introverts are excellent listeners, which is a critical part of the sales process. So they’re developing these sales skills, which as we all know, is a really important part of being a senior leader in a professional services firm.

Jason Mlicki:
Jeff, I just want to check. You didn’t catch that part about listening, right?

Jeff McKay:
Did you say something? You said a couple of things there. Jason, you said something interesting as well, but because Mark’s a guest I’m going to focus on him. You held out the accounting and strategy firms as being more sophisticated in their sales process. My inclination is that is because of two things. One is their size. They have the resources to do it, but the other and probably more applicable part of that is the competitive set. I mean, they have to be good at sales given that they’re playing with other very capable firms. Do you see that in the work that you do as well?

Mark Wainright:
Oh, absolutely. And these firms are people who have dedicated salespeople, they have dedicated sales managers and they have a sales organization. They’re getting the best of the best. The easy way to see who’s just running after it better is the BCG and the McKinsey and all those. Where are they? They’re $450,000 annual revenue per employee. In that ballpark. And a very high performing architecture firm is half of that. I know that that’s almost an apples to oranges comparison, but not really. There is some relativity there between those two. You can start to compare sort of people that are selling services, how much money they’re actually bringing in on an annual basis per employee and that’s a shocking statistic.

Mark Wainright:
So anyway, I don’t know if I addressed that directly, but yeah. I mean, you’ve just got the people that are the go getters there and they’re not the practitioners, right? I mean, they’re not the folks that are there delivering the services necessarily. So they don’t have that constraint. We’ve kind of talked a little bit about what it is, right? We talked about the backlog and we talked about this pipeline. That post talks about the what as well. It gives a picture of the what. The why is the next part of it, I feel. Why? What’s really in it for firms who take this seriously?

Jeff McKay:
Yeah, it makes a lot of sense. I would think the why, of course, is more revenue because growth is good for firms because it provides capital and opportunity. But I think below that is something even better because we’re talking about quality of life and enjoyment of work. You talked about how we start to create a discipline to nurture, whether you’re an introvert or extrovert, ambivert, but I would think as you start to get better at selling, you feel better about selling and it becomes a mutually reinforcing process. My son playing the viola. You master a new song, you’re ready for the next tougher song. You just keep growing and evolving.

Jeff McKay:
But one of the cool benefits, I think, of having a healthy pipeline… And I say healthy because I’ve worked in firms where they have huge pipelines, but when I do an analysis on them it’s all garbage. It’s there to just hide the fact that people really aren’t doing business development. But when you have a healthy pipeline and you think long term, it really does free up the capacity for consultants to actually help prospects because they’re not obsessed about getting the sale today. It also provides the confidence to take more risk in the type of work and the type of approaches that you can use in having conversations with prospects. It gives you confidence to ask more challenging questions. It gives you confidence to focus in on ideal clients instead of less ideal clients. And it gives you the confidence to walk away from bad sales as we talked about with Brian Caffarelli. To just walk away. When you don’t have any pipeline and you see the cliff, you’re not going to walk away from a bad sale. No emotion is going to-

Mark Wainright:
[inaudible 00:22:53]. It’s so true. It is so true. You’ve hit right on it, is just the ability and the confidence to say no and to walkaway is a huge reason why. That strikes fear in professional services providers. And one of my clients, in the last few weeks or so, I said, “Look, okay, in our next sales meeting, we’re going to get together and we’re going to kill an opportunity.” And they freaked out. They didn’t know what I was talking about. They’re like, “Well, things come and go. They close all the time. But we’re going to proactively kill an opportunity that’s in the pipeline?” I said, “Yes.”

Mark Wainright:
So we sat down at our subsequent sales meeting and everybody was… I could feel that people really didn’t know what was happening here. So we went through the whole pipeline opportunity owner by owner and said, “Well, is there anything on your list that we’re going to kill?” And we didn’t really get there because no one really had that confidence to say, “Yeah, that one we’re going to kill.” We never really got there, but it’s a really interesting concept to think of is we are out to get rid of one. Right? It was a very good conversation, I think, to have is that… In that moment, you almost saw people think, “Oh, we can start to take control of this thing. We can determine as a group, as a sales team, what’s in there. As an organization, we can chart our own path. And that’s pretty powerful.

Jeff McKay:
I think that is very powerful. And I suspect with that firm, once they kill one, number two, number three, number four will come rapidly behind them. It’s kind of like a retailer. Once you get that person to put that first item in their cart, the second, the third item are not so hard to convince them to put in there because they already have to go to the register. Right?

Jason Mlicki:
The interesting thing about all of this from a confidence… So first off, the notion of killing an opportunity is tremendously confidence building. So just the idea of saying, “That’s not the right fit for us, we’re letting that go.” That moment is a huge confidence building moment, which I think would think your waterfall there, Jeff. But the other benefit of this, I think, that we shouldn’t understate before we wrap is that that confidence extends beyond the sale. Meaning that we talked a lot about confidence, that it raises in terms of the selling piece, but I think it actually enhances technical delivery massively. Because when you have options, when you have a healthy pipeline and you know that there’s other revenue to be had, you’re much more confident in giving high quality recommendations to a client. You’re not as afraid of them cutting tail and running away or whatever, which is just critical to delivery. So I think it hits everything.

Mark Wainright:
Agreed. And the last sort of big benefit of this that I wanted to bring up is about resources. We’re in the go, go days right now. This amazingly buoyant economy has put a lot of firms in a position where they are constrained simply by resources. They just can’t recruit and retain the right people or just enough people to get their work done. And having a really clear pipeline gives you that added sort of visibility on your future resource demands where you can start to plan for that. I mean, really you should be resourcing your pipeline. You should not be resourcing your backlog. Your backlog should be work that you can deliver today and that you bring a high level of and skill to. You should be resourcing your pipeline. If you don’t know what your pipeline is, how are you going to resource it?

Jeff McKay:
I love that, Mark. I would say maybe one 10th of 1% of professional services firms actually make that leap, in my experience, where they are forward looking and they’re using that pipeline for resource allocation. I mean, it’s such a huge leap for so many firms to do that, but it’s such an intuitive action to take. I love that. I love that. That’s your next blog post.

Mark Wainright:
Yeah. All right, I’ll get right on it.

Jason Mlicki:
I agree. I also agree that that is a really good place to stop because it’s a really emphatic statement. Jeff tried to water it down, but reality is resourcing the pipeline. Wise words. That’s all I can say.

Jeff McKay:
Hey, before you go, I have a quick question because you’re on peer stories. If anyone else wants to be on peer stories, go to rattleandpedal.com/peerstories.

Jason Mlicki:
He’s like a robot. He just says that over… I think he says that in his sleep at times.

Jeff McKay:
Yes. What’s the dumbest thing you’ve ever heard Jason say on one of our podcasts?

Mark Wainright:
It’s tough. All the dumb things sort of just-

Jeff McKay:
It’s tough because there’s so many.

Mark Wainright:
All the dumb things just fade away. They do. All the brilliance just rises to the top. Like I said, I’m a huge fan. You guys are doing a great job. So I am humbled to be in your peer stories and to be part of the group of people that you’ve graciously invited to join you. So thanks.

Jeff McKay:
Our pleasure. Keep up the good work and, hey, by the way, rename this thing from the pipeline cliff to the confidence ladder.

Mark Wainright:
I like it.

Jeff McKay:
All right, buddy.

Mark Wainright:
Brilliant.

Jeff McKay:
Thanks for joining us, Mark.

Mark Wainright:
Absolutely. Thanks guys.

Jason Mlicki:
Thanks Mark. 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.