Chris Simmance (Host):
Hello, welcome to the first ever OMG live webinar with myself and Mat. How are you doing, Mat?
Mat Bennett (Guest):
Yeah. I’m doing well. I’m doing well. I’m excited for this and honored to be part of the first one.
Chris Simmance (Host):
I’m very nervous that this is the first one, but it’ll be fun, right?
Mat Bennett (Guest):
I’m not. If it goes wrong, it’s all on you, Chris. I’m just…
Chris Simmance (Host):
Thank you.
Mat Bennett (Guest):
That’s all right. [inaudible 00:00:52].
Chris Simmance (Host):
I really do appreciate that. Hey Anae, nice to see you on here. Hey Hans, I think you came to one of our doodle ones that I did a while ago. Nice to see you again. How’s it going? Hopefully everything’s all right there. Celine, you’ve come along all the way from I think South Africa, Cape Town, if I remember rightly. Oh, I’ve got a nice international contingent already. This is brilliant.
Mat Bennett (Guest):
Oval. That’s great [inaudible 00:01:15].
Chris Simmance (Host):
Look at that.
Mat Bennett (Guest):
Yeah.
Chris Simmance (Host):
And so we’ll let a few people filter in and see where they’re coming from. So I think-
Mat Bennett (Guest):
[inaudible 00:01:22] webinar. If you don’t mind me jumping in, anyone that hasn’t seen it, I really genuinely enjoyed that. I think that was a great webinar actually.
Chris Simmance (Host):
What webinar? My one?
Mat Bennett (Guest):
Yeah. Do the doodle one. That you get to [inaudible 00:01:39]. No, genuinely thought that was really good.
Chris Simmance (Host):
I wasn’t ever good enough to be an actor. I’m barely good enough to be a public speaker, so I have to do these things and these are great. A lot of fun.
Mat Bennett (Guest):
Yeah, good. Yeah. People should look that one out, but obviously not until this is finished.
Chris Simmance (Host):
Yeah. Yeah. Yeah. At the end. At the end.
Mat Bennett (Guest):
I don’t know.
Chris Simmance (Host):
Just hit up Anton and he’ll find the link. It’s on the doodle what’s called YouTube channel as well, but we’ve got a really good webinar in store today. Hopefully given how the world is turning and how things are moving out, reasonable pace I think, especially given the current news. But we’ll keep politics and things out of it from this kind of perspective today. Hopefully we’ll be able to help as many digital agency leaders as possible when it comes to thoughts, decision making, actions and adding to the ever growing to-do list. So sorry digital agency leaders if your to-do list is increased slightly after this webinar, but it’s only with love that we bring up these points. So I think I’m ready to start. Are you ready to start Matt?
Mat Bennett (Guest):
I’m good to go. Yeah. Yeah.
Chris Simmance (Host):
Hopefully everyone else who’s watching from home or home office or just office are already as well. So Matt, I do have a confession to make.
Mat Bennett (Guest):
Oh no. It scares me when you start saying this. You’ve changed the topic. We’re doing it in song. Cover me. [inaudible 00:03:13] with it.
Chris Simmance (Host):
You said to me the other day that I am an agent of chaos and I am. So what I’ve done is we’ve got six different kind of key areas to cover in this webinar today and I sent you the slides, you’ve seen them in advance so we can make sure we know what we’re talking about and things like that. What I’ve done though is I’ve completely reordered them ahead of this webinar. And just to keep you on your toes because I know how much you love to prepare for things.
Mat Bennett (Guest):
Yeah.
Chris Simmance (Host):
So in doing so hopefully this will be a lot more fun. I’m going to count my number of arms and ours from both of us. Probably a few considering I can’t remember what order they’re in either. So I’m-
Mat Bennett (Guest):
Could be fun.
Chris Simmance (Host):
… I’m as much in the dark as you are, so let’s see what comes up first. Shall we?
Mat Bennett (Guest):
Yeah, let’s see what happens.
Chris Simmance (Host):
Oh, thanks for coming.
Mat Bennett (Guest):
We’re off now.
Chris Simmance (Host):
Show’s over everybody.
Mat Bennett (Guest):
That was great.
Chris Simmance (Host):
It was punching enough.
Yeah. I think you did very well Matt considering.
Mat Bennett (Guest):
Thank you. I know your stories.
Chris Simmance (Host):
No, no, none at all. So there we go. This is a good starting point. So recession looming, almost deadly certain, there’s almost no chance of there not being one now and that’s globally as well as UK, US in particular. You were running an agency back in 2008 or a business as well as we should say, because there were many facets to your agency. You should listen to Matt’s podcast by the way. And so how bad do you think it will be? Is it going to be cash-magedon? What we are looking at? Everyone eating tins of beans?
Mat Bennett (Guest):
Oh God. Well let’s be honest, we don’t know. We don’t know. No one here has got a crystal ball. No one’s got a crystal ball. I think you can go as high up the food chain as you can, although there might be a bit missing at the top of the food chain. No one knows clearly. So it’s looking shaky for sure. It’s going to affect different people at different levels. I think even if it is it’s cash-magedon, that doesn’t mean it affects everyone at the same level does it? Yeah. So you know can sit and worry. You can persuade yourself not to do things that you would otherwise do or you can’t to some extent live in the now.
Chris Simmance (Host):
Yeah.
Mat Bennett (Guest):
But only really making decisions based on what’s happening and just keeping a real tight close knit close eye on what is happening.
Chris Simmance (Host):
Yeah. Absolutely. I think one of the key things that really does drive into recession is how people act before it and someone said something to me the other day and it was quite profound and he said, “You should really be looking at supply chain because things in supply chain have bought and sold months if not sometimes years before they’re actually used.”
Mat Bennett (Guest):
Yeah.
Chris Simmance (Host):
And so the costing for those sorts of things are catered for months and months in advance. And if you’re looking at things like supply chain, there’s not a huge amount changing at the minute beyond the geopolitical stuff that we’re not going to touch. But that sort of suggests to me when you’re in the sea or probably when you were a kid standing in the sea and you’re facing the shore and the wave comes over you but you don’t move, the wave goes over the top of you before your body can bob up.
Mat Bennett (Guest):
Yeah.
Chris Simmance (Host):
I feel like the wave is over us at the minute it’s happening, it’s going to happen, but we haven’t all moved quite yet and I think that there’s probably quite a high likelihood of the impact from say today being felt in a year plus this time.
Mat Bennett (Guest):
Yeah. I think that’s pretty fair. I know my conversations for people, I think lots of people are concerned. I don’t know if anyone’s really feeling… Yeah, costs have gone up, we can’t ignore that. But in terms of new work, I’m not seeing a consistent drop off. I think you are right. I think things are happening but maybe they’re not hitting people in the way they might at some point.
Chris Simmance (Host):
Yeah. And I’d argue that in obviously different industries and different types of businesses will always feel differently around these sorts of things. So leisure based things usually and hospitality usually suffer in these sort of situations. Service based industries usually tend to do relatively well and I think since the last recession and previous to that the digital and digital marketing and digital agency service sectors professionalized hugely into something which is a lot more credible. And I think perhaps yes things will be tough. Some clients might leave, some clients might reduce or pause and things like that. But because of the legitimization of the sector as a whole, it may well be looked upon in the same kind of way as you would’ve done with lawyers and solicitors and with them accountants and the things like that. Yeah.
Mat Bennett (Guest):
Yeah, [inaudible 00:08:24]. I think another temperature gauge I’ve often used is my last agency was involved with advertising and that’s always one of the things that it gets cut off quickly. Especially if you’ve got people at the top suggesting [inaudible 00:08:43] advertising spend drops quickly. You’ll often see that in CPC rates changing and so on. But also comes back quickly at the end as optimism starts returning.
Chris Simmance (Host):
Yeah.
Mat Bennett (Guest):
I’m less involved now. I’m not seeing everyone saying there’s a fire sale on advertising. I think spend is still happening, which suggests some optimism in the market, doesn’t it?
Chris Simmance (Host):
It does. It does. And I’ve spoken to a couple of digital agency leaders who run PBC firms and they’ve seen a few changes but not anything that would be immediately worrying. I think change is part of life and I think potentially things need to be done, you need to prepare, you need to work, make all of the things that we’re going to go through in the following slides. I think all of those things are… you should be doing those things anyway.
These are just really good to be done now. And so if we move on to the first one, which is slide number five. Awesome. So get ready. Operation and processes, almost always under sold when it comes to running an agency. Usually because they’re moving a million miles a minute, everything’s in everyone’s head. You end up with these kind of unwritten ground rules and no one has it written down particularly well what needs to be done. But also the actual operational parts of agencies typically end up being can be bloated and expensive. And I think with potentially cash being less available when an agency’s being run, sometimes those things end up being overlooked somewhat more. What do you reckon?
Mat Bennett (Guest):
Yeah. And they are important, aren’t they? Because it’s your processes that are going to ensure that you’re hitting your margins and that your costs aren’t going out of control and that things work’s getting turned around and all the rest, all the good stuff that’s going to keep us profitable if we have less wiggle room because things tie up.
Chris Simmance (Host):
Yeah.
Mat Bennett (Guest):
So yeah, definitely not to be cut back on and likewise kept an eye on are things slipping for whatever reasons.
Chris Simmance (Host):
And I think recession or not, you should do an audit in your agency, an audit of basically every process that is done and every operational process and every procedure in the agency. There are things, there are almost certainly things that with a little bit of hard work you can put into an either automated or semi-automated process that is less labor intensive. Not saying to get rid of staff, but you can put people on jobs that are a lot more [inaudible 00:11:29].
Mat Bennett (Guest):
[inaudible 00:11:29]. Isn’t it?
Chris Simmance (Host):
To use people better.
Mat Bennett (Guest):
Yeah.
Chris Simmance (Host):
And there’s also a lot of repetitive but non-automatable tasks that are quite low down the food chain in terms of the intrinsic value that they produced for the client at the end of it, but they take a hell of a lot of time. And just thinking I haven’t done SEO for a while so don’t attack me if I’m wrong here. So for example, you might end up working with a client and they’ve got 5,000 images and there’s no alt tags on them. From an accessibility point of view, that’s a thumbs down. But potentially other things, that’s a hell of a lot of work to do something that will never be proven to be of value. But if you’ve got an opportunity to outsource anything or even potentially algorithmically create out all tags and things like that, maybe that’s the thing. You
Mat Bennett (Guest):
Your captain process I think is what you like. And I always find that everyone start when no one has agencies unless you’re really weird. No one starts a small business of one person and starts off with process documents.
Chris Simmance (Host):
Nope. Very few.
Mat Bennett (Guest):
Yeah. Not enough people do, I’ll put it that way. But it tends to be you start defining processing, having documentation as the team starts growing, you start looking at moving yourself out the business. So you’re getting that five to 10 push in terms of head count. For the people who aren’t there yet, for the micro agencies, if they’re just sitting there going, “Oh yeah, I’m not going to audit my process, I have nothing written down.” It’s difficult. Different agencies do different things, but where would you suggest that people start? What’s a good… So I’m going to just throw the chaos back at you and throw you on [inaudible 00:13:18].
Chris Simmance (Host):
Where would I start in building processes? Is that it?
Mat Bennett (Guest):
Yeah, so that’s just heard you say or audit my process and they go, “Do you know what? We don’t have it documented.”
Chris Simmance (Host):
From someone who has done this, and I did do this early as I could doing it, it was originally just a word document with nested bullet lists and I looked at everything from if you were to build an organizational chart of where you want to be or where you currently are, you look at the roles that you don’t want to do or you shouldn’t be doing at that job level. And then you write the standard operating procedures, the processes, the checklists, whatever you want them to be called. You write the ones on all the way up to the point at which make, if you had someone that could do all of them, you’d then be redundant. So I started by writing standard operating procedure for how to write title tags and meta descriptions and then one for how to do some basics of technical auditing. And then that built over time into something that essentially was everyone else’s job and not mine.
Because ultimately you want to make sure that the business can run without you. Not so that you can be lazy and sit on a beach somewhere, but because the people you hire are smart enough that they shouldn’t have you breathing down their neck. But when I’m saying about auditing your processes quite often you might have a process which I’d put money on it if you as an agency leader look at every single process that you’ve got, I’d be surprised if there wasn’t one or two where something is in there that either needs removing entirely because the industry’s changed or updating because the industry’s changed or it’s just playing wrong now, not because the industry’s changed but because the business might have changed. And those sorts of things create small, tiny measures of friction. Tiny bit of friction added up over the course of a year is wasted time, energy and you never get that energy back.
Mat Bennett (Guest):
Yeah, I totally agree. I think if people are auditing, if you’re not ordering your processes then if you’re not doing it already, putting review dates straight into every process as you are reviewing and this things you know are going to be good for a year for two years and there’s things you know are going to need checking in six months because it always changes.
Chris Simmance (Host):
Yeah.
Mat Bennett (Guest):
Yeah. Getting that the process of reviewing process is in place as part of it. Yeah. Because it’s the stuff, isn’t it? The devils in the detail, it’s getting these things right.
Chris Simmance (Host):
Oftentimes, yeah. Absolutely. And I think reporting is usually the reporting and to clients and internally and externally is often kind of, again, it’s not overlooked in the sense of its importance but it’s probably overlooked in the sense of what can we get out as quickly as we can for all of our clients as fast as we can. And when you end up trying to squeeze every little bit of utilization out of people, you might over automate a few reports here and there, but if you can make your reporting bulletproof and you can make your clients see the value you bring, you’ll keep your clients and therefore regardless of a recession, you’re still making an income from your clients.
Mat Bennett (Guest):
Yeah. Oh there can be started on reporting. That’s one of my… For sure We haven’t got long enough but yes, just stick with the yes.
Chris Simmance (Host):
Just to close off the operations and the systems bit, I think the key things really is to order everything you can, automate whatever you can and make sure that you are reporting and the level of internal communication reporting is quite good as well. Because people get worried in a recession.
Mat Bennett (Guest):
A clock, a question come in from Hans as well about requisites for clients. Are you able to pop that one up? I think that’s-
Chris Simmance (Host):
There we go. Yup.
Mat Bennett (Guest):
… probably [inaudible 00:17:03]. Look at that efficiency.
Chris Simmance (Host):
Because of a difficult time, will you lower your requisites for clients? I mean taking clients you wouldn’t yesterday. So I don’t know about you Matt. I’m taking that as would you reduce the qualification barrier to take new clients in.
Mat Bennett (Guest):
[inaudible 00:17:21]. Definitely. Yeah.
Chris Simmance (Host):
And on the sales side, I’ve got an answer to that so I’m going to let Matt say something on this one though.
Mat Bennett (Guest):
I would say ideally no. I don’t think you should be planning to lower the bar because if your requirements are well defined and they’re based on logic, this is what we need in order to have a profitable client, then that shouldn’t change. If it does change, change the requirements. Don’t make exceptions on a per client basis. That’s my take on it.
Chris Simmance (Host):
I’d also argue Hans that reducing the requirements or the qualification criteria for taking on new clients may end up costing more money in the long run. You might take more revenue in but you’ll either churn that client sooner and that’s costly or that client may end up causing a problem, which from an operational point of view, you can’t solve without changing something else somewhere else. And it may end up because they might not be the right client, the right fit for the agency. It may end up being that you have a member of your team leave, which is even more expensive to replace.
Mat Bennett (Guest):
Yeah, yeah. I think I did qualify it with ideally, obviously it depends on the situation. There comes a point. I don’t think let’s turn this into a negative thing, but seriously if it did hit and got really squeezy for an agency then there comes a point where it becomes about cash and then maybe, but I think it shouldn’t be the plan, that’s for sure.
Chris Simmance (Host):
Completely agree. Finance, that’s a meaty one. So as the person on the screen here, the lovely cartoon person saying, “Know what you have and where it’s going. Be sure to keep your clients paying on time.” If you take nothing else out of this entire webinar, you should know exactly how many pennies and pounds you’ve got. Dollars, whatever currency it is, you should know how much money you have got and where it is going. And when it is coming back.
And not necessarily down to the penny but your management reports that you get from your finance director or from your accountants and things, they should show you your cash flow forecasting. They should show you where your money is going and how much of it you’ve got left. But just as importantly, if not more importantly, you really need to make sure your clients pay on time because any delays from them is a knock on impact to your cash flow, which is a knock on impact to you paying your own bills. I know that you’ve got a lot of feeling on the finance side as well Matt based on the conversations we’ve had. But thinking on cash only, what advice would you have in regards to that?
Mat Bennett (Guest):
Well yeah I think firstly you know it is all about flow. If you look up the worst case scenario in agency closing, it’s generally down to cash flow it you can be profitable if you can’t pay the wage bill at the end of the month, it’s a major issue. So yeah, cash flow. So look at ways to making sure those payments come in time, go card-less, getting people on direct debit if a brilliant one, especially if you’re working retainers and regular payments anyway or staged payments works really well for that as well. There’s different ways of setting it up. It just means you are getting the money on the day, you expect to get the money. Not them spending another 60 days and effort of somebody chasing it.
Chris Simmance (Host):
Yeah.
Mat Bennett (Guest):
Some people don’t like direct debits. There’s that feeling of people don’t understand the direct debit guarantee and the fact that there’s that feeling of giving up control of it. Standing order works pretty well as well. I think a lot of people will be happy with the standing order when they wouldn’t have direct debits a little bit more manual to set. That’s [inaudible 00:21:26].
Chris Simmance (Host):
Yeah. And I think making the clients pay on time thing, there’s the element off to Hans’ point a minute ago, there’s the element if the client trusts you and you can build trust with the client, you’ve got the right client, you’ve qualified them properly, you’re building a relationship, they usually aren’t uncomfortable with paying by a direct debit or a standing order. The size of the client usually determines how that conversation happens because usually there’s an internal finance function in a larger client and they’ll deal with that.
So from an onboarding, well pre presale and into the onboarding process, it’s really, really important to ask the right questions of your main contact when you sign someone up, who is it that we need to talk to about making sure that we’re onboarded with the accounts department? Who is it that we should talk to if there are any problems around that? It’s always awkward to ask those questions. But the last thing you want, like you say Matt, is to get 60, 90 days in with a 30 day payment term and you’ve paid out, you’ve paid for staff, you’ve paid for normal software bills, you might have paid for other services and things like that and that erodes your cash flow and it’s terrifying when you start seeing that happening.
Mat Bennett (Guest):
Yeah, I think there’s another opportunity around there. Most businesses are getting pretty hideous interest rates still even though the base rate’s risen. So if you’ve got a cash risk rich client, then if you’re working regular, can you give them a discount, small discount for an upfront payment? Well if cash flow is a challenge for you, then that actually could end up being a cheap way to finance.
Chris Simmance (Host):
Yeah.
Mat Bennett (Guest):
And that should be quite a good deal for the client as well because suddenly they’re getting value on that cash in the business-
Chris Simmance (Host):
Yeah.
Mat Bennett (Guest):
… they wouldn’t otherwise get. I think sometimes you’ve got to look at it in [inaudible 00:23:26] way.
Chris Simmance (Host):
And I think like if nothing else, you should ensure you have got an excellent accountant.
Mat Bennett (Guest):
Yeah.
Chris Simmance (Host):
And whether it’s internal or external, your management accounts should show you all the key metrics that are for basic businesses but also anything that is a leading indicator from your perspective of future issues and success and wins. I work with an agency leader who has his management accounts update every three hours, which that might be too far for some people.
Weekly is usually all right and monthly if nothing else, but your management account should be allowing you to see where your cash flow is going, where your income is going, how many debtors you have, debtor days on average, things like that. Because if those debtor days start to rise, that serves a problem down the line. That’s 30, 60 days down the line, there’s a problem there. But making sure that you are having that forecasting allows you to be a bit more smart when your review spend. So building in resilience in your cash in the business is important. Okay. There’s a recession coming. There’s a recession on for example. But the thing you should never do is just suddenly start slashing costs.
Mat Bennett (Guest):
Yeah.
Chris Simmance (Host):
Slashing spend just to make numbers in one column larger than the other.
Mat Bennett (Guest):
This is it. Things like management accounts. They’re a tool for us getting ahead so we don’t have to be as reactive. Aren’t they? I think having them is great. The idea of three hour management, there has to be some sense behind there. But I’m sit there go, well you’re not going to review them every three hours and if you do so, but I’m sure there, there’s a use case there. But to me having them is one thing.
There was certainly a period of my life as a business leader where the management council a piece of paper that was put on my desk and I had a bit of a scan down and put it away because I didn’t really know what to do with it, to be honest. I know what the numbers meant, but in terms of interpreting them into how does this change into action? So then we kind of changed that into, as you said, have a good accountant, had a great accountant, we turned it into, we reviewed the accounts together every month rather than being an email or whatever. And these are the metrics we’re going to really go over and an actual discussion around what we’re going to do about them and then taking that into your 90 day plan, 30 day plan as well.
Chris Simmance (Host):
I’m bad when I get given a big spreadsheet with loads of numbers in, I want to know, do I need to look at this and in any detail, where should I look? So I came along with my accountant, we created essentially a traffic light system. Red men, really risky. Orange went, you had to go and look at something and dig into something and green was everything is on the right line and everything is going the right direction. But I think don’t randomly cut costs spend, invest in, if nothing else, a brilliant accountant or finance director in your agency because they’re the ones that ultimately will be able to show you the direction you’re heading in I think.
Mat Bennett (Guest):
I think randomly cutting. Sorry, just jump back. Don’t randomly cut costs. Tell me if we’re running out of time. I’m not watching the clock. That’s your job. But yeah, don’t randomly cut costs. I think there’s a weird thing that happens, isn’t it? As soon as we get time we start looking outside of work. I’ve seen like loads of people go, “Oh I’ve cut my Netflix.” I’m going, “Oh, that’s great. That’s saving you seven pound, eight pound a month or whatever. Fantastic.” Is it really the right-
Chris Simmance (Host):
Yeah.
Mat Bennett (Guest):
There’s cost to cut and there’s cost to cut. So if you do get into cost cut and it’s looking, don’t cut off anything that is actually giving you a benefit [inaudible 00:27:10].
Chris Simmance (Host):
Again, I would stake my reputation on it and I bet you any agency leader that can look through their as a leader, look through every line item in their PNL. If they can’t find something which shouldn’t be being spent on I’d be shocked.
Mat Bennett (Guest):
I just [inaudible 00:27:28].
Chris Simmance (Host):
There’s an errand subscription to something or something like that.
Mat Bennett (Guest):
For me, best tools in mind, I’m a sod for them, I just can’t help but sign up for a witty tool and then six months on you’re still paying a monthly fee and if you don’t review it, so yeah, everyone’s got their area.
Chris Simmance (Host):
There’s agencies out there that allow their staff to have access to the credit card and they’ll set up a subscription on one app and then because someone else is using a different email address, they’ll just go and do another one and the next thing, you’ve got all these bills that are coming in. You’re not looking at them, you’re not in charge of that stuff on a day to day basis. And I bet you if anyone watching this right now looks at their PNL and cannot find one thing that shouldn’t be being spent on, they actually shouldn’t be spent on, come and find me. I owe you a beer or wine or a drink of your choice.
Mat Bennett (Guest):
Okay. Take him up on that everyone. You will have reviewed it, which is great. And there might be a beer rewind in it as well.
Chris Simmance (Host):
Exactly, exactly.
Mat Bennett (Guest):
Yeah.
Chris Simmance (Host):
On the sales side of things, the thing that often will end up making you lose a client once you’ve sold them is by selling them fluffy deliverables things that they can’t necessarily, they can’t feel it’s that tangible but it feels cool. Like the wizzy pitch deck doesn’t always translate into something that’s awesome at the end of it. Right? And the other thing is when you were running your agency, how many pages was your terms and conditions or your contract?
Mat Bennett (Guest):
I think the rule there was how many did the lawyer think he could get away with. I think yeah, it was hard and it was a constant. In the space we were in, it was a constant point of friction. I think we tended an awful lot of clients would fall into one of two camps. Those who were scared by the massive document and those who saw the massive document as a challenge for their legal department. And in neither case was it helpful for us to have. When we started off, we had this really lightweight one side of, but unfortunately that I got outvoted by the people we paid large fees to on that. Yeah.
Chris Simmance (Host):
I think the balance needs to be made right between mitigating risks for IP and all that stuff, but making it as easy for the client to sign as possible and as easier for after that signature to make an impact as possible. And there’s a way in which you can have the head terms of a contract on one page and anything else is on subsequent pages, you can read it at your leisure. And if you’re looking at clients where you are working with the marketing manager only and it doesn’t have to go through a very long process, then the heads of terms stuff is usually enough and it means that it can get signed really quickly and you can start billing really quickly and start earning really quickly. But the longer the contract usually, the more red pen comes back on that contract because the lawyer on the other side has to justify their work.
And the problem is, most agencies, I don’t know about you, but if you were to send a long contract to a prospective client and they then got their internal legal department or external legal department to send a load of red pen back and say, “No, no, no. Change this. Change this.” Did you have an internal council at your agency? I remember just deleting them, delete anything that was read in there that they said they didn’t want. I remember sometimes just deleting it because I needed the signature. And then when you think about I’m worried about a recession coming along, you might delete things that you ought not to and it can cost you dearly in the future just to get the sale through. We
Mat Bennett (Guest):
We were working on something when I sold my agency. So this never quite saw the light a day, but it was a thing that was in the pipeline. Maybe someone else can make more use of it. Some of the more productized stuff we had won’t run almost like a SAS as far as the client could sit. So we were going to just literally have it so that the contract was signed within effectively looking like a SAS. They would log into the dashboard, they would ask for this edition to be on there, they would sign up and as with all these things, the meat of the term, the headlines were there, but the meat was in a terms and conditions document that they could scroll through if they really wanted to do and then [inaudible 00:31:57].
Chris Simmance (Host):
Yeah.
Mat Bennett (Guest):
And the thinking we were working on wasn’t to hide anything. We had really good terms for the clients anywhere I think in that space really lenient. But it was just removing that friction because for certain organizations, if they see that it’s got to go off to legal, it’s going to slow it all down.
Chris Simmance (Host):
Yeah.
Mat Bennett (Guest):
But no one sends off their next, “Oh, I’m going to sign up for sim rush. Let me send the terms of conditions of that off the legal.” That doesn’t happen. Yeah. So sometimes you can set an expectation about the way it’s presented as well.
Chris Simmance (Host):
I totally agree. And I think if you of TLDR the whole sales thing, make sure what you’re selling is super simple to understand and the outcomes are really clear. Make it really easy to get the signature. Like I said, the longer it takes, the more expensive it ends up becoming and potentially more of a risk that you have. And to Hans his point earlier, qualify, qualify, qualify, qualify, and the sale will be quicker and easier and will be a longer lasting client if you keep to your qualifications criteria.
If you drop your prices and you’re working on a profit margin that fits prices that are higher than that, that’s a problem. If you increase your prices, maybe it’s a problem from a client’s point of view, you often have to get to that sweet spot of pushback when you’re pricing things for clients. But you need to be qualifying, you need to make sure that they have an immediate requirement for the work that you’ve got and it urges them to continue buying and continue the buying process on their side. I think the hardest thing to do when you’re selling as an agency leader, especially when there’s out external worries that aren’t in your control, is to say no. And sometimes you should still say no. It can cost you staff, it can cost you other clients, not just money. And those things are more costly than losing some money on not taking on a sale.
Mat Bennett (Guest):
Yeah, no, absolutely.
Chris Simmance (Host):
One’s coming up next, Matt. Do you want to take a guess? I reckon it’s going to be strategy.
Mat Bennett (Guest):
Strategy. Okay. A really random things just about to happen in this webinar that my cat has just is going out because he’s locked in this room with me, so just bear with me a moment.
Brilliant. Stray cats. He’s a lovely animal loving man.
He says kicking him out of a room. Strategy. Yes.
Chris Simmance (Host):
Strategy is by far, I think one of my most favorite topics and I’m sad that we don’t have as much time to do it. However, there is a webinar coming up in a couple of months time about building a strategy for your agency. Strategy is by far the most important thing. If you don’t have one, speak to someone or build one and you should absolutely have one and it should be forward focused.
So you look at where you need to be in three or so years and you work your way back to where you are now and it’s essentially a game of numbers. Where do you need to be in terms of revenue and profit margin tells you how many staff you need at what cost they are, tells you how much money you need to spend on this, that and the other. And then you can map that to your cash flow forecasting and can you afford these things at those steps? So if you’ve not got one, get one. But don’t be afraid if the strategy isn’t playing out exactly how the numbers work out because there are things outside of control happening in the world in terms of recession and financials that you need to have that flexibility to be able to change it, which is where your management accounts can come back in. Your management accounts and your operational processes.
Mat Bennett (Guest):
The two are hand in hand, aren’t they? Your management accounts are giving you the view of where you are and your strategy because it is, here’s where I want to be and here’s the path to get there. At various times you’re comparing the two.
Chris Simmance (Host):
Yeah.
Mat Bennett (Guest):
So without the strategy, the management counts, yeah, you’re fine. You can deal with the day to day from that, but you don’t know how you’re doing in terms of your journey. The two have to be in line with each other absolutely.
Chris Simmance (Host):
To put it in a lovely sounding way, strategy realistically is an operationalized financial plan.
Mat Bennett (Guest):
Yeah.
Chris Simmance (Host):
Potentially in a way. And the good thing about strategy-
Mat Bennett (Guest):
[inaudible 00:36:35] does it?
Chris Simmance (Host):
Sorry.
Mat Bennett (Guest):
Doesn’t sound as sexy.
Chris Simmance (Host):
It doesn’t. It doesn’t at all. But then we’re talking about strategy mate.
Mat Bennett (Guest):
Yeah.
Chris Simmance (Host):
So the really cool thing about strategy is no matter how big or small your team are, they’re going to be a bit nervous about the world and things like that, especially after coronavirus and lots of people having employment changes across the world. If you’ve got a strategy and it’s robust enough to whether changes as things happen, flexible enough to move as things need to be moved, your team will feel an awful lot more comfortable working as hard as they can because they know that you’ve got a plan. And communicating that to your team is essential. Definitely not advocating read line by line and your strategy, but you give them the headlines and the big picture and show them how things are going along the way and you’re going to see some fantastic change in the way people feel that you reckon.
Mat Bennett (Guest):
It’s always interesting when you talk to business and you’ll talk to business leader and get a sense of where they are on strategy and then you’ll talk to the rest of the team and ask them and there’s often a gap of either, “Oh, I don’t know. Is there one?” Or a complete as I said, a gap in what that strategy is. I don’t understand how a team’s meant to all pull in one direction if everyone doesn’t know what direction they’re headed for starters.
Chris Simmance (Host):
Exactly.
Mat Bennett (Guest):
And then if things do get tight, people need that emotional security of knowing there is a plan, they can judge, but it’s going well into that plan even if it’s been updated. The last thing you want is a quarter of workforce concerned about their future job and spending a chunk of their time, job hunting and looking around and so on. Yeah, the communication unit always isn’t it? Keep it open, keep it updated, and it’s not an announce these the strategy and step back, it’s just a regular part of the communication with discussions that happen.
Chris Simmance (Host):
And this is getting into management and leadership conversation. But once you’ve dealt with the building of the strategy and the communication of the strategy, you should always keep coming back to it in all your conversations. So how does this strategy align with the values of the business? How does that align with your role? How does that align with the accountabilities of your role and so on? And it keeps people consistent. I don’t know how many strategies you’ve seen produced in the past, but the strategies, when I speak to agencies and they say, “Oh yeah, we’ve got a strategy.” And say, “Oh cool. Right. Well we’ll save ourselves a couple of weeks, then let’s have a look at it.” And it’s not a strategy, it’s a standard operating procedure with a spreadsheet on it. It’s not a strategy unless you can measure it.
And that’s the leading measures of success along the way to those lagging ones, which are where you are in 3, 4, 5 years time. And to move along, people and culture, this often takes a big backseat when it comes to recession time because everyone, agencies, not necessarily just agencies, but businesses tend to end up reverting back to people and time as a commodity. If you look after your people because they’re humans, then they’ll continue to look after you and work towards the best aims of everyone’s role. How do you find having these kind of conversations with the agencies that you work with, Matt?
Mat Bennett (Guest):
I think one pattern you definitely see is soon as agency leaders are under, I was going to say under stress, but being an agency leader is always stressful, but under increased stress, the team communication just suffers anyway because we all end up well then a lot of us have a tendency to get heads down the stuff that needs doing stressful and we will close off. And if people do have concerns, then that’s shutting down or play into them, you’re missing the opportunity to get people on board and working with it. So I definitely see that. And even not because things are tight because of recession or anything, if pressure’s on because of growth, I see the same happens. And again, both of these things are change and change is always scary for our people.
Chris Simmance (Host):
And I think much like with marketing, when times are tough and money is tighter, you don’t switch off marketing. I know you’ve got a lovely quote for that and I think in a minute, and you’ve talking about your quotes late, earlier. And-
Mat Bennett (Guest):
Although I promised you I was going to look up before you [inaudible 00:41:16].
Chris Simmance (Host):
Just like with marketing, you shouldn’t be stopping marketing. You shouldn’t be stopping the training and development and support of your team even there’s every penny that you spend on your team should and usually is paid back in the long run. It really is. And I don’t feel like we’re doing this justice because of time, but if you look after your humans, your humans will look after you and their clients. It’s really, really, really that simple. Marketing timely coming up. Just as I’ve brought that up, clients often you end up having conversations with some clients because they’ll want to leave or want to pause, they want to stop their marketing and they’ll want to stop people seeing them. And that’s stupid, right?
Mat Bennett (Guest):
Yes. Hey Chris, I’ve got a really good quote for this.
Chris Simmance (Host):
Oh, have you?
Mat Bennett (Guest):
[inaudible 00:42:08] winner.
Chris Simmance (Host):
Interesting.
Mat Bennett (Guest):
Henry Ford quote. He once said, “A man who stops advertising to save money is like a man who stops a clock to save time.” It’s kind of there, maybe it’s a bit glib, but I think it’s true though, isn’t it? That there was some years ago, I was probably heading into an old recession, I think one of the advertising marketing associations had an amazing little short video that they were putting out on TV, which was the analogy they gave was a bouncing basketball and the advertising being the power that goes into that bounce. And that one’s always stuck with me. You stop putting the effort in, it’ll bounce a few times and then it’s going to figure off. How do we get through a recession? We do more business.
Chris Simmance (Host):
Well, you spend your way and earn your way out of recessions. And that’s just the only way that happens unless the fundamental mechanics of money changes. And I think if you focus your marketing on things that you know work and you can prove will work, then it’s the same at same spend but in areas you know definitely work. And why not get your whole team working on the marketing for the business? There’s events that go on. They should be having business cards. They should shout from the rooftops about how well you look after them and how good the results are. Your team are your best marketing agency because they are a marketing agency usually. But you should get your team to help you deliver as much awareness and advocacy as possible.
Mat Bennett (Guest):
This is why I’m so keen on agencies I work with. Just really nailing their messaging. Making sure that everyone in the company knows how to talk about the company.
Chris Simmance (Host):
Yeah.
Mat Bennett (Guest):
Because then every point of contact you are selling yourselves or what does your company do? “Oh, we do something in digital.” Doesn’t help you at all. We do this for these people.
Chris Simmance (Host):
And you should absolutely focus, focus, focus, focus your marketing on the stuff that you know do well because if you’re doing it in the right place that you know works and you’re doing it to the right people because you qualify and you’ve got your people aware of what you are selling, when you market the services as you know do well or you’ve increased the value of that sale that comes through because that sale will stay with you for longer. And it’s really, really, really, really, really simple.
Mat Bennett (Guest):
Yeah.
Chris Simmance (Host):
And we’ve got time for one question. And I think I’ve got one here from, where is it? Anna. Anna. There we go, I’ll put it on the screen. So how do you know when your pricing is right? Feels like Bruce Forsyth here. For those of you in the UK you’ll know that reference. So how do you know when your pricing is right? Especially in the recession, I think that’s probably more pertinent.
Mat Bennett (Guest):
Do you know what? I’m going to let you take this one because our pricing, So my most recent direct agency experience, we work on quite a strange model. So whereas I’m being with promising for others, I think you are more firsthand.
Chris Simmance (Host):
I think the key thing from a pricing point of view is you work out what margins you need first and you work out what your cost base to deliver at a zero profit margin would be. And then at the very least, you need to make sure that you’re putting two-thirds to allow for costs which aren’t considered, but also a profit margin of at least, at the very least, you need 60% profit margin as a gross profit to be aiming for in order to bring your net profit margin down to at something nice. The real testers of whether you’ve got it right is you get lots of yeses, but if you get all yeses relatively quickly, put your prices up and then when you start getting more nos, the pricing is getting closer and closer to the right place. It’s very, very difficult without having a very clear understanding of the specific products that you’re selling. But the key thing I think is you push the pricing as high as you can ethically that as long as it definitely makes at least 60% gross profit based on the number,
Mat Bennett (Guest):
Keep reviewing that as well, isn’t it?
Chris Simmance (Host):
Oh yeah.
Mat Bennett (Guest):
That management account review, looking at that margin
Chris Simmance (Host):
In your one page, hopefully one page contract with your client, it should say, “Every year we reserve the right to increase fees by at least 10%.” You don’t usually increase them by 10%, but it’s there in the contract if you wanted to do so. And I think that it’s quite important that you think about that. I think all that remains now beyond wishing everyone the best of luck. I’m in the OMG community, Matt’s in the OMG community, we’re here to help everyone. This industry is full of wonderful, fantastic, very helpful people. And I think that the only way that we all do well is by all of us helping each other. Any questions you’ve got, you can always put them in the comments, you can always send them to Matt and I through the community and there’s so much more to talk about on this and we might have to do mini videos around it and things like that.
Mat Bennett (Guest):
Yeah. Well, it’s just tip the iceberg. Wasn’t it?
Chris Simmance (Host):
It was very much.
Mat Bennett (Guest):
Yeah.
Chris Simmance (Host):
And the next webinar on the 14th of November is about getting the right bums on the right seats and that’s a conversation with Ross Tavendale, who’s the MD of Type-A Media and Anna Marsden, who’s one of the trainers at the OMG Center. And we’re going to talk about finding the right people to hire, but also making sure you keep the right people whilst they’re there. And I think you… Excuse me, you get the right people on the right seats, you keep the right people on the right seats. Those people do a really good job and everyone’s happy.
Mat Bennett (Guest):
Look forward to it.
Chris Simmance (Host):
Thank you very much everybody for coming along to the first ever webinar and there are, I’m sorry to say, if you didn’t like it, 26 more planned.
Mat Bennett (Guest):
Well I get to see you take a back seat from the next few.
Chris Simmance (Host):
So thank you so much for coming Matt, and thanks very much everyone for joining [inaudible 00:48:24]. Thank you.
Mat Bennett (Guest):
Bye everyone.