Logan Lyles (00:05.282)
Welcome back to the Agency Builders podcast. I'm Logan Lyles. I'm joined today by Michael Davern. He's partner and CEO at Incept. Michael, long time LinkedIn friend, first time podcast guest. Thanks for joining me, man.
Michael Davern (00:17.38)
I'm glad to have this conversation with you and what's what better than just to do this for the first one out of the gate.
Logan Lyles (00:22.456)
Yeah, exactly. Exactly, man. Well, we're going to be talking about a specific situation with a client that you guys dealt with in your agency that nearly had some catastrophic consequences so that other folks can, I think, know, kind of buyer beware agency beware here of, you know, look out for these sort of warning signs because it was really close to kind of wiping you guys out.
So we want to walk through that situation. What was it? Why do you think it happened? And then especially what are you guys doing now to avoid that sort of situation in the future? So tell us a little bit T up the conversation with you know, what was the situation? What was kind of the danger and what came out kind of the quick synopsis and then we'll dive into kind of the backstory.
Michael Davern (01:11.344)
Sure, so we had signed on a client that was a startup health plan in the Northeast and it was one specific niche that they were in, of which we had a lot of experience. In fact, myself and my two partners had worked on the client side in that industry before. In fact, one of my partners was the managing director for my ad agency when I was in marketing in that world. you know, the sales pitch was kind of easy, right, in this space and we still have a couple of clients in this space as well.
But this particular client, because they were a startup, we actually caught them in only year two of existence, there were a lot of obstacles in our way, both really from the client side with not being staffed up enough for their actual needs and a little bit of a lack of sophistication in marketing. So the client was cut more from the sales side. So their sales leader was also the director.
or vice president of sales and marketing. And you're asking that question, I'm really setting it up from the beginning. The warning signs were all there, Right out of the gate that we were dealing much more with a sales organization that wasn't as heavily invested or didn't see the light in terms of what marketing could bring. And so we started with a really tight time deadline, picking up something at the end of a year.
Logan Lyles (02:17.729)
You
Michael Davern (02:34.712)
that we pulled something off that most agencies couldn't do and we had a win, but then that level of expectation comes that that win is always going to be the place that we get to. And let's be real, if marketing was a get rich quick scheme, we'd all be selling our process on YouTube or TikTok. Yep.
Logan Lyles (02:52.536)
We'd all be on yachts, you know, I mean, a lot of us are getting together here in March for the agency builders retreat in St. Augustine and there'll be a boat or two, but it's not like everyone there has their own yacht, right? To your point.
Michael Davern (03:00.325)
Yes.
Yeah, and if we were 10Xing and 20Xing, 100Xing everything we did, then we'd be printing money. you know, slow and steady wins the race. we're talking about put money in if we get 20, 30, 40 % return on that investment, especially in the DTC space, which is what really health insurance is for this particular client. We're doing really well, actually. So we set up expectations too high, too early. We saw the warning signs in terms of who our client was and how
Logan Lyles (03:09.869)
Midas Touch.
Michael Davern (03:33.198)
they needed to be educated and maybe missed some opportunities for that education. Really did well in year one with them. In fact, Blue Cross Blue Shield is a big guy on the block very well. Not just a national brand, but a well-known, world-renowned brand. And in their second year with us working with them, we actually made them the most enrolled plan. Only number two to Blue Cross Blue Shield, their local competitor. And we killed it.
kill it and we actually brought digital to an older audience. The average person we were talking to was between 68 and 72 years old and we actually did very little traditional and we really doubled down the digital so we did a really, really good job. Again, we set that bar really high and we over-serviced the client and when there was more budget, we added more effort to it even if the effort really crested beyond what the increased budget is.
all of those things we did, we staffed up, we had actually two positions we were able to create with the acquisition of this client. So everything looked great until there was a leadership change and budgets were scrutinized more and they went to RFP. We didn't expect that in year three to go to RFP that quickly. But we had no access to leadership. Everything that we talk about and hear about, whether it's on your podcast or everything we're exposing to, all those things were right there in front of us. And we were not just taking a step back.
taking a breath and realizing how we were getting set up.
Logan Lyles (05:04.621)
Take me to that moment when you learned that they were, you've got this existing client relationship. It's going on year three and they're like, you know, we're putting this out to bid. It's going out to RFP. what was that moment like, or was it a moment more pivotal that was before then? Like, what was the kind of like, no, this could be a major problem moment in this story for you.
Michael Davern (05:30.64)
Well, the goals, for one thing, were not in line with reality. And when I say that, because we have really quite a lot of experience in the market, we know what the market potential is. So in that world, companies contract with the government to be able to provide this insurance instead of going to going on Medicare. So the market is what the market is. So there's only so many people that they can insure. So
Logan Lyles (05:32.501)
Okay.
Michael Davern (05:55.184)
We already know if I'm going to make up a number of there's 100,000 people that they can potentially ensure you're a new guy on the block. Maybe you might be able to get three, four or five percent of that market in year one. Their goals were larger than the opportunity. So even though we were, as I put it, just really killing it for them and really winning. Well, we didn't hit our goal and we're going to hold you as Incept accountable for not hitting our goal, even though the numbers were well beyond what a trajectory would have been realistic for them for their growth path.
but then also in then the second year around and then looking into whoever got the relationship this year. Those goals I'm confident were still out of whack and really difficult. But we look at all of those things that lined up for us. Again, I mentioned that it was right there and all the the signs were there. And then even when it came to RFP time, it was one of those. it's a formality. You guys, you're going to get the work. Just give us what your recommended budget is. Never do.
Logan Lyles (06:34.061)
You
Logan Lyles (06:48.971)
Yeah. Did you believe that for a minute?
Michael Davern (06:54.19)
I can't speak for everyone who was at the table on the Incept end in that decision. I think there was a little more investment and really hope I think that it was going to come through. you know when it comes down to knowing that we don't have access to leadership to even start those conversations because we were sticky before. had gone in and produced some commercials in spots and had direct access to the CEO. They had some partners who were investors actually in the company.
that we had access to and that eroded. So that should have been really the first spot is when the CEO was kind of on their way out and the investors pulled away from being involved. We should have been like, guys, what's our contingency plan? And that was the biggest piece was that revenue at the end of the day was a little less than half of what we were bringing in for the entire year. So we did everything we're not supposed to. We doubled down on 50 % and
We just wanted to keep on trying to make that relationship work. So we didn't want to see what the result would be if we didn't. And we didn't plan properly for what would happen. And that's one of the things we've adjusted is it sounds grim, but every time we sign a new client, we're already preparing for their exit in terms of what it will look like to have to replace that revenue. Because it's different. Like when we started out, there was, it was really just me. I brought in a partner than another partner. had
a couple of employees and a couple of contractors, but it wasn't until we're almost 10 years old. wasn't until about year four that we started staffing up. And that changes the game too, because there's more people relying on us running our business properly as well.
Logan Lyles (08:35.947)
Yeah. Yeah. How much, how much time passed between kind of that, that leadership change, the lack of access there to, we're going to RFP. Like what was that kind of window? Like, was it kind of one, two or was. Okay.
Michael Davern (08:46.97)
Four months, four months. So just, just over a quarter. And we went from, you know, I'd call it hero to zero pretty quickly.
Logan Lyles (08:52.107)
Okay.
Logan Lyles (08:58.06)
Yeah, yeah. Talk to me a little bit about, I guess, for context for folks listening to this saying, OK, this is a horror story. This is why so many agency consultants and coaches from Jay here at Agency Builders to others like Drew McClellan, I've heard, say, talk about the guerrilla client. can't have this one client.
tying up, you know, certainly you don't want 50 % of your revenue, not to put you on the spot, but you sat in the hot seat today, right? Um, but you want that 25%, 20, even 10 % I've heard sometimes, right? You want to get that down. And this is exactly why, um, tell me a little bit about size scope of your agency, kind of how you guys are built full-timers versus contractors, that sort of stuff, part-timers to, I think, to kind of lay out the, like, this is what we were looking at and this is what we've had to do since.
Michael Davern (09:27.504)
Mm-hmm.
Michael Davern (09:31.268)
Yep, absolutely.
Logan Lyles (09:50.763)
And then we can kind of unpack some of the, you know, looking further down the road, some of the things that you guys are going to do differently out of this lesson.
Michael Davern (09:58.266)
Sure, so when this client was at the peak, all in, were 15, had gone, including the three of us who owned the company. We're down to 13 now because we absolutely did have to let two people go because of that loss of revenue. were able, and it was a challenging one too because there was still some business we were responsible for holding onto for them until December 31st. So we were dumped and still having to have dinner with our girlfriend. Four months after we knew that it was.
Logan Lyles (10:23.809)
Mm-hmm.
Michael Davern (10:26.714)
you know that that was coming. So that was challenging as well. But in terms of where we are now, we are almost all FTEs. We only use contractors sparingly. One thing we have started exploring is the use of some more contractors to make sure that when there's an opportunity, we can react quicker. And if anyone out there is looking to diversify with adding contractors, hire specifists, do not hire generalists. So.
Logan Lyles (10:27.543)
Yeah, yeah.
Michael Davern (10:55.074)
If I need someone who is a designer who can do HTML5 design for programmatic ads and video illustration for placements, we hire people and contract people who just do that because, or even for web, I mean, I'm getting off on a tangent, but even for website design, hire a Figma designer. Like hire a Figma designer. Look for someone specifically working in Figma. Don't hire a designer who does everything because as we know, and even for us, you we learn is,
Logan Lyles (11:11.819)
No, this is good stuff. think this there's a lot of agency owners who need to hear this, Michael.
Michael Davern (11:25.166)
If you try to accomplish everything, you accomplish nothing. So there'll be designers who are hungry for work and commit to something. And then the product is not what we would want to put our name on. And then we end up having to find somebody else. So that's one of the positives about this is really because we knew this was coming as of about June of, May or June of this year, we started getting some people in play. Yeah, for six months. Yeah, it was rough. So it's about.
Logan Lyles (11:45.357)
You had to have dinner with a girlfriend for several months.
Michael Davern (11:53.108)
So we do have the people we have in-house who are really good at what they do, but even if you're a small agency and hire a graphic designer, make sure that they're almost more, I'd almost say have the ownership mentality and a creative director bit of a hat, and they understand where their limitations are from a design standpoint. And three or four years ago, said, no, we got to staff up. I don't want to use contractors for anything. It's not realistic and practical, but...
You know, but the Core 13, except for one person, everyone is an employee.
Logan Lyles (12:24.983)
Yeah. Yeah. That's interesting. It's, it's similar for us at, at business builders. think we're around 18 full-time employees, at the agency, that, that Jay founded and I work in leading sales and marketing right now. And as I came on last September, he, he shared this with me. said, I've really, you know, kind of pivoted the way that we've thought about the business to major shifts have come in the way that we've built out the teams. One, we split out the account manager and the project manager into two different roles.
over the last several years, shout out to Carl Sakes who gave Jay that advice long time back. And we just found that we were asking too much in one role and by dividing those were able to divide and conquer. I I'm kind of given this pitch regularly to new clients, but I won't, I won't go into that sales pitch. But the other thing is, you know, he looked at, okay, all of our full-time employees, I want to be leaders, managers, or strategists.
Michael Davern (13:07.824)
Yes.
Logan Lyles (13:18.797)
And then we're going to look at this specialist level and we're not just going to use anyone and everyone, but we are going to form very strategic partnerships with either the right outsourcing group or the right specialist, if that's individually, so that we can respond up and down, you know, as the client portfolio grows, shrinks, those sorts of things. Thankfully we've grown year over year, we haven't had any quick hits, but you know, if you're not to your point earlier, if you're not
planning for churn as an agency, you're just you're missing a huge part of the equation in either just managing cash flow or hitting your growth goals. You can't do that without accounting for some sort of churn. And so I've seen that similarly. It's also why I think that specialist marketplaces like this one I came across the other day is called YT jobs.co specifically, you can find script writers.
Michael Davern (13:57.689)
Absolutely.
Logan Lyles (14:15.681)
thumbnail designers and editors that all they do is YouTube videos, right? I don't need a, you know, if I'm looking to do a YouTube campaign paid or organic for a client or for ourselves, I don't need some generalist designer. I need, you know, very specific skills in designing YouTube thumbnails. And I think those sorts of marketplaces and those sorts of specialists are going to be in higher demand with very specific skills for very specific client needs. So that's kind of what
was rolling around in my head as you were talking there.
Michael Davern (14:47.66)
You know, you make a good point too. You didn't mention the F word Fiverr. Because we learned very quickly because we had never used a Fiverr contractor. And I'm not saying there's not good. There's not good talent on Fiverr. It just didn't seem to be the fit for us in terms of the specificity we were looking for and the turnaround. And again, it's our brand that's representing our clients brand. And if I won't slap my name on it, I'm not, you know, like we did it in house. So.
Logan Lyles (14:51.789)
DF work.
Yep.
Logan Lyles (15:03.191)
Mm-hmm. Yep.
Logan Lyles (15:08.588)
Mm-hmm.
Michael Davern (15:17.378)
Network is super important. Listening to podcasts like this, in my opinion, because I've listened to everything you've put out, but there's several others that I listen to as well, and I learn a ton. And really what I've learned too is it's okay to leverage the network and ask the question, like, everyone on LinkedIn, who are you using for this? And getting some of those introductions.
You know, I pick on Figma, for instance. Yeah, a Figma designer through the network is going to cost us more money and they're going to do a heck of a lot better work too.
Logan Lyles (15:51.864)
Yeah, it's one of my favorite things about the agency builders community. And if you're listening to this and you've been listening to the podcast, you're not yet in Slack with the 300 plus of us that are in there now. in addition to growing some stuff and some free resources on circle, use the link in the episode description here, or send me a note on LinkedIn because what Michael's talking about is exactly what's going on weekend and week out. Not only are agency owners in the community.
asking questions. What are you guys doing about this? We have this client situation. Has anyone ever dealt with this? What did you do? But also like, Hey, we need someone very specific for this sort of role or we have this client that came in that we're actually not the right fit for who could be a right fit. And so I love to see those sorts of things happening in the community. So subtle, shameless plug, not so subtle, shameless plug for the community there. So
Michael back to the main point though, talk to me a little bit about some of the things that you guys are now looking at on what you're going to do differently, how you're going to build differently, how you're going to plan differently, in the agency's next phase based on this experience. mean, letting two people go is, is nothing small, especially for those two individuals, obviously. So I don't want to minimize that, but you guys did lose a client that was taking up nearly 50 % of your revenue and you weathered the storm. You didn't, you know, you didn't have to cut half your staff. So.
Michael Davern (17:02.394)
not at all.
Logan Lyles (17:13.921)
There is some silver lining there. So tell me a little bit about how you guys weathered it and what you're looking to for the future to make sure you don't get right in the eye of the storm in the same way. At least there'll be different storms in the future.
Michael Davern (17:27.088)
Well, I'm going to take one step back in terms of the whole things that we should have done differently out of the gate with the other client. And everyone should be hearing this over and over again because it's true. We were not selling strategy first. We were a commoditized vendor at the end of the day with a big fat budget to play with. And so the strategy, we did it, but it came as sort of expected in terms of the more traditional media approach. So
Logan Lyles (17:35.533)
Love it.
Okay.
Michael Davern (17:56.08)
It's not 2002. We're not planning media for people and the strategy just is included in the commission. It doesn't work that way anymore. And so we were already moving towards that, but we engaged Chris Dubois as a coach and really helped us see the light in terms of selling on the problem, desired outcome, solution process, which then also screams strategy. So we're looking at strategy being a part of it and strategy being something that is continuing. So just like a website is never finished, strategy is evolving, goals change, market conditions change. So really where we've been able to go with that, with the help of Chris and
the resources that we've built from all the other places we do research and even just how we're approaching it, it gets to the point where, well, okay, we're pitching this new client and we're pitching a current client on a larger relationship. I'm gonna be honest, what do we have to lose if we try something different? And for the most part, Logan, it's working. So we were able to, with really just changing our orientation.
able to increase a couple of clients, attract some new clients. And a little bit of it too comes into even my personal branding. You know, I keep on backburning some of it. I'm a little edgier, but sometimes I say things that people like. So we have a very conservative client who I even offered like, okay, we're going to be having some meetings with leadership. I'll come in, I'll even wear a button up shirt. Probably won't give me a tie because I haven't worn a suit in 10 years, but
Logan Lyles (22:02.089)
Mm-hmm. Cool.
Michael Davern (22:27.908)
It's like, no, Mike, we hired you because you come in and swear and tell us how it is and wear a black t-shirt. So that's refreshing too, right? So now we've got more people wanting to buy into a relationship with us, or even I call it more of a partnership. And that's what we're doing is we're selling ourselves as a strategic partner. And if a client's not interested in strategy, we're not interested in working with you because I want a website. What do you want it to do? I don't know, but we need a new website. Well, why?
Logan Lyles (22:32.365)
I like it
Logan Lyles (22:42.133)
Mm-hmm. Yeah.
Logan Lyles (22:49.644)
Mm-hmm.
Logan Lyles (22:57.238)
Yeah.
Michael Davern (22:58.412)
And that starts the conversation. And that's the same thing for everyone. I want to run ads. Why? You know, and so we're getting those questions answered early. Our discovery is really helping clients select out if it's not a fit. And we're very close to relaunching our new presence online, which will be a case study and us sharing it with other people on blowing up our website. Our website.
you hear this over and over, you can just slap another logo on our website and the other digital agency. And we're not interested in being in that club anymore because we're interested not only in making sure that we're long-term successful, but hell-bent on our clients winning. that definition of win is, and it's not just let's place media and hope it works. So.
Logan Lyles (23:52.462)
I love to hear that. love to hear the focus on client success. It's obvious that you've been listening to and talking to Chris talking about, you know, just being a replaceable agency and your website, you know, just being able to, you know, swap out the logo. I think so many agencies aren't able to show themselves as their own.
case study. mean, one of the things I mention all the time in my sales calls for our agency, we lean very heavily into the story brand framework. That is one of the things that we do to.
to kind of frame our strategy on the front end, which usually comes in some sort of workshop that we sell as a blueprint separate from the ongoing services. And I'm consistently telling people, hey, we updated just the messaging on our website without even redesigning it. And we doubled our monthly inbound qualified leads. sometimes I've hesitated to use whoever I'm selling for as like our own case study, because they're like, well, of course. But.
I think so many agencies aren't able to say things like that. And then they're not setting themselves up in that, that space of authority. Like what you were saying there, people who are paying you to do a thing that they said, go and do this is very different from no, we're paying you to execute what you told us to do.
And that's really the difference. I mentioned a little bit about what that looks like at business builders today. You know, when Jay started the agency, he was building websites. He'll be the first to tell you that's not how he did it. He'd say, you know, you want a website. Okay. It'll be 15 grand or, you know, probably even less than that when he was first starting out. And then he would say, well, what do you want to put on it? Right. And he's like, that was the wrong way to do it. So fast forward 25 years.
Logan Lyles (25:39.146)
It is now, Hey, we want to launch a campaign or we want to build a new website. It's hold on timeout before we start producing and promoting stuff. We need to actually plan it and we need to help you drive that plan so that we know that it is a good one. And so that's kind of how we've divided it. Put that line in the sand of like consulting, engagement first, and then the ongoing services. that a similar pivot that you guys have made Michael or what's different in your situation that people can learn from? Okay.
Michael Davern (25:57.443)
Yes.
Michael Davern (26:02.272)
Absolutely, and even picking on the concept of a website. A website is never finished, so if we race to perfect to get something launched, it could take six months to never. And we're also doing everyone involved a disservice. Not only are we not doing the right thing for the client, we're also creating frustration and tension and really stress within our team that we don't need to as well because it's...
Logan Lyles (26:19.169)
You don't know if you're building the right thing.
Michael Davern (26:29.592)
Let's get this thing up on a plan and a hunch. And we're all not.
Logan Lyles (26:34.509)
planning a hunch just a little bit better than a hope and a prayer, right?
Michael Davern (26:36.856)
But hunch is something we all do in marketing. is, and it's something that we probably don't give enough credit to. But yeah, we've got a good educated guess. We've got a hypothesis about what's going to work based on our plan. But then let's let the market tell us what they want from us as that thing is up, as it's evolving, as it's learning, as it's breathing. And then, okay, that plan didn't go according to all the database decision making we made.
The hunch might've been better or the hunch was awful and the plan was better. But the point of the website relationship and that's what we're also selling when we're looking at a website, it's not just a website one and done. We're selling 12 to 18 month relationships just on the website development. So let's get not quite as basic as an MVP up, but something conceptually like that. And let's let the market speak because B2B and B2C are two very different things. So I don't want to, I want to make sure that
Logan Lyles (27:34.337)
Yeah, not necessarily exactly prescriptive. We're talking about principles here and
Michael Davern (27:35.79)
We've got right. But B2B is like, let's learn from our market because if we're not learning from our market, even if we have the best data and a good plan, we're also missing opportunity if we're not adjusting as we learn. So.
Logan Lyles (27:42.327)
Yeah.
Logan Lyles (27:48.426)
100%. Yeah. Yeah. I love it, man. So you guys have made that that pivot. It's changed the way that you sell things on the front end, the way that you qualify in and out. So often we forget to qualify out. It's like, why are we qualifying in if every client is making it in other than when they tell us no, right?
Michael Davern (28:00.612)
Absolutely.
Yes.
Logan Lyles (28:07.533)
But then what are some of the other things you guys are looking towards the future in the way that you guys are either structuring, engaging with clients, positioning yourself to avoid again, you know, a repeat of this sort of incident. I imagine one of those is not letting a client get to 50 % of the revenue. What else is on kind of your hit list there,
Michael Davern (28:24.258)
Absolutely.
Michael Davern (28:27.8)
I think it's a bit we're experimenting, but we are getting more relationships on retainer that are based on the outcome and the output and not the output. So we're not quoting on ours. So the same client that says, I want you in these meetings to swear and wear a black t-shirt. We actually have a flat rate retainer with them and we've structured it that we have a certain number of main priorities are working out at any given time and some sub-priorities actually in the contract.
And so we also have that that that check when we're asked to do something that seems to be more significant. We do we do quantify what what the main priorities are. This particular contract and actually everything we're proposing on the side, it's the main priorities have to comprise 70 percent of our effort and the miners are 30 percent of the effort. And we're checking against that as we're having a conversation. So the nice part is we're not scoping every little piece of the relationship over and over again. We're not overscoping anything, but we're keeping that in check and
when we start looking at evaluating how that's going to look for us after the first year, because we're only six to seven months into doing it this way, I can tell you our achieved hourly is going up on a couple of these clients already. If we were to go back, because we do track time, and the time is really just for an estimate on how long a project is going to take. And if we miss the mark, then we're going to learn from that and adjust it either way. But at the end of the day, is the outcome is what we're selling.
Logan Lyles (29:38.498)
Really?
Michael Davern (29:54.582)
and we're not selling the time that it takes to get that. So looking at strategy, looking at selling the outcome, being very realistic in terms of timeframes, we can't just, we can't tell everyone we're planting seeds and we've got to wait for it to grow. We also are planning early wins right out of the gate. So we're, we know where we can win on seeing some tangible results. So we're planning very purposely some early wins for the client and also doing the opposite side too. What is the stretch?
Logan Lyles (29:57.228)
Yes.
Logan Lyles (30:07.949)
That only gets you so far with clients, right?
Michael Davern (30:23.086)
What is that needle in a haystack that you need that you're trying to get out of your business and trying to get with whatever your customer client acquisition is? And we're throwing ourselves a challenge out of the gate as well because it's showing the tenacity that we can throw into a relationship. And I got to tell you, Logan, it's tough for someone to say, OK, six months in, we're going to exercise our three month review and reevaluate our relationship. When they see that you're working and showing some progress towards that needle, they're not going to go anywhere.
Logan Lyles (30:33.351)
love that.
Logan Lyles (30:52.312)
Yeah, it totally reframes everything there. I like it's kind of like the way you were talking about there of having those priorities, the main priorities, the sub priorities, and those are really driving your review and your scope conversations with your clients. It's like, instead of talking about the scope, we're talking about priorities, which is already a more strategic conversation, right? You go to a vendor and say, well, can I do this? That's outside of my contract versus I'm going to a partner and saying, we want to do this. And it's not.
Is this in your contract? Is this a priority? Okay, hold on. Maybe we dig in and maybe it does supplant another priority, right? But most often, it's not going to be. And then you're not the one who said no to just a request. You're the business coach who told them, get distracted. That is a very different conversation about the same thing, isn't it?
Michael Davern (31:40.234)
And that's it. And we're saying absolutely. And we're saying no to no to strategy. And the other piece, and this should be table stakes for all of us, but my God, Logan, the number of clients we have, the number of, and I'm not just talking about small companies, but larger companies, especially mid smaller and mid-sized companies. The fact that they are, and I saw this on LinkedIn recently, don't build on borrowed ground, was something going around when we thought TikTok was going away.
Logan Lyles (31:51.853)
You
Michael Davern (32:09.708)
is you have to do something parallel to that borrowed ground. Like I heard you using Circle, which is great because you might start a community in Facebook, but we all know Facebook can do whatever they want, whenever they want to. And it's about making sure that whether that is you're building a community on something third party, that you have more direct control over, or most importantly, the value of first party data. We started essentially as a first party data company before it was called First Party Data.
We started as a text message marketing company before people knew what the heck text message marketing was. So, and starting in Buffalo and in the Rust Belt, people can say what they want to say, we're 18 to 24 months behind. And so, selling text messaging in Buffalo didn't work. So we went big, we went with larger brands and now it's baked into what a lot of people are doing, but owning that list, getting people's permission, emails and mobile numbers, but then also the crazy part I know.
Logan Lyles (32:44.065)
Yeah, yeah.
Logan Lyles (32:51.629)
you
Michael Davern (33:07.094)
asking people how it is they want to hear from us and then doing it. So that part of its strategy and then building your own world and owning your own world no matter what happens around you. So it could be blowing up all around you, but if I have permission to send people emails, I'm in great shape. We're not a proponent of cold outreach. We don't do any of it for our company. We try to avoid it with clients as well. But there's also ways to leverage whether it's cold outreach or even
Logan Lyles (33:11.915)
Right? Right?
Logan Lyles (33:19.757)
Yep.
Michael Davern (33:36.716)
Again, well, what's your ad budget? Well, what are we going to accomplish here? Do we want people to buy something or do we want relationships and partnerships? And if we want relationships as a part of that ad-based or ad-supported acquisition, we darn well better be getting contact information that we own and permission to then use that information.
Logan Lyles (33:54.766)
Yeah. Yeah. And there I'm testing right now for our agency. Maybe we'll do it kind of unpacking this later because I just kind of launched it. I've learned from some other folks where we're often missing the boat could be for clients could be for ourselves as well as like one we're not willing to invest marketing dollars to just build the relationship. But two we may be missing out on kind of throwing a right hook when we could be. So one of the things I'm testing is like
we've got a few new content offers that that we're testing out there for our own agency and I'm doing kind of this one two of where just real simple basic landing page Do you want this course or whatever just email? But then it redirects them to a multi-step type form that lets them kind of qualify in or out and if they meet certain criteria Hey, do you want to book a meeting about this thing? And I'll tell you what Jay was just at a pretty small event in front of like 50 people
He put a content offer in front of everyone at the end, got about 30 people to sign up for that and three booked meetings. Now, had I just captured those and then gone after them and said, well, hey, do you want to book a meeting? I would be viewed as kind of let pushy salesperson, but because we baked it into this two-step process. anyway, long, long story there, but something I'm thinking about. So stay tuned. I may share more on that process as we go here.
Michael Davern (35:09.305)
Yes.
Michael Davern (35:17.284)
That's cool. And you know, to what you're talking about too, as long, no matter who you are, whether you're an agency or professional service firm, or you're selling something that's tangible D to C, your goals have to align with your sales cycle. So that's part of it. So we can sometimes speed up the sales cycle, but sometimes we can't. So we work with the client in a very niche industrial custom engineered space. Their sales cycle is 24 to 36 months. We learned out of the gate that
We really can't hasten that sales cycle. It takes what it takes, but they had never done anything to help support their sales efforts. So they engaged to start doing that. Right, absolutely. However, our mistake there was that the expectation was, well, we bought an ad, everything should just start coming in and we should be closing deals in a few months. And this is sourcing, this is going through.
Logan Lyles (35:56.856)
You can increase that close rate if you can't increase sales velocity, right?
Michael Davern (36:13.454)
like some of their clients are government, so it's going through a whole RFP process and the time's going to take what it's going to take. And you can scale that down into other relationships is that as long as your external efforts, your marketing efforts are matching your sales efforts to maximize the sales cycle for what it is, that's how you're going to win.
Logan Lyles (36:36.288)
I it, man. Well, I think that is a good spot to transition to our rapid fire round. Quick plug again, second shameless plug of the episode, but what the heck you brought up Chris Dubois has really helped you guys be able to make that pivot into offering and selling, not just offering or baking it in, but selling the strategy. Chris is going to be one of our great speakers at the agency builders retreat here at the end of March.
There are last I checked less than 10 tickets left. if you're listening to this and you're not signed up yet, you want to hear from Chris Dubois, Gray McKenzie and several other.
great, great agency consultants who are going to be speaking at the event. Go to agencybuilders.com slash ticket or use the link in the description and join us there. The weather is going to be great. A lot of us have had some really cold snaps here in January as of the recording of this. So you'll enjoy some sunshine in March as well. All right. That being said, Michael, we want to hit you with our rapid fire round. So you ready, my friend? All right. What is number one? What is one book you often recommend to other agency leaders?
Michael Davern (37:31.053)
Absolutely.
Michael Davern (37:37.636)
I'll give sort of a tribute to an oldie but a goodie is the subtle art of not giving enough by Mark Madsen. You know, it's been around for a while, but I think it helps people. Actually, I give a copy of it to everyone we hire. So just to make sure that we're not taking ourselves too seriously and we understand how to prioritize really at the of the day. Yeah, I think it does align with that just a little bit. And then this one's a little bit older, but I think it's still very relevant.
Logan Lyles (37:52.065)
Really?
Logan Lyles (37:57.41)
Nice. That fits with that personal brand we were talking about. I like it. Yeah.
Michael Davern (38:07.574)
And it transformed how I lead my team, the coaching habit by Michael, I think it's Boongay Stenier, I think if I'm pronouncing his last name right. But there's these seven core questions to ask in one on ones or with interactions with direct reports. And it really can change how you're helping. And it actually makes our job easier at the end of the day as leaders too.
Logan Lyles (38:17.931)
Okay.
Logan Lyles (38:33.313)
I love it, man. All right. Number two. What is the next challenge you and your team are focused on tackling this quarter? Michael.
Michael Davern (38:39.042)
we've actually talked a little bit about it already is calibrating this process on how we're doing proposals. We actually just bought software from a previous guest of yours, the pricing table. Yeah, yeah, so we're streamlining some of that, but it really is, it's prioritizing just like we would with a client. Okay, it's great, we have 10 things you want to accomplish, we're gonna get nowhere doing that. So what are the key two or three things we want to focus on? So.
Logan Lyles (38:48.287)
Okay. Which was okay. Yeah.
Michael Davern (39:07.672)
I think every agency owner can relate to this. Process is great and it stinks at the same time. So process can keep us a little shackled, but it also is going to help us win. it's refining some of our processes to those top two or three goals and then focusing just on those. That's really where we're headed. We're actually a little bit ahead of the game for Q1 here to get there. So, yes.
Logan Lyles (39:28.781)
I love it man. All right. 28 days into the year gaining some traction. right. Number three is always one of my favorites because it kind of relates to what you were talking about there. What's a tool you've been recommending to friends or peers lately? Could be a Chrome extension, could be an AI app, could be an iPhone app, anything that you've been nerding out over a little bit lately.
Michael Davern (39:49.186)
I love the voice feature in GPT-4. It's catching everything. And I use Otter as well, so I can take some notes and go back and forth between the two. But it's something I've really started working with quite a bit. We have a new client. We're working with something pretty complex in terms of mapping out what we need to accomplish for a new website and some content is Whimsical. Not sure if you've heard of Whimsical before. They have a GPT as well for one piece of their feature.
Logan Lyles (40:13.965)
Mm-mm.
Michael Davern (40:17.698)
But it really is, I think they call it lo-fi, and it's taking something complex and mapping it visually into something more lo-fi that almost anyone can look at and digest. It's pretty cool.
Logan Lyles (40:28.717)
Okay, very cool. I love it. All right, number four, if you could ask one question of all your peers in the agency builders community, what would you use that one question on Michael?
Michael Davern (40:37.272)
Well, I already brought up chat GPT, so I'd like to ask everyone with the door locked and no one listening, what are you actually using AI for? Not like we talk, a year ago we'd have a conversation where it was, well, it's great for operationalizing routine tasks and helping with that. Things have come a long way and we're pretty, we're very transparent with our clients, but this studio where I'm in right now and speaking into the mic for AI voiceover, for instance.
For some reason, my voice is the voice of the agency. I don't have the best voice in the agency, but I can record and there was even, I think a grad student at Harvard came up with a list of everything to say to prompt AI to learn. And so we can talk into this and never have to bring someone in studio again. And AI voiceover is doing great work with inflection and everything. So I'm saying something we're using and our clients know we're using it we do, but we might've said draft zero.
Logan Lyles (41:31.841)
Yeah. Yep.
Michael Davern (41:36.108)
a year ago or 18 months ago for AI even for some insights. We're at draft one or draft two now. And I'll admit that we bring that into that piece. We use software that has AI learning, like reputation management. Why wouldn't a client just not want to hit, what would my automated review look like? And then just make some tweaks. But that question I would really like to ask is, what are you really leveraging it for? Because I think if we put all of our cards on the table, we're going to learn more from everyone quicker too, in each other.
Logan Lyles (42:02.573)
Yeah, absolutely, absolutely. All right, number five is one of my favorites on the list. Who's one person you want to thank or mention that's helped you in your own journey as an agency builder, Michael?
Michael Davern (43:31.615)
Sure. My wife, and we've already given Chris Dubois enough attention, I'll shoot him a text after this. no, my wife, because she's been with me since after I started the agency, so she doesn't know anything other than this version of me. But she has a real job, which helps, you know, with things like health insurance and all those sorts of things as well. But she's super supportive and she gets it.
Logan Lyles (43:36.717)
He got his shout out. Yeah.
Michael Davern (43:58.623)
I'm not proud of this, but like I worked on my honeymoon when we were really brand new. I've been married now for seven years and we had a client that just needed my attention for something. She's super understanding. And I think all of us, whether it's a wife or a significant other or a business partner, we all need someone grounded in a different direction than us to go in the direction we need to go in. And so she helps me keep my true north when I might not have that support elsewhere.
Logan Lyles (44:28.587)
Yeah. I love that man. Well, you definitely will have to share this with her. If she listens to nothing else of the episode, she needs to hear those words. So I love that.
Michael Davern (44:37.331)
Well, we'll get her on this and outside of her true crime podcasts. I think that she spends most of her time listening to so.
Logan Lyles (44:40.685)
There you go. There you go, man. All right. Well, if anybody listening to this is not yet connected with you like I am Michael and has gotten a ton of value and here's how open and willing you are to share swap notes, pass leads, support each other, find those, you know, mutual connections in your network, all that sort of stuff. Somebody wants to find you stay connected. How could they do that?
Michael Davern (45:05.235)
LinkedIn. I'm on LinkedIn a lot. There's other Michael Daverns, I promise you I'm the only one who's bald and has BS, the word BS in my headline. Yep.
Logan Lyles (45:14.422)
And your LinkedIn tagline. Yeah, I love that one. Awesome man fits with that personal brand comes back around to that. Thank you for kind of unpacking this story for the transparency that you showed today in sharing that story. I think it is one that a lot of folks can learn from. So Michael, thanks for being our guest today, man. Really appreciate it.
Michael Davern (45:30.729)
Thanks Logan, enjoyed it. Take care.
Welcome back to the Agency Builders podcast. I'm Logan Lyles. I'm joined today by Michael Davern. He's partner and CEO at Incept. Michael, long time LinkedIn friend, first time podcast guest. Thanks for joining me, man.
Michael Davern (00:17.38)
I'm glad to have this conversation with you and what's what better than just to do this for the first one out of the gate.
Logan Lyles (00:22.456)
Yeah, exactly. Exactly, man. Well, we're going to be talking about a specific situation with a client that you guys dealt with in your agency that nearly had some catastrophic consequences so that other folks can, I think, know, kind of buyer beware agency beware here of, you know, look out for these sort of warning signs because it was really close to kind of wiping you guys out.
So we want to walk through that situation. What was it? Why do you think it happened? And then especially what are you guys doing now to avoid that sort of situation in the future? So tell us a little bit T up the conversation with you know, what was the situation? What was kind of the danger and what came out kind of the quick synopsis and then we'll dive into kind of the backstory.
Michael Davern (01:11.344)
Sure, so we had signed on a client that was a startup health plan in the Northeast and it was one specific niche that they were in, of which we had a lot of experience. In fact, myself and my two partners had worked on the client side in that industry before. In fact, one of my partners was the managing director for my ad agency when I was in marketing in that world. you know, the sales pitch was kind of easy, right, in this space and we still have a couple of clients in this space as well.
But this particular client, because they were a startup, we actually caught them in only year two of existence, there were a lot of obstacles in our way, both really from the client side with not being staffed up enough for their actual needs and a little bit of a lack of sophistication in marketing. So the client was cut more from the sales side. So their sales leader was also the director.
or vice president of sales and marketing. And you're asking that question, I'm really setting it up from the beginning. The warning signs were all there, Right out of the gate that we were dealing much more with a sales organization that wasn't as heavily invested or didn't see the light in terms of what marketing could bring. And so we started with a really tight time deadline, picking up something at the end of a year.
Logan Lyles (02:17.729)
You
Michael Davern (02:34.712)
that we pulled something off that most agencies couldn't do and we had a win, but then that level of expectation comes that that win is always going to be the place that we get to. And let's be real, if marketing was a get rich quick scheme, we'd all be selling our process on YouTube or TikTok. Yep.
Logan Lyles (02:52.536)
We'd all be on yachts, you know, I mean, a lot of us are getting together here in March for the agency builders retreat in St. Augustine and there'll be a boat or two, but it's not like everyone there has their own yacht, right? To your point.
Michael Davern (03:00.325)
Yes.
Yeah, and if we were 10Xing and 20Xing, 100Xing everything we did, then we'd be printing money. you know, slow and steady wins the race. we're talking about put money in if we get 20, 30, 40 % return on that investment, especially in the DTC space, which is what really health insurance is for this particular client. We're doing really well, actually. So we set up expectations too high, too early. We saw the warning signs in terms of who our client was and how
Logan Lyles (03:09.869)
Midas Touch.
Michael Davern (03:33.198)
they needed to be educated and maybe missed some opportunities for that education. Really did well in year one with them. In fact, Blue Cross Blue Shield is a big guy on the block very well. Not just a national brand, but a well-known, world-renowned brand. And in their second year with us working with them, we actually made them the most enrolled plan. Only number two to Blue Cross Blue Shield, their local competitor. And we killed it.
kill it and we actually brought digital to an older audience. The average person we were talking to was between 68 and 72 years old and we actually did very little traditional and we really doubled down the digital so we did a really, really good job. Again, we set that bar really high and we over-serviced the client and when there was more budget, we added more effort to it even if the effort really crested beyond what the increased budget is.
all of those things we did, we staffed up, we had actually two positions we were able to create with the acquisition of this client. So everything looked great until there was a leadership change and budgets were scrutinized more and they went to RFP. We didn't expect that in year three to go to RFP that quickly. But we had no access to leadership. Everything that we talk about and hear about, whether it's on your podcast or everything we're exposing to, all those things were right there in front of us. And we were not just taking a step back.
taking a breath and realizing how we were getting set up.
Logan Lyles (05:04.621)
Take me to that moment when you learned that they were, you've got this existing client relationship. It's going on year three and they're like, you know, we're putting this out to bid. It's going out to RFP. what was that moment like, or was it a moment more pivotal that was before then? Like, what was the kind of like, no, this could be a major problem moment in this story for you.
Michael Davern (05:30.64)
Well, the goals, for one thing, were not in line with reality. And when I say that, because we have really quite a lot of experience in the market, we know what the market potential is. So in that world, companies contract with the government to be able to provide this insurance instead of going to going on Medicare. So the market is what the market is. So there's only so many people that they can insure. So
Logan Lyles (05:32.501)
Okay.
Michael Davern (05:55.184)
We already know if I'm going to make up a number of there's 100,000 people that they can potentially ensure you're a new guy on the block. Maybe you might be able to get three, four or five percent of that market in year one. Their goals were larger than the opportunity. So even though we were, as I put it, just really killing it for them and really winning. Well, we didn't hit our goal and we're going to hold you as Incept accountable for not hitting our goal, even though the numbers were well beyond what a trajectory would have been realistic for them for their growth path.
but then also in then the second year around and then looking into whoever got the relationship this year. Those goals I'm confident were still out of whack and really difficult. But we look at all of those things that lined up for us. Again, I mentioned that it was right there and all the the signs were there. And then even when it came to RFP time, it was one of those. it's a formality. You guys, you're going to get the work. Just give us what your recommended budget is. Never do.
Logan Lyles (06:34.061)
You
Logan Lyles (06:48.971)
Yeah. Did you believe that for a minute?
Michael Davern (06:54.19)
I can't speak for everyone who was at the table on the Incept end in that decision. I think there was a little more investment and really hope I think that it was going to come through. you know when it comes down to knowing that we don't have access to leadership to even start those conversations because we were sticky before. had gone in and produced some commercials in spots and had direct access to the CEO. They had some partners who were investors actually in the company.
that we had access to and that eroded. So that should have been really the first spot is when the CEO was kind of on their way out and the investors pulled away from being involved. We should have been like, guys, what's our contingency plan? And that was the biggest piece was that revenue at the end of the day was a little less than half of what we were bringing in for the entire year. So we did everything we're not supposed to. We doubled down on 50 % and
We just wanted to keep on trying to make that relationship work. So we didn't want to see what the result would be if we didn't. And we didn't plan properly for what would happen. And that's one of the things we've adjusted is it sounds grim, but every time we sign a new client, we're already preparing for their exit in terms of what it will look like to have to replace that revenue. Because it's different. Like when we started out, there was, it was really just me. I brought in a partner than another partner. had
a couple of employees and a couple of contractors, but it wasn't until we're almost 10 years old. wasn't until about year four that we started staffing up. And that changes the game too, because there's more people relying on us running our business properly as well.
Logan Lyles (08:35.947)
Yeah. Yeah. How much, how much time passed between kind of that, that leadership change, the lack of access there to, we're going to RFP. Like what was that kind of window? Like, was it kind of one, two or was. Okay.
Michael Davern (08:46.97)
Four months, four months. So just, just over a quarter. And we went from, you know, I'd call it hero to zero pretty quickly.
Logan Lyles (08:52.107)
Okay.
Logan Lyles (08:58.06)
Yeah, yeah. Talk to me a little bit about, I guess, for context for folks listening to this saying, OK, this is a horror story. This is why so many agency consultants and coaches from Jay here at Agency Builders to others like Drew McClellan, I've heard, say, talk about the guerrilla client. can't have this one client.
tying up, you know, certainly you don't want 50 % of your revenue, not to put you on the spot, but you sat in the hot seat today, right? Um, but you want that 25%, 20, even 10 % I've heard sometimes, right? You want to get that down. And this is exactly why, um, tell me a little bit about size scope of your agency, kind of how you guys are built full-timers versus contractors, that sort of stuff, part-timers to, I think, to kind of lay out the, like, this is what we were looking at and this is what we've had to do since.
Michael Davern (09:27.504)
Mm-hmm.
Michael Davern (09:31.268)
Yep, absolutely.
Logan Lyles (09:50.763)
And then we can kind of unpack some of the, you know, looking further down the road, some of the things that you guys are going to do differently out of this lesson.
Michael Davern (09:58.266)
Sure, so when this client was at the peak, all in, were 15, had gone, including the three of us who owned the company. We're down to 13 now because we absolutely did have to let two people go because of that loss of revenue. were able, and it was a challenging one too because there was still some business we were responsible for holding onto for them until December 31st. So we were dumped and still having to have dinner with our girlfriend. Four months after we knew that it was.
Logan Lyles (10:23.809)
Mm-hmm.
Michael Davern (10:26.714)
you know that that was coming. So that was challenging as well. But in terms of where we are now, we are almost all FTEs. We only use contractors sparingly. One thing we have started exploring is the use of some more contractors to make sure that when there's an opportunity, we can react quicker. And if anyone out there is looking to diversify with adding contractors, hire specifists, do not hire generalists. So.
Logan Lyles (10:27.543)
Yeah, yeah.
Michael Davern (10:55.074)
If I need someone who is a designer who can do HTML5 design for programmatic ads and video illustration for placements, we hire people and contract people who just do that because, or even for web, I mean, I'm getting off on a tangent, but even for website design, hire a Figma designer. Like hire a Figma designer. Look for someone specifically working in Figma. Don't hire a designer who does everything because as we know, and even for us, you we learn is,
Logan Lyles (11:11.819)
No, this is good stuff. think this there's a lot of agency owners who need to hear this, Michael.
Michael Davern (11:25.166)
If you try to accomplish everything, you accomplish nothing. So there'll be designers who are hungry for work and commit to something. And then the product is not what we would want to put our name on. And then we end up having to find somebody else. So that's one of the positives about this is really because we knew this was coming as of about June of, May or June of this year, we started getting some people in play. Yeah, for six months. Yeah, it was rough. So it's about.
Logan Lyles (11:45.357)
You had to have dinner with a girlfriend for several months.
Michael Davern (11:53.108)
So we do have the people we have in-house who are really good at what they do, but even if you're a small agency and hire a graphic designer, make sure that they're almost more, I'd almost say have the ownership mentality and a creative director bit of a hat, and they understand where their limitations are from a design standpoint. And three or four years ago, said, no, we got to staff up. I don't want to use contractors for anything. It's not realistic and practical, but...
You know, but the Core 13, except for one person, everyone is an employee.
Logan Lyles (12:24.983)
Yeah. Yeah. That's interesting. It's, it's similar for us at, at business builders. think we're around 18 full-time employees, at the agency, that, that Jay founded and I work in leading sales and marketing right now. And as I came on last September, he, he shared this with me. said, I've really, you know, kind of pivoted the way that we've thought about the business to major shifts have come in the way that we've built out the teams. One, we split out the account manager and the project manager into two different roles.
over the last several years, shout out to Carl Sakes who gave Jay that advice long time back. And we just found that we were asking too much in one role and by dividing those were able to divide and conquer. I I'm kind of given this pitch regularly to new clients, but I won't, I won't go into that sales pitch. But the other thing is, you know, he looked at, okay, all of our full-time employees, I want to be leaders, managers, or strategists.
Michael Davern (13:07.824)
Yes.
Logan Lyles (13:18.797)
And then we're going to look at this specialist level and we're not just going to use anyone and everyone, but we are going to form very strategic partnerships with either the right outsourcing group or the right specialist, if that's individually, so that we can respond up and down, you know, as the client portfolio grows, shrinks, those sorts of things. Thankfully we've grown year over year, we haven't had any quick hits, but you know, if you're not to your point earlier, if you're not
planning for churn as an agency, you're just you're missing a huge part of the equation in either just managing cash flow or hitting your growth goals. You can't do that without accounting for some sort of churn. And so I've seen that similarly. It's also why I think that specialist marketplaces like this one I came across the other day is called YT jobs.co specifically, you can find script writers.
Michael Davern (13:57.689)
Absolutely.
Logan Lyles (14:15.681)
thumbnail designers and editors that all they do is YouTube videos, right? I don't need a, you know, if I'm looking to do a YouTube campaign paid or organic for a client or for ourselves, I don't need some generalist designer. I need, you know, very specific skills in designing YouTube thumbnails. And I think those sorts of marketplaces and those sorts of specialists are going to be in higher demand with very specific skills for very specific client needs. So that's kind of what
was rolling around in my head as you were talking there.
Michael Davern (14:47.66)
You know, you make a good point too. You didn't mention the F word Fiverr. Because we learned very quickly because we had never used a Fiverr contractor. And I'm not saying there's not good. There's not good talent on Fiverr. It just didn't seem to be the fit for us in terms of the specificity we were looking for and the turnaround. And again, it's our brand that's representing our clients brand. And if I won't slap my name on it, I'm not, you know, like we did it in house. So.
Logan Lyles (14:51.789)
DF work.
Yep.
Logan Lyles (15:03.191)
Mm-hmm. Yep.
Logan Lyles (15:08.588)
Mm-hmm.
Michael Davern (15:17.378)
Network is super important. Listening to podcasts like this, in my opinion, because I've listened to everything you've put out, but there's several others that I listen to as well, and I learn a ton. And really what I've learned too is it's okay to leverage the network and ask the question, like, everyone on LinkedIn, who are you using for this? And getting some of those introductions.
You know, I pick on Figma, for instance. Yeah, a Figma designer through the network is going to cost us more money and they're going to do a heck of a lot better work too.
Logan Lyles (15:51.864)
Yeah, it's one of my favorite things about the agency builders community. And if you're listening to this and you've been listening to the podcast, you're not yet in Slack with the 300 plus of us that are in there now. in addition to growing some stuff and some free resources on circle, use the link in the episode description here, or send me a note on LinkedIn because what Michael's talking about is exactly what's going on weekend and week out. Not only are agency owners in the community.
asking questions. What are you guys doing about this? We have this client situation. Has anyone ever dealt with this? What did you do? But also like, Hey, we need someone very specific for this sort of role or we have this client that came in that we're actually not the right fit for who could be a right fit. And so I love to see those sorts of things happening in the community. So subtle, shameless plug, not so subtle, shameless plug for the community there. So
Michael back to the main point though, talk to me a little bit about some of the things that you guys are now looking at on what you're going to do differently, how you're going to build differently, how you're going to plan differently, in the agency's next phase based on this experience. mean, letting two people go is, is nothing small, especially for those two individuals, obviously. So I don't want to minimize that, but you guys did lose a client that was taking up nearly 50 % of your revenue and you weathered the storm. You didn't, you know, you didn't have to cut half your staff. So.
Michael Davern (17:02.394)
not at all.
Logan Lyles (17:13.921)
There is some silver lining there. So tell me a little bit about how you guys weathered it and what you're looking to for the future to make sure you don't get right in the eye of the storm in the same way. At least there'll be different storms in the future.
Michael Davern (17:27.088)
Well, I'm going to take one step back in terms of the whole things that we should have done differently out of the gate with the other client. And everyone should be hearing this over and over again because it's true. We were not selling strategy first. We were a commoditized vendor at the end of the day with a big fat budget to play with. And so the strategy, we did it, but it came as sort of expected in terms of the more traditional media approach. So
Logan Lyles (17:35.533)
Love it.
Okay.
Michael Davern (17:56.08)
It's not 2002. We're not planning media for people and the strategy just is included in the commission. It doesn't work that way anymore. And so we were already moving towards that, but we engaged Chris Dubois as a coach and really helped us see the light in terms of selling on the problem, desired outcome, solution process, which then also screams strategy. So we're looking at strategy being a part of it and strategy being something that is continuing. So just like a website is never finished, strategy is evolving, goals change, market conditions change. So really where we've been able to go with that, with the help of Chris and
the resources that we've built from all the other places we do research and even just how we're approaching it, it gets to the point where, well, okay, we're pitching this new client and we're pitching a current client on a larger relationship. I'm gonna be honest, what do we have to lose if we try something different? And for the most part, Logan, it's working. So we were able to, with really just changing our orientation.
able to increase a couple of clients, attract some new clients. And a little bit of it too comes into even my personal branding. You know, I keep on backburning some of it. I'm a little edgier, but sometimes I say things that people like. So we have a very conservative client who I even offered like, okay, we're going to be having some meetings with leadership. I'll come in, I'll even wear a button up shirt. Probably won't give me a tie because I haven't worn a suit in 10 years, but
Logan Lyles (22:02.089)
Mm-hmm. Cool.
Michael Davern (22:27.908)
It's like, no, Mike, we hired you because you come in and swear and tell us how it is and wear a black t-shirt. So that's refreshing too, right? So now we've got more people wanting to buy into a relationship with us, or even I call it more of a partnership. And that's what we're doing is we're selling ourselves as a strategic partner. And if a client's not interested in strategy, we're not interested in working with you because I want a website. What do you want it to do? I don't know, but we need a new website. Well, why?
Logan Lyles (22:32.365)
I like it
Logan Lyles (22:42.133)
Mm-hmm. Yeah.
Logan Lyles (22:49.644)
Mm-hmm.
Logan Lyles (22:57.238)
Yeah.
Michael Davern (22:58.412)
And that starts the conversation. And that's the same thing for everyone. I want to run ads. Why? You know, and so we're getting those questions answered early. Our discovery is really helping clients select out if it's not a fit. And we're very close to relaunching our new presence online, which will be a case study and us sharing it with other people on blowing up our website. Our website.
you hear this over and over, you can just slap another logo on our website and the other digital agency. And we're not interested in being in that club anymore because we're interested not only in making sure that we're long-term successful, but hell-bent on our clients winning. that definition of win is, and it's not just let's place media and hope it works. So.
Logan Lyles (23:52.462)
I love to hear that. love to hear the focus on client success. It's obvious that you've been listening to and talking to Chris talking about, you know, just being a replaceable agency and your website, you know, just being able to, you know, swap out the logo. I think so many agencies aren't able to show themselves as their own.
case study. mean, one of the things I mention all the time in my sales calls for our agency, we lean very heavily into the story brand framework. That is one of the things that we do to.
to kind of frame our strategy on the front end, which usually comes in some sort of workshop that we sell as a blueprint separate from the ongoing services. And I'm consistently telling people, hey, we updated just the messaging on our website without even redesigning it. And we doubled our monthly inbound qualified leads. sometimes I've hesitated to use whoever I'm selling for as like our own case study, because they're like, well, of course. But.
I think so many agencies aren't able to say things like that. And then they're not setting themselves up in that, that space of authority. Like what you were saying there, people who are paying you to do a thing that they said, go and do this is very different from no, we're paying you to execute what you told us to do.
And that's really the difference. I mentioned a little bit about what that looks like at business builders today. You know, when Jay started the agency, he was building websites. He'll be the first to tell you that's not how he did it. He'd say, you know, you want a website. Okay. It'll be 15 grand or, you know, probably even less than that when he was first starting out. And then he would say, well, what do you want to put on it? Right. And he's like, that was the wrong way to do it. So fast forward 25 years.
Logan Lyles (25:39.146)
It is now, Hey, we want to launch a campaign or we want to build a new website. It's hold on timeout before we start producing and promoting stuff. We need to actually plan it and we need to help you drive that plan so that we know that it is a good one. And so that's kind of how we've divided it. Put that line in the sand of like consulting, engagement first, and then the ongoing services. that a similar pivot that you guys have made Michael or what's different in your situation that people can learn from? Okay.
Michael Davern (25:57.443)
Yes.
Michael Davern (26:02.272)
Absolutely, and even picking on the concept of a website. A website is never finished, so if we race to perfect to get something launched, it could take six months to never. And we're also doing everyone involved a disservice. Not only are we not doing the right thing for the client, we're also creating frustration and tension and really stress within our team that we don't need to as well because it's...
Logan Lyles (26:19.169)
You don't know if you're building the right thing.
Michael Davern (26:29.592)
Let's get this thing up on a plan and a hunch. And we're all not.
Logan Lyles (26:34.509)
planning a hunch just a little bit better than a hope and a prayer, right?
Michael Davern (26:36.856)
But hunch is something we all do in marketing. is, and it's something that we probably don't give enough credit to. But yeah, we've got a good educated guess. We've got a hypothesis about what's going to work based on our plan. But then let's let the market tell us what they want from us as that thing is up, as it's evolving, as it's learning, as it's breathing. And then, okay, that plan didn't go according to all the database decision making we made.
The hunch might've been better or the hunch was awful and the plan was better. But the point of the website relationship and that's what we're also selling when we're looking at a website, it's not just a website one and done. We're selling 12 to 18 month relationships just on the website development. So let's get not quite as basic as an MVP up, but something conceptually like that. And let's let the market speak because B2B and B2C are two very different things. So I don't want to, I want to make sure that
Logan Lyles (27:34.337)
Yeah, not necessarily exactly prescriptive. We're talking about principles here and
Michael Davern (27:35.79)
We've got right. But B2B is like, let's learn from our market because if we're not learning from our market, even if we have the best data and a good plan, we're also missing opportunity if we're not adjusting as we learn. So.
Logan Lyles (27:42.327)
Yeah.
Logan Lyles (27:48.426)
100%. Yeah. Yeah. I love it, man. So you guys have made that that pivot. It's changed the way that you sell things on the front end, the way that you qualify in and out. So often we forget to qualify out. It's like, why are we qualifying in if every client is making it in other than when they tell us no, right?
Michael Davern (28:00.612)
Absolutely.
Yes.
Logan Lyles (28:07.533)
But then what are some of the other things you guys are looking towards the future in the way that you guys are either structuring, engaging with clients, positioning yourself to avoid again, you know, a repeat of this sort of incident. I imagine one of those is not letting a client get to 50 % of the revenue. What else is on kind of your hit list there,
Michael Davern (28:24.258)
Absolutely.
Michael Davern (28:27.8)
I think it's a bit we're experimenting, but we are getting more relationships on retainer that are based on the outcome and the output and not the output. So we're not quoting on ours. So the same client that says, I want you in these meetings to swear and wear a black t-shirt. We actually have a flat rate retainer with them and we've structured it that we have a certain number of main priorities are working out at any given time and some sub-priorities actually in the contract.
And so we also have that that that check when we're asked to do something that seems to be more significant. We do we do quantify what what the main priorities are. This particular contract and actually everything we're proposing on the side, it's the main priorities have to comprise 70 percent of our effort and the miners are 30 percent of the effort. And we're checking against that as we're having a conversation. So the nice part is we're not scoping every little piece of the relationship over and over again. We're not overscoping anything, but we're keeping that in check and
when we start looking at evaluating how that's going to look for us after the first year, because we're only six to seven months into doing it this way, I can tell you our achieved hourly is going up on a couple of these clients already. If we were to go back, because we do track time, and the time is really just for an estimate on how long a project is going to take. And if we miss the mark, then we're going to learn from that and adjust it either way. But at the end of the day, is the outcome is what we're selling.
Logan Lyles (29:38.498)
Really?
Michael Davern (29:54.582)
and we're not selling the time that it takes to get that. So looking at strategy, looking at selling the outcome, being very realistic in terms of timeframes, we can't just, we can't tell everyone we're planting seeds and we've got to wait for it to grow. We also are planning early wins right out of the gate. So we're, we know where we can win on seeing some tangible results. So we're planning very purposely some early wins for the client and also doing the opposite side too. What is the stretch?
Logan Lyles (29:57.228)
Yes.
Logan Lyles (30:07.949)
That only gets you so far with clients, right?
Michael Davern (30:23.086)
What is that needle in a haystack that you need that you're trying to get out of your business and trying to get with whatever your customer client acquisition is? And we're throwing ourselves a challenge out of the gate as well because it's showing the tenacity that we can throw into a relationship. And I got to tell you, Logan, it's tough for someone to say, OK, six months in, we're going to exercise our three month review and reevaluate our relationship. When they see that you're working and showing some progress towards that needle, they're not going to go anywhere.
Logan Lyles (30:33.351)
love that.
Logan Lyles (30:52.312)
Yeah, it totally reframes everything there. I like it's kind of like the way you were talking about there of having those priorities, the main priorities, the sub priorities, and those are really driving your review and your scope conversations with your clients. It's like, instead of talking about the scope, we're talking about priorities, which is already a more strategic conversation, right? You go to a vendor and say, well, can I do this? That's outside of my contract versus I'm going to a partner and saying, we want to do this. And it's not.
Is this in your contract? Is this a priority? Okay, hold on. Maybe we dig in and maybe it does supplant another priority, right? But most often, it's not going to be. And then you're not the one who said no to just a request. You're the business coach who told them, get distracted. That is a very different conversation about the same thing, isn't it?
Michael Davern (31:40.234)
And that's it. And we're saying absolutely. And we're saying no to no to strategy. And the other piece, and this should be table stakes for all of us, but my God, Logan, the number of clients we have, the number of, and I'm not just talking about small companies, but larger companies, especially mid smaller and mid-sized companies. The fact that they are, and I saw this on LinkedIn recently, don't build on borrowed ground, was something going around when we thought TikTok was going away.
Logan Lyles (31:51.853)
You
Michael Davern (32:09.708)
is you have to do something parallel to that borrowed ground. Like I heard you using Circle, which is great because you might start a community in Facebook, but we all know Facebook can do whatever they want, whenever they want to. And it's about making sure that whether that is you're building a community on something third party, that you have more direct control over, or most importantly, the value of first party data. We started essentially as a first party data company before it was called First Party Data.
We started as a text message marketing company before people knew what the heck text message marketing was. So, and starting in Buffalo and in the Rust Belt, people can say what they want to say, we're 18 to 24 months behind. And so, selling text messaging in Buffalo didn't work. So we went big, we went with larger brands and now it's baked into what a lot of people are doing, but owning that list, getting people's permission, emails and mobile numbers, but then also the crazy part I know.
Logan Lyles (32:44.065)
Yeah, yeah.
Logan Lyles (32:51.629)
you
Michael Davern (33:07.094)
asking people how it is they want to hear from us and then doing it. So that part of its strategy and then building your own world and owning your own world no matter what happens around you. So it could be blowing up all around you, but if I have permission to send people emails, I'm in great shape. We're not a proponent of cold outreach. We don't do any of it for our company. We try to avoid it with clients as well. But there's also ways to leverage whether it's cold outreach or even
Logan Lyles (33:11.915)
Right? Right?
Logan Lyles (33:19.757)
Yep.
Michael Davern (33:36.716)
Again, well, what's your ad budget? Well, what are we going to accomplish here? Do we want people to buy something or do we want relationships and partnerships? And if we want relationships as a part of that ad-based or ad-supported acquisition, we darn well better be getting contact information that we own and permission to then use that information.
Logan Lyles (33:54.766)
Yeah. Yeah. And there I'm testing right now for our agency. Maybe we'll do it kind of unpacking this later because I just kind of launched it. I've learned from some other folks where we're often missing the boat could be for clients could be for ourselves as well as like one we're not willing to invest marketing dollars to just build the relationship. But two we may be missing out on kind of throwing a right hook when we could be. So one of the things I'm testing is like
we've got a few new content offers that that we're testing out there for our own agency and I'm doing kind of this one two of where just real simple basic landing page Do you want this course or whatever just email? But then it redirects them to a multi-step type form that lets them kind of qualify in or out and if they meet certain criteria Hey, do you want to book a meeting about this thing? And I'll tell you what Jay was just at a pretty small event in front of like 50 people
He put a content offer in front of everyone at the end, got about 30 people to sign up for that and three booked meetings. Now, had I just captured those and then gone after them and said, well, hey, do you want to book a meeting? I would be viewed as kind of let pushy salesperson, but because we baked it into this two-step process. anyway, long, long story there, but something I'm thinking about. So stay tuned. I may share more on that process as we go here.
Michael Davern (35:09.305)
Yes.
Michael Davern (35:17.284)
That's cool. And you know, to what you're talking about too, as long, no matter who you are, whether you're an agency or professional service firm, or you're selling something that's tangible D to C, your goals have to align with your sales cycle. So that's part of it. So we can sometimes speed up the sales cycle, but sometimes we can't. So we work with the client in a very niche industrial custom engineered space. Their sales cycle is 24 to 36 months. We learned out of the gate that
We really can't hasten that sales cycle. It takes what it takes, but they had never done anything to help support their sales efforts. So they engaged to start doing that. Right, absolutely. However, our mistake there was that the expectation was, well, we bought an ad, everything should just start coming in and we should be closing deals in a few months. And this is sourcing, this is going through.
Logan Lyles (35:56.856)
You can increase that close rate if you can't increase sales velocity, right?
Michael Davern (36:13.454)
like some of their clients are government, so it's going through a whole RFP process and the time's going to take what it's going to take. And you can scale that down into other relationships is that as long as your external efforts, your marketing efforts are matching your sales efforts to maximize the sales cycle for what it is, that's how you're going to win.
Logan Lyles (36:36.288)
I it, man. Well, I think that is a good spot to transition to our rapid fire round. Quick plug again, second shameless plug of the episode, but what the heck you brought up Chris Dubois has really helped you guys be able to make that pivot into offering and selling, not just offering or baking it in, but selling the strategy. Chris is going to be one of our great speakers at the agency builders retreat here at the end of March.
There are last I checked less than 10 tickets left. if you're listening to this and you're not signed up yet, you want to hear from Chris Dubois, Gray McKenzie and several other.
great, great agency consultants who are going to be speaking at the event. Go to agencybuilders.com slash ticket or use the link in the description and join us there. The weather is going to be great. A lot of us have had some really cold snaps here in January as of the recording of this. So you'll enjoy some sunshine in March as well. All right. That being said, Michael, we want to hit you with our rapid fire round. So you ready, my friend? All right. What is number one? What is one book you often recommend to other agency leaders?
Michael Davern (37:31.053)
Absolutely.
Michael Davern (37:37.636)
I'll give sort of a tribute to an oldie but a goodie is the subtle art of not giving enough by Mark Madsen. You know, it's been around for a while, but I think it helps people. Actually, I give a copy of it to everyone we hire. So just to make sure that we're not taking ourselves too seriously and we understand how to prioritize really at the of the day. Yeah, I think it does align with that just a little bit. And then this one's a little bit older, but I think it's still very relevant.
Logan Lyles (37:52.065)
Really?
Logan Lyles (37:57.41)
Nice. That fits with that personal brand we were talking about. I like it. Yeah.
Michael Davern (38:07.574)
And it transformed how I lead my team, the coaching habit by Michael, I think it's Boongay Stenier, I think if I'm pronouncing his last name right. But there's these seven core questions to ask in one on ones or with interactions with direct reports. And it really can change how you're helping. And it actually makes our job easier at the end of the day as leaders too.
Logan Lyles (38:17.931)
Okay.
Logan Lyles (38:33.313)
I love it, man. All right. Number two. What is the next challenge you and your team are focused on tackling this quarter? Michael.
Michael Davern (38:39.042)
we've actually talked a little bit about it already is calibrating this process on how we're doing proposals. We actually just bought software from a previous guest of yours, the pricing table. Yeah, yeah, so we're streamlining some of that, but it really is, it's prioritizing just like we would with a client. Okay, it's great, we have 10 things you want to accomplish, we're gonna get nowhere doing that. So what are the key two or three things we want to focus on? So.
Logan Lyles (38:48.287)
Okay. Which was okay. Yeah.
Michael Davern (39:07.672)
I think every agency owner can relate to this. Process is great and it stinks at the same time. So process can keep us a little shackled, but it also is going to help us win. it's refining some of our processes to those top two or three goals and then focusing just on those. That's really where we're headed. We're actually a little bit ahead of the game for Q1 here to get there. So, yes.
Logan Lyles (39:28.781)
I love it man. All right. 28 days into the year gaining some traction. right. Number three is always one of my favorites because it kind of relates to what you were talking about there. What's a tool you've been recommending to friends or peers lately? Could be a Chrome extension, could be an AI app, could be an iPhone app, anything that you've been nerding out over a little bit lately.
Michael Davern (39:49.186)
I love the voice feature in GPT-4. It's catching everything. And I use Otter as well, so I can take some notes and go back and forth between the two. But it's something I've really started working with quite a bit. We have a new client. We're working with something pretty complex in terms of mapping out what we need to accomplish for a new website and some content is Whimsical. Not sure if you've heard of Whimsical before. They have a GPT as well for one piece of their feature.
Logan Lyles (40:13.965)
Mm-mm.
Michael Davern (40:17.698)
But it really is, I think they call it lo-fi, and it's taking something complex and mapping it visually into something more lo-fi that almost anyone can look at and digest. It's pretty cool.
Logan Lyles (40:28.717)
Okay, very cool. I love it. All right, number four, if you could ask one question of all your peers in the agency builders community, what would you use that one question on Michael?
Michael Davern (40:37.272)
Well, I already brought up chat GPT, so I'd like to ask everyone with the door locked and no one listening, what are you actually using AI for? Not like we talk, a year ago we'd have a conversation where it was, well, it's great for operationalizing routine tasks and helping with that. Things have come a long way and we're pretty, we're very transparent with our clients, but this studio where I'm in right now and speaking into the mic for AI voiceover, for instance.
For some reason, my voice is the voice of the agency. I don't have the best voice in the agency, but I can record and there was even, I think a grad student at Harvard came up with a list of everything to say to prompt AI to learn. And so we can talk into this and never have to bring someone in studio again. And AI voiceover is doing great work with inflection and everything. So I'm saying something we're using and our clients know we're using it we do, but we might've said draft zero.
Logan Lyles (41:31.841)
Yeah. Yep.
Michael Davern (41:36.108)
a year ago or 18 months ago for AI even for some insights. We're at draft one or draft two now. And I'll admit that we bring that into that piece. We use software that has AI learning, like reputation management. Why wouldn't a client just not want to hit, what would my automated review look like? And then just make some tweaks. But that question I would really like to ask is, what are you really leveraging it for? Because I think if we put all of our cards on the table, we're going to learn more from everyone quicker too, in each other.
Logan Lyles (42:02.573)
Yeah, absolutely, absolutely. All right, number five is one of my favorites on the list. Who's one person you want to thank or mention that's helped you in your own journey as an agency builder, Michael?
Michael Davern (43:31.615)
Sure. My wife, and we've already given Chris Dubois enough attention, I'll shoot him a text after this. no, my wife, because she's been with me since after I started the agency, so she doesn't know anything other than this version of me. But she has a real job, which helps, you know, with things like health insurance and all those sorts of things as well. But she's super supportive and she gets it.
Logan Lyles (43:36.717)
He got his shout out. Yeah.
Michael Davern (43:58.623)
I'm not proud of this, but like I worked on my honeymoon when we were really brand new. I've been married now for seven years and we had a client that just needed my attention for something. She's super understanding. And I think all of us, whether it's a wife or a significant other or a business partner, we all need someone grounded in a different direction than us to go in the direction we need to go in. And so she helps me keep my true north when I might not have that support elsewhere.
Logan Lyles (44:28.587)
Yeah. I love that man. Well, you definitely will have to share this with her. If she listens to nothing else of the episode, she needs to hear those words. So I love that.
Michael Davern (44:37.331)
Well, we'll get her on this and outside of her true crime podcasts. I think that she spends most of her time listening to so.
Logan Lyles (44:40.685)
There you go. There you go, man. All right. Well, if anybody listening to this is not yet connected with you like I am Michael and has gotten a ton of value and here's how open and willing you are to share swap notes, pass leads, support each other, find those, you know, mutual connections in your network, all that sort of stuff. Somebody wants to find you stay connected. How could they do that?
Michael Davern (45:05.235)
LinkedIn. I'm on LinkedIn a lot. There's other Michael Daverns, I promise you I'm the only one who's bald and has BS, the word BS in my headline. Yep.
Logan Lyles (45:14.422)
And your LinkedIn tagline. Yeah, I love that one. Awesome man fits with that personal brand comes back around to that. Thank you for kind of unpacking this story for the transparency that you showed today in sharing that story. I think it is one that a lot of folks can learn from. So Michael, thanks for being our guest today, man. Really appreciate it.
Michael Davern (45:30.729)
Thanks Logan, enjoyed it. Take care.
