Many small agencies experience revenue peaks and valleys and wonder how they can break out of the “feast or famine” cycle.
In this episode, Chip and Gini explore the real cause of the revenue roller-coaster and what agency owners can (and should) do about it.
The co-hosts share some of their own experiences and the advice they received years ago — and why it still applies today.
- Gini Dietrich: “The reason you have famine is because you’re not doing the business development during the feast periods, and then the feast period ends and you have nothing in your pipeline. So do business development even when you’re busy and you will never have the famine. The end.”
- Chip Griffin: “Part of the problem comes about because agency owners are not scoping and pricing correctly to give themselves the breathing room to do business development.”
- Gini Dietrich: “The business development arena is not just networking and having coffees. It’s marketing your agency. It’s knowing who your ideal customer is.”
- Chip Griffin: “Look at the clients that you’ve won. How did you win them? Do more of that.”
The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.
Chip Griffin: Hello and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin.
Gini Dietrich: And I’m Gini Dietrich.
Chip Griffin: And I, you know, I, I ate a lot yesterday. But now, now I feel hungry again. I don’t know what to do about it, Gini.
Gini Dietrich: So bad.
Chip Griffin: We’ll talk about it right after this.
Of course, now that I said that, I actually am getting hungry. So probably gonna have to have lunch after we finish.
Gini Dietrich: Well, yeah, it is your lunch time, so.
Chip Griffin: It it, it is my lunch time here on the East Coast. So alas. No, we’re gonna be talking about something not quite food related, but the words sound like food.
Gini Dietrich: They do. They do.
Chip Griffin: Feast or famine. A favorite topic among agency owners. Probably one of the more common complaints that we hear from agency owners. Oh geez, it’s feast or famine. I’m either just buried under client work and I don’t know what to do, or I’m out there and saying, Oh my God, I need to fill my pipeline because there’s not enough money coming in the door.
Gini Dietrich: Yes, indeed. And this is going to be a very short episode because all you need to know is that the reason you have famine is because you’re not doing the business development during the feast periods, and then the feast period ends and you have nothing in your pipeline. So do business development even when you’re busy and you will never have the famine, the end.
Chip Griffin: That is the upshot of it. But I, I feel like we probably ought to try to add a little more value if for no other reason than a two minute episode of a podcast is unlikely to win us any awards. So why don’t we dig into that a little bit deeper? Because I think it is, you know, a lot of times when someone says, Oh my God, it’s feast or famine, They think this is some external thing.
They think this is something they can’t really control. Right? But the reality is exactly as you said. You have control, at least to a much greater extent than you believe you do over feast or famine, or as I often call it, the revenue roller coaster. And so what you need to do is you need to have a process in place so that you are consistently doing business development and not, as I’ve heard some agency owners tell me, I just lost a big client, I need to go out and replace them.
Right? That’s not how it works. This is not, that’s not how it works. You don’t have this luxury of being able to say, Oh, this is disappearing. I’m going to go out and have a plan to replace it. And believe me, I’ve, I’ve talked to even larger agencies that have this mindset. I’ve talked to finance team members at large agencies who tell me, Geez, this, this organizational unit is short a couple of clients, they need to go find a couple of additional ones. Not how it works. You need to be doing business development on a consistent basis. And as I was told very early in my ownership career, when I’m the busiest with client service is when I need to be the most focused on business development.
That’s right. And I think that absolutely stands true and something that every agency owner needs to take to heart, particularly smaller agencies where you feel that revenue roller coaster a lot more directly.
Gini Dietrich: And it’s really hard, especially in a small agency where you’re doing the client work and the business development.
But one of the things that’s really important, and we talk about this all the time, but one of the things that’s extraordinarily important for the owner is to spend the majority of your time on business development and not on client work because that’s what’s going to get you – well, There are other issues and challenges with you spending all your time on client work as well, but it also creates the feast or famine conundrum because you’re not doing that business development, you’re focused on servicing clients and servicing clients is important for sure. But those are the kinds of things that you can delegate to your team while you’re out hunting for new business or making rain.
Chip Griffin: Right. And it’s, it, it’s difficult because, When you’re first starting your agency, you have a certain amount of time that’s free.
Because it’s unlikely you started your agency on day one with a hundred percent of your time dedicated to client service. Right? So you naturally have time available, so you’re naturally committing a huge amount of time to business development. And so if you’re spending this time doing business development and you’re probably spending a fair amount of time playing solitaire or whatever, browsing, you know, social media or something like that to kill time.
Look, I get it. You’re spending more time doing business development than you might otherwise because you have that time available. So you’re spending it out there networking. You’re building your website, you’re spreading content, you’re doing all of the things that need to be done in order to build a pipeline.
Then that work starts to pay off, and so you start to have client service work that comes in and you, you simply shift that time to client service. And the problem is that you don’t tend to get out of that until you now have another opening because a client has left, right? And so now, now you have that time available, and so you start working on it again.
And so that’s what leads to this revenue roller coaster. But as you say, you need to be thinking about in advance how you keep yourself out of being a hundred percent committed to client service. And I, as you know, I, I believe it’s okay for an owner to still be doing even a fair amount of client service as long as you’ve planned accordingly.
But part of the problem comes about because agency owners are not scoping and pricing correctly to give themselves the breathing room to do business development, either themselves or or them in concert with some other external resource. So make sure that you’re planning and pricing and scoping correctly so that you have the room to do business development and don’t have to do everything on the client service side.
Gini Dietrich: Yeah, I mean, I talk about this with some of my agency owner friends and clients too, about how, you know, we get sucked into the day to day and, and we don’t, Like, I talked to a friend last week and she’s like, I’m so tired of pitching media. And I’m like, You have a team of 10 people. Why are you still pitching media?
She’s like, I feel like I’m the only one who can do it. And I’m like, No, that’s not true. If you don’t want to do it anymore – and pitching media is pretty tactical – I think you can probably get out of it. And so she, I told her she should call you because she needs to get out of that for sure. But…
Chip Griffin: Well, and if your people can’t do it, you need to hire different people.
Gini Dietrich: Correct. Right.
Chip Griffin: I mean, she might be right. It might be that her team is not capable of doing it, but then she needs to look at restructuring her team, Right. So that they can. Or giving them the training that they need so that they can. Because if you, if you have that mindset that you are the only person who can do it, figure out how to solve that problem. Don’t just perpetuate all of the other problems that it causes.
Gini Dietrich: Yeah, so I mean, we talk, we talk about this too, and I’m actually, I’m on a board of an agency and, and I’m making them go through this process as well. And this is for those of you who listen consistently.
This will not be new to you, but I’m having them create three lists. Things that only they can do, things that they are doing that they should delegate and things that they’re doing that they absolutely should not be. And we were going to look at that as a board in a couple of weeks at our board meeting to understand who’s doing what, and should they be doing those things and what, how can we plan to make the right hires to take the things off of their plate that they shouldn’t be doing?
And that’s a really, it’s a really good time of year to, to do that exercise for yourself, make those three lists. What are the things you’re doing that only you can do? And media pitching is probably not one of those things. There are things maybe in your agency right now, only you can do it, but we can plan for that.
So then your second list is what are the things that you’re doing that you absolutely should delegate? And then what are the things that you’re doing that you absolutely should not be doing? And then you can start to plan. Okay, if I’m doing 70% of my time is on media pitching or on content writing, or on content production, or on social media, whatever it happens to be.
And I definitely need to delegate that as an agency owner. How do I start to plan for next year so that I can bring somebody in or people in to help with those things.
Chip Griffin: Mm-hmm. And, and part of it is as you’re building out those lists, making sure that you’re fencing off the appropriate amount of for all of the key activities. And so business development is one of those, and you need to understand how much time needs to be dedicated to that on an ongoing, consistent basis in order to have the kind of pipeline that you need. And so part of that then comes down to figuring out what kind of pipeline do you actually need, right?
And you need to know what is the life cycle of your clients in working with you, because clients don’t stay with you forever. We’ve talked before about the problem of clients who are with you for too long because they tend to become unprofitable after a period of time. Yep. But the reality is that at some point, either your clients outgrow you or move on to a different challenge or what have you.
And so you, you need to understand how long should they be with you? What makes sense? Where are they gonna continue to get the value? And so understanding, you know, what that estimated lifespan of a client is also helps you understand what do you need for a pipeline? How many prospects do you need in there?
What kinds of prospects do you need in there in order to continue a healthy cycle? Because you do wanna be careful. You don’t wanna have so many new clients coming in the door that you are under servicing them as soon as they come in, right? Right. Because you can have too big a pipeline. You can sign too many clients at once.
That absolutely is a problem that sometimes agencies go through. But you can address that by looking at the kinds of engagements that you’re looking for, the kinds of activities that you’re engaging in, and you need to just keep tuning it so that you get that happy medium that allows you to deliver excellent service and excellent results while still also being able to continue to grow your business.
Gini Dietrich: Yeah, absolutely.
And you need to be thinking about, I mean, for me, You know, when I started, started down this path, and it’s been several years now, but I, I was completely overwhelmed like everybody else gets, and I was trying to understand how I would delegate certain things that I, of course, thought only I could do and spend more time on business development.
And one of the things that I did is I blocked off half a day a week and I said, Okay, this half a day, I don’t take meetings. I don’t do internal meetings, I don’t meet with clients, I only work on the business. And that eventually grew to a full day. And so there is one day a week that I do not do any meetings.
We don’t have internal meetings. We don’t have external meetings. I don’t meet with clients. You, I don’t answer the phone. I turn off all distractions and I work on the business. For other people, it might be an hour a day or two hours a day, but figure out what works best for you. I know myself well enough to know that I’m completely disciplined, to be able to say, Okay, this is the day I’m working on business, on the business, and I’m not doing anything else.
If I had to seed it into every day, I would, I’m not disciplined enough to do that, and I know that about myself. So figure out what works best for you so that you can start to build it into your process. And you’re working on the business as much as you need to to be able to fill that pipeline.
Chip Griffin: Absolutely. And, and it’s knowing you and, and how you work that allows you to create that space most effectively, right? Because there are some people who can work with the, the, the kind of system that you have. Others may need a different structure, right? Come up with the structure that works for you. And when it comes to structure, I think that’s another one of the issues that contributes to feast or famine, which is that there are a lot of smaller agencies out there that put artificial constraints on their size. And they say something like, I want to, I always want to be a five person team. Like, that’s my happy spot.
The problem is if you don’t have any ability, any ability to flex in your capacity, it does make it very difficult to have an ongoing pipeline of new business because then if you’re at full capacity and you don’t ever want to expand, if you have someone come to you and say, Hey, I want to hire you, you have to turn them away.
Now the problem is that you’re then in a, in a situation where you don’t just have to have a pipeline, but you have to have a pipeline where someone pops up with wanting to hire you at the exact right moment, so you have to time it as well. Right? That’s almost impossible to do. So you need to have the ability to flex by having contractors or being willing to, to make additional hires so that you can have that additional capacity to serve new clients as they come on, but also to pull back when necessary.
And so if you’re going to try to achieve a hundred percent utilization at all times and never go above and never go below, you’re, you’re going to struggle and you’re going to have feast or famine. So you need to have that elasticity in what you’re able to deliver so that you can manage a sensible pipeline.
And it doesn’t have to be timed just so correctly. Because that’s almost impossible to do.
Gini Dietrich: So. I know just from my own experience that people are probably wondering how much time should they spend per week on business development?
Chip Griffin: That is an impossible question, but a very popular one.
Gini Dietrich: It is.
Chip Griffin: Right? If that, I mean, I, I do, I… how many hours a week should I be spending on business development?
I can’t tell you that. I mean, it depends on all of the questions that we’ve led up to so far. What size pipeline do you need? What kinds of things? You know, if you’re in the business where, you know, you only have to sign up two new clients a year, you may not need to spend as much. But also it depends on the quality of your network and the ability that you have to extract referrals from your existing network and all sorts of other stuff.
That’s just unknowable. So what you need to do is you need to, you know, sort of pick a number as a starting point and see what it develops. And if you’re not developing enough, you need to spend more time or spend that time differently, right? But it’s not, there’s not a one size fits all answer where I can tell you, you know, you need to spend 10 hours a week or 20 hours a week or two hours a week, because every agency is different. Every agency owner is different and, and you know, there are some agency owners out there who probably could spend 30 minutes a week and that would be more than enough because they’ve got an established reputation and they actually have people knocking on their doors saying, Hey, you know, when are we gonna get a chance to work with you?
When can you fit us in? And that’s obviously ideal. Most agencies are not in that position, so most agencies are gonna have to spend more time. But it’s just throwing more time at it also is not typically the right answer. You need to be able to understand who your ideal client is and how to communicate effectively to them the value that you’re providing.
And I have seen some absolutely miserable ideal client definitions and positioning statements of late that I just, my head wanted to explode at some of the things that, that I have seen agencies doing because it’s a complete lack of understanding of who you should be servicing. And if you’re out there and you’re saying I can do pretty much anything for anyone, that’s not a good positioning.
You need to understand who you can produce the best results for. And if you are that targeted and if you know exactly who you can serve well, you can spend a lot less time on business development because you’re not wasting so much of your effort.
Gini Dietrich: Yeah. And I would say in there, in the business development arena is not just networking and, you know, having coffees and things like that, but it’s marketing your agency.
It’s knowing who your ideal customer is. It’s knowing how to communicate to them and with them, it’s knowing where they hang out online. It’s knowing where they hang out in person. It’s, you know, the right conferences and trade shows to go to. It’s those kinds of things. You know, I spend. probably two or two and a half, maybe three hours a day, marketing the agency.
That’s, that’s one of my main priorities. And that’s not necessarily business development in its traditional sense, but it is what drives most of our referrals. So you think about it from that perspective as well, that you’re not just having to go out for 30 minutes or eight hours or 16 hours or 25 hours a week networking.
It’s also marketing your agency.
Chip Griffin: Absolutely. And this is something that Lee McKnight and I talked about on the Small Agency Talk Show recently because the business he works at RSW/US came out with their annual agency business development survey. And they looked at, at some of the tactics that agencies are using and what’s working and what isn’t.
And one of the things that, that struck me as it always does when I’m talking with agency owners is there’s always this desire to engage in tactics that have never worked for you before, but you think ought to. And so you want to learn how to do them well. And so the things that that typically work for agencies and that showed up in the RSW/US survey, things like referrals, things like networking, things like organic growth. Yep. All those things. And there’s nothing wrong with them. And I’m not saying you shouldn’t use them. Lean into them. Figure out what actually works for your agency. Like if your agency does not, has never generated any business off of Facebook ads.
And I was sitting here saying, Geez, you know, I need to, to, you know, grow my revenue. I’m not gonna say let’s go buy Facebook ads. No, no. It doesn’t mean you can’t test some of these things on a small scale and see if any of these other tactics that have, that you’ve either never used or have never worked for you before, that, that they might not work one day.
So yes, devote some, some basically marketing R and D to that, but for God’s sakes, lean into the things that have gotten you to where you are today. Right, right. And so look at the clients that you’ve won. How did you win them? Do more of that.
Gini Dietrich: Do more of that, yes. Yeah. And it’s going to be different for everybody. I mean, for us, blogging was the right place for a really long time, and this year it stopped generating as much.
And so we started testing a newsletter on LinkedIn and suddenly it’s, Oh, Right, but that doesn’t necessarily mean that that works for everybody. So you, you definitely have to test. I love the idea of doing marketing R and D, but if you’re, if you’ve grown your agency on referrals, figure out how to get more of those.
Chip Griffin: Right. And, and that’s the thing, you know, people are always like, Well, you know, geez, referrals don’t work. You know, because you can’t, there’s nothing you can do about them. They, you know, we get referrals. They’re unpredictable. No, they, they can be. You just have to have a process to encourage referrals.
You need to create the circumstances under which those referrals show up. And part of that is by being out there and talking with your network about the work that you do and the kind of clients that you’re looking for. And if, if I’m having a conversation with somebody and they know the work that I can do, the results that I can produce and who I produce them for, they’re much more likely to make a referral.
If all they know is that I’m a digital marketing agency or a PR agency or an advertising agency, that’s a lot more difficult for them to make a referral because they’re not making the direct connection between the person that they just talked to yesterday, or having lunch with tomorrow, and the fact that they might be a good fit for you. Because I mean, an advertising agency, almost anybody could use an advertising agency. So you need to be able to communicate when you’re talking with people in your network, what kind of clients do you do the best work for? And if you say, you know, I’m an advertising agency and I service funeral homes just perfectly like, like I produce outstanding results, guess what?
Someone’s talking to a funeral home director. They’re gonna say, Hey, you should talk to this guy over here. But if, if all they knew was you were an advertising agency, they’re unlikely to make that referral.
Gini Dietrich: That was quite the analogy. The example.
Chip Griffin: I don’t know where it came from .
Gini Dietrich: Funeral homes. Yes.
Chip Griffin: Right. So it’s probably the whole famine thing, right?
We’re talking feast or famine. What happens when you have a famine? People die. So, funeral home, Geez. I dunno.
Gini Dietrich: Well, on that note.
Chip Griffin: I feel like I may have killed off this episode. So why do we, why don’t we draw this episode to a close? But you know, for God’s sakes, when you’re busiest with client work, just do more business development, do more, and, and you will be amazed at how much less of a revenue roller coaster and feast or famine you actually experience.
So if you had only listened to the first two minutes of this show, you probably got all the value you actually needed. But thank you for listening to us for an extra 18 or so. And with that, I’m Chip Griffin.
Gini Dietrich: I’m Gini Dietrich.
Chip Griffin: And it depends.