"For any agency, once you make that decision and draw that line in the sand, then that becomes a bit of a good watershed moment. And speaking from experience, you never really look back from that." – Matt Hodkinson
Barry O’Kane: Hi and welcome to Episode Six of Season One. As you probably know by now, Season One is all about the long haul. We dig deep into long term client relationships, recurring revenue, repeat business, referrals and more. Everything that’s vital to building an agency that not only survives, but grows.
In this episode we get an incredible insight into how transformational it can be to change your agency’s mindset from project based to a more retainer based model. My guest, Matt Hodkinson, from Influence Agents, very clearly articulates why you might want to do this and some very specific and actionable approaches. I hope you enjoy the show.
Hello, and welcome back to Happy Porch Radio. I’m amazingly excited to have Matt Hodkinson here with me. Hi Matt.
Matt Hodkinson: Hi, how’s it going?
Barry: Thank you so much for joining me. Just to start, why don’t you introduce yourself and tell us a little bit about yourself and your company.
Matt: I’m Matt Hodkinson. I’m the CEO at Influence Agents. We’re an inbound content agency based in London. What we do is we basically work alongside B2B technology businesses, like IT companies, MSPs and value added resellers, to help improve the amount of traffic, and qualified leads, and eventually sales that they’re getting using inbound marketing, blogging, digital and all of those good things.
Barry: We connected through the Agency Collective, which is an excellent organisation and had a really good event. At that event we had the start of a conversation about retainers and recurring relationships with clients, and I know that you have a lot of experience and a lot to share about that. So I’d love to dig straight into that. As you know, Season One is all about the long term relationship with clients.
So to start, tell me a little bit about the kind of recurring business your company does.
Matt: To rewind a little bit, I think as far as about a year back, we were still doing–as many agencies do I know–still too much project work and what that produces, you know, and talking to a lot of other agency owners they would concur with this, what it produces is a lot of uncertainty in the cashflow department.
It almost reads like a roller coaster. Lots of dips and lots of highs as well, and any unpredictability in pipeline and revenue and in growth is clearly a bad thing for any business. So, we came to the conclusion that we wanted to replace a lot of the project that we were doing with retainers.
Now, I realise for some agencies that’s very difficult. I know, particularly web design and development companies seem to find it very difficult, because typically there’s a glut of work that’s required when you’re developing a new website or redeveloping a website, and the kind of ongoing work is quite often maintenance or small bits of project work.
But we’re in a rather fortunate position in that what we do in producing content and promoting content to our clients’ audiences on an ongoing basis is the likes of writing blogs, it’s creating premium pieces of content like video, and webinars, and slide decks, and ebooks, and white papers and all of those good things. And, so, we can quite easily maintain a long term relationship with our clients to keep fuelling their digital marketing efforts and keep fuelling their pipeline in that way.
So, we transitioned from this old model of just doing bits and bobs and creating the odd bit of content for clients or building a funnel and then kind of stepping away, to really focusing on retainers. And I think for any agency, once you make that decision and draw that line in the sand, then that becomes a bit of a, you know, good watershed moment. And, you know, speaking from experience, you never really look back from that.
Barry: Yeah, that’s really interesting that you’re saving that you’ve moved from projects to retainers or recurring relationships rather than trying to juggle them both. Or are you still in a position where you’re doing some of it both?
Matt: No we still we have clients, inevitably, that come to us and ask us to do project type work but we’re in the rather fortunate position of not having to take it. So, we’ve got to focus on relationships and long term focus and there are two reasons for that.
I mean, one is that, you know, rather selfishly, it’s good for us as an agency for the reasons I’ve already cited. You know, more predictability in the pipeline, more stability in cash flow and all of those things. But for the client, it’s also beneficial because they are seeing the fruits of a really strategic approach to what we do. They don’t just want something for the short term that they then have to run with and promote themselves and, you know, juggle with all the other 47 hundred things they’ve got to do as business owners. They want somebody to be holding their hand and walking them through this process and continuing to deliver results over time as well. And, also, you know, grow the level of results that we’re getting in terms of generating new leads and growing the business for our clients.
So, it works on both sides. It’s a real win-win situation. But, as you and I have spoken about before, the big, kind of, head trash around this from a client’s perspective is the commitment side of things. I think that clients tend to be a bit like men when it comes to relationships and commitment’s a scary thing. So, we tried to remove, you know, the barriers and make it as frictionless as possible for people to do business with us by not making them commit to the long term.
We’ve found what we think is a pretty good compromise of having a rolling notice period rather than tying our clients in for 12 months and then having to worry about the renewals, you know, one or two months before that 12 month marker comes around. And I know that a lot of agencies still, kind of, subscribe to that model of those long term 12 month relationships. You’re tied in, you can’t get out of it. In our experience the clients who know that they can exit, you know, given a realistic and relevant kind of notice period is a really good thing for them.
Barry: What you said at the start there about the relationship being value coming to both sides, rather than treating the recurring as something, ‘Hey, I need the money to stabilise my cash flow or to reduce the sales effort, I mean, the feast and famine cycle.’
Matt: You can’t bring an ego to this relationship. It can’t be about an agency setting at their stand and saying, ‘Well, if you want to work with us, you know, this is the way we work and, you know, like it or lump it.’ If you want a relationship to work it’s got to start off on the best possible footing and it’s got to be a win-win situation.
As any agency knows when selling, you know, the mitigation of risk is a big thing because what we do is such an intangible. Over the years I know that agencies have tried to productise and package up what they do to make it seem more tangible to clients but still there’s always this element of, you know, leap of faith.
That’s the phrase that’s going around in a lot of prospects’ minds, is that I’m not guaranteed to see the results and, you know, you’ll quite often be asked for value based selling or results based charging and all of those things. That starts the relationship off on a disparity and that, that’s not going to work. Whilst we’re not tying our clients in, we still hope for the longer term relationship. We still want them to go full term and realise the benefits of what we’re doing. And that only comes when there is parity. Everybody in the relationship is benefiting.
Barry: And there’s almost a little bit of a conflict there between that long term relationship, is where the real value is for your client as well as for yourself, but at the same time, particularly for a new client, it is a scary commitment, like you say. Long term contracts and unless there’s a very strong belief upfront that that value is definitely going to come.
So, do you find that, that the rolling notice period that you mentioned, do you have to sort of massage that? Or is that a kind of compromise? Or is that something that you’re able to standardise across everything you do?
Matt: I think we’re quite fortunate in that at this moment in time we can cite it as a bit of a differentiator because not many agencies I know of are using that model. There are still a lot who have no tie in whatsoever which doesn’t serve them as an agency, which means that they’re compromising in a big way and introducing a lot of risk on their side. And, on the other end of the scale those that are tying their clients in for 12 months or sometimes even more.
And, so, I think we can use it as a bit of a differentiator right now and I think as more and more agencies come around to this way of thinking, more people listen to this podcast for example (laughter), and are alerted to it, you know, we’re going to have to find ways to even justify that kind of model.
I think it works right now and, you know, tied in with that is the expectation setting. A big part of maintaining that relationship, getting off on the right foot but also keeping clients engaged is by being completely honest upfront and saying the kind of work we’re doing generates results in a certain timeframe and not overselling. Because if we do get three-six months into the relationship and, you know, results from as far as you’re concerned as an agency are kind of on par with where you want to be or sometimes even ahead of where you wanted to be as a goal.
If you haven’t communicated that to the client effectively, then they’re going to have different expectations. They clearly want as much as they can get as quickly as possible.
There’s a rather in depth deep conversation that needs to happen very early on to say, ‘These are the methods we’re applying, this is what we’ve seen historically in terms of the time it takes to get the right kinds of results for you,’ and set that expectation so that they’re completely satisfied. You know when that situation arises and when it all comes to fruition.
Barry: What do you think is the difference between that kind of process–so setting expectations, being clear and honest upfront and so on–in terms of the sales process for a project versus the sales processes for a more long term arrangement.
Matt: Well, I think the deliverables are usually more easily defined in a project scenario. Typically, if it’s a fixed piece of work you have a remit and that’s what you have to deliver. It’s very difficult for us, given what we do to be able to really provide an expectation or guarantee of any kind of results. When it’s a project based piece of work. It’s only when we can apply our skills overtime that we can start to bring real results to our clients.
And I know that that’s not the case for every agency owner, every discipline of marketing. So again, if we go back to the kind of website design and website development guys, I think, you know, if they want to move from a project based model to a retainer model, again, it’s going to be mapping out exactly what it is that they’re going to be delivering in a retainer model versus a project and communicating the value of doing it in that way.
And I know that a growing number of web development and design agencies are doing this. That they’re starting to get involved in websites for conversion and, you know, taking this persona led approach and, you know, applying some of the same inbound methodologies that we use in our agency. So that they’re making website design and development more about real tangible business results and about lead generation and about sales, rather than about user experience and a flashier or more attractive website presence.
Agencies can do better things, can set better expectations and create longer term relationships when they make it more about results and real tangible business goals.
Barry: Yeah, that last part for me is really, really key. Being in the development side of things myself, I think that being able to talk about more than just, ‘Here’s your project,’ you know, ‘Here’s your deliverable,’ or, ‘Here’s your piece of code’ or your design or whatever and that’s me done, is to me, not providing the value in terms of what the business actually needs.
And actually thinking about that longer term, although–and maybe you can talk a little bit about this–that sort of transition from thinking and selling and having those types of conversations around projects, and then having to shift that to talking about, ‘Okay, well actually, this is going to be a longer term, in order to provide the value that we can see, that we can provide and that you’re looking for,’ that that’s a different type of conversation.
Like you said that the services you provide the value is maybe clearer on a longer term cycle, do you feel that that shift from that conversation from projects to the, ‘I’m now talking about the value that comes longer term,’ do you think that’s a challenging shift?
Matt: I don’t think so because it really speaks to the desires of the clients in prospect. They’re thinking return on investment, they’re thinking, you know, real tangible business. They’re thinking about value. And actually, I think, historically a lot of agencies have just been about the features and the deliverables. Whilst a lot of business owners will see the underlying value of doing that, or kind of, assume the value of it.
So if we take, you know, an average website redevelopment, for example, they know that at the end of it they’re going to be presenting their business in a much better way and theoretically that that’s going to bring them more business. They haven’t really taken it to the next level and thought to what extent is this going to move me towards my business goals.
But in turning the conversation from a project based conversation to a retainer based conversation, you as the agency owner can be turning the conversation towards true business goals instead. And I think any prospect would be receptive to that. They’ve got to make a bit of a connection themselves if it’s a project, you know, between a website redesign in that example, and the results. Whereas you can kind map that out for them if you’re given the opportunity to work with them longer term.
Barry: And, so, some specific examples of a web designer who’s been traditionally working in the majority in terms of, ‘I do the design, there’s your website, and then come back to me when you want a redesign’–what are the types of things, other than support and maintenance that that kind of agency person could be looking at?
Well, the really value in terms of my design skills longer term includes things like… and I assume we’re talking about things like conversion, optimisation and that kind thing?
Matt: Exactly. One of the major shifts in a lot of web design and development agencies are seeing is taking this persona, via a persona specific approach, where it helps my agency, and anybody who has digested some of HubSpot’s content will know that they’re all about being very specific about who the buyer is. So niching in a particular industry but also identifying particular roles that are the best fit for their product.
Now, I’m yet to meet a business that just has one buyer persona. They have several. But what they can do is, they can create different campaigns to speak at a more specific level to the needs of that particular buyer and then repeat the process for a completely different profile of buyer. And I think for any agency, especially in web design and development, they can be thinking about creating web assets, be it a web page, be it a mini site, be it landing pages, that are specific to a particular buyer persona, and then perhaps, either on a month by month basis or even a quarter by quarter basis, shifting focus to a different buyer persona. And that way, as you move through the relationship you’re increasing the numbers of buyers and the number of sectors that they, as a business, are reaching out to.
Now, effectively, you’re creating more and more web assets that can be marketing their business more effectively and it’s speaking at a more specific level to more different types of buyer persona. And I think that’s the big issue that I’ve seen recently. The biggest opportunity for those in web design and development to move into that retainer model is to think about the different types of buyers and be more specific about the web properties that they’re building.
Not just putting all their effort, as many business owners will want you to, into a fantastic home page but instead on focusing on those subsections and seeing which buyers they can more accurately speak to.
Barry: Yeah, that makes a lot of sense and changing the focus between–instead of trying to do everything at once, or what often happens in a project, in trying to do everything at once and doing nothing at once, in my experience–but being able to shift focus across time is, can be really powerful. I can see that makes a lot of sense.
That also allows–so if an agency is like design led, they’re really focusing on, ‘This is our strength,’ or technology led, so, ‘Our real strength is in the code or in the platform,’–that still allows us in either case to say, ‘Well, this is how our expertise feeds into this focus,’ in, as you say, landing pages or a particular marketing campaigns or the technology behind integrating all of that.
Matt: One further note to that is that HubSpot have kind of defined this whole process. So, anybody who’s looking to move their agency to that model, if they search for something called ‘growth driven design’, that’s the terminology that HubSpot have kind of coined for this way of moving design and development agencies from project to retainers.
And they’ve got a whole wealth, as you’d imagine from HubSpot, a whole wealth of content on this–videos, training courses–but also, even like quoting tools and proposal templates. There’s almost like a business in a box over there. So, yeah, search for ‘growth driven design’ and you’ll get some really good guidance on that.
Barry: So, to shift topic very slightly and to go back to something you said a little while ago about pricing and using results or value based pricing, is that something that you–company–do yourself or something that you see that you find, does that work in the retainer model?
Matt: What we found works best is, because we battered around this idea of results based charging, and we’ve never been able to really nail it for various different reasons. But most predominantly, for many agencies they’ll maybe sympathise with this, is that you’re reliant on the client to be able to convert any of the business you bring them. Their sales process rarely changes as a result of what you do for them. And so, you’re kind of beholden to things that are outside of your control.
So, we don’t tend to go for that model. Again, the compromise sort of thing we’ve found, is we’ve moved to a, what we call a value based pricing model. Almost like a points system where people buy a certain number of assets from us. And rather than charge them for our time, we charge them for a deliverable. You know, month on month, we’re kind of planning the different deliverables we’re creating for them and each of those has a value in terms of like a points system.
And we found that that works because, you know, a lot of agencies will recognise that, you know, mistakes are made sometimes. You know, it takes awhile sometimes to be able to match the tone, the brand identity, and also to get up to speed with the facts of a particular industry or a particular product that’s on offer from a client. You know, whilst you’re going through that alignment process and researching topics and really getting up to speed, there’s a lot of wastage, sometimes. A lot of revisions going back and forwards as well. We don’t think that a client should have to pay for that.
Our compromise is that we charge based on deliverables so the client knows that they’re getting something that they have approved that is fully useable and is of great value to their marketing engine, if you like. That’s where we’ve gone to. We don’t charge by the hour. I mean, obviously, behind the scenes we’re doing all of the calculations to make sure that we’re still profitable and that there’s still the margin that we require in order to keep the lights on. For the most part, again, it’s a system that appeals to both the client and to us as an agency.
Barry: Yeah, the obvious benefits of not tracking, or sort of, squabbling over hour by hour invoices, yeah. Have you productised that service? I mean, is there a standard, as a client I pick x, y and z? Or is there a sort of a menu? Or is it more custom?
Matt: Yeah, we’ve gone for the kind of traditional gold, silver, bronze type package deal whereby, you know, you buy more points and then the per point price comes down. There’s kind of a bulk buy situation.
But quite often we’ll find that we have to revert to a completely bespoke proposal and that’s fine. If we find ourselves, you know, in between two packages then we’ll design something that meets the specific needs of the client. You know, we’re not as rigid as that.
But it gives, what we’ve found is that it gives a good guide to prospects and to clients as we’re onboarding them to let them know what the options are and at what levels they can achieve a bit of a discount, as well. So, yeah, I think that’s important.
One of the things I’ve battered around as well over the years is whether we publish our prices on our website or not. And as things stand as we speak right now, we do but I’ve also heard really strong arguments for not doing that. You know, the most compelling being any customer that you win on price is going to be lost on price. But I think, you know, transparency sometimes is a good thing because if you set expectations and you’re setting those expectations with the right profile of prospect, then they’ll appreciate it. You won’t lose them as a result of being so, kind of, dark and hidden about what you’re charging.
It’s only when you’re actually sitting in front of somebody who’s not an ideal prospect and doesn’t fit the profile of your ideal buyer that the price becomes an issue anyway. So, so long as you’re being targeted about who you’re talking to and who you’re targeting, there’s no issues.
Barry: Yeah, that’s really interesting and the two thoughts that come to mind there are qualification of any leads and people coming in. If you’re more transparent about pricing then it’s easier to qualify people who fit or don’t fit into where you’re target is.
Thinking about the packages, that was, even separate from the pricing, but having those clear packages but then, as you say, being able to flex that on a per client basis, is that transparent to a client who comes to you first of all? I mean, do you feel like when a lead comes in they’re looking at gold, silver and bronze and thinking, ‘Oh that’s it,’ or is it fairly clear, depending on how that initial conversation happens that for the right clients you’ll do the right things?
Matt: To be honest, we’re not advertising that fact to an extent and that is semi-intentional. I think that the reason it is semi-intentional is it gives us that flexibility to be able to to be more bespoke when the conversation gets to that stage of proceedings.
So, if we have a prospect that’s thinking, ‘Okay, well, I think we need that kind of mid range level of service but we haven’t got budget for that,’ and we’re able to give them something that is kind of in between two of the tiers it kind of feels like we are, kind of, bending to their needs a little or being more flexible. And of course that goes a long way, to be able to say that to a prospect. That we can bend to their needs and it kind of makes them feel a bit special if it’s more bespoke. You know, for the same reasons that being a specialist commands higher pricing, you know, to be flexible is a really good thing.
So, we save that. You know, we don’t advertise the fact because every prospect we were talking to at that point would be thinking, ‘Okay, well, if they’re flexible on what packages they provide, maybe they’re more flexible on discounting and, you know, bringing the price down and meeting a lower budget. We don’t want to set the wrong expectation.
Barry: That’s actually, really smart. I like the way you’re talking about being clear on expectations upfront but at the same time having this extra flexibility for clients when you really want to close them or when there’s something additional or more powerful in that relationship.
What about retaining retainers, if you see what I mean? So, do you have any explicit ways of keeping in touch with clients with a rolling notice period?
Matt: Yeah. One of the things we realised early on–I mean, I have to be incredibly honest and open here–in the early stages of the business we probably weren’t very good at the communication with clients. And that reflected in the kind of churn rate at the time.
We’ve gotten much, much better at that now. We insist on weekly update calls with all of our clients. We insist on monthly face to face meetings, where geographically possible. Even when it’s not then it’s a more in-depth kind of screen share and video conference situation.
And what we found–and this kind of goes back to the fact that we’re on a rolling contract–the reality is, there is no concept of renewal, if you like. It’s ongoing. Again, that kind of works in the client’s favour because you as an agency really have to stay on top of communication, you have to stay on top of the relationship throughout the year and on an ongoing basis.
You’ll quite often find that agencies will kind of withdraw into themselves, this from personal experience, anyway, to get the work done. And it’s only actually with two or three months to go at the end of the year that attention is turned to, you know, schmoozing and thinking about renewal and therefore kind of returning to strengthening the relationship. I’ve seen too many agencies lose clients because they didn’t provide good communication throughout the engagement.
So, that was a really big learning for us. I think that if you communicate well with the client, they’ll quite happily forego all the extras–the schmoozing, the wining and dining and all of that stuff from what I call ‘old marketing.’ That’s really been key for us.
Barry: The regular communication being an important part of that, like you mentioned. But also, several times you said things like ‘good’ and ‘communication’ and ‘communicating well.’ Do you have an example of what you mean by ‘good communication?’ What I’m imagining is tying that back to the value it’s providing.
Matt: It all comes down to results and it comes down to being able to report on the metrics that are most important to the client. A lot of clients are coming around to the fact, really understanding as time goes on, the difference between vanity metrics and the stuff that really counts to them.
And also, again going back to the expectation setting, if we’ve set expectations at the beginning of the engagement and we’re communicating on that basis, you know, week after week, month after month, then eventually, it’s going to become very, very obvious whether you are delivering on promise.
Obviously, you’ve got to have that connection. You’ve got to engage with the clients. There’s got to be some kind of charismatic connection and personal connection. At the end of the day it comes down to results and if you’re able to offer the transparency and the key metrics, the KPIs, then, quite often that’s all it will take to just stay on track. And that’s all clients really are interested in at the end of the day, is whether you can deliver on what’s going to bring them the greatest benefit.
Barry: And to be good at that you must have that pretty good operationally in terms of delivering that process. Like you said, in my experience, it’s very easy to fall into that trap of maybe just dropping a report email or something or leaving a whole chunk of time before realising, ‘Oh, I need to get back in touch with them.’ So, when you talk about weekly calls and monthly meetings, is that systematised? Do you have a structure around actually doing that part, as well as doing the actual work?
Matt: We’ve got all our internal processes and, you know, that helps us do everything that we have committed to deliver to the client. But also, we take an approach to, not so much on the how but on the outcomes. So, I think if you can be outcomes focussed when you’re dealing with the fulfillment or the management of projects then again it comes back to being able to deliver on KPIs and it really does boil down to one simple thing:
If you as an agency, irrespective of what you’re discipline is, if you can deliver on your promise, you can’t go far wrong. It really is that simple.
Barry: And that ties it all the way back to the start to the changing–of our conversation–to the changing the conversation from projects to retainers and how that’s, or long term relationship however it’s structured, and how that conversation is about the value provided rather than the how, rather than the bits of pieces.
Outstanding. Thank you so much for your time today. There’s quite a lot more, I’m sure I could dig into that even more, but just to finish us off, if anybody wants to connect with you or with your agency, where do they find you?
Matt: They can find our website at InfluenceAgents.com. Feel free to use good old email to get in touch with me, matt(at)influenceagents.com, and if you search on the good social media, you’ll be able to find us there as well I’m sure.
Barry: Brilliant, thanks again, Matt.
Matt: Thanks, Barry.