Agency Forward

Chris DuBois (00:08.918)
All right, good to go. So how should an agency know if their positioning is tight enough?

David C. Baker (00:16.396)
tight enough. Yeah. Well, if they're not making any money, I guess maybe it could be too broad or it could be too narrow for sure. I have seen firms where their positioning was too narrow. One, there was only six possible clients in the world for them. So that was too narrow. But there are, I've published five pre-tests. So things that you might think about before you actually

make it official and then for sort of back tests that you can use after you've got it out in the marketplace. But the core of the answer to that question is really very mathematical and it's an overlay of two separate things. So you look to see if you are in a certain range with the number of competitors and within a certain range in the number of prospective clients.

And those don't always agree. Most of the time they do. And there's a way to handle that if they don't agree. So on the competitor side, you kind of want somewhere between 10 and 200, but ideally you would skew towards the 10. So the lower side. People don't like that idea, but unless you're first to the marketplace, there are going to be other competitors out there. And if there aren't other competitors,

that should normally terrify you because we live, economists call this an efficient marketplace. So any holes get filled in with water as it finds its own level. And so if there's no other competitors, then it could be that you're the first to discover this, but it's more likely that a lot of people tried it and it was a bad idea. So somewhere in 10 to 200, ideally closer to 10. And then the prospects, you need

At least 2000, ideally more like 10,000. So 10 competitors, 10,000 prospects, somewhere in there is the perfect match. It's not safe to assume in a professional service setting that you can lock up more than 1 % of the opportunity. Now, some firms do more than that, but it's not a good bet. And so 1 % of the opportunity for 2000 would be 20 clients. that's actually more than you need at any given point.

David C. Baker (02:36.856)
So that's how I would answer it, 10 and 10,000.

Chris DuBois (02:40.542)
Right? Yeah, it's like the magic ratio. There is definitely, I don't know, paradox is the right word. Like something I've seen with my clients is like, we're trying to, so we niche on whatever problem set we're trying to solve for. But then we're using the, you know, the vertical horizontal, like the positioning in order to kind of narrow the market and who we're talking to. So we can get more specific with the messaging and everything. But we've started adding.

like I guess diagonal layers to that, like where we can, we can just look at a local space, right? Depending on the size of the market that we're working in. or we could add like the, life cycle of the business, what stage they're in and just really target that. But there, there always becomes this point where it's like, now you are getting way too refined in the market. So even though you're super targeted, it's like, there is nobody. And so the fact that we have this, this ratio to fall back on is, is actually really helpful.

David C. Baker (03:40.302)
Right. Yeah. And also you might end up with the ideal target in terms of those numbers that we just talked about, but that doesn't guarantee that your market is addressable. So for instance, you might say, we're a branding firm and we want to rebrand companies. And so there are 10,000 at any given point that need to be rebranding and there's only 10

big firms that do it. But there's no easy way to find those people at the right moment when they're ready to rebrand. So there's an addressability factor too that has to be solved.

Chris DuBois (04:23.22)
Yeah, so, mean, 5 % rule, right, where only 5 % of the markets currently looking for a solution probably contributes. And so really, would you want more potential clients knowing that only a certain percentage are currently shopping? Or does that factor it in?

David C. Baker (04:41.87)
I would rather err on that side for sure on having more. But if you end up with, let's say, know, hundreds of thousands or a million possible clients, that's a sign of one of two things. It's most likely a sign that you're not targeted enough, but it could also be a sign that you are addressing an immature market or a market that doesn't care that much.

So an example of that would be manufacturing firms. So there are millions of manufacturing firms and not that many firms that focus on manufacturers. Why is that? It's because manufacturers don't naturally believe that specialization is important when they're finding a firm. So they tend to go with somebody they've heard of or somebody locally who is a generalist. So that's a sign that

Okay, we need a bigger market because this target is a little bit less sophisticated. It's still a fantastic target. It's just a little different than the normal rules that would apply.

Chris DuBois (05:48.342)
Right, so I've been dying to ask you this question because as we were talking before this, I'm a fan of all of your content, books, everything. So one of the challenges that I get into with my clients is when we start talking positioning, there's always this fear that if they get more specific with their positioning, they're going to lose potential clients. How do you...

how would you approach shaping the way that they're viewing this from, you're not just losing potential clients, you need to be thinking about gaining all of these potential great fit clients.

David C. Baker (06:28.172)
Yeah, and some of those fears are so real that nothing I would say would actually dissuade them from that point. And often it comes from two things. One is like if this is earlier in their journey, so they're still in the expiration phase. They're still loving all the variety that comes from being a generalist in the marketplace and they love those new challenges. Or they are very

They're very inclusive in decision making, so they want the staff to be a part of the decision, and the staff cannot as a group make a courageous decision. What I tell them is that positioning is strictly about the work you look for and not the work you accept. So you can still take whatever you want. You don't have to lose any of your current clients. You're just going to publicly put a stake in the ground and

More than that, like even if that doesn't resonate, tell me how you're gonna do a marketing plan for a firm that's not focused. So we're gonna have a marketing plan that drives people to a focused message. All the other word of mouth, referral kind of stuff that's been buttressing your firm for all these years, because you haven't had a marketing plan, is still gonna happen. people do have to realize that there is a downside to this, and they have to be willing to accept that, right? It's not all.

It's all not all peaches and cream. There are some downsides to positioning.

Chris DuBois (08:00.074)
Right. And it's, it is very hard to, to give that confident. No. Right. If you don't know where that next deal is coming from, if you don't know how to keep the lights on, pay your team.

David C. Baker (08:11.436)
Right. It is. Yeah. And especially if you're responsible for payroll, it's even harder to do that. Right. But at some point, it's not just about marketing. At some point, it's about that. It's about ethics and delivering real value for your clients. And I use a silly example, but I try to make the point. Like if you have a physician that like they're really good at heart, they're just they're heart physician. They've gone through all the training. They've been certified, all that stuff.

And in the next staff meeting on Monday, the owner of the medical practice says, hey, know people keep coming into our office because the UX isn't very good in this building and they think this is where you're going to do knee replacement surgery. And they come in and we have to send them down to where they meant to go. And it says, quit doing that. Let's take some of these people. I've always wanted to do that. It's like, that's so ludicrous.

because we see the skill set that somebody has as a surgeon. Well, why do we think we don't have the same sort of skills that we can just apply it to anybody? It's like a joke. It makes me mad, actually, because I think a lot of our unwillingness to focus is actually an ethical problem.

Chris DuBois (09:32.734)
Yeah, I can see that. It's a, reminds me of just how agencies will continuously take on additional services over time. And where they might not actually even be the expert in it, where if I went into my garage and get my brake lines fixed and the mechanic said, yeah, we got that. And then I watched him going back and Google how to fix brake lines. I'm immediately on edge yet. Yet every agency will just keep, yeah, we can figure out SEO. And then it's like, now it's on their service menu.

David C. Baker (09:53.324)
Yeah. Yeah.

Chris DuBois (10:02.568)
And it is an ethics issue.

David C. Baker (10:03.276)
Yeah, yeah, it is. And we wonder why we're we're not a regulated field. It's in part because the sad thing is that, you you only regulate things that if they went bad, it would hurt people. So nuclear plants, medical people, CPAs, lawyers, well, there's no regulation on marketing people because there's very little good or bad we can do.

Chris DuBois (10:11.318)
Yeah.

David C. Baker (10:31.906)
That's what the marketplace thinks and that's sad.

Chris DuBois (10:34.996)
Yeah. So if you were forced to reposition an agency in 30 days, what would be the first thing you'd do?

David C. Baker (10:46.274)
Well, the position decision has to emerge from something they have already done. So the first thing I would do would be to look at what the options are. And the vertical options are easy because you can just pick what NAICS codes they've done work in.

but the horizontal ones take a little bit more thinking. So that's the first thing I would do is figure out what are our options that we're choosing from. And it may just be one, so it's just a matter of courage, or it might be two or three or four, and we have to just play the pros and cons game and see which one makes the most sense.

Chris DuBois (11:24.896)
Right, and then I guess what criteria are you using to see which one does make the most sense?

David C. Baker (11:32.954)
So ideally, you have at least two or three examples within the last two or three years, good case studies. You made a lot of money, you really moved the needle. Those are the kinds of things that you're measuring. Whether you have any existing connections in those spaces or referral sources, whether it's a good place to go, like,

You're not gonna be a cobalt shop. That's dead. You're not necessarily gonna start an SEO shop right now, given all the uncertainty about AI. So all of those factors, and in most cases, I don't have to do any research, because I've worked with so many firms. In other cases, I'll have to do some research to say, okay, what's the size of the market? Who are the competitors? What do they need?

Is this a good fit? then there's lots of little things too, like geographic expectations. So if, for instance, you're a fashion firm, like most of your experience is in fashion, so that's an option. Well, if you're in Iowa, that's not gonna work, right? And there's a dozen of those where there's just packaging in Chicago, tech in...

Chris DuBois (12:47.03)
Yeah.

David C. Baker (12:54.282)
on the West Coast or Boston or New York or like, so you have to kind of overlay some of those things too and say, what would the marketplace say if they heard of a firm focused where you want to focus that was geographically located here, right? So there's lots of little things too.

Chris DuBois (13:10.74)
Yes. I want to get into two things that you brought up during this with the first one actually where you left off. How have you noticed that a lot of companies are still looking for locally based firms?

David C. Baker (13:22.446)
No, not sophisticated clients. They don't care. To them, expertise is way more important than where you are. So I would say that's the case. But as you move down that sophistication ladder, then yes, geography is sort of a protective moat where they want to work with a local firm as much as possible.

I strongly suspect that's going to go away. It'll keep going away like it has for years. mean, geography was the moat over this industry before the internet came around. So there would be, you know, the small town of 100,000 people, there might be 10 agencies, and you were all competing for work within that community. Well, those days are completely gone. So, except for the unsophisticated options, and I think those are slowly disappearing too, I would guess.

Chris DuBois (14:20.758)
I like that you just referenced a town of a hundred thousand as being small. I'm from a town of about 3000. so, but the, have a client in Duluth, another client in Charlotte, and both of them are working with, I guess, less sophisticated marketplaces, more like mom and pop shop type stuff. And for all of, for those clients, like they very much appreciate having someone nearby. And so yeah, I'm seeing pretty similar things. But the other, the other thing I want to get into,

David C. Baker (14:24.856)
Yeah.

Yeah.

David C. Baker (14:44.61)
Right. Yep.

Chris DuBois (14:50.216)
is something you brought up that I feel gets missed by so many agencies. And it's when they're looking at positioning and what market do they want to go into, just asking, do I have access to this market? And it seems like such a commonsensical question, but it gets so often overlooked and I'm not sure why.

David C. Baker (15:13.368)
Well, maybe because they have never really had to do a marketing plan, so they don't necessarily realize how difficult it might be. And then there are some industries that defy a typical marketing plan where the work that you do is going to be based on relationships in the political arena, in the social justice space, video, entertainment. A lot of that stuff is based on

your connections, your existing connections, so that can be particularly important, for sure.

Chris DuBois (15:48.022)
Yeah, I say anything. I have some clients who are trying to break into fields where RFPs are like the dominant way to get business. so, construction, where a lot of these companies are losing deals to someone who just has a better relationship with whoever sent out the RFP.

David C. Baker (16:08.43)
Right, yeah, so they're disrupting the pitch, as Blair would say, where they have some unfair advantage, usually a relationship or some inside information or something, yeah.

Chris DuBois (16:17.418)
Yep. Yeah. So I want to shift gears a bit and to talk expertise. How should agencies think about demonstrating their expertise rather than just claiming it?

David C. Baker (16:35.98)
Well, I think the answer is that they need to articulate it, but that won't only serve to demonstrate it, that will actually help them develop it more. So I'm just a firm believer that clarity comes in the articulation and not before the articulation. So you sit down to figure something out and you'll never really get as far as you could

until you craft a point of view on it, it doesn't have to be something you write, but it has to involve writing, but it could be an end product that's not written. It could be video presentation or something. So that's, that's, that I think is the answer to it. Now, obviously that can be supplemented with research, which we're not very good at as an industry, but

You need to have a point of view on lots of things. And if you're not sure what those things are, just start writing down the questions that your ICP keeps asking you or note the things that you say where their eyes light up and it feels like when you watch their reaction that they have a, they wonder if you have a camera in their office. It's like those sorts of things where they just expect you to know those things and.

write those questions down and then just start answering them by articulating a point of view. And then not as if that's in stone. I mean, it's just like this is a tentatively held point of view that then keeps getting reviewed as more information comes, right? As you listen and look for new information.

Chris DuBois (18:18.366)
Yeah, I think that's an important aspect. the, seems like the changing of opinions and thoughts, is often frowned upon. And it's like, well, when we acquire new information, shouldn't we be able to shift that opinion so that we can get the best result for everybody? but, yeah, an exercise I've actually started doing that it's still using AI. So I love writing my degrees in English. I will sit down. I will just write to like figure out all my ideas, but.

David C. Baker (18:34.882)
Right, right.

Chris DuBois (18:48.308)
Now that you're at GPT, I can just talk to it and it'll give me ideas. just have it probe, probe me for, like to further develop whatever my POV is on something and, know, give it the instructions. Don't summarize anything. Just keep questioning. Maybe like the devil's advocate to like help me think deeper about these questions. I can just walk around my, my office having a conversation essentially with myself. but getting these like deeper insights and I'm like, yeah, I didn't even think about that. And now it's actually one of those.

key things in my delivery.

David C. Baker (19:20.184)
Right, right. Yeah, I'll often run an article through perplexities, deep research arm. I never do it until after I've written the article, but then I'll just see if there's something I've missed. Like, it's not that I necessarily missed having a perspective on it. I just missed even talking about it. And so, yeah, I find AI to be very, very fascinating and useful.

Chris DuBois (19:25.878)
Yep.

Chris DuBois (19:46.134)
Mm-hmm. Yeah, just I wish more people would be using it in that regard rather than trying to outsource a thing that they're actually good at. Right, yeah. Just the comment section everywhere on LinkedIn. So I guess what would you say is we're in a trying time, I guess, for agencies right now.

David C. Baker (19:54.562)
Yeah, right, or writing posts on LinkedIn. Yeah.

Chris DuBois (20:12.948)
What would you say is the most underrated move that an agency can make to stand out right now?

David C. Baker (20:22.446)
Well, the specific thing they might do to stand out is going to depend on their positioning for sure.

I don't know of anybody that's written a book who regrets doing it. That would be, so if you, like you're trying to do the non-standard things, you're trying to climb that lead generation ladder and reach the highest rung you can. So a book would be one easy way to stand out if it's worth reading. Or even going back to some things that,

We don't do anymore. Like direct mail, goodness gracious. Why don't we use direct mail some in terms of standing out? What I don't want is to give people the idea that there's some playbook for this because I really hate that idea. Like if you're gonna do stuff on LinkedIn, for instance, don't use a playbook. Just be yourself. Don't think about algorithms. Just be yourself. That would be one way to stand out because everybody seems to be

using a playbook.

Chris DuBois (21:32.074)
Yeah. And when everyone's using the same playbook, it's, impossible to stand out. So, yeah, what I like about the writing, but I think a lot of people overthink, the writing a book piece, and this is coming from coming as a advice from someone who has never written a book, but, take like Carl Sakes is new one or even like max trailers. Like they're very short books, but there's great value packed within it. And then you immediately have this like credibility.

David C. Baker (21:35.011)
Yeah.

Chris DuBois (22:01.77)
that comes from writing a book. It sets you apart from everyone else because there is this physical act of having to do something and prick your ideas out.

David C. Baker (22:10.754)
Yeah, right. It demonstrates your commitment to thinking through something and developing a point of view. And then you can use that book in your new business efforts for sure.

Chris DuBois (22:20.977)
Right. Um, yeah, I was actually, uh, recently talking to someone who actually got the advice from you to write a book and said, was the thing that got his agency to take off. Um, was just shifting in that and I can, I can share more in that after the, uh, the episode. Um, yeah. So. So I guess going back to, to how we are in some, like, uh, I guess economic turmoil might be the way to put it. And a lot of agencies are, um,

struggling right now. What are some of those things you think they should be, they should care about more right now in order to ensure that they can kind of see it through the year and hopefully see the other side of this current challenge.

David C. Baker (23:02.498)
Well, for sure, if they haven't positioned their firm tightly enough, the firms that are struggling the most are the unfocused generalist firms for sure. So fix that, have a marketing plan. And I think just from an expectation standpoint, the most important thing they could do is to quit dreaming that the Calvary is coming to save them. Like, I don't think this is the down part.

of a cycle. think this is the new normal. And so if you can't figure out a way to make money, build your cash cushion, and pay yourself what you're worth, then you need to do something else besides run an agency. Because this is no longer the, I need to wait it out, kind of period. This is the new normal. I might be wrong.

but I think it's safer to assume I'm not. So just psychologically, I think that's the most important thing. This is the new normal. It's not like after COVID where all this money was circulating through the economy and there was artificial lack of constraints and like, no, that was an unusual time. That's not happening again.

Chris DuBois (24:25.494)
So do I, I guess, do you feel like the challenges for agencies are drawn from like an oversaturation of the market where there's too much competition or are buyers actually changing how they buy? so there's, you know, they're more tentative, I guess, to go in with an agency now.

David C. Baker (24:45.58)
I think probably both. The biggest killer of marketing spend is uncertainty. And there's so much uncertainty in the marketplace right now because of the new administration and some of the stuff that's happening and geopolitical stuff. So that's part of it. The other half is that I think we over hired and there's all these people who have been laid off who are

looking for fewer jobs, they're kind of chasing the same parked cars. And so they're putting up shingles. And they're fractional this and fractional that. So there's more competition, less opportunity than we think there should be, even though there's still a lot of opportunity. It's like people sales pipelines are really full. It's just that they're moving slowly. And so we're, there's a mismatch still between what we need

what kind of new business we need at the size agency we have and what the marketplace is willing to provide. So there's going to have to be a reckoning here. And a lot of people are already doing it. They're laying off, trimming their staff a little bit, which I think is a good thing. And like, if you're not willing to do that kind of thing and you're struggling, then it's going to be, it's going to get worse before it gets better. So I think it's a combination of uncertainty on the demand side and oversupply on the supply side.

Chris DuBois (26:15.722)
Yeah, yeah, can see all of that happening. I wanna throw one out there just because I'm interested in hearing what your answer would be. If you could outlaw like one, I don't know, positioning like cliche, I guess forever, what would that be?

David C. Baker (26:35.406)
It'd probably be any phrase that uses the word proven because it's just almost universally bullshit. We use a proven process or guaranteed results. Anything around proven or guaranteed is just nonsense in the marketing world. And I think people rely on that quite a bit when they don't have anything else to say.

And it's sort of their version, they don't come around and say it like this, but it's their version of, yeah, everybody says that they're really good, but we really are. It's sort of like, yeah, and it's just hollow. And I just kind of like my eyes roll when I see that, but I see it all the time. It's like it's on half the websites at least.

Chris DuBois (27:16.168)
it right.

Chris DuBois (27:28.82)
Yeah, no, think I, yeah, I can agree. It's almost like just taking the, well, I'm louder than them mentality for putting it out. Well, David, lots of good insights in here. I got two more questions for you as we wrap up with the first being what book do you recommend every agency owner should read?

David C. Baker (27:38.467)
Yeah.

David C. Baker (27:52.194)
Well, I'll not resort to one of my books. Although I think probably the business of expertise is the one that people should start with. But I think the book that Blair just released, Blair Ends, called The Four Conversations, a New Model for Selling Expertise, is really, really good. And unlike any other book that he's written, it really captures everything about

selling professional services and doing it in a way that complements your expertise rather than makes you look desperate. So Blair Ends is a new book that just came out. I think it's a really good one.

Chris DuBois (28:31.732)
Awesome, yeah, have that queued up for my travels starting tomorrow, so awesome. Then the last question, where can people find you?

David C. Baker (28:41.036)
Yeah, so probably the best place is punctuation.com. And we do two things there. I run the advisory side and Jonathan runs the &A practice. And our &A practice is bigger than our advisory practice. So if anybody needs help there, they can just go to punctuation.com.

Chris DuBois (28:59.55)
Awesome. All right, David, thanks for joining.

David C. Baker (29:02.05)
Thank you, Chris. Appreciate the opportunity.