I’m feeling positive about how we’re starting the year. This isn’t because things are all rosy and looking up. In fact, as you’ll read in the next section, we’ve had some setbacks that’s required tough decisions in the first few weeks of 2023. But what feels different about this year is that we’re starting off with a lot more confidence in the systems and structures we have in place, the result of a year-long effort to “focus on the basics” and establish foundations for running the business.
For example, we have clear revenue, profit, and new business goals that are tied to actual pipeline and existing client contracts. We also have a year’s worth of accurate utilization data and retainer margin reports. Our account leads ended the year by having business review meetings with key accounts, which has set us up for work in the new year. We also have learnings from our many project debriefs, which have led to process changes and clearly documented standard operating procedures.
We’re a leaner team in position to deliver improving business results this year. Things won’t be easy, but I sense a confidence that wasn’t always there.
About Agency Journey: This is a monthly series detailing the happenings at my agency Barrel, founded in 2006. You can find previous episodes here.
Navigating Setbacks to Start the Year
We began the year with a round of layoffs. Seeing that anticipated deals were not signing quickly enough, team capacity was opening up in a big way, and existing clients were hinting at budget restrictions for the upcoming year, we decided to make some tough decisions to reduce costs. Because our team was already quite small in terms of headcount, it was very challenging to make the cuts, but we went ahead and parted ways with 3 team members.
In the weeks after the layoffs, we got word that one of our largest clients would need to cut back on their monthly spend with us due to budget cuts on their side. Another client also capped their spend with us for Q1 and let us know spend levels would not be the same as it was in 2022. We also found out that another client would not be renewing their retainer with us in 2023 after having done quite a volume of work with us in 2022.
In terms of new business, there’s been a lot of activity, but it’s been slow going in signing new clients and projects. It’s possible a bunch of things may sign at once, but we’re sensing greater pricing sensitivities than usual, so it’s having to balance winning project budgets with our ability to do them profitably.
With all these challenges in hand, we’ve focused our efforts on continuing to deliver for our existing clients, ensuring that we’re providing great service and value. We’ve been flexible with terms and pricing where necessary to help with retention. We’ve also benefitted from some clients continuing to extend and expand their scopes with us, offsetting some of the setbacks mentioned above.
By staying disciplined on costs while delivering consistently for existing clients, I think we can weather slow periods and have a healthy base on which to expand when new client work really picks up.
Doing New and Different Things to Generate Business Momentum
New work picking up means winning more work, and this is one area where we need to generate greater momentum. We can’t expect that same results by continuing to do the same things, so we’ve been deliberate in doing new and different things in an effort to drive improved outcomes.
One of those activities is strengthening and deepening partnerships with the folks at Shopify, Klaviyo, and Recharge in order to better serve our existing clients who are using their solutions, to drive potential clients to adopting these platforms, and to be considered as an attractive agency partner for their account executives selling into new opportunities. We attended the National Retail Federation (NRF) Retail’s Big Show in New York City this month. Our Chief Experience Office Lucas Ballasy worked tirelessly all weekend long (check out his recap of his experience there) to meet and connect with numerous folks, especially from Shopify, who invested in a huge presence at the event.
We’ve got a lot of work to do in order to become more visible and impactful agency partners, but it feels good to identify the gap and to take deliberate steps to address it.
In a similar vein, we also began doing more systematic outreach to various contacts, especially agencies offering complementary services or solo consultants who advise brands in our target verticals. These have led to one-on-one catch-ups and email exchanges all in the spirit of staying in touch and exploring ways to mutually benefit each other. We also sent out a newsletter to a list of “friends and advisors” as a way to keep people updated on what we’re doing at Barrel.
At the end of last year, we signed up for ZoomInfo (a pricey 3-year subscription). Our initial thought was to try various outbound email campaigns, targeting executives of companies in hopes of getting invited to bid on a website project. We’ve since shifted away from this approach. We’re using the tool to identify companies visiting our websites and testing out ways to nurture their early interest with additional content and potential conversations. We’re also using the tool to craft very tight lists of brands we’d like to target in different verticals and finding ways to develop relationships with stakeholders through warm introductions. We’re taking long-term approaches that won’t yield results anytime soon, but reflecting on major deals we’ve won over the past decade, the best ones are usually those that had its origins years ago.
These are just some of the different things we’re experimenting with in Q1. Strengthening our ability to attract and land new business is top of mind, so many of our experimental activities will continue to be around improving our sales and marketing functions.
Top of Mind
The Barrel partners met in early January for our quarterly get-together in New York. We had fruitful discussions around two books, Straight-Line Leadership by Dusan Djukich and Extreme Revenue Growth by Victor Cheng. The prevailing sentiment after talking through our takeaways from the books was simple yet powerful: do whatever it takes to achieve our desired outcomes, no excuses.
Part of internalizing this attitude is shifting what Djukich calls our “inner stance” to default to action, to overcome our fears, and to take ownership of situations.
I’ve been reflecting quite a bit on how much fear has driven poor decisions, inaction, and hesitation in my performance over the years, and how it’s probably held Barrel back from realizing its full potential. This is stuff that we tackled in our coaching sessions with Novus throughout 2021 and early 2022, but reading Djukich’s book closely and discussing with my partners helped to crystallize the concepts more clearly.
When it comes to fear, I can point to a few categories that really impacted me negatively in the past. Completely overcoming these, I believe, will help drive better outcomes. Even over the past few months, deliberately working through these has led to a more empowering and energized outlook:
- Fear of critical feedback: hesitancy to reach out to at-risk clients to hear them out, get their honest opinion how things are going, and to make necessary adjustments
- Fear of rejection/being ignored: being timid or slow to reach out and connect with people, afraid that they might not think you’re worth their time or that you have little to offer
- Fear of confrontation: whether it’s employees or clients, being afraid to have difficult conversations around behaviors, performance, or money and instead putting off much-needed discussions until it’s too late
- Fear of looking bad: being precious about putting things out there and taking action because you want things to be “just right” before others see it, leading to lots of tinkering and second-guessing
- Fear of being disliked: prioritizing sub-optimal decisions or sugar-coating situations in order to not ruffle feathers and to keep people from being disappointed or having a negative opinion of you – usually a ticking time-bomb that can lead to loss of respect over time
Nobody is completely without fear. It’s a human characteristic, and depending on our moods and situations, fear can creep into our subconscious in many ways. I appreciate the idea of having a default stance to spot the feelings of fear–a sort of filter if you will–in order to move quickly past and take concrete actions, whether they be around making tough decisions, having difficult conversations, or doing deep work. It’s all about making the deliberate choice to embrace discomfort and trusting that this is really the only way towards growth.
Djukich sums it up well in this quote with what happens when you give in to your fears:
“We subconsciously believe that by labeling uncomfortable actions as impossible and things that we can’t do, we give ourselves relief. We take ourselves off of the playing field. But in truth we are losing strength, inside, every time we retreat. Our inner stance weakens each time we surrender to comfort. Soon we’ve developed an inner stance of total incompetence and impotent passivity. It’s the most frightening way to live. It’s a life without the power of choice. To allow your power of choice to be overwhelmed in this way is insane.”
Shared with Partners
“Where have I mistakenly assumed that our existing projects are self-sustaining and require little or no ongoing attention?” (Keith J. Cunningham, The Road Less Stupid)
We’ve continued to benefit from being diligent about reviewing the status of our client accounts and quickly surfacing risks to projects. In an environment when some clients are forced to revisit their budgets or to cut back drastically, we’ll need to be very on-point about continually delivering and also showing our value.
“There was a point where my team was playing poorly and I felt I was doing a lousy job. I called Dean to vent about all the things I was failing to teach my players to do. Dean listened quietly and finally said, “You’ll be all right.” I was looking for more than a pat on the back. “I’ll be all right?” I said. “What do you mean, I’ll be all right?” Dean said, “As long as you blame yourself and not those kids, you’ll be all right.” That was one of the most valuable things he ever told me, because when you blame the kids, you’re saying they’re the problem. When you blame yourself, you keep searching for the answer.” (John Thompson, I Came as a Shadow)
Priceless lesson – never stop pointing the finger inward.
“Most important, the discussions must include close attention to gross margins. Too many people look for revenue gains without planning to build or protect gross margins at the same time. But gross margins are where the bottom line comes from—all operating expenses are deducted from the gross margin, not the revenues. Everything flows from gross margins. If you can’t get the pricing you need to achieve them, then you have to cut costs.” (Larry Bossidy, Ram Charan, Charles Burck, Execution)
We’ve been exploring lower budgets on some of our proposals but we’re also consciously making sure that process evolves to protect gross margins. We can’t charge less but still do the project the way we did in the past, so we’ll have to be creative in delivering for our clients while finding efficiencies in our approaches.
“The cause of almost all relationship difficulties is rooted in conflicting or ambiguous expectations around roles and goals. Whether we are dealing with the question of who does what at work, how you communicate with your daughter when you tell her to clean her room, or who feeds the fish and takes out the garbage, we can be certain that unclear expectations will lead to misunderstanding, disappointment, and withdrawals of trust.” (Stephen R. Covey, The 7 Habits of Highly Effective People)
This is a great reminder, especially as strategy shifts and people’s responsibilities also need to evolve. When there isn’t alignment to address the changing landscape and what’s expected of everyone, there’s bound to be misunderstanding, disappointment, and withdrawals of trust. We’re working through these challenges especially on the business development side, where we’ve introduced a slew of changes.