Have agencies listened too well to the “be strategic” mantra?

Agency Leadership Podcast

For years, agency advisors like Chip and Gini have implored agencies to be strategic and avoid being simple order takers. Owners were told that this shift was key to increasing profitability and client retention.

But has it gone too far? In this episode, Chip and Gini examine whether agencies have hit ‘peak strategy’ as suggested recently by Blair Enns.

They ask whether some agencies are overemphasizing strategy at the expense of implementation. They note that clients say they want their agencies to think strategically, but they also balk at explicit costs for strategic planning.

They maintain that agencies should incorporate strategy into their overall services without explicitly charging for it, and emphasize the need for balance between strategic planning and practical execution.

Chip and Gini also discuss proper pricing strategies, ensuring clients receive value without feeling nickel-and-dimed. The conversation highlights the necessity of delivering workable strategies tailored to client needs and the importance of understanding costs and pricing based on agency specifics.

Key takeaways

• Chip Griffin: “You need to be strategic. You need to be viewed that way, but you don’t need to rub it in the client’s face and make them pay for it explicitly in a line item on the invoice.”
• Gini Dietrich: “When we say you need to look at your pricing, you need to increase your prices, it’s because you have to fold in your account management and your results reporting and your data analysis and your strategy.”
• Chip Griffin: “A restaurant doesn’t offer someone wine and then itemize the glass because you’re not going to let them sit there and drink it straight out of the bottle. That’s how strategy should be. It’s the glass.”
• Gini Dietrich: “There’s a common occurrence that’s happening that I see happening more and more where people are asking one another what they’re charging for things. And I think that’s the completely wrong approach. When you’re thinking about pricing, you have to figure out what it costs you and price it that way.”

Resources

• Have We Hit Peak Strategy?

View Transcript

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: Gini, you know, strategy. Does strategy even matter? We don’t really care about strategy, do we? We just kind of amble forward. And that’s what we should do with our clients, right?

Gini Dietrich: We do care about strategy.

I think it’s in how we position it, that is different.

Chip Griffin: Oh, Really, the topic is, have we hit peak strategy? That’s something that Blair Enns of Win Without Pitching was writing about recently, and he was talking about how agencies have been encouraged to head towards strategy, to build for strategy, to demonstrate strategy to their clients, and he’s questioning now whether agencies have perhaps overcorrected in this direction, and we’ll include a link in the show notes so you can read it because it’s a much more detailed assessment than what I just condensed it down to in 15 seconds.

But let’s talk about agencies, strategy, and clients.

Gini Dietrich: Yeah, I mean, I think there’s a couple of things going on. For sure, you know, people like us, and we’ve done this too, and other agency owner advisors have talked about the importance of raising your prices and finding things, packages, for lack of a better term, or projects that you can do that are easy for a prospect to sign on to become a client.

And I, I think that those things still stand. I think that, overall, and generally, most agencies don’t charge correctly. They’re not priced correctly. And overall, just like I think we talked about last week or the week before, there are too many agencies that are going in for a full year retainer versus in times that are tough, like this year, doing project based kind of work. So I do think there’s something to be said for those things. But to your point, I think that we have over expanded and a really good example of this is that we have always, gosh, probably for the last seven or eight years, we’ve always started a new client with a strategic planning session.

And in the last couple of years, and it’s been great because it’s a project. It helps. We charge a certain price for it. It, it gets us into an organization fast. We learn about the business fast. We get access to all of the tools that we need on their end really quickly. We get the executive’s attention really quickly and we get some, we show them some demonstrable results and something tangible within 30 days.

So it’s great from that perspective, but in the last year and a half, I would say every single prospect has said something along the lines of, we don’t really need that or let’s just get started. Or, you know, our last agency did a big strategic planning session. Can you use what they created? And it’s been one of those things.

So we’ve had to sort of take a step back and go, okay, wait. Let’s not talk about a strategic planning session to launch the relationship. Let’s, let’s try something else. And I think it goes to what Blair Enns is writing about or talking about right now.

Chip Griffin: Yeah. For, I mean, for many years, agency advisors have told agency owners that if you want to be able to charge more, you have to be strategic.

You have to be viewed as a strategic advisor and not merely an implementer who just delivers individual tactical executions. You need to be at that level. And so I’ve seen this shift in a lot of the agencies that I’ve talked with where they really want to lean into that. And so they do things like try to explicitly charge for strategy. Or at the extreme, I talked to some agency owners who are like, I don’t even want to do implementation. I just want to get paid for strategy. Now let’s start with the extreme end there. Almost no client today wants to pay just for strategy. They’re out there. They’re very, very few and far between. Most clients. may even understand that you need to be strategic, but they don’t want to feel like they’re paying for it.

So to me, the first lesson I take from what Blair was talking about and something that I’ve encouraged my own clients for a number of years is don’t ever explicitly charge for strategy. Don’t have a line item that says strategy in whatever you’re doing. You need to be strategic. You need to be viewed that way, but you don’t need to rub it in the client’s face and make them pay for it explicitly.

Gini Dietrich: That’s right. And I, I mean, there are other things on that you and I discussed before we hit record that are on the, that can be on the invoice or in the scope of work as well, which are project strategy for one. Project management or account management, administrative work, like all of the things that we have to do to be – results reporting – we have to do to be able to do our jobs.

But clients don’t want to pay for it. So those are the things that you say when we say you need to look at your pricing, you need to increase your prices. It’s because you have to fold those things into it. You have to fold in your account management and your results reporting and your data analysis and your strategy.

You have to fold it all into the pricing and then do the work so that you’re able to do those things and get paid for it. But it’s not something that a client or a prospect can go, Eh, you know, we don’t really need account management. We can do without results reporting, and we definitely don’t need strategy.

You do need those things, but they’re not, you have to do it in a way that they can’t just remove it from the scope of work.

Chip Griffin: Right. Whenever you’re talking about something that you’re line iteming with a client, something that’s going on the invoice here, in the proposal, you never, ever, ever should list anything that can’t be removed or added.

You only want to include those things where it’s truly a menu option. You don’t, you know, if you’re a restaurant, you don’t offer someone wine and then itemize the glass because they can’t have the wine without the, you’re not gonna let them sit there and just drink it straight out of the bottle.

Gini Dietrich: I mean, you could give them a straw.

Chip Griffin: You could, but you’re not going, if you have a nice restaurant, you’re not going to allow that. So you should not have an explicit charge for the glass. Even though there is a cost, there’s absolutely a cost to have it, to purchasing that glassware, maintaining that glassware, cleaning that glassware, delivering it to the table. There’s breakage, there’s all sorts of costs that go into it, but you don’t actually charge the restaurant customer for the glass. You charge them for the wine and they get the glass along with it. That’s how strategy should be. It’s the glass.

Gini Dietrich: I love that analogy. And there you go.

There’s the end of the episode because that’s perfect. So there you go.

Chip Griffin: Well, I mean, but I do think you need to be thinking in general about all of these kinds of things that you’re putting in there. And it reminds me, I think I’ve shared this story previously on this show. Certainly I’ve shared it a lot of other places, but when I first started hiring agencies myself back in the mid 90s when I was in house, I had agencies that would nickel and dime me for faxes and copies and things like that.

There are very few things more irritating than getting an invoice for a dollar per page for faxes. And you young folks don’t even know what faxes are. But anyway, look it up. I’m sure you can, you can hear the screeching noise if you go on YouTube and put fax machine noise in there or something like that.

You’ll know what all of us have heard for many years. Anyway, you need to be thinking about how is this being received by my client? None of it means these are things you shouldn’t do. For example, you need to do things to maintain the client relationship. Should you expressly charge them for the time that it takes for you to go and pitch a renewal?

No! No client’s going to want to pay for that. But, your overall pricing needs to account for the fact that you’re going to spend the time to put together the proposal for the renewal, that you’re going to go visit them. It needs to factor in the travel costs. Again, don’t charge the client to go visit them.

To pitch the renewal. Nobody wants to pay for that, but you do need to price it into the work that you’re doing. And so understanding that these are two different things is important. And I think the other thing is just when it comes to strategy itself, be careful that you don’t overvalue it, right?

Strategy is important. Absolutely. You’ve got to have it. But if you sit down and you say, okay, well, Chip and Gini say, well, we shouldn’t itemize strategy, but I’m going to include it in there. I’m going to put a big number in there because it’s really important. And we’ve got really great ideas. I’m sure you do.

I’m sure you have the best ideas and the best team and all of that, but you’ve got to be reasonable in what you’re charging. As my old business partner used to say, pigs get fat, hogs get slaughtered. So make sure that you are being greedy, but not too greedy.

Gini Dietrich: Yeah, I mean, I think that’s exactly right. And another thing is, you know, I, there’s a, there’s a common occurrence that’s happening that I see happening more and more and more in groups that I belong to.

Facebook, LinkedIn, Slack, wherever it happens to be. where people are asking one another what they’re charging for things. And I think that’s the completely wrong approach. Now, certainly Is it nice to be able to say, Oh, well, so and so charges 30 grand and so and so charges 25 and so and so charges 20 for this package. Okay, that’s fair. But when you’re thinking about pricing, you have to figure out what it costs you and price it that way. So, you know, I’m in Chicago, so it’s gonna cost me more to get work done than it’s gonna cost someone that you’re working with, Chip, in New Hampshire, right? Because the cost of living is a lot higher here and people get paid more and like all the things, right?

So I think that’s the wrong thing to think about. So if you think about and, and I know that we beat this horse to death all the time. But if you think about here’s everything we have to do. And here’s all the software that we need to use. And here’s everything that it takes. Account management, strategy, all those pieces.

How much time we’re going to spend in weekly meetings and in you know, creating agendas or whatever it happens to be. All of the stuff has to be incorporated into the pricing. And then you can price based on what’s – and add in your profitability too, be based on what makes sense for your agency, not what makes sense for my agency or what makes sense for another business.

Chip Griffin: Yeah, I’d go even further. I mean, it’s, you shouldn’t be worrying about what other agencies are charging. You shouldn’t worry all that much about what they’re scoping either, and whether they’re expressly talking about strategy or not, right? You need to figure out what you need to do in order to deliver the results that your prospects and clients are looking for.

I will almost certainly guarantee you that’s not strategy only. Right. No matter whether you find another agency owner who says that that’s what they’re doing or not. If they say that, I would seriously question it because I do think it is so few clients today who will pay for strategy only. But even if you hear, even if you believe that, you still need to sit down and say, well, how much strategy do I really need to do here?

What is it really going to take? And if by strategy it means you spend two hours putting together a few ideas on a piece of paper, is it valuable? Yes. Should you charge through the nose for it? Absolutely not. Because it’s two hours. And I know we, you know, we get excited about value pricing and all that kind of stuff.

And I think everybody here knows that I think value pricing is silly for 99 percent of agencies because almost 100 percent of agencies don’t even understand what it is, let alone having it as a viable thing that they can use. But you need to figure out what you need to do to get the job done, and then you need to figure out what does it actually cost you to your point.

It is very different in different places. It would be like landlords getting together in a group and saying, How much do you rent your apartments for? Well, how big is the apartment? Where is the apartment located? And it’s not even just that it’s in Chicago. Where in Chicago is it? It’s going to be different prices in different parts of town.

It’s going to be different price based on the age of the building, the square footage of the apartment. There’s so many things that go into it. And so if as an agency, you’re trying to just compare and say, you know, what is everybody else doing and try to follow after them? You’re not thinking about the most important thing, which is what is your client need? What do they value? Yep. Those are the things you should do. And those are the things you should charge for.

Gini Dietrich: Yeah, absolutely. And I think the other thing that the other mistake I think I see agency owners make in this kind of scenario is they, they price it by saying, Oh, well, to your point, it takes me two hours to write down ideas.

It probably takes me two hours for meetings and maybe four hours to do some research on an audit. So I’m eight hours all in. And so I’m going to charge it based on my hourly rate for eight hours. And I’m like, no, First of all, you shouldn’t be the one delivering this, ever, and doing the work. So how much time is it going to take your team?

And then they go, oh, well, maybe 10 hours. I’m like, no! It takes your team at least triple the time it takes you. At least. So you have to take those things into account as well. Because you, you have to think about, okay, Yes, if you were doing that, it would take you less time because you have more experience and expertise and all those kinds of things, but you shouldn’t be the one that’s delivering this.

So even if you’re the one who’s delivering it in the beginning, you still have to price it based on who’s going to deliver it six months from now, a year from now, because that’s gonna be really hard to go from your eight hours at $150 an hour to 24 hours at $125 an hour. It’s gonna be, that’s a huge divide.

So you have to think about those things too. And I think we, I see a lot of agency owners make that mistake.

Chip Griffin: Absolutely. And, and I think as we’re thinking about strategy and, you know, bashing on how agencies work with strategy. I’m going to continue it. I think the other thing when it comes to strategy is that that we need to be putting together strategies that are actually workable for our clients. Because I’ve seen a lot of strategies put together that look great on paper.

That maybe it’s the absolute right idea, but it needs to be a strategy that can be sold internally with the client that they will actually buy into. It needs to be a strategy that they can actually implement both from a resource perspective as well as a cost perspective and a time perspective and an organizational tolerance perspective.

I mean, if I go into a, a client and say the solution, you know, you would knock it out of the park with video, but they don’t have anybody they want to put on camera. They don’t have any desire to do that. They’re nervous about YouTube. That’s probably not a good strategy for them. So the strategy needs to be something that they can actually implement and ideally that you can implement for them because ultimately what people are really paying for is that the outputs and the results and we can sit here all day long and say that’s wrong.

They shouldn’t, they shouldn’t pay us for a press release or a website or a video or a social media post. But guess what? That’s what they’re paying for. In their minds, that’s what they’re paying for And you can sit there and you can have a religious conversation with them about how that’s not really what it is and we really need to be thinking about results and all this which is all great And you need to think about it.

You need to report on it. But if if you get so wound up in that, you will go out of business. Because that’s not what clients want.

Gini Dietrich: They hire agencies because they need extra arms and legs. They need somebody’s help to do the work and not to think. I mean, yes, to think and to do the work. So, you know, I mean, there are plenty of us and I’m the same.

Like if you came to me and said, Hey Gini, I’d love to hire your agency to do social media. And, but I want you to be the one who does it. I’m like, no freaking way. No, thank you. And even if it’s not strategic from their perspective, even if it costs them a ton of money because I’m the one doing it, I’m still not going to do it.

So you also have to be able to say, not the right fit for us. But it has to be based on what they expect the relationship to bring, not because you think they’re not strategic.

Chip Griffin: So, I mean, I think the bottom line is, do you need to be strategic? Yes. Do you need to be smart about how you’re being strategic with your clients?

Yes. Do you need to charge explicitly for strategy? Absolutely not. Hell no. Please don’t do that. Can you be a strategy only agency? Probably not. Do you need to tie strategy to actual tactics and results? Yep. Absolutely. I mean, and I think because we’ve talked so long, not, not just the two of us, but the agency advisor community generally about the importance of strategy, we have pushed too many agencies into over correcting on this.

And we need to pull them back in and help them to understand that it’s about balance. Ignoring strategy completely and just being an order taker, that’s bad too. We’re not, we’re not telling you to now over correct back and don’t have the pendulum swing back the other way so hard that you just, you know, go in there and you say, I’ll just do whatever you tell me to do as long as you’ll pay for it.

We don’t want that either. You’ve got to have balance.

Gini Dietrich: Yeah. And I think that, you know, just incorporating it into the work that you do and into your pricing is the right way to do it.

Chip Griffin: Absolutely. And it works. It’ll help your clients. It helps your team, frankly, if they understand why they’re doing things and they’re being part of that, that process.

So, so wrap it in. Just make strategic thinking part of what you do. Don’t make it something that you put up on a pedestal and try to charge a billion bucks for.

Gini Dietrich: And remember that you’re serving a very nice bottle of wine, and along with that they get a glass and some service.

Chip Griffin: That’s right. And if anybody out there can find a restaurant that actually charges you for the glass, I look forward to seeing your comment

on whatever platform you’re listening or watching us on. With that, that will draw to an end this episode of the Agency Leadership Podcast. I’m going to go get, no, I’m not going to eat a glass of wine. It’s only one o’clock in the afternoon right now. So, so with that, I’m Chip Griffin.

Gini Dietrich: I’m Gini Dietrich.

Chip Griffin: And it depends.