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For this episode of Ecoffee with Experts we have Michael Sloan, founder, and CEO of Macallan Group. Matt got Michael to share his entrepreneurial experiences and effective ways to run a successful marketing agency. Dive in as Michael enlightens us with new foot-in-the-door techniques for boosting client engagement and growth.
Every entrepreneur must be a salesperson in some way. In some way, you will need to sell a product or service.
Thanks for having me, Matt.
I remember a little of a trigger point. When I was a senior in high school, it was funny. I didn’t know what I wanted to do, as no 18-year-old does. I had a friend take me to a multi-level marketing seminar. And it didn’t do anything. But they gave me a few books to read. And I was not a reader at that point. They gave me Rich Dad, Poor Dad, and- How to make friends and influence people. I had no experiences or people around me growing up that were Entrepreneurs. But I read those books, and I liked them. I started reading, and throughout college, I carried that out. And much later in my college years, I started thinking about what I was going to do, and I started a company in college, and the rest is history. I decided I didn’t want to work for somebody else at a certain point. And I was fortunate enough to start and run a successful company in college, and never really looked back.
It’s tough. I think certain people are more adept at it and will have a better time. I think every entrepreneur has to be a bit of a salesperson. You have to sell a product or service in some capacity. And it’s an uncomfortable process for a lot of people. But it’s interesting. You see a lot of very successful entrepreneurs who would not consider themselves salespeople but are very knowledgeable about their industry, their subject matter, and so on, and they inevitably become good salespeople. But I think most small businesses, you have to wear that hat a lot in the beginning. I think there are many things with just mental fortitude, and being able to deal with the pressures and risks that inevitably arise. So I think that those are key variables in the equation outside of just like- What is my product? What is my service? And what am I going to execute? But there are those ancillary traits that I think are important. There are a lot of people who are very smart, very talented, very good at what they do, who just probably can’t handle those, the sales or the mental aspect of it, or the risk. The risks are high.
I think that’s valuable. I look at my own life, I don’t consider myself a salesman, but I think just interacting with people and I think you need to have good communication skills. And it can be as simple as growing up I always like waitered and bartendered and just communicating with people. It’s not necessarily a sales role, but you need to be able to connect with people. It’s hard to go into business without having that dynamic in some capacity. So learning those basic kinds of skill sets is certainly going to be valuable and not just for an entrepreneur or anybody. I’ve worked with and hired a lot of younger kids out of college and it’s interesting how many people struggle with some of this stuff. People are stuck behind computer screens most of their lives and it’s a dying skill set.
You know it’s kind of profiling a little bit to your point like, what are they dressed for? Are they in formal business attire? Are they going to be drinking a fancy scotch? Are they going to a football game? Are they going to drink Coors Light? All those things are very relevant in that capacity, but also the business world. You can tell a lot about somebody about how they carry themselves, how they dress, how they speak. And it’s important to pick up on those nodes.
It’s funny when you think about like, raising children and stuff, I always say they have to read some of those books and work in restaurants and it builds somewhat of a just as good of a foundation, I think as much that you learned in school.
I think the number one thing in an ideal situation is you are starting a company already with clients, or with some kind of revenue planned out. So that way you’re opening up and you’re hitting the ground running, as opposed to having to burn a lot of cash to build up. I think that would be the ideal situation. I see a lot of people who work for a big company, they develop relationships with clients and they have new ideas for a spin-off of what they’re currently doing. And they’re able to start with a few clients and at least get the cash flow going. Because I think cash flow is one of the most important things. Most people underestimate what their costs are going to be and then they’re put in a situation where they need to take out loans or refinance their home, or just put themselves in a very uncomfortable situation. So I think that would be first and foremost is addressing how to get cash flow, get clients and overestimate. I think people are too optimistic about what is going to happen in the 2, 3, 6 to 12 months after they open. I think they should err on the side of conservative and adjust their performance and their expectations to- what if things don’t go the way I have planned out? What is my capacity for failure? If things don’t work out the way I want at what point do we say this is not going to work? People are just overly optimistic and quite frankly, the entrepreneurship stuff is glorified these days. It’s good and it’s bad. It’s on a pedestal and it’s not for everybody, but I think that if you have the right plan and understand the cash flow side of it, anything’s achievable.
Yeah, and that’s so hard to predict. I mean, you prepare for all foreseeable issues and market trends and stuff like that. Coronavirus and stuff were just completely unpredictable. But you’re right and there are people I know that went into the restaurant industry right before it and got slammed. And then there are some other industries like I’m having health care, so we didn’t skip a beat, fortunately. But yeah, not everybody was as fortunate.
100% I think you have to have the contingency plan and be realistic about if things don’t work out 100% the way you want. Are you relying on this ideal situation to get you to wherever you want to be? Or if you only hit, 70% of your initial goals are you still going to be okay? If you had 60%? Are you going to be okay? If you have 40% are you going to go bankrupt? That might be something you have to figure out. Maybe get some lines of credit or get some additional cash flow. Do something because you have to figure it out.
Well, I think I dropped out of college, the first challenging decision. I started in college and was doing very well, I had two classes left, but our business was too busy. So I was like, I’ll do this at some other point. And it just continued to grow. And I never went back. So that was a challenging decision at the time. I don’t know if there are any large ones, but I think just small ones along with the wedge, personal sacrifices. For the first two years in my current company, I think I didn’t pay myself anything. I was living on nothing, just shoestrings and working 60, 70, 80 hours a week for many years without taking a break. That takes a toll on you.
It has to be high. And I have to imagine those statistics are changing a little bit because there are so many business opportunities now that don’t take a lot of capital. There are so many little things you can do. You can sell online. You hear all these things about people selling random products on Amazon and Etsy. Where their success rate is probably pretty high because you can continue to run that thing forever. You got a little store, you got an LLC, and even if you’re making a couple 100 bucks a month, you’re not technically going bankrupt. Whereas I think where you see a lot of the statistics that come from the 70s 80s 90s, you’re talking about big capital, injection, and infrastructure where you can operate without having good cash flow. So I would be interested to see what the statistics are today. I think that the success rate is higher, or at least the lack of default rate is lower. But yeah, you’re right.
There have been lots of little mistakes, every day, we make mistakes. But I think there have been a few situations where we have tried starting up a company or a spin-off or something like that. And we were bringing in people that were either hired employees, alright, so I’m not a software engineer. I’m not a developer. I know the basics, but not my core skill set. So, for example, in one company, we’re trying to build a SaaS model. And we were just hiring the developers; it was hired guns to do it. And we spent a lot of money, a lot of time, a lot of energy, we love the product. But we got to a point where the development team couldn’t execute what we needed to do, we went way over costs, and we ended up scrapping the project and dumping a lot of money into it. And at the end of it, I was just like, this sucks, being in a position where I can’t go in and fix it in my organization. I can pull an all-nighter and fix any problem. And I’ve always had that mentality where I’ll just do it, if it needs to get done, I’ll make sure it gets done. But when it can get to a point where it was like the technical situation where I physically couldn’t do it, I couldn’t spend all night working on something I was relying on other people. That was a struggle and something that I vowed I won’t do again. I won’t put myself in that position again. I don’t have a developer partner or somebody who I can trust to do those things to be successful in a venture. So that would be one. A painful learning lesson that I’ve had is; to try not to do something that you can’t fix yourself.
Yeah, 100%. I would make sure that they’re putting in the sweat, equity and not just looking at it as a paycheck. And everything else is aligned with goals, objectives, and a true partnership, not just a gun for hire.
But you have to look at it if you have completely conflicting objectives. If it’s just a gun for hire, they’re almost incentivized to let it dry out a little bit. And for the change or for where you’re trying to do it as lean and mean as possible as the owner. The developers, if they’re just looking at it, from a paycheck perspective, had the complete opposite incentive. They wanted to drag it out as long as possible. And that’s the inherent issue.
If they don’t have another project lined up, then they’re like, oh, shoot, I’m gonna be out of work after this. Or they’re going to drag it out.
Yeah, it was November 2011, just going into 2012. Yeah, so, so it was a little serendipitous. So, my partner, family, and I went to high school together. We knew each other. We weren’t really good friends, but we knew each other. We’re in different grades and stuff. But I ran into him at a mutual friend’s party. And we were both in a very similar position. I had started my first company, and I wasn’t getting along with my partner at that time. And he had started another company, he wasn’t getting along with his partner. And we were at this mutual friend’s party, and we were just talking business all night at the campfire. And it was just we’re up to like three in the morning, just talking business. And by the end of it, we were just like, we got to do something together. We’re very like-minded. We’re both going through a similar situation. And over the next six months or so, we kept in close contact, kept spitballing ideas on what we could do. And we both left our previous businesses around the same time and we started the Macallan Group.
I think it’s important to be introspective and know what you’re good at. I think that there’s a lot of when it comes to like marketing agencies, there’s so many out there these days, and everybody tries to do everything. And we made this mistake, for sure, in the beginning, of trying to do everything and realizing you’re, you’re competent in one area, and not so great in another area, and you had those ebbs and flows of skill sets. And at the end of the day, it would piss off clients in some capacity in those areas where we weren’t very strong, and so on. So I think it’s important to know what you’re good at and what you’re not good at, in areas you’re not good at, either internally work to improve that or develop strategic partnerships with other people who are good at that. That has been our kind of recipe to just really understanding what we’re good at. And then finding the right partner agencies or individuals who are very good in areas we’re not good at, and then rounding out our skill sets.
Yeah, it’s extremely impossible and nobody’s good at everything. And there’s nothing wrong with that. It’s hard to find the superstars and there are a lot of people who are mediocre at things. There are so many resources out there. There are so many areas you can get educated on various aspects of marketing, whether it’s copywriting, design, or running ads, and you really can become very proficient in a lot of these skill sets in not a lot of time in the big scheme of things. But, one, if you’re taking on a lot of clients, you can’t do it yourself, you’re inevitably going to have to bring on additional help. And two, it’s just important for people to be at a very high level in what they’re doing. You don’t want to be known as the mediocre grip.
So when there are situations when I have a client identify like, we’re not the best fit for them. I know who those good fits are. We’ve been around long enough to know who those agencies are, I pass them off. Yeah, 100%. I think everything comes around. I’ve seen, for example, that we don’t do PR, it’s something that I tried to internalize a few times, it’s just something we were okay at it. And I know a few really good PR agencies. And so in those instances, I’ll just say, this is not our bread and butter, if you need video, if you need websites, you need XYZ, we’ll be glad to help you but I recommend you go with these guys. And they’ve referred us business in the same capacity. I think everything comes around. I think if you’re not greedy, you’re gonna be okay. At the end of the day, it’s a small world. It’s a small industry. You see the same people over and over again. And I think it’s nice to play well in the sandbox. For example, I have our office in Arizona is a few people who had worked for a competitor agency. And we were always friendly with them always saw them at events and knew them in the industry and respected their work and collaborated on clients with them. And they got hit pretty badly during COVID. And they kind of joined our team. So it’s there are always opportunities like that happen. I think it’s always good to look at the long picture. And you know, it’s like the adage. It takes a lifetime to build a reputation but two seconds to destroy it. So if you’re promising clients things you can’t deliver on or just doing malicious things in a competitive manner to people who are also in the industry, it’s going to come back to bite you. I think that clients are more trusting when you’re very upfront with them and say, Hey, this is not our competency. And it’s never come back to bite us. It’s always come back to benefit us in the long run, having those conversations.
Yeah, there are certain financial commitments that we need for engagement. And I think like in the agency world, I find there’s kind of like, three different tiers. You have your entry-level tier- where you’re you have agencies selling the $2000 to $10,000 packages. It’s a lot of automation. It’s a lot of streamlined stuff. It’s more of a high volume, low margin model. Then you have your middle tier- where people are charging 10 to 50 grand a month. Who are a little bit more boutiquey. Then you have your like mass and AV agencies, which are, representing coke and Nike and stuff like that. So we know where we fall, we’re more in that middle boutiquey, somewhat industry-specific type Nichi model. Some people are just like; “We have a certain threshold”, and we won’t engage with them, because they can’t allocate the resources for the client to be successful. So I’ll pass those off to some of those people who I know take on those types of clients. When I’m having conversations with potential clients, I’m always listening to what their pain points are. How they have engaged with previous agencies? There are certainly a lot of red flags to look out for. I think people who talk bad about other agencies and how they do it, and what they’re saying. I think a lot of problems in the agency world and why a lot of people suffer from a high attrition rate is they’re overselling and under-delivering. And I think that’s a huge problem. I talk with people who say, “Oh, this guy told me I could do for this price and I can do this. And for this person, I can do this”. And, and I kind of approach it very oppositely. I come in with very low expectations. I try and tell them, like, “for this price, this is what you should expect. We’re going to shoot for this”. But realistically, this is where our barometer should be. So we do when we do and I often think we can achieve better results than what I’m telling them. They were blown away. So I may lose a few bids, because of that. But we never lose clients, because it’s all about managing expectations. And I think I’m very good at making sure they know exactly what we’re doing. How money is being allocated, and what they should expect at different points in time. And we’re very good at surpassing that. And that’s where, we talked earlier about being a salesman, and stuff like that. I’ve hired salesmen, and sometimes the problem you get into his salesmen are just focused on sales and don’t have a sometimes operational side of it. And they’re over promising just so they meet their sales quota.
I think that brings about a lot of issues. And ultimately, the client is left with a subpar product, and the delivery is not what was being sold. And people talk and eventually that client is going to talk to other people in the industry. And the word is gonna get around very quickly.
I think that there are clients we’ve certainly worked with and spoken to who don’t take criticism well or don’t listen to advice. There are exercises I’ll do in some of those initial conversations to gauge their feedback as to whether or not they would be open to certain changes or certain things. And I think if you get some heavy pushback on something that should be pretty trivial, it’s a little bit of a red flag. I often try to get an understanding of, how frequently they want communication? How frequently do they want to do meetings and updates? I’ve had people say, “oh, I want daily updates”. Which is fine but there’s a price and problems with that. It’s a lot of manpower. And they don’t want to pay for it. So it takes time but I think it’s just a matter of like, after a few conversations, it’s pretty apparent whether or not their budget allocation matches their expectations. I mean, because let’s say there was an unlimited budget that they had allocated to something, you can usually meet their expectations. But if there’s just an unrealistic, “hey, this is my budget, and this is what I’m expecting”. At that point, usually, I’ll just pass it off.
Yes. I refer them to another Agency. I just say I don’t think you are the right fit for us. I think these guys will be better suited for you. That’s my main one. I try to help them as much as possible. We may not want to deal with them, but maybe somebody else will. I usually refer them out.
I love using videos. Not just on ads because we don’t do a lot of ads. I use it more because the sales process for an agency is very challenging for a client to differentiate one agency from another. When clients are scouting for an agency, they’ll have meetings and do interviews. The agencies will promise various things, for example, page one, content creation, backlink, distribution, and on-page issues. So the clients will have the same conversation over and over again. They get the proposals and the numbers are all over the place they can’t understand. This makes it hard for them to decide. In the end, a lot of them have buyer’s remorse. I talk with clients who speak of their bad experiences in the past. Every agency has heard stories from clients who have had bad relationships. It is hard for us in the industry to understand what is being done behind the scene.
Are they good at what they are doing? It is very easy for someone who puts together a proposal with just numbers to make the numbers look good. The reason I love videos is that it is very tangible. It is easy for someone to look at it and be like, “This looks awesome. Let’s give these guys a try”. It is sharable. When you leave that room in an organization with multiple decision-makers, they are not retaining most of what you said. Do they like you? Do they like your personality? Often, decisions get made on whether I like the person, and their price is good?
The aspect I love because I’ll text it to the client with a message saying, “Hey share this with your partners. This is what we did for a client with a very similar business to you”. And that closes more deals faster than you think. It lets us make sure that what we are trying to convey doesn’t get diluted. So it is great from that perspective. It’s easy to see, it is easy to say ok, this is quality, and this is what we want. We have done so many case studies for work that I have a variety of videos for many scenarios that I can just send out. And I love texting it to people, and they’ll be like, this is awesome. It is a great foot in the door when it comes to upselling. What I am looking for is, want to get my foot in the door. I want to develop a relationship and start to work with you. You then hire us for a video shoot and we will then work to upsell and grow that relationship. Many of our bigger clients started with that. They saw one of our videos, thought it looked good, started a relationship, and eventually, we took over all their digital needs.
It’s usually a video deliverable that we created for other clients relevant to the person I am pitching. To say here is how we did this branded video. This is how we created this ad for this client. It’s usually actual deliverables we have for other clients using it to show; this is the quality work, this is what we can do, and we stand by it, and we can do this for you. This is usually the easiest way to get our foot in the door.
I think there are two ways. There is a word of mouth where an existing client or somebody I know is recommending us, which may take a different direction. For clients that don’t know our company and don’t know anyone within our organization, the videos are the best way for us to get to the meeting and sit at the table, submit a proposal and get our foot in the door.
We have two or three branded videos talking about our services, and they are fine. We created them maybe two years ago. Those I find aren’t as persuasive as showing them like. We work a lot in health care. We work with hospitals, pharmaceutical, and medical device companies. We just did a project for a medical device company. We took 3-D video spine implants. We took their implants, and they sent us the 3-D rendering. We animated it and made this cool video using their website, so I started showing it to other medical device companies. I know it is better than what they have on their site and in their video library. I am showing them- “Look, here is what we did over here”. And with that, we have started to have conversations with many of their competitors. I think that strikes a chord with more people, showing them what their competition is doing. That we are in the industry, and we can do it better. I think videos are the easiest conservation openers, especially if it is a cold opening.
You need to get your feet wet somewhere. You need to have a good product. As I said before, some people are mediocre, and some are exceptional. You need to have qualified for it to be effective so I would start there. There are a lot of resources out there between upwork and some of those freelance services to find good Editors, good Directors of photography, and produce some good content. Deal with that initial cost, get a good portfolio, and then it becomes easy to start showcasing and spreading it around once you have that figured out how to get it in the right hands.
I understand and it is a good pitch to acquire new clients. Be open and honest especially if you are going after small clients, like mom and pop shops and clients who do not have large budgets. It’s easy with a portfolio to go and say “Hey I am a new agency, this is what I can do, let me help you out”. You should be able to get a few of those projects.
Yes. We have been very good at looking for revenue opportunities and sinking our teeth in the clients, making us irreplaceable. I think it is important for agencies to find ways to become friable. We have learned a lot of clients; again, we are big in the healthcare space, with a lot of hospitals and large groups. We work largely with big orthopedic and neurosurgery groups. Many of these organizations have been doing marketing, and they have a bad taste from previous engagements. They spent all this money, and it didn’t work. What we found was it wasn’t necessarily a problem with their marketing strategy and initiative but usually an operational issue. They didn’t have the right technology in place to track things. They didn’t have the right people in place. You go into a hospital, or medical practice and the person sitting at the front desk or the person answering the phone has never had a day of customer support training. They have never worked at a restaurant and dealt with those interpersonal things. Suzy is very nice to the Doctor, her boss when he comes through the door, but when you hear her on the phone and record those calls, she doesn’t know what she is saying or what she is doing. So we started doing a lot of camera consulting and basic customer service training. We stay on top of their intake team and become Consulting managers for our Clients when needed. We started doing that a few years ago, which has been very successful for us. It’s an additional revenue stream, making us a very intricate part of their organization. So it would be very difficult for them to replace us in many instances. Things like that are how we are upselling and cross-selling. Adding additional services, like call tracking and CRM tools. We implement it. It makes us sticky. We make a little bit of a margin on it. It is recurring revenue, and it is simple. Once we get our foot in the door, we always look at how we improve this? How do we scale the scope of our services? What can we execute? We like to become very knowledgeable about our clients and their businesses. We are a bit low volume and high margin, and we can allocate the resources in the time needed to do that. That is our model. That is what works for us, and that is why I think this is effective for people who have this kind of model.
It is challenging. I think that you have to look at your objective for starting the business? Is it that you want to make a certain amount of money? Is there an exit strategy? Are you looking for a lifestyle? It is important to lay that out on the table and understand- How much time are you putting into this? What other engagements do you have going on? Is this your sole focus? Are their ethics to make sure you stand on the same page when it comes to business decisions? It is very important to outline roles and responsibilities and hold each other accountable. In the past, when there were no detailed roles and responsibilities, there was a lot of finger-pointing. I think when you have the right vision and the right exit strategy. You need defined expectations of what to do with finances when it comes in. Do you want to reinvest? Do you want to pull it out and pay yourself? Do you want to hire staff? Those are very important conversations because they are big areas of conflict.
I have had, up to this point, several companies that I have exited or sold or dissolved. It is usually very apparent and an interpersonal thing where those things weren’t outlined or addressed. There are two reasons. One- financially, it made sense to do so. Two- from an interpersonal relationship standpoint. It is like a divorce where it is no longer working. We have different goals. We have different visions. There is just too much animosity in an individual capacity. So we either have to part ways or sell and dissolve the company altogether. Usually, it is one of those from my experience.
The nice way, is to sell. If it comes to the point where two partners can’t get along, hopefully, you can sell the business and you each some money and walk away shaking hands. Sometimes, it’s like a bad marriage, and businesses struggle. It is unfortunate, and it does boil down to a lack of communication. My wife says that it is all about communication. In business, it is the same way, making sure that all that stuff is addressed in the beginning will be extremely valuable in the long run.
I agree, and I think that is one of the more challenging things for people starting a company. I struggle with this. After all, you want to do everything because you think you can do everything the best. You are never going to scale that way. You’re just giving yourself a job. It’s hard to relinquish control. It’s hard to relinquish responsibility. Because everybody thinks they are the best at everything, it is a human flaw. You have to do it so you can grow. I have struggled with having people and trusting them to do things.
I think that is a great idea. I was talking with a friend who owns a very big IT company. He did that, and that was how he scaled. He said he would keep a log of his time and record his activities while doing certain tasks. He used the information to create a library and for training. It became the catalyst for his business, which he used to successfully scale his business very quickly. I have not done it, but it makes a lot of sense. I think the challenge would be the creative aspect. In building a website, certain things can be systematic. The creative aspect is where I always bang my head against the wall. How do we duplicate those processes?
An operational book was written about doing SCRUMs. I think it was created from How do we get our creative team and how do we get large groups to be in sync so we can all have a similar mentality when things are less structured.
Yeah. I would love to, Matt. It was a pleasure talking with you.
They can visit our website, the Macallan group. We named it after my favorite scotch. Also, my LinkedIn page. Our social media is good too, but our website and my LinkedIn page are the best places.
No I am not.
I am fascinated by the whole Crypto sphere and what is going on with that. Everyone is talking about it, and I know very little, so I would like to learn more about it. So if this does become the future, I don’t want to be left behind. So I would say the crypto market.
Staff. getting the right people.
My favorite dish is Chicken Piccata. I love Italian food. I love a good pasta dish.
It’s tough. I love snowboarding and I love the beach. I am leaning towards summer. I am getting into golf lately.
Yes. You too. Thank you so much for having me.
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