Losing Money as a Business Plan? Forging Long-term Client Relationships, with Kim Lawton | Ep #693

Do you prioritize new clients or building lasting relationships? Would you be willing to lose money on a client in order to build a long-lasting relationship? Today’s guest has built two successful agencies banking on the power of planning for the long term instead of focusing just on the numbers. She’ll explain how she and her partner formed their vision of an agency where people could do their best work, clients felt heard, and it would all translate into business. Tune in to learn all about the visionary approach that led her and her partner to success.

Kim Lawton is a successful agency owner with two agencies under her belt. She’s the founder of Inspira Marketing, a 300-employee agency reaching the nine-figure mark, as well as the president and CEO of Enthuse Marketing, a purpose-driven group committed to building brands through effective experiential marketing strategies. She shares her journey building two agencies and discusses her approach of over-resourcing client relationships, her role as the chief possibilities officer and president/CEO, and her entrepreneurial journey from a young age.

In this episode, we’ll discuss:

• The four pillars of relationship building.

• Risking losing money for long-term client relationships.

• Strategic hiring to fuel growth.

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Sponsors and Resources

E2M Solutions: Today's episode of the Smart Agency Masterclass is sponsored by E2M Solutions, a web design, and development agency that has provided white-label services for the past 10 years to agencies all over the world. Check out e2msolutions.com/smartagency and get 10% off for the first three months of service.

The Four Pillars of a Relationship-Driven Agency

Although she’s an accidental agency owner, according to Kim she’s been an entrepreneur since the age of fourteen, when she managed her father’s pizza shop and fell into the role of marketer. It wasn't until years later, working at an agency during the rise of experiential marketing, that she truly started to believe in her marketing abilities. It was there that she met her current business partner.

As Kim and her partner dreamed of owning their own agency, they kept a journal to define the key elements they wanted to include. Their primary focus was creating a place where people felt seen, heard, and empowered to do their best work. They believed this would translate into a successful business.

Rather than focusing on the numbers, hourly billing, or time spent on each account, like most agencies, they made the strategic decision to invest in relationships over profit. As they planned how this would look as a profitable business, Kim and her partner decided their agency would be built on four main pillars:

• People: Their investment in talent.

• Organizational development: Tools they invest in that help people do their jobs more effectively.

• Client leadership: How they show up for their clients.

• Growth and reputation: They measure the previous three elements and look at that to establish how the agency performed that year.

It may seem counterintuitive for business owners who prioritize profit margins and bottom lines, but it was a conscious choice to become their clients' preferred solution, even if it meant potential short-term financial losses. Their long-term relationship investment approach not only allowed them to create long-lasting relationships, but it was also a good way to quickly identify bad clients. If the client didn’t value the time they were investing in their project, it was easy to say goodbye to them and not look back.

Maximizing Client Relationships: A Strategy for Long-Term Success

How do you start to set up a structure where the business is set to lose money with each client for the first year? Kim suggests allocating a portion of marketing expenses to client service. This approach allows agencies to prioritize nurturing existing client relationships, leading to increased business opportunities and revenue.

Of course, it wasn’t a reckless strategy, Kim and her partner set a maximum 15% loss threshold per client and assigned specific departments to absorb these costs. They also regularly evaluated the value provided to clients and sought to exceed their expectations.

Despite occasional overinvestment in certain clients, they take pride in sustaining numerous client relationships over sixteen years.

Pro tip: Kim and her partner went above and beyond for their clients and meticulously tracked any additional hours spent outside the scope of the project and presented these as zero-dollar change orders. This showcased their dedication and established a strong foundation for future collaboration. This transparent and proactive approach not only fostered goodwill with clients but also paved the way for potential opportunities in value-based pricing and performance-based marketing.

Consistent Outreach for Consistent Results: Leveraging Cold Calls

Cold calling has proven to be a successful strategy for many agencies and it has certainly been the case for Kim. In the initial stages of the agency's development, one of its primary objectives was to transform cold calling into an effective strategy. Today, at their agency, this approach is known as the "nifty fifty" and has resulted in a steady stream of opportunities and business expansion. Kim and her partner committed to contacting a set list of 50 individuals each week, holding each other accountable for completing these calls.

For Kim, it’s all about timing. There’s a right time and place for these calls, but by regularly reaching out to her network and staying connected with past clients, they were able to uncover new opportunities, referrals, and partnerships that ultimately contributed to the success of her business.

Balancing Client Needs and Agency Vision: Their Path to a Second Brand

The opportunity for their second venture came from a client engagement, prompting them to develop a specialized team dedicated to delivering the client’s brand message within the hospitality industry. As discussions progressed, the client realized that their agency's brand, focused on experiential and client-facing elements, did not align with their objectives. They sought an approach more grounded in education, prompting whether establishing a dedicated business department would suffice.

Kim and his business partner's wife, an educator eager to reinvigorate her career, collaborated on a program tailored to the client's requirements. While the results met the client's expectations, a new challenge emerged: the exclusive focus on the program overshadowed the agency's identity. Consequently, they restructured the agency to revolve around the new program, shifting the focus from the client to the new business.

Strategic Hiring to Fuel Growth

Kim and her partner were deliberate in their approach to building their agency, understanding the impact of every hiring decision on the agency's success. They were determined to avoid the common pitfall of reactive hiring that leads to a cycle of downsizing and expansion. Instead, they focused on strategic, long-term growth and sustainability, ensuring that each new team member added value to the agency.

In order for this to work, they instilled in their team the importance of considering the long-term effects of their hiring decisions and aligning them with the agency's annual plan and budget. Employees were involved in the decision-making process, fostering a positive work culture and team cohesion, ultimately leading to improved client satisfaction and retention.

Effective delegation is also crucial in maintaining balance within the team. In this sense, Kim’s agency used a specialized company to conduct weekly assessments measuring employees’ strengths and weaknesses. This approach allowed the agency leaders to gauge each team member's performance in real time and identify areas where they excelled or struggled.

Do You Want to Transform Your Agency from a Liability to an Asset?

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