I’ve run a digital marketing agency since 1999 but it was only in 2015 that we passed $1M in annual revenue, a goal I’ve worked toward for over 15 years. For most of those 15 years my agency’s revenues hovered around $500,000.
Without making any major changes we hit $3M in 2016, and worked toward the goal of doing $10M in 2017. What changed?
Part of it is due to bringing on a partner who is an expert at sales. Part of it is the thought leadership content I’ve been producing. But another key factor has been a focus on outputs, outcomes, and obstacles.
Outputs vs. Outcomes
When I heard Wil Reynolds, Founder and CEO of SEER Interactive, speak about outputs and outcomes at ClearLink's Confluence event it clicked immediately.
Outputs are things you can check off. Outputs are activities that make you look busy, that make you feel valuable because you measure value by activity.
Within my agency an SEO audit is an output. A new link for a client is an output. A new website for a client is an output. A blog post is an output. A buyer journey analysis is an output.
Guess what? Clients don't care about outputs. Outputs are worthless, unless...those outputs generate outcomes.
An outcome is "My business grew by 243% in 2016," or "We doubled our email newsletter subscribers during the past 3 months," or "Our sales are up by 24% this quarter." Clients want outcomes, not outputs.
The only time a client wants to see outputs is when they have doubts about whether the outcomes are on the way.
Clients understand that outputs lead to outcomes, so when they start to doubt whether the outcomes are coming, they start asking about outputs.
Outputs aren't bad--outputs are 100% necessary. We don't get the outcomes we want without the right outputs.
The problem happens when we focus on outputs instead of outcomes, and the outputs become the outcome we're working toward.
The problem with focusing on outputs is we lose track of whether they're producing the desired outcomes, or are ever going to produce outcomes.
When we focus exclusively on outputs we end up focusing on outputs that don't work to produce outcomes, and then at my agency we get feedback like this:
"We've really enjoyed working with you, and we appreciate all the hard work you've done, but we're just not getting the results we need to justify continued spending on this."
In the past, my team would get this feedback from a client and say "Well, we gave it a good try. We did a lot of good work, and it just didn't work out."
Let's be clear--what I've just described is what failure looks like.
Success is when the client keeps paying their bill because they can't afford to stop paying it.
Success means the client can't afford to stop because they're making such a large profit on the investment they've made with my agency.
When my agency fails to generate an outcome that compels the client to stick with us, we've failed, regardless of anything else good we've done. The best we can do in this situation is analyze what went wrong, learn from it, and make improvements.
The Obstacle is the Way
In Ryan Holiday’s best selling book The Obstacle Is the Way: The Timeless Art of Turning Trials into Triumph, he explains how successful people use problems to show them how to overcome weaknesses and challenges and accomplish their objectives.
I read the book twice in 2015, and every time I encounter a challenge I tell myself “The obstacle is the way.” Then I get to work figuring out how I can turn the obstacle to my advantage.
When a client quits, that presents an obstacle for my agency.
Losing a client means we lose revenue, which means we can't hire people we want to hire. We can't fund things like retreats, raises, computers, and training.
This kind of obstacle doesn’t sound like a good thing, but an obstacle can be a great thing if leads to success. How does the obstacle become the way to success? When we learn from it.
Bad companies are destroyed by crisis, good companies survive them, great companies are improved by them. – Andy Grove, former CEO, Intel
In 2015 my agency faced a crisis. We lost over 1/3 of our clients in a short time period. That was an obstacle, but the obstacle became the way. It clarified things that were wrong at my firm, and we took steps to make things better.
Unfortunately, that meant letting some people go. We also moved some people around. We created new processes, changed others, and dropped some that were getting in the way. And things got better.
Now, we’re working on creating our own obstacles. Wait, what? Why would I want to create obstacles?
Natural vs. Artificial Obstacles
When a client leaves, that's a natural obstacle. It happens on its own. It's real. An artificial obstacle is when someone inside my company asks "Why are we doing blog posts for this client?
Are these producing the outcomes the client wants, or are we focusing on an output that doesn't generate the desired outcome just so we can look busy?"
When we hire someone to work at our company and we later find out that person isn't qualified, or doesn't have the right culture fit, then that is a natural obstacle. In an effort to improve our hiring processes I recently read Who by Geoff Smart and Randy Street.
As a result, we now have a policy that requires that every prospective hire be interviewed by three other team members. That is an artificial obstacle.
Artificial obstacles are useful because they prompt us to fix problems proactively, before they become natural obstacles.
The obstacle of having three team members interview every prospective new team member becomes the way by which we hire people who help my company grow, rather than holding us back.
The obstacle of every team member asking "Why are we doing this particular activity? How will this generate the desired outcome for the client?" is the way we focus on activities that work, stop wasting money on activities that don't work, keep clients happy, retain clients longer, attract new clients, keep team members happy feeling like we're all doing work that matters, and build a great company.
One Simple Step For Creating Effective Artificial Obstacles
Artificial obstacles can be annoying, especially if one doesn't understand the connection between the obstacle and the benefits it produces.
There's a place for trust, such as during an emergency, but wherever possible we should "trust, but verify." It all starts with one simple question, "Why?"
- Why are we doing this audit for the client?
- Why are we doing this buyer persona research?
- Why are we doing this blog post?
- Why does this blog post need a photo?
- Why are we doing social media posts for this client?
- Why are we making these specific on-site SEO changes?
At my company I’ve instructed all our team members that if they don't know why they’re doing something they’ve been asked to do, they should ask why.
Then, one of two things will happen, either; 1) they’ll learn why they’re doing it, which will help them do a better job at it and be able to teach others why and how to do it, as well as explain it to clients, or 2) we'll stop doing it, which will save time and money that we can allocate to productive tasks.
What gets in the way of asking "Why?" Pride. Fear. If I tell someone to do something, and they ask "Why?" and I don't have a good answer, then I look foolish.
Nobody likes looking foolish. This prompts some people to say "Stop asking why, it's annoying!"
Instead, it should motivate us to stop doing foolish things, or to make sure we know exactly why we're doing what we're doing.
Are you focused on outputs or outcomes? Do you do work just to make others think you’re busy?
Or are you focused on providing real value? When you encounter a challenge do you groan and lose hope, or do you figure out how this obstacle can become a benefit?
Focusing on outcomes and welcoming obstacles has helped my business pass major milestones. Try these tips out yourself, and let me know how it goes.
Josh Steimle is the CEO of MWI, a digital marketing agency with offices in the U.S. and Hong Kong.