Transcription
Aderson Oliveira: I've spoken with Keith Loris about Outsourcing Marketing Services, or his version of it, which is called JointSourcing. Very interesting model where he shares the risk and rewards with their clients. We have also spoken about what businesses should look for when evaluating a marketing organization to work with, and why the term "outsourcing" sometimes can have a bad perception.
Hello, hello. Aderson Oliveira here. This is another episode of the OuchSourcing Podcast where we talk about outsourcing, and I bring specialists and people that know a lot about the field to talk about that and it's because they know how to take the pain out of the outsourcing process.
I have with me Keith Loris. Keith is the CEO of Sales Renewal Corporation. Keith, welcome.
Keith Loris: Thanks very much.
Aderson: Perfect. Let's start with your location, and what is your business about?
Keith: Excellent. So, Sales Renewal is located in Boston, Massachusetts. We serve clients across the U.S. and, actually, really across the world. We're a truly unique marketing agency. There are two things that are unique about us. One is our breadth of services. Most of marketing agencies are a single tactic. It's a PR firm, it's an ad firm, a trade show consultant. And that's okay because they're generally serving big businesses who have a marketing infrastructure in VPs and Directors that can hire all these point-specific vendors and come up with a coherent marketing strategy and implementation.
Sales Renewal is serving small businesses. Most of our clients are between zero and five people in marketing, and often they have zero, right? We often report to a person who's got a title VP Sales of Marketing, but they're really sales, and they grow to whatever level of success, because they're really good salesmen. Sales Renewal is a marketing general contract. So, we subcontract the work to various industry-specific experts. So, that allows us to provide a breadth of services that's pretty unusual and pretty unique for marketing agencies.
The other unique thing about us is the business model, and that's we share the risk and reward. So, with JointSourcing, we basically insource - and I'll talk about that in a minute, as opposed to outsource. The equivalent of a Chief Marketing Officer, a VP of Marketing, and the entire team, and we do that all in this unique shared risk-reward business model.
Aderson: Got it, got it. So, we just discussed a little bit about that before the interview, and you said, "We don't do outsourcing. We have a spin on that word," and I understand that. But, at the end of the day, you are taking the sales and marketing role for an organization. So, they are asking you to deliver that for them. I can only assume that it's very different to - and I'm going to call it outsource - outsource sales and marketing as compared to outsourcing IT, to outsourcing development. Can you talk a little bit about how different those things are?
Keith: Sure, sure, absolutely. No, you're right. Technically, in the business school sense, it's outsourcing. We're not employees of our client; we're doing marketing for them. We call it insourcing, because outsourcing often has this connotation of shipping business offshore to save money, the quality is not necessarily as good, things like that, right?
Aderson: Why? Why?
Keith: Why?
Aderson: Yes.
Keith: Because that's the way it's often presented, especially in the places like the IT work. There were all this Indian outsourcing companies and things like this. So, we don't really want to fight that battle in that particular case. In that particular case, it's really not. We're not taking work and jobs away from -- you know, let's say our client did have two marketing people. We're not replacing those people. The idea of insourcing is that marketing has gotten very technical of the details. It's long past the time where you can be an English major in college, you could make a good marketer, right? It's very technical analytics, and there's lots of sales-enabling technology, and it's really hard, if not impossible, for a small marketing team to be an expert in all the different strategies and tactics you need to do in marketing. So, when we view it as insourcing, we're not replacing anybody there. We're insourcing the pieces they're missing.
Aderson: Got it, okay. Let's go deeper, a little bit deeper into the JointSourcing strategy that you implement with Sales Renewal. So, it looks to me that JointSourcing, you have some skin in the game as well. Can you go a little bit deeper into your version of outsourcing which, again, you call JointSourcing?
Keith: Sure. It goes to the question you asked a minute ago about outsourcing work is a little different than IT, or HR, or some other things, and those generally are in a line of operations and it's not necessarily as scary. For most business owners, the thought of that, "I'm outsourcing marketing to this third party. Am I putting the risk of my business? This is where my revenue is coming from." That's a very scary thing, right? That's why the business model is so great, right?
Another thing, for instance, in the JointSourcing solution, it's a one-year contract. We're not doing a project. So, we and all the subcontractors as we bring to bear all have a one-year contract, which is pretty unusual. We're all invested in the long term and coming up to speed in getting better. As an example, our average JointSourcing client has been with us 3.7 years. We are their marketing department.
So, the business model that becomes instrumental, the shared risk-reward as a way to allay the concern of the business owner that these people are going to be into it, they're going to do the right thing. Would you like me to elaborate a little bit more about that?
Aderson: Please go.
Keith: So, Sales Renewal is actually my fourth company. I started four different companies. The first three were all technology company. It was originally PC software, then web software, venture-backed, privately-backed, and so on. In those other three companies, I was a big consumer of marketing services and I always felt that the business model marketing agencies was broken. So, those three companies, the innovative thing that we did was technology, and Sales Renewal is the business mode. A, we're trying to serve small businesses, which most marketing agencies ignore, and B is the business model.
The typical predominant business model for marketing firms is by the hour. You're paid by the hour. If you think about it, the business owner is motivated of the marketing agency. They're motivated to kind of work slowly. They all make more money the slower they work if they're paid by the hour. Now, I'm sure the vast majority of those people are honest. They're going to do the right thing for their clients. But, I wanted a model that did not rely on "He is being a nice guy". I wanted it to be my economic interest.
In certain parts of marketing, the business model's even worse than by the hour. For instance, advertising, the ad firms typically gets 20-25% of the ad spend. So, their economic motivation it is to spend more money on advertising. In our model, when I say shared risk-reward, what I mean is Sales Renewal earns commissions on the revenue we help generate to the client. It's a paid performance kind of model, and just like with sales, even though we're marketing, all the issues around commissions of sales applied to us. Obviously, what's the percent number? Is it old revenue, new revenue, new product, new territory? We're happy to have all those conversations with clients. But, the idea is the fact that getting commissions on revenue is motivating us to grow the sales.
We go a step further now. We also put skin in the game and we share the risk, alright? And that's where the joint in JointSourcing, the word itself, has two pieces. Insourcing, the business we talked about a minute ago, is the last part, and then joint venture is the first part, and that's the shared risk-reward. So, the idea is that whatever commission we're earning on the revenue side, we will pay, we will contribute for the big ticket marketing expenses we work in them.
So, I'll give you an example. If we’re earning a 10% commission on revenue, which by the way, we don’t often get. But it's an easy number. If we're getting a 10% commission on revenue and we propose to a client a $1,000 a month online ad community, if the client says yes, we will pay a 10% of that or $100 a month. The client will pay the $900 difference. What we’re trying to do there is align our economic interest with the client. Like the business owner, Sales Renewal is motivated to grow their sales, like the business owners who are also motivated to grow them cost-effectively.
Contrast ad business model with the ad agency. Their motivation is getting to spend more money on ad just so they can get 25%. Our model, we want to minimize the ad spends. Trust me, I sit in Excel quite a while and figure out our incremental commission for an ad campaign versus our incremental cost of the ad campaign. If it's profitable for us, it's profitable for the client. So, the shared reward applies to sort of the big-ticket marketing expenses: paid marketing, direct mail, things like that.
The point of that is it engenders a tremendous level of trust. Business owners understand that if we say we think you should spend $1,000 dollars on ads each month, they understand that our money's in the deal, right? It leads to a level of trust, where if the ad firm's getting 25%, you might be a little skeptical where they come up with that number, right? So, it's a different kind of a model.
Aderson: Got it. Perfect. There is something I'd like to explore a little bit deeper here, Keith, which is your general contractual model there. I find it very interesting that you don't shy away from, you don't hide the fact that, "Okay, you know what? We use subcontractors to deliver part of what we do." Talk a little bit about which types of work you subcontract and why you make that clear that you subcontract it. Why you don't shy away from white-labeling that, from hiding that? Why?
Keith: Well, for one thing, we're being honest. Most marketing agencies do subcontract, right? They just call it white labeling and they pretend, and the thing is it’s ridiculous to me. The PR firm who does SEO, the PR people are not doing SEO. They're outsourcing it to some SEO firm, and conversely, the SEO firms go right to press release. It's ridiculous. The PR people should write the press release.
In our model, you probably can't see this, but you could see this on our website. We divide the world up into these nine different characters. As an example, web marketing and SEO, email marketing, paid marketing, and so on. The bottom one here is strategy analysis of program management. That's what Sales Renewal does. We do the strategy, we do the bench marketing that drives everything - we're very, very data-driven - and then we become really good at herding cats, because we turn around and subcontract to all these marketing agencies who are not used to working together. Their normal mode is to try and grab as much of the businesses as possible.
In our model, we would ask the PR team to write the press release and the SEO team to place the inbound links in the group of ranking. This subcontracting model allows us to use each expert for what they're really expert in, and not pretend that they're experts in all these different things. So, when I'm claiming we're experts in all these different things, there is a depth of expertise. You do have to be 25 years in advertising to be really good at advertising.
So, our model, again for the small business, we feel like we're giving the best of both worlds. We handle the breadth of all the different marketing tactics they need as a custom plan in JointSourcing. We have this process we figure out exactly: one part SEO, two parts trade show, three parts content marketing, whatever make sense to that business, and then we will go find all the subcontractors. We, ourselves, do not claim any inch of the expertise.
Again, we're doing the strategy in a program management. Strategy tends to be industry-agnostic. The team we assemble for each client, again, the one you're contracting, we'll be expert. So, a financial services client will get financial services writer. We'll get people who have that industry expertise you need to get good performance. So, again, it's the best of both. We give them the breadth that we manage on the day-to-day, but then we have the depth of expertise specific to their industry that's going to give them the performance they want.
Aderson: Got it, okay. Let's talk a little bit about the key aspects to be a success with - and I'm going to call it outsourcing, you call it the term that you want - but what is a few key aspects to be successful with outsourcing marketing to somebody else to do on behalf of my organization. Can you talk a little bit about that?
Keith: Sure. There's two parts of the outsourcing. We'll use that term. One is from the client's perspective, what makes it successful from the client's perspective. Well, I already stated one. It's the business model. The shared economic interest, we're not getting paid by the hour, we're not just checking things off. A lot of the classic the about the marketing agency is the ad firm or the SEO firm. Yeah, they're bringing more traffic to your website, but is it qualified traffic? Are you getting more business?
Often, you go through contortions to try and benchmark and show that it's good kind of traffic. Our model is revenue. We just use revenue. If we're bringing you unqualified leads, we're not going to close them, we're not going to get a commission. So, the model itself focuses on quality kind of stuff. That's a really important thing. It's a one-year contract. We have monthly meetings, we have quarterly stretch reviews, we have lots and lots of analytics to back up. We don't go so much with that gut; we go with data, what's working, what's not. In the quarterly meetings, we can move money around. SEO is not doing what we want? Put more of it into advertising, things like that. From the client's perspective, it's very, very helpful.
The idea for this, by the way. We call ourselves marketing general contractors. When I started the company eight years ago last month, I made a simple observation. I looked at home construction. So, imagine if you were to build your own house. It's highly unlikely that you would hire the plumber, the carpenter, and the electrician. You'd probably hire the architect to design your house, and then you hire the general contractor to find the subcontractors, to manage them, to make sure the wood's there before the carpenter needs it, and so on. That's our model.
The way it is today for small businesses. A local company, a local manufacturer is going to hire SEO people and trade show people, and often, they don't even speak the language. The SEO guys is going to talk about things that clients can understand. The advertisers are going on about click-through rates. Small businesses don't understand any of that stuff, right? But, the contractor, who's got the economic interest aligned with the owner, we do understand that. We can talk to the SEO guy. We also can push back when they say, "The Google Panda updating is why it's not working." We can say, "No, it's not doing that. Sorry." You got to deliver, right?
It's a really important to the intermediary. You could think, "Okay, well they're in the middle, but there are a lot of advantages being in the middle." So, again, as I said earlier, with JointSourcing, we're the equipment of CMO, the architect, we're the VP of marketing that manages the team, and then we hire the team.
Now, the other version of outsourcing is the fact that we subcontract. That's, again, what we call that. But, again, we're very open and we try and use the various experts for what they're expert on. So, the PR team, the press release, and that kind of thing. What we've done, frankly, over the last eight years is develop infrastructure to herd the cats, to share information amongst these vendors who are not used to sharing information.
We start of at JointSourcing with the agent with what we call a blueprint, which is a strategic engagement. We had a lot of information. Again, the strategic thing, the messaging, the positioning, which we then turn around with all subcontractors, right? So, each subcontract, typically, has their own discovery process. They don't have to do that; we give it to them. Also, by the way, the fact that the client knows that they're there, we don't have to hide them. If the SEO team's got a question, they can ask the clients. We don't have to pretend. So, there's really good information flow.
The other really big benefit for the subcontractors is, again, we're in the industry. They typically would have a conversation with us, they're off the phone on 15 minutes. That same call with the client would be an hour and a half. The client would ramble, they talk about different things. When the subcontractor talks about Google Panda, they thought we know what they mean. So, it's much more efficient for the subcontractors to deal with us. For most matters, we're a really good proxy for the client. Any question they ask us, we generally can answer it. And if we can't, we turn to our client and ask them and they'll answer.
Aderson: Got it, perfect. Very good, very good. So, as I said before you wear both hats. You provide services and you hire services as well. Now, I can only imagine that you must have come across many horror stories of problems that you may have with your clients, or even with contractors as well. Whatever you feel comfortable with, I would like to hear a two or three-minute story that you may want to share with us that can exemplify something that, "Hey, this is a problem with outsourcing and this is how we came about solving that. This is how we solved this issue here, this horror story." Do you have anything that you can share with us?
Keith: Sure, sure. I don't think I'd call it a horror story, but a classic outsourcing problem is you hire the vendor and you're not right for me. So, this happens to us sometimes too. A story I'll share with one of our clients sells used test and measurement equipment. So, they did things like network analyzers and oscilloscopes, things that an electrical engineer would typically use. This equipment used could be $40,000, so it's a big ticket item of it. Like anything electronic things online, it's very much commodity. They sell on eBay, on a $40,000 of product, a $1 difference in price could win the sale, right? Because, again, our client doesn't build it. They're not Agilent or Hewlett-Packard. They're selling somebody else's machine.
One of the things we did for this client to sort of get out of the commodity world they were in and instill some loyalty was we wanted to make their website content-rich so that the engineers who typically will specify the purchase will come to the site, view it as a resource and get in the habit of coming there even when they're not in the market. So, we had a very robust content marketing program and we started this engagement with a really good marketing brand - really, really very good at this.
The challenge that we quickly ran into was she was writing for engineers. So, typical engineer response to marketing "fluff", throw up all over it, this is just garbage, "I want details, I want facts!" This is like within the first two, three weeks of the engagement, we realized this is not a good thing. So, without the client even knowing it, we started looking around for somebody better. Turns out, we found a test and measurement engineer who was in Kuala Lumpur. He worked for Intel, and as a hobby, he blogged about test and measurement, so he had a blog. We found him, and we ended up hiring him and he ended up writing their blog. He actually does experiments then we published them on the site. It was fantastic. We didn't even tell the client about this until we had found this guy and we told him, "Basically, we weren’t happy with the quality of the initial writer and so here is a replacement. What do you think?" They were thrilled.
Aderson: Perfect. Love this story, love this story. That is a great segue for my next point. How do you go about finding your contractors?
Keith: That's always a challenge because, again, we're looking for industry experts. It's not the case that we have a bench where we always employ the same people to every, every gig. We're always looking for expertise in that industry. It's a whole grab bag of things. We haven't ever run and ad yet, but we network, personal contacts, various websites, and the example I just gave you. We were searching the webs looking for test and measurement content. We found this guy with the blog.
Aderson: Got it, got it, okay. So, let's talk a little bit about your tool belt, because I can only imagine that to manage projects, to manage clients and contractors, you must be using a lot of different tools out there. Can you name a few of the tools not only for communication, but for project management that you and your team use?
Keith: We actually used quite to three different project management tools. That's one of the historic challenges. We were using Liquidplanner for a while, we used Trello. We’re back, I think, to Asana at this point as far as the project management tool. What we're finding, actually, is more important -- I mean, the project management is important, but the flowing of the information is the hard thing, right? I mean, you know, this is 2017, the world moves really fast, things change, clients do this, they do that, they want to change. How do we keep everybody in sync? The communication tools, the Skype, the shared stuff in Google Drive all becomes quite instrumental. As a company, our business model with our client is a win-win model. We really do the same thing with the subcontractors. We have, for example, even shared our commission in some way with subcontractors. If the logic of shared risk-reward works for the client to us, it should work with us to the subcontractor, and we have done that at times.
Aderson: Got it, okay. Let's talk a little bit about misconceptions and barriers for clients to engage on marketing services, on outsourcing marketing services. What are the some of the misconceptions and things that clients, in general, they don't understand well when it comes to potentially outsourcing or subcontracting their marketing initiatives?
Keith: The biggest one is it's not that I blame the small business owner, but when they look at the marketing world, they see all these single tactics silos: again, the ad firm, the PR firm. So, they'll tend to view their marketing problem as a single tactic. So, a classic, I look at my website, I'm not getting enough leads, and my brother-in-law hired an ad agency, and it worked for them, so I'm going to hire the ad agency. Couple of problems with that. First off, unless you're running those businesses and yours is identical doesn't mean the good thing I did, for you, it's going to work, right?
Also, the problem with like not enough leads for the website. There are many causes of that. It could be the traffic you're getting from ads, or from SEO, or from your social media sites to your website. It's not very qualified. It could also be, the website's not very good at converting a visitor to a lead. When they hire the ad firm, they're basically saying, "This one tactic can solve all of my marketing problems." The truth is it's usually a mix. I've not met many ad firms who will say, when they're about to get hired, "You know what? Don't hire me. Go spend nine months and update your website and then call me back." It's not in their economic interest.
Our model, since we do all of it, we have no bias to anyone. We will do the website first and then we work on traffic generation, then we have a 12-month contract, so we have time to do things in the right order and use the right efficiencies and so on.
Aderson: Now, going on a little bit beyond the scope of Sales Renewal, if a business out there is trying to evaluate a potential company, marketing organization, what are some of the things, one or two things that they should be laser-focused on checking about that organization? How will you come about evaluating a company, a business, that you can potentially do some marketing together?
Keith: Well, it actually goes on to a previous answer. The key thing is you need integrated marketing. You can't just hire that ad firm or even just do your website. You need an integrated marketing plan and then implementation of the plan. The left hand needs to know what the right hand is going to do, what the right order is. So, that's the key thing, and again, that's the challenge for a lot of small business people because they often don't necessarily have the marketing expertise. They certainly don't have the time to get that involved in the day-to-day and do all this coordinating and stuff like that. That's, again, the problem that Sales Renewal is trying to solve.
What we do is what we call agile integrated marketing. With JointSourcing, it's a complete one-stop marketing solution. We will take on the entire marketing problem. Again, we get through it in subcontract and we have the shared risk-reward business model, and then we have the one-year tie, we have the quarterly reviews to look at the data and make adjustments. So, it's agile in the sense of we don't want to spend eight months thinking up deep thoughts. We'd rather do some a little bit and test it. Did it work or not? Then, we can adjust it.
So, the key things are the agile, the concept that comes from the world of software development applied to marketing, and then the fact that it's an integrated complete one-stop marketing solution.
Aderson: Got it, got it. I'm just going to recap in my own words to make sure that I got it, because I find it very interesting which what you basically say is that, ideally, a marketing partner will look at the entire, all the different channels, potentially, to market your business and not only -- not just SEO, or not just PPC, or not just content marketing. It's really a gamut, a full set of tools and channels to promote your business. Not just one tool, correct?
Keith: That's exactly right. Again, that's what the big companies do because they have the internal resources to hire all this point-specific vendors and come up with a coherent plan. That's what we're trying to bring that big company marketing to smaller businesses. Exactly right. That's where you get -- we have some great statistics. You can see these cards over here. But, that comes from the fact that we have the PR team writing the press release and the SEO team doing the leads. We're using the right experts to do the work, and that's integrating that we do the website first then we bring the traffic to the website. That leads to phenomenal returns.
Aderson: Got it. I want to be mindful about your time, Keith. I know that we are running out of time, but I just want to ask you this before I let you go. What is one thing about outsourcing -- forget about, for a second, your specific services and products. What is the one thing about outsourcing that you would like people leaving this interview knowing about?
Keith: I think communication is key. So, the business owner has to have regular communication with the firm and keep them in the loop. In Sales Renewal's case, every client gets a quarterly review, most clients get a monthly review, some clients get a weekly review depending on the size of the engagement. So, that's where you work, because again, this has changed a lot, and the marketing teams got to be kept in the loop.
The other key thing is the economic motivation. If you're hiring outsourcing purely to save money, well you get what you paid for. If your goal is, "I just want to drive down on my costs," then it's hard to say, "Well, I also want high quality." So, one of the things I really like about my model is the shared risk and reward as the way to sort of address that.
Aderson: Got it, perfect. Finally, how can people get in touch with you in case they have more questions or maybe want to do some business with you?
Keith: Sure, sure. Right there on the screen there is our website, SalesRenewal.com. They're free to give a call, (508) 529-4300. That's our phone number. Or, call us or submit off the website. By the way, there's a lot of cool information about JointSourcing and a lot of good resources on the website even if you don't hire us. We want to be a destination website too. Our blog covers all of marketing. It's not just one tactic. There's information across all the different marketing things. So, people should feel free to go to the website whether they're interested in us or not.
Aderson: Perfect. Keith, thank you, thank you, thank you very much for your time. I really appreciate you sharing your knowledge and your experience with marketing here, okay?
Keith: My pleasure. Thank you very much.
Aderson: Bye.