Do Core Values Matter?

Introduction:

This week, Sarah Segal tells Shawn Busse and Paul Downs why she’s never articulated a set of core values for her business and why she’s thinking about doing it now. But she’s wondering whether establishing her values will really make a difference. Do employees care? Do clients care? Both Shawn and Paul say they do. In fact, Paul says his core values have been extremely helpful when it comes to recruiting. And Shawn says he thinks sharing values can be the best competitive advantage smaller businesses have. Plus: We get an update on how Paul’s big marketing initiative is going, and we follow up on why Sarah feels compelled to participate in almost all of her firm’s client calls.

— Loren Feldman

Guests:

Sarah Segal is founder and CEO of Segal Communications.

Shawn Busse is co-founder and CEO of Kinesis.

Paul Downs is founder and CEO of Paul Downs Cabinetmakers.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Full Episode Transcript:

Loren Feldman:
Welcome Shawn, Paul, and Sarah. It’s great to have you all here. Thanks for coming back, Sarah. I’m glad we didn’t scare you away. Sarah, you sent us an email this week, raising an interesting question. You indicated that you’re thinking about articulating a set of core values for your business, for your employees. But you have some questions, specifically: Are they necessary? Do they work? Do people really care? I’d love to dig into that a little bit. But first, what prompted your thinking about this?

Sarah Segal:
I think what prompted my thinking about it was really LinkedIn, and just social media in general, because I’ve been seeing so many companies really start advertising their core values as a benefit, an asset of working with them. And it just got me thinking that we have core values from our parent company, but I’ve never really established core values for my own brand. I do have three things I kind of look at when I’m potentially working with a client, but I wouldn’t call them core values.

Loren Feldman:
What would you call them?

Sarah Segal:
Well, they’re just kind of the things that I’ve learned along the way about how I want to work with clients. They’re really simple. The first one is: Whether or not the client is interesting and has natural newsworthiness. The second thing is: Can I explain it to my grandmother? Which is a hard question for some companies, especially in the technology space.

And then the third one is: We don’t work with jerks. So those are not really core values. So I was like, “Maybe it’s something that I should think about establishing, just kind of as a roadmap.” But my question: Is it beneficial to my team? Is it beneficial to our clients or our potential clients? I mean, “Do people really care about core values?” is my question.

Paul Downs:
I do, and I have rolled out a pretty extensive set for use by my employees and myself. And we’ve found it to be extremely useful. And I think that the easiest way to characterize it would be to think of: If you were playing a game, would you want to know the rules? And so I wrote rules, and they guide us in a lot of different situations.

And they go beyond just the kind of three bullet point platitudes that a lot of organizations put out. I tried to expand each of the main headings with some guidance that’s specific to what kind of business we’re in and the situations we encounter. But I will preface it by saying that we rolled these out, I believe, in 2018. So I had… oh, that’d be 33 years without them. And you already have core values, whether you like it or not.

Loren Feldman:
You mean they exist, you just may not have articulated them?

Paul Downs:
Yeah, every group of people is going to come to some kind of operating agreement, spoken or unspoken. And in a lot of cases, in a lot of companies, what the boss will tolerate is the acceptable range of behaviors. And so if nothing’s ever said, then people start testing the boundaries, and all kinds of bad things can happen.

So I tried to just sit down and define what I wanted to have happen and how I wanted my people to work with each other, and came up with—how many do we have?—seven core values. And then I eventually added to that a further set of statements about why our company exists and what employees would get out of it if the company is successful. And we have those under two main headings, which we call “craftsmanship” and “prosperity.”

Now the people who go to work in wood shops are, in general, craftsman-oriented. They want to do a nice job. They like to make things. So that makes it easier for us to come up with a set of values, because we’re not trying to put every single possible kind of person under one tent. We have a fairly consistent type of personality that enters the business in the first place.

But craftsmanship is what we deliver to our clients, and then prosperity is what our clients give back to us. So we have ideas about what craftsmanship means and what it looks like, and when we go all the way and make every effort, and when we don’t. And then prosperity is what the employees can expect the company to deliver to them, in terms of a genial working experience and pay and benefits.

And when you lay it all out there, I’ve found it to be extremely useful to derail and head off conflict in the team. And as a point of management, the situations that call for refreshment of these points happen all the time, and then you’ve got them. And it’s super useful in recruiting, because we are extremely different from the average in our industry, in terms of being managed well and having some actual ideas about how we want people to work. So when I’m bringing new employees in and saying, “Here’s what we do”—and I talk about this in a lot of interviews—it’s a real eye-opener for people who are coming from other shops. So all in all, it’s been very, very useful for me.

Sarah Segal:
Can I ask a question: Why did you do them in 2018 after having not had them for so long?

Paul Downs:
I’m in a Vistage group, and it was sort of one of the things that various people in the group were trying for themselves. And I was not one of the early adopters, because there’s always a feeling that, “Oh, you know, I don’t want to put my own views on my employees,” or just a certain reticence to do that—to preach—because you end up preaching. But I saw how effective it was for other companies, manufacturing companies. And I was just like, “Yeah, better try it.” I’m having trouble managing a team as it gets bigger, and you see something working. And even if it’s not your personal taste, it’s often worth trying. And then it worked out pretty well for me.

Loren Feldman:
Yours are quite extensive, Paul. You have them under three different rubrics, and each of them has a fairly substantial list with a good bit of explanation. I’m curious: How did you disseminate it? How do you know that your employees have actually internalized it? How do you think about that?

Paul Downs:
I will say that in all the examples that I’ve run across that worked well, they were absolutely driven by the boss from the top with personal involvement in writing them and in making sure people conform to them. And so I followed that model.

We had been introduced to the concept in my Vistage group by a guy named David Friedman, and he had rolled out this idea for his accounting firm. And one of the things he said was, “Don’t try to make it short. Because short doesn’t actually help. If it’s just a couple of statements, then it’s just the usual mission statement nonsense. You need to make it specific to your company and your business. And then you can provide real guidance.”

And do they buy in? As far as I can tell, they do. We don’t go as hard on preaching it as some other people I know. But whenever something comes up, I refer to them, and I’ve heard my employees refer to these different points in conversations with each other. So I would say that there has been buy-in.

I mean, in my case, a lot of them are just common sense, and they’re designed to make the workplace a nicer workplace. There’s a promise that we’ll treat each other well and that if people are causing trouble, they’ll be dealt with. And then there’s the promise that if the company is doing well, we’re going to make sure that everybody who works there does as well as we can, too. And that explicit promise, I think, is quite unusual these days.

Loren Feldman:
How about you, Shawn? What have you done?

Shawn Busse:
Yeah, we got our start in this arena back in 2000. We were doing a lot of work with nonprofits, and we were doing a lot of board facilitation. And the work we were doing there was really about aligning organizations around a shared set of ideologies. And that was really the beginning for us of learning the power of this and helping people to do the work. So you know, with about 20-22 years of leading into organizations to help them articulate their mission and purpose and values, I’ve just seen it over and over again have similar effects to what Paul has communicated. It’s just been my experience that it’s transformative.

That said, there are a ton of pitfalls in this arena. And I think maybe some of your initial inquiries, Sarah, are around that. You know, if you look at the values that, say, Enron had in their shareholder reports, things like integrity and communication, I think that the peril is that a lot of organizations use them as platitudes and marketing, as opposed to actually what is lived in the organization.

And so to escape those challenges, you actually have to do some hard work, and you can’t just pick words that sound good. It does absolutely have to come from the owner in an owner-run business. I believe that one thousand percent. I think it helps to get outside help. Of course, that’s my bias, as we do that work. I wrote a book called Marketing From the Inside Out. It’s been out for about five years now, and the first three chapters are about mission and values. It’s not actually about marketing. So it’s just been really powerful.

I think where Paul and I might diverge a little bit is, I actually believe shorter is better. We have a process called a one-word mission statement. And we tend to try to get folks down to about four or five core values. And the reason for that is that, if people can’t remember what the values are, it’s really hard to live them. Same with the mission. So I think where I meet Paul in the middle is that we start with brevity, and then we expand from there to articulate what things actually mean. So we may be arriving at the same place just through two different paths.

Paul Downs:
Shawn, can I just jump in and comment on that concept that if you can’t remember them, you’re not going to live them? The efforts that I’ve seen that have been successful involve making sure that everybody has a copy. And in several cases, it’s actually a little pocket-size fold-out that employees are expected to carry around with them or have access to at their bench or their desk.

And we have them posted all over the shop so that wherever we happen to be having a meeting, if something comes up, I can just jump up and double-check with everything that’s in there. And they say, “Oh, yeah, this is an example of number 7B,” or whatever. The value of having more detail is that it provides more specific guidance. So just to give you a quick example, one of our core values is about resolving conflict. And you could just be like, “Be nice to each other,” and be done with it. But that may not work.

So filling in what resolving conflict and being nice to each other looks like and saying what’s not okay has just been extremely useful. Whenever I’ve got people who are in a beef, I bring them into my office, and I have them each read out loud those points before we start the discussion. And then we’ve had fruitful discussions.

And so I think that there is value in detail, particularly if you have a particular kind of business. A lot of what we do involves actually making things, so some of the statements about our craftsmanship concepts are about the actual work we do, and very specific to that. And that’s, again, helpful. I wouldn’t expect to roll it out at a PR shop, but there’s going to be something that PR people encounter that’s specific to their business, that’s going to be useful to have some detail on.

Sarah Segal:
Paul, have you updated those core values since you originally drafted them? Do you see it as kind of a living document? Or do you see it as, “This is it, and this is what we’re going to live by, and I’m not going to touch it again”?

Paul Downs:
Sort of a hybrid. I have made some changes on occasion, when something came up that made me think, “We need to expand on a point.” But in general, I try to figure out a good set of rules at the beginning and just lay it down there for people. And there’s a reason for that, which is that that’s actually how a lot of humans work. They’re comfortable with a set of rules.

Just think of religions, for instance, where the rules aren’t up for discussion. The situation during which the rules are being applied is open to discussion. But if you’re constantly fiddling with the rules, it just makes it harder to actually get to the endpoint. So if you have a reasonable set of rules and you put them in place after some thought, and are open to the idea that they may need to be changed—but it’s not my goal to change them, ever. So that’s my reaction to it.

Shawn Busse:
Yeah, one of the things that I’ve pushed back here is that your work environment, Paul—people come together, they work in the same space—right now, I have 13 people, all distributed across desktops and home places, and so forth. It’s probably an environment more like Sarah works in. And for me, I found it to be far more important that people first can understand the overarching concept, and then we can get into the details.

We have those lengthy descriptions attached to each of our values. But as you start adding to it, if you go from four to five, and five to six, and six to seven—if you ask somebody, “What are the seven?” and they can’t look up and see a poster, the chances of them being able to remember it diminish dramatically.

And I have found that the path to creating shared agreements is actually through succinctness and brevity, and everybody being able to just be able to remember them at any time. I can ask any employee, “What are our four values?” And I promise you, they can all remember them. I can ask them what our mission is. They can remember that it’s “transformation.” I think there’s a lot of power in that.

And I think to your earlier point, Sarah, about, “We’re not going to work with jerks,” it sounds to me you probably have this value in terms of customers, but I’m guessing that’s also a value you have for your employees. And where I have seen value is really, really powerful is when you can actually align customers with internal workforce so that then the customer is actually starting to live the values that you expect out of your employees, which then makes a more harmonious organization. And customers and employees feel like they’re in alignment, as opposed to in an adversarial relationship.

Sarah Segal:
Do you think that your customers care about your core values? Do you share those with them when you’re working with your folks? And how does it benefit you?

Shawn Busse:
It’s huge. It’s huge. I mean, in our sales deck, the very first slide that I show is the word “transformation.” And that’s our one-word mission statement. And the reason I show that slide is that I want to gauge how intrigued the clients are by that idea of change. Because if they look at that word, and they look uncomfortable, or they look at that word, and they maybe just don’t even understand it, then that’s like a first red flag. On the other hand, if they see that word, and they are like, “Yeah, we’re here for change. We’re here because we want to act different. We want to think different. We want to improve ourselves,” then I know we’re going to have a really good relationship.

And for us—I’m not saying this is true for all businesses—but for us, we have absolutely focused on long-term win-win relationships with clients. So for us, it’s all about lifetime customer relationships. And when you’re in the business of building long-term relationships with clients, if you’re out of alignment with values, it will not go the distance. And you’ve probably experienced this, Sarah. I mean, you get that client, and it’s a struggle all the time. Those clients don’t last years and years and years.

So I think the more relational the business, the more being clear about what you stand for and who you are as an organization is important in the sales process, and the more transactional your business is, then the less critical it is with your customers, because they’re going to buy something from you and move on. And maybe it’s not as important in that case, but for me as a service business who wants 5-to-10-year relationships, I’ve gotta get that squared away right away.

Loren Feldman:
Paul, I think I heard you say that your set of core values has been an advantage to you, in terms of hiring. Can you talk about that?

Paul Downs:
Well, our interview process consists of asking the people we’re interviewing to take a skills test. So I have some idea of: Do I actually want this person or not? And assuming that everything looks good, then I start talking about the core values, because it is unusual in my industry. And I have a big copy of them hanging on the wall, right where I do the interviews. So I start talking about, “If you join my company, we have rules to get along with each other,” and then point to the rules and give people a copy of our employee manual, which has policies—but also all of these statements restated in them—and really emphasize that this is going to be a place where, when you come to work, you can do your work. And you won’t be encountering all the various pathologies that are built into most wood shops, and if you did, to take care of it.

And so it’s about making a better place to work. I think that my assumption, when I see a desirable candidate who I’m interviewing, is that I have to do some work to hire them—that they’ve got options, because they’re good candidates. And I’m not going to be shy about displaying all of the things that we do that are different and better than the ordinary choice they may have.

And so that, again, is tailored to my industry. But it has been very, very helpful. The last three hires that I’ve made, one guy thanked me as soon as I even brought them up. And everybody has been favorable, like, “Wow, I didn’t realize that you did that. You have a reputation as being a good place to work.” But we don’t really use them for marketing. It’s more for internal stuff.

Shawn Busse:
Do you put them in a job description, Paul?

Paul Downs:
I don’t put them in the job description, because then the job description would be nine miles long, and no one would read it. But what I do say is, “Come work with us. It’s a no-drama professional environment. It’s a good place to work.” And then we follow up. I don’t believe you need to sell everything in the first encounter with people. We want them to come out and see us and see what we do. And I want to see them before I put on the full court press, too.

Sarah Segal:
How did you guys develop them? Did you sit down by yourself and really think about things? Or did you involve your team or key confidantes? How did you put pen to paper?

Paul Downs:
I started with sets of these guidelines that had been developed by other companies, the original David Friedman set, which was 27 points, and then the set that had been developed by another member of my Vistage group, who ran a very similar manufacturing operation. And he had taken the 27 and sort of tweaked them for his situation. And I looked at both of those and started with that, and then went through and tweaked it for my situation. And I don’t start by involving my employees in any kind of writing project, because I’m a better writer than any of them. And so I’ll do a draft and then roll it out for everybody for comment. But as I said, this has to come from the boss, and I think that people take it a lot more seriously when it does come from the boss.

Loren Feldman:
I think this says something about me as a person, perhaps, and certainly as a journalist: I have never worked for a company where I took a pronouncement of core values seriously. It always came across as pablum to me, as something that somebody did because they felt they had to do it. But it didn’t feel authentic to the business at hand. It didn’t feel like something that I needed to pay attention to. And thus, I never paid attention to the articulated core values of any place I’ve worked. Actually, most of them didn’t even try.

Sarah Segal:
I totally hear you on that. From a journalism background, it just seemed like jazz hands. Like, “Hey, we’re so great,” all these wonderful things. But it just seems, sometimes, like a way to promote yourself as, “We’re so great, and we live by these values.” That’s my struggle with it.

Shawn Busse:
Yeah, you’re spot on. I mean, generally, I won’t even talk to a corporation that wants us to do this kind of work. Like, we’re really, really good at it, and have been doing it for a long time. And it’s just because, that environment, it just fails. And for a lot of the reasons …

Loren Feldman:
You’re defining a corporation, Shawn, as being a company that’s not run by the owner?

Shawn Busse:
Yeah, definitely if you have external ownership versus internal operation, it can be done, but once you start to get above maybe 150 to 300 employees, you start to get into these dynamics of politics and picking things that sound good. Honestly, I think it’s the best competitive advantage a small business has, because you could really create a ton of harmony in the organization, as Paul’s described, as I’ve experienced with ourselves, as we’ve seen with clients year in year out.

In large corporations, they just can’t do that. There are just too many competing interests. There’s a lack of authenticity, oftentimes. So I think you have two different universes here. And what works really well in one, I’ve found, like 90 percent of the time is just utter horseshit in the corporate space.

Loren Feldman:
How about in a smaller environment, Shawn? Have you come up with a way to assess whether the values have been articulated effectively and are making a difference?

Shawn Busse:
Today, most clients come to us either needing help with this, or they’ve done it and they need to really see if it’s authentic. And so a couple of methodologies we use are we have confidential interviews with employees and we have confidential interviews with their customers. And what we’re looking for, without asking leading questions, is behavioral consistency. So, are employees telling stories about activities that are going on in the organization that either reflect the already stated values? Or, if we’re trying to shape them, we’re looking for things that employees say consistently across employees—and that, if we are then also talking to the owner, we hear those things, too. So we have the benefit of being outsiders without bias.

I do agree 100 percent with Paul, who is an amazing writer, that you don’t want to crowdsource this. That’s a different activity that I see folks do that’s a disaster. So I don’t think you go ask your employees, “What do you think we stand for?” and so forth. I think in a small company, like your company, Sarah—I don’t know how many employees you have—but if you don’t bring somebody in to help you with it, then it probably just starts with you. I would say that.

Sarah Segal:
Are there questions that you think are valuable to kind of prompt your thinking, that you give to any clients that you work with that are working on that? “Ask yourself these things, and that will help you kind of start that process.”

Shawn Busse:
I mean, I really believe you’ve got to start with a mission before the values. I think that that’s a great path. Because for us, when we can identify what the mission is, what the purpose is—so let’s say Paul’s mission is craftsmanship and prosperity, so that’s his kind of thing he’s driving towards. I think that the values, which should be verbs—you should be able to answer the question, “Is this value in service of, or we are in the business of, and by doing these actions, we will produce this outcome?”

So for example, for our mission of transformation, one of the key values we have is to think big. So the question is, “If you think big, will you be producing transformation?” So there should be a relationship between those two. So I think that’s really, really important. Yeah, that’s, I mean, that’s one of many.

Sarah Segal:
Loren, do you have a mission statement and core values? [Laughter]

Loren Feldman:
I do have a mission statement. I will say this, in answer to your last question, Sarah. You asked: Are there questions that are helpful, in terms of coming up with what your statement is? He’s not here today, but let me channel Jay for a moment. He has said numerous times that his definition of culture is basically to ask three questions. One is: How far will you go for a customer? Two is: What do you expect from your employees—and by that, he means to suggest that he does not expect people to be working 60 hours a week. The third is: What are your standards for how people treat each other?

Shawn Busse:
That’s great.

Paul Downs:
But he left out what the employees can expect from him.

Loren Feldman:
I’m sorry he’s not here to answer that question.

Paul Downs:
Well, a lot of these things are sort of the legacy of the opportunity comes from the company to the employee, that you’re in an environment where employees are assumed to need jobs. And that’s just the wrong attitude for today. Now, maybe if we have a rapid recession in six months, it’ll all go back to where it was. But at the moment, I think that there has to be—or I’ll put it this way—I have benefited from making clear to my employees what they can expect from me.

And then the other thing is getting back to this: Can you roll it out in a big organization? I would say that the number of people involved is pretty critical, that if you start with anything more than about 40 people, I think you’re gonna have a very hard time doing it. And mostly because if you have a large organization, there’s bound to be quite a bit of behavior already within the organization that’s going to be quite counter to whatever values you come up with—unless you’re willing to really go far afield and be like, “Backstabbing is encouraged!” Or something like that. [Laughter]

Loren Feldman:
That’s journalism.

Paul Downs:
That’s journalism. But if you roll out values, and it’s not immediately apparent how you would implement them, and every day you’re confronted by people who are ignoring them, it’s going to be a failure. Whereas in the smaller owner-driven company, the boss can roll them out and just enforce them.

And I’ve gotten rid of people who I did not think were going to be able to do it. And I’ve certainly used the values for a warning with employees who I wanted to keep, but they were starting to kind of drift into misbehavior. I would sit them down and say, “Look, these are the values. If you don’t start flying right, I will fire you. But I’ll give you a chance. It’s pretty simple. Here’s the rule you’ve got to follow.” And that has worked on a number of occasions, too.

Shawn Busse:
What Paul just said, it’s like an effective value is something you can point to the behavior, you can point to the value, and then ask the employee, “Do you think that was in alignment with our values?” And it should be really clear to both parties so that then they know, “Yeah, I was off the mark. I was out of line.” I’m curious, Paul. How do people respond when you kind of bring that to them?

Paul Downs:
Nobody enjoys these conversations. I don’t.

Loren Feldman:
Has anybody ever said, “I was off the mark, I now realize…”?

Paul Downs:
Yes, they have. I’ve had a lot of people who’ve worked for me for very, very long times. And so for the first 10 years, everything was great. And then the marriage fell apart, and trouble started to show up at work. And I used that principle of, you warn people: “Hey, you’re now heading for trouble.” I’ve used that over the years, and much more successfully since the core values.

We just had a case of that two weeks ago. An employee who is wonderful in many ways, but he’s got a bad temper. And he sort of zeroed in on one other employee and really let it rip whenever she made a mistake. And he wasn’t quite as willing to bring forth his pathology with any other employees. And she complained, and I brought him in. I said, “Listen, you do anything more with this woman, you are gone.” And he took it as a wake-up call. The very next day, his whole attitude had changed. Will it last forever? I don’t know. He’s kind of fighting the way he’s wired. But I don’t care about that. I just need him to perform the way I want him to. And he’s now had clear feedback. And so far it’s working.

Loren Feldman:
I want to hit some other topics. But before we go, Sarah, has this been helpful?

Sarah Segal:
Very helpful. I’ve been taking copious notes, as we’ve been going.

Loren Feldman:
There will be a transcript, you know.

Sarah Segal:
I know, I know. It’s just, I can’t imagine that I’m the only small business owner that is daunted by this task, because—

Loren Feldman:
You’re not.

Sarah Segal:
I just don’t want to get them wrong. But you know, they’re important. I think that we do have core values. Like I think we talked about last episode, transparency is one of them. But I want to make sure that they really reflect the business that I’ve started. And so it’s gonna take me time to put these together. And maybe you’re right: Having that outside backboard to prompt you with questions and ask you questions, it might be helpful for me.

Shawn Busse:
Sarah, you are like part-way there. Like, I was listening to that last episode. You talked about your transparent PR approach for the customer. I was just like, “Oh, this is so good!” That’s a really great example of, you have probably an internal value with your team about transparency to one another. But now you’ve produced an actual way of working with clients that aligns with probably a personal value of yours. And now you’re connecting the links in the chain between employees, your operational way of working, and then what the customer appreciates. And so I was super encouraged by hearing that from you in the last show, because so much of PR is a black box, and there’s just a lot of uncertainty around it. And you’re kind of tackling that head on with probably what is a core value of yours.

Paul Downs:
Yeah, let me just throw this out there. I would be very happy to share my statements—and also the original David Friedman ones—with anybody who wants to contact me. And maybe we do it through Loren, or maybe you just send me an email. I’m not that hard to find. Loren, I’ll make PDFs, and we could just send them around.

I think that seeing what other people have done is very, very helpful. So Shawn would have the very succinct version, and I would have the very prolix version. And everybody who’s trying to roll this out is just gonna decide what they want to do.

Shawn Busse:
Yeah, I mean, Paul’s document on prosperity is—I’m almost gonna swear—it’s fantastic.

Paul Downs:
Well, thank you.

Shawn Busse:
And I’m not just blowing smoke here. A lot of times I see stuff owners create, and I’m like, “Oh, God. Nobody believes this shit.” And that was one of those things I read, and I was like, “Man, I believe this.” And I just think about, if I were a candidate for a job, and I were to see that kind of thing, I would be like, “Yeah, I want to be part of this.”

Sarah Segal:
Yeah, while I’m going through this, I’ll share my process and what I’m doing to kind of develop these ideas and my thought process on my Twitter feed. It’s not a very popular Twitter feed yet, but I’ll definitely tag Loren and 21 Hats through it, as I kind of break this down for my own business. Maybe some of the things I’m going through might be helpful.

Loren Feldman:
All right. I want to hit some more topics before the time runs out. Paul, earlier this year, you talked to us about a big marketing initiative that you’re trying this year. Can you give us an update where you’ve gotten with it?

Paul Downs:
Yes, I have engaged a marketing firm that specializes in sort of a complete—from identifying messaging to producing messaging to distributing it and then follow-up. And this company is owned by a fellow Vistage group member. And I have in the past, since I’m—

Loren Feldman:
Which means that if it doesn’t work, he’s going to have to explain why in front of your Vistage group.

Shawn Busse:
The walk of shame.

Paul Downs:
How about the “march of triumph”?

Loren Feldman:
There you go.

Shawn Busse:
There you go. Even better.

Paul Downs:
Yeah, I’m interested in going through this process, because all my other marketing efforts have basically been me sitting down and writing an ad or a tweet or whatever. And this is now subjecting myself to a process that’s actually structured, extensive, and is designed to really tease out what we know and what we want to say and who we want to say it to.

So when we deal with our clients who come to us and don’t really know anything about how a big conference table is made, we put them through a process. And it’s an extensive process, and we’ve worked it out. And this is the first time I’ve really been subjected to that, and I can see absolutely the value of hiring a professional and going through something way more disciplined than what I would have done on my own devices.

Loren Feldman:
Is the purpose of the process to figure out who exactly your target audience is for these?

Paul Downs:
No, I had a target audience for this effort. You know, we do a lot of work with architects and interior designers, and they are good for us because they have the potential to be repeat clients, and only about 20 percent of our business is repeat. And if we can get a couple firms that are just used to calling us whenever they run into a need for a boardroom table, that would be a good thing for us.

So I have a very defined target audience, and they are a very particular set of people. So a lot of the process that we’ve undergone so far is just about, I have my beliefs about these people, having dealt with them for 38 years, and I wanted to use the opportunity of this marketing firm to double-check that. So they asked me a lot of questions about what I think these people think and then they’re going out and actually talking to as many as they can get to answer the phone to double-check what I think is true. And then from that, we’re going to be crafting targeted messaging, and then there will be a content production phase. So we’re about a quarter of the way through the whole process at this point, but I’m happy with the way it’s going so far.

Loren Feldman:
How many customers do you have to attract through this?

Paul Downs:
Well, we have one relationship right now with a local firm that is kind of the model for what we want to achieve. And those people send us about a half million bucks a year in business. So I’m thinking, if I can get five or six other firms located around the country, then it’s a home run for me. And so I don’t need thousands of people. I just need to get a few home runs.

Loren Feldman:
That seems very doable.

Paul Downs:
I’d hope, yeah.

Loren Feldman:
Can you tell us what you’re spending on this?

Paul Downs:
The entire thing is budgeted about $60,000, which is a pretty good piece of change. But I have not put much money into marketing and advertising in the last few years. And I feel like we suffer in our industry from not having any kind of brand reputation, mostly because my clients generally come to us through Google searches, and they have no idea who we are when they contact us. And they don’t care that much, as long as we perform to satisfaction.

But with the architects and interior designers, branding is going to be much more important. We need to kind of establish ourselves as, “Hey, we’re the experts in this field. We’re the ones you want to call. As soon as you do that, your problems are over.”

Shawn Busse:
Yeah, what that is is a real shift from an end-buyer strategy to a center-of-influence strategy, the architects being that kind of gatekeeper to multiple customers. And honestly, I think it’s the best way you can spend your money on marketing.

Paul Downs:
Yeah, and 60 grand is a lot of money, but Uncle Sam put it in my pocket, thanks to PPP loans and ERTC credits. So it’s just spreading the money that was given to me around, which I think is the intent of those programs.

Loren Feldman:
Well, the other side of that, Paul, is that if you only need to get five or six customers out of this, the cost of acquisition would be $10,000 or $12,000 per customer, and their lifetime value to you is going to be—

Shawn Busse:
Oh my gosh.

Paul Downs:
Much higher. Yeah, I mean, if it works at all, the ROI should be pretty good.

Shawn Busse:
Have you done a calc on the ROI, using, say, gross profit…?

Paul Downs:
No, I’m not that smart.

Shawn Busse:
Okay. One thing you can do is look at your gross profit—you could do it on an annual or lifetime basis—and then divide it by the investment to achieve that, and you’ll get some number: Five, ten, two, three, something like that. And a remarkable ROI would be 10x. Pretty average to successful is four to five, would be great. So I don’t know if you want to do that math.

Paul Downs:
I have a different way of thinking about it, which is that we tend to spend 5 percent of my revenues on marketing, or a little less. So if you did $60,000 divided by .05, that would tell me how much I would need to sell. I’m gonna do the math here: $1.2 million. We should easily exceed that if this works at all.

Loren Feldman:
All right. Sarah, I wanted to follow up with you about something you told us last week, which is, you told us that you are on 99 percent of your firm’s client calls because you think it’s important to be there to help them figure out what story they have to tell. And I’m wondering, how concerned are you that this is limiting your potential growth by requiring you to be the person who handles each and every client?

Sarah Segal:
Well, I don’t handle each and every client. I am there. The team runs the call. But I’m there to listen in and basically use my years of experience to say, “Wait a minute. Did you think about this? Did you think about that?” And be that overseer to make sure that we’re not forgetting to look under certain rocks for opportunities.

But I think I may have mentioned this last week, but to keep things clean and give us time to really focus on other things, we do client calls only once every two weeks, so every other week. And we have what we call “meetings week,” which is this week. And then we have non-meetings week. So next week, we have zero client calls. And that really is an opportunity for us to kind of focus on those other non-agenda items.

Shawn Busse:
Can you tell us more about that? Because that’s a super tension with lots of service-based businesses, is weaving in customer needs with doing the work. And can you tell us how you arrived at that and what your experience has been?

Sarah Segal:
Well first of all, I think everybody’s a little bit tired of calls over the last couple of years for COVID. Everything’s online, and having to turn your camera on and smile for half an hour to an hour, because nobody wants your resting bitch face on your call. And so when I went to some of our long-term clients, and I said, “Hey, I would like to have our calls not be weekly,” which was kind of the tradition for every agency I’ve ever worked in, “because there’s a lot of stuff that goes into preparing for a call. And I would like to give my team a longer runway to work on delivering projects for you.” That said, even though we’re gonna go biweekly, every client we have, we share a Slack channel with them. And we really establish ourselves as an extension of their team.

So we’re talking to them constantly, all throughout the day, and throughout the weeks and the months. But we’re not necessarily sitting down and having those agenda calls where we’re reviewing our work every week—just every two weeks. In fact, some of our smaller clients, we only talk to them once a month, but we’re talking to them constantly on Slack.

I’ve had zero people complain, and anytime I talk to a client, and I say, “Hey, we generally do our client calls every two weeks to give the team more time to work on deliverables,” nobody says boo. And it’s been fantastic. Needless to say, my team is exhausted by the end of meetings week, and we’re all ready for that cocktail on Friday afternoon. But we all know that the following week is going to be this awesome time where we can literally be heads down, focused on getting our work done and delivering good results.

Loren Feldman:
So back to my original question: You haven’t found the time that it takes you to sit in on those calls to be an issue for you?

Sarah Segal:
Well, when I said I do 99 percent, there are calls where I’m like, “You know what? My team is—” I have to pick and choose, right? And there are some times where I miss a call, because I’ve got to prioritize and work on a proposal or something else. But there are a lot of clients that hired us because they wanted to hire me. And I know that. So if I were to disappear, then they’re not getting what they paid for.

I think one of the largest complaints I’ve heard in the PR industry, in general, is that a client will get this great dog-and-pony show to get them on board. And then as soon as they are signed as a client and they’ve paid their first month retainer, all of those higher level executives disappear. And I don’t want to do that to our clients.

It’s probably not sustainable, completely, as we grow. But I also have high-level talent that are kind of taking over that role for me, where I’m not really needed on the call anymore. And one of those clients is a donut shop with several locations in the Bay Area. They don’t really need me on the call, and my team will ping me if there’s an opportunity, if there’s something that’s bigger that needs to be discussed. But I kind of float in and out of those calls, because I’m just extra screen time for those.

Loren Feldman:
Shawn, has this been an issue for you in dealing with clients?

Shawn Busse:
I think I have a slightly different situation from Sarah, because Sarah is clearly a subject matter expert and has this tremendous track record. I had a business partner for… gosh, 17 years, give or take. And somewhere around 2010, we started, I would say, sort of professionalizing the organization and delineating roles. And so she became kind of the Sarah, for our company. So I would go find clients, I would introduce them, and then she would run the account.

But then over time, she and I sort of decided we were parting ways. That’s a nice way to put it. And so I had to actually find a way to build the org to not require me to be that SME, subject matter expert. And so I may be where Sarah is headed, in terms of the team that’s servicing the clients. There are folks in there who have actually far more experience than me in some areas. So yeah, I’m not on the calls pretty much at all, except for one client.

Sarah Segal:
Have you ever been in the situation, though, where you had a client ask you about a specific thing that you’re just not looped into? I never want to be in that situation, and that’s kind of why I do it. I hate not knowing what’s going on, and then all of a sudden being cornered by clients, saying, “What’s happening?” And if I don’t know, then, to me, I get tight in my chest, and it provides me anxiety.

Shawn Busse:
Yeah, you know, we had an era where that was a real problem. And we had some folks on the team who weren’t doing a really good job of sharing those kinds of pieces of information. And that’s a different problem I can talk about sometime. But essentially, that motivated me to start what has now become a ritual, which is the client health meeting. I think it’s about weekly or every other week, where everybody who’s working on client accounts and some folks from the leadership team get together, and we review all the clients. And we talk about, “Is there anything going on that’s a challenge that we’re concerned about? What do you forecast for the next few months?” So then there’s an accountability to the folks working with the clients, and that’s been transformational. It’s taken our client turnover rate, and just like, dropped it to the floor. It’s been great.

Loren Feldman:
All right. My thanks to Sean Busse, Paul Downs, and Sarah Segal. As always, thanks for sharing, guys. That was great.