We Need to Go Back to Marketing for Humans
Introduction:
This week, Paul Downs tells Jay Goltz and Jaci Russo about the latest developments in his year-long campaign to stop relying so heavily on Google AdWords. At a specially arranged, two-day marketing event, Paul got to sit down with a series of architects and designers who had already been vetted and who he hopes will become repeat customers. So far, Paul says, the results look promising. Plus, we also discuss: Do you write your website copy to please Google or to please people? Is there any way around skyrocketing property insurance rates? Why has Jay decided he no longer needs a chief financial officer? How big a disadvantage to owners are the new laws forbidding employers from asking job candidates about their salary histories? And would you reject a candidate simply for trying to negotiate a starting salary? I know someone who would.
— Loren Feldman
Guests:
Paul Downs is CEO of Paul Downs Cabinetmakers.
Jay Goltz is CEO of The Goltz Group.
Jaci Russo is CEO of BrandRusso.
Producer:
Jess Thoubboron is founder of Blank Word.
Full Episode Transcript:
Loren Feldman:
Welcome Paul, Jay, and Jaci. It’s great to have you here. Paul, I believe the last time you joined us, you told us you were preparing for a big event organized by the marketing firm you hired, where you would be sitting down with a bunch of potential customers. Do I have that right? And did that happen?
Paul Downs:
You are correct. And it did happen, yes.
Loren Feldman:
How did it go?
Paul Downs:
I would say it went really, really well. This was an event that put us in direct contact with a target audience that is very difficult to reach by other means.
Loren Feldman:
Give us a quick update. This is part of your marketing campaign where you are trying to reach a different audience.
Paul Downs:
We’re trying to get beyond Google searches driving our business and make inroads into a different way of selling our product that we have not had a ton of success with, and that’s through high-end architects specifying custom tables for their clients. And so we had 27 half-hour meetings over two days. And I have been working on four solid projects.
Loren Feldman:
It sounds like speed dating. Is that kind of the idea?
Paul Downs:
It is like speed dating. And it was actually a really well-managed event down in San Antonio at a fancy resort. And they delivered what they promised, which was a chance for us to meet, explain what we do, and have an actual personal connection with a target audience, which is pretty well insulated from outsiders by any other means.
Loren Feldman:
How did you get them to come?
Paul Downs:
I didn’t get them to come. Event organizers get the architects to show up. And we asked most of the ones who we talked to, “Do you do this often?” And most of them had either been multiple years, or their firm had been multiple years, and this was their first year attending. So the firms see value in this kind of relationship with a vendor where they get a chance to see what someone does without the usual email and blah, blah, blah.
Jay Goltz:
So wait, first of all, it’s not like speed dating at all, in that you want to get everybody. In speed dating, you’re looking for one person. So correct me if I’m wrong, is this not like basically a virtual trade show, where they don’t have to get on a plane to go to a trade show, they get to talk to vendors?
Paul Downs:
It’s not virtual. You do have to get on a plane and go talk to people. The difference between having a meeting with someone across a table and over Zoom is, to my mind, just incredibly different—which makes sense. That’s what our product is all about, which is getting people in the same room.
We had requested something like 18 meetings, and then we found that quite a few of the people were requesting to meet with us, because we do have a unique product that they were interested in. And so we’ve already got four active projects out of this with a value probably in the range of half a million bucks, which to me is an enormous success. And we haven’t even even started our follow-up so much.
Jay Goltz:
So was it like a one-person trade show?
Paul Downs:
No, there were somewhere between a dozen and 20 different vendors. And I think there was something on the order of 60 architects and interior designers.
Loren Feldman:
Did they come knowing what you do and with a certain amount of interest to begin with, or were you starting from scratch?
Paul Downs:
So one of the things that was also good about this is that you have a lot of information going both directions. So we filled out a description of who we are and what we do that was available for all the attendees to take a look at. And then we had detailed information of every single person, and we could make a choice out of everybody who was attending who we prioritized as wanting to meet.
And so I prepared with my marketing manager. We sat down and went through the resume, the LinkedIn, the website, for every single person and prepared a briefing document: had their picture on it, had their LinkedIn, had what they do, had where their office was, projects they were working on, which we were provided with, and then also projects that were similar that we had worked on so that we had a pretty tailored response to each person. And I feel that that made the meetings much more productive. We really prepared for it.
Loren Feldman:
Paul, was this your event?
Paul Downs:
It’s put on by an English company called Bond organization, and they do a variety of different shows that are of this type where they put vendors and buyers together. They’re really focused on the architecture and interior design industries. And they have managed to get pretty much the top firms in the world onto their train. And so it was a great chance for us to go and meet some of the people who we really are dying to do business with, but it’s hard to break your way through just by going and banging on the door and sending an email and making a phone call. You just don’t get the access that we got on this show.
Jay Goltz:
So, I’m a little confused. Neocon is in Chicago. It’s the big show. Why wouldn’t they just go to Neocon? What’s the difference? This is a very small thing. Is it a niche Neocon where there’s a difference between the vendors that were, here versus going to Neocon, which is the big design show in Chicago once a year?
Paul Downs:
Have you been to Neocon, Jay?
Jay Goltz:
Yeah, years ago. I haven’t gone lately.
Paul Downs:
I mean, it’s just a gigantic scrum. And I think that it’s not actually conducive to conversations in the way that this was. And also, I would never exhibit at Neocon. It just doesn’t make sense for me. But this venue gets me to the subset of people who might possibly go to Neocon who I’m actually interested in. So instead of having to wade through 25,000 people, I’ve got 24 or 27 who I really want to meet.
Jay Goltz:
No, I totally get your side. I’m trying to understand: What was the sales pitch to these companies to come to this very mini-trade show? What was the sales pitch to them?
Paul Downs:
I don’t know. Probably: You’re going to meet some vendors who are going to be useful to you. And it’s not Neocon.
Jay Goltz:
Of the people that were there, were you all custom-made? There must be a common denominator to everybody who was there.
Paul Downs:
The common denominator? It’s a good question. There wasn’t an apparent common denominator. We weren’t all furniture makers. And I had first been approached by this outfit in 2018 and was about to actually do the show in 2020, when COVID screwed that all up. So it just took a while to get me around to it. I’m not sure how Bond finds the people who they try to talk into doing this. But that’s clearly a curated bunch of vendors, because otherwise the architects would be like, “I don’t want to meet these clowns.”
Jay Goltz:
Well, no, it would have turned into another Neocon. Were they mostly custom?
Paul Downs:
No, there were a couple that were sort of custom. At this end of the architectural practice, a lot of stuff is just custom, like your glass, your building envelopes. But there were a couple of guys —I think there was one that was selling the air hand-dry things you have in the washroom. You know, everybody needs a pile of those. So that made sense for them, and they had a pretty big showing there. And I think different people just made a decision that, “Yeah, this is how I want to do it.” The total cost to me was, at the end of the day, about $35,000: $22,000 for the show and the rest for all the other stuff we’re doing around it.
Loren Feldman:
Which is part of the overall marketing campaign that you’re spending a lot more on.
Paul Downs:
Well, I’m kind of done with the spending parts of that campaign, in that we have built a new website, developed content for it, completed all of the filming and photography and market research that the marketing guys did. That’s all done, but those two things that were between them—about 100 grand—that’s all completed. So next year, I don’t have to do that.
Loren Feldman:
And the new website is aimed at the same audience: designers and architects, right?
Paul Downs:
Yeah, it’s aimed at the designers and architects audience.
Loren Feldman:
Have you released that?
Paul Downs:
Oh, yeah, it’s been up. And we’re starting to even get some organic traffic through it, which I’m surprised at, because we’re not particularly pitching it to Google. We’re not keyword stuffing or doing any of that stuff. This is really meant to be read by human beings for their own pleasure, as opposed to just written for robots.
Loren Feldman:
Jaci, you’re in the marketing business. Have you ever done anything like the event Paul’s talking about?
Jaci Russo:
I have. I’m just stuck on “written for robots.” That’s gonna be, I think, the title of my next book, because it just feels like that’s what everybody’s doing right now: “I’m gonna use A.I. I’m gonna try to stack the deck.” And it’s painful. We need to go back to marketing for humans.
I love this for you, Paul, and for everybody else who participated, because this is what trade shows used to be. It used to be about quality over quantity, making real connections with actual decision makers. This is awesome.
Paul Downs:
Yeah, I mean, I’m quite satisfied so far. As I said, we met with 27 people, we sent them all an email afterwards saying, “Hey, thanks. You know, you mentioned this project. So we’re here to help.” And a little time went by, but now we’ve got four active ones where people came back and said, “Okay, here’s the thing. Here’s the drawing. Here’s the project.” And one of them we should close within, I would say, mid-January at the latest.
Jay Goltz:
Would you say these were mostly niche businesses? I mean, there was no Steelcase there? There was no Herman Miller there? Was it all niche-y, smaller businesses?
Paul Downs:
Yeah, it was niche. Niche is a good way to put it. But I think that a lot of what the architects were looking for was, in my case, anyway, a way to get a product that didn’t involve working through 15 layers of a Steelcase bureaucracy, and the dealers, and all that stuff.
Jay Goltz:
Which I totally get, because even when I’ve gone to the show, “Oh, I want to buy some chairs.” It’s just not an easy thing. They send you to a dealer, and then maybe the dealer couldn’t care less about a company my size. So I’m gonna guess that it wasn’t just niche-y, but they’re trying to curate this that goes direct from the seller to the buyer, versus what you just said. A lot of that industry is now going through dealers, which just makes it all much more difficult.
Paul Downs:
Yeah, everybody hates dealers. They suck.
Jay Goltz:
All right, that was Paul who said that.
Paul Downs:
And don’t ask me why. But the architects are not buying for themselves. They’re specifying for their clients. They do have to often go through furniture dealers, and that can be an ordeal for everybody involved. Because… this is a controversial thing. Let’s just say that, in general, the industry is not focused on service and understanding the needs of the client. What they are focused on is meeting their quota of what’s in the catalog and just trying to push that.
Loren Feldman:
Paul, can you describe what those half-hour conversations were like? Did you just start with a pitch? How did that go?
Paul Downs:
Well, I told them my story, because it’s a great story, which I believe we’ve told it here, but the very quick version is: I was just a little nobody, made one conference table, and then Google decided that that one on my website was going to be the top search result for boardroom tables back in 2003. Lightning strike! And ever since then, we’ve done that business. And now we work at the very, very highest levels.
But we don’t interact with the selling path that these architects and interior designers are on, so they didn’t know that we existed. And then you walk in, you say, “Oh, yeah, we just did this project. We did that project. We worked for these guys. We did this stuff.” And often, it was projects that these firms had been involved with. They just didn’t know we existed. That’s a very easy story to tell.
Loren Feldman:
Paul, I think one of your clear goals with this was to develop customers who will be repeat customers. Is that something that came up? And do you have a sense that you’re headed in that direction?
Paul Downs:
Yeah. Again, when people heard the story, they were like, “Oh, yeah, you can do what we need to do. We just didn’t know you existed.” So that, to me, is the start of a good relationship. And now we’re starting working on actual projects. And the nature of the market is that the designers are involved with a project a couple of years before the furniture needs to show up. So this is very long-term. But I’m presuming that if our initial response looks credible, then we’ll continue to get more opportunities. So far, it looks like that’s happening.
Jaci Russo:
And that’s how marketing should be. It should be direct and personal. It should be targeted and specific. And when we focus on quality over quantity, we’re gonna win every time.
Paul Downs:
And how do you make sure that happens for your clients, Jaci?
Jaci Russo:
Well, I think it’s finding opportunities like that. That’s always important. And then creating those opportunities when they don’t. I was on a call this morning with a prospective client. And I said, “So tell me about your target audience.” And he said, “Oh, well, we work with everybody from A to Z. I mean, it’s startups and billion-dollar companies.” And I was like, “Okay, we can’t work together.”
Because you can’t be successful thinking like that. Those two things don’t match. The language is different. The needs are different. The problems are different.
Jay Goltz:
The buyer is different. One’s using their own money, and the other one is some corporate employee who just doesn’t want to get in trouble.
Jaci Russo:
One hundred percent.
Loren Feldman:
Paul, you talked about how your second website is aimed specifically at a niche audience and you’re not stuffing it with keywords. You’re not trying to reach everybody. But you have your main website, which still is SEO-driven and is still trying to find the customers you’ve always been looking for. Have you learned anything through this process that’s going to change the way you approach your original website?
Paul Downs:
The more I look at my original website, the more I hate it, because of the way we structured it in order to be SEO strong. And you never know exactly whether the decisions you make to make Google robots happy are detrimental to how human beings experience the site. But my suspicion is they are.
Because what we did was basically we took a page. Let’s say you had three sub-points about tables, like: How big should it be? How much should it cost? And you broke that out into three separate pages with backlinks into an initial page. And it all just made the whole thing more complicated to navigate, and to my mind, not as pleasurable to interact with. On the other hand, the traffic keeps going up. So you know, what do you do? I don’t have an answer for that. I don’t like what Google is asking us to do, but I can’t piss them off. That would be a bad move.
Loren Feldman:
All right, I want to give Paul and Jaci a chance to pick apart some of Jay’s decisions. Let’s start with insurance. Jay, we talked recently, and I think you had a big insurance surprise.
Jay Goltz:
It’s mostly property insurance. It’s not workman’s comp. It’s not car insurance. It’s mostly property insurance. We just pulled up what I was paying for property insurance in 2011. And if you look at what I’m paying today, if you factor in inflation, it used to be three. So I put it in four to compensate for some of the higher years. My insurance has literally doubled. And my building, where I have a factory warehouse, is most of the problem. It’s 85,000 feet. It’s sprinklered, but it was built in 1903. So the insurance company is not counting it as a sprinklered, because the pipes are too small and the blah, blah, blah. And you say, “Oh, well, if the insurance is going up…” $100,000. It’s going up $100,000 a year.
Loren Feldman:
From this year to next year?
Jay Goltz:
Yeah. So you’d say, “Oh, well, you ought to just fix the sprinkler.” Yeah, that’s gonna be about $700,000, $800,000, $900,000. They would have to completely take all the pipes down, bring a whole new pump in. And it gets down to the cost-benefit analysis. The insurance guys tell me this stuff goes back and forth, that the prices could drop dramatically in the next year. So I don’t know that it’s worth spending the 600k or 700k. But it’s up a lot, and it’s not just me. I think anyone who owns a building, the insurance has gone up a lot. In the last three years, between real estate taxes and insurance, my active occupancy costs have gone up pretty dramatically.
Paul Downs:
What would a fire cost you?
Jay Goltz:
Ten million bucks. Which is why, trust me, I thought about, “Well, maybe I should just self-insure.” And I realized that if the place burned down, which is obviously a long shot—we haven’t had a big fire since 1871. If my building burned down…
Loren Feldman:
You’re talking about Chicago.
Jay Goltz:
Chicago. If my building burned down to the ground, okay, the land’s still there. So that’s worth something. But if I had to replace all the inventory and the building? Like, yeah, I’d have a check, but I’d be out of business. So I realized, I’m gonna have to pay the piper and just pay for the insurance, because self-insuring is not really an option. So you literally have to just build it into your business model and say, “Okay, insurance is going to cost more.”
Loren Feldman:
Jay, is your sprinkler issue just a niggling insurance company problem, or is it a safety issue?
Jay Goltz:
Well, first of all, there’s not a safety problem, because it’s not a housing development. If there was a fire in there, people would run out of the building. And I do believe the sprinkler would work. The problem is the insurance company. It’s not up to their standards. But one of the problems I have is, I’m in the framing business. So I’ve got lots of wood there on racks, so that freaks them out. And the insurance company says the pump isn’t up to standard. And I just put a new pump in. I don’t know, that was a six-figure expense.
But yeah, the pipes are literally 120 years old. They’re too small, and they want me to put a whole new sprinkler system in. And if it was $200,000, okay, great, do it, because you’ll make it back in insurance premiums. But it’s going to be far more, and I have to decide: Is it worth the money to go ahead?
And the insurance guy says: It’s a competitive market. Sometimes, the insurance just goes back and forth. They take some bad losses, and all the insurance companies raise prices. Then all of a sudden they say, “Oh, wait, we can get some more business if we lower our prices.” And that’s the way the commercial insurance business goes. It swings back and forth. So maybe next year, it’ll only cost me $40,000 more. So spending that kind of money to put up a brand new sprinkler system in is not necessarily a good investment.
Jaci Russo:
So I’d like to take your sprinkler and wood and compare that to my cinder-block building that is only 50 years old in downtown Lafayette. We have no wood, because the walls that we’ve built are all done with metal studs and Sheetrock and literally cinder block. The exterior of the building the entire way around is cinder block. So I mean, I guess there’s wood in the kitchen cabinets, but we don’t have a stove. We have computers and people and some printers. I mean, we’re not talking anything that feels flammable. And in ‘21, our insurance doubled.
Jay Goltz:
Wait, wait. How big is the building?
Jaci Russo:
8,000 square feet.
Jay Goltz:
Okay, so it’s literally 10 percent of the size of mine. So what, did the insurance go from $10,000 to $20,000?
Jaci Russo:
Uh huh. And it doubled again, and it doubled again. And here’s the crazy thing: We’ve owned the building since ‘05. We’ve had no claims ever. We did have a little flooding problem, and so water came in under and flooded into the conference room. Didn’t make a claim, fixed it myself, the same insurance company all of the 17-18 years. And just all of a sudden: double, double, double, double. So we switched companies, and we were able to at least get it back to our 2022 rates. But it’s crazy.
Jay Goltz:
So wait, so how much is the insurance now?
Jaci Russo:
Well, I was able to get it back down. We’re sitting right at $17,000 now.
Jay Goltz:
Which is funny, because think about it: Percentage-wise, it’s exactly what mine is. Your building is 10 percent the size of mine. And my insurance on that building is about $190,000. So literally, it’s the exact same dollar per square foot, except to your point, you don’t have racks of wood there.
Jaci Russo:
Correct.
Loren Feldman:
Do you have other issues, Jaci? You’re in Louisiana. Is this a climate issue?
Jaci Russo:
It could be, sure. But we don’t have hurricanes here. I’m 22 miles from the Gulf. I’m not saying hurricanes don’t come to Louisiana. I mean, knock on wood. But I’m saying in the 18 years we’ve owned the building, there have been three named storms that have quote-unquote hit Lafayette, but no damage to the area in which I’m in at all.
Jay Goltz:
Let me tell you another extremely interesting part of the story. My broker, who I’ve been with for 45 years—he’s two years older than me—he sold the company to the big conglomerate insurance company. And now they’re going public. I call him. I said, “You know, I really don’t love the way this whole thing has been going.” And he apologized. And he says, “I’ve got some internal problems here.” And he literally said to me, “Jay, do what you have to do to take care of your family,” which is basically saying, “Yeah, we’re screwing you over, because my company is going public.” So, once again, your reliable old vendor sells out to the big conglomerate, and the customer pays the price for it. So I’m changing brokers after 45 years.
Jaci Russo:
And good luck with that, because what I found when I started to shop around, is that the brokers have this gentlemen’s agreement, and you can’t get another company to quote it because they quote-unquote “own” you.
Jay Goltz:
For sure. Whatever the word is, they don’t want to quote the same building to two different brokers. Is that right or wrong? I don’t know. Maybe. Yeah, I don’t know. But we’ll see. I’m going to start doing it. I brought up a big company, Marsh McLennan, and he goes, “Oh, that’s the biggest company in the industry,” but they’re already public. Maybe they’re better. But I was rather taken aback. Like I said, he said to me twice, “Jay, do whatever you need to do.” He’s like throwing up the white flag, because he knows I’m getting screwed around, and he’s not on commission anymore, he told me.
Loren Feldman:
Paul, you have a big factory, and a lot of wood. Have your insurance rates gone up?
Paul Downs:
Not all that much. I was just looking. It looks like we’re gonna spend on all of the insurance—this would be life insurance, liability, workman’s comp, and business catastrophe—we spent $36,000 last year. We’ll probably spend $38,000 this year.
Jay Goltz:
Wait, do you own the building?
Paul Downs:
No.
Jay Goltz:
Right. That’s the difference. You don’t own the building. It’s a totally different animal. It’s the property insurance. Of the money I’m spending, most of it’s going to the building insurance.
Paul Downs:
Well, I’m sure we’re gonna get that somehow.
Jay Goltz:
They’re gonna pass it through to you, yeah.
Paul Downs:
But my idiot landlord just didn’t bother to do that for the last 20 years. So they’re finally figuring that out. And so they’re catching up, but they didn’t realize that they are in arrears going back to 2003. So when we did our lease renewal, they were talking about causes of default, and I just put in a sentence and said, “Any past-due, common-area charges are not a cause for default.” They didn’t notice that I added that to the draft. They just signed it and executed it.
Jay Goltz:
So how old is your landlord?
Paul Downs:
The old one was my age, and his son has taken over, and he’s in his 20s.
Jay Goltz:
I was gonna say, the problem frequently is the landlord dies or sells it. And the next thing you know, again, the renter pays for it.
Paul Downs:
We added a bunch of space, too, so there was a new lease and blah, blah, blah. But these guys don’t read what comes back from their tenants before they execute it. So that’s their problem.
Jay Goltz:
So the moral of the story is: Occupancy costs are going up between high interest rates and insurance. Many people’s occupancy costs are going up, and somehow you’ve got to cover that in your pricing, because you got to pay for it.
Paul Downs:
Well, I think it’s worth knowing what percentage of your revenues your insurance costs are, too. So last year, it was .77 percent for me. And this year, so far, it’s about 1 percent. It’s not the biggest line item on my list by a long shot.
Jay Goltz:
What is your rent as a percentage of your business? I’m going to guess: 5 percent?
Paul Downs:
Something on that range. Let me see. Although we signed a new lease, so it’s higher this year. Last year, it was 4.21 percent. This year, 5.27 percent.
Jay Goltz:
Okay.
Loren Feldman:
Jay, you had another interesting situation recently. We had spent a good bit of time, I don’t know, maybe a year or more ago, talking about your attempts to hire a chief financial officer. I think you’ve recently come to the conclusion that you don’t actually need a chief financial officer. Can you explain that?
Jay Goltz:
I fumbled the ball very badly on that one. I had someone who was here for over 20 years, did a good job with keeping all the financials and everything going well. He retired and went out looking for a replacement, and the first thing I should have done is not looked for a CFO. I should have called it a controller. And we hired someone—
Loren Feldman:
What’s the difference?
Jay Goltz:
Ummm, first of all, I’m not a public company. I’m not buying and selling companies. I didn’t need them to oversee HR. I don’t need them to oversee the insurance. It’s just lesser of a job. And besides which, I fully take responsibility. I didn’t pay enough attention. I left it up to my HR person and [my outgoing CFO]. And I interviewed the person we hired. She’s gone now. She did not have the background and the experience to do this job. And I said to her at one point, “Did you know what you were getting into when you took this job?” And without any hesitation, she said, “In no way, shape, or form.”
So, I did a really bad job. And if anyone gets anything out of this, I always tell everybody— correct me if I’m wrong, I’d be interested in your opinions—I believe, of all the jobs, of all the 21 Hats that we wear, hiring and firing’s gotta be the number one and two ones. Because if you’ve got the wrong people, I don’t care what your strategy is. I don’t care what your advertising is. I don’t care what your anything is.
It was a bad fit. She didn’t have the right background for it. And now I’m going back to reinventing the wheel of: What do I really need? Do I really need a full-time controller? And then my accountant goes, “Oh, maybe you should get a fractional CFO.” I did the math on that. For what they charge per hour, if they even work just one day a week, it’s going to cost me the same as a full-time employee. So that doesn’t make any sense.
So we’re okay at the moment. Everything’s running fine. I’ve got three solid people in accounting, working together. So I’m reassessing what I need in that department. And it’s tricky. And so I got a recruiter this time. I’m using the recruiter who works at the accounting firm. And I don’t have the end of the story yet. I’m still figuring it out.
Loren Feldman:
One of the reasons I’m intrigued is that I had just kind of assumed that a business of your size did need to have a CFO. And of course, you’ve always had one. Jaci, Paul, do you guys have CFOs?
Paul Downs:
No.
Jaci Russo:
No.
Jay Goltz:
You can’t at their size. The math doesn’t work.
Paul Downs:
No, it doesn’t make any sense. What are they going to do?
Loren Feldman:
What do you have?
Paul Downs:
Me.
Jay Goltz:
That doesn’t surprise me.
Paul Downs:
Yeah, I’m the Eye of Sauron, when I’m looking at my finances. I’m just zooming in, and I’m pretty clear on what we’re spending money on. I don’t know. Jaci, how big is your company?
Jaci Russo:
We’re about 28 people. We’ll do close to three this year.
Paul Downs:
Okay, so a little smaller than me, but not much.
Jaci Russo:
We’re in a bit of a flux. This is our third wave. And so we had somebody in-house who was more of a controller, because I was new. At that time, we were primarily media buying. We handled $5 million of other people’s money, and that made me very uncomfortable. So somebody needs to be in charge of that.
And then as we transitioned from being a media buying agency to being a strategic brand, planning, and implementation agency, our profit margin went way up. We went from a 15-percent margin to a 90-percent margin. And our overall sales went way down. So it was less money to deal with. And so, most of the money flowing through here was ours. So it was easier to keep track of. So our controller moved on to go somewhere else. And we used a combination of in-house and outsourced accounting firm who kind of serve as a double-blind check, and CPA taxes.
And now we’ve evolved again to a lot of software that I think is pretty well connected together. And I mean, I’m two weeks into this transition. So it’s a little new, but we still have an outside resource to make sure that I’m not doing anything that’s gonna get me thrown into jail.
Jay Goltz:
I actually have an accounting degree. But the fact is, I never went into it, because I like the creative side of things. So I’m the first to admit, I haven’t paid enough attention to it. I should have. I am now. And I’ll tell you a problem. I don’t have a problem with most government regulations going on. It’s all fine, except for one piece: This new law—I don’t think it’s in every state—in Illinois, you can no longer ask someone what they’re making in their last job.
And it is really, really inhibiting. Like, at least if you know somebody was paying them X dollars, they probably were worth it. But in a job like this, you don’t know whether the person was making $90,000 at their last job or $180,000, and it’s extremely frustrating. And I understand why they did it, so that there’s more pay parity. Women in particular aren’t paid enough so they figured, “Okay, well at least if they’re going to a new job you won’t be able to use their lower income and continue that on.” Okay, I got it was all good intentions and probably it’s helped that, but it really makes it more difficult.
Paul Downs:
You don’t have any way to evaluate what they might have been getting paid. So you just make up the number in your head. And you know what you want to offer for the job, but you don’t know what this person—
Jay Goltz:
Right, at least if you know someone else was willing to—
Loren Feldman:
Aren’t there other ways to determine that, Jay?
Jay Goltz:
Like what? See what kind of car they’re driving? I mean, no.
Loren Feldman:
No, what kind of experience they have.
Jay Goltz:
I’ve gotta tell you, you can have a $90,000 person and a $160,000 person, and their stories could be exactly the same: “Oh, I oversee all the accounting. But at least if somebody was making $160,000 a year for five years, you have to believe they probably were worth it, or the company wouldn’t have been paying it. Whereas if they were working 90—
Loren Feldman:
Companies do make mistakes sometimes.
Jay Goltz:
For sure, but at least it’s one more bit of information. I’ll tell you the breakthrough I had though lately. This is really interesting. We’re hiring an assistant HR person. Now, we’re doing the other thing: We’re playing by all the rules. We put the range in the ad now. Fair enough. They say that your response gets much better. So we put right in the ad, whatever it was, $45k to $55k. It’s right there out in the open.
Okay, we interview her. We like her. She says, “I don’t have a lot of experience.” Fair enough. We offer her the job. We give her a little more than halfway up, like $51k. And she comes back and she says, “Gee, can I get three weeks vacation?” No, we give two weeks to begin with. And then she comes back again and says, “Can I get $2,000 more?” Now, we’re starting to get uncomfortable.
Maybe she wants to make more money. She did answer this ad. She knows she has no experience. So since the ad said $45k to $55k, she certainly shouldn’t have expected the higher of the range. But this is where it gets interesting. We thought long and hard about it. And rather than rescind the offer, we sent her an email that said, “I have to tell you, I’m starting to get uncomfortable. This might not be the right fit. We told you what the range was. We made you a good faith offer after giving it a lot of analysis. We think this is really a good offer.”
And she comes back and she admits it. I give her credit for this. She goes, “I’m sorry. I’m sorry if you were offended. I took my advice from my mentor.” And somebody else at work says, “Jay, everybody’s being told every day, between YouTube and TikTok and everyone, ‘Always negotiate your salary.’” That isn’t good advice, because there are some cases where that’s not going to come off well. So the answer is: From now on, we’re gonna go, “We’re gonna make you an offer. And we just want you to know, it’s non-negotiable. If that doesn’t work for you, just don’t take the job.” And that way, they don’t have the pressure of thinking they left money on the table. And we don’t have to go through this.
Loren Feldman:
Can we hear from Jaci on this? Has it been a problem for you?
Jaci Russo:
Well, it hasn’t been a problem for me. I don’t hire as often as I think y’all do. So we have a set team that we’ve kind of been set for a while. We also have an internship program. So we basically test-drive each other for three months through the internship program. And the best of that bunch makes it to a part-time paid position, and then, when they graduate, a full-time position. So it’s kind of a stair step of we’re all making sure we’re on the same page the whole way through, which really helps.
We also did a round of raises over the past year. And so our payroll increased by almost 100 percent. And we added in that no work on Fridays thing that Jay loves so much. So we’re kind of sitting pretty. My inbox is probably hit with five times more resumes now of people looking for jobs that aren’t even open. And that’s kind of changing the negotiating seat for me for when we hire next.
Jay Goltz:
So that’s my question, though: Is there negotiation? Or do you say, “Okay, give them the number,” and they go, “Great, I’ll start Monday.” Is that how it goes?
Jaci Russo:
That’s exactly how it goes. “Here’s the number. Thank you very much.”
Jay Goltz:
I don’t want to negotiate starting salaries. I give them a good faith offer that I think is worth it. We don’t try to get the cheapest. We think of their experience. And we put the range in the ad. So we’re playing fair. It’s all right there and transparent. So, Paul, tell us your view on that.
Paul Downs:
Well, I don’t think you can really knock someone for trying to negotiate, if it’s a moment when negotiation is not an unusual thing. I mean, when you’re working out a salary, why wouldn’t you ask for something more? I think that an employee who has the guts to ask for something, I would be like, “Okay, you get some points for trying.”
Jay Goltz:
Do I want them taking the job knowing that they’re not making what they want to make?
Paul Downs:
That’s not necessarily what it works out to. Now, when I negotiate—it sort of depends on who I’m hiring for—on hourly people, we can legally ask what they were making, and so I do. And then I ask, “What do you want to make?” And I get an answer. And oftentimes, if it’s someone who is attractive to me, I’ll say, “I’ll pay you that, and I’ll even pay you a little more to start with. And here’s the deal. If you’re no good, I’ll fire you. But if you’re good, you’re worth it.”
Jay Goltz:
That’s very different. They’ve told you what they’re looking for. You gave it to them. That’s not negotiation. You gave them what they were asking for.
Paul Downs:
No, but I’m saying that I live in a different information environment. You’re trying to get information that you can’t just straight out ask. But you’re also making a very negative judgment on someone who’s sincerely doing their best to take care of themselves. And given the zeitgeist these days is, “Oh, yeah, it turns out that a lot of people are really bad at negotiation, and maybe if you can just get your head around it for one day, you might actually get a great payoff. Maybe you should try it.” Like, I don’t blame someone for trying it.
Jay Goltz:
Okay, the point is, you said, “You can’t.” You’re wrong. You can’t. But I can. I can do whatever I want. You can do whatever you want. Maybe you don’t want to hold it against them. I do. I put in the ad, “Here’s the range.” I very clearly said, “Here’s where the number came from. You don’t have as much experience,” and we lay it all out. We tell them, “This is what we believe the number is,” and I don’t really want to negotiate it.
Paul Downs:
All right, that’s fine.
Jay Goltz:
Listen, we can all hold anything against anybody we want. And this is where it makes it easy. We’re going to tell them upfront, “It’s not negotiable.” So they don’t have to go home and hear from their mother, father, cousin: “Oh, you should have asked for our money.” No, we’re gonna tell them upfront: We put the range in the ad, $45k to $55k. You have very little experience. But we like you, and we think you’ve got some skills. We’re gonna give you $52k. Period.
Paul Downs:
Okay, well, let me ask, Jay, would you be willing to make a menu that breaks down all the ways you could get from $45k to $55k? “If you did this,” “if you could do that”?
Jay Goltz:
Sure. No problem.
Paul Downs:
Would you put that in an ad?
Jay Goltz:
I don’t know that I’d bother. I would tell them in the interview that, “Listen, as soon as you get more skills”—and I mean, she said at the interview, she put up her hands: “I just want you to know, I have very little HR experience.” I mean, we’re all on the same page. So it’s not like we gave her the bottom of the scale. Oh, I left this part out. She admitted it. She goes, “Oh, I thought that was a very good offer.” But then someone told her, “Oh, you should still ask for more.”
Paul Downs:
Did it cost her the job to ask for more?
Jay Goltz:
It could have. It could have, absolutely. If I had three other great applicants that were thrilled. Yeah, maybe.
Paul Downs:
All right, well, I think it’s up to you, as the employer, to make it clear. As you said, “We’re gonna give you an offer. There’s no negotiation. Take it or leave it.” Great. Say that at the beginning. Don’t say that after she’s come back and asked for more. Don’t spring that on her. I would be pretty upset if an employer did that to me.
Jay Goltz:
I’m saving everyone a lot of grief. I’m absolutely going to tell them beforehand. “We’ll explain to you what we’re gonna make the offer, and we just want you to know…” It just saves everyone a lot of grief. So I’ll for sure tell them beforehand, and then if they don’t want to take it, okay. But I think telling people, “Oh it never hurts to negotiate,” is not a good phrase. Sometimes it does hurt. Loren, you said that to me, “Everyone does that.” No they don’t. No, they don’t. Everyone doesn’t do that.
Loren Feldman:
I didn’t mean literally everyone, Jay. But as Paul was saying, this is a time when the standard advice is, “Whatever you get for the first offer, you should probably ask for a little bit more and see what happens.”
Jay Goltz:
I understand that, which is why I’m going to take everyone off the hook and just tell them upfront, “Listen, I just want you to know, we don’t negotiate starting salaries.”
Loren Feldman:
Jaci, I’m curious: I heard what you said about you haven’t done a lot of hiring recently. But do you have a gut sense of whether the law prohibiting owners from asking for a salary history is in fact helping women?
Jaci Russo:
You know, I have a couple of groups of women friends in business, and we haven’t seen that impact us as much as our connection to each other has helped. Not the bad advice of, “No, go back and negotiate for more, because you’re getting screwed.” Not that, but standing up for yourself, making sure that you advocate for yourself. I’m in an online group of about 50,000 women marketers, and the low-balling and job-scope creep and gender-based expectations that come through, I am appalled by on a regular basis. I mean, there’s some horror stories on there. But I’m seeing improvements.
Loren Feldman:
What’s the answer for that, if not salary law?
Jaci Russo:
I don’t think it’s necessarily that we always have to go back and negotiate, because I’m with Jay—probably not a phrase I’m going to use very often. But I’ll try it out for right now. [Laughter]
Jay Goltz:
How come everyone that comes on the podcast feels like they’re not initiated until they take a shot at me? Okay, you’re in now.
Jaci Russo:
Because we’ve always said, “Hey, this is the offer,” kind of a take-it-or-leave-it thing. But we don’t lowball. We are very fair. We are at the top of market rates, because I want the best talent. And I have to balance the fact that I have local people and remote people. It’s a whole thing.
But I think it’s communication. I think that if the whole goal was to help women, then what helps women is when we talk to each other, and we help each other out, and we don’t look at each other as competition. And we make sure that we are turning around and holding a hand out to the person behind us. That’s how we improve our lot in life.
Jay Goltz:
Keep in mind, if you tell someone, “We don’t negotiate,” and you say, “Okay, we’d like to offer you the job for $51,000,” they certainly can say, “You know what, I’d love to work for you, but to be honest, I’ve gotten some other offers. And I really need to make $53,000.” That’s not negotiation. They know that they might have just lost the job, but at least they can always throw out there, “I need $53,000.” And you could still rethink it if you chose to.
Here’s the point: If you had four different people who were great applicants, and they all would have been thrilled at that number, and the fourth one isn’t, why not hire the one that’s like, “Oh my God, that’s great. I’ll start Monday”? Why wouldn’t you do that?
Loren Feldman:
Well, to Paul’s point, all four might be thrilled with that number. But they have been taught that you might as well ask.
Paul Downs:
Jay, sorry, tell me again. This was for an HR position?
Jay Goltz:
An assistant HR. Assistant.
Paul Downs:
Does this person need to assert themselves in any way at any time during their job?
Jay Goltz:
Um, not at this moment. She’s very young and has no experience. And no, we’re not going to set her free to start going out and dealing with sticky HR situations. It’s mostly to do payroll, keep records. And as she matures and gets more experienced with things, certainly she will. But at this point, she’s not there yet.
Paul Downs:
If you were hiring a salesperson, you’d want them to come at you for more money.
Jay Goltz:
Maybe. Maybe a salesperson.
Paul Downs:
I mean, there’s plenty of jobs where being assertive is a plus, depending on how you do it. But the total lack of spine is a red flag for me in a lot of situations. I’d rather people stand up for themselves.
Jay Goltz:
Okay, you’re making it black and white. If someone asks for money, they’re assertive. And if they don’t, they don’t have a spine. There’s a third category: They don’t and they have a spine. There are those people out there. I’ve got 130 of them. I almost have never negotiated a starting salary, and I don’t have a bunch of wusses working here.
Paul Downs:
All right. I bow to your greater experience.
Jay Goltz:
Okay, accepted.
Loren Feldman:
On that note, thank you for a lively conversation: Paul Downs, Jay Goltz, and Jaci Russo—and to our sponsor, the Great Game of Business, which helps businesses use an open-book management system to build healthier companies. You can learn more at greatgame.com. Thanks, everybody.
