The I-Hate-Marketing Approach to Marketing

Introduction:

This week, Shawn Busse tells Jay Goltz and Mel Gravely why he doesn’t want his firm, Kinesis, to be known as a marketing agency. Part of it is his sense that people just don’t trust marketers. But Shawn also believes that what Kinesis offers its clients is much more than just marketing. Hearing that prompts Mel to take us through his recent decision to spend a lot of money rebranding his construction business, which he says created alignment throughout the business and would have been worth twice what he paid. Plus: Mel explains how he manages to generate new business without employing salespeople. Jay asks if it’s still possible in this tight labor market to enforce attendance policies. And, for the first time in the almost four-year history of this podcast, Jay goes extremely quiet in this episode. What exactly was that about?

— Loren Feldman

Guests:

Shawn Busse is CEO of Kinesis.

Mel Gravely is CEO of Triversity Construction.

Jay Goltz is CEO of The Goltz Group.

Producer:

Jess Thoubboron is founder of Blank Word.

Full Episode Transcript:

Loren Feldman:
Welcome, Shawn, Jay, and Mel. It’s great to have you all here. Shawn, I wanted to start with you, with kind of a follow-up. Some time back, you told us that you were making some changes to the way you market your business. Specifically, you brought on a salesperson to do outreach in a way you hadn’t been doing. How’s that been going?

Shawn Busse:
Yeah, so that was, what? Maybe six months ago, I think?

Loren Feldman:
Something like that.

Shawn Busse:
Yeah, you know, I viewed it as an experiment. It was relatively low-cost. He was available to work part-time, and I knew him well. So I had a lot of trust. I would say that it proved a few things, and it also helped me discover a few new things. So the things that it proved for me were cold email outreach is pretty much a losing game. Any efforts that he made in that arena just kind of fell flat.

Relationships are pretty much everything. So when he leveraged his network, and he went out into the community, and he met with people he knew and asked for introductions, that was very effective. When he used LinkedIn and Sales Navigator and all these other things to try to connect to new people, that was a tough road to hoe. So, it was good. I don’t think we’re going to continue. I think there are better ways to invest our money than that.

Jay Goltz:
Okay, we’re gonna have the same conversation we had six months ago. I have to ask the question: You have a list of prospects you sent emails. As a person who gets 50 emails a day that I get rid of in three seconds, I haven’t gotten a letter in… I can’t remember the last time I got a letter. So my question is still—

Loren Feldman:
You’re talking about a letter through the mail?

Jay Goltz:
Let me explain this. Those people who wear blue uniforms to go around.

Shawn Busse:
Jay wants me to do direct mail, basically.

Jay Goltz:
I don’t want to call it direct mail. I want to call it a selective—pick out 50 great targets. Get beautiful stationery. And send a letter saying, “Hey, I’ve watched your company for years, and I’ve always admired your blah, blah, blah. I’d love to be able to talk.” I think—not think—I am confident the person will get this envelope. They will open it, they will read it, and they will think about it, and perhaps call you 10 times, 100 times, more than getting a cold email. And I still believe that is worth trying. Because I believe if you send out 50 of those, you’ll get a few people to call. I do believe that.

Shawn Busse:
I think it’s worth thinking about it. I’m curious what you thought of the invitation I sent you to Catalyst, Jay.

Jay Goltz:
It was an email, right?

Shawn Busse:
No, it was the mail. It was in the mail. [Laughter]

Mel Gravely:
Yikes.

Jay Goltz:
Okay, how long ago was that? How long ago was that? A month ago?

Shawn Busse:
It was probably a month before the event. So, I want to say maybe two months ago.

Jay Goltz:
Okay, I can’t remember. Yeah, two months ago. You should have asked me a few days later. And I know you, so that’s not a fair thing.

Shawn Busse:
Well, I guess my point is, you know me. Actually, of anybody, I would have thought you would pay more attention to it.

Jay Goltz:
Well, I probably did at the time.

Shawn Busse:
You probably didn’t get it, is my point. It’s really hard to get this stuff in the hands of people, because there are so many intermediaries.

Jay Goltz:
Wait, wait. What do you mean, I didn’t get it? You think someone that works for me took it?

Shawn Busse:
Yeah, yeah.

Jay Goltz:
No, I can tell you, absolutely not. I open the mail myself. It’s my one little fun thing of the day. I go through the mail, and I pull the checks out. No, I go through the mail myself. Maybe it didn’t arrive. I think that’s possible.

Shawn Busse:
Anyway, my point is that it’s harder than you think—for lots of reasons, especially with remote work and all that stuff. Do I mail it to the person’s office? Do I mail it to their home? I’ve got to pick my battles, right? I can’t do everything.

Loren Feldman:
Well, let’s go back for a moment to your sales experiment. You made it sound like you eliminated the cold outreach. That didn’t work. But it sounded somewhat encouraging on the other side, building on relationships. And yet, you’re not planning on extending the six months. Why not?

Shawn Busse:
I think he’s the wrong person for the strategy that is effective there. So what I mean by that is, where he did add a lot of value is he went through our CRM. He cleaned up all the bad data in there. He put together a process of outreach to past inquiries, past customers. He’s very systematic, which I value, and is really good for sales. But that is not the same person who really loves to go out into the community and kiss babies and shake hands. And I’ve come to the conclusion that what I need is that person, if I’m going to hire a salesperson.

And that’s what I’ve had before, in the past. When I had my prior business development person for 10 years, she was a consummate connector. Everybody knew her, everybody loved her. And so Rob is a great guy. He performs a very important function in the sales world. I actually think he would be very successful if he were managing a person who really enjoyed kissing babies and shaking hands.

Jay Goltz:
Okay, so I just need to challenge that thought process. So you’re telling me targeting 50 people and writing the same letter to most of them is harder than hiring somebody, interviewing them, training them, paying them big money? Really? That’s harder than what you’re talking about? That’s just ridiculous. You’re gonna go hire someone now and pay him a lot of money and send them out there and not maybe try—

Shawn Busse:
No, we’re not hiring somebody else, Jay. I’m just telling you the difference between this experiment and, if I were to hire somebody, what I would be looking for, and the difference between the two.

Jay Goltz:
Okay, I’m just saying, the phrase, “I can’t do everything.” I think sending out 50 letters to people who you’ve already got on your mailing list—you already know who they are, maybe they came to your thing—and just appealing to them personally—”Here’s my card, give me a call”—I think is well worth it.

Shawn Busse:
All right, so how about instead of debating tactics, we can just talk about what I am doing instead. Because, you know, as a small company, I can only do so many things. And I think this is the trap a lot of people get caught in, is they try to boil the ocean, especially when they’re a small business. So what we are doing in lieu of Jay’s direct mail outreach—which is still totally viable, Jay, and I may try it at some point—we’re calling it “one hundred and five.”

So, we’re basically taking the entire company, and everybody’s activating their networks, reaching out to customers, friends, anybody we have a relationship with. We’re having meetings with them, and essentially, we’re asking them for introductions and connections to people who may be able to use Kinesis’ services. So, the idea is we want to have 100 conversations in 100 days with a goal of having up to five new customers. So, that’s the effort we’re pushing on right now. And that’s a lot of work. But it’s actually already yielding great results.

Loren Feldman:
How are you selecting the people you’re reaching out to?

Shawn Busse:
So we went through the CRM. We went through everybody who’s ever been interested in us, anybody who’s ever been a customer. Because past customers are a great source of introductions and new business. We’re targeting people, so folks who we look at—to Jay’s point—who would be somebody who we would really like to know or could be a customer. And then we’re looking into LinkedIn and saying, “Well, who might know that person? Who could make an introduction who’s a friend of ours, a customer, etc.?”

Jay Goltz:
Okay, so you could say, “Jay, I agree that I’ve got this great list. And I agree that could work. But here’s even better, rather than sending them a letter, we’re actually going to call them, and…” Okay, I can’t argue with that. Okay, that’s better. Okay. No argument. That’s better.

Mel Gravely:
This is my first time in this environment, and I’m, like, “Wow.”

Jay Goltz:
Are there air quotes over that “environment?”

Mel Gravely:
Yes! Shawn, I don’t know your business at all. It all sounds rational to me. Even Jay’s strategy sounds rational. If I could put on my PhD professor hat—I’m a former professor of marketing and entrepreneurship—I would say that the most important thing about the combination of sales and marketing—and we’ve mixed that word together today, and I do think they’re different—is consistency over time. So, whatever the strategy is, be committed to it over time, even when it appears it’s not working. It’s the replication of the same model over and over. So whatever you pick—

Loren Feldman:
That’s close to the definition of insanity, though, isn’t it, Mel?

Mel Gravely:
Yeah, but here’s the thing about marketing. Think about when you go to your mailbox, and there’s a tree-service advertisement in the mailbox. You don’t have a tree problem, so that tree marketing didn’t work. So they’ve got to do that often enough so that you remember their brand. And they’ve got to do it consistently enough that when you have a tree problem, you’re a day or so away from getting another ad about a tree service. Because then it activates. So people can be getting great marketing data and just not be in that place right then. But if they get it consistently enough when they are at that place, they can activate on it. That’s all.

Jay Goltz:
You know what, that is an excellent example. And I have a lot of trees near my house. And I have to tell you, you know what would be really smart for those guys when they come out and do the work? Take a label with your name on it and say, “Hey, do you mind if I put this up in your garage?” I’d go, “Yeah, sure.” And that way, the next time I need them, I don’t have to go looking for their name. It’s right there in front of me. But they never do that. That would be really smart to do.

Mel Gravely:
The garage-door people do it.

Jay Goltz:
Right!

Mel Gravely:
The HVAC people do it. So, Loren, that’s what I meant by the continuity of it. Again, that’s theoretical. And I didn’t drop down to whether it should be a mailing or not. I will say, though, the ones that get through to me are the handwritten notes. If you write me a handwritten note, my staff—I don’t open the mail. I could lie and say I do. I don’t. But all the handwritten notes get to me. Even the ones that are angry mails get to me.

Shawn Busse:
Yeah, and Mel, I agree with you a thousand percent. And since you don’t necessarily have the full context, the kind of constant drumbeat prior to the pandemic, we had that going on. And we had it going on on several levels. So we had a constant drumbeat of speaking and workshops. That was largely me. We had the constant drumbeat of Alison networking, connecting, meeting people, making friends, kissing babies, shaking hands. We had kind of a constant drumbeat of recurring communication, folks who signed up to our newsletter and so forth.

And that put about, I don’t know, 10-percent growth a year into the company, very reliably. You could set your watch by our CRM and inbound inquiries and conversion rates. Obviously, in-person events were disrupted quite a bit in the pandemic. And that was a tough blow. So we’re getting back, I think, to the fundamentals of what we did before. I wanted to try something slightly different with this guy, Rob, that was more of a cold direct outreach. And you might be right, in terms of, that process could work if I gave it another six months to a year. I just want to put bets in other areas.

Mel Gravely:
Well, six months, to me, is long enough on the strategy. I wasn’t questioning your strategy at all. I was commenting at a much higher level, Shawn, because I believe everything you’re doing is exactly right. Jay’s wrong. [Laughter]

Shawn Busse:
Mel, we’ve got to have you back, man.

Jay Goltz:
Listen, Mel, you said it all. You get a handwritten card, a handwritten note. Tell me if this isn’t true. When you get an envelope that’s hand-written, it’s either the lady or the tiger. It’s either, “You are the greatest company ever. I love you. And I want to thank you.” Or, “You are the worst.” And I don’t get many bad letters. I can’t think of the last time I got a bad letter, but it always makes you stop—“Okay, here we go”—when you open up the envelope. So it makes you think.

Loren Feldman:
Shawn, the other piece of context that Mel may not be completely aware of is that, as you’ve explained to us previously, you’ve kind of had a love-hate relationship with marketing. And you’ve gone back and forth a little bit, in terms of how you want to pitch what you do. You don’t like to sell yourself as just marketing. You like to take a more holistic approach, and look at how a company operates in total. How are you addressing that now, as you do this outreach over 100 days? What have you decided, in terms of what exactly you’re pitching?

Shawn Busse:
I mean, I’m probably a guy who knows marketing and hates marketing. I mean, just in terms of how it’s normally practiced. It just drives me crazy as a discipline. I think there’s so much snake oil and salesmanship in that discipline. And I also think that it is very complicated as a domain, meaning that if you send your kid to school and they take a class in marketing or get their degree in marketing, the kinds of stuff they’re going to learn, it does not apply to our clients. I mean, 90 percent of it.

Jay Goltz:
It doesn’t apply to small business.

Shawn Busse:
Very rarely. Yeah, exactly. So, I found that when I would go to a party and somebody would ask me what I do, if I say the word “marketing,” most people? That ends the conversation. Like, literally.

Loren Feldman:
Seriously?

Shawn Busse:
Yes, seriously.

Jay Goltz:
I totally understand what he’s saying. Absolutely. I’ve been thinking that ever since college. “Oh, you’re getting a marketing—huh, what is that?” I think you’re right.

Shawn Busse:
Well, one of two, like, maybe in your era, they didn’t know what it was. In my era, it’s a distrust. And it’s not universal. It’s probably 80/20.

Jay Goltz:
Mel, did you pick up on that subtle, passive aggressive “my era, your era?” [Laughter]

Mel Gravely:
I literally was going to call that out.

Jay Goltz:
Excellent. All right. I just, I want you to get the rules of the game here.

Shawn Busse:
Well, I mean, you were talking about how people didn’t understand you, and I would just say my experience is different, in that they actually stop the conversation because they’re not interested. And I found that really interesting. And I think that’s because there’s so much marketing going on around us—so much of which doesn’t live up to its promise—that we just have a hard time with it. So I have an inherent frustration with marketing, in that most people, especially in the B2B space—I’m in the B2B space—are even more skeptical. My clients are often engineers. You want to talk about a customer that doubts marketing more than anybody else? It’s an engineer.

Jay Goltz:
Sure. Interesting.

Shawn Busse:
So, what I’ve realized, in looking at my clients, the ones who are really winning at the end of the day—I mean, just killing it—what we’re doing—and you will like this word, Jay—is we’re helping them gain alignment across the organization.

Jay Goltz:
Oooh, you’re right.

Shawn Busse:
So that the culture believes in what they’re doing. The culture is amplifying what they’re doing. Employee retention is really high. People want to work for that company. So that’s on the inside. And on the outside, the customers are getting a great experience they can’t get anywhere else. So they become a word-of-mouth for you. So if you just say “marketing,” most people are gonna think, “Oh, do you do AdWords?” It’s like, “Oh, God, you’re killing me here.” Here’s the hidden truth: The marketing industry is designed to sell marketing services to marketers within large companies. Full stop.

Jay Goltz:
That makes perfect sense.

Shawn Busse:
It’s a silo, right? So you have an agency that does digital advertising. You have an agency that does branding. You have an agency that does content marketing. They want to sell their siloed services to an internal marketer who is siloed. That marketer probably doesn’t have a lot of influence within the leadership team, which is why they got fired in the recession. And so they’re working with silos of activities. It’s totally ineffectual. But when the economy’s good, people don’t look at it. And they just kind of keep cranking the wheel. Mel, I’m kind of curious what your perspective is on this.

Mel Gravely:
Well, I’ll tell you, Shawn. You have nailed your value proposition, and you have also nailed the dilemma of B2B. I run a construction company full of engineers, 100 percent stocked full of them. And we just went through a rebranding exercise. And when even I heard “rebranding,” I was unsure what my team meant. What it did, though, is it aligned us in the organization around our value proposition, clarity around our purpose and values, how we talk to prospective clients.

Jay Goltz:
Core competencies.

Mel Gravely:
All of those things came out, and it was so much more. Yes, and we changed our colors slightly, and we’ve made our logo lowercase, and it looks much nicer. But that was after we did all the other work. And it took nine months and a lot of money. But if you said to me, “Mel, would you spend twice that much to get it?” Don’t tell the consultant, but I would, because I see the company moving.

But here’s the challenge, though: It is so frickin’ hard to articulate that value proposition ahead of time—unless I tell my peer, another CEO, “Let me tell you what it did for us, and let me tell you who did it for us.” And that, to me, is the breakthrough. I mean, the consultant we used was amazing. They were the most expensive of the three we looked at, and I just wouldn’t have it any other way. So I think you’re dead on track. It’s just hard to articulate.

Shawn Busse:
I’m really curious about this. Why did you hire the most expensive one?

Mel Gravely:
Well, we went through an RFP process, right? Not a bid process. I want to be clear about that. They all gave us pricing, but we weren’t ever telling them we were gonna pick a lower bid. But they had the clearest process. They were able to articulate that process and why it was so important to the outcome. And they would not accept a refresh. They said, “No, we don’t want your 50k to do a refresh, because you’re going to be mad at us. So if that’s what you decide, we’ll pass.” And that made me pause.

Jay Goltz:
Wow. That’s a good story.

Loren Feldman:
Shawn, you’ve answered part of my question. You’ve explained what you hate about marketing and what you really want to do. But you haven’t really said how you’re pitching this now, during the 100 days.

Shawn Busse:
Yeah, I appreciate that. So, in looking back at our customers, we literally have clients that have been with us for a decade. And I just the other day crossed the threshold of a client spending—what would that be?—seven figures with us over a lifetime. So the lifetime value of our customers is very high. And I had to ask myself the question: Why do they keep coming back? Why do they keep not just doing a $50,000, one-and-done thing? Like, literally $200,000 a year, year in, year out. And I started looking at it. And I was like, “Oh, it’s because the return on that is like $10 million.”

I just started seeing these slopes of growth, or a client that—because they’re a magnet for talent—they’re not paying recruiters a single dollar. These large companies are calling them to hire them. They’re not doing digital advertising. They’re not paying for customers. And I’m just like, “Oh, of course. Because $200,000 to get $10 million is a really good deal.”

And so the piece that I’m talking about now is the 10X. Like, what is the thing we can help you do that’s a 10X impact? And that’s the impact we’re having on our clients that are really investing in us. They’re seeing these returns around culture and around customer acquisition that are not linear, like you would see with traditional marketing. Because traditional marketing is a linear output usually. It’s you do A/B testing with digital campaigns. You get 5 percent better, you have a linear improvement. This is like an exponential return. And so I have to tell that story.

Loren Feldman:
Aren’t you running the risk of sounding like just another marketer when you start talking about 10X? Doesn’t it sound like potentially over-promising?

Shawn Busse:
I mean, except I can back it up. I have the financials. I have the retention rates. I have the data. Because when we start working with a client, we’re not just collecting their marketing data. We’re collecting their full business profile, their P&L, revenue, margins, customer lifetime value. So some of this stuff is marketing stuff, but a lot of it is high level. What does the business owner care about? And then we can demonstrate that change.

Jay Goltz:
Just to be clear—and Loren, I think this is what it might be. Correct me if I’m wrong, you’re not suggesting they’re gonna have 10 times sales revenue. You’re just saying, for what they’re paying you, they’re gonna get a 10-time return. As an entrepreneur, I would buy that. I don’t buy when I get these emails every day, “We’re going to get 10 times your profit.” I mean, are you serious? You don’t know anything about my business. But the 10 times what you pay? Okay, that’s believable.

Shawn Busse:
Or: What is the thing we can unlock in your organization that leaps you forward? And that can be a new product offering, something you’ve never sold before that is potential, but you didn’t realize you had it within you. Mel, you’ll appreciate this: I literally had an HVAC contractor who had 50-percent turnover per year. And we took that number down to four in two years. So you can do the math on that. I mean, you know what those jobs pay, right? Probably $80,000 to $120,000.

Jay Goltz:
All right, I’m gonna take the bait. Tell me, were they treating them badly? What was the formula there? It must have been rather obvious that they were doing something wrong.

Shawn Busse:
So, Mel put his finger on it. The new owner bought it from an old owner. The old owner had the belief system that employees were a transaction, that employees were expendable. So it started with a mindset. And the new owner had a different idea of how employees operated in relation to the company. But he didn’t know how to manifest that in his mission, his vision, his values, his brand, his internal brand.

So, to what Mel was talking about: communicating to the team what matters. So we helped him do that. We helped him articulate that. We helped him announce it. And then we helped him manifest that operationally. So, changing the job descriptions to not just look for skills and talents, but actually to look for a persona type, to look for a set of values that are about teamwork, collaboration, caring for the customer. And so, it doesn’t happen right away. But when you start bringing in people who care about those things, now you’re shifting the culture.

Jay Goltz:
All right, so what you said, though, this was clearly not just about the vision. It was also about just better management, understanding how to hire.

Shawn Busse:
For sure.

Mel Gravely:
Well, let me just drop this in here. What it does, if it’s done right, is it starts to invade every system. So, for example, the interview questions that we now use in our interview approach are driven by our new clarity. The way we evaluate our talent is driven by our new clarity. The way we look at customers and what is a real opportunity—our go/no go strategy—is influenced by our clarity.

And so you start to see this just infiltrate your organization, so everyone knows which way we’re going and why. And we eliminate a lot of the noise that comes from bad hires. It’s not zero, of course. You always have bad hires. But people who just obviously don’t fit, customers who obviously shouldn’t be in your portfolio. Even the things we do in the community—whether we decide or not to—are all much more clear today because of it. So I think that’s what it does. And to call that “marketing”…

Shawn Busse:
It’s a disservice.

Mel Gravely:
It’s almost cheating it a little bit. Yeah, I don’t have a better word, but it’s more than that.

Loren Feldman:
Mel, can you tell us what you paid for that rebranding and that clarity?

Mel Gravely:
Yeah. So the consulting fees were—I’m making it up, but I’m close—170 grand. But you know, that’s the beginning. And then I got all new swag. Everybody’s got new stuff. I got new signage all over the place. I’ve got to redo our HR stuff. All the vehicles have to be rewrapped. All that stuff. Every sign on every job site has to be changed.

Jay Goltz:
Wait, did they take charge cards?

Mel Gravely:
The firm?

Jay Goltz:
Yeah. Did you get some points? [Laughter]

Mel Gravely:
No.

Shawn Busse:
Jay’s always looking for points.

Jay Goltz:
You gotta get some points out of it, at least.

Loren Feldman:
Mel, do you have an expectation as to how much that’s going to pay off?

Mel Gravely:
No. And when I heard him say 10X, it made me pause. Because if I’d heard that, it might have turned me off, Loren. So you mentioned that. The promise they made was clarity across the organization, and they sold me on the value of how that would look. And this idea that we are a very values-driven, purpose-driven organization is really, really key. And he tapped into that. The guy who was selling it tapped into that. By the way, the guy who was selling it was also on the team that implemented it. We didn’t have a side salesperson.

So I would just say, I’m not trying to measure it, Loren. I can feel it. I can see it. I can feel the energy behind it. And so I don’t have a need to do that. But it’s also been too soon. I mean, we just finished in July and launched it.

Jay Goltz:
I’ve gotta tell you though, the payback, you have to remember: This is not 170 grand. Divide that in five years. I mean, it’s a lousy 30 grand a year for it. This is going to last for the next whatever. So it’s not like you’re gonna be paying it every single year.

Mel Gravely:
Absolutely.

Jay Goltz:
It’s really a minimal expense, when you think of the big picture. And what I would say, Shawn, in your case: You help people uncover opportunities in their business to maximize performance. I think that’s what you do. You uncover opportunities to maximize performance. And if you said that to someone, I think they’d get it.

Shawn Busse:
Yeah, I think what you say about the spread out over five years is something I’ve thought about for a long time. Is the activity you’re doing something you put on your P&L? Or do you put it on your balance sheet? And I would argue that $170,000 actually is a balance sheet activity.

Mel Gravely:
There’s no doubt.

Shawn Busse:
You’re making a capital investment in the long-term health of your business. And then it will depreciate, right? Maybe it’ll amplify. But a P&L cost, which is most marketing, is like, “Okay, we tried something, and it didn’t work.” Or, “We did this thing, and it increased 2 percent,” or whatever. It’s not a balance sheet activity.

Jay Goltz:
And that’s why it’s actually giving bad financials. If you took that all off one year, the fact is, it’s not accurate, because that’s gonna last for years. So it’s gonna mask profits, because you say, “Oh, wow, you didn’t do well this year.” No, you put this money into it. To your point, this is an investment.

Loren Feldman:
Shawn, I think you said that the 100-day thing has already shown some promise. Can you tell us what you were referring to?

Shawn Busse:
Yeah, actually, this was my aha moment of: I think we need to switch our organization. And I think, Mel, you do this, but correct me if I’m wrong. I think we need to switch it from “Shawn goes out and gets business because he has a really big network and people believe him” to “Everybody in the organization is active in the community”—and really switching to that mode.

And what’s really been cool about this activation is, I’m asking people who have never been involved in the sales process before—and I use sales loosely; I call it relationship building—who’ve never been involved in that, who’ve basically just done the work. I’m asking them to reach out and be part of the network and connect. And they’re doing it, and they’re getting great results. They’re having meetings with people who are saying, “I’m interested in that.” Or, “Let me introduce you to this person. This person might be interested in what you’re doing.” One of my guys had a meeting the other day with somebody who gave him like six connections that are all really highly valuable. And I’m just smacking myself in the head going, “Why did I not do this years ago?”

Loren Feldman:
Mel, I think that’s similar to the approach you described the last time you were on.

Mel Gravely:
Yeah. It is critical for us, because again, I don’t know when someone’s going to build. And if it’s in the newspaper, it’s too late. And I will tell you that it went from it mainly being me to it almost never being me over the last few years. And it’s because it is an expectation of every leader in our company that they’re involved in the community in some way. And I mean in a meaningful governance-level way on boards and other things of that nature. Now, it is the slow train, but it is a sustainable train.

Shawn Busse:
Mel, can you tell me a little bit about how you made that transition from you being the guy to the team being the quote guy or gal?

Mel Gravely:
So, I wish I was super thoughtful about it. I’ve gotten better in the last couple of years. But here’s the premise. So if I’m known by everyone, which I was by the time I bought this company, then I already have this access. And so what I began to do was say, “I’m going to leave that board. But I’ve got a replacement from my organization.”

Shawn Busse:
Oh, so good!

Mel Gravely:
And most people will take that, because they don’t want to lose our support. And so that just got more and more thoughtful. For example, the gentleman who was just announced as our new president and CEO will be the chairman of the Chamber of Commerce board next year. That’s unheard of for a person who’s been in our community for 11 years. That’s just unheard of. But it’s because I left that board and said, “Hey, I’m leaving, but here’s the guy. And they put him on.

So that’s part of it. And then the other part is that we codified this expectation that as you get to a senior level role, it’s explained to you when you get promoted, this is what’s expected. And so now it’s just a built-in expectation. We’re not telling you where to go. We’re telling you, “Go somewhere that you care about and spend time there.” And again, it’s a slow train, but over time, it just really pays off. It’s amazing the kinds of opportunities we get just because we’re in the room.

Shawn Busse:
I really appreciate you sharing that. And I’ve already got something great out of that—that idea of blaze the trail, put somebody else in place after you. Because I can do that. And then the other thing: oOne of these longtime clients I was talking about, he has zero salespeople, even though he’s like a 32-person company. And he essentially has turned senior leadership into those types of roles, which has an interesting ramification, in terms of your financials. Because most professional services businesses that have compensated salespeople, they’re paying them a quarter million a year, or more. Do you have any dedicated quote-unquote salespeople?

Mel Gravely:
We don’t. We don’t. And we just hired a person in February whose job is to coordinate responses to RFPs. But that’s 25 percent of his job. And he’s got other internal and external responsibilities as well. So we really don’t. And what I found is, for our business, those people get frustrated—pure salespeople. Because they go out, and they find something that is a good lead, but it’s just not a good lead for us. And if they come back with five of them, and four of them are bad, they just get very, very frustrated. So the hunting model for our B2B business—and I’m not saying it’s for everyone—it just doesn’t work for us, because we say no to too many of those opportunities.

Loren Feldman:
Mel, the last time you were on, you told us that you were getting ready to kick yourself upstairs. It sounds like that has, in fact, happened. How’s it going?

Mel Gravely:
Hey, I tell you what, this is not for the faint of heart. I have never felt so different, literally, the hour after. So imagine this: We have this big announcement. And let’s say, it’s like one o’clock, we announced this, right? It takes all of about 12 minutes to announce it, and video cameras rolling and all that. And then we’re gonna have a big party—we called it “party on the lot.” And so we’ve got this big lot by our building, and we go out and play whatever and eat and have beers. And so we make the announcement, we go outside to start hanging out, and I’m telling you, I’m by myself. All of a sudden, no one wants to talk to me. It is just amazing to me.

And maybe it’s in my head, but it went over very well. It was one of those, “Well, of course, we saw this coming, which is what you want.” The feeling now, though, is, as my days wind down—the end of the year is the last day—I’m trying to figure out how I’m going to be. I still own the majority of the company. And I’d be lying to you if I didn’t have a little bit of anxiety—not about how well my successor will do, but about my own need to know and be involved and make decisions. And so I’ve got to figure that out.

Loren Feldman:
This is a leadership transition. Do you have a plan for an ownership transition?

Mel Gravely:
Yeah, we separated the two. And I got this idea, Loren, from my peers at Tugboat. I’ve just seen so many models, and I was consternated because I was trying to change leadership and ownership at the same time. And it just hit me, like, “Don’t try to do both.” So right now, we are treating ownership as a family asset. Our middle child is on the board of directors. And we’ll leave him there for now. And I’m gonna teach him good governance of the asset, and then we’ll see what happens over time. But I’m trying to keep my options open on that part.

Loren Feldman:
Sounds a little like you, Jay.

Mel Gravely:
Jay went to sleep. Jay, are you still there?

Shawn Busse:
Once we stopped talking about direct mail…

Mel Gravely:
He was like, “I’m outta here.”

Shawn Busse:
So Mel, I’m really interested in this topic, because I’m 52, and I’ve been thinking about how to transition, and the difference between ownership and leadership. Tell me a little bit about how you identified that person to follow in your footsteps.

Mel Gravely:
Yeah, it was a little serendipity. Because when I bought the company, I didn’t have any construction background. I had a partner at the time who did. It didn’t work out. So I assumed the seat of president and CEO, with the expectation we’d go find a CEO and that person would run the business. I kind of liked the seat, so I stayed in it. But the person who we did find became the successor. And so he was kind of always seen as my partner in running this thing anyway.

So, I got a little lucky. It’s gonna be harder in the next go round, though. We’re gonna have to be much more intentional about development and positioning. What I don’t think we’re gonna be good at is bringing someone fresh from outside. I think we’re gonna have to figure out how to bring them up in the organization.

Jay Goltz:
All right, do you hear me now? Okay, I’m gonna tell you something that’s kind of funny. So I think maybe I accidentally hit the button on the cord, and I didn’t notice it. I kept saying something, and you kept talking over me. And I thought, like, “God, both Shawn and Loren, three or four times.” It’s like, “All right, I’m just not gonna say anything. Because you just keep cutting me off.” And now I realize the mic wasn’t on because usually, I’ve never had that feeling. So my big question to Mel is, which is what I really want to ask: How old is your son?

Mel Gravely:
Our son is 27.

Jay Goltz:
Wow. Okay, that’s a lot to have on a 27-year-old.

Mel Gravely:
Well, it’s a seven-person board now. He’s not chairing the son-of-a-bitch yet.

Jay Goltz:
Yeah, no, no. I’m just saying that’s young.

Mel Gravely:
I actually would disagree with you. I think it’s perfect, because there’s no weight on his shoulders at all. He is there. And he gets an opportunity to learn what governance looks like. He gets to learn deeper about what a privately-held business looks like.

Jay Goltz:
Don’t get me wrong. I think it’s a good thing. I’m not saying it’s wrong.

Mel Gravely:
No, no, I didn’t think you were. I would say to you, that’s the time, if you’ve got a young person around. Because if you wait too long, in my opinion, at least, they have less of a runway before pressure hits. So let’s say I’m 70 years old, and then we decide, “Hey, let’s bring the kid in now. He doesn’t know his butt from a hole in the ground. [Laughter]

Jay Goltz:
No, I think you’re right.

Loren Feldman:
What’s his job, Mel?

Mel Gravely:
He just finished law school in May, and started as a young attorney 60 days ago, here in town. And the reason he’s on the board, he’s the only one in town. So it just makes it convenient. Our daughter’s not interested. Our younger son probably would be, too. But I love the fact that for the first year he was on the board—he was on the board all through law school—he didn’t say a word. And that was smart of him, because he didn’t have any words that made any sense. But I can see him getting more comfortable and adding more value, from a perspective of being a younger professional and all. But there’s no pressure on him, because the other board members are carrying him right now, which is perfect.

Jay Goltz:
All right. So the three times that I kept trying to say something that I thought you were talking over me, here was my point: I’ve realized, you’re in service businesses. I’m a retailer. This is the difference. First of all, I’ve got no one to go out and call on. No one’s giving us enough business to invest the time in going. So that’s why I think like a retailer. I’ve got all the dials of retail: direct mail, blah, blah, blah. And I can’t argue with you. What you’re doing makes sense for a service organization. You’ve got big clients that are going to turn into potential $100,000, $200,000, $500,000, and yeah, people aren’t spending $300,000 to frame a picture or buy a sofa. So it’s just different.

Mel Gravely:
Yeah, the difference between B2B and B2C is huge. No doubt about it. So, Shawn, I feel you.

Shawn Busse:
I appreciate that, man. God, I have this poor client. He’s such a good guy. And we told him, “We really think you should hire a marketing coordinator, and here’s what this person would look like. If you’d like, we can actually interview, etc.” He turned it over to his HR department. That was the first mistake. And the next mistake was, they brought in somebody with extensive experience in B2C. And I’m like: This guy’s an engineering company. They didn’t hire coordinator level. He hired somebody who perceives themselves as very senior. So he’s launching all this digital this and digital that. And like, no. The buyers are not searching for your services.

Jay Goltz:
I don’t think there’s a bigger bandwidth than marketing. You get an accountant. Okay, they’re gonna probably know how to do a tax return, do some financials. Marketing could be anywhere from… It’s almost a meaningless phrase. So, to your point, they hire the wrong person, and they’re going to be turning the dials on the wrong dashboard, basically.

Shawn Busse:
Boy, you gotta get it right, in terms of who you work with and who you hire. Mel, it sounds like you killed it. You hired the company to help you gain more alignment within your organization. You could have gone and hired somebody who runs paid AdWords on Google. Literally. But I’ve seen that happen. And conversely, a company who sells jewelry online probably should do paid AdWords on Google.

But knowing the difference, it’s really hard. And the industry doesn’t want to educate you. The industry just wants to sell you whatever it is they do. And it drives me crazy.

Mel Gravely:
The difference between a business-to-consumer company and a business-to-business company is huge. And I think also you start breaking down services versus product, it gets even more nuanced then. But that difference is major. And our marketing manager—she came to us as a coordinator, she’s a manager now. But we stole her from another construction company, because she understood what we’re trying to accomplish.

Jay Goltz:
Well, part of it, in this case is, I’m looking for 1,000 customers to spend $1,000. You’re looking for one customer to spend a million dollars.

Shawn Busse:
Or more. Mel, gosh, I mean, what’s your customer value? It’s got to be tens, if not hundreds, of millions.

Mel Gravely:
Well, we’re not hundreds of millions ourselves. But you mean over a lifetime?

Shawn Busse:
Yeah, yeah.

Mel Gravely:
Absolutely. I mean, our good customers are doing between 20 and 30 million a year with us. That’s just a lot. So, I can only handle 20 customers at any given time. And they’re in some stage of planning or execution of work.

Loren Feldman:
Jay, I have a question specifically for you. We don’t have too much time left. You and I were talking the other day, and you told me that you’re kind of having a tough time deciding where to draw the line with employees who don’t seem to be comfortable doing things that were once taken for granted, like showing up on time.

Jay Goltz:
It’s become a problem. I went to that ESOP convention, and the guy speaking said something. He goes, “Hey, listen, most of the clients I work with, they’ve thrown out their attendance and late policies.” And it’s like, “Oh my God, I thought it was just me.” The anxiety level out there in the world is so bad these days that people are struggling. So what do we do? Move it from you get three free lates a quarter to five?

I mean, at some point, it’s not fair to the other employees. And it’s not just me. It’s everyone I’ve talked to about it. I’m trying to be accommodating and supportive and everything, but at the end of the day, someone needs to answer the phone at this company and talk to a customer. And it’s definitely different than it was 10 years ago. I mean, there’s no comparison.

Shawn Busse:
Even five years ago.

Jay Goltz:
Yeah, it’s a problem. And I’m having to reestablish: When do we say, ‘I’m sorry that you’re struggling,’ but if they start missing one day a week or something, I can’t deal with that? I mean, the business can’t deal with that. And so, I don’t have an answer. I’m trying to navigate it myself.

Loren Feldman:
Mel, have you seen this too?

Mel Gravely:
Oh, yeah. [Laughter]

Shawn Busse:
As Jay’s talking, I’m like, “Mel’s gonna say something here.”

Mel Gravely:
But here’s the thing. At the end of the day, we do have to do business. So what I try to tell the team is: Everyone’s going to have a season when things in their life don’t allow them to be completely present, but their season can’t be all the time. Right?

Shawn Busse:
All four seasons.

Mel Gravely:
You know what I’m saying? Like, they’ve got a sick child. Or they’ve got a parent who’s aging. So I’m trying to work with you through that. But we don’t have a specific attendance policy. What we have is a qualification of expectations. So for example, if someone struggling, can’t get to work on time, childcare something, car’s broken down, all that kind of stuff happens. Their manager should be talking to them about, “First, what can we do to help, if there’s anything we can do? Second, what’s the expectation you can give me? Tell me what you can do. And I’ll let you know if that’s going to be enough. But when you tell me that you can do—three days a week, two days a week, one day a week—I need you to do that.” And that gives them flexibility for the season. But then you gotta let them know, we’re going to have to get back to something else at some other time.

Jay Goltz:
You know what, that’s an excellent point.

Loren Feldman:
Just to be clear, Jay, when you say that’s an excellent point, you’re talking about what Mel said about—

Jay Goltz:
To say to them, “What do you think you can do?” Like, for instance, I had someone, she comes to my manager, and she works in framing. She wants to take Fridays off so she can work in a different frame shop, where they’ll pay her cash, $25 an hour. And we have to explain to her, “No, we actually need you here to do the job here.”

Loren Feldman:
And not work for a competitor?

Jay Goltz:
For cash. And it’s like, you want to say, “Seriously?” It would have never in a million years happened five years ago. And I want to say it again, I’ve got lots of lovely 20-some year olds here who work out great. It’s not everybody. But there certainly are a part of the people who are out there these days who are coming in for jobs that just think, basically, they should be able to do whatever they want to do.

Shawn Busse:
At Catalyst, a couple of months ago, we had a presenter who does kind of home health and assisted care. So if you think about who those employees are, they’re generally single moms or very low-income folks. They have a lot of challenges, because they have kids and kids get sick and all this stuff. And what’s interesting is, she has this attitude of: How do we take the stressors that are constant off the table? And as an example, she said, “You know, when you don’t have a ton of money and your car breaks down”—

Mel Gravely:
It’s over.

Shawn Busse:
It’s over, and so what she did—she’s getting to a size now where she can pull this kind of stuff off. She bought a car, and the car is called a “floater.” So if somebody is struggling because their car broke down, and they maybe can’t afford to fix it right away, or it’s going to take a while to get it fixed, she gives them the floater. And I was like, “Wow, that’s really innovative.” And I think that’s the challenge as leaders, is figuring out when to be innovative and creative and do things like that, and when to have a certain set of boundaries.

Jay Goltz:
I can tell you, over the last 45 years, I’m sure I’ve given out 300 loans, easy. There’s always three or four. And if somebody’s transmission fails, and they need six, I give them the $600.

Loren Feldman:
You loan them the $600.

Jay Goltz:
I loan them the $600. Now, the interesting part of the story is this. You should ask, “Jay, out of 300 times, how many times have you been stuck?” Once. Once for $500. And it was well worth it, because the guy was becoming a pain. It was cheaper than unemployment. He just disappeared, and I didn’t try hassling him for it. I just said, “That’s fine.” I accept the risk when I give money that I might not get paid back.

But, Mel, I love your answer to ask them, “Tell me what you think is going to happen from here forward. Give us an idea,” and then we can say, “Yeah, that’s not going to work.” Or we can then say, two weeks later, “You said you weren’t gonna miss any more days.” I think that that was an excellent suggestion. Welcome to the 21 Hats team.

Mel Gravely:
I’m gonna do a direct mailing next week. [Laughter]

Jay Goltz:
Excellent. I knew I was gonna get you to turn on that.

Loren Feldman:
All right. My thanks to Shawn Busse, Jay Goltz, and Mel Gravely—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.