In this session, we discuss some of the secrets of unlocking expansion revenue from within existing accounts. You’ll learn how nurturing and developing employees who begin their careers in non-revenue generating positions can lead to a surprising uptick in your bottom line as they learn how to become natural rain makers. Discover the approaches used to transform these high potential employees into powerhouse revenue generators, and how this approach not only boosts your firm’s financial health but also fosters a culture of growth and innovation.
TRANSCRIPT
Greg Alexander: Hey, everybody. This is Greg Alexander, founder of Collective 54 and welcome to the Pro Serv Podcast brought to you by Collective 54. And on today’s episode, we’re gonna talk about one of the five channels of expanding revenue within a boutique professional services firms. And it’s the most important channel. We call it the expansion revenue channel and it’s defined as generating additional revenue from happy and satisfied existing clients. And we prioritize it as channel number one because it tends to be the easiest to get to most profitable because we’re dealing with happy clients. It sits on top of the other four. And the other four are in order of priority is referrals, which comes second, word of mouth, which comes third, inbound lead generation driven by content, which comes fourth, and then outbound lead generation, which comes fifth, which is, you know, cold outreach to people who don’t know who you are. So, so today we’re gonna talk about expansion revenue. So we have a longstanding well respected Collective 54 member with us. His name is Phil Leary he’s worth a late. So would you please introduce yourself and your firm to the audience?
Phil Leary: Thanks, Greg. I appreciate that. So, I’m Phil Leary, I’m the chief operating officer of a late, we’re a technology consulting firm focused on digital excellence. We work with our customers on initiatives that are client facing revenue generating or in some cases drive operational excellence. We have everything from strategy delivery around data and software product management, and experience. And recently have added on longterm manage support solutions.
Greg Alexander: Okay. Sounds great. So, Phil late, it’s been quite the success story, quite a bit of growth over the last six or seven years or so. And from what I understand, a big piece of that was the expansion of revenue that you generated from existing clients. So why don’t, you tell us a little bit more about what that means to you and kind of who’s responsible for it in the system and the method that you used to make that happen?
Phil Leary: Yeah. You know that’s been a bit of an evolution over our timeline as a company. So we’re seven years old as you know. And about two years ago we sold a stake to a private equity which has kind of changed our focus a little bit to lots of inorganic acquisition revenue in addition. But one of the core features of the company has always been that it’s easier to keep our customers and expand our customers. And it is to go and acquire new ones. We absolutely love the net, new logo. We want to do outbound. We want to be finding new customers. We want to build relationships, but we want to be really quick to make new friends and slow to get rid of the old ones. And that’s kind of the watch word we follow. So one of the ways that we did that very early on was the relationships that our executive team had, our management team, and our executive team really fostered relationships over the last 20 years that led to probably our first three years of revenue as a firm. As we’ve moved into more of a commercial sales engine. We’ve had to put processes and policies and structure in place to support that. And a lot of that effort now really goes to the relationships that are very intentionally created and managed by our account managers. So as you grow up in the firm at lata, you start out as a consultant, you move up into associate, and then the manager and then into principle. And each one of those has really within our cohort structure, a definition of so span of control for responsibility and a principle starts to manage large scale programs, lots and lots of different projects, multiple clients. But is principally responsible for the client relationship. And so their focus is to build a relationship with the client with the buyer and to expand across to others that the buyer may refer us into within that particular company. And they’re held accountable to that with an account plan with a weekly call with conversations with our sales leader and with the firm around just performance from a delivery quality and from a revenue perspective for each one of their accounts, we do that in a couple of different meeting each week?
Greg Alexander: So, this principal job which is… the elevated career of somebody who’s gone through that ladder. As you just explained to it is that the first time that this person is responsible for revenue generation or does it come before that as well?
Phil Leary: The first time that they have a quota of any sort and it’s a soft right? We, we don’t beat people up if they’re not able to make their, you know, whatever we might call it two and a half 1,000,000 or to 4,000,000 in revenue on an annual basis because in many cases, we will ask them as a firm to focus on something else, an internal initiative work across multiple clients that are, you know, needing some sort of a recovery program or something like that where revenue may not be the focus but quality might be the focus. So we don’t beat them up too hard. But, as you grow in your career, we have, a dimension that we evaluate everybody on called advisor. So as a consultant, you’re straight out of college. You’re focused on a technical stack. You’re getting, really deep, on technology, which is what we do and nobody wants to think about being a sales guy. So what we ask them to do is just, hey, bree, reach out to them on Linkedin, take them out for a coffee. If you’re working remotely, hit them up on Zoom. Everyone’s wrong and just talk personal stuff as we get to associate.
We’re like, hey, now they’ll start to do that a little bit more intentionally. We’re going to assign you some team leads throughout the organization because that’s what you are. And we want you to reach out to your peers and have those conversations with them. So they’re in a mode even early in their career, building relationships and having those conversations as they move into the manager cohort. Now, they’re having conversations where they might have to have a hard conversation, right?
Where something’s gone wrong with a project or maybe a client person is not stepping up. And so we want them to build a political capital. So that political capital is done by celebrating mutual success. If you think about it, all of these are sales activities, right? They’re building a relation to so that we can have a conversation later about, hey, we’re doing really well or we navigated this really tough time together. How can we work together on the next project? Or is there another area of the firm that you could introduce me to? Where I could have one of our sales guys come in and talk about our capabilities that might help them out. So everybody gets this little step wise process. So by the time they get to principle there, maybe not formally have done it but they’re familiar with the concepts. So we used to hear it a lot. Hey, I don’t want to become a sales guy, right? I’m a technologist. And then we sneakily get them to do this advisor to mention until by the time their principles, they’re like, yeah, it’s not a big deal just to ask somebody for a little bit more work, but the intentionality comes in with the account planning that we do around that.
Greg Alexander: So let’s talk about the term political capital that’s an interesting term. What, what does that mean?
Phil Leary: When times get tough, you can’t just be bringing up, a tough topic with a
stranger for the very first time and accept a good reception. So if I wanted to tell you, hey, something was really going wrong with 54 or one of your people. We probably need to have some conversations ahead of time where things are going well or we have a personal relationship where we, we’ve created some respect for each other where that conversation is not gonna come out of the blue and you’re gonna be able to accept it that’s political capital. So, one of the ways we do that is that at every opportunity we try to talk about the mutual success we’re having and it’s mutual success, right? We’re not a show you out of the way consulting firm. We want to partner on hybrid teams with the client. And so every success we have every time we deliver code, every time we complete a strategy project, it’s a mutual success. So we can celebrate that. So if we celebrate that a lot and we’re thinking, hey, this isn’t just for the project. This isn’t just for the client. But this is also for Greg Alexander, my buyers career. Well, if I’m thinking about that focus throughout the entire project or engagement delivery by the time I have to have a conversation with you, that might be a hard conversation or a conversation where I’m asking you to introduce me to somewhere else in the firm, we built up positive political capital.
Greg Alexander: Yeah, I love the term. I love the concept because, you know, generating expansion and revenue from existing clients, which is the topic of today’s podcast, it very much comes down to the strength of their relationship and focusing on something like political capital in such a structured way allows for that relationship to be built. Let me pivot to the account plan. You discuss that. You do use one. We have members in collective 54 who don’t like account plans. They view it as administrative tasks. They view it as overhead, you know, non billable time. Why am I doing this? You know, pick your flavor of the week, excuse. How have you been able to get people to use account plans effectively?
Phil Leary: By acknowledging that they suck, right? And no good template is really gonna give us everything we need. And yes, it’s a hard thing to do. But we actually went through about a year long period where we put in place a weekly call where an account manager had to come to the call and we had two or three each week and present their account plan. And everybody got feedback from those account plans. And people who had never put account plan together could attend and listen and kind of understand what was really expected in the questions that they were gonna get from the executive team around those account plans that then led a lot of people to go. Well, it’s kinda not that big a deal. It’s a eight page powerpoint template. I need to do some thinking. I need to work with my team to make sure we’ve mapped out contacts and we’re thinking about introducing services across all of our service offerings? Not just the thing we’re doing for that client. But once you get over the hurdle of hey at sucks and I don’t want to do it, it’s actually pretty easy to do. And to make as long as you carve out, you know, an hour, the first time, 15 minutes every week or so, you can update that account plan. It’s also really useful. We put in place just a couple of years ago, an internal methodology that we call the laid away. What we discovered is that we would always just do things, you know, project based kind of, the method of the process was based upon whoever the account leader was or the project manager. Some of them were fun. Some of them were exciting. Some of them had no idea, nobody knew what their expectations were. So we put that laid away methodology in place to drive expectations. Well, an account plan also drives expectations. If I go into a project. And I know according to our methodology, I’m gonna be playing the role of a project manager. And here are the 1,525, you know, checklist items that I need to be thinking about to deliver a quality project. One of those is participation in the account plan. And what that means to me is working with my account leader to know who so should be reaching out to intentionally, right? Who should I be building a relationship with? And what political capital should I be doing? Am I gonna be the project manager of fun? And I’m going to celebrate everything? And I’m gonna be super excited and extra averted about it. Or am I the guy who’s focused on quality and constantly checking to make sure that our quality is good? Either one of those can help build up political capital. So that account plan is really important to us. It helps put that structure in place. It does suck the first time you do it, but then it just becomes a routine thing. Now, we’ve got it. You know, once we got past that year of making everybody go through the sucky phase, now we’re into, hey, it’s a really easy meeting. Everybody comes, you know, talks a little bit about where the project is, what the potential for revenue and pipeline is there. And if there’s any bottle in that or a hand off, the account plan, is the glue between the two people who might be doing the hand off or the thing that they go back to. If there’s any kind of interruption, in their sales focus?
Greg Alexander: Very interesting. I love the intentionality of it, in the formality of it, you know, and it, is doing what it’s supposed to do, serving as a communication vehicle for everybody in the account, making sure everybody knows the roles they need to play, and the objective which is to keep the client happy. So the client continues to invest with us on, you know, the next project and the one after that, and the one after that et cetera. So, do you think account planning and this formal process works only with large accounts that might have multiple business units to expand into? Or do you think it also works in the mid size to small account that might not have as much complexity? What, what advice would you give our listeners and our members and as to, should they have an account plan for every account? Or just a few accounts? So I.
Phil Leary: know you’ve done a few of these with matron, and Matt says, and this is another wise little phrases that we use a lot is if it’s not written down, it doesn’t happen, right? Yeah. And an account plan is a great way to write down the intentional actions that you intend to take and then hold yourself or have others hold you accountable too. So, I think an account plan is useful regardless as to the size of the client. You can also think of it as a growth mechanism, right? So, hey, I’ve got an account manager. They’ve never put an account plan together. Let me work with them on this small easy account plan. So they understand all of the concepts, they have, the intentionality, they execute against it. Then when they’re faced with a larger client, as they move up in the organization, it’s it gets easier for them. It’s robe. So, I look at the account plan as meaningful at any level, sometimes for the client, sometimes for additional, sometimes for the account manager.
Greg Alexander: Let’s talk about skills for a moment. So, when I get hired off the college campus and I enter at that point all the way up to this principal stage where a big part of my job is expansion revenue, how long does it take to go from point a to point B? And, and how do you help that person develop those skills so that when they do hit that principal job, they can do it well?
Phil Leary: So typically, it’s about 10 years. We, we have an accelerated promotion program, that works over the first five years that you’re here at in the company. So people can move up pretty quickly to the manager ranks. But manager gets to be really impactful, not just impactful to our clients because they’re managing projects and managing relationships, but they’re also managing our people. So culture idea, intentionality, feedback, all of those things are really important. We spend a lot of time on building up our managers before we allow them to become managers at the manager rank. They may spend three to five years there. And during that time, it’s all pre principal activities. So, we have three different levels, M1, M2, M3 that are the managers. And by the time you’re in M3, you’re really being a principal, we’re just not quite ready to give you that title yet. And any of the M threes that you were to talk to in our firm would tell you that you’re like I’m a principal, I’m just not getting paid for it, which is exactly what we want, right? And when they perfect, a lot of those things that’s when they get to move into the principal ranks. So I’d say somewhere around 10 years is how long it takes and, we do a number of things. One is, you know, we have that advisor dimension. We actually have a relatively large growth framework that, you know, we’ve stood on the shoulders of giants, you know, firms 2025 years back have these expectations or growth frameworks and we’ve modified it to suit what we do as a business and what we want from our folks. But part of that is rooming them to, by the time their principal, they have the soft skills, they have the boldness, and they have the ability to be able to whiteboard a solution, be able to explain a problem, really anything that is needed by the buyer to be able to navigate whatever conversations they might have.
Greg Alexander: You know, and I have had a chance to look at your growth framework, expectations framework. And I love it. And what I love about it is it’s mostly on the job training, you know, apprenticeship model type development. Is there any kind of out of the workflow training, classroom training like that? Or is it all that apprenticeship model?
Phil Leary: So, the only job training is a big part of it, but we, you might know about four or five years ago, we decided that we’re gonna start taking kids straight out of college who might have a mathematics degree or might have a computer science degree that had never been in consulting. And it’s a little bit different, right? You know, we used to joke that back in the old days you could sit there code in the corner and reel on your cardigan and nobody cared as long as your code was good. That’s a little bit different in the consulting room, right? We might be on a Zoom call, with a client and they expect more, they expect some soft skills. They expect some attention paid. So, for us, we put together a program that we call the ascend program which was to take these kids who had technology skills, sharpen the technology skills over a three month period. But more than 60 percent of the curriculum that we spent time with them on with soft skills relationships. How do I become a really good teammate, work with somebody who might be difficult to work with… as we came out of our acquisition by the private equity firm? And we decided to pivot to things like our near shore organization, or our offshore organization, less of the demand here in the united states for a send. And so, we pivoted our training department in the united states to really focus on continuing education if you will. So for every cohort within the organization up to the vice president level, we now have specific classes that we want people to take and they may be on, you know, relationship selling. They may be just on managing an account plan. Some of those we put together probably about 25 percent. And the other ones we utilize a Udemy professional relationship that we have, and we leverage all of those through a learning management system, allows us to track, the courses that folks take.
Greg Alexander: Yeah, fantastic. You know, the reason why I’m asking that question is it’s a big piece of, you know, being able to consistently generate expansion revenue. It’s not just the account plan, it’s having the skills. So, you know, and if you take somebody who in our terminology grows up in the delivery or, you know, someone who is delivering for the client, they don’t have a revenue generation responsibility and you just throw them into revenue generation without teaching them the skills. It usually doesn’t go very well because, they lack the skill, they lack the confidence, they lack the desire, these people through an apprenticeship model like fill it in the team and let is doing by the time they get there by the time they are in M3, they’re already doing it anyways, right? So it’s kind of, you know, part of how it works well. I could talk to you about this forever. We try to keep the podcast short to 15 minutes. We’re already over that, but we will have a member Q and a session with you. We’ll get into this in more detail and we’ll let the members ask you some questions directly. But on behalf of the membership, thank you so much for coming on the podcast and sharing with us what you guys do as it relates to this critical topic of expansion revenue.
Phil Leary: Now, I appreciate that. I look forward to the Q and a because we’re not perfect of this by any stretch of the imagination, but we are intentional, and we’re well practiced.
Greg Alexander: Yeah. Well, I will tell you better than most. I mean, you know, we have a few 100 members in the collective now. And the reason why we’re profiling you on this dimension is that the definitely above average and approaching that kind of best in class status. So again, thanks thanks so much for sharing all that and, you know, a couple of calls to action for the audience. So if you’re listening to this, you’re not a member and you want to become one, go to collective 54 dot com and fill out an application, and some will get in contact with you if you’re not ready, you know, for that just yet, and you want to just consume some content. I pointed to a couple of resources, so out, how to start scale and sell a professional services firm. You can find out on amazon. If you don’t want to read a book, it’s not your thing. You can subscribe to collect the 54 insights. We publish three pieces of content a week, a blog on Monday, a podcast on Wednesday, in a youtube video on Friday. But until next time, thank you for listening. And I wish you the best of luck is you try to grow scale and exit your professional services for thanks again, Phil. Thanks. Awesome. Thanks man. I appreciate it very much for a.
Phil Leary: You bet. Happy to help.