Selling and delivering insight is at the heart of what professional service firms do. Some pro serv firms have packaged their expertise into research and sell it as a “product” via subscription. Attend this session and hear how member Mike Ellison has done this and built a 95-person firm in the process.
TRANSCRIPT
Greg Alexander [00:00:10] Welcome to the ProServe podcast, a podcast for leaders of thriving boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community focused entirely on the unique needs of the boutique proserv firm. My name is Greg Alexander, I’m the Founder, and I will be your host today. On this episode, we’re going to discuss syndicated research and why I believe it’s an effective way to package expertise and thus scale a professional services firm. And we’ve got a great role model with us today. We have a member by the name of Michael Ellison, and he’s in the syndicated research business, and he’s going to share his journey with us. So, Michael, we appreciate you being here today. Would you please introduce yourself and your firm to the audience?
Michael Ellison [00:01:06] Sure. Greg, thanks. Happy to be here. Thanks for having me. My name is Mike Ellison. I am the President and CEO of Corporate Insight. We do competitive analysis research on the digital customer experience for financial services and health care industry. So we help our clients who are large banks and insurers to understand how their websites, their mobile platforms and the whole customer journey online compares to the competition, what they need to do to improve.
Greg Alexander [00:01:32] Okay, very good. So let’s start with the very basics, the term syndicated research. Please define that for us.
Michael Ellison [00:01:40] Sure. So I think in prior purest form syndicated research, it comes out, I think really the marketing profession and it’s it differs from customer research in that it’s often put together by not just one client, but perhaps multiple clients. So you might have a study that gets done and rather than say, you know, just Company A being the sole sponsor of the of the research and thus own all the data, a research company might form a syndicate, so it might be half a dozen or so companies that get together have similar objectives that they want to get out of it. And then collectively, they own all of the data and the findings.
Greg Alexander [00:02:23] Okay, very good. There are some very large firms that have that business model at their core. The one that obviously comes to mind is Gartner Group, just because they’re large and public. Why do you believe that putting a syndicate together as an approach to generating research is such a scalable activity?
Michael Ellison [00:02:47] Well, I think the economics are just such that, you know, you kind of do the work once and you sell it multiple times. You know, I know with us, we we probably are, it’s more productized, too. So, you know, we well you can we call our research syndicated, really what we have as a product. So we don’t necessarily put the work together. And Gartner’s the same force has got a similar model. You know, it’s not we don’t have a bunch of companies that come to us as they do the study. We actually do the research. It’s a subscription-based, it’s annual-based research, and then we sell it to multiple people in multiple firms. So it’s it’s a lot more scalable, obviously, than just having one company come and do the study and then they own the data. You know, we own the data. We can do a lot with it. And and the our clients don’t subscribe to it and they get access to it.
Greg Alexander [00:03:37] Yeah. So I was so excited to have you on the call today because your starting point was scale was built right into it per the description you just gave us. Many of our members are the opposite. They’re starting off as, let’s say, consulting companies and they have, you know, they get hired to do a project for a client. Many times it’s a custom project. And then the way they scale their firms is they just try to do multiple custom projects over time and eventually that hits a ceiling, right? If everything’s a snowflake, it’s kind of tough to really scale that you’re going the other way. You know, you started with this syndicated research concept, and in a moment, we’re going to talk about how you’re also doing consulting and the pros and cons of that. But for somebody who started, let’s say, as a consulting company and wants to, quote unquote productize to use your term, that’s the buzzword these days, what advice would you give them as to moving from point A to point B?
Michael Ellison [00:04:29] Yeah, I think it is hard to say because we to your point, we kind of started at point B. Yeah. But I’d say find the common ground, you know, what are you solving that’s common to the industry? What are the problems that are common amongst all the players in the industry and how can you take that problem, that solution, and and just make it applicable to everybody? You know, what can you do that enables you to do the work once and then sell it multiple times? You know, it’s it’s it’s I think that’s kind of the key to it.
Greg Alexander [00:05:05] Yeah. So the way it works for you, let’s say there’s a new research report you guys want to produce. Do you go and get multiple sponsors for it, then go do the research and then sell it to the broader public? Or do you make the investment, do the research yourself with no sponsors and then sell it as a subscription, so to speak?
Michael Ellison [00:05:24] Yeah, it’s a great question. And when we were smaller, just for context, we have about 95 employees now and when we were smaller and had less bandwidth I guess we would try to pre-sell it. We had the idea. Or usually what happened. A client would come to us and say, Here’s here’s what I need. And we say, Actually, that’s a really interesting idea. We’ve had a couple other clients, you know, let’s take this on and let’s, you know, let’s see if we can build a product. And so we’d say we’d want to sell it to maybe three or four other clients before we actually agree to do the work. And that obviously, you know, it’s made all the costs paid for it kind of the you know, the initial group would sponsor it. Often we would have a charter membership or a charter subscription rate for that, and then you would get those for kind of backed it. We do it and then we’d launch to regular people might add another 20% to whatever the price would be. Now and we actually just launched a subscription service this in January focused on the home auto and home lending space. So we had a couple of clients talk to us. We did a couple of projects in that space over the past couple of years, so we pretty much knew it was going to be well-received by our clients and that we would do it. We, we pre, I think marketed it. But we got some buy in and said, yeah, the concepts right now we’d be interested, but it was never a firm commitment. And so this time we actually started out just we underwrite it on ourselves and we just did the research and we knew that it would happen so.
Greg Alexander [00:07:02] Okay. And the way you monetize it is it’s a monthly subscription all-you-can-eat or is it they buy an individual piece of research?
Michael Ellison [00:07:11] So the way we do our work, it’s it’s a social it’s kind of an all-you-can-eat subscription. There’s a number of different deliverables into the work that we do. We have monthly reports, quarterly reports. We’ve got sometimes depending on it, we might have a bi-weekly readout. So there’s, you know, there’s some data components like Excel matrices or dashboards that we sell. So there’s usually probably 3 to 4 different deliverables and then, you know, content delivered throughout the year. So it’s an annual subscription.
Greg Alexander [00:07:42] Okay. And is it just reports or are you doing things like webinars and things of that nature?
Michael Ellison [00:07:47] Well, we use webinars from a marketing standpoint, so we’ll we’ll do that as part of sort of industry awareness, but we will often package it like they’ll have as part of the subscription, they’ll have access to our analysts and it’s not metered necessarily. You know, if it starts getting abused, we’ll push back a little bit, but they’ll have access to analysts. We might do quarterly readouts for certain clients, things like that. It’s sort of a way because quite honestly, we now use those things to then land some custom work. So once you’ve got them hooked on on the subscription, on the syndicated work, you know, they start having a wait, we’ll actually want to take this. And do you know, can we look into this issue that’s not directly covered? And we use that as an opportunity to then add custom opportunities to it.
Greg Alexander [00:08:35] Okay. And you mentioned access to an analyst. So our members are going to ask you this question on the Friday Q&A when we get it scheduled. How do you staff something like this? Is it are you hiring consultants? It doesn’t sound like it. It sounds like you’re hiring analysts. So describe the role for me.
Michael Ellison [00:08:51] Yeah. So we have. And you’re right, it’s analysts and, you know, I’d say our consulting works probably not your traditional management consulting. We are not looking at the problem, finding the solution and telling it, telling the C-suite what direction to take their business. Right. It’s custom research offering and there’s consultative elements to it. Like we’ll make recommendations and things we need to do, but we’re not really concerning ourselves with actually how to go about doing it. Mm hmm. So the people that we tend to hire, it’s you might say it’s kind of that traditional pyramid, though, right? We hire a lot of people right out of school. We teach in the industry that that we cover. And we’ve got certain methodologies around how we gather our research. And and some of the more fundamental, key elements to it are what you start out with. And then as you get a little more experience within each industry or a vertical that you’re in, you write a little more research, you do a little more thinking, you do some blog posts, you do your own client calls and things like that. So our average age from our analyst team is probably in that late twenties. Mm hmm.
Greg Alexander [00:10:00] And average salary ballpark.
Michael Ellison [00:10:03] I think we start people in the 60 to 70 range and then, you know, they’re probably in their, you know, high nineties, low hundreds as you get. Okay. And it just for context we’re New York City based.
Greg Alexander [00:10:16] Okay. So the model there, the labor model, the expense model is lots of people, 95 people younger, less expensive, but lots of them. Whereas in a traditional consulting world, it’s a little bit more top heavy than that, you know. In fact, at the top of the pyramid, you might have million dollar earners and they’re keeping an army of juniors busy. So it’s a different it’s a different labor model because the work they’re doing is different. That makes sense, I would imagine, based on the way you’ve described it, almost all or a high percentage of your revenue is recurring.
Michael Ellison [00:10:53] Yeah, it’s in the 65 to 75% range is recurring. Yeah.
Greg Alexander [00:11:00] Which is the reason why most of our folks that have not productized want to productize because some of them, unfortunately, 0% of their businesses recurring every year. They start the year January 1st at zero. And you know, at some point when you get to a certain size, that’s really hard. So having some recurring revenue is really nice. And that’s the whole idea of today’s show, which is this is this is one way to productize expertise. And maybe it’s not the only way, but if you can start doing this, given Mike’s advice today, you can start building some recurring revenue into your model though. Mike, you’re also doing some consulting work and most syndicated research shops offer that, but it’s a certain type of consulting which you hinted about earlier. Can you describe for us what that looks like?
Michael Ellison [00:11:46] Sure. So let’s say in the syndicate a report that looks at the banking space, we might do one of our monthly reports might be on the online bill payment capability, and we’ll compare and contrast. And within each vertical, we have, you know, 20 to 25 industry players that we routinely track our coverage set. And we’ll compare and contrast how each firm offers that know, in this case online bill pay. And we’ll look at, you know, strengths and weaknesses and so forth. And we give some high level recommendations about usability and things like that. But one of our clients might be like, you know, this is really interesting and we’re actually planning to build out this capability for our customers next year. But, you know, we also want to see not just what you guys did here, but how does it compare to firms that you might not cover on a regular basis? Or we want to add in some UX actual UX testing based on some of the work that we’re we’ve done to date. So they would hire us to really build out really on that topic, or it could be something else entirely that they can do, but it’ll be like, here’s kind of what we’re trying to understand. How does our feature, our service compare to this particular set of customers that you may or may not track on a routine basis? And we’re really looking for recommendations in improving the overall UX experience, maybe not just functionality.
Greg Alexander [00:13:06] Okay. So it’s very, very so it’s related to the research that you’re doing. It’s building off of that. So it sounds like everything everything comes back to the research, whether it’s custom work off the research or consulting work of the research. Is that correct?
Michael Ellison [00:13:20] Correct. Yeah.
Greg Alexander [00:13:21] Okay. Got it. And how do how does somebody take a service like this to market?
Michael Ellison [00:13:30] Well. That’s a good question. And we the way we do it, we actually have a sales team. I mean, we have and it’s grown over the years when it was my dad who actually started the business and I joined him as employee number one. And, you know, I did the work and he sold it. Then I hired an analyst and I started selling. So it was very much, I think, a product-oriented sale. And as we’ve grown, you know, now we have, I think, five, eight years to customer success. So we’ve kind of built a sales organization within it. And I think that’s probably one of the benefits of selling a product, if you will, versus selling a consulting thing, because we can teach our salespeople what the value propositions are and who we know, who we want to speak to and everything like that. It’s the sale isn’t predicated on their own internal industry expertise.
Greg Alexander [00:14:23] Yeah. My last question for you, Mike, would be, if somebody wants to go down this path, any landmines to stay away from?
Michael Ellison [00:14:32] Yeah. With us. You know, one of the things that it can, you know, data ownership I think is one big one, right? You want to make sure that you can sell what you’re selling from a you know, in that you’re protecting your own business and. It’s also like your clients are going to see everything, like they’re going to see the same thing. So, you know, what Merrill Lynch sees is the same thing that Citibank sees or what have you. So I think your message has got to be consistent. And one of the problems this was a growing pain for us is particularly if you’ve got kind of a hybrid product versus custom, you got to make sure everybody’s playing from the same set of rules and expertise. We had something where we had our our analyst in and one of our syndicated packages were making recommendations that contradicted what the analysts on the consulting side of things. So we had to do some reorg after that. So I think it’s make sure you’re all you’re all preaching from the same pew. Yeah.
Greg Alexander [00:15:35] Awesome. Well, listen, on behalf of the community, it was great to talk to you today. This is your you’re different than most of our members in the sense that you’ve started off with a productized service, if you will, and our members are trying to get there. So your your story was really illuminating today. Thanks for being here.
Michael Ellison [00:15:52] Thank you. Glad to be here. Thanks, Greg.
Greg Alexander [00:15:53] Okay, So some takeaways for the audience. So if you’re a member, be sure to attend Mike’s Q&A session when we get it scheduled. If you’re not a member and you want to become one, go to Collective54.com and fill out the contact us form and one of our reps will get in contact with you. If you want to consume additional content, two things to try to do. So first would be Collective54 Insights, which is our weekly newsletter. If you subscribe to that, which you can do on the website, you get three things every week. You get a blog on Monday, a video on Wednesday, and a chart of the week on Friday. If you don’t want to do that and you want depth, you know, meaty stuff, spend a few hours with something, check out a book. It’s called The Boutique: How to Start, Scale, and Sell a Professional Services Firm. Take about three or 4 hours to get through that. Alright. Great episode today. Thank you all for listening. And until next time, we wish you the best of luck as you try to grow, scale, and exit your boutique professional services firm.