This week, Corey Quinn discusses scaling a technology-enabled service firm from $20 – $150 million. You see, it pays to stop saying ‘yes’ to clients.
About Corey Quinn
Corey helps agencies break the cycle of flat sales by becoming a vertical market specialist. Host of the Vertical Go-To-Market podcast, Corey is also the author of Focus Vertical (Q3, 2023) and the former CMO at Scorpion (which he scaled from $20-$150M in 6 years).
When he’s not helping companies to scale, he loves spending time with family, traveling, and enjoying the great outdoors!
Points of Interest…
- ‘Build Versus Buy’ ethos when scaling a service firm 1:54
- Is software key to scaling your services firm? 6:29
- Where Corey sees services headed in the next decade 14:52
- Becoming a specialist in a specific vertical market 18:45
- The next frontier in specialization 21:10
‘Build Versus Buy’ ethos when scaling a service firm
I want to explore a little bit of what Scorpion was from a business model perspective – simply because it’s what we’re trying to do at Parakeeto! In fact, I think it’s a model that more people should consider. A lot of agency owners look at the stories of a services business and it’s seen very much as this binary path – you’re either a services firm or you’re a software company.
That said, Scorpion was both. During his time there, Corey managed to scale a services-led technology development approach, which was ahead of its time. So, naturally, I’m keen to pick his brain about how Scorpion was structured in terms of the services and the technology – and how that played into its rapid growth.
“It was an evolution that sort of evolved! We did raise about a hundred million dollars in 2020 during the COVID pandemic, in large part, because of the software that we had developed. Interestingly, however, it was primarily a service-led business…”
When Corey joined Scorpion in 2015, it was a $20 million business focused on one vertical market, that being personal injury attorneys. This successful model made sense given the symbiotic nature of personal injury lawyers and internet marketing.
What Corey found when he joined Scorpion is that the majority of these businesses were experiencing the same problems, which Scorpion became adept at solving. In tandem, the CEO and founder, Rustin, was committed to Build Versus Buy; developing software to build websites and local marketing instead of employing WordPress or the like.
“We built our internal software that hosted our client websites, and it would run our PPC campaigns… there was always an investment of developing custom software that, ultimately, allowed us to deliver better results for our clients.”
As for what that looked like? It meant that Scorpion could progress into expediting the contract signing process, thanks to digital signing. In turn, this resulted in a series of workflows being triggered more quickly.
“That allowed us, from an operations perspective, to grow much faster than if we were doing everything bespoke and manually. A big part of that initial early success was due to the fact that we were focussed on one buyer. Ultimately, it allowed us to do relatively the same thing, over and over and over, which allowed us to get some scale.”
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Is software the key to scaling a successful services firm?
As it relates to getting that level of scale through this model, what was the key step Corey tackled in order to succeed?
“One of the keystone aspects of being a SaaS business is efficiency. It’s building out and making everything super efficient. And it gets to a point – especially in a service-based business, at least when you’re talking about working with local businesses – where you can’t substitute software for customer relationship. At the end of the day, customer relationship kinda doesn’t scale!”
In Corey’s firsthand experience, an area in which businesses can get into trouble is over-indexing on the efficiency side. The knock-on risk is that this can impact the business. This ties into one of the other core reasons that I believe we’re gonna see services come back in style alongside tech. The ecosystem of technology and services is going to shift over the next decade or so. Why? Because, to Corey’s point, there is a correlation between the relationship aspect and the success aspect.
As some of you may be aware, I have a second life in which I’m part of the SaaS Academy community. Dan Martel, one of my mentors, says something that I think is really profound… “SaaS should stand for ‘Success as a Service’.” Think about it; The software is meaningless unless the person using it is, is successful in achieving the business outcome that they want..
If you think about every successful B2B SaaS company – Salesforce, HubSpot, Marketo, Segmented (I could go on) – they either have a professional services team or they have a massive ecosystem around them. They have people helping to fill in the gaps, covering the things that the software simply can’t. These include:
- The concept alongside the long-term strategy/thinking
- Data schema design
- Necessary process changes that must map to how the system works
- The resulting change management involved
There are so many other aspects to the success of a client. Now, with all this scrutiny on the unique economics of these companies, you’re seeing more SaaS companies bring all this in-house. I dive into an example of QuickBooks competing with their own bookkeeping ecosystem from 13:51 minutes*** But the underlying ethos of this “Is it software or is it service?” debate boils down to how successful it makes your customers. Moreover, is it profitable and can it scale?
Where Corey sees services heading over the next decade
With all of these changes happening in the world, where does Corey see services going over the next decade or two? And what does he think is gonna be important for those running an agency, a services firm, or a consulting firm, in order to be successful and adapt to the coming changes?
When you’re serving small, medium-sized businesses, you’re still going to need someone to talk to… Back in the day, everyone had a financial advisor or a stockbroker. Now, there’s e-trade that enables more functional trading. That said, in terms of building towards a retirement I still need to talk to a financial planner for results. And while I think the toolset is evolving rapidly with Chat GPT and AI, I frankly don’t care how my financial advisor gets his recommendations as long as they’re the good recommendations.”
Equally, Corey reckons an agency client doesn’t really care exactly how you generated the content, as long as it delivers on the arrangement you made with your client.
So, if anything, Corey believes AI will allow agencies and expert businesses to provide more value at lower costs. It can’t however, substitute for a good and profitable person-to-person relationship in which positive outcomes are achieved. I don’t think professional services are going anywhere anytime soon.
Even if you look at technology, there’s always this virtuous cycle of fragmentation and consolidation which results in a new ecosystem of tools. With every layer of disruption, there’s a new layer of complexity that needs to get managed. ***Further insight on this cycle and how we respond to it (specialization and niching down) from 17:50***
Becoming a specialist in a specific vertical market
A level of sophistication operationally is going to continue to accelerate. This is particularly true when you see SaaS companies (especially funded SaaS companies) enter the marketplace.
I look at what they do just from the perspective of data management, for example, and they’re two decades ahead of professional services in terms of their level of sophistication. So, with that combination of factors, what does Corey think is going to change about how an agency needs to position, execute, sell, and deliver in order to stay competitive?
“Every agency needs to do become a specialist in, not just in what you do, but also who you serve. Because what you do these days is changing so rapidly. You could be the foremost expert in TikTok videos, that’s your specialty, but what’s going to happen if/when Threads potentially takes over?! I am super passionate about getting the idea out there that for an agency to really scale and win, they need to become a specialist in serving a specific vertical market.”
This is not just a way to differentiate and stand out, but it’s also a way to provide superior value. Why? Because, it’s only through that focus that you’ll become an expert at solving really expensive, hard problems for your target audience.
When you start discussing niching down and focusing, many only think about it in a very mechanical way. For example, they say “Oh, we do Facebook ads, or we do TikTok ads, or we do this service and that service.” The real crux is defining the problem you solve and who you solve it for. What you do is only relevant in relation to that. Its methodology will likely change. That said, your perspective, your point of view, your high-level strategy, and the framework for how to accomplish an outcome probably won’t change nearly as quickly. More on this table-stakes concept from 21:04***
The next frontier of specialization…
I have a thesis that I want to bounce off Corey, which is that there’s a next frontier of specialization – at the operations level.
So, in addition to identifying who you serve and the problem you solve for them, you need to become equally clear about what your strengths are so can double down on what you’re innately good at! This way, you can remove the operational overhead of the things you’re not so good at.
For example; we worked with an SEO firm that was great at sales, great at strategy, great at account management. That said, they weren’t actually that great at tactical SEO delivery. So, they would partner with white-label agencies through the delivery and push all that revenue out. But they scaled to eight figures, had crazy EBITDA, and had great processes because they understood – as a team – what they excelled at.
So, I see that as the next frontier; not only knowing who you serve and what you do but ALSO looking inwards and specializing even further. As for Corey’s thoughts in this space?
“I’m a big believer in this concept of really understanding what makes your business unique. What are you really uniquely good at? What are you really specializing in – in a way that your buyers care about? Really lean into that. Equally, if there’s aspects to your business that your buyer really cares about but you’re not particularly good at, then I’m all in favour of finding a better ‘who’ and let them free you up to really pour that time and resources into doubling down on what’s working for you.”
And Corey would know all about focusing on doubling down. He is, after all, currently focused on helping 1,000 digital marketing agencies transform from being market generalists (meaning serving all shapes and sizes) to becoming vertical marketing specialists.
As for how he does this? Well, he invites agency owners to look at their business and see if the following statements resonate with them…
- It’s both hard and expensive to acquire customers or new clients
- You have no pipeline or process employed to attract new clients
- Client churn is high and you’re not innovating
If all three of the above statements ring true, then there’s a solid chance you may be saying “yes” to way too many different types of companies. It may be time to think about verticalizing – narrowing your focus and becoming an expert in solving one problem for a specific audience.
Key takeaway…
A software platform is just technology leveraging an existing process and making it happen faster, more efficiently, and more predictably with more scale. But, in my experience, creating software is a really bad way to figure out what works and a really good way to scale what works. It’s an expensive, slow, and arduous way to try and find product market fit.
Services, on the other hand, have the opposite set of qualities. Unfortunately, they tend to be trickier to scale. That said, they’re a wonderful way to get close to a problem, understand the requirements, and iterate on the process. This is so brilliant about a services-led product development process; you’re taking all the things that a software company has to do to build a world-class product, and then using that to get paid to fund the product development!
What’s even more fascinating is it de-risks the commercial success of the product, which I think a lot of agencies that have tried to build a side SaaS company out of the agency are missing out on. You could make an investment in that technology. It never actually becomes commercially successful in the sense that someone is buying that platform and subscribing to it, and it becomes a standalone SaaS product. But what Corey does is increase the efficiency of that service offering, so that you will get a return in perpetuity on the additional gross margin that that creates for you.
So, I think this is something that people aren’t talking enough about! It’s going to become much more common in SaaS as we’ve seen a regression, I think, in momentum investing and more scrutiny on the real economics of software companies. Corey provides his insight on how this can lead to interesting acquisitions from 8:21 minutes***
See more from Corey Quinn…
Did you learn anything new from this episode? Let us know in the comments below! We have helpful blogs designed to bolster your agency profitability, such as How To Calculate Your Billable Employee Cost-Per-Hour.
Our next installment of #APP, on September 6th, will see Marcel talk with Ryan Watson for our 122nd edition. Our previous APP blog – Episode 120 with Ilia Markov – can be viewed here…
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