804: Meet the Agency Growth Expert with a $10M Shortcut | Corey Quinn

If you’re everything to everyone, you’re nothing in the market. That’s Corey Quinn, the architect of the Deep Specialization Movement. As a former CMO of Scorpion, he helped scale the agency from 20 million to 200 million by dominating niche verticals like legal home services and healthcare. He advises six, seven, and eight figure agency owners on how to break free from the generalist trap, become the go-to solution in the market, and build truly scalable businesses. But how does he do it? I’ve seen inside of hundreds of agencies. The one thing that gets them to eight figures is… In this episode, you will learn how to escape the generalist trap and choose a vertical that’s profitable and fulfilling without guessing.

One percent of your market equals an eight-figure success. Always pick a vertical with that’s your sweet spot. The hidden clues inside your agency’s current book of business that often point to strong vertical opportunities. Nine times out of 10, your best vertical is already hiding in your client list. How to stand out, charge more, and build a flywheel inside your niche. One vertical, one problem solved exceptionally well. We were able to go from 40 deliverables to five and got our clients to pay us double by… And a hot take you were not expecting. MSPs are a sort of one of these sleeper industries that has a lot of potential.

Hey, well, just as a level set to get things going, what are you seeing the marketing agencies are struggling with? Yeah. In today’s day and age, what’s causing it? And what do you think that they’re getting wrong? Yeah, well, what I see happening right now in the market is that it, unfortunately, is getting harder than ever to run a profitable agency. Clients are bringing work in-house. People are leaving agencies. They’re trying a lot of different options. The agencies are really struggling to keep clients. And I think one of the key things that is driving that struggle is that so many agencies are caught in the generalist trap. And I’d love to share with you, Jeff, what that is.

It’s actually something I call a negative flywheel. And it starts with the classic trap that every agency owner gets into, which is saying yes to everyone, right? Typical agency owner. You get started. You invite your friends, colleagues, neighbors, alumni to become clients. And of course, as you’re getting started, you say yes to everyone. And because as a new agency founder, you want to really build this agency. You want it to be successful. So of course, you over-deliver on those first clients. So when you over-delivered, you get referrals. And you get new business. You say yes to all of that. And all of that’s wonderful. You get into business. Maybe you hire an employee or two.

And you really start to get the revenue going. Maybe the MRR above 10,000, above 20,000. You got a great business. But then you lift your head up and you realize that you built a business that is full of context switching. OK? What that means is maybe today, you’re building a website for a dentist. Tomorrow, you’re doing an SEO strategy for an attorney. And maybe the next day, you’re doing an e-commerce strategy for a manufacturing firm. Right? And the challenge there, of course, is that you’re building a business where every single new client that comes in the door, your team and yourself, you have to learn their business to learn their industry.

And that causes a lot of operational inefficiency. What that means in plain terms is that you have no real processes. Sure, you may have written up SOPs and documented your processes, but the reality is, is that those sit in a drawer and they’re collecting dust because nobody is using them because, frankly, they’re just not useful. Right? And of course, when you build a business that’s full of context switching, no real processes. Everything’s bespoke. You’re making it up as you go. You’re doing the best you can. You build a business that’s full of bottlenecks. And there is one person in the business. I’m going to ask you to guess who this might be.

One person in the business who is the bottleneck. The biggest bottleneck is who? Right at the top. Right, at the top. The founder, because they’re the only person in the business who knows exactly everything that was sold and who was sold to and what was promised. And everyone else in the team is just trying to stay heads down and getting things done. Of course, when that happens, you get things like scope creep. And the product that you end up building is, unfortunately, over time becomes, let’s call it average or mediocre. And when you build an average or mediocre product, you begin to be perceived by your clients as a commodity. And of course, commodities get traded up.

Your clients can think, well, this agency, they’re nice, but the results are not that outstanding. We’re paying a lot of money. Maybe we can find this same service somewhere else, maybe for the less expensive, or maybe we could find a specialist, someone who really understands us. And of course, that leads to clients leaving. And when clients leave, that puts you in a position as a founder, as an owner with employees and a mortgage and trying to get kids through college. Guess what happens next? You have to chase revenue. And that brings you back to the beginning of the cycle where you say yes to everyone. You have to just, whatever comes the door, let’s go. Let’s say yes.

And so that repeats the cycle. It’s what I call a negative flywheel. It’s called the generalist trap. And it leads to bottlenecks burnout. And it is truly a race to the bottom. Corey, as you’re narrating this, I’m sitting back and saying, I’ve seen this movie.

So you’ve worked with hundreds of agencies to help them find their ideal vertical. And talk us through like, how do you start? What are some of the patterns that you look for that separate a great vertical from a poor one? Fantastic question. And I’ll tell you a story about a woman named Nicole and how she struggled with this. And I think maybe some of your listeners will relate to this. So Nicole, she runs a service-based business. It’s actually not an agency. It is an accounting firm. But the lessons here apply. So a couple of years ago, she bought into this idea of niching down, having a vertical approach. And so she decided to specialize her accounting firm in wealth management companies.

So she did things like started going to their conferences, started writing content for the wealth management industry, started speaking from their stages, networking, doing all these great things. And she began to build her positioning and her reputation in that market. And it was working. However, she realized that the wealth management industry was too small. There wasn’t enough businesses that she could potentially work with in the wealth management industry to justify only working in that industry. And so she decided, okay, well, this isn’t going to work for me. So I’m going to try and find another industry or another vertical market to specialize in.

So she actually specialized next in agencies. And so what did she do? She started going to the conferences. She started writing content. She started speaking from their stages and networking and began to build a reputation as an accounting firm for agencies. And then she realized that although there are a lot of agencies in the world, especially in the United States and North America, they’re just not her people, right? Just was not the right fit for her. And so when I was speaking with her is at the end of this cycle where she had spent all this time building a reputation and momentum in wealth management and then pivoted to agencies. And then she’s on the call with me because she was frustrated because she felt like she’d spent all these years and all this effort in niching down and taking a vertical approach.

But she was at square one. And I think that this is an example of where many agencies, maybe they dip their toe in the water, they try a lot of different things, but they always end up kind of frustrated and starting over. So what I teach in the work that I do with agencies who genuinely want to achieve and have the benefits of a vertical specialization, which of course is scale and amazing profits, is to do three things. The first thing that the agency must do is to harvest the wisdom that exists within the agency. We just talked about it, Jeff, where if you’ve been in business for three to five years, you’ve done a lot of work for a lot of different types of clients.

And maybe you’ve dabbled in the types of things that you do. Maybe it was websites or SEO or social media. You’ve probably done a lot of things. What you want to do is you want to harvest the wisdom that exists in your business. And so some of the things you could do to uncover that wisdom is to look at your book of business, both current and previous clients and group your clients based on the vertical market. So put all your dentists in one group, put all your doctors or whatever that looks like for your agency. And you want to look at some of the numbers, right? Things like what’s the average revenue per client per vertical? What is the average retention profit?

Where do we get our referrals from? So you want to run kind of a quantitative analysis and try to understand where do the trends, what does this data tell me? You also want to go into your business and talk to people. If you have a sales team, you want to ask them things like, who do you like selling to? Who do you find is the easiest to sell to? By the way, sales people love selling to people who say yes. So there is some level of product market fit there. So you want to use that as information. You also want to ask your client success team, the people who manage your clients on a day-to-day basis. Guess what kind of clients they like the most? Happy clients.

So you want to uncover that data as well. So that’s really step one. I have a system of process called the Focus Finder Process to help with that. The second step, which is probably the step that most people miss, Jeff, is you got to give a damn about the vertical market. If you want longevity, you got to give a damn. It’s got to be interesting to you, right? At some level. So let me give you an example. This is probably an example of someone who went all the way in. This is an agency owner. His name is Luke Eggebrotten. He runs an agency called Phaser Marketing. And Phaser targets the construction industry. And if you know the construction industry, you know that there is what Mike Rowe, the old dirty jobs host says that there is a five to two problem in the construction industry.

You’re probably filling it up there up north, where you guys are, where there is an expanding demand for construction services. However, for every five people who retire from the construction industry or blue collar work, only two are coming in. So there’s this kind of widening gap. And so what does Luke do, who again focuses on this industry? Of course, he builds websites. He does PPC campaigns. Sure, he’ll even help his clients to run ads to find employees. But because he is dedicated to this vertical market, he has a lot of empathy. He cares about the people in this industry. He goes the extra mile. And so what he has done successfully is he has not only done all these things, but he has also started in nonprofit.

He also hosts an annual gala where he raises a ton of money to black tie event at the nice hotel. And he brings a lot of people together, raises a lot of money in order to fund raising awareness of careers in the trades. He also gives away one of these big paper checks to a kid who is graduating from high school and going into the trades instead of college. And so he speaks from stages. He writes books. He does all of these things to help raise the awareness. And he does that because he is not really part of the marketing industry. He is truly a part of the construction industry. He has joined that industry. And as a result of that, he becomes a safe and trusted choice for people who are looking for marketing services in that industry.

Yeah, what a great story and an example. Like you’re not doing that if you don’t give a damn about the…

And you’re not passionate about it. But what a fantastic marketing strategy to get your name out there. Yeah, absolutely. And the reality is, Jeff, not everyone needs to do this. This is probably an extreme case. What you do have to do is you have to like these people. You have to believe in them and the mission that they’re on because you’re going to be spending a lot of time with them. You’re going to be writing books with them. You’re going to be on their stages. You’ll be interviewing them on your podcast. And so there has to be some level of intrinsic care and empathy for them if you want to be successful over a long run. That’s number two. And then there’s number three, the third step.

The first one was harvesting wisdom. The second one is give a damn. The third one is you have to have a large enough addressable market, which means that if you’re going to focus your agency in a vertical market and going forward, you’re only going to be focusing this one area, you want to make sure that there are enough businesses to justify actually exclusively focusing in on that market. So the model I teach is you take the total addressable market, which is all of the businesses in that vertical market, and you multiply that by 20%. That’s the Pareto principle, the 80-20. You know that out of any market, only 20% of the businesses give or take are going to be the ones that are in your sweet spot.

Once you have that number, I want you to multiply it by 3%. Now, the 3% is the number of businesses in that 20% that you should be able to achieve getting as clients within the first year or two as a result of vertical focus.

So, yeah, go ahead. Now, so I just wanted to jump in there and ask, how do you know if your market is too small? Sure.

Yeah, I don’t know if it’s a problem that everybody has, but you have to be able to figure out is, hey, should I be putting some energy into it before I go and put a whole bunch of months or years of effort into… 100%. Yeah, so it’s like the old saying, something my mom told me growing up, she said, you want to make sure that you’re leaning the ladder against the right building because you don’t want to get to the top of the ladder and realize it was against the wrong building. And so this is why it’s critical work to do ahead of time. And what does it take to get to an eight-figure agency? You need to target a vertical market that has just over 16,000 businesses.

If you target a vertical market that has 500, 1,000 businesses, you’re limiting your earning potential. That’s why I use the number 16,000. It’s actually 16,600 businesses. If you’re at that number and you charge $5,000 a month for your services, you have an eight-figure business. I like having the specific number. So let’s continue on with some specifics because I want to convince people on this path. You’ve been behind the curtains of hundreds of different agencies now.

So talk to me a little bit about how specialization can really create operational scale. I think the best way to answer that question is to talk about the deep specialization flywheel. And this is really the key to unlocking scalable growth for an agency. And it, of course, touches on sales, marketing, and operations. It starts by having a vertical focus. So choosing a vertical market, going through the three steps we just discussed, let’s say it is plumbers, for lack of a better term. And as an agency owner, you go through the process, you identify plumbers as a vertical market, which means going forward, you’re going to attract those businesses.

And over time, you build five, 10, 15, 20 of these clients. You begin to, as a result of that, build a lot of expertise. You’re solving the same problem for the same business over and over and over. And guess what happens? You get pretty good. It’s like the old Bruce Lee quote, I fear not the man who’s practiced a thousand kicks once. I fear the man that’s practiced one kick a thousand times.

And then through that expertise, you’re able to build, truly be able to build systems and software. Back when I was at Scorpion, the agency we grew from 20 million to 200 million, using this methodology, we built a lot of systems that allowed us to create predictable results for our clients. It also created a lot of operational efficiency and leverage. What that means is for every client that we sold, every one of those clients went through an assembly line, a very carefully curated assembly line approach that created an amazing experience for the client and it allowed us to completely operationalize our business. It’s once you have that predictability in your operations, is that you are be able to create outstanding remarkable results on demand for your clients in that vertical market.

Of course, that raises your authority in the market. It raises your branding, your visibility. You become the go-to agency in that vertical market. When you become that rare hard to find agency who truly understands the business and produces amazing results consistently, guess what you’re able to do? You’re able to raise prices. When you raise prices, you’re able to have more margin, both because you have an operationalized business and you have an outstanding brand and premium positioning in the market. This last step, which is the last step in this flywheel we’re just talking about, is you want to take that margin, that extra revenue, and you want to reinvest it back into that vertical market.

So I’ll give you an example to bring this to life for folks. At Scorpion, my last agency, we targeted personal injury attorneys. And these attorneys would hire us for 10, 20, $30,000 a month and they would stay with us for 30 months.

The next closest generalist agency was selling those same attorneys a $2,000 package and they would lose them in 12 months. So if you took a step back and you look at the economics of those two different, let’s call it clients, one is $300,000 for Scorpion, the other one’s $24,000 for our competitors. Well, because we had so much more revenue per client and a lot of margin built into that, that allowed us to reinvest all of that into things like better sales teams, more sales trainers, more sales infrastructure, helped us to have better marketing. We were able to do things like give away cars and we sent gifts to everybody. We gave away trips and all these amazing experiences, which of course allowed us to run circles around our competitors.

Everyone knew who we were and it also allows us to improve our operations. It allows us to build out better systems for onboarding and ongoing marketing support. It allowed us to build better marketing tools and products for our clients and so on and so forth. This flywheel goes round and round and what it allows us to do is really build a moat around our agency that no one can really touch. I want to double click on that point about margin growth. Building a software as a service company like we have at Vendasta, I know firsthand how important it is to grow margin over time and how important the margin growth is for scaling your organization. And so when you get to that size that you truly need to scale, so, so important.

I think you did a great job of explaining exactly why it’s important and what you invested in and what it allowed you to do.

I just wanted to ask, what does this look like on the ground?

If you’re working with an agency or you own an agency that’s specializing with a particular vertical, say dentists or roofers, how do you start retooling the delivery of the solutions?

Especially if you come into an agency or you own an agency that’s been providing services and a lot of them have been one-off type specializations. Where do you start?

It’s fine, I laugh because it’s so true. Interestingly, the most impactful area to start in the business is actually in the sales process. And here’s why. The challenge that a generalist agency or let’s call it a semi-specialized agency has is that the sales are all founder dependent. Usually you have a founder that is the hustler, the one that’s out there in front, it’s the one networking or you’re dependent on Facebook leads or things like of that nature. The challenge, of course, is that every sale, because every sale is unique and different, you end up having a bottleneck in the sales department. So the first place I teach my clients to focus on when it comes to getting leverage from this vertical approach is in the sales process.

Now, I teach something that’s called the six slide trust multiplier. The reality is, is that when you are new in a vertical market and you’re trying to convince people in that new vertical market that you are an expert, you’re going to get people who have a lot of resistance going into that sales call. And what you want to do is you want to get them to trust you that you understand them, you understand their problems, you’ve solved it for other people. And so one of the first things you need to do is to be able to build trust quickly through, again, I teach a methodology called the six slide trust multiplier.

And secondarily, you want to take much more of a consultative sales approach. Many agencies today have a menu type or approach to their pricing where it’s a good, better, best.

Challenge with that is that it does not position you as an expert. So the best way to differentiate yourself, escape yourself from the sales process as the founder is to find a way to build trust in the first 10 minutes and then to have much more of a consultative sale. When you’re asking questions about their current situation, their desired situation, their obstacles to getting their goals and then what is the cost of inaction? What happens if they don’t change? Doing so separates you from all of your competition who is much more of a transactional sale. And as through specialization, you’re able to do that much more effectively.

At the beginning of the episode, you said something that struck me. You said, contact switching kills. Yes. So if you’re an agency and you’ve decided to focus on a particular vertical, what are the first set of systems or deliverables that you need to productize? So the way I would approach this is that I would form what I call a tiger team. Now in any agency, if you have your team that’s managing the sort of the generalist pool of clients and there’s a lot of all this contact switching, adding in, let’s call it higher ticket specialized clients is going to just create exponentially more chaos in your agency. So where possible, what you want to do is you want to carve out some resources that are dedicated to this new vertical market.

And ideally, they’re not pulled into the everyday clients. As a result of that focus and the fact that they’re separated from the rest of the clients, they’re only focused on the, it’s called the high ticket specialized clients. They’re going to be able to benefit from having clarity into what systems are need to be created, what onboarding processes need to be and what insights that market wants. Again, helping you to build a better product and a better positioning. Yeah, you’ve worked with so many different agencies. Is there one that jumps out at you that has really nailed this or done a really, really good job of it? So it’s great question. One of my favorite clients, all my clients are my favorites, but one that I’ve been working with very closely over the last, let’s call it six months, is an e-commerce focused agency.

And they’ve built a great brand for themselves. They have really a fantastic podcast. And that is listened to by literally tens of thousands of people every episode. And as a result of that, they get all these inbounds, right? They get all these inquiries. And as a result of that, they have built this generalist business. Well, they were struggling with the things we talked about in the generalist trap. They had client churn. They had a lot of context switching. And so through the work we did, we identified a vertical market, which happens to be premium D to C beauty brands. And as a result of choosing that vertical, we optimized their sales, their marketing process, and their positioning.

And now they’re closing big six-figure deals on a weekly basis because they now have clarity on who they’re targeting. Their messaging is specifically targeting them. And by the way, their team loves this focus because they believe that they can win and they believe that they can finally have repetitive process-driven agency versus kind of the scattershot what they’ve been used to. Well, I couldn’t have a conversation without asking about AI at some point. And so I wanted to ask you what role that you see AI playing most importantly right now in automating agency workflows. One of the best ways agencies can use AI when it comes to trying to find scale is when they are specialized.

They have the benefit of having a very specific context window. We all know that AI works great with really good context. What agencies should be doing is be taking the knowledge of a vertical market who their buyers are, their clients are, what they care about, what the psychology of their buying is, where they buy from and being able to instruct the AI to produce amazing content, campaigns, ads, all the things that an agency wants improve at the vertical level when you’re leveraging AI. Well, that is a great note to put an exclamation mark on. I want to ask you a question that I want a one-word answer for. What vertical market do you think is a gold mine that is maybe something that someone wouldn’t, either a market that’s underserved right now or something that a lot of people would think is boring and they don’t necessarily pay attention to?

You know, it’s funny, Jeff, the boring businesses are the good businesses, right? So one that I had no idea even existed until fairly recently is something that’s called an MSP. A managed service provider. And these are companies that provide IT services for small businesses. And it turns out there’s tens of thousands of these all over the United States and North America. And as a result of there being a lot of them, there is an opportunity for an agency to step in there and help them to grow. In fact, there are a couple of amazing agencies already doing this. Doesn’t mean there’s not room for more opportunity here. But MSPs are a sort of one of these sleeper industries that has a lot of potential.

And it could be really interesting for agency owners to look at. That’s interesting. You and I haven’t talked about this before. And it was a question that our producer put into the mix here. But it’s something that I totally agree with, by the way. We’re seeing an explosion of interest from the MSP space. And they have real needs that need solving. Yeah. And they’ve got budget, which is also important. I wanted to ask you, if you wanted to leave the audience with one final thought, what do you want to leave our audience with you? I think the hardest thing an agency owner has to do, if they really want to get that seven, eight figure mark, is to find a way to stop saying yes to everyone.

And saying no goes against every fiber in our bodies in some respects, because we want to be successful. We want to follow the dollars. But in some respects, and especially in the context of what we talked about today, what got you here is not going to get you there. So one of the best things you could do for your business, your employees, your family and yourself and your sanity is to specialize in a vertical market and become dedicated to being the best at solving their profound problems.