The difference between good growth and bad growth for an agency

In this new series, PRmoment founder Ben Smith conducts short interviews with agency chiefs on a specific challenge they are working through in their business or their communications.

This week, he talks to Tom Buttle, CEO at Chameleon, about the differences between bad growth and good growth for an agency.

1. What do you see as good growth for your agency and conversely what is bad growth?

I’ll try to avoid leaping onto my soapbox here. But we didn’t want to be just a topline-obsessed business, or a “big creative or nothing” type of place. We wanted to build an environment where the commercials and the culture both thrived. Where those factors weren’t just equals – they were actually interlinked.

If you’re heading up an agency you’re always making decisions – and helping the team make decisions – that have a profound effect on both people and the numbers. Do we set an aggressive growth target? And therefore do we go for that pitch or keep working with this client? Do we tweak up the profit number for the year, or do we have a spanker of a trip to the Alps as the Christmas party?

Financial growth can be addictive, especially if you’re in board meetings hypothesising how big you can go. But if you want your team to have some balance, to be excited by their job, to have good mental health, typically you can’t make growth an endless churn of pitches and new clients. Equally, the work that commands the best margins and fuels the bottom line is delivered where the team has high energy, an acute eye for opportunities and headspace for critical thinking. That doesn’t happen if everyone is knackered beyond belief.

Lastly, culture is hard to pin down in words. But I think for Chameleon it’s about having what’s pretty much a family atmosphere, whilst at the same time being ambitious. It’s wanting to be really bold with our consultancy, whilst having a relaxed and friendly team. If we feel after each year of growth that this is still the essence of our business, then that’s good growth.

2. What would you say makes a good client and what makes a bad client?

Avoiding platitudes about being aligned in our cultures and so on, the reality is that we want clients who are open with us. That might be structural stuff like sharing insights about the business, or more fundamental things like acting as part of a collective team and listening to our consultancy. And there’s no point ignoring the fact that we like clients who recognise the value we add, and are willing to both play and pay fair. Working like this makes it easier to uncover the brilliant opportunities for that brand – which is better for the client, and in turn supports our growth.

So we don’t take client relationships lightly, and we always work hard within them.

3. What is the impact of growth within an agency business?

Growth typically requires a lot of graft. But that doesn’t have to be confused with stress, unnecessary pressure or a loss of your personal life. It can fuel career development, passion for the job and obviously bring rewards. It helps define energy in the business. It puts money in the bank for training. Perhaps most of all, when you get the balance right and find that equilibrium, it actually removes pressure within the team because you’re not panicking about hitting targets.

I always think about being ‘good busy’ or ‘bad busy’ – because firefighting negative issues generally doesn’t directly contribute to growth. Having a positive and supportive culture means I don’t remember that last time I didn’t want to be at work. Pragmatically, it also means we have more time for being good busy – which can be business development, nurturing client opportunities and planning what’s next.

4. Specifically, how do you define the type of growth you are looking for?

For us it has to allow us to keep doing the things we want to do – but bigger and better. Can we have more extensive client relationships across PR and marketing, that are interesting to work on and deliver a fair margin? Can we invest more back into the team – with wide training, bigger bonuses and better social events? Are the numbers looking good, with core metrics staying stable or improving, all through our organic efforts? If the accounts and NPS score are both in a good place, it’s a decent sign.

5. How do you measure whether you are achieving that type of growth?

We use a wide range of metrics across the business, which are monitored through our senior management team sessions, and reported on within board meetings. There are financial measures such as topline growth, profit margin, staff cost:income ratio and all that lovely stuff. We have key awards and recognition within the industry that we strive to achieve. There are the quantifiable things that touch on softer elements such as NPS scores for both clients and within the agency.

But we also treat as critical a wider range of factors. Are we growing the business in part through referrals and word of mouth? Are people coming to us for jobs because they’ve heard we’re a great place to work? Are we seeing the team progress and get promoted; if people are moving forward in their careers it’s a sign our investment in them is paying off. And what’s the general vibe like in the office? Both through the management team, but also informal check-ins, line management and mentoring, we stay closely connected to the agency’s atmosphere.

6. How do you control the type of growth that you want to achieve?

As a senior team we spend a lot of time monitoring capacity, checking in with the team and planning against our pipeline. We’re also very attentive to ambitious, but pragmatic, growth plans. When you glue the two together, you get a sense of what is attainable without killing us from the inside out.

It’s important to make this a whole-agency ethos. We have quarterly strategy sessions with the full team, where people understand how the business is progressing, and can input based on their experiences. This in turn loops into the senior planning meetings and helps us have full situational awareness for our strategy.

Ultimately, when you’re in the thick of it it comes down to decision making that at times needs to be a bit brave. We’re willing to turn down opportunities, to approach new business in different ways, but also to go all guns blazing when we feel passionate about an account.

When you look at at the financial year and both the commercial AND the cultural metrics look right, that’s when you can pat the team on the back.