Turning Every New Client Opportunity Into an Agency's Compounding Asset

Sei-Wook (00:02.442) On today's episode, we're talking about how to stop treating client work as one-off revenue and start treating every engagement as a compounding asset. We'll break down the idea of engagement yield, why some agencies build up advantages over time, and how to design, select, and run engagements so they pay dividends long after the invoice is sent. Peter Kang (00:23.021) All right, so today we're diving into this concept of engagement yield. Let's first dive into how we're defining that. To start, basically when you get a new client and you're engaging with a new client, revenue is obviously the thing that you get paid for, right off the bat. Whether it might be in installments or upfront or whatever it might be, you agree on a scope of work and then you get that revenue, you invoice the client, you get paid. So that's revenue. What we're talking about goes way beyond that. So let's talk about what those things might be and why it's so important. Sei-Wook (01:04.928) Yeah, what we're talking about is all the maybe intangible, but tangible aspects beyond the money that you get paid. It's the difference between the immediate return that you get from the revenue versus what is the long-term impact and the upside from certain activities and aspects of the work. I'll outline — we have four aspects of it and we'll go into depth, but the four are proof, leverage, relationships, and referrals. Peter Kang (01:40.811) Yep, cool. We'll talk a little bit about why the best agencies — the ones that are able to grow and continue to retain clients — are the ones that are doing the best at yielding more out of every engagement. So we'll dive into what they're doing differently to position themselves for more yield. But let's jump into each of the components. Take a crack at the first one. Sei-Wook (02:13.397) Yeah, so the first is proof. Let's talk about what proof is from an engagement. It's essentially all of the materials that you can create that show what you've done. It's a case study. It can take the form of a case study, testimonials that you receive from clients, anything that you can build in your portfolio and really document what you were able to deliver for a client. Peter Kang (02:44.535) Yeah, and some of the stuff could be some of the artifacts that are produced during the course of an engagement that you can then stick into your agency overview deck or on your website. It can also be in the format of some thought leadership content that comes out of it — hey, we were able to do XYZ for this client, or we were able to get XYZ results or outcomes for this client. And it might be in some measurable metrics that you're able to present as well. Sei-Wook (03:13.409) Yeah, and really this obviously helps you the next time you're trying to land a client and talk to a prospect and really convince them and have them trust your ability to deliver on what it is that you're selling. Without having the tangible assets against it, they're taking your word that you can deliver for them. Peter Kang (03:38.849) Yeah, and this is obviously another topic, but something we've talked about in the past — you want to have your proof align well with who you're positioning for and which types of clients, your ICP, that you're going after, because the relevance of your proof assets matters more than volume. You might have a ton of proof assets across a very wide range of different types of clients, but then it's a lot thinner. What really helps is, let's say you're focused on a very specific type of client — just having a depth of case studies supporting that really helps. Sei-Wook (04:16.948) Yeah. And the other aspect is also recency. There is a shelf life to this. So if you worked on a similar case study years ago, it has less impact versus six months ago when you just launched something and worked with the client. The consistency is really important here to just continue to put things out. Peter Kang (04:40.31) Yep. All right, cool. Let's dive into the second component of engagement yield, which we're calling leverage. Leverage is centered around how well your agency learns from the engagement and gets more efficient and effective over time. This is where we're really talking about operational leverage. If you work on the right kinds of engagements and you have a good system of learning from them, over time you should be able to improve processes and just get better in a way that makes the next project that much easier. And when things are easier to do, typically the margins are going to follow. Sei-Wook (05:27.316) Yeah, and this could take the form of working on a project and taking the time to write SOPs — we keep seeing this pattern of a process, so let's document exactly the process, the workflow, maybe even create some templates that can be reused or internal frameworks on how to approach a type of challenge. You're really developing your agency's point of view on how to approach similar engagements, and these are all byproducts of the work that you were just paid to do. Peter Kang (06:02.72) Yeah, exactly. We talk often about the importance of training and professional development of your team and building value that way. But you really need the reps, you need a way to put that into practice. So you're only going to get that by taking these engagements seriously and using them as a source of leverage. And also, if you think about building that knowledge internally — if every engagement is done and it's all in people's heads and they're not taking the time to document it or help train other team members — you're going to end up reinventing the wheel quite a bit on every single engagement, even though there is a lot of common knowledge or common process from engagement to engagement. Sei-Wook (06:50.241) So just to put a bow on it, great leverage — when it's hitting all cylinders — is faster onboarding, more consistent delivery, and of course much better margins. Sei-Wook (07:03.964) Yep. Let's move on to the third component, which is relationships. Relationships — you can think about it as the almost like trust and goodwill that you're building with clients over the course of an engagement. Some of this stuff happens naturally where you deliver for a client and they need to feel good about the work that you've done for them. But the output of it is the client thinking about you down the line when they have a new need for their own business, or if someone asks them about their experience working with you. Yeah, the relationship is definitely a big part of what you gain from an engagement. Peter Kang (07:58.172) Yeah, and if you think about the relationship side of things with clients, typically you might have a point of contact on the client side that you work with on a particular engagement. But during the course of the engagement, you might be introduced to other stakeholders in that organization. So the yield from that engagement could be that you have multiple relationships you develop on the client side. This is like planting seeds for future opportunities, because any one of those folks could be promoted later and have more authority to make decisions on hiring an agency, for example. They might move on to other organizations and bring you along to a new logo for the agency. And that's just bigger surface area for your reputation to build, because now they might tell others about it and it just has this effect of building that network and making it more valuable. This is such a key part — if you really look at it, it's not a transaction where you just try to sell to them, do your job, and move on. You've met people, and the better you can leverage that into deep relationships, you're going to be able to mine that for a long time. Sei-Wook (09:13.723) Yeah, and this is one of the biggest aspects of compounding over time. The more clients you work with, the more people that you deliver for, that network grows really quickly. As long as you're delivering — that's the baseline of all of this — they need to have a good experience working with you and really trust that you have their best interests in mind, and the next time a need comes along, they'll think of you. Peter Kang (09:37.704) Table stakes. Peter Kang (09:52.927) Okay, so the last component, the fourth one, we're calling referrals. The yield that comes from a great client engagement — maybe this is the clearest form of yield that you could put a value to — are the leads that come from really happy clients who you've deepened the relationships with, and now they're ready to turn that into something tangible, which are introductions to maybe peers or even introductions within the organization to other departments that might need your help. These referrals are obviously gold. If you're doing things right, you're getting a lot of these kinds of referrals, and it signals a satisfied client. But also, this doesn't happen naturally all the time — it's something you actually have to work for. Sei-Wook (10:51.003) Yeah, referrals and that compounded network of more clients — those people have referrals who've then become clients — and this can expand exponentially. But yeah, to your point, referrals, you have to have a system for when to ask, how often to ask for a referral from your relationships, and not have just a one-off thing that happens and you'll never talk about it again. Peter Kang (11:23.007) Yeah, and we'll come back to this topic of how agencies can better position themselves for referrals. Just to wrap up — those are the four components: proof, leverage, relationships, and referrals. This goes back to the concept that not all engagements are created equal. If you look at it through this engagement yield lens, you can quickly see that you might have two opportunities with identical budgets — say clients looking to spend 50K to get some kind of work done — but if you bring in the engagement yield lens, you might be looking at two very different opportunities. Sei-Wook (12:09.08) Yeah. And if you kind of go down the line, we all see it where you might take on a client that's not exactly the right fit, but the money is there. You have to understand what the limitations are, especially when thinking about the fact that your team has a limited capacity on how they can spend their time. You've got to really think about the engagement yield potential. You might have a client where they have a clause where you can't talk about the work, can't publicize it. That's something we come up against — is it worth it to do all the work when you can't put it on your site, can't create a case study that you can publicize? Those are all downstream impacts of that engagement. But you could have referral potential or you could have a relationship with that person. It's not so cut and dry on what's weighted higher than the other. Peter Kang (13:09.362) Yeah, absolutely. The thing we actually haven't talked about — and this just occurred to me — is that it is possible to select poorly and get negative engagement yield too. You could argue that there's an opportunity cost to taking on the wrong kind of client, where it just takes your team away from building expertise in something, you drop the ball on that, and now you have reputational damage. Relationships-wise, you're cooked there. On top of that, you're not going to get referrals — you might actually get people bad-mouthing you and keeping people away from hiring you. Negative engagement yield is very much possible too, so it's something to be aware of. Sei-Wook (13:58.235) Yeah, more money from a revenue standpoint could hurt you versus a lower-budget project with much higher yields. So you've got to look at the full picture there. Peter Kang (14:08.349) Yeah, and this is where a long-term perspective on things can really make your decision-making become clear. Sei-Wook (14:17.818) Yeah. Awesome. Peter Kang (14:19.462) Okay, let's talk about positioning the agency to actually generate engagement yield. We touched upon some of this earlier, but let's reel off some things that agencies can do. Sei-Wook (14:32.047) Yeah, one thing on the idea of leverage and really learning from each engagement is having a structured debrief process — thinking about what are the things that we learned and are there common patterns that we can then create an SOP around, or a process or template, et cetera, that we can take into the next engagement. Just setting aside the time and making that part of your internal process. Peter Kang (14:58.576) Yes. So either debriefs or we might call them after action reviews, or anything like that. Sei-Wook (15:03.556) Yep. Another is deliberate client surveys. That can take many forms, but thinking about it not just as a check — like, did we ask the client if they're happy with working with us or not — but using it as an opportunity to, if they're in a state of appreciation for the work you've done for them, maybe it's a good time to ask for a referral. Say, is there someone else in their network that could benefit from the work that we've done for them. Just thinking beyond just the tactics of that survey. Peter Kang (15:44.272) Yeah, definitely. And then just hitting on the proof side of things — building a system to actually generate case studies on a regular basis. Across some of our Barrel Holdings agencies, they might set aside time every quarter to publish a certain number of case studies and make that a regular thing. Or they might pair that with a newsletter that goes out once a month where they feature some kind of proof for their list, and then that can also be used on social media as a proof point as well. Just getting that going, and along with that, the documentation that might come from something like the after action review or just in general along the course of an engagement. Sei-Wook (16:29.966) Yeah. And to touch on the relationship piece — you can go through the exercise of really intentionally mapping all the people that you've worked with, all the relationships, all the people within the organization who you may have had conversations with but who may not be your immediate point of contact. Just having a good landscape of everyone that's in your network, who you can talk to, who maybe could be jumping-off points for new referrals. Peter Kang (17:00.102) Yeah, and sometimes it's simple things like — you meet all these people at a kickoff, there might be like 70 people from the client side and you haven't met most of them because you've only been talking with a single or a couple of point-of-contact folks. But after that meeting, adding those folks on LinkedIn, getting them into the CRM, and maybe even getting them on the newsletter list as well — because you just never know how important it might be to stay in touch and top of mind for these folks over time. We've seen so many times folks that were super junior when we started working with them, and maybe seven years later they've become the director of marketing somewhere else and they're like, hey, I remember working with you guys, that was a great experience, here's an opportunity for you. It just pays to pay attention to those small details. Sei-Wook (17:54.261) Yeah, for sure. Peter Kang (17:56.347) So a lot of this stuff we do talk about in some of our past episodes. Episode seven, we talked about the 10 essential habits for running a successful agency — we did touch upon after action reviews, client feedback surveys, and consistent weekly outreach on a regular basis. Any other episodes we should mention? Sei-Wook (18:17.24) Episode 18, where we talk about — it's titled "Why Agencies Rely on Referrals, But Few Treat It as a System." Really talking about the process of asking for referrals in a state of appreciation, building referral lists, really staying top of mind. We go really in depth into the idea of referrals. Peter Kang (18:40.207) Yeah, check those two episodes out if you want to go deeper on these. Okay, awesome. Let's wrap it up. For an agency that does all this well, what does a high-yield agency look like over time? Sei-Wook (18:58.136) Just touching on a few points. An agency that always has relevant proof case studies — always in rotation, always consistently going out to the public — just always has new proof points in the wild. Another is knowledge, so thinking about SOPs and processes that really go beyond specific team members. The knowledge is really shared amongst the team and people are learning and not reinventing the wheel each time. Another is a healthy flow of warm inbound leads — that's a good signal of strong relationships and referrals. Inbound leads based on trusted referrals and handoffs from people in your network, versus going out and spending money on ads to get some leads. And then, yeah, sales conversations ultimately end up getting easier — the warm leads, the strong proof points, the strong process and SOPs that show you really know what you're doing, all mean that you could have stronger pricing power as a byproduct of having true expertise in a specific area. Peter Kang (20:29.705) Yeah. And let me take the inverse of that — what's the real cost of low engagement yield for an agency that's picking the wrong types of engagements and doesn't have some of these things in place. First, growth is going to be either linear, very slow, or non-existent, and they're going to have a high client acquisition cost — it's just going to be that much harder to land that incremental client. From a leverage perspective, there's just not going to be much — they're going to be reinventing the wheel every time, with no real repeatable process they could bring to bear and do things at a high margin. So there's going to be some margin erosion as well. And part of why they can't land clients without spending a lot of resources and time is that they can't demonstrate expertise or experience — there's going to be a lack of proof to show that they're really good at this, and they might have to compete on price instead. That's where the downward pressure on pricing and differentiation comes in, because if you don't have these other areas to compete on, you're going to try to offer the cheapest price and hope the client goes for that. So yeah, this is a pretty dark place to be if you have low engagement yield on your projects. Sei-Wook (21:56.616) Awesome. To close things out — if you think about this concept of engagement yield and the four components we talked about, most agencies already do aspects of this. It may not be consistent or may not be captured in a systematic way, but these are all aspects of it. It's really just about thinking intentionally about it from this lens when looking at an engagement — whether or not you should take it, or how to make the most of it — going beyond the revenue and the money and thinking about these additional aspects to capture this value. Peter Kang (22:35.801) Yeah, just to wrap it all up — we talked about the word compounding, and really every engagement is a bit of an investment. You've got to think about it that way. This long-term perspective we talked about: if you make the right decisions with that perspective in mind, you're going to go into a situation where that decision will help compound in the right direction. That's such an important lens to have in mind as you take on more clients. Okay, well, that's the episode. Thanks for joining us, and till next time, have a good one. Sei-Wook (23:17.088) Thanks.