December 8, 2016

Helping PR pros make smarter decisions

Chats with Chip: Gini Dietrich and the business side of PR

Chats with Chip: Gini Dietrich and the business side of PR

In this episode of Chats with Chip, I am joined by Gini Dietrich of Arment Dietrich and the Spin Sucks blog to talk about the business of public relations.

We cover lots of ground, including the five reasons that Gini believes public relations firms fail to scale:

  1. You Don’t Have a Business Plan
  2. You Can’t Break Free from Client Work
  3. Operating In Chaos
  4. Freakin’ Technology! Who Can Keep Up?
  5. Not Understanding the Whole “Measurement” Thing

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*** UNVERIFIED TRANSCRIPT ***

Please review the audio before quoting to confirm accuracy of this unverified transcript.

Chip Griffin: My guest today is Gini Dietrich of Arment Dietrich and, of course, the Spin Sucks blog. Welcome, Gini.

 

Gini Dietrich: Thank you. I feel like Chats with Chip is so nice alliteration. I like it. Chats with Chip. We should write a children’s book using words that only start with ch.

 

Chip Griffin: I’m fairly certain that me writing a children’s book is not a good idea for-

 

Gini Dietrich: I’ll do it and I’ll give you credit then.

 

Chip Griffin: Sure. Fine. Okay.

 

Gini Dietrich: All right.

 

Chip Griffin: Yeah. I’m good with that. People don’t tend to say, “Chip, yeah, he’s the kid person.”

 

Gini Dietrich: You don’t have to be a kid person to write a children’s book.

 

Chip Griffin: I suppose. I suppose. I officiate youth sports and people always make fun of me because they’re like, “You like to see them cry, don’t you?” There’s a small piece of me that does actually.

 

Gini Dietrich: I think you also like to see the parents cry.

 

Chip Griffin: Believe me, there are some parents I’d like to see more than cry, but anyway …

 

Gini Dietrich: We digressed.

 

Chip Griffin: Yeah, we’ve digressed a little bit but that’s okay. The reason why I asked you to be on, Gini, was because you sent out this two-part email to promote a program that you’re marketing. It really focused on a topic that is near and dear to my heart and something I’ve been ranting and raving about a lot more than usual lately and that is the importance of PR people paying attention to the business side of PR. In particular what you did was you came up with five reasons that PR firms don’t scale. You want me to just quickly run through them for our listeners so that they have this basis and then we’ll take the conversation where it goes.

 

Gini Dietrich: Sure.

 

Chip Griffin: Your five reasons were, one, you don’t have a business plan. Two, you can’t break free from client work. Three, you’re operating in chaos. Four, freaking technology. Who can keep up? I love that one. That was a good one. Then, finally, something that’s also near and dear to my heart, not understanding the whole measurement thing with measurement in quotation marks. I think you’re spot on all five of these. Frankly, at least three of these had been problems for me in various businesses that I’ve had over the years probably partly because, number three, operating in chaos. Having multiple companies at once is probably not the world’s best idea. It’s entertaining so I do it.

 

  Obviously, you share my concern that PR folks are not paying enough attention to the business side. Why is that and what can we do about it?

 

Gini Dietrich: It’s funny we’re having this conversation right now because I just had a conversation with an entrepreneur. I sit on her board. We had our monthly board meeting chat. Her market is PR professionals. She said, “I’m really struggling with why PR professionals, as a whole, not all of them, but as a whole aren’t getting the service that we provide.” I said, “It’s because I think traditionally communications professionals don’t have P&L responsibility.” Unless you work yourself up to one of five agency heads in a large agency or you’re chief of corporate communications inside an organization, you typically don’t have P&L responsibility. You certainly don’t run a business unless you’re someone like you are me who’ve gone out on their own.

 

  I think I would venture to guess, I don’t know, more than half of PR professionals never have had any business experience. We certainly don’t have business education. One of my favorite questions to ask PR professionals when I speak is how many of you went into PR because you hate math? 99% of the room raises their hand. I think we’re missing the business acumen that you need just as an industry to really get it and I think that’s part of d problem.

 

Chip Griffin: If you don’t have business acumen, how do you get it?

 

Gini Dietrich: Well, there’s one way and it’s to go build your own business because you get it really fast, really fast.

 

Chip Griffin: I have a friend of mine who went to … He got an MBA from Harvard. I have often said to him that I got an MBA but I got to make money while I was doing it as opposed to just paying it to someone else.

 

Gini Dietrich: You might have lost some money. I certainly had an expensive education. I’ve made money and lost money. It’s definitely been an expensive education.

 

Chip Griffin: No doubt about it. When you have your own business, you make mistakes and you find out very quickly that those mistakes go right to the pocketbook. There are very few people start out as an entrepreneur. When you’re out on your own with a PR agency, you are an entrepreneur. I think that’s part of the problem is that even once someone starts their own agency or as a solo PR, they don’t have in their mind that they’re an entrepreneur. They just think that they’re providing PR services because they love doing that. You’re starting a business. It’s no different than going out and opening up a Subway franchise, or a landscaping service, or whatever it is that you’re doing. You’re starting a business.

 

Gini Dietrich: You’re starting a business. Yeah. I think that’s exactly right. Your skill is PR but you have to do HR, and you have to do financials, and you have to work with the bank. You have to do new business development, which aka sales which PR professionals shy away from. You are literally having to do everything. I don’t think it’s the case for just PR professionals. I think every entrepreneur at some point has to learn different skills because they’re strong in one area and then they have to learn the others. I think that’s the irony of being an entrepreneur is you start a business to do what you love doing and you end up doing none of that anymore.

 

Chip Griffin: That is true. You started your list with not having a business plan. I think I’ve always been an advocate for all entrepreneurs that I talk of the importance of having a business plan, not because it’s this great biblical document that you take out and adhere to religiously, but because of the process you go through to create it. It requires you to think through your business. What you’re doing? Who you’re targeting? What are realistic revenue goals? What is it really going to cost you? You’re going to get most of it wrong. Six months later that plan will change substantially. Nevertheless, it gives you something to work off of and it’s gotten your thought process moving in the right direction.

 

Gini Dietrich: It gets your thought process moving in the right direction. It also helps you think through why am I here? What’s my purpose? Once you think through that, then you can communicate it to a team, assuming you have a team or you want to build a team. If they don’t have a bigger purpose to work everyday, you’re turnover is going to be high, and there’s not going to be really any reason for them to come to work. I think it helps with that as well.

 

Chip Griffin: You’ve touched on something there with the team aspect, and it’s not one of the things that you explicitly mention here in your top five reasons, but deciding when to have a team, in other words, going from one to two because almost everybody starts with a single person PR agency. Very few are fortunate enough to have the resources out of the gate to have a whole team. At some point, you have to decide to hire that first employee. At some point, you have to make decisions on when to expand your team and just, importantly, when to contract it. In almost every agency that I’ve ever been affiliated with, including my own has had to contract at one point or another. It’s just the nature of professional services business. You grow to meet the need but when the need isn’t there, what are you going to do?

 

Gini Dietrich: Right. You do have to scale back. It’s the nature of any service business, I think: consultants accountants, lawyers, whatever it happens to be. Same lines with the business plan. I will not call anybody out by name. Every client that I worked that owns a PR agency does not have a cash flow projection or know where their money is going. They’ll say things like, “Well, I have money in the bank.” It doesn’t quite count. That’s one of the things I really work with my clients on is let’s figure out how much money is coming and how much money is going out, to your point, so that you can figure out when you can hire or when you need to contract. Are you making money? What is your profit margin? Those kinds of things most PR professionals just look at you like you’re crazy when you ask.

 

Chip Griffin: Look. They’re never easy decisions, right? Anytime-

 

Gini Dietrich: No, never.

 

Chip Griffin: I’ve always argued that your first employee is the hardest because, at that point, you are no longer responsible just for putting food on your own table. You’re taking some responsibility for someone else. You’ve got the psychological barrier. Obviously, there’s all sorts of paperwork that comes into play once you decide to actually hire an employee. It’s amazing how many folks I’ve dealt with going from a one person to a two person company that they don’t realize all of the paperwork that comes with that as well as the restrictions, right?

 

Gini Dietrich: Mm-hmm (affirmative).

 

Chip Griffin: A lot of us, if we have a one person business, you can restructure your benefits so that it’s really beneficial, if you will, to you from a tax perspective. Once you start adding employees, they have to get something similar. Do you really want to do that? Probably not.

 

Gini Dietrich: Probably not because it’s really expensive.

 

Chip Griffin: It’s probably not scalable. There are all of these things to think about. At the same time, as you say, everybody is always focusing on their client work. They’re not thinking about these issues necessarily, right?

 

Gini Dietrich: Well, yeah. I’m sure you’ve had the same experience. You’re stuck doing the work. I guess stuck is not the right word because many of us like to do the work. You do the work. You do the work. You do the work. All of a sudden, you look up and you go, “My gosh, I just lost this client because they merged with another company. Now, 50% of my business is gone and I don’t have anything in the pipeline because I’ve been doing the work instead of working on new business.” It’s that kind of stuff that is really detrimental and really could be the end of your business if you don’t pay attention to that kind of stuff.

 

Chip Griffin: I think one of the number one rules for consultants is that whenever you’re the busiest with client work is when you need to double down on your selling because it’s when you’re most likely to lose sight of it. You need to, A, capitalize on the momentum and, B, mitigate against the risk when some of that business inevitably goes away because it does.

 

Gini Dietrich: It does go away, yes.

 

Chip Griffin: As you and I have talked about before, you never have a client who’s with you for two decades or very rarely. At some point, someone is going to move on for whatever reason, business changes, client personnel changes. You just get sick of the work. Whatever it is. Things change.

 

Gini Dietrich: Your business model may change. They may merge or get bought up. There’s lots of reasons that a client would go away.

 

Chip Griffin: Of course, if things are changing day in and day out, that’s your chaos theory, right? That’s where you need to have a little bit of certainty in the process and maybe a little bit of an organizational structure even if you’re a solo … How do you overcome the chaotic nature of a professional services business particularly when you have employees because that’s where chaos really can multiply quickly?

 

Gini Dietrich: It can multiply quickly. I think part of the reason that you go out on your own and you’re an entrepreneur is because you thrive in chaos. As it turns out, most people are not like that. They like to have a process. They like to have structure. They like to be told, “This is your box. This is what I want you to do.” You really have to think about those kinds of things. For me, if I were told these are the confines in which you need to work, it would make me crazy. I learned the lesson really early on that I’m not the norm.

 

  Even if you just create a process, and this goes back to your business plan as well, that tells a client, “This is how we work and this is what you can expect at the end.” That also tells your team, “This is how we work and these are the kinds of results we expect. Because of our experience doing this, we know that if you do A, B and C, you’re going to get D.” That’s really what I’m talking about is creating that structure or the system that allows your team to be successful so that they can … Just like McDonald’s has a recipe for their special sauce and Southwest Airlines has a recipe for the way that their flight attendants engage with customers. You have to have your recipe that people can follow.

 

Chip Griffin: You need structure around your clients, too. Clients will eat you alive if you don’t give them some sort of structure and set expectations. I’m a big believer in having regular meetings with clients either in person or by phone even when you think you don’t need them because it allows you to channel their requests, and it allows you to make sure that you’re communicating all the things that you’re doing. So often these days where people can do things virtually, you don’t necessarily see all the work that’s being put in behind the scenes to get the end result. Those meetings give you the opportunity to share some of those details. I think the biggest value is channeling their requests so instead of having 400 emails everyday from them with little things, if you can somehow get them into some sort of halfway structure, you’ll be a lot more sane and happy.

 

Gini Dietrich: Yeah, even just some sort of project management system like Basecamp or Asana where you can get them all into one place. I think them seeing the behind the scenes, seeing how the hot dogs are made is good for them. I think PR is seen still as the black box or the magical pill that nobody really knows how it works. When it works, boy, it works really well.

 

Chip Griffin: Look, my experience over the years in consulting has been that the clients who end up being the worst usually are so because I screwed up something early on. Not screwed up necessarily in a bad way, but I didn’t provide the right structure. We always try to over deliver when you have a new client. You have to be careful about that, too, because then they come to expect that. “You did this last month for X dollars. Why are you telling me now I have to pay more? That doesn’t make any sense to me.” They don’t understand the concept of I was just trying to over deliver to make you happy to start and that kind of thing. You’re essentially driving down your own rates if you over deliver. If you respond super fast simply because you didn’t have a busy day, they then start to expect that. Then what happens when you have other clients who wants things? You really need to be thinking … I think about client management from day one and setting appropriate expectations even to the point where …

 

  Nowadays with clients, I will sometimes deliberately sit on something that I could turn around right away simply so that you established the right process going forward. If they think they own you 24/7, you’re dead. You’re dead.

 

Gini Dietrich: That’s actually a really good point and is something that I’ve coached my team on. In the last year, we’ve really been cognizant about it but it is. Don’t answer clients at 8 o’clock at night. Don’t answer clients on the weekend. I know it may not be a big deal. Obviously if there’s crisis or something that has to be, yes. If it’s just a, “Hey, can you remind me what time our meeting is on Tuesday?” It’s Saturday at 8 PM. You don’t need to respond to that right away because you’re right. They do come to expect it. Then when you don’t do it because, heaven forbid, you’re out with your friends on a Saturday night, it becomes an issue.

 

Chip Griffin: When you have your own business, you’re not allowed to have friends. It’s all about work.

 

Gini Dietrich: Well, I’m talking about my team.

 

Chip Griffin: Well, you’re hiring the wrong people then. I only hire people without friends. I don’t want them to be distracted.

 

Gini Dietrich: That’s funny. The interview questions: how many friends do you have? Zero? Okay, you’re hired.

 

Chip Griffin: Well, yeah. If they come in with friends, they probably don’t have them for very long once they’ve been working for me. No, no. That’s not true. Anyone listening, I’m a great person to work for. I have some job openings right now so please do apply for them.

 

  You touched also on technology. Technology has changed so much in the 20 years that I have been in business for myself doing consulting amongst other things. When I first started out, I had a pager that a client could use to reach me in the event of an emergency. I had this giant brick of a cellphone that I remember clipping on my belt next to the two-way pager that I had there. I have found both in boxes within the last year or so. I looked at them and I’m like, “How the hell did I walk around with these things on my belt all the time and not have everybody just laughing at me?” It was because everybody did it. That cellphone, it’s bigger than my home phone here that sits on my next. It was giant.

 

  Technology has evolved to the point where back then, you were much more tethered, right? If I had to deal with a client issue, I had to be somewhere where I could be near a computer that could dial up to a modem, or something like that, or lug around a giant laptop with me even if I’m going to the beach or something just in case. Now, with smartphones, in some ways, it’s liberating because you can do almost anything you want from wherever you want. At the same time, clients know you can do almost anything at anywhere you are. Balancing those two … On the one hand, I feel free. I feel like I can go somewhere on the weekend and not feel like I’m chained to my desk. At the same time, you’re still chained to the client just in a different way, if you allow yourself to be.

 

Gini Dietrich: If you allow yourself to be. I’m not saying, and I don’t think you are either, that you should never do after hours. I knew that this was going to change when I was in Colorado and I was skiing. It was the week between Christmas and New Year’s. A New York Times reported called me. It was still when I had the flip phone where you could text going A, B, C, D, E, F. She called me. I saw it was a two and two number so I answered and I was literally getting on the lift. I had this conversation with her and I said to her, “Okay. Let me get some information for you and I’ll call you back.” I got off the ski lift, skied to the bottom, called her back again, got her what she needed and then kept skiing. I think there’s a nice opportunity to be able to be wherever we are doing whatever we want at the beach, or skiing, or whatever happens to be but also settings and boundaries and making sure that the expectations are clear.

 

Chip Griffin: Nowadays, it’s not just that personal technology that we have, it’s all of the tools that we have as communicators that we need to have access to whether it’s an excellent media monitoring service like CustomScoop, or Google Analytics, or Slack for communications. There’s so many tools now that we need to understand that I think it makes it hard to figure out, “Okay. If I’m running a business, which are the tools that I should be using versus which are the ones that are just nice to have, or be generally aware about?” That’s I think a struggle for anyone in business but particularly in PR.

 

Gini Dietrich: It is a struggle for anybody in business, but I think you’re right in PR because we’re supposed to be the ones who know all the ins and outs, the pros and cons of every tools. Are we supposed to be paying attention to artificially intelligent Twitter users and what’s happening there? Should we be incorporating that? Of course, live streaming videos, the big huge trend for 2016, what should we be doing there? What are the pros and cons? What are the creative ideas around using it? Microsoft is introducing holoportation. What does that mean for events, and for trade shows, and for town hall meetings with our executives? I think that’s a real struggle. Even for me who’s somebody … I love this stuff and I love being … I’m always a first adopter. I love technology but, man, it’s hard to keep up. It’s really hard to keep up.

 

Chip Griffin: I’m in the same box. Virtually a week doesn’t go by that someone doesn’t say, “Hey, what do you think about X and such?” I’m like, “To be honest, I’ve never heard of it. I’m going to go Google it right now and see what it is.” You deal with this from clients, too, right? “I think we need a Snapchat strategy.” Well, say that seven times fast. I’m like, “No, we’re not doing that because it’s not your target audience. What the hell are you going to do with it anyway?” There are all these tools out there and there’s the expectations that you’re not only aware of them, but that you’re proficient enough to use them. You have to also be able to, from both a business as well as strategic perspective, go to a client and say, “No, this is not a good fit.”

 

Gini Dietrich: Here’s why. We’ve tried it and this is what we’ve seen. You have to be able to do that.

 

Chip Griffin: It is a good fit but you’re going to have to pay more for it, right?

 

Gini Dietrich: Right, right.

 

Chip Griffin: Yes, we’re working with you to communicate on three different platforms. You want three more? Okay, there’s going to have to be a way to pay for that either by us doing less somewhere else. Again, that goes back to the business side. Again, I’ve been guilty of this many times over the years where I just add on those extra platforms and help communicate on them. Then pretty soon, you’re doing six times as much work as you originally had planned and are billing for. Then how do you get out of that whole?

 

Gini Dietrich: It’s hard. To your point earlier, you go back to the client and say, “I need more money.” They say, “You’ve been doing it … ” You’re doing it for free essentially.

 

Chip Griffin: Well, that’s where being able to show results, as you put it, the whole measurement thing can also be helpful, right? If you’re able to demonstrate the benefit of your work for the client, that can be a conversation starter for additional compensation or additional projects where you can potentially get that compensation in the future.

 

Gini Dietrich: Yes, I think we struggle among our industry as a whole. We struggle with the measurement thing for two reasons. One because we don’t fully understand it. There’s not a universal way to measure what we do, but also because clients ask for things that don’t matter like, “I want a million Facebook fans,” or, “I want 200 million impressions,” or, “I want an advertising equivalency of 20 million.” Those things that don’t matter but because that’s what they’re accustomed to getting, they keep asking for it. You have these really wide divide of if that’s what the client wants, we certainly can show it to them in that way, but we also need to educate them and bring them over to this new way, a real way showing results that isn’t advertising equivalencies and media impressions. It’s also that balance of we know that maybe this isn’t the right way, but that’s what they want so you have to do that. Also, how do you continue to educate them and show them the right things to be measuring?

 

Chip Griffin: Look, I remember back in the ’90s, one of the first internet projects I worked on, my predecessor had always reported the number of hits that a website received. Of course, probably these days nobody wouldn’t even say this anymore. Back then, once we got smart, we said, “Hits is how idiots track success.” A hit included the loading of every single image that was on the page. You could easily juice your numbers just by putting another standard graphic on your homepage, right?

 

Gini Dietrich: Right, right.

 

Chip Griffin: All of a sudden, look, instead of 10 graphics, we have 11. We got a 10% growth in traffic this month. No, you had exactly the same amount of traffic. My point is he had been reporting this up the chain. Once I inherited it, I was forced to do the same thing even though I knew that it was a garbage number.

 

  At one point, I redesigned this site in order to make it load faster because this was in the days of modems, and so speed mattered. I reduced dramatically the number of actual images that were on the page. All of a sudden, the chart that they loved to see looked horrible. They’re then saying to me, “What have you done? How did you screw this up?” You have to go through that whole explanatory thing. That goes to setting expectations early on with a client and agreeing early on what are the metrics that you’re going to use, so that you have a way of communicating to them that you’re both on the same page.

 

Gini Dietrich: I think you’re right. It goes to the business development end of it, too, which is what kind of success do you expect to see? If a client says, “Well, I expect that I’m going to get two times return on my investment,” that’s probably a really good client for us. If the client says, “I just want my name in print,” we’re probably going to walk away from that client. We want to be doing things that actually move a business forward and getting your name in print doesn’t always equate to that.

 

Chip Griffin: I still see proposals from PR pros who will put out, “I’ll get you one to two placements a month.” Seriously, that’s what you’re pitching? Some of these are relatively smart people. It boggles my mind that’s their business model that they’re pushing. I think that goes to … Everyone needs to understand what their business model is. What are they comfortable selling? What are they going to be happy selling? What can they actually deliver?

 

Gini Dietrich: Well, it’s funny you say that. I think it also goes to … If you have that process or you understand your best practices and what makes you different, then it also helps you with clients. We had a client that we just walked away from at the beginning of April because we have a very strict process, especially when you have eCommerce. The reason we have this process is because we know it works and we know we’re going to generate you revenue. If you follow our process, I know exactly how much revenue we can generate for you.

 

  I am comfortable saying to a client, “We will generate X number of dollars in these many months if you follow this process.” Well, he kept trying to muck up the process. I said to him, “I can’t guarantee the work that we’re doing if you want to do it this way.” He would say things like, “Well, I used to run corporate communications at such and such agency 20 years ago.” Things like that. I finally said, “Look. We can’t be successful if you don’t follow our process.” He said, “I guess that we’re at crossroads.” I said, “I guess we are,” and we walked away. It saved us a ton of time, and energy, and angst because without that process, we probably would have gone the full year before we realized it was a bad relationship.

 

Chip Griffin: I think that entrepreneurs in the PR space or elsewhere need to be in a position where they’re comfortable to fire. You need to be comfortable to fire a client and you need to be comfortable to fire an employee. Firing an employee is never fun, but it’s usually the best for everybody. If you let it go too long, it just becomes more painful for everybody. Fire.

 

Gini Dietrich: For everybody, you, the person, the team, everybody.

 

Chip Griffin: Now, firing a client on the other hand, I actually kind of enjoyed that.

 

Gini Dietrich: You do?

 

Chip Griffin: I do. Usually because at that point, it’s just … If I have gotten to the point where I’m firing a client, it’s gotten so bad that it’s just lancing a boil. I want it done. It’s like calling a kid out on the basepath in baseball. There’s a certain thrill in it. What can I say? I’m not a healthy individual, Gini.

 

Gini Dietrich: I love it. I love it. I love it. Usually, too, when you have problem clients like that and you’re hanging on for whatever reason, your team is looking at you like, “Why are we doing this?” Then you lose a certain amount of respect from your team, too. I think there’s a lot of different reasons to be really cognizant about these things.

 

Chip Griffin: Absolutely. The team has decided the client should be fired well before,

 

Gini Dietrich: Well before.

 

Chip Griffin: … the executive finally agrees to it. Heck, there are some clients that the employees would fire on day one probably, if they had their [druthers 00:29:28]. It’s a balance.

 

Gini Dietrich: It is a balance. Yes. The employees don’t necessarily always have access to whether or not you’re going to be able to make payroll if you fire a client.

 

Chip Griffin: Right. Make payroll, come on. On that note, I think it’s important that PR folks know if they’re going to make payroll. If they can get smarter about business, that’s a good thing. One way they can get smarter about business is by reading the Spin Sucks blog because, you guys, put lots of good content up there that’s useful from a business perspective, not just from the mechanics of PR perspective. Of course, we do so at Media Bullseye as well. Hopefully, those are some tools people can use.

 

  Gini, do you want to remind people where they can find the Spin Sucks blog? This is going to be hard.

 

Gini Dietrich: Spinsucks.com, it’s really difficult.

 

Chip Griffin: I think that pretty much any listener can achieve that and, if not, then go find a different podcast in the event. My guest today has been Gini Dietrich of Arment Dietrich and the aforementioned Spin Sucks. Thanks for joining me.

 

Gini Dietrich: Thanks for having me.

 

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About The Author

Chip Griffin is the Founder of CustomScoop. He writes and speaks frequently about data-driven public relations. You can follow him on Twitter at @ChipGriffin.

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