Could Marketing be More Important Than Sales? Welcome to the New World.

Let’s face it. Over the past few years, the Marketing function has become more critical to the success of a staffing company than sales. This is a bold statement, I know. A staffing company is, essentially, a sales organization so how is it that marketing has become more critical to the growth plan?  Well, we’ve been hearing buzzwords like “digital transformation”, “automation”, and “social recruiting” for years now. Plus, more marketing technologies are emerging and the need to both understand and manage these platforms is becoming more important as people want to be communicated to on their terms. Throw in the pandemic accelerating all of this and now the entire selling and recruiting landscape has completely changed, not just for the staffing industry, but for all the clients as well. 

The entire sales methodology has shifted. When we look at the outbound sales function, it is a state of the art website that is being recognized by the search engines that must be aligned with the sales efforts. Remember, “sales” is outbound or push-orientated and “marketing” is inbound or rather pull-orientated.  It’s no doubt you have your salespeople making phone calls not really to get anyone on the phone that minute, but rather to leave a compelling commercial that will intrigue a hiring authority to explore the company further, most often driving them to their website.  Once that is reviewed and the value proposition is clearly communicated, then and only then will the hiring authority reach back out to the salesperson (hopefully!). A good majority of a salesperson’s activities are now social media-related tasks whether it’s direct outreach on platforms like LinkedIn or it’s keeping in front of them via a posting schedule. And should be responsible for the execution of this sales work? The marketing leader, namely the VP of Marketing or CMO. 

When we look at the recruiting function, where do I start? A marketing leader should play a huge role in the recruitment strategy in their staffing company. The marketing leader should be working with Recruiters to have a certain persona on LinkedIn and other social media platforms. Marketing should be assisting recruiters with writing job board ads to make the ads more attractive, thus acquiring a higher percentage of candidates. Marketing leaders should be working Operational leaders and IT to ensure the quality of the information in the ATS is high and work with Recruiters to more fully utilize the database for more efficient sourcing.  Most importantly, marketing leadership should be managing the marketing campaigns, including candidate engagement platforms, like Sense and Herefish, and texting programs to ensure that staffing firms are getting the utilization and conversion rates from their investments. 

I am just touching the surface here with the responsibilities of this VP of Marketing or CMO.  I have not even addressed all the senior level executive responsibilities.  Think through the sales & recruiting functions and work tasks. This marketing leader should be touching all of those responsibilities. We are even seeing our clients, who are small owner-operator businesses, hiring full-time marketing leaders to lead and manage a bulk of this work. 

Guess who is managing and advising the entire company on job boards and job board usage?  You guessed it, the CMO.  Specific to job boards, all bets are off.  First, the job board metrics are way off due to all the craziness that has been going on in the economy and the job market.  Any when I say “the job board metrics are way off”, I mean that the price keeps going up and up and up and the results continue to go down and down and down.  A staffing firm cannot solve this issue by thinking about and utilizing job boards the way job boards were utilized pre-pandemic.  The smarter staffing firms are using programmatic advertising.  And guess who on the team is figuring that all out?  Again, it’s the CMO.  

I have been blogging here about the Chief Marketing Officer.  This title is going to be different depending upon the size of your staffing organization.  It may be a Direct of Marketing or a Vice President of Marketing or a Marketing Manager.  Regardless of the title, I really believe this role has become more critical to the success of a staffing firm than the Vice President of Sales.  At the Visus Group, we help staffing firms figure out these functions and roles and responsibilities and work tasks to adequately respond to the rapidly changing world of selling and recruiting. Marketing has rapidly become a very critical function in most firms, but finding the right leader to take the helm can be a challenge. We can help. The last thing you want to do is find yourself behind the competition. If you’re thinking about this role or hiring a marketing leader, contact us.

Seven Most Common Mistakes to Avoid When Making a Staffing Firm Acquisition

With over 20,000 staffing and recruitment firms in the industry, there are always mergers and acquisitions that occur. According to Duff and Phelps research 115 staffing industry M&A transactions were completed by 96 unique buyers in 2020. This was a 20% decrease from the 143 transactions completed in 2019. Strategic buyers accounted for 85% of the staffing industry acquisitions in 2020, with private equity funds (financial buyers) investing in new platform acquisitions accounting for the other 15% of transactions.

Of the 115 transactions reported in the 2020, 44 involved companies whose predominant service offering was IT staffing and/or IT consulting. Healthcare staffing is another historically attractive sector, with 16 transactions completed in 2020.

We’re seeing that in this post-Covid era, a lot of staffing firms are in the market to acquire, but unfortunately, few do it well. Buying a small competitor or acquiring in a new market to get into that market sounds fun and sexy. The fact of the matter is that there are tons of places to make mistakes, whether it be wrong fit, not enough education of the financial indicators, or just being a novice to the valuation process.

In this short blog, I am going to outline some of the common errors I see buyers making in their attempts at acquiring a small to midsize staffing firm.

  1. Synergy & Trust: The number one thing a buyer needs to do at the onset is to establish synergy and trust with a seller. In fact, a buyer needs to actively build synergy and trust through the entire process. Why? No seller is going to sell their company to a person or group they do not trust. It is that simple. Building trust takes time and work. I see it often overlooked.
  2. Breaks in Communication: No news is bad news. Setting up weekly or bi-weekly calls to stay connected, move the process along, resolve issues, establish credibility, walk through information given and received is critical to success. When there are breaks in communication a buyer is simply communicating to a seller that they are not interested. Not good.
  3. Lack of Flexibility: No two deals are the same. No two sellers are the same. Buyers may have a preferred way in which to acquire a company, but when buyers approach the market with a “one size fits all” strategy, specifically regarding to the way they plan on structuring the payout of the acquisition, then they are just going to leave a lot of potential deals on the table. 
  4. Lawyers: I see this error often with new buyers. Namely, they utilize a lawyer that does not have staffing industry experience. Big mistake. A buyer’s legal provider is likely to have M&A council on staff, but how much experience does this council have in getting staffing acquisitions across the finish line. I have seen a lot of deals go sideways simply because the buyer’s lawyer did not have the expertise in staffing.
  5. Lack of Focus: Nail down an acquisition profile and stick to it. Yes, stick to the profile. Such a profile is going to address the issues of size, geography, staffing niche, etc. Going to the market haphazardly or “opportunistically”, as I commonly hear, is only going to set up a buyer to waste a lot of time chasing a lot of deals that are only going to get washed. Get focused and stay focused.
  6. Money: Get the money lined up and secured. To start looking for acquisitions prior to having a bank on board and money lined up is only going to delay the process of acquiring a company. It is also going to communicate red flags to a seller. Most sellers will require “proof of funds”. The point here is to get your bank on board on the front end prior to going to the market. 
  7. Not Using a Cultural Assessment: This is so effective in understanding if an acquisition is going to be a good fit. Find a tool or hire a consultant to conduct a cultural assessment on the buyer. Understand the buyer’s cultural preferences. Survey the potential acquisition using the same cultural tool. Determine if the acquisition target has cultural preferences that match the buyers. If a buyer acquires a firm where there is not a good match, post-acquisition is going to be ugly. 

Here are just seven points here where buyers make common mistakes when acquiring companies, but there are many more. I will tell you, if you want to lose a lot of money, go do an acquisition without the appropriate assistance. 

Here at the Visus Group we have 75+ staffing firms in our RoundTable program and over half of these members are actively seeking acquisitions. If you are looking to get orientated into doing acquisitions, think about our advisory services or joining a RoundTable and learning from staffing firms that have a track record of successfully getting deals done.