Marketing has come a long way, and rapidly, from the bad old days. Smart Group has not only the nous to work, but also the runs on the board to make a difference.
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William Scott is only 27. Yet he bought two businesses this year and is planning to scoop up another six. His company Smart Group turned over $19 million and is expecting to turn over $24 million in 2006-07. And to top it off that he plans to float later this year. He talks to Amanda Gome.
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Amanda Gome: Smart Group is an integrated marketing company that does advertising, PR, door-to-door sales, telemarketing – a whole host of things. You’ve got some exciting plans for this year, but you’re also going to talk to us about how you built your company using some of the very things you sell, like PR and advertising.
Can you just briefly tell us, William, how you built your business – the niche you saw in 2000 when you were setting it up, and where you got the money from to start and how it all grew?
William Scott: Well, we didn’t have any money, unfortunately, which I think is probably the best way to start any business, to build the basics anyway. When you get to a certain size you need to manage your cash flow, but my first contract was back in the dot-com days with a company called thingstodo.com.au, which as an internet advertising company selling advertising space on the web.
In those days there was a lot of money being thrown around for a lot of different concepts, and I managed to pitch for the business and win a contract with them, which was selling the advertising. They went out of money a long time ago, but the next client after that was the Herald Sun, which we did a door-to-door campaign for.
And what were you trained as?
My background’s in public relations. I also studied marketing and my business partner has an accounting and marketing degree.
Which is, yeah, very handy. But we sort of got our business plan together and we approached different companies that we were coming from a different angle.
I think in the marketing space there’s a lot of branding and sort of high-level stuff, which doesn’t necessarily return an investment for the client, so most of the stuff we wrote in the initial days and particularly now with the same philosophy.
We always put in a return on investment through, so we were driving sales as well as branding and that’s sort of been our key point of difference in the market.
So you would show the return on investment to the client at the end of the campaign?
How could you do that if, for example, you were running ads in the press? How could you show a return on investment for your client? Would you put a special phone number in there or what would you do?
We never just run an ad in the press. I think that’s old-school advertising. I think in the marketing space it’s a bit dinosaury at the moment. Particularly… we’ve come up with a strategy that we call carpet bomb.
An example: one of our clients… we’re the biggest in Australia in electricity in terms of marketing. The way we market electricity is not the traditional way where you advertise and hope people come to you, or you do PR or you just knock on a door, or you telemarket.
We use a combination of it, so we might start off for example with a PR strategy and some advertising and then we take that PR and the advertising and we turn it into a direct marketing piece, which we mail out to a targeted data base which we have because we’re a data company as well, called Smarter Data.
Then what we do is we doorknock on that customer and we say, ‘Hi, did you get my mailout?’ or ‘Did you see us in the paper? Did you see our advertisement?’. The ones that aren’t there, we leave behind a card for and then we capture the data of the people we didn’t speak to, then we outbound telemarket them. At the same time we’re doing that, we’re doing shopping centre promotions so the end customer goes, ‘Oh my god, you guys are everywhere’.
The reality is, it’s how we target. We don’t just do it at different times. We don’t do it out of a line. A lot of the clients… working with companies. If you went to a traditional advertising agency we find that most of them come up with solutions based upon lining their own pockets. Because we do all parts of the marketing mix, we come up with a campaign which gives the client the best result and we’re making money out of all the areas anyway, so it’s in our best interests to give them a good result and they keep coming back to us. It’s certainly been successful over the last seven years.
Now how have you integrated that into building your own business? What have you used at the start and how did you change your strategy as you grew?
Well in the early days it’s you and your partner going out there and knocking on the doors to get the business and getting in front of as many people as you possibly can.
When you get to a larger level you need to use other tools like… public relations I still think is one of the most infectious ways of getting business because people read, they like to read and when they read it, it becomes more believable.
I think marketing can sometimes be overdone and people sort of tune out for marketing now, so I think a good way of getting the person’s attention is to get some PR and then you market the PR. I find that’s the most effective way of building credibility and getting good results.
Right, so you for example, what sort of PR did you do and then how did you market it?
Example… well we’ve had a number of different articles over the years. I was a runner up in the Entrepreneur of the Year Awards, which was great. You meet a lot people along the way through that, and then I marketed to some of the people I’ve met through that.
I’ve been in Wealth Creator magazines over the years by writing different articles on things we’ve achieved. You do case studies. Case studies are also a good way of showing what you can do without actually selling it, because people can relate to it if it’s in the same space or similar industry. Mailing, target mailing with a follow-up telemarketing call to set appointments, is a good way to get out there.
I don’t think you want to cold-call on your own these days. I think those days are gone, but if you can come up with a marketing or a PR piece and send it out to your specific market, then following up with an appointment that is a good way of getting to the end person.
That’s interesting, because just as journalists we always prefer it if someone directly comes to us rather than through a PR company.
Not saying that PR company comes to you. I’m saying the PR company structures the market and then what you do is you use whatever piece they’ve got for you and you send it out.
I’m not advocating public relations manages your business, I’m saying the public relations you actually get, you need to use that yourself, because you guys can relate to what you’ve read. It’s on the same page.
What mistakes have you made over the years?
Probably under capitalising. We’ve been the fastest growing marketing company in Australia for the last three years, (ranked) 13, 19 and 13 in the BRW.
Yeah, well you’ve had revenue jump from $12 million to $19 million in 2005-06 and you think it will be around $24–25 million this financial year?
Yeah that’s right. In the early days we didn’t have debtor finance. So Friday would come along and you need to pay everyone for the wages. We were always profitable, but sometimes clients don’t pay on time, so you’ve constantly got that cash flow area, which is a bit of an issue. So your credit cards are always worn out.
Nowadays obviously it’s a lot different, but we probably didn’t get our debtor finance structured until a year later than we should have, so there was a year of pain and torture of getting new business and keeping it alive during that time because we grew so much.
And then who did you use and how did that come about?
I was doing a speech at, funnily enough, a Wealth Creator magazine [function] about three or four years ago, and at the end of it a guy from Ernst & Young, who now works for me, funnily enough. His name’s Brendan Shaw, he’s a very good asset to the business. He came to me and said, ‘Look, I want you to come and have chat with Ernst & Young’, which I did, and we got them to put together a finance package, if you like, for the bank.
We went and presented it formally. We got one of the partners at E&Y and we ended up structuring a very good deal with National Australia Bank, who in turn gave us a debtor finance solution that allowed us to concentrate on growth rather than managing cash flow, which is I think is a very important part of business.
We were dealing with the entrepreneurial growth market section of that business so it wasn’t like a traditional, old-school, nuts and bolts accounting firm, which is often a bit of a turn-off. So we liked what we got, and for us the end result was perfect because it allowed us to concentrate on doing what we do best, which is marketing and getting out there and servicing our clients.
So you solved your cash flow problems. What other mistakes did you make and how did you overcome them?
Hiring the wrong people. In the early days sometimes you go for the cheaper option and in key areas you’ve got to be very careful that you don’t hire the wrong person and empower them for the wrong reasons. So there’s probably a couple of staff in the early days that we put on board because we were growing so quickly we didn’t have time to interview them the right way.
And they were critical areas of our business – finance control and so forth – so you need to be very careful in who you hire. Reference check, and make sure they’re culturally aligned to your business, but also they had the skills they say they have in their resume. They say that 90% of resumes have lies in them so you need to check them out.
And who does that for you? Do you do that yourselves or do you get a recruitment company to do it?
No, we have five full-time recruiters in our business. It’s such a key part of our business.
That’s amazing. Five!
Why wouldn’t you outsource that?
Well we prefer to do it in-house and it’s cheaper as well, and the people that we actually hire on board are working in our office so we get a feel for how they work, where sometimes the outside recruitment company doesn’t fit our culture.
We’ve got our own company called Smart Jobs, which is another one of our businesses, but smartjobs.com.au is where we recruit a lot of our staff from. In the sales area you need to make sure… sometimes you’ll hire five people and you only get two good people out of it, so it’s a bit of a numbers game and you need good recruiters to do that so we’ve got… we’re in Melbourne, Sydney, Newcastle, Brisbane, Canberra, Adelaide and Perth and we’ve got five recruiters to cover those areas.
Now any other mistakes you’ve made as you were growing? Strategy – how did you change your strategy?
Well we started off like most businesses in our space, concentrating on a couple of different areas, which was doorknocking and telemarketing. That was OK and we’re certainly very good in that area. I think that the market is changing so much at the moment in our space that you need to have an integrated approach.
Anyone that’s just selling a certain area, such as public relations, on its own or advertising on its own or telemarketing on its own doesn’t understand where marketing’s going to. You need to have an integrated approach and it needs to be consistent because what you’ll find is that different people respond to different methods.
You might have one person that loves advertising and they respond to that message. Some people read it in the paper and that’s how they get their message. If you knock on the door and say hello they might… another person responds that way so it’s important that you have in whatever service area you’re in, you’re covering all parts with a mix rather than trying to sell what you think you can make money out of.
The days of selling something because you make money out of it are gone. That’s because we’re becoming a globalised world. We’re no longer competing with just our competitors in Australia.
For example we do IT, we build databases, we do SMS and video broadcasting. We come up with different e-marketing strategies now as well, and that can be done anywhere in the world so I think it’s important that the person or the company when they’re planning their company, they look at it and go, how is this going to be on a global scale?
Am I setting up my business to be second-rate or am I trying to be the best? If you’re not trying to be the best then I think you’re in the wrong business.
So what are some of the best integrated advertising campaigns, where you thought, ‘Gee, that’s smart’?
Yeah, I think the best guy in terms of marketing in the world is Richard Branson because he never just uses one way. Virgin’s very clever in how they market. They love puns and plays on words, but they always think differently.
They’re not doing the old-school, traditional style, so I think that if I was to say one company that’s done very well in our Australian economy it would definitely be Virgin. They came in particularly at a good time because Ansett was failing, but they’ve taken good market share.
They know what their market is and, from the coffee cups that they give you on the plane right down to the TV ads, to the billboards, to the mailing, to the credit cards, everything you’ve got is consistent and it’s all tied in together and they also use their cross-marketing very well. I think there’s a lot of opportunity for most companies to think about cross-marketing.
There’s a lot of businesses in the same space with the same market; for example, you might have a telco and electricity company working together, or you might have a water company and an newspaper company working together.
You need to look at what market a company has, how you can tap into them. Also loyalty I think is a huge part now in the marketing space… you need some sort of added bonus for the person at the end.
Like what, for example?
Well we’ve got our own loyalty card which we use, but everyone’s got their own different angles. We’ve got a card where you get 5% off Coles. You’ve got 35% off your cinema tickets, four cents off your petrol.
Things like that really gets the person across the line because they can relate to it. It’s also a justification of purchase. If someone’s going to buy something from you, no matter what it is, if they’ve got something else that saves them money or they get something else, sometimes a tangible is good as well. People respond well to tangibles because they can feel it or touch it.
So what are you plans going forward?
We’re in the process of… we’ve grown to a point now and my vision for the business is we’re really getting aggressive in the space. We’re buying a lot of strategic companies.
So how many have you bought in the last year?
We’ve bought two in the last year and we’ve got six at the moment which we’re negotiating with.
And what were the two you bought? What are you looking for?
We bought a PR company and we bought an advertising company. At the moment we’re looking at a whole range of scenarios, ranging from production to technology to advertising to PR in different spaces.
There’s a lot of different companies out there who have their own niche who have mastered that niche which we think will come in and integrate well. We’re preparing our business at the moment, we’d like to float at some stage so that’s obviously a lot of work, but it’s quite exciting times here.
Lot of growth and the clients are getting a good result, because we’ve got so many services we can offer them. Our solution is getting better and better by the day.
And just on the float, what’s your plan? Will you take some of that money and have a well earned rest or what?
No, I don’t think so. Unfortunately it doesn’t work that way and no, my personality is not that sort of guy that will sit down. I think I get bored pretty quickly.
How old are you?
I’m 27. I started really early.
So you started at 20.
I started when I was studying full-time at RMIT. I started a company then. So it’s been a lot of work, but it’s amazing what you can achieve if you push hard.
Surely, though, I mean you’d be working very long hours. You won’t take some of that at least and… are you planning to stay on for a long time or what are your plans?
My plans are to stay in the business and grow it. I’m interested to see how big I can get it. And I think what I’m doing is quite innovative in Australia particularly, but it’s happening around the world at the moment. What you find is a lot of consolidation in our space with certain companies joining together.
Photon Group is an example of that. There’s another one just listed called Dark Blue Sea which has done a digital marketing version. Where I see the gap in the market is that no one’s actually put together a strategic integrated solution.
Those companies have got segregation among their assets, so the solution is still tailored based upon whatever their core competency is. Ours is a little bit different to that. We’re bringing the strategy under one house and we’re allowing a solution that is not dictated by the profit. By what we think will be a better solution for the client.
So this is integrated marketing, end-to-end solution, is it?
And marketing advertising?
Marketing advertising technology, public relations, production…
What do you think the risk is going forward?
The risk going forward is that we lose our identity because you’re bringing on so many cultures into the company. I think there’s a risk that you hire the wrong staff along the way. There’s always a risk doing that so you’ve got to be careful. Certainly we think there’s a risk if you bought in a bad apple and if you spend a lot of time focusing on negatives rather than positives. But it’s the same with every business.
You mean bad apples in terms of buying an acquisition that doesn’t work or bringing in some…
We’re not looking for blue sky acquisitions. We’re not focusing on that. I’m talking about if you bring in the wrong personality from an organisation you’ve got to deal with that person or situation. It takes your focus off the positives. That’s the same with everything though.
And the six companies, you’re talking to them at the moment?
And what space are they in?
Well I can’t… it’s under confidentiality at the moment, but we have an advertising group that we think is very good for the business. We have a very good production company. We have a technology group. We have a very good PR company as well. So the companies you’ll know probably. Some of them you’ll know and some you won’t but…
And what about online? What’s happening in your space online and are you up with it, and where’s the future?
Online is evolving so websites are now changing completely. The old-school, corporate-type website is slowly dying out. An example of that would be the new McDonald’s website. If you’ve seen that one it’s pretty amazing.
Websites are turning into more mini TV portals if you like. You can put so much video content on there now as well, so web optimisation… getting your website out there is still very important. No one wants a mailbox in the middle of the desert. They’ve got to be able to find you somehow, so…
Do you see smaller companies doing their things well?
The smaller end of the market does very well in terms of networking and there’s a lot of websites now set up to sort of networking groups, getting people out there till they get to the next level so my advice to small businesses will be to use those services.
They’re a great way of meeting people and finding people who are like-minded who want to do business with the small business as well. At a large level, when they grow, they need to look at different things as well, and if you look at how they get their website out there… and you can use old school and new school methodology in order to do that.
An example being one of the most effective ones I’ve seen, funnily enough, was with a small business which was a technology group that went around fixing computers for small companies. What they did is they had stick-it notes which they gave away for free to all the businesses which go on the bottom of your computer…
Anything else? Anything that’s impressed you, web-wise?
I’m always impressed when I see companies that are small that understand how to optimise their business, an example being when a person searches on Google they need to find a website, there’s a thousand in front of them… what you find with some companies is the way they tag their website and the words they use on their front page is how Google identifies them. So if you’ve got a lot of key words which are specific to your business. If it’s not on your front page, then people can’t find you. Unless you advertise with Google or whoever else along the way.
So there’s lots of tips like that, that people just don’t know about, do they?
No they don’t, and it’s hard to find out about it and a lot of companies will try to charge you to teach you as well. The best way is to research it yourself.
It’s still a competitive advantage, being good on the web, so they don’t share it.
They don’t. And can I say the smartest people are the youngest ones coming out of university at the moment in that space. If you’re a small business and you’re trying to get your name out there, you can often find good resources at a cheap price from universities rather than paying top dollar and going to a massive business.
That’s true. We’ve just got a student in one day a week and he’s just so on top of everything and he has great suggestions and he’s so cheap.
And again if you went to a larger company you’d pay a fortune for it. So yeah, you’ve got to use your head. Look I’m not saying that… from a small business point of view definitely. At a larger level no. If you’re dealing with a major corporate they’re much better outsourcing to another corporate.