At the start of every quarter I hold an all-hands meeting with our team to review our results from the prior quarter, recap highlights, and share upcoming initiatives for the new quarter ahead. Below are some of the key updates from our quarter ending on September 30th, 2018. You can also find our last quarterly update here if you’re interested.
Before diving into our updates for the prior quarter, I take some time to remind our team what my vision for Growth Pilots is and what makes us unique. Here is a quick overview of what makes us tick:
Our vision is to build the agency of the future by focusing on the long-term in everything that we do. First and foremost, that means focusing on the long-term partnership between us and our team members. We are nothing without great people and we do everything we can to make sure our people are happy, healthy, and advancing in their career growth.
Next, we focus on ensuring long-term partnerships with our clients. We achieve this by working with fewer clients who are a better fit, allowing us to spend significantly more time and resources across those clients and truly acting like a partner integrated into their team.
Finally, we practice adaptability. That means we embrace the changes that happen in our industry as opposed to viewing them as a threat and remaining complacent. My hypothesis is that successful agencies in the future are going to reflect these principles in some shape or form and the current agency model is going to disappear.
Q3 At A Glance
Q3 had its ups and downs like all quarters. We were joined by a number of awesome new team members and signed two new clients that we’re very excited about. We only work with about 15 clients at a time, so we are very selective about the companies we partner with. And when we find a fit we go all in!
We did lose a long-term client as well as some team members in Q3. This is the nature of the agency business and you have to learn not to take it personally when clients and employees move on. Contrary to what most people assume, our main competition comes from in-house marketing teams, both from a revenue and talent perspective.
Our revenue is driven primarily by high word of mouth referral rates amongst clients and other people in our network (VCs, advisors, etc). We have never done any outbound sales or promotion, which we take great pride in. We evaluate quarterly revenue growth against the same quarter in the prior year.
Below is a graph of our revenue over each of the past five years during Q3. We grew revenue modestly about 6% year over year in Q3 2018 and since our very first Q3 in 2014 we have achieved a CAGR of about 43%. The reasons for our slower growth in Q3 were that that we had a very strong Q3 in 2017 (as you can see below) as well as one of our long-term clients migrating their account to in-house management.
We evaluate NPS (net promoter score) by collecting individual NPS surveys amongst each client and then weighting it according to spend for each client. Our spend-weighted NPS for Q3 2018 was 8.7. We like to use spend-weighted NPS because it is more accurately tied to revenue. We still look at absolute NPS on a per client basis and investigate any shortcomings, but we have team bonuses tied to NPS so we determined that revenue-weighting made it more fair for everyone. NPS does not fluctuate often for us and we tend to see a pretty consistent NPS between 8 and 9.
First External Leadership Hire
For the first time, we hired someone external for a leadership position.
Historically, we have promoted from within for all of our leadership roles. My stance has been that it was better to promote an internal team member who intimately knows the company, its processes, and its shortcomings and can leverage that insight into becoming an effective leader. I still believe this to be true, but I also think there are situations that call for having someone with outside perspective and unique skills that are not present internally. That is what we optimized for in our search and we were able to find it.
There are definitely challenges that come along with hiring someone in a leadership position who is unfamiliar with the DNA and culture of a company, and we have run into some of those. I’ve been learning a lot about what it takes to bring someone senior up to speed in an environment that’s as unique as Growth Pilots.
I’m happy to say that while it was challenging for the first few months, we are now in a really good place from an “integration” standpoint and we are starting to really see and feel the benefits of hiring externally for this role.
One area we identified as needing more structure in Q3 was our collective knowledge and point of view around new features and changes to the advertising platforms that we manage. While everyone on our team keeps up to date with what’s happening in our industry, we found there were disconnects in knowledge about new features/changes and their implications.
We came up with a new system in which one team member will take the initiative to write a point of view (POV) when a new feature or change is announced and then present this to the wider team and hold a discussion around it. This allows everyone to have the same information and brainstorm the opportunities that might be created by a given feature or change.
This has been very successful and we have even started publishing select POVs on our blog to help others share in the knowledge and brainstorming sessions we are having internally.
Hiring and Employee Retention
We lost some team members in Q3, which could have been predicted somewhat based on what we have observed about how long on average team members stay with us. After seeing these trends over the past few years, we changed the way we staff to allow for built-in support to alleviate the impact of an employee leaving.
Regardless of what the data says and the staffing configurations we designed, it’s always difficult to lose good team members.
I’m happy to say that we very rarely lose employees to other agencies, which is a key indicator of success to us. Our morale and culture are stronger than ever, and we spend a lot of time to understand our people and their motivations.
Our People Operations Manager, our Channel Managers, and I each personally meet with every team member at least once per quarter to get feedback and see what we can be doing better as a company. We also highly encourage our current and former team members to leave honest feedback for us via Glassdoor.
We’ve gathered a lot of actionable insight from these quarterly one-on-one meetings and Glassdoor reviews. As a reminder, we are hiring for multiple positions in both SF and LA.
Growth Pilots Alumni Network
One area that I have been thinking more about as we approach the five year mark is how many great, talented individuals we have had the opportunity to work with, but are no longer in contact because they left the company.
That’s the blessing and curse of a small company – you spend a lot of time with the people who work there but once someone leaves it can become difficult or awkward to keep in touch. We saw an opportunity to embrace what might be considered uncomfortable for some companies and took advantage of it.
We have established three alumni initiatives thus far. First, we started an alumni Slack channel to help people keep in touch. It’s been great to see team members from our past connect with our current team over Slack. Beginning this month, we’re also going to start hosting alumni events to bring together past and present team members. Finally, we have created an alumni referral bonus for previous team members who refer new team members our way.
Outside of our current team (who also enjoys a candidate referral bonus), no one is in a better position to give prospective candidates a glimpse into what it’s like working at Growth Pilots. More than 90% of our previous employees are participating in one of these three alumni initiatives which makes me very proud and speaks to the culture we have built.
End of Quarter Outing
For Q3, we kind of cheated because we repeated our same quarterly outing from Q3 2017 as it was such hit. We did a wine tasting boat tour of the San Francisco bay and watched the Blue Angels airshow during Fleet Week while we enjoyed pizza from Tony’s Slice House and mini donuts from Pier 39. This might just become a Growth Pilots tradition going forward.
Prepping for Q4
Q4 is always a busy quarter for us as advertising costs increase dramatically due to holiday seasonality and our team goes into overdrive to make sure that our clients goals continue to be met. The first two and half months of Q4 are very intense and then in the latter half of December things calm down a bit, which gives our team time to relax for the holidays with their families. We are well underway into the madness of the holiday ad frenzy and we’re looking forward to finishing year five stronger than ever.
Wishing you all a happy holidays and looking forward to sharing our Q4 update after the new year.