Why Selling Professional Services Differs From Product-Based Sales

When Greg Alexander successfully sold his consulting firm in 2017, he thought he was headed into early retirement. After some downtime, though, Greg found himself itching for a meaningful second act. And when a mentor spoke with him about the concept of the circle of competence, a lightbulb went off for Greg.

The circle of competence says we all have areas of expertise, and that we deliver the highest value when we stay in those realms we know well. Greg realized that he knew the world of consulting better than most. While he didn’t want to start a new consulting business, he did have a passion for helping other consultants scale and exit their firms. That’s how Collective 54 was born.

At Collective 54, a membership-based organization for consulting practice founders, Greg helps leaders do the tricky work of building a service-based firm. He says the sales process is often an early stumbling block. While some founders have a sales background, selling consulting services is different from any product-based sales experience. Greg likes to say that products are sold, where consulting is bought.

Think about it like this: When you’re researching a product, you’re considering the specs, the features, the cost. You can do a side-by-side comparison of two products and come up with a pretty clear pros and cons list. With services, it’s different. Particularly in consulting, there’s that unquantifiable question of: “If I hire this team, will I enjoy working with them? Will they deliver value?” 

That’s why Greg advocates for treating every prospect like a client. He coaches Collective 54 members to start adding value right away. As a professional services provider, you have to demonstrate your depth of knowledge and client experience from your very first interaction. When you give freely from day one, eventually the prospect says, “This is very helpful. How do I engage you in a more formal way?”

Greg says another common hurdle is how to split time between selling and delivering service. For those with aspirations to grow and scale, Greg advises a split between the sales and delivery teams. It’s not possible for one group to effectively switch back and forth between the two, and quality will suffer as you scale if you try to do it all with one team.

Greg’s passion for helping consulting firms drove him to write a book as well. The Boutique is his no-nonsense, practical guide for folks leading consulting, marketing, advertising, and IT services firms—or any service-based boutique. Greg believes that the similarities between service-based agencies are greater than their differences, and his advice for scaling is just as applicable to someone in legal services as it is to a marketing founder.

At the end of the day, successful growth is about delivering value to your customers. That’s true whether you sell products or services, but the way you demonstrate and produce that value is where the difference lies.

Episode Transcript

Announcer: This is the CEO Campfire Chat with your host, Rob Ristagno. Taped in front of a live studio audience, join us to hear successful growth stories from middle-market companies, just like yours. Sponsored by the Sterling Woods Group.

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Rob Ristagno: Welcome to the CEO Campfire Chat, recorded live in front of a studio audience of leading executives. I’m your host, Rob Ristagno. And today I have the privilege of introducing you to Greg Alexander. He is the Chief Investment Officer at Capital 54, which runs Collective 54. Greg is a very successful entrepreneur. He started and sold SBI, which is a management consulting firm for over $160 million. Welcome, Greg.

Greg Alexander: Thanks Rob, good to be here.

Rob Ristagno: All right. So I’m excited about this interview. It was totally a coincidence, but I am one of Greg’s customers. His publicists reached out to our producer and they made the match, and then we’re both excited to be here together today. So thanks for making the time, Greg.

Greg Alexander: My pleasure.

Rob Ristagno: So we’re going to start this episode off like every episode with a game of five questions because CEOs are too busy for 20 questions. All right?

Greg Alexander: All right.

Rob Ristagno: So question number one, tell us the difference between Capital 54 and Collective 54.

Greg Alexander: Yeah, it’s very simple. Capital 54 owns Collective 54. So Capital 54 is my family office. So that’s my investment vehicle upon which I make decisions and investments. And Collective 54 is one of the portfolio companies. And just briefly, that’s a membership organization that serves founders of boutique professional services firms.

Rob Ristagno: Excellent. And tell us your vision for Collective 54.

Greg Alexander: So my vision is this, there’s 1.5 million professional services firms in the United States. And only a little over 4,100 of them have reached scale; scale defined as more than 250 employees. That’s one quarter of 1%. So if you talk to the other 99% and you ask them, what do they want to do? They tell you they want to scale their firms and someday they want to sell it. And there’s a deep desire there, but yet, so few people do it. I was lucky I was one of those people. So that’s the problem I’m trying to solve. And if founders are able to solve that problem, they reach all their dreams professionally, financially. So that’s the vision. That’s the problem I’m trying to solve.

Rob Ristagno: All right. What a promise there. And number three, who is your ideal member for Collective 54?

Greg Alexander: Yeah, so ideal member is a founder or group of founders in a professional services firm. So what does that mean? Someone in industry code 54: consultants, marketing agencies, design firms, anyone who markets and sells their expertise on some version of the billable hour. Typically U.S. based, although surprisingly in today’s digital world, we’re getting members from all over the world. Size wise, probably let’s just say, I don’t know, 25 to 250 employees, et cetera. But really they have to have a burning desire to do one of three things, either have to really want to grow their firms. And what that means to us is smaller firms, and younger firms, in particular, want to grow large enough to fund their lifestyle. So there’s got to be a burning desire to do that.

Greg Alexander: The second group of ideal customer, remember, is sometimes people wake up and they say, “I want more than a lifestyle business. I want to scale beyond myself.” So that’s an ideal client for us. And then third is sometimes people have been doing this for a long time and they want to do something else and they want to figure out how to sell their firm and selling a professional services firm is a hard nuanced thing. But if that’s something of interest, that’s an ideal member for us as well.

Rob Ristagno: Excellent. Question number four. What is your favorite part of running Collective 54?

Greg Alexander: The members. I get a chance to meet, I literally feel like it’s my tribe. I mean, I was one of you, before I started Collective 54, I ran a consulting company for 11 years, started, scaled it, and sold it. And they’re my peeps. And I just love hanging with them.

Rob Ristagno: All right. And last question here, question number five. What is the one thing that has got to make or break the next year for you?

Greg Alexander: That’s a great question. I would say the execution of my team and their ability to execute, so we built what I think a great team that’s running the firm and as long as they’re happy, they’re engaged, I like what they’re doing. They’re serving the members, then we’ll do great. But like everybody else, the labor market’s tight and if we lose a few key people, then we got a problem. So hopefully that doesn’t happen.

Rob Ristagno: Hopefully not. Well, all right. Thanks Greg. Hope that gives everyone a good feel for where he’s coming from and where he is going. And very clear. I always like very clear identification of your ideal member and the value that you’re going to add to them. But the purpose of today’s discussion here is to go deep on this topic of how selling services is very different than selling products. And I imagine a lot of your members have that complaint when they first join. They either have never done sales before or they’ve sold products and they feel like their business development efforts aren’t quite working out. So what’s one of the rookie mistakes you see over and over again with people who are trying to sell services?

Greg Alexander: Boy, that’s a big topic and there’s a lot, but the first one that maybe we can put an umbrella around this and then dive from there is services are not sold, they’re bought. Products are sold. So for example, if I’m a customer and I’m considering buying a product, I’m buying the features of the product, the tangible benefit of the product. For example, I’m looking at your microphone right now, and I want one, that’s a product, I’m going to buy that product. And I might never even talk to a salesperson. And even if I do talk to a salesperson, it’s not part of my evaluation criteria. What’s part of my evaluation criteria is the quality of the product. So I can separate people from the product. Services on other hand, just the opposite. So I can’t separate the person from the service because the person is the service, they’re going to deliver me the service.

Greg Alexander: So if you try to sell me yourself, I’m going to not respond well to that. If you allow me to buy and you facilitate a purchasing decision as opposed to selling me, then I’m able to do that. And there’s a whole different set of criteria. For example, Rob, let’s say I was going to hire you. Well, first question I would say to myself is how long is this project going to be? And let’s say, you say 90 days, and I’m going to say to myself, do I want Rob in my life for 90 days? Do I like him? Literally, I’m going to ask that question because we’re now going to go on a journey together where we’re going to engage multiple times a week next three months.

Greg Alexander: So I’m going to ask a question like that. I’m going to ask another question. Am I important to Rob, or am I one of 300 clients and I’m barely going to get his attention? Another question that’s going to happen in my mind. And as you can see, the way that I’m making the purchase decision is so different than the way that I would make a purchase decision when buying a product. So that’s the big thing, is that services are not sold. They’re bought.

Rob Ristagno: And maybe thinking about the funnel itself, where do you think some of the biggest differences are? Is it in the awareness? Is it in the lead gen? Is it in the nurturing? You talked a little bit about how it’s different in the conversion or decision point. Where’s it most different along the funnel?

Greg Alexander: The biggest difference is in the demo. So it’s not in the awareness to lead gen, the appointment setting, or even the closing process. It’s in between when you begin your sales campaign and the close that the point where you’re demonstrating the product, because when you’re selling an intangible service, how do you make the intangible tangible? How do you give the customer an opportunity to taste their service a little bit before they commit to it? And with a product you get a product demo and you try it out, you test drive a car, do you like it? Do you like the sound system, the steering wheel, the sunroof? That’s the demo. So how do you demo a service? So that’s the single biggest difference.

Rob Ristagno: And just from your experience, either at SBI or here at Collective 54, what are some examples of ways to give a taste to a prospect?

Greg Alexander: So you got to demonstrate two things. You got to demonstrate your depth of knowledge, and you have to demonstrate the client experience. So how do you demonstrate depth of knowledge? Well, you publish and give away your expertise freely, and that’s the way you demonstrate it. So how do you do that? You write books, articles, podcasts, things like we’re doing today. And people learn about what you know, if you keep that hidden and you don’t let anybody know that you’re not demonstrating how much you know, so how do you separate yourself from everybody else? That’s number one.

Greg Alexander: Number two is a client experience. And the way that I always approach that with SBI is I just start working. I view a prospect when I’m engaged with them, as they’re already a client. And I just start providing value instantaneously, I start helping and solve their problems. And I don’t even ask for any money. And what ends up happening is they say, “Boy, this is really helpful. Hey, Greg, how do I engage you and your firm in a more formal way?” So just literally just start solving problems and just start being helpful right away. Treat a prospect as if they’re a client and more often than not, they’ll become one.

Rob Ristagno: Excellent. So show not, tell, approach.

Greg Alexander: Exactly. Yes.

Rob Ristagno: Because I’ve seen a lot of consulting websites that have a lot of jargon and mumbo jumbo  and where’s the proof?

Greg Alexander: Yeah, exactly.

Rob Ristagno: One other pain point that I’m sure you hear a lot is this classic conundrum between when I’m delivering work, I’m not selling and when I’m selling, I’m not delivering. I’m sure you’ve a million times, but what’s the antidote to that?

Greg Alexander: Well, it depends on what your aspirations are. So we like to say that firms have a life cycle. It’s about 15 years cradle to grave three phases, five years each grow, scale, and exit. So in the growth stage, you don’t need to separate sales and delivery. You can probably sell and deliver enough work to satisfy your growth needs. If you decide one day you want to go beyond a lifestyle business, which is a big decision. And by the way, people think lifestyle business is a negative term. It’s not, who doesn’t want a great lifestyle? I mean, there’s nothing wrong with a lifestyle business. It’s just, what are your personal aspirations? Well, if you want a scale, that means scaling beyond yourself. So other people have to do what you do as well, if not better than do it. And there, delivery and sales has to be split.

Greg Alexander: Otherwise it’s a fill the lake, drain the lake, fill the lake, drain the lake, fill the lake, drain the lake. And you never scale. You got to split those two things. So the people that sell to work are not the people that deliver the work, the people that deliver the work are not the people that sell the work. And that requires a new organization, requires an investment. Because those people that are selling the work, the non-billable assets. So your utilization rate’s going to drop. And if they don’t sell anything, that’s expensive. But you got to split those two things, otherwise you’re never really going to scale.

Rob Ristagno: And you mentioned lifestyle business there. How does one make that decision? What are some things someone should think about? Am I happy with this lifestyle business? It’s kind of going, okay. Maybe I could be doing a little better. How does a business owner think about that?

Greg Alexander: Well, it’s a very personal decision, and I wouldn’t be arrogant enough to project my definition of a good lifestyle on somebody else. It’s what is your lifestyle? So I can share my personal experience. So I started my firm because I had a chip on my shoulder. I needed to answer a question for myself. And that question was, how good am I? The first stint in my career with a tech company called EMC and I got lucky, I got hired off the college campus. I went to work there in the early days and the company grew like crazy. And everybody assumed, including me, that the reason for my professional success was because of the company that I worked for. It had nothing to do with me. Now that bothered me. I’m a competitive guy, and I needed to test myself and say, how much of my success is things that I’m doing myself versus who I work for?

Greg Alexander: So I said, what’s the purest way to test that? The purest way to test that is to quit. Start your own firm with no employees, no customers, no clients, no products, no revenue, no nothing. And see if you can make a go of it. So in 2006 for my kitchen table and my boxer shorts, I launched a company called SBI. And that was my goal. That was the lifestyle I wanted to live because that intrinsic motivation is what was driving me. Now that changes over time. After about five years in it, I had answered that question and I said, okay. So my personal success is driven in part due to my personal ability. Then the next question was, well, how big can this thing get? So my ambitions expanded, and I started dreaming bigger. So it was no longer enough for me just to answer that one question.

Greg Alexander: So I went on a journey there to try to really scale it and have become a firm, not just Greg Alexander Inc, but have a firm at some point where no one even knew who Greg Alexander was. They can’t even remember the founder’s name. And through a lot of hard work and contributions from people beyond myself, we were able to do that. So much so that when I sold the firm, I didn’t have to have an earn out at all. I was able to leave because at that point I truly was irrelevant. It was about the firm. It wasn’t about me. And the thing that I’m most proud of just to put an exclamation point on this, my personal story is that after I left, the firm did better than when I was there.

Greg Alexander: And I that’s the ultimate measure of an entrepreneur. So that is what allowed me to answer that question. The firm was able to perpetuate when I wasn’t there. And you might think that that’s a hit to your ego, quite the opposite. It was a tremendous compliment that it was so sustainable. That didn’t require me. So that was my own story.

Rob Ristagno: That reminds me of some advice. If you’re growing a consulting business or professional services businesses the right way, the sequence of questions should be who is Greg Alexander? And then a few years later, it should be, get me Greg Alexander. And then it should be, get me someone like Greg Alexander. And then it should be who is Greg Alexander? So I think that’s exactly what you just described.

Greg Alexander: Yeah. I love that. And that last two is Greg Alexander has asked differently, like, who the hell is that? And why do I care? It’s like, like, why do I bother? So that’s a really good way of saying it, Rob.

Rob Ristagno: What about product companies that are thinking about getting into services, either bundling a service around their product or even just some sort of an ancillary adjacent service business. How do they have to think through this problem of selling a product versus a service?

Greg Alexander: A lot of them do it and it’s a nightmare and this problem’s been around for 100 years. So when they get into services, they get into services because they have to, if they don’t have the service, they’re not going to sell the product. So their product requires some services to get it implemented. And there’s one of two ways to handle that. They either do it themselves, or they build a ecosystem of service providers that do it for them. And for example, let’s take the software industry very all often that’s the case is a professional services group inside the firm. But that destroys valuation for that. It really hurts their enterprise value, in fact, so much so that they put a limit on it. They say they don’t want more than, I don’t know, 10 to 20% of the revenues coming from services because Wall Street will then look at them differently.

Greg Alexander: And they’ll think there are services which carries a lower multiple than a software company, which carries a higher multiple. So they’re always going to cap that. I’m a believer and know who you are and be the best at that as you can be. And if you’re a product company and a services company, you’re trying to be two things. And they’re very, very, very different businesses. And I think that’s a mistake.

Rob Ristagno: Know who you are, pick a lane and stay in it.

Greg Alexander: Yeah. Exactly right. Yeah. For example, a services company doesn’t have to write any code, so they’re not going to have an R&D department. They’re not going to have engineers on staff. It’s just not who they are. Where a product company, maybe they don’t need, I don’t know, subject matter experts and XYZ or project managers or engagement managers or what have you. It’s just a different business.

Rob Ristagno: Some people in our audience might be aspiring to do what you did and just work from their boxers in the kitchen, start their own professional services firm. But I think a common hesitation might be, how do I get those first clients? Do you mind sharing a little bit of your secret sauce and how you got those initial sources of revenue when you started SBI?

Greg Alexander: You know, I think it’s a myth. It’s not a hard as you think. Now, that’s easy for me to say because I’m looking at it backwards now, but truthfully, I’ve given this some thought, because I’ve been asked this question several times. I mean, I had my first client before I officially launched. What happens is that you have your own personal network and you go to that personal network and you say, “Here’s what I’m doing.” And people admire folks who have the courage to start their own firms and humans want to help other humans. So they find ways to get you started. And I had some friends of mine, some old colleagues of mine from my days at EMC that had moved on to other companies. And they said, “Hey Greg, I want to help you out.” And they’d give a little piece of business.

Greg Alexander: Now, I want to emphasize the word little. It wasn’t a big contract. It was low risk for them, but it’s not that difficult to get you first set of clients. I will tell you that here we are at the end of 2021, and it’s way easier now than it was back in 2006, especially since the pandemic, because we’re living in the golden era of boutiques, companies are so comfortable now doing business virtually like when I started, everybody said to me, “Where’s your office?” You had to have a physical office to prove you are credible. Now everybody’s comfortable with everybody working from home. So you don’t have to have an office. So it was just a lot easier to do that. There was no social media back then. I talked earlier about demonstrating your expertise, but all these new channels allow you to do so with much greater reach than was the case back then.

Greg Alexander: Maybe your marketing materials required video because you wanted your humanness to come out and you want to people to see, “Yes, I would want to work with Rob for the next…,” we create video these days and we’re doing it right now. I mean, it’s just so inexpensive back then you have to book time in a studio with a big editing team. It’s so much easier right now to do this and the opportunities are so great because the needs from the customer base is unbelievable. Get this at the end of 2019 a little date, but 2020 was let’s just say a unique year. There was 2 trillion dollars spent just in the United States on professional services.

Rob Ristagno: Wow.

Greg Alexander: 2 trillion dollars.

Rob Ristagno: Wow.

Greg Alexander: There’s 9 million people employed in the professional services sector. It’s the second biggest sector in the U.S. economy trailing only oil and gas. So there’s so much demand and so much money out there being spent on professional services that the risk in getting into the business is so small.

Rob Ristagno: Yeah. Seems like easier than ever before. So hopefully that’s inspiration for those listening who have been thinking about making the plunge. Tell me a little bit, now you actually used the word boutique in that response, which is a nice segue to the book you recently published, called The Boutique. Tell us a little bit about the book and what inspired you to write it and what people will learn from it?

Greg Alexander: So the story of writing the book was COVID hit and I got tired of watching Netflix and I’m like, okay, I’ve got to be productive. What can I do? What would be interesting? So I had a lot of people calling me saying, “Hey, how the heck did you do what you did?” Because we had a large exit, which was uncommon for the world that I was in. And I had all these questions. And at first I enjoyed the conversations, but after a while I was telling the same story over and over and over again. And I didn’t want to be rude. When people would say, “Hey, can I steal some time?” But after you tell a story 50 times, like my God, I’m like, so how do this at scale? So I just sat down and I wrote the book and I wrote the book for this audience.

Greg Alexander: And it was the audience of that founder or co-founder of the boutique professional services firm who’s trying to figure it out. There’s just not a lot of information out there. There’s some great books that have been around, but they’re like 30, 40 years old. I mean, and they were designed for a different era, a different style of economic activity back then, different org structure, et cetera. But then I said to myself, well, my audience they’re time starved. So are they actually going to sit down and spend three hours and read a book? I mean, today you can read a tweet in 140 characters. So I said, what’s a better way to communicate this? So at the time my wife handed me a cookbook and she said, “What are the recipes? So if a founder wants to do this and they only want lasagna, they don’t need tacos. Can you just net it out for them?”

Greg Alexander: So I’m like, “Boy, that’s an interesting idea.” So I wrote the book almost like a cookbook. There’s 50 chapters in the book. I think the longest chapter is five pages, the book is organized into three sections. So it’s not meant to be read, cover, to cover. There’s a section for grow scale and exit. So for example, if you’re interested in scale only read section two, and then within that section, there’s 15 chapters. Many of them might not apply to you. So you can read a four page chapter. And at the end of every chapter, there’s a 10 question checklist. And the question there’s only, yes, no checklist. There’s no maybe. And I say, ask yourself these 10 questions. If you answer yes to eight or more, ignore this chapter, move on to the next one. If you answer no too many times, okay, you got an issue here, circle this chapter, come back to it. And this is something you need to work on.

Greg Alexander: So it’s extremely practical. Now I will tell you that the academics out there, the people that write fancy books, they hate me because they think I’m like a crude communicator. But I didn’t write it for them. I wrote it for people that are in the trenches, trying to grow their businesses. I wrote it myself. I didn’t use a ghost writer, there some flowery language in there that might not be for everybody. So that’s the style of the book. So if you’re looking for a real practical reference manual to sit on your desk, that you can refer to when you run into problems and that’s the book for you. If you’re looking for a grand academic theory supported with 5,000 hours of empirical evidence, it’s not the book for you.

Rob Ristagno: And so The Boutique, you also have a companion podcast as well, right?

Greg Alexander: Yeah. I do. And that’s hosted by Sean McGinnis and that’s doing really well. We do that. And then of course through the Collective, we get on the call every Friday morning and discuss the chapter in the podcast and a kind of Q and A session much like this one.

Rob Ristagno: All right. Speaking of Q and A’s, let’s open it up to the audience for questions for Greg.

Brent: Yeah. I’m kind of curious as you think about what you’re doing and a lot goes into the name of the company, was there any significance to the name Collective 54?

Greg Alexander: That’s a great question. Thank you for asking. And the answer was yes. So the number 54 is the industry classification code for professional services. So that was chosen very precisely to indicate we’re focused on a single industry. And the word collective was to signal the type of business that we are. So we’re a membership business, so we don’t have customers and we don’t have clients. We have members. And the relationship we wanted with our members was a two-way street. So membership is all about give and get. So if you join Collective 54, you’re going to get a lot of value, but you also have to be willing to contribute to the collective, contribute your knowledge. So if there’s another member, a peer of yours, that has a problem that you might be able to help with, you got to be willing to roll your sleeves up and offer your advice and counsel in that situation. So that’s why the name was chosen Collective 54.

Brent: And how many members do you have now and how do you facilitate these meetings between members?

Greg Alexander: Yeah, that’s a great question. The actual member count, I’m not 100% sure because it changes every day, but it’s a few 100. It’s not quite 1,000, but it’s grown rather substantially. And I think the sales team is adding like 25 or so a month. And we started in January of 2020. And of course, March, 2020, the whole world changed. I thought we were dead on arrival. I’m like, oh my gosh, we launched a brand new business and we’re selling a discretionary item to small business owners. We’re going to be the first thing that gets cut. And just the opposite happened, which I would not have predicted, but all of a sudden, everybody said, “Hey, I’ve got to reinvent my business. Maybe this thing Collected 54 makes sense.” So I hate to say that we would’ve beneficiary of the tragedy that’s taken place in a weird kind of way. We benefited from that.

Greg Alexander: I’d love to tell you that that was my master plan, but I honestly did not see that coming. But the way that we engage, we engage in three things. So first there’s self-study, so we have a set of proprietary tools, assessments, solution, guides, templates, things that members can access just by going to the member portal. And they’re meant to save you a ton of time. So the great thing about the professional services industry is most of the problems you’re going to experience other people have experienced. So if you can shortcut your way to an answer, we created some of that stuff. So that’s number one. And that’s self-study and self-service. Number two is small group learning and each of our members get dropped into a peer group and we call it a leadership board.

Greg Alexander: It can vary in size from the smallest 10 to as large as 20. And they meet virtually once a month for 90 minutes. And the structure of those sessions is a member each month presents their business. That might sound something like this is my business. This is what I’m trying to accomplish with it. These are the obstacles standing in the way of my success. Here’s what I’ve tried. Here’s what’s worked, here’s what hasn’t worked. Has anybody else had any experience with my problems and can you help me? So that happens every month. We also have a all member hands on call every Friday morning at 10:00 Central Standard Time. And this is outside of your own individual group of 10 to 20. All of the members come on board and we’re able to have a session. We call it a Q and A session. So we engage with that.

Greg Alexander: There’s also a monthly speaker series. So the members tell us what topics are of interest. And we go and source speakers and they speak every month. And then the third component of the member experience is what we call expert instruction. And here that’s done in a variety of different ways, but the one that’s probably the most often used is our board of advisors. So we’ve been able to curate a group of true experts that have area of specialty that’s in the mission critical path for these founders of boutiques that are trying to grow scale and exit. So for example, one of our board members is a woman by the name of Aisha Armstrong and Aisha runs a company called Vecteris and her area of specialty is productizing professional services. And that allows boutique founders to generate revenue streams that don’t depend on head count, but depend on licensing intellectual property. And that’s relevant for a lot of our members. So she sits on our board and when somebody’s interested in that they have access to her. So just to recap, self-study, small group learning and expert instruction.

Brent: And do you group these people together by types of businesses or do you just group them in some other way?

Greg Alexander: So here we’ve gotten a little slick, I will say, and I give all the credit to Jeff Cleman, who’s our head of our products division. So before you join, you take an assessment and it’s a pretty detailed assessment that allows us to understand your business and your strengths and weaknesses. And since everybody takes those assessments, we’re we able to pattern match. So we put these two groups together, very deliberately based on an interesting mix of strengths and weaknesses. Because if you get on a call, everybody’s good at the same thing. It’s not very productive. You get on a call and it’s the blind leading the blind. It’s not very productive. So we try to put these groups together thoughtfully.

Greg Alexander: And the way we do that is through this assessment tool that we built, that, let’s say you and I are in the same group. Well, you might be really good at something that I need help at, but you also might have a weakness that I tend to be really good at, Brent. So by putting the groups together that way, it’s very helpful. We also do it by tier. So as I mentioned, we have three tiers grow scale and exit, and those tiers are usually put together based on the age of the firm. So the younger firms tend to be in the growth tier. Kind of mid-life cycle firms, if you will, are in that scale tier. And then the older firms that are looking to exit are in that exit tier.

Brent: That’s helpful. Thank you.

Greg Alexander: You’re welcome.

Paul: Hey Greg, I’ve got a question. So you’ve done what so many in the audience are after doing and I’d love to hear from you. What accomplishment are you most proud, I guess in what I would call your post exit life? Right. So maybe give them something to strive for beyond that exit.

Greg Alexander: Yeah. That’s a great question, Paul. And I wouldn’t tell you the thing I’m most proud of is the creation of Collective 54. And I know that sounds somewhat self promotional, but it is true. And here’s why, so when I sold my firm and retired, I was only 47 years old. And I thought that was the finishing line. So I went and traveled all over the world and played a lot of golf and ate a lot of steaks and all that. And then eventually I got bored. So then I went on a little bit of a journey of self discovery on what I was going to do with the rest of my life. So I engaged in exploring nonprofit opportunities. I had some opportunities to be a professor at a university. I had a group that wanted me to run for office.

Greg Alexander: I went on a spiritual journey to see how involved in the church I wanted to get. And I considered all these things that were outside of the business domain. Through the lens of… I’ve been so blessed, how can I give back? How can I help people? And all four of those things, religion, academia, nonprofit and government. They weren’t as fulfilling to me because I was a square peg in a round hole. And what I realized through that process is the way I can make the biggest impact is I can contribute to the founder or the entrepreneur. Because that’s my tribe. Those are my peeps. So I didn’t want to go back into the consulting business because it doesn’t for me that would’ve been one on one. Maybe I could have, I don’t know, a dozen or so clients every year I wanted to make a much bigger impact this time.

Greg Alexander: So the membership business model really lined up well for that, I can impact hundreds and hopefully someday that thousands of members through this unique structure, instead of having a client, we can have members. And by building this community we can get real scale by having peers helping peers. And then me maybe dropping in my wisdom based on my experience along the way. Hopefully over time and this is beginning to happen, but the Collective takes on a life of its own, and it’s truly this big, giant collective body of knowledge. And my contribution there is a small one and we’re on that journey right now. So that’s the thing. Collective 54 has been the thing that I’ve been most proud of after the sale.

Paul: Excellent. Thank you. How long did that journey of self discovery actually take before you really narrow down on what you wanted to do?

Greg Alexander: It was quite a while. I sold in August of 17. I funded the idea for Collective 54 and then hired the management team the end of ’19. And we launched in 2020. So what is that? Almost two years, year and a half? Yeah, two years. I went really deep at it. I had the belief that I had spent 25 years in the business world and I felt one dimensional and I knew there were other things in life and I’ve been married 25 years, but we don’t have any children. So I went on this journey to figure out these other dimensions in life and in what that might take me as I move into my 50s and beyond. So it was quite a while I will tell you, it was also very humbling.

Greg Alexander: You have this big exit and you think you’re hot shit. Then you go into these other worlds and they’re foreign worlds and you realize what these other people doing in their fields. And I just didn’t think because I was so new to them, I didn’t think I was going to be able to have that big of an impact. And at that time I had a mentor introduce me to a concept called the circle of competence and he said, “Listen, it would be a shame to walk away from 25 years of experience. Don’t walk away from that, that’s your circle of competence, figure out way to package that up and contribute that.”

Greg Alexander: And that hit me like a ton of bricks because that’s where I can have the biggest impact. There’s lots of other people in academia or healthcare or whatever, they have their 25 years of experience. So what am I going to do there? How am I going to really move the needle there? And not very much. I mean, they’re the experts, I’m not, it was quite a journey. It was a humbling experience. But in the end, it led me to this point and I’m very fulfilled right now.

Paul: I’m just curious on that journey, what was the one thing you learned about yourself that you the most, that you just didn’t really know about yourself?

Greg Alexander: I learned that I am a free market capitalist, and I believe that for-profit businesses are a force of good in this world because they create jobs. And jobs are opportunities, and it allows people to feel a sense of accomplishment and improve their lives. In the nonprofit world, I didn’t feel that as much. It was a little too bureaucratic for me and moved too slow. Government don’t even get me started. That was a whole nother thing. And it was just like, wow. And then I was really intrigued by academia because I’m a lifelong learner and that presented a unique opportunity to really do some research, but I’m not a researcher. I went to University of Massachusetts undergrad. I got an MBA from another public university, Georgia Tech. I went to a public high school in Peabody Massachusetts. I’m not an academic genius. So I figured that people at Harvard and Stanford, let’s leave the research up to them, they’ll do it better than I will. So that’s what I learned about myself is this is my circle of competence. This is where I’m supposed to be.

Audience Member: So Greg checking in from Andover, Massachusetts just curious in the professional services industry, there’re subcategories and what are the most and least common types of businesses that are members of the Collective?

Greg Alexander: This is a great question. There’s 26 sub-verticals and we study this. What they all have in common is this. They have the same business model. So they’re selling, marketing, and delivering their expertise. And you’d be surprised that the commonalities that a law firm will have with a marketing agency or an accounting firm will have with an IT shop. They’re the identical business. What’s different is the domain. So if I’m a custom software development shop, then I’m really good at QA testing in agile development. Well, if I’m a marketing agency, I’m really good at running marketing campaigns, domain is very different for sure, but the businesses are identical.

Greg Alexander: And the reason why we didn’t go to the sub-market level, those 26 sub-markets and we stayed at the code 54 is because of the remarkable commonality amongst these businesses. And what we found is, is that if you pick your head up out of your domain and you look around, you really can learn a bunch of stuff. We have so to answer your question directly, we do have some concentration. We have lots and lots of folks in IT, IT services and all of its various forms. We’ve got a lot of folks in management consulting a lot in all of its forms. We’ve got lots of people in HR, in leadership development, in organizational development, things like that.

Greg Alexander: We have lots of people, as I mentioned in marketing agencies, but we have engineers, we got graphic designers, we’ve got architects. It’s very broad and eclectic. And we’re happy about that. And we’re actually deliberate about it. When we reach out in our efforts to recruit members, we want to make sure that we have a good balance there. Now within this small group, one thing that I mentioned, if you so desire to concentrate your membership with people like you in your same domain, then we broker that for you.

Greg Alexander: All of our members are supported by what’s called a member success manager. And this person’s job is to get the members of what they want quickly and easily. We design everything for what we call the effortless experience. So let’s say, I don’t know, you’re in the marketing industry in Atlanta, and you want to know what’s going on in Silicon Valley, but you don’t compete with those folks. And you want to connect to a marketing agency in San Francisco. We’ll broker that relationship for you and arrange for a one-on-one call. And you can talk shop with somebody that’s in your industry. And that happens quite a bit, actually.

Audience Member: Excellent. Thank you.

Greg Alexander: Sure.

Audience Member: Greg, not speaking from anywhere in Massachusetts, just wondering, one of the things that you see, whether it’s a vendor or people you know who are trying to get into the professional services world often, they’re moving from having played a role in corporate America into a professional services lifestyle that they hope will be successful and what you see, you see a lot of successful ones and a lot of people who are not having success. And the thing that you find is that they’re struggling to get to yes from their perspective customers. What advice do you give? I’m sure there’s a lots of different advice, but what would be the one or two most most important pieces of advice you would give to anybody moving into that world from a traditional corporate role?

Greg Alexander: Yeah. I see this all the time. So the number one thing that I see is they’re selling vitamins instead of painkillers. So when I’m faced with that challenge with members, I tell them you’re not going after an urgent problem. So you are a professional services expert and you’re in the problem solving business. If the problem you solve is really isn’t a problem. It’s more of a nuisance, you’re going to have a lot of continuations, not a lot of advances. What’s a continuation, and what’s an advance? Continuation is lots of conversations, but no deal. An advance is a conversation leads to progress it on a sales campaign that results in the deal. It comes down to the urgency of the problem. So if I’m a prospect, the problem I need to solve, when does it need to be solved? If I don’t solve it, what is the cost of inaction?

Greg Alexander: That’s the most important thing. So very often these consultants, professional services folks, they don’t think like that. They think first about their solution. And then second about the problem. And you should flip that on it’s head. And you should think about the problem you’re going after and make sure that when you articulate the problem and communicate it to the prospect you do in such a way that the prospect makes it a priority. “Wow. If I don’t do this, I’m going to be in pain and oh, by the way, the pain’s getting worse. So the longer I delay the bigger and bigger this problem gets, I should hire Steve to solve this problem now.” That’s the advice I would give that scenario.

Audience Member: Thanks.

Audience Member: Hey, Greg, coming from, I know previously at SBI, you were selling a solution for hundreds of thousands of dollars. And now it’s obviously a lot less at Collective 54. What are the different sales approaches that you take now that you know you’re hunting rabbits and not whales?

Greg Alexander: Yeah. I mean, so the main thing is the targeting who we’re going after? So membership at Collective 54, there’s three tiers. It’s $500 a month, $750 a month or $1,000 a month. So it’s very inexpensive and it’s designed that way. This is a business architecture that’s built on the following principle, lots and lots of members, each spending a little bit, because we wanted to make it accessible to a whole wide variety of people. We didn’t want it to be free because then people we weren’t committed, but we didn’t want to price it so much that only a small number of people could participate. And the consulting business that I was in was just the opposite. We were doing seven-figure deals. So that business architecture was based on a small number of clients that spent a lot.

Greg Alexander: That’s a very, very different business. We were swinging for the fences. We were in the elephant hunting business. One or two big deals a year could make or break the year. It was a whole different ballgame. That’s the sales cycles there were much longer, the sales cycles in Collective 54 is like a day or two, like you either want to do it or not. And try it out if you. It works like a Netflix subscription, you go in your credit card and you can cancel it time. So it’s a low risk situation. So the targeting Julian is the really big difference. And that’s something that anyone who owns one of these firms, they got to figure that out. Who is the ideal client and why? What business architecture do I want? Do I want to go after these big clients and have a small number of clients or do I want to have lots and lots and lots of clients, each spending a little? That’s a really important decision to make.

Rob Ristagno: Great. So are we ready for some campfire games? You’re ready for some trivia?

Greg Alexander: Campfire games, it’s October here in Texas, but it’s still 90 degrees. So I’m ready for the games, but not the campfire.

Rob Ristagno: No, no, campfire. Okay. Fair enough. Thanks to Brent’s question. We know that the 54 in Collective 54 comes from the NAICS industry code 54 for professional services. So all these trivia questions have to do with the number 54.

Greg Alexander: Okay.

Rob Ristagno: And inspired by your book. They’re all going to be yes, no questions.

Greg Alexander: Oh, excellent. Fantastic.

Rob Ristagno: All right. So question number one. A Rubik’s Cube has 54 squares on it. So yes or no. Was Mr. Rubik, the inventor, from Russia?

Greg Alexander: No.

Rob Ristagno: Correct. Do you know where he is from?

Greg Alexander: I don’t, but the way you asked that question, I knew how to answer it.

Rob Ristagno: Okay. He’s Hungarian and it was actually originally called the Hungarian Magic Cube.

Greg Alexander: No kidding. Interesting.

Rob Ristagno: All right.

Greg Alexander: Learn something every day.

Rob Ristagno: Question number two is +54, the international direct dial code for Argentina?

Greg Alexander: Yes.

Rob Ristagno: Correct. Did I have some sort of body tell on that one too?

Greg Alexander: That one I know. No, I knew that.

Rob Ristagno: No, okay. All right. Number three is 54 the number of countries on the continent of Africa?

Greg Alexander: No.

Rob Ristagno: It is actually.

Greg Alexander: Is it?

Rob Ristagno: Yeah.

Greg Alexander: Wow. I thought there would’ve been many, many, many more. That’s a big continent to only have 54 countries. Yeah.

Rob Ristagno: Is the Roman numeral for 54, L-I-V?

Greg Alexander: Yes.

Rob Ristagno: That’s correct. All right. And the last one, I think your wife’s going to take you to trivia because I think you’re pretty good at this. Number five, is 54 the atomic number for radon?

Greg Alexander: Yes.

Rob Ristagno: No, sorry. Xenon. Xenon.

Greg Alexander: Okay. That question was so specific. I figure it had to be yes.

Rob Ristagno: Well this number 54, it comes up lots of different places. So Greg Alexander, thank you so much. Author of The Boutique. Also you can get his podcast called The Boutique by Capital 54 and of course, check out collective54.com if you’re interested in becoming a member.

Greg Alexander: Hey, thanks, Rob. It was a lot of fun, I appreciate you guys being here. Great questions and down the road, I hope I can come back.

Rob Ristagno: All right. We like that too. Thank you, Greg. Thank you everyone in the audience. Great questions today. That’ll do it for this episode of the CEO Campfire Chat, I’m Rob Ristagno. For more episodes and bonus content, be sure to visit us at ceocampfiretochat.com. See you next time around the fire.

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