Alex Hormozi's SEO Advice is... — Transcript

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1. 0:00Alex Hormozi just put out a video where
2. 0:01business owners ask him how to scale
3. 0:03their service companies. And one guy, a
4. 0:06digital marketing agency owner selling
5. 0:08to small local businesses at $2,000 a
6. 0:10month, gets told something that most of
7. 0:12you watching this channel already know,
8. 0:14but you probably aren't doing yet. He
9. 0:16also talks to a $20 million website as a
10. 0:19service company about AI disruption, and
11. 0:22a chiropractor who's been stuck at $2.4
12. 0:24million for 5 years. Every single one of
13. 0:27these has a local SEO angle that he
14. 0:29doesn't fully get into. So, I'm going to
15. 0:31fill in the gaps. Let's go ahead and get
16. 0:32started.
17. 0:33>> I've scaled six brick-and-mortar gyms. I
18. 0:34did 30-plus gym turnarounds across the
19. 0:36country, and built service companies to
20. 0:38over $30 million a year. Today, our
21. 0:40portfolio at acquisition.com is over
22. 0:41$250 million annually. And so, in this
23. 0:43video, I'm answering your questions
24. 0:44about how to scale your service
25. 0:45business. And for all these questions, I
26. 0:47try to make, you know, my answers as
27. 0:49tactical as humanly possible, so that
28. 0:51you watching from home can immediately
29. 0:52use them. Enjoy.
30. 0:53>> So, that's his introduction. Uh, this is
31. 0:55the chiropractor. We don't talk about
32. 0:57too much SEO here. I thought it was
33. 0:59pretty funny when I watched this the
34. 1:00first time.
35. 1:01>> So, you separate meta ads from Google
36. 1:03Ads when you talk about ads.
37. 1:04>> Yep.
38. 1:04>> Okay, got it. Um,
39. 1:06>> We don't actually currently do Google
40. 1:07Ads, but that's where they said they
41. 1:08came from.
42. 1:10>> Heard.
43. 1:11>> [laughter]
44. 1:12>> Got it. Which I would probably see as
45. 1:13word of mouth. Like, I Googled you or
46. 1:14Googled somebody. It's probably SEO or
47. 1:16something like that. But,
48. 1:17>> Okay.
49. 1:17>> Probably SEO or something like that. I
50. 1:20think that's pretty funny. He's
51. 1:21literally hand-waving the fact that this
52. 1:23guy is getting a significant amount of
53. 1:25his
54. 1:26revenue, of his customers, from SEO. I'm
55. 1:29just kind of surprised that Hormozi
56. 1:31doesn't dial in or ask any more
57. 1:34questions about how many people that is.
58. 1:36He said it's 20%, right? So, that's
59. 1:38pretty significant. What's he doing for
60. 1:40SEO? Does he have an agency? Is he doing
61. 1:43it himself? Can he double down? I've
62. 1:45seen other content where Hormozi talks
63. 1:46about SEO. This is the most hand-wavy
64. 1:50uh, reaction to SEO I've seen from
65. 1:52Hormozi. It's pretty surprising to me,
66. 1:54if I'm honest. The or something is
67. 1:56definitely doing a lot of heavy lifting
68. 1:58there.
69. 1:59>> I sell basically complete digital
70. 2:01marketing services to service-based
71. 2:02businesses in Australia.
72. 2:03>> Hopefully you can understand this
73. 2:05gentleman is Australian. He's a agency
74. 2:07owner selling digital marketing to small
75. 2:10local businesses in Australia.
76. 2:12>> I move
77. 2:13>> SMBs?
78. 2:14>> Uh like cleaning companies, stuff like
79. 2:15that. Cleaning, yard work, and
80. 2:17>> Average revenue?
81. 2:18>> Uh average revenue per company is
82. 2:19anywhere between half a million to 2.5.
83. 2:22>> Tough.
84. 2:22>> Uh the ones I sell.
85. 2:24Uh I move to the the company's gone from
86. 2:26zero to 500k in the last four four
87. 2:28months.
88. 2:29>> It is.
89. 2:29>> I pivoted from fitness. Uh just
90. 2:31happened, so it worked out well.
91. 2:33>> Zero to 500k in four months is honestly
92. 2:36really impressive. Very solid growth.
93. 2:38That's a lot of new clients coming on
94. 2:41board uh at He's talking about $2,500
95. 2:44per client. Let's do some some quick
96. 2:46math here. 500k divided by 12. So it's
97. 2:49about 42 clients. So $500,000, that's
98. 2:52about $42,000 a month. $42,000 a month,
99. 2:55he's at $2,000 a month. So he has about
100. 2:5720 21 clients that he's landed in four
101. 3:00months. So he's getting maybe five, six
102. 3:04a month uh plus some churn. Pretty
103. 3:06pretty impressive for a new agency.
104. 3:08>> As they were all being wound down,
105. 3:10getting up people upright, I'd like to
106. 3:11ideally get to
107. 3:13eight figures.
108. 3:14Uh in terms of what's stopping me, I
109. 3:16Well, I spent the whole 28 hours here
110. 3:18going through every framework I could to
111. 3:19figure out what was wrong.
112. 3:20>> Yeah.
113. 3:21>> I just want to figure out
114. 3:22>> Can I tell you what it is?
115. 3:24>> Good. Uh I want to try to figure out
116. 3:25where would be
117. 3:26>> Funny that he just sort of keeps going.
118. 3:28Alex interrupts him and says, "Can I
119. 3:29tell you what's wrong?" And he just
120. 3:31says, "Good." and then keeps talking.
121. 3:32Kind of strange. Anyway, keep going.
122. 3:34>> Cool. And making sure I'm not involved
123. 3:36in delivery, where would be the best use
124. 3:38of my time.
125. 3:38>> tunnel suck.
126. 3:41>> Yep.
127. 3:41>> Yeah. That's what's going to happen.
128. 3:42Yeah.
129. 3:43So, you're four four months in, so
130. 3:45you're it's it's brand new.
131. 3:46>> It's very new.
132. 3:47>> And you haven't seen all the that's
133. 3:48about to happen. So,
134. 3:50what's going to happen is because you're
135. 3:51because you're servicing SMBs,
136. 3:53>> Yep.
137. 3:53>> their volatility will translate over to
138. 3:55your volatility.
139. 3:56>> Mhm.
140. 3:57>> And independent of how well you do, they
141. 3:58will start churning.
142. 4:00Um and you have probably mastered the
143. 4:02sales function, which is why you're
144. 4:03growing quickly.
145. 4:03>> Yep.
146. 4:04>> Um but you also will have like CAC will
147. 4:07never be cheaper than it is today.
148. 4:09>> That is of course customer acquisition
149. 4:10cost, how much it cost to acquire a new
150. 4:12customer.
151. 4:13>> It always go up.
152. 4:14>> Mhm.
153. 4:14>> And churn is going to start eating into
154. 4:16the business because SMBs suck.
155. 4:18And so we what's going to happen is that
156. 4:21your margins will continue to compress
157. 4:22and compress and compress and you have
158. 4:23to spend more and more. CAC will go up.
159. 4:25You'll have to hire more people because
160. 4:26of churn and that's what you're going to
161. 4:27think you're going to do in order to fix
162. 4:28the churn, but it's not. Whatever, let's
163. 4:29go to it.
164. 4:29>> Yep.
165. 4:30>> And so you're going to keep going, keep
166. 4:31going, keep going and so revenue keep
167. 4:32going up but the margin gets smaller and
168. 4:33smaller until eventually you're just
169. 4:34like I feel like I'm running a nonprofit
170. 4:36and I have to just keep selling stuff
171. 4:37and I don't even feel confident about it
172. 4:39cuz I got all these people complaining,
173. 4:40but it's really cuz they're the business
174. 4:42owners who suck and then you think maybe
175. 4:43I should take on more responsibility for
176. 4:44the business owners. I'm going to start
177. 4:45maybe doing some sort of sales motion,
178. 4:46some sort of you know, nurture motion
179. 4:48because they suck at sales. They don't
180. 4:49know how to run their business and
181. 4:50that's why they can't market with me,
182. 4:51but I'm going to do this cuz I want to
183. 4:52take a you know, responsibility this and
184. 4:54all of that is just wrong.
185. 4:55>> Yeah.
186. 4:56>> And so if you want to get 3 million
187. 4:58bucks a year, you can just do what
188. 4:59you're currently doing.
189. 5:00>> Yeah.
190. 5:01>> You'll just sell more and
191. 5:03LTV will probably be What's your price
192. 5:04point?
193. 5:05>> Uh $450 a week.
194. 5:06>> Yeah. And what Alex is saying here, a
195. 5:08lot of local businesses hit this, right?
196. 5:10They're $2,000 a month, $450 a week. Uh
197. 5:14they get a lot of complaints like oh the
198. 5:16the leads are low quality. Oh, I'm not
199. 5:18closing anyone, etc. etc. Uh that's a
200. 5:20very common thing we hear. Uh local
201. 5:22businesses often struggle with uh
202. 5:25dealing with leads that come from the
203. 5:26internet. For the most part, a new local
204. 5:28business, right? They're getting a lot
205. 5:30of business from word of mouth,
206. 5:32something like that. A call from a word
207. 5:34of mouth is very very different than a
208. 5:36call from a paid ad lead or from an SEO
209. 5:40lead. And a lot of businesses just don't
210. 5:42have the infrastructure in place to be
211. 5:44able to train their staff or even if
212. 5:46they have staff to be able to have the
213. 5:48conversations with a cold lead to
214. 5:51actually convert them into a customer. A
215. 5:53very common thing that's happened to us
216. 5:55that I've seen happen to other agencies
217. 5:57in that $2,000 price point is the churn
218. 6:01starts happening because the local
219. 6:04businesses aren't able to actually close
220. 6:06any of the leads.
221. 6:08>> Yeah.
222. 6:08>> So, you're right in the sweet spot of
223. 6:09churn. Like that is like if you like
224. 6:131,500 to 3K a month for an SMB
225. 6:16average stick is going to be 4 to 6
226. 6:17months.
227. 6:18>> Mhm.
228. 6:18>> Um and so you can back nap back of
229. 6:21napkin how many you selling a month
230. 6:22right now?
231. 6:23>> Uh I'm selling about 10 a month at the
232. 6:24moment.
233. 6:25>> Cool.
234. 6:26>> So, selling 10 a month, I mean that
235. 6:28implies he already has a pretty high
236. 6:29churn cuz if he's selling 10 a month for
237. 6:324 months, that's 40 at $2,000 a month,
238. 6:36that's more than the 500 4 500K he's at.
239. 6:39So, he already has lost close to half of
240. 6:43his client base if he's been
241. 6:44consistently selling 10 a month.
242. 6:46>> If you're selling 10 per month, right?
243. 6:49And uh you said 2K was your price point,
244. 6:52right? So, let's say that we have five
245. 6:54turns on that on average.
246. 6:5610K?
247. 6:57>> Yep.
248. 6:57>> Right? And 10 per month.
249. 6:59>> Yeah.
250. 6:59>> Right? So, you're going to get to 100K
251. 7:02ish per month.
252. 7:04Um and then you will stall.
253. 7:08And so at that point you'll either have
254. 7:09to increase units sold or increase LTV
255. 7:12and then you'll keep thinking, "Man, if
256. 7:14I could just get this to go up."
257. 7:15>> Yeah, we've seen this so many times.
258. 7:16This is very common. We've worked with
259. 7:18hundreds of local businesses and the
260. 7:20pattern is very similar to what Alex is
261. 7:22talking about. They're excited for a few
262. 7:24months, the rank map turns green, then
263. 7:27maybe the business owner's kid gets sick
264. 7:29or they have a slow month and your
265. 7:31invoice is the first easiest cost for
266. 7:34them to cut. This is why it's so common
267. 7:37to see this three to four uh
268. 7:40lifetime stick rate for this two to
269. 7:43three thousand dollars a month. We we
270. 7:45talk about this all the time. That's a
271. 7:46really tough price point to be in. It's
272. 7:49not enough money that you can actually
273. 7:51help the business owners close and help
274. 7:54them train staff or even use your own
275. 7:57sales staff or your own AI agents to
276. 8:00help them with this, but it's enough
277. 8:02that they're going to notice and not
278. 8:04just keep paying as soon as something
279. 8:06slows down or they get into a shoulder
280. 8:08month if they have a seasonal business.
281. 8:10Your invoice is going to be really
282. 8:12tempting for them to cut. Okay, this is
283. 8:13really important to keep in mind with
284. 8:15how you price yourself as a digital
285. 8:17agency owner.
286. 8:18>> Yes, this is
287. 8:18>> Um and so the only way to really make
288. 8:21SMB work is to go the opposite end is to
289. 8:23go super super cheap.
290. 8:24>> Yeah.
291. 8:25>> And then build something that costs you
292. 8:26nothing.
293. 8:27>> Nothing to deliver
294. 8:28>> Nothing to deliver.
295. 8:29>> Yeah. So it's like $400 a month or less
296. 8:32for an SMB if it's a nuisance style.
297. 8:35So I'll give you some examples. Um if
298. 8:37you were like I can get you ranked on
299. 8:39first three of the
300. 8:40>> maps
301. 8:40>> in your local area and I charge
302. 8:43400 500 dollars a month.
303. 8:46They'll do it cuz they can see it.
304. 8:47>> Yep.
305. 8:47>> And they'll pay for that. Um review
306. 8:50management um and SEO stuff. Uh they
307. 8:54will pay 300 to 400 dollars a month and
308. 8:56they will stick on that. You'll get like
309. 8:5730 to 40 month stick rates on that. Um
310. 9:00but you'll close way more sales
311. 9:01velocity. Uh so LTV's actually similar
312. 9:04to this but CAC stays super low
313. 9:05>> Yeah.
314. 9:06>> um as a result.
315. 9:07But I know you just got a fitness which
316. 9:09you probably got out cuz it was terrible
317. 9:11and hard.
318. 9:12Um
319. 9:14you might need to just go and get to
320. 9:16there and then you'll feel good about
321. 9:18things. Um like you might need to walk
322. 9:20this path rather than believe me. But
323. 9:22that's probably what that's what's going
324. 9:23to happen. So
325. 9:24>> So this is pretty much the exact
326. 9:27business model that I often talk about
327. 9:29that I suggest people do. It's almost
328. 9:31word for word, right? Rank in the maps,
329. 9:34do review management, manage the Google
330. 9:36Business Profile, uh do local SEO $300 a
331. 9:40month. This is a very doable price range
332. 9:43with AI tools. Uh this gives you a
333. 9:4530-to-40-month stick rate. We've seen
334. 9:48that. We have many clients who've been
335. 9:49with us for many, many years. And there
336. 9:52are a lot of add-ons that can happen
337. 9:55when they go above that price range. So,
338. 9:57say they want to get prepared for AI.
339. 9:59Say they want to have help actually
340. 10:01handling calls and closing. There are a
341. 10:03variety of things that you can do to go
342. 10:05above that price point, but this is a
343. 10:07very common price point. I talk about
344. 10:09this a lot in my school community. Uh
345. 10:11there's a link in the description if you
346. 10:13want to join. Uh there's over 3,000
347. 10:16people in there. And one of the early
348. 10:18things I walk through is exactly how to
349. 10:20do fulfillment for this $300-to-$500 a
350. 10:23month range product, where you're
351. 10:26basically going to help them with the
352. 10:27GBP management, the local ranking, the
353. 10:30review management. Not full-on core 30,
354. 10:33uh content-managed website, anything
355. 10:36like that, but just getting the basics
356. 10:38right, which will help local businesses
357. 10:41rank higher. This is not theory. Uh
358. 10:44I've seen this happen dozens, dozens,
359. 10:46probably hundreds of times that clients
360. 10:49will pay this. Uh your acquisition cost
361. 10:52stays low because the price point is so
362. 10:54low. You can build trust, right? And
363. 10:58eventually potentially sell them on
364. 11:00higher-end services once you establish
365. 11:02the fact that you do in fact know what
366. 11:03you're doing. And here's what he said
367. 11:05that's the key, right? They do it
368. 11:07because they can see it. And I mean,
369. 11:08that's the whole game. We're going to
370. 11:10share a rank map with our clients every
371. 11:13single month. And that rank map gets
372. 11:15greener and greener and greener. When a
373. 11:17plumber or some other SMB sees their
374. 11:20business showing up number one on Google
375. 11:22Maps and his phone is ringing, he's not
376. 11:25going to cancel three or $400 a month,
377. 11:28right? Uh it's not enough money to be
378. 11:31like something that they're going to go
379. 11:32after uh when it slows down. They're not
380. 11:35going to risk it because it's working.
381. 11:37They're seeing it happen. It's not a
382. 11:39vanity metric that, you know, you give
383. 11:41them a a monthly PDF report that shows
384. 11:43the number of impressions or, you know,
385. 11:45some meaningless thing like that. This
386. 11:47is a real metric that they're seeing.
387. 11:49How many phone calls is your work
388. 11:51generating? When this works, when you
389. 11:53can turn their rank maps to green, this
390. 11:55is where you get very long-term clients.
391. 11:58And because the entry price is
392. 12:00>> relatively low, your acquisition cost
393. 12:02can also be low. This is a slow roll,
394. 12:04right? You're not going to get to
395. 12:06uh 500k in 4 months at $400. You know,
396. 12:10maybe you could, uh but you probably
397. 12:12won't. It's a little bit more of a slow
398. 12:13roll, but the lifetime value of a
399. 12:1630-month customer at $300 a month is the
400. 12:20same as a $3,000 customer who's only
401. 12:23with you for 4 months, okay? And the
402. 12:26$400
403. 12:28customer is much less expensive in
404. 12:30acquisition cost.
405. 12:32>> Or uh do not have to walk the path in
406. 12:33the first place.
407. 12:34>> Okay.
408. 12:34>> [laughter]
409. 12:35>> Um
410. 12:36>> Get less amount of money.
411. 12:37>> So, this is like the
412. 12:38This is me just being real, like
413. 12:40marketing There's so I mean, obviously a
414. 12:41lot of marketers follow my stuff, and so
415. 12:42I get a disproportionate amount of
416. 12:43marketing agencies, and I've seen every
417. 12:44model under the sun.
418. 12:46Um
419. 12:46SMBs suck as customers. Um and so, you
420. 12:51have You have to do this one of the
421. 12:53other. You have to go up market, you
422. 12:54have to go down market. Um and you guys
423. 12:56go really cheap and it's something
424. 12:57that's super automated, uh or you do
425. 13:00truly do more of these high-ticket
426. 13:01services, but you do with a business
427. 13:02that actually knows their metrics,
428. 13:03actually has a sales process, already
429. 13:05has a proven model,
430. 13:06uh rather than all of them just like
431. 13:07wanting to change their stuff all the
432. 13:08time, not knowing what they're doing to
433. 13:11begin with cuz like they're expecting
434. 13:13you to figure out something that they
435. 13:13haven't figured out themselves. Um and
436. 13:16so, that's So, like your price either
437. 13:17goes up and you serve a higher-level
438. 13:19avatar,
439. 13:20uh or it goes down and you serve the one
440. 13:22you are now, but you make sure that your
441. 13:23delivery is always nothing.
442. 13:24>> Yeah. And again, I I I agree with what
443. 13:27Alex is saying here. Absolutely. I mean,
444. 13:28this is the line. If you are watching
445. 13:31this and you run any kind of digital
446. 13:32marketing agency, like burn this into
447. 13:34your brain. The $1,500 to $3,000 price
448. 13:37range is where agencies go to die. You
449. 13:40need to be less expensive than that and
450. 13:41fulfill almost exclusively automated
451. 13:44with AI or you need to be a lot more
452. 13:47expensive than that, high touch,
453. 13:49um, personalized service and only work
454. 13:53with businesses that are actually
455. 13:54businesses, okay? We have I've had
456. 13:57hundreds of small local clients. Uh, we
457. 14:00landed 97 plumbers in 6 months once and
458. 14:04of those 97 clients that we landed, 97
459. 14:07plumbers, I would say that the vast
460. 14:08majority of them were a business in the
461. 14:11sense they were dude with a truck. They
462. 14:13didn't know their metrics, they didn't
463. 14:15know their numbers, they weren't good at
464. 14:17answering the phone, they didn't know
465. 14:18their close rate, they didn't know their
466. 14:20pricing. They were a business, but they
467. 14:22were running their business as if it was
468. 14:23a hobby, okay? And and that type of
469. 14:26client is not going to pay you $2,000 a
470. 14:29month for years. Uh, they're just not.
471. 14:32But, if you talk to a plumber and they
472. 14:34have multiple trucks, they have a
473. 14:35receptionist, they run uh, booking
474. 14:38software, they have a calendar software
475. 14:40where everything is organized, they know
476. 14:42their numbers, they know their pricing,
477. 14:44they know how to talk to cold customers,
478. 14:46that is someone who will happily pay you
479. 14:495, 10,000 dollars a month
480. 14:51when you can demonstrate that you can
481. 14:54meaningfully bring revenue to their
482. 14:56business. So, either cheap and automated
483. 14:59or expensive and personal and high
484. 15:01touch.
485. 15:02>> Yeah. And then it becomes a CAC issue
486. 15:03because you have to offset CAC and so
487. 15:04then become big head long tail, one time
488. 15:06setup into very small recurring monthly
489. 15:08high gross margin.
490. 15:09>> I understand.
491. 15:10>> Those are the two models that work for
492. 15:11what you want to do.
493. 15:12>> So, drop low, go high.
494. 15:14And then in the middle it's just a dead
495. 15:15zone.
496. 15:15>> Where everyone dies.
497. 15:17>> Cool.
498. 15:18Makes sense. Thank you.
499. 15:18>> That's the end. Makes sense. Thank you.
500. 15:20Cool. Cool. Well, I don't know. We'll
501. 15:22have to maybe I don't know if he's
502. 15:24actually going to go and act on that or
503. 15:25not. But like I said, if you want to
504. 15:26know exactly how we fulfill that
505. 15:29low-cost offer, there's a link in the
506. 15:31description of my school community. I
507. 15:32walk through it with a real client every
508. 15:34step of the way exactly what we do,
509. 15:35exactly what we set up. It's all
510. 15:37AI-based fulfillment. If you're a
511. 15:39business owner and you want to see what
512. 15:40somebody is going to do for two, three,
513. 15:43$400 a month, you can check that out.
514. 15:44Also, you can do a lot of this yourself
515. 15:46and save that money.
516. 15:48And yeah, I mean that's that low-ticket
517. 15:51foot-in-the-door type offer
518. 15:53where you're going to have long-term
519. 15:54clients. Okay. So, this next one, let's
520. 15:57watch him. He has a website-as-a-service
521. 15:59company, which I think is very
522. 16:01interesting in the age of AI.
523. 16:02>> Do you we're WAS, so
524. 16:04website-as-a-service
525. 16:06base company. So, we build websites, do
526. 16:08digital marketing services, that kind of
527. 16:09stuff. We cater to small, medium
528. 16:11businesses, small businesses.
529. 16:13Average revenue per customer is 450
530. 16:16bucks.
531. 16:16>> Right around where Alex said the other
532. 16:18guy should be. I agree that's a solid
533. 16:20price point.
534. 16:21>> Okay. Subscription-based company.
535. 16:23>> Yeah.
536. 16:23>> And we're at yeah, we're at 20 million
537. 16:26bucks in revenue.
538. 16:28>> Notice example, right price.
539. 16:31Really small, you price it super low and
540. 16:32it works.
541. 16:33>> Go ahead.
542. 16:34>> And we want to get to 80 80 million
543. 16:36bucks in revenue in about 3 years.
544. 16:38>> Okay.
545. 16:39>> So, the question we're asking ourselves
546. 16:41is we're in an industry where AI is very
547. 16:44disruptive.
548. 16:45Every day that goes by, you know, it's
549. 16:47constantly degrading and decaying our
550. 16:48product.
551. 16:50And at the same time, we have kind of
552. 16:52this one channel
553. 16:54>> [snorts]
554. 16:54>> risk that we're living with. All of our
555. 16:56sales, 100% of our growth has been done
556. 16:59through outbound cold calling.
557. 17:01>> Love it.
558. 17:01>> Yeah.
559. 17:02>> Wow, impressive. Outbound cold calling,
560. 17:04100% of growth. I'm I'm impressed.
561. 17:06That's impressive.
562. 17:07I've said before, outbound cold calling
563. 17:09can work. I wouldn't be able to do it,
564. 17:11but
565. 17:12it can work. I've I've seen heard from
566. 17:14other people who've done it. This
567. 17:15gentleman, $20 million business built on
568. 17:18outbound cold calling.
569. 17:20>> It's great. Um
570. 17:21but again, cold calling is becoming
571. 17:23harder and harder in the industry is
572. 17:24decaying. So, we're we're constantly
573. 17:25we're trying to figure out
574. 17:26>> is decaying.
575. 17:27>> Yeah.
576. 17:28>> What do you mean by that? Churn is going
577. 17:29up?
578. 17:30>> Churn is slightly ticking up, but
579. 17:33um
580. 17:34at the end of the day, you know, AI is
581. 17:35making it easier and easier for our
582. 17:37customers to be able to build their own
583. 17:39websites.
584. 17:39>> Yeah.
585. 17:40>> Well, yeah, I know. [laughter]
586. 17:42With the type of customer we deal with,
587. 17:43they're not usually super sophisticated.
588. 17:45>> Yeah. And we do have time.
589. 17:46>> They just found out about ChatGPT. So
590. 17:49>> [laughter]
591. 17:50>> Yeah, exactly. So, we we have time, but
592. 17:53>> you guys still fax, so I think you got
593. 17:54time.
594. 17:55>> Yeah. But this is the question, right?
595. 17:56So, do we double down on on on marketing
596. 17:59and create like a an inbound channel and
597. 18:01really invest hard into that? Or do we
598. 18:04do
599. 18:05um do we try to innovate on the product
600. 18:07and figure out what else they need and
601. 18:08like build a revenue engine? Uh right
602. 18:10now, we're kind of we're doing we're
603. 18:11trying to do both, but it's obviously
604. 18:13limiting.
605. 18:14>> So, this is This is really really good.
606. 18:16I love that you asked this. So, um I
607. 18:18went on this long rant the other day
608. 18:20about this particular topic, which is
609. 18:22solving problems that don't exist.
610. 18:23>> Okay.
611. 18:25>> So, unless cuz like you have a
612. 18:27narrative, you have a story around
613. 18:30AI is decaying the business. But all I
614. 18:32hear is that you have customers and your
615. 18:34job just got way easier.
616. 18:37>> Explain.
617. 18:39>> So, you know what I mean? Like, if you
618. 18:41were like, "Our churn is escalating by
619. 18:4210% per month." I'd be like, "We have a
620. 18:44problem. We need to change something."
621. 18:46But if it's not really showing up in any
622. 18:48meaningful way in terms of the business
623. 18:50itself,
624. 18:51I think there's plenty of people who
625. 18:53will just be super laggards on this and
626. 18:55are not going to be Replit vibe coding.
627. 18:57They never bought your to begin
628. 18:58with.
629. 18:59>> Yeah.
630. 19:00>> Like the person who is super into AI
631. 19:01right now
632. 19:03wasn't hiring Waze anyways. They built
633. 19:05their own website.
634. 19:06>> Mhm.
635. 19:06>> Before AI made it quote easy.
636. 19:08Like it cuz I mean, to be fair, website
637. 19:10building software not that complicated.
638. 19:12>> No.
639. 19:12>> Right?
640. 19:13>> Yeah. I mean, I I love the way he's
641. 19:15reframing it here, right? This is
642. 19:17exactly how I've been talking about AI
643. 19:19in the local SEO space, also. AI isn't
644. 19:22killing your business. I mean, maybe it
645. 19:24will at some point, but even right now
646. 19:26today with Opus 4.7, AI is not killing
647. 19:30your business. It's helping you make
648. 19:32your delivery cheaper. The small
649. 19:34business owner who is never going to
650. 19:36build their own website before isn't
651. 19:38going to build it now because Claude
652. 19:40Opus 4.7 with Claude Code in Windows
653. 19:43PowerShell can build a website quickly
654. 19:44and easily, right? That doesn't affect
655. 19:48the person who was paying $450 a month
656. 19:51for a website when Wix has been around
657. 19:54since 2016, which is a very easy-to-use
658. 19:56graphical interface.
659. 19:59Anyone who's into tech is already had
660. 20:02their own website. Honestly, that's what
661. 20:05drove me to build the Core 30 AI agent
662. 20:07specifically around this idea. It's this
663. 20:10tool where the AI doesn't replace the
664. 20:12service, right? It replaces the labor
665. 20:14cost inside the service. Your client or
666. 20:18your business still needs someone to
667. 20:20manage their online presence, whether
668. 20:21that's you or whether that's somebody
669. 20:23running AI. They just don't need you to
670. 20:25spend 10 hours a month doing it if
671. 20:28Claude can do it quickly.
672. 20:30>> Um so, you said there's two paths. So,
673. 20:32one is
674. 20:33>> So, let's see. I'm interested to hear
675. 20:35what Alex says a good path forward is
676. 20:38for this gentleman in this case.
677. 20:40Um my guess is it's going to be pretty
678. 20:43much stick to the plan, make sure that
679. 20:46they're using AI in their own workflow.
680. 20:49>> You know, change the product around. My
681. 20:51opinion, I wouldn't That's probably
682. 20:53wouldn't be where I'm focused unless I
683. 20:55had some
684. 20:57business metric that was way off that
685. 20:59that I'm not seeing.
686. 21:01Um I would be doubling down on the
687. 21:02acquisition side. What's your LT What's
688. 21:03your number of months average stick?
689. 21:05>> Uh so, it's a 29 months.
690. 21:07>> Yeah.
691. 21:08>> Yeah.
692. 21:08>> 29-month average stick, and he hasn't
693. 21:10seen any meaningful increase in churn,
694. 21:13yet he's freaking out about how easy AI
695. 21:16makes website building. I mean, we've
696. 21:18all been there, right? Uh, I like how
697. 21:20Alex said this at the beginning, classic
698. 21:22case of trying to solve a problem that
699. 21:23doesn't exist.
700. 21:24>> Again, it's it's usually uh, yeah, it's
701. 21:2630 to 40. It's It's the the highest I've
702. 21:28seen uh,
703. 21:30uh, was 38 for this type of business.
704. 21:32So, like, you're right. You're right in
705. 21:33the in the sweet spot out there. You're
706. 21:35a little higher priced. I think they
707. 21:36were 299. Like, it all works out in the
708. 21:39same, you know, um, same thing.
709. 21:41So,
710. 21:42yeah, I think you just double down on
711. 21:44inbound, so paid ads.
712. 21:46>> Paid ads, yeah.
713. 21:47>> Yeah, and I would just see if you could
714. 21:48get them to prepay for the quarter so
715. 21:49you can offset CAC.
716. 21:50>> Mhm.
717. 21:52Okay. Um, on that subject, if you don't
718. 21:54mind, uh, in terms of prepaying for the
719. 21:55quarter, mhm, you know, again, our
720. 21:57customers are pretty price sensitive.
721. 21:59Um, there's people that are cheaper than
722. 22:01us, obviously, as you've seen before.
723. 22:03Um, my fear is the amount of churn that
724. 22:05will generate some, you know,
725. 22:06>> So, what Alex is talking about here, uh,
726. 22:08is on the first month you have costs in
727. 22:11actually building the website. In the
728. 22:12first month you also have onboarding
729. 22:14costs. You have the cost of paid ads,
730. 22:17right? So, if you're running paid ads to
731. 22:19customers, and your paid ads are good,
732. 22:21you're maybe paying, you know, 30 to
733. 22:24$100 in ads per phone call. Maybe you
734. 22:27have a 30%, 40% close rate. So, two,
735. 22:31$300 acquisition cost is pretty
736. 22:34reasonable for this type of service
737. 22:36business. So, if you're running a two or
738. 22:38$300 acquisition cost, and then you have
739. 22:40a bunch of onboarding and build-out
740. 22:42costs in the first month, you're going
741. 22:43to be cash flow negative in month one.
742. 22:45That can be quite problematic if you're
743. 22:47trying to grow quickly, and even worse
744. 22:50if your clients have a tendency to not
745. 22:52stick around after that first month. So,
746. 22:55Alex is saying, "Hey, why not charge
747. 22:57them for the first quarter up front?
748. 22:59That's going to be, you know, 11, 12,
749. 23:011,500 dollars, that will pay the ad cost
750. 23:05to acquire a customer, plus it will make
751. 23:07sure that you're profitable, cash flow
752. 23:09profitable on day one.
753. 23:10>> We we bill 90% of our customers on
754. 23:12credit cards, and we hold on to 10% that
755. 23:14pays through like pad and through checks
756. 23:17and that kind of It's all It's
757. 23:18awful, but
758. 23:19you know, we're going to experience
759. 23:21churn if we're like, "Hey, you need to
760. 23:22pay you know, pre prepay us up up
761. 23:23front." You'd still
762. 23:25>> We wouldn't churn, just close fewer, but
763. 23:27>> Um close fewer, absolutely, and I think
764. 23:29customers that are with us would leave
765. 23:31us.
766. 23:32>> Why would the people who are with you
767. 23:33leave you for how you treat new
768. 23:34customers?
769. 23:35>> Sorry?
770. 23:38People that are with us would leave us.
771. 23:39>> think you change your billing process
772. 23:41for existing customers.
773. 23:42>> Got you.
774. 23:42>> I'm saying if you're doubling down on
775. 23:43inbound,
776. 23:44what will go up is CAC, because you'll
777. 23:46have media spend in addition to the
778. 23:47sales commission. And so, to offset that
779. 23:50from a cash flow or how cash flow
780. 23:51positive are you right now?
781. 23:52>> Uh so, we did 3.6 in EBITDA last year.
782. 23:56Generated about
783. 23:57>> Interesting.
784. 23:57>> 3.6 in EBITDA on I think you said it was
785. 24:0020 million dollars. Uh that's a pretty
786. 24:02low margin for a website as a service
787. 24:05business. Yeah.
788. 24:06>> It's lowish.
789. 24:08>> It's lowish.
790. 24:08>> Yeah, I'm curious about
791. 24:10>> Hm? We're heavy on people.
792. 24:12>> Dude, AI.
793. 24:13>> [laughter]
794. 24:14>> I know.
795. 24:16>> Yeah, okay, that's so he's not using AI,
796. 24:18he's heavy on people. That's
797. 24:20Okay.
798. 24:20>> Big thing.
799. 24:21>> I know. [laughter] It's like, you're
800. 24:22worried about them doing it, you're not
801. 24:24even doing it.
802. 24:25>> Right.
803. 24:25>> Right.
804. 24:26>> Yeah.
805. 24:27>> Right.
806. 24:28>> Yeah.
807. 24:28>> So, like um okay, so this is what I
808. 24:30would actually do. I would probably
809. 24:32spend the next 6 months reorganizing the
810. 24:35workflow, probably reduce head count by
811. 24:3750% using AI workflows in order to
812. 24:40actually do the same thing, increase the
813. 24:42margin from 3.6 to like seven, um or
814. 24:45more. With the added cash flow, you
815. 24:48wouldn't have to change the price on the
816. 24:49front end. You'd be willing to go
817. 24:51negative for a quarter in the
818. 24:52acquisition knowing you're going to get
819. 24:5429 on the back.
820. 24:55>> Hm.
821. 24:56>> That's how I'd actually fix it.
822. 24:58>> [laughter]
823. 24:59>> Yeah, I think that's funny, right? Like
824. 25:01website as a service, he's coming in and
825. 25:03he's panicked that AI is going to take
826. 25:06away his business even though he hasn't
827. 25:07noticed his customers doing anything
828. 25:08differently. And then at the tail end we
829. 25:11find out that he's not using AI himself.
830. 25:14He has a huge staff. So his profit
831. 25:18margin is like 12% which is super low
832. 25:21for a website as a service especially in
833. 25:23the age of AI. And honestly, what Alex
834. 25:26said is exactly the play. And this is
835. 25:29exactly what most agency owners aren't
836. 25:31doing yet. I was talking to someone,
837. 25:33another agency owner, like last week and
838. 25:36he was talking about how high his
839. 25:38content production costs are, okay? I
840. 25:40mean, I the last time I worried about
841. 25:42content production costs was before we
842. 25:44started using chat GPT 3 and 1/2
843. 25:46regularly, which was over 3 years ago,
844. 25:49okay? So if you're worried about clients
845. 25:51using AI to replace you, but you're not
846. 25:54using AI to reduce your costs, it just
847. 25:56doesn't make any sense, right? Your
848. 25:58clients are much less likely to use AI
849. 26:02than you are. Presumably you're an
850. 26:04expert in the field and you know what
851. 26:05you're doing and you're familiar with
852. 26:06the technology and you're not using AI,
853. 26:09but you're afraid that your customers
854. 26:10will. AI is not there yet. Not yet,
855. 26:13okay? I don't know how long before it
856. 26:15is, but it's not there today, right?
857. 26:17Right now, as I'm talking, a local
858. 26:20business could not use AI to rank their
859. 26:23business on local maps and get
860. 26:25recommended by AI systems without human
861. 26:28intervention, without human expertise
862. 26:30helping to guide the AI, making sure
863. 26:33what the AI is saying makes sense, and
864. 26:35then doing those things, right? So in my
865. 26:37agency, we of course use AI generated
866. 26:40content pipelines that produce the
867. 26:42volume of pages and posts that used to
868. 26:44require full writing team. My content
869. 26:47production costs are a fraction of what
870. 26:49they were back in 2021 before GPT 3 and
871. 26:52a half. The quality is there. Uh Claude
872. 26:56Opus saw it. It can write high-quality
873. 26:59content that scores very low on any AI
874. 27:02detection system you want to throw at
875. 27:04it. You just need the right framework
876. 27:05and the right prompts uh to have Claude
877. 27:09write content that works, that ranks,
878. 27:12and sounds reads like it was written by
879. 27:15a human. And honestly, that's exactly
880. 27:17what I built the Core 30 AI agent to do.
881. 27:19It uses an eight task system to write
882. 27:21content at as high a quality as
883. 27:23possible. So, if you're an agency, if
884. 27:26you're a business owner, you're worried
885. 27:27about local SEO, the move right now is
886. 27:30to use AI to produce two or three times
887. 27:33the amount of capacity per team member
888. 27:35to get your business or your clients'
889. 27:37businesses ranked at a lower cost, at
890. 27:40fewer input resources. All right. So,
891. 27:42overall, three things to take away from
892. 27:45this video with Alex. Number one, if
893. 27:47you're selling digital marketing to SMBs
894. 27:49between $1,500 and $3,000 a month, this
895. 27:52is the dead zone. Either go cheaper and
896. 27:54use automated delivery or go upmarket
897. 27:57with sophisticated clients. Number two,
898. 27:59local SEO with map rankings and review
899. 28:01management, GBP management, $300 to $500
900. 28:05a month is the stickiest model in the
901. 28:07game. Hermosi just confirmed what I've
902. 28:09been saying for the past couple of
903. 28:10years. And number three, for right now,
904. 28:13for today, stop worrying about AI
905. 28:15replacing your clients. Stop worrying
906. 28:18about your clients using AI to replace
907. 28:20you. Start using AI to cut your delivery
908. 28:23costs in half or even lower. That's
909. 28:26where the money is right now.