When Is a Cheaper Offer Actually a Better Business? — Transcript

Full transcript

1. 0:00I sell marketing to MSPs, which is
2. 0:02basically a local IT support company.
3. 0:05>> All right.
4. 0:05>> Uh we do about uh 300,000 a month in
5. 0:10recurring revenue. We'd like to be at 10
6. 0:13million annual revenue.
7. 0:15Um
8. 0:16we're right now we're built the company
9. 0:19as an agency and we had good
10. 0:22year-over-year growth until we got kind
11. 0:24of past 2 million, 2 and 1/2 million,
12. 0:27things started slowing down. More things
13. 0:29started breaking, required a lot of
14. 0:31human resources.
15. 0:33Um about a year ago, we
16. 0:36launched a lower ticket offer towards
17. 0:39emerging MSPs, IT guys that just wake up
18. 0:42one day and want to start an MSP.
19. 0:44Um we're doing their website in high
20. 0:47level, doing a high level offer for
21. 0:49them, charging about $500 a month.
22. 0:51>> All right.
23. 0:51>> That's been getting good
24. 0:54We added 60 in the first year. We're now
25. 0:56at like five a week um pretty
26. 0:58consistently.
27. 0:59>> What's the stack?
28. 1:01>> Their website is built into high level.
29. 1:03>> Let me say differently. What's what's uh
30. 1:06annual revenue retention or monthly
31. 1:07churn if you have either of those?
32. 1:09>> It's um with the agency, it's about 2.5%
33. 1:13monthly churn.
34. 1:14With the low ticket guys, it's like 1%.
35. 1:17>> Interesting.
36. 1:18>> Yeah.
37. 1:18>> Okay.
38. 1:20Okay. So, what's the decision?
39. 1:24>> Kind of like what a lot of the people
40. 1:26have asked already is like am I just
41. 1:28doing something new because I'm facing
42. 1:30friction in the agency model?
43. 1:32>> you are.
44. 1:33>> Yeah.
45. 1:33>> [laughter]
46. 1:35>> Well, so
47. 1:40What are the gross margins on the $500 a
48. 1:42month thing after you set it up?
49. 1:45>> 75%.
50. 1:46>> Huh.
51. 1:47What's the other 25 go to?
52. 1:50>> Uh we add a little bit of extras in like
53. 1:51live chat agent, uh unlimited website
54. 1:54tickets, things like that.
55. 1:58>> Could you 100x that?
56. 2:01>> I think so, yes.
57. 2:03>> How many agents do you have to How many
58. 2:04customers do you have You said you have
59. 2:06um
60. 2:06the 60? Is that what you said?
61. 2:07>> We have 60 on the low-ticket offer.
62. 2:09>> Currently. How many reps do you have to
63. 2:11service the 60?
64. 2:12>> It's done through a partner, so we pay
65. 2:14$5 uh per chat and then $35 a month base
66. 2:18fee for that.
67. 2:21>> $5 per chat. Okay, that's for the 75%
68. 2:24margin thing. Okay.
69. 2:25Um so you really just need to have a
70. 2:27sales machine to set just You just do
71. 2:29the setup and then you hand it off, more
72. 2:30or less.
73. 2:31>> Yeah, we do a little bit of onboarding,
74. 2:32but after that, yeah.
75. 2:34>> Yeah.
76. 2:35Um
77. 2:37Hmm.
78. 2:38And how do you get customers right now?
79. 2:41>> We word of mouth, Google Ads, SEO, but
80. 2:44now we just started for the first time
81. 2:46we're having success with Meta Ads.
82. 2:50>> Uh and I'm guessing a lot of the people
83. 2:51coming in are the the $500 people,
84. 2:53right?
85. 2:53>> Yeah, exactly.
86. 2:55>> Okay.
87. 2:56Well,
88. 2:59I I don't normally say this, but
89. 3:02I actually like the low-ticket thing
90. 3:03better.
91. 3:04>> Yeah.
92. 3:04>> Main reason, so this is not common. Uh
93. 3:07the fact that you have one You have
94. 3:08lower churn
95. 3:10on that and I'll bet you have higher
96. 3:11gross margins on that than you do on the
97. 3:12core service.
98. 3:13>> Yes.
99. 3:14>> And so
100. 3:16I actually do think it's a better
101. 3:16business.
102. 3:17I don't normally say that, but I think
103. 3:19just for a lot of reasons, like there's
104. 3:20a lot more of them. You have higher
105. 3:22gross margins and if we needed to just
106. 3:24say, "Cool, let's just 10x band." And
107. 3:26you go from five a week to
108. 3:27How many could you take a week max right
109. 3:29now?
110. 3:30>> Right now, I would be testing it, but I
111. 3:32think I could get to 10 and then I could
112. 3:34expand pretty quickly.
113. 3:35>> Yeah. So, I mean, even if you signed up
114. 3:37500 a year, right? Uh that's 250 a
115. 3:40month, so you're adding 3 million per
116. 3:43year
117. 3:43>> Yeah.
118. 3:44>> uh to ARR and that's a super high-value
119. 3:47enterprise value business.
120. 3:48>> Yeah.
121. 3:48>> Cuz it's sticky, right? So 1% a month is
122. 3:50like you're you're you're you're
123. 3:51retaining 9% plus. Not 90%, 85, whatever
124. 3:55percent plus annually, which is pretty
125. 3:56good. Especially with a with a with a
126. 3:58avatar that there's so many of.
127. 4:00>> Yes.
128. 4:00>> Uh which is really really outstanding.
129. 4:02It's like a prosumer avatar. Normally
130. 4:04those are really good numbers for
131. 4:05prosumers. Um and so I would yeah, I
132. 4:08would strongly consider
133. 4:09uh making the pivot. I don't normally
134. 4:11say this, but I actually think that for
135. 4:12your business it does make sense.
136. 4:14>> Thank you.
137. 4:14>> You're welcome. If you like this video
138. 4:16and you're business owner who wants to
139. 4:17break through your current revenue
140. 4:18ceiling, I distilled every lesson from
141. 4:20scaling 10 businesses past 10 million
142. 4:22and three businesses past 100 million
143. 4:24into a completely free scaling roadmap
144. 4:25that I've used to go from zero to one,
145. 4:27zero to 10, and zero to 100 plus. And so
146. 4:29you can click here and you can check it
147. 4:31out. Again, absolutely free. And since
148. 4:32you're business owner, I appreciate you
149. 4:34and enjoy.