Why Mid-Priced Agency Offers Get Crushed — Transcript

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1. 0:00I sell basically complete digital
2. 0:01marketing services to service based
3. 0:03businesses in Australia. I moved
4. 0:05>> SMBs?
5. 0:06>> Uh like cleaning companies, stuff like
6. 0:07that. Cleaning, yard work, and
7. 0:09>> Average revenue for them?
8. 0:10>> revenue per company is anywhere between
9. 0:12half a million to 2.5.
10. 0:14>> Tough.
11. 0:14>> Uh they're the ones I sell.
12. 0:16Uh I pivoted the company's gone from
13. 0:18zero to 500k in the last four four
14. 0:20months.
15. 0:21>> Good.
16. 0:21>> I pivoted from fitness. Uh just
17. 0:23happened, so it worked out well. Uh so
18. 0:25they're all being wound down, getting
19. 0:27other people operate. I'd like to
20. 0:28ideally get to
21. 0:30eight figures.
22. 0:31Uh in terms of what's stopping me, I
23. 0:33Well, I spent the whole 28 hours here
24. 0:34going through every framework I could to
25. 0:36figure out what's wrong.
26. 0:37>> Yeah.
27. 0:38>> I just want to figure out
28. 0:39>> Can I tell you what it is?
29. 0:40>> Good. I also want to figure out where
30. 0:42would be Besides like getting operations
31. 0:44and moving out to other people and
32. 0:46making sure I'm not involved in
33. 0:47delivery, where would be the best use of
34. 0:49my time?
35. 0:49>> three, turn will suck.
36. 0:52>> Yep.
37. 0:52>> Yeah. That's what's going to happen.
38. 0:54>> Yep.
39. 0:54>> So, you're four four months in, so
40. 0:56you're it's it's brand new and you
41. 0:58haven't seen all the that's about
42. 0:59to happen. So,
43. 1:01what's going to happen is because you're
44. 1:02because you're servicing SMBs,
45. 1:04>> Yep.
46. 1:05>> their volatility will translate over to
47. 1:06your volatility.
48. 1:07>> Mhm.
49. 1:08>> And independent of how well you do, they
50. 1:09will start churning.
51. 1:11Um and you have probably mastered the
52. 1:13sales function, which is why you're
53. 1:14growing quickly.
54. 1:15>> Yep.
55. 1:15>> Um but you also will have like CAC will
56. 1:18never be cheaper than it is today.
57. 1:20>> Yeah. CAC will
58. 1:21>> So, CAC will always go up
59. 1:22>> Mhm.
60. 1:23>> and churn is going to start eating into
61. 1:25the business because SMBs suck.
62. 1:27And so, we What's going to happen is
63. 1:29that your margins will continue to
64. 1:30compress and compress and compress and
65. 1:31you'll have to spend more and more. CAC
66. 1:32will go up. You'll have to hire more
67. 1:34people because of churn. That's what
68. 1:35you're going to think you're going to do
69. 1:35in order to fix the churn, but it's not.
70. 1:37But, whatever, let's go to it. And so,
71. 1:38you're going to keep going, keep going,
72. 1:39keep going. And so, revenue keep going
73. 1:40up, but the margin gets smaller and
74. 1:41smaller until eventually you're just
75. 1:42like, "I feel like I'm running a
76. 1:43nonprofit and I have to just keep
77. 1:45selling stuff and I don't even feel
78. 1:46confident about it cuz I got all these
79. 1:47people complaining, but it's really cuz
80. 1:49they're the business owners who suck."
81. 1:50And then you think, "Maybe I should take
82. 1:51on more responsibility for the business
83. 1:53owners. I'm going to start maybe doing
84. 1:54some sort of sales motion, some sort of,
85. 1:55you know, nurture motion because they
86. 1:56suck at sales. They don't know how to
87. 1:57run their business, and that's why they
88. 1:58can't market with me, but I'm going to
89. 2:00do this cuz I want to take a, you know,
90. 2:01responsibility this, and all of that is
91. 2:03just wrong.
92. 2:03>> Yeah.
93. 2:04>> And so, if you want to get to 3 million
94. 2:07bucks a year, you can just do what
95. 2:08you're currently doing. You'll just sell
96. 2:09more, and
97. 2:11LTV will probably be What's your price
98. 2:12point?
99. 2:13>> Uh $450 a week.
100. 2:15>> A week, okay, so you're 2K a month, ish.
101. 2:16>> Yeah.
102. 2:17>> So, you're right in the sweet spot of
103. 2:18churn. Like that is like if you like
104. 2:211,500 to 3K a month for an SMB,
105. 2:25average stick is going to be 4 to 6
106. 2:26months.
107. 2:27>> Mhm.
108. 2:27>> Um and so, you can back na- back of
109. 2:30napkin How many are you selling a month
110. 2:31right now?
111. 2:32>> Uh I'm selling about 10 a month at the
112. 2:33moment.
113. 2:34>> Cool.
114. 2:35So,
115. 2:37if you're selling 10 per month, right?
116. 2:39And uh you said 2K was your price point,
117. 2:43right? So, let's say that we have five
118. 2:44turns on that on average.
119. 2:4710K,
120. 2:48>> Yep.
121. 2:48>> right? And 10 per month.
122. 2:49>> Yeah.
123. 2:50>> So, you're going to get to 100K, ish,
124. 2:53per month.
125. 2:55Um and then you will stop.
126. 2:58And so, at that point, you'll either
127. 3:00have to increase units sold or increase
128. 3:02LTV, and then you'll keep thinking,
129. 3:04"Man, if I could just get this to go up,
130. 3:06it'd be amazing." But, you won't be able
131. 3:07to.
132. 3:07>> Yeah, cuz it's so easy.
133. 3:08>> Um and so, the only way to really make
134. 3:10SMB work is to go the opposite end, is
135. 3:12to go super, super cheap.
136. 3:13>> Yeah.
137. 3:14>> And then build something that costs you
138. 3:15nothing.
139. 3:16>> To deliver.
140. 3:17>> Nothing to deliver.
141. 3:18>> Yeah. So, it's like $400 a month or less
142. 3:21for an SMB, if it's a nuisance style.
143. 3:24So, I'll give you some examples. Um if
144. 3:26you were like, "I can get you ranked on
145. 3:28first three of maps
146. 3:30in your local area, and I charge
147. 3:32$400, $500 a month."
148. 3:35They'll do it cuz they can see it,
149. 3:36>> Yep.
150. 3:36>> and they'll pay for that. Um review
151. 3:39management,
152. 3:40um and SEO stuff,
153. 3:42uh they will pay $300 a month, and they
154. 3:45will stick on that. You'll get like 30
155. 3:47to 40 month stick rates on that. Um but,
156. 3:50But close way more sales velocity. Uh
157. 3:52so, LTV's actually similar to this, but
158. 3:53CAC stays super low
159. 3:54>> Yeah. um as a result.
160. 3:56But I know you just got a fitness, which
161. 3:58you probably got out cuz it was terrible
162. 4:00and hard.
163. 4:01Um
164. 4:03you might need to just go and get to
165. 4:05there, and then you'll feel good about
166. 4:07things. Um
167. 4:09like you might need to walk this path
168. 4:10rather than believe me. But that's
169. 4:11probably that's what's going to happen.
170. 4:13So, what do you want to have happen?
171. 4:15>> Not walk uh to not have to walk the path
172. 4:17in the first place.
173. 4:17>> Okay.
174. 4:18>> [laughter]
175. 4:19>> Um
176. 4:20>> Get a lesson out of this.
177. 4:20>> So, this is like the this is me just
178. 4:22being real. Like
179. 4:23marketing it there's so I mean obviously
180. 4:25a lot of marketers follow my stuff, and
181. 4:26so I get a disproportionate amount of
182. 4:27marketing agencies, and I've seen every
183. 4:28model under the sun.
184. 4:29Um
185. 4:30SMBs suck as customers.
186. 4:33Um and so you have you have to do this,
187. 4:37one or the other. You have to go up
188. 4:38market, you have to go down market. Um
189. 4:40and you guys are going to be really
190. 4:41cheap, and it's something that's super
191. 4:41automated, uh or you do truly do more of
192. 4:44these high-touch services, but you do
193. 4:45with a business that actually knows
194. 4:47their metrics, actually has a sales
195. 4:48process, already has a proven model. Uh
196. 4:50rather than all of them just like
197. 4:51wanting to change their stuff all the
198. 4:52time, not knowing what they're doing to
199. 4:54begin with cuz like they're expecting
200. 4:56you to figure out something that they
201. 4:57haven't figured out themselves. Um and
202. 4:59so that's so like your price either goes
203. 5:01up, and you serve a higher-level avatar,
204. 5:04uh or it goes down, and you serve the
205. 5:06one you are now, but you make sure that
206. 5:07your delivery is almost nothing.
207. 5:08>> Yeah.
208. 5:09>> And then it becomes a CAC issue because
209. 5:10you have to offset CAC, and so then it
210. 5:11becomes big head-on tail, one-time setup
211. 5:13into very small recurring monthly high
212. 5:15gross margin.
213. 5:16>> Understood.
214. 5:16>> Those are the two models that work for
215. 5:18what you want to do.
216. 5:18>> So, I drop low, go back
217. 5:20and then the middle's just a dead zone.
218. 5:22>> Where everyone does.
219. 5:23>> Cool.
220. 5:24Makes sense. Thank you.
221. 5:25>> That's it. Yeah, cool. If you liked this
222. 5:27video and you're a business owner who
223. 5:28wants to break through your current
224. 5:28revenue ceiling, I distilled every
225. 5:30lesson from scaling 10 businesses past
226. 5:3210 million and three businesses past 100
227. 5:34million into a completely free scaling
228. 5:36road map that I've used to go from zero
229. 5:37to one, zero to 10, and zero to 100
230. 5:39plus. And so you can click here, and you
231. 5:41can check it out. Again, absolutely
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233. 5:44I appreciate you, and enjoy.