Why This $500 Offer May Beat the Agency Model — Transcript

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1. 0:00Hi Alex, my name is Nate Friedman. I
2. 0:01sell marketing to MSPs, which is
3. 0:04basically a local IT support company.
4. 0:07>> Right.
5. 0:07>> Uh we do about uh 300,000 a month in
6. 0:12recurring revenue. We'd like to be at 10
7. 0:15million annual revenue.
8. 0:16>> Mhm.
9. 0:17>> Um
10. 0:18we're right now we're built the company
11. 0:21as an agency and we had good
12. 0:24year-over-year growth until we got kind
13. 0:26of past 2 million, 2 and 1/2 million,
14. 0:28things started slowing down. More things
15. 0:30started breaking, required a lot of
16. 0:32human resources.
17. 0:34>> Um about a year ago, we
18. 0:38launched a lower ticket offer towards
19. 0:40emerging MSPs, IT guys that just wake up
20. 0:43one day and want to start an MSP.
21. 0:46>> Mhm.
22. 0:46>> Um we're doing their website in
23. 0:48HighLevel, doing a HighLevel offer for
24. 0:50them, charging about $500 a month.
25. 0:53>> Right.
26. 0:53>> That's been getting good
27. 0:55we added 60 in the first year. We're now
28. 0:57at like five a week, um pretty
29. 0:59consistently.
30. 1:01>> What's the stick?
31. 1:03>> Their website is built into HighLevel.
32. 1:05>> Let me say differently. What's what's uh
33. 1:07annual revenue retention or monthly
34. 1:09churn if you have either of those?
35. 1:11>> It's um
36. 1:12with the agency, it's about 2.5% monthly
37. 1:15churn.
38. 1:15>> Okay.
39. 1:16>> With the low ticket guys, it's like 1%.
40. 1:19>> Interesting.
41. 1:20>> Yeah.
42. 1:20>> Okay.
43. 1:22Okay. So, what's the decision?
44. 1:25>> Kind of like what a lot of the people
45. 1:27have asked already is like am I just
46. 1:30doing something new because I'm facing
47. 1:32friction in the agency model?
48. 1:34>> [laughter]
49. 1:34>> are.
50. 1:35>> Yeah.
51. 1:37>> Well, so
52. 1:42what are the gross margins on the $500 a
53. 1:44month thing after you set it up?
54. 1:46>> 75%.
55. 1:48>> Huh.
56. 1:49What's the other 25 go to?
57. 1:51>> Uh we add a little bit of extras in like
58. 1:53live chat agent, uh unlimited website
59. 1:55tickets, things like that.
60. 2:00>> Could you 100X that?
61. 2:02>> I think so, yes.
62. 2:04>> How many agents do you have to How many
63. 2:06customers do you have You said you have
64. 2:07um
65. 2:08the 60? Is that what you said?
66. 2:09>> We have 60 on the low-ticket offering.
67. 2:11>> Currently. How many reps do you have to
68. 2:12service the 60?
69. 2:14>> It's done through a partner, so we pay
70. 2:15$5 uh per chat and then $35 a month base
71. 2:19fee for that.
72. 2:22>> $5 per chat. Okay, that's for the 75%
73. 2:26margins. Okay.
74. 2:27Um so, you really just need to have a
75. 2:29sales machine to set this You just do
76. 2:30the setup and then you hand it off, more
77. 2:32or less.
78. 2:33>> We do a little bit of onboarding, but
79. 2:34after that, yeah.
80. 2:35>> Yeah.
81. 2:36Um
82. 2:38Hmm.
83. 2:40And how do you get customers right now?
84. 2:42>> We word of mouth, Google Ads, SEO, but
85. 2:46now we just started for the first time
86. 2:47we're having success with Meta Ads.
87. 2:52>> Uh and I'm guessing a lot of the people
88. 2:53coming in are the the $500
89. 2:55>> Yeah, exactly.
90. 2:56>> Okay.
91. 2:57Well,
92. 3:01I I don't normally say this, but
93. 3:03I actually like the low-ticket thing
94. 3:05better.
95. 3:06>> Yeah.
96. 3:06>> Main reason, so this is not common. Uh
97. 3:09the fact that you have one you have
98. 3:10lower churn on that and I'll bet you
99. 3:12have higher gross margins on that than
100. 3:13you do on the core service.
101. 3:15>> Yes.
102. 3:15>> And so,
103. 3:17I actually do think it's a better
104. 3:18business. I don't normally say that, but
105. 3:20I think just for a lot of reasons like
106. 3:21there's a lot more of them. You have
107. 3:23higher gross margins and if we needed to
108. 3:25just say, "Cool, let's just 10X band."
109. 3:27And you go from five a week to
110. 3:29How many could you take a week max right
111. 3:30now?
112. 3:32>> Right now, I would be testing it, but I
113. 3:34think I could get to 10 and then I could
114. 3:35expand pretty quickly.
115. 3:37>> Yeah. So, I mean, even if you signed up
116. 3:39500 a year, right? Uh that's 250 a
117. 3:42month. So, you're adding 3 million per
118. 3:44year
119. 3:45>> Yeah.
120. 3:45>> uh to ARR and that's a super high value
121. 3:48enterprise value business.
122. 3:49>> Yeah.
123. 3:50>> Cuz it's sticky, right? So, 1% per month
124. 3:52is like you're you're you're you're
125. 3:53retaining 9% plus. Not 90%, 85,
126. 3:56whatever, percent plus annually, which
127. 3:57is pretty good. Especially with a with a
128. 3:59with a an avatar that there's so many
129. 4:01of.
130. 4:01>> Yes.
131. 4:02>> Uh which is really really outstanding.
132. 4:04It's like a prosumer avatar. No, like
133. 4:06those are really good numbers for
134. 4:07prosumers. Um and so, I would yeah, I
135. 4:09would strongly consider
136. 4:11uh making the pivot. I don't normally
137. 4:13say this, but I actually think that for
138. 4:14your business it does make sense.
139. 4:15>> If you like this video and you're a
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142. 4:19distilled every lesson from scaling 10
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147. 4:27to 10, and zero to 100 plus. And so, you
148. 4:30can click here and you can check it out.
149. 4:31Again, absolutely free. And since you're
150. 4:33a business owner, I appreciate you and
151. 4:34uh enjoy.