The Curse Of The Entrepreneur
You’re here because you’re cursed, but not all curses are bad.
Once you understand the predicament you’re in, you can learn how to control it – and put it to work as a strength. I will show you how to harness your power to focus on what’s most important.
You don’t have to pass on great new ideas and opportunities that come across your desk – you just need to pass on the wrong ones. This simple mental framework will give you the scorecard to make the right decisions.
Engineering Your Ideal Life
If you want a life you love – your life must be lived intentionally.
I’m going to show you how to intersect the Pareto Principle with Maslow’s Hierarchy of Needs to design your agency. Not all agencies are the same; and they shouldn’t be. What’s right for some agency owners is the opposite of right for others.
Most business owners have an idea, test that idea (sometimes), find some traction, sell a little bit and are suddenly in business. That’s a great way to build a reactionary business that doesn’t support your vision for your life. The first part of your entrepreneurial journey needs to be planning how your business fits into your ideal life and not the other way around.
Identifying What’s Most Important
There’s a good chance you’re not that great at prioritization. It’s not an inherent, intrinsic, or innate ability – it is a learned behavior.
At this point we’ve run through how to think about your 80/20 so it 1) supports your personal needs and 2) aligns with your end-goal and ideal mix.
This next exercise is going to examine all the current efforts you’re spending your time on within your business, and force you to select a finite list of only those that will have the biggest impact on getting you to your ideal day.
Building Systems of Accountability
Who’s holding you accountable? Your significant other or children? That’s not true accountability – because it’s personal.
We’re going to work together to build true accountability for you and your professional goals. It’s objective and systems based, opinion has no place here.
These systems will in turn become motivating factors that actually create an intrinsic force within you to move the right pieces on your agencies chess board.
Sound flowery? It’s not, these are techniques used by the top peak performance coaches in the world with Fortune 500 CEO’s and Olympic athletes, because they work.
You’re an entrepreneur (which puts you in a bucket of only 5% of people globally) , whether by accident or on purpose – there’s something in you that drives you to take risks in the name of big rewards.
In the U.S. alone over 50% of businesses fail within their first 4 years, and what’s more, for those that “succeed” 62% of them never make it to even 5 employees.
Why?
They’re cursed, and they don’t how to put the systems in place to convert that passion for building into building companies that scale.
You need to accept that it’s going to be harder for you as a person to focus on just what’s going to move the needle for your business, and not get caught up with shiny object syndrome.
Learning to Say No
For starters, this isn’t the point of this exercise – because as an entrepreneur i know you’ve heard this before.
I’m going to teach you how to say no, and better still, why.
It becomes much easier to ignore hamburgers when you know you have steaks at home – but this is a mindset that must be built, trained, and conditioned.
And it starts with scheduling
One of the most important mentors I’ve ever had, Dan Martell, once said to me that if I wanted true freedom in my life to spend my time how I wanted to spend it – I needed to put my calendar to work for me.
This has been life changing once actually implemented.
In general, the practice of forcing scheduling at this level will actually end up cutting down on so many of the meetings you’re having that are, in reality, unnecessary.
Did you realize
If you cut just 1 five-person meeting per day from one hour down to 30 minutes, you will gain back 10+ hours a month of production time from those resources.
Annualized, that’s over 120 hours per year… or in other terms, a full month of 40-hour work weeks.
How is this achieved with just a calendar?
A tool is only as effective as how it’s used – and 95% of agency owners don’t use their calendars the right way.
Here’s the motto that I live by:
If it’s not on my calendar, it doesn’t exist.
And everyone knows that.If I miss a call, a meeting, a dinner, drinks, visiting grandma – whatever it is; it’s because it wasn’t on my calendar.
The calendar becomes the inanimate object that is telling people when you have time – and what that time is dedicated to.
People can’t get mad at a calendar – I mean, I guess they can, but that’s not on you.
Leveraging your calendar to take control of your curse is a process – and it takes conviction, because it’s very easy to start moving things around, and not hold yourself to do what’s scheduled – and to only do what’s scheduled, if it’s scheduled.
Think about it like this
Part of the reason you’re here, in 7FA, is to get back more of your time while driving more net results from your business.
Maybe you want to get back to the gym, or you want to spent more time with your spouse, children, or friends.
You’re here to gain operational efficiency in your business – but the only way you can do that is to gain the same operational efficiency in your life; because as the business owner – they’re one and the same.
You want to “make time for the gym” – put it in the calendar.
You want to “make time for your wife” – schedule a weekly, bi-weekly, or even monthly date night, and put it in the calendar.
You want to “spend more time with your kids during the week” – schedule dropping them or picking them up at school, in your calendar. Maybe this means you leave work 3 hours early on that one day per week – but trust me, I’m going to show you how to do that without losing a minute of production within your company.
What’s Involved
There is a major shift that has to happen for you to do this, and it comes in 2 parts (but multiple steps to implement):
- Setting up a centralized, public calendar.
- Re-enforcing the calendar as the gatekeeper.
How to Implement
Step 1
Get your hands on the tool – the calendar.
It doesn’t matter which calendar you select, but you need to pick one – and only one.
If you’re like me, you have a dozen email addresses likely strewn across multiple platforms; Gmail, Google Apps for Business, a Domain with a Microsoft Exchange Server, ZohoMail, the list goes on.
You need to pick one email address that will become your master calendar – and here’s a small tip – use your agency email (that’s what I do).
When I get meeting invites send to my other email addresses (which happens daily), I move them into my master calendar. If I hit a snag (which usually is the case when working with big companies still stuck on Microsoft Exchange) I immediately reply and ask them to update the calendar invite to my central calendar email address.
This is the only calendar I look at on my laptop and phone.
Step 2
This is going to be uncomfortable – but now you need to set your calendar to be publicly viewable.
To be clear, this doesn’t mean it’s showing up in Google – but it means anyone who has the link to your calendar can view it in it’s entirety.
On most platforms (like Google Apps for Business) you’ll likely still need to turn on access for your organization and than share the calendar with other people who need access — and need is the operative word there (and not what you think).
Because everyone needs access.
This means all your partners, employees, and family members (spouse and children).
Give access to everyone, and then let them know they have access.
Make a company wide announcement letting any/all of your contractors, freelancers, or employee’s know that they now have access to your calendar.
Tell your family at dinner (and ask them which email addresses they would prefer to use), and then explain why.Example Announcement EmailThis example email template is a Microsoft Word document and can be downloaded directly from within the course members area.
Step 3
You need to build the habit for yourself – everything needs to be in your calendar.
This is relatively straight-forward when it comes to stuff during the weekday work-day, but not for “non-work stuff.”
This is critical, and will require a shift in your behavior.
Do you have happy hour drinks with friends one night? Put it in the calendar.
Are you going to a baseball game with your spouse on Saturday? Put it in the calendar.
Have a dentist appointment on Saturday? Or a haircut? What about needing to go to the grocery store? Yup, all in the calendar.
I spend a chunk of time each Sunday going over all of my personal time commitments for the upcoming week and getting them all into my calendar.
Privacy Tip
This strategy is about making intentional use of your time as the first step to focusing on what’s important, it’s not about sharing intimate details. Use innocuous descriptions for your personal items, like:
- Dentist
- Haircut
- Doctor
- Kid Time
- Date Night
- Groceries
- Happy Hour
If you’re like me, and within a few days won’t remember the finer details for some of those things (like “which Doctor” for example) be sure to include the address in the calendar event.
Step 4
Re-enforcement and evaluation.
You need to build a habit of course-correcting and responding to requests for your time with the same question:
Did you check my calendar?
In my experience it take about 5x per person to start programming this behavior from the people who are making requests of your time.
But within a week you will start to see shifts in behavior, and meetings will start to pop up on your calendar on their own.
Feeling Nervous?
So was I, it’s perfectly normal as an entrepreneur to feel very uneasy to give up control over something so important – but this is exactly why this is the first step in 7FA… we need to scale the 3 core systems of your business, and your time must be focused on that and that alone to get you to the point where you’re running a somewhat passive, million dollar per year business without working more than 30 hours per week.
It’s also important to remember that just because someone send a meeting request doesn’t mean you need to accept.
This is where evaluation comes into play, and why it’s baked right into the meeting request template.
By forcing your team members, vendors, and contractors to answer these 3 questions as part of their request for your time – they are being forced to evaluate how necessary a meeting really is, especially a meeting with you.
It’s also OK to turn down meetings, if a request comes in and it’s a low priority (less than 5) and there’s someone else that can assist on the topic, then decline the meeting and suggest the requester to contact the other resource first.
Lifestyle Engineer – This is probably the label that I prefer most when thinking about myself, even more so than entrepreneur.
It’s become something of an obsession of mine to design and build my ideal life – this is where consciously choosing to be an intentional entrepreneur takes shape.
Engineering your ideal life means you need to take a big step back from where you are right now, and think about how you want to be spending your time if you had 100% control over how your time was spent (to push you into the 5% of entrepreneurs that are able to work 30 hours per week or less).
This exercise is going to set you up for how to design your business – regardless of where it is right now, again – because you’re here.
You made a conscious choice and committed your hard earned money to effect change in your life as a business owner.
Engineering Your Ideal Life
The main purpose of your business
Your business exists to serve you, but you probably don’t think about it that way.
You created the situation you’re in likely for a mix of control and freedom, but I’m willing to bet you don’t think about your company as a way to further advance what you personally want to get out of life.
The fact of the matter is, without a lifestyle design framework – how could you?The purpose of this exercise is to take you through a framework for:
- Identifying how you’re currently spending your productive time each week.
- Prioritizing where you should be spending your time.
- Designing what your ideal weekly schedule looks like.
- Backing into your perfect day.
Understanding where your time is going
We’re going to start with the end in mind, and back into what an ideal life means for you personally.
To do this we need to first understand where you’re spending your time each week – and it’s OK if this isn’t exact, just do your best.
I need you to come up with the 10-15 things you do each and every week as part of running your business right now.
Tip:Open a new Google Sheet or Excel Spreadsheet and write these down in a list, one per cell.To help you get going, here’s a look at what my list looked like when I went through this exercise myself;
- Admin tasks (invoicing, vendor payments, ledger management, etc)
- Data entry (CRM, project plans, etc.)
- Managing my calendar / schedule
- Publishing content
- Post production for content (editing, graphics, etc.)
- Content promotion
- Team planning
- Content creation
- Managing vendor relationships
- Driving marketing / awareness for the business
- Product development
- Developing strategic partnerships
Once you have your list together in a column, I want you to go back over each item and assign a cost to it – but, I want you to use only 4 cost buckets;
- $5
- $50
- $500
- $5,000
Those costs are representative of how much value that task brings to the company for each hour you put into it.
Then lay it out into a table, so it looks like this:
You can now start to visualize the separation between where you’re spending your time each week versus how much value that time is creating…
Now imagine if you were to spend $200/week pushing items in the left 2 columns of your matrix off of your plate to free you up to work on items in the right 2 columns?
Here’s what the math looks like behind value creation:You unload 4 hours of $50/hour work (for $200) and instead you spend those 4 hours working on $500/hour items; creating $2,000 in value.
You just increased the weekly value you are creating for your company by 10x.
This is your delegation scorecard
Another way to look at your delegation scorecard, and to approach getting it filled out to be as accurate and effective as possible is to include not only tasks that create low amounts of value, or those which you’re simply not good at.
There are many thing that I can do, but I kind of suck at… like creating logo’s, images, and ads for various marketing campaigns.
What’s worse is I actually like creating ads… but I’m just not good at it, so it’s not where my time should be spent, and so it’s on my scorecard.
If you look you will see it represented as “post production” i.e. creating the polish for my posts and pages that’s needed for them to feel “complete.”
For “content promotion” which is the physical act of scheduling out social media updates, and setting up and running ads on platforms like Facebook and Twitter, this is just not high value work. It’s important, but it’s not where my time should be spent.
We will be coming back to this task list in the future, and it’s going to be critical for moving forward – so make sure you take the time to complete this part of the exercise.
Mapping out your ideal week
GRAB A NOTEBOOK
Now that you have a sense of where your work time is ideally being spent (items on the right side of your delegation scorecard), the next step is to lay out what your week would look like in an ideal world, where your focus is 100% on high value items and spending your time how you want to.
Without worry about how much time you’d be spending on each item, jot down a list of the types of things that you would want to have dedicated time for each week – this should include everything, not just work tasks.
Here’s mine:
- Business strategy
- Client strategy
- Bike rides
- Meals with my wife
- Yoga
- Drinks with friends
- Lunch with my business partners
- Work lunch (either with local team members or other professional contacts)
- Researching and writing new content
- Painting
- Review of what’s driving the most revenue for the business
- Outdoor time with my family
- Catching up on sleep
- Time at a second home / vacation house
Now load this list into your spreadsheet, and then add a label to the column immediately to the right of this list, and call it Focus.
Within the Focus column, go back over your list and label each item business or personal, here’s mine:
- Business strategy – Business
- Client strategy – Business
- Bike rides – Personal
- Meals with my wife – Personal
- Yoga – Personal
- Drinks with friends – Personal
- Lunch with my business partners – Business
- Work lunch (either with local team members or other professional contacts) – Business
- Researching and writing new content – Business
- Painting – Personal
- Review of what’s driving the most revenue for the business – Business
- Outdoor time with my family – Personal
- Catching up on sleep – Personal
- Time at a second home / vacation house – Personal
My Business / Personal activity split for my ideal week is:
- Business = 6
- Personal = 8
But there’s no right or wrong answer, so this split can be whatever you want it to be.
Now inside your spreadsheet create a new table (it can be in the same sheet, but that’s your call) and write out the days of the week across the top; one column label for each day from Sunday – Saturday.
Using your Business vs. Personal labels as a guide, fill in each day of the week to create a picture of how all your priority activities would fit into the week you want.
It should look something like this:
Again, for this part of the exercise don’t worry about the time length for each item, just try to fit all your priorities into a one week snapshot.
Designing your ideal day
Now it’s time to think about how much of your most limited resource (your time) you are going to dedicate to your activities on a daily basis.
And, unfortunately, the right way to do this is going to involve us getting just a bit ahead of ourselves.
In the next exercise we are going to lay out how to prioritize the major impact items you need to be focusing on; or in other words – your big rocks.
So for right now, just to get through this exercise – don’t worry about what your big rocks are, just understand that you will have 3 of them and we’ll be defining them as the next step in the entrepreneur’s mindset framework.
What I’m asking you to do in this section is to focus in on just the core set of items from your ideal week that if you only had control over one day would be the tasks that you would be sure to fit into that day.
I also want you to think about how you would block-out your schedule to separate your focus between those items, so it should look something like this:
Your break-up of when your day starts and ends, as well as how much time is spent within each chunk is entirely up to you.
Seeing the big picture
Are you starting to get your head wrapped around what you personally see as being the most important things in your life?
I need you to go through this process so you will be able to create a vision for how your business will need to change and grow to meet these requirements.
Tip: print out a picture of your ideal day and post it up on your desk at work
When you’re running through your schedule for the week, and blocking out all the time-slots on your calendar for your most important items, your ideal day should be your guideline for what gets scheduled first.
Identifying What’s Most Important
If you’re like I was, I would start out most days overwhelmed with all of the things that had to get done – driving my perception to be that they were all priorities.
But when everything’s a priority, nothing is.
So in this exercise we’re going to evaluate all of the items you’re prioritizing, and organize them into 3 main, core themes – that will your 3 big rocks.
This concept was first brought about by the productivity company FranklinCovey, but for Agency Owners, it’s an absolute game changer.
What are your companies big rocks
The concept is that running your business consists of a hundred different tasks that need to get done – and the secret to being effective is not to get more things done, but to get the right things done.
What’s even more important to understand, is that all of the tasks that you have on your plate can be divided up into big rocks, small rocks, and gravel.
If you put your time and energy into knocking out all of the smaller tasks, therefore moving them into your “done bucket,” you won’t have any time left to focus on the big rocks.
But, if the big rocks go in first, the small rocks and gravel fit around them and everything gets completed.
Identifying your big rocks
Unlike a lot of other businesses, for agencies I like to identify big rocks on a quarterly basis.
This can of course be treated differently if you prefer; instead choosing to select your big rocks on a monthly, weekly, or even daily basis – but I’ve found that when it comes to scaling the 3 most important pieces of an agency (resources, sales, and profit) it’s best to focus on 3 rocks per quarter.
You may not realize it, but you have actually already identified what you believe to be the most important tasks you should be focusing on.
They are the items in the far right column of your delegation scorecard.These are most likely to represent your big rocks; the specific tasks that you need to be intentionally and ruthlessly blocking out time for every week.
My 3 big rocks
Since my big rocks change from quarter to quarter, if you recall the far right side of my delegation scorecard included; marketing and awareness, product development, and strategic partnerships.
At the time when I went through my personal weekly tasks analysis for the first time, my 3 big rocks were:
- Publish new content (1 blog post per week)
- Design 1 new client deliverable (per month)
- Develop 1 new professional relationship (per month)
All of which we’re going to dive into in gritty detail later in this program, but that was then – and as your big rocks get completed, they get smashed down into small rocks and ultimately gravel.
Over time they evolve into items picked up and support by other team members or even better still, they become a naturally occurring part of the operational matrix of your business.
If you look back at 2012-2014 I was writing a lot of blog posts. On top of it, I was writing everywhere my target audience was hanging out – it created awareness.
In 2014 when I founded FTF I also designed a few new deliverables that gave me services that fit the needs of my target customers and allowed me to generate revenue – these were the keyword matrix, the keyword opportunity model, and a keyword-focused analytics audit (back before not provided ruined that one).
Fast forward to today and I still write blog posts, but not nearly as often. I still work on product design, but it’s for bigger offerings that solve bigger problems because the initial big rocks have become smaller rocks that are handled by my team.
If we look at where my agency is today, my 3 big rocks are:
- Scaling our growth engine
- Retaining the highest value team members
- Advocating for our NorthStar metric
Your 3 big rocks
Where this exercise creates impact is when you allow yourself to step back from your day to day, and look at your business as a whole.
What are 3 initiatives that if you were to focus on them above all else, would grow your top-line faster than anything else?
Your answer very well may be; I don’t know.And that’s OK, it’s why we’re here, so stay with me…
Bringing this back into consideration of those ~15 items in your delegation scorecard – and putting the Pareto Principle into effect (better know as the 80/20 rule), it’s likely that 20% of what you focus on will generate 80% of your net results.
Furthermore, as an entrepreneur it’s very likely that your core needs (or your “deficiency needs”) are being met, but what you’re seeking from this program is to find and support your “growth needs,” those that will support fulfilling your cognitive, aesthetic, and self actualizing needs.
These are beneficial byproducts of going through this set of mindset exercises.
I’ve found that there’s a significant amount of overlap between working on my big rocks and fulfilling the growth needs within Maslow’s hierarchy.
What this means is that if you’re willing to make the commitment to aggressively change your scheduled priorities – and defend that time like you would your newborn child, not only will you get more accomplished, but you’ll get more fulfillment from your work.Starting small with the now
Jumping right into wrapping your head around 1) what your big rocks are and 2) how to attack them can also be pretty overwhelming the first time you do it.
What I’ve found is it’s best to start with tasks you can focus on immediately (like this week) that can be written out in plain, actionable language that fall within the themes of your big rocks.
So let’s say one of your big rocks is marketing your agency, a few starter tasks underneath that theme could be:
- Create a list of 10 topics that your best clients are interested in (if you don’t know, email them and ask them – you’d be surprised how much client’s actually like hearing from you and are willing to help).
- Make a list of 10 blogs in your industry where you’d love to have an article published.
- Make a list of 50 twitter accounts that are influential in your space (here are some free tools that can help).
And something we’re going to go deep on later in the program is how important it is to build processes (and correlating SOP’s) by doing the work yourself first; so you understand how it needs to be done.
But these small rocks are things that, if crafted correctly – can be easily delegated and outsource within the left-side of your scorecard from low cost resources.
Setting deadlines
Big rocks have broad, far away deadlines (like next quarter), but for the task lists you’re creating that support them, these need to have near immediate deadlines.
For example, the 3 measurable, actionable tasks I wrote out above could all be completed today.
The trick to crafting “deadline-able” tasks is to make them measurable; every one of the above tasks is finite with a binary success criteria, i.e. it’s not “Create a list of topics your best clients are interested in” – cause what does that mean? 3? 7? 55?
It’s a nuance but it’s important, and these are the building blocks for how you are going to build systems where you design the vision and strategy for execution – and then you manage the outcomes.
Building Systems of Accountability
Yesterday you said tomorrow
An accountability system must be based on objective criteria for success.
This means there’s no gray area and there’s no “well I tried my best.”
Either you failed or you succeeded, and there will be plenty times where you fail – it’s the learning that’s important, otherwise you’re likely insane:
Insanity is defined as trying the same thing and expecting different results
Building a system to support this process is what separates high performance execution from mediocre results.
We’re your first line of defense
The good news is the community you are part of within 7FA has been designed to support your baseline for accountability.
The American Society of Training and Development (ASTD) did a study on accountability and found that you have a 65% of completing a goal if you commit to someone. And if you have a specific accountability appointment with a person you’ve committed, you will increase your chance of success by up to 95%.
For this very reason, every month you will be emailed a link to a form on the 7FA website with a list of questions centered on your commitments, and how you’re going to apply them.
These questions are designed in a way that forces you to transparently get to the root issue and in a way that let’s us, your most immediate system for accountability, hold you accountable for making progress.
Your accountability to your commitments
Once you’ve answered the questions and set your commitment for the month, upon submission these answers will be shared automatically within the #commitments channel in 7FA’s Private Slack.
This makes your commitments public within our group of peers.
It let’s us ask questions, share ideas and make recommendations that will help you understand your options and best path forward.
It also gives me the chance to review and make sure you’re approaching the right commitments the right way.
In addition, you will have a dedicated Partner.
Partnering within 7FA
The only way you’re going to transform your business (and your life) in the next 12 months is if you’re held accountable to do so.
For this reason I will personally be reviewing every members intake survey and matching you up with an Accountability Partner within 7FA by April 15, 2019.
You will both give and receive Partnership in this relationship, but to keep it manageable for you – your main responsibility will be to review your Partners commitments each month once they’re posted into Slack.
To make sure this happens, once you submit your commitments to the group, and Slack posts them in the #commitments channel, it is your responsibility to go into that post, create a thread, and tag your Partner (so they are notified).
Notifying your Partner
First mouseover the post, and click on the icon to “start a thread”
Then once you’re in the thread (it will open in the right sidebar of Slack) tag your partner by typing “@” and then their name
Being a Good Partner
Once you’re notified, your responsibility as an Accountability Partner is to respond with your thoughts or questions on that post within 72 Hours of being notified.
I find it best to do this by immediately scheduling time to read and respond in your calendar as soon as you receive the notification.
On that note – I will be holding you accountable for all of this as well, to make sure you form the habit.
The accountability framework
Just like everything we’re going to embark on within this program, there’s a process for making sure accountability converts into real change.
Here’s the process we’re going to use each month to ensure you’re making progress:
- We will review your commitments within the group, checking on the status of your previous months commitment.
- You will present your current month’s issue or focus (via the commitment form) which forces you to come prepared with a goal and ready to accept feedback / direction.
- As a group we will shave down your issue to sharpen it to clear, concise point that can be address and enacted upon.
- You will commit to us (and yourself) on the action you will take to advance progress on that issue, knowing that there is a deadline already in place.
This framework (and the community we are going to build around it) is what is going to make this experience different from any other agency training program you’ve experienced before.
Your first chance to be accountable
Each exercise within this section (that you’ve now been through) had a process that culminated with a tangible result, all in the name of building a business that is successful on your terms.
Your first step on this path to accountability is going to be to:
- Go into the #commitments channel and create a new post called [Month 1 Action], and hit Enter.
- Mouseover that post and create a new thread.
- Follow the instructions below, posting each within your Month 1 Action thread.
The first exercise was to setup your centralized, public calendar. Once you’ve done this, share a screenshot of your monthly calendar within the commitments channel.
Slack will automatically timestamp this and we will use it as a benchmark for building the time-blocking behavior that will let you escape the curse.
The second exercise was to lay out all of the activities you are currently responsible for on a weekly basis. You were then to take all these tasks and build your delegation scorecard, and use it to design your ideal week and ideal day.
Post the results of each of these 3 exercises into your Month 1 Action thread (don’t worry about what they look like, the action behind these exercises is what’s important).
The third exercise was to review the right side of your delegation scorecard, group your most valuable tasks into themes, and come up with your 3 big rocks.
Post your current 3 big rocks in your Month 1 Action thread
Your first deadline
Post all of the above no later than midnight on March 31st.
Additional accountability resources
In many instances, having a local group you can lean on for accountability is a great additional resource to help you effect change within your business.
I currently belong to 3 groups, one is for CEO’s of small businesses call Netcito, I’m a member at YEC (or Young Entrepreneurs Council) which I’ll talk a bit more about later in terms of the benefits (hint:it’s not accountability), and I formed my own small peer group here in Philly.
The trick to building your own peer group is to tap 1-2 people you know and trust that are at a similar level in their careers, but are not in a competing business or industry.
The trick is to then ask the people you’ve tapped to do the same; find 1-2 people they know who meet the same criteria, with the added caveat that you can’t also know the people they reach out to.
Meetings tend to work best once per month, for 4-5 hours in the evening after dinner.
Local peer groups that you build personally tend to reflect more on your personal ethos and goals from a lifestyle perspective (and less on business), but this is a good thing.
The critical part here is to make sure the one rule in the group above all else is confidentiality according to the 3 P’s; you don’t share anything discussed in your meeting with your:
- Partner
- Pets
- Plants
So in other words, total and complete confidentiality. If you want some more tips on how to get a local peer group going, I’m happy to discuss more of the details.
Your Ideal Customer Profile & Selling What They Want
What is Your Niche, and Who is Your Audience
Who are your current clients and new sales targets?
Where do they hang out online?
Are you defining your niche too broadly? (note:this may be limiting your sales effectiveness).
In this exercise I’ll show you how to find (and efficiently mine) stores of audience data straight from the fingertips of your audience. We’ll zero in on your niche (or likely sub-niche) and we’ll build your ideal audience matrix.
What Should You be Selling
What are the most common questions your audience is asking?
Which specific language are they using to describe their most pressing pain?
What are the current solutions or supplemental solutions they’re experimenting with?
With your ideal audience matrix in hand, we’ll answer these questions and you will create a list of new products and services.
Designing Your Roadmap Offering
Your initial, out of the gate pitch needs to offer high value for a low cost amount.
I’m not talking about a $99 product or service, but something that’s less than a thousand dollars and gives you the opportunity to create trust, and sell more.
You will design this based on your research so far this month, and then start testing it (and I’ll show you how).
Creating Your Ideal Customer Profile
The next exercise in Month 2 will involve defining your customer demographics to create your buyer personas.
In order to be more effective at selling you need to map out your buyer’s journey, so you can understand it. You will create your ideal customer avatar.
Defining Your Niche & Finding Your Audience
In this exercise I’m going to take you through my framework for analyzing what you’re most equipped to sell.
What you know
You already have a sense of what you’re good at, and what you can provide that creates enough value for your clients to pay you for it.
What I want to do is challenge you to dive deeper to explore services you may already be providing (but not explicitly selling) and possibly identify additional services you can productize to increase your total scope of services and drive more revenue per engagement.
What you don’t know
What else you should be selling, or probably how to position it so it’s easier to sell.
Let me start with a story.
Back in 2013 I was putting energy into figuring out how to monetize my SEO blog (SEONick.net) and outside of affiliate revenue, I had heard a lot about creating courses.
I decided since I had a lot of traffic relevant to keyword research, and at the time there weren’t any courses dedicated just to keyword research, that that would be the topic for my first course.
I created a 7 day course delivered by email and called it Master Keyword Research in 7 Days (or MKR7D for short).
What I didn’t realize at the time was that what I had actually created was a product outside of the course, that people would start coming to me to buy; asking for it by name.
The process I sold in MKR7D was how to create a stand-alone deliverable; what I called a “keyword matrix.”
And as the course started selling, and word spread, people started mentioning it (and discussing it):
This led to the creation of branded demand:
that still exists today (albeit small):
which led to folks both jumping on the term:
and even some straight up stealing it.
The Unexpected Effects
This ended up creating demand for a new, unintentional product; the keyword matrix. And before I knew it, I had people hitting me up to place an order for a matrix of their own…
The eye opener was when the SEO Manager from Progrexion Marketing (owners of CreditRepair.com) hit me up and agreed to pay me $5,000 for a matrix.
And then was happy enough to send me a testimonial when I asked if it was useful:
What I learned was that even though I was writing about SEO, there were super-specific problems within the niche itself that people wanted help with; and were willing to pay for.
Based on all the demand (and sales velocity) I ended up increasing the price of the course to $127, but for the 2 weeks it was priced at $67 it generated more leads for consulting than in the 6 months leading it up to it.
The insight I gained was that my niche wasn’t SEO, it was more specific – it was the research part of SEO – and that’s what allowed me to create the initial few client relationships for what would become FTF.
How you leverage this
You don’t need to get this right the first time (and it’s actually pretty unlikely that you will) but you need to start refining your niche and positioning, and then listen to the people who are interested in your services – and pay attention to the questions they ask and verbiage they use.
The first IFTF agency site was 3 pages with no testimonials or service pages.. it was a single-page site with a few sections; services, about, team, and contact.
It was the content I was putting out that was driving all of the traffic to the site, and in turn creating the leads for consulting.
Here’s a look at some of the earliest contact form submissions I got
See a pattern?
The language kept hitting on the same 2 themes; increase traffic and increase conversions.
So I baked it into the copy of my super simple homepage; increase traffic and conversions => increase revenue – and lead form conversions immediately increased.
The site wasn’t sophisticated, in fact, the GET STARTED button just linked to a page with an embedded Google Form:
And look at that “logo” for crying out loud.. I mean, it couldn’t feel less sophisticated.
But it worked; this was the site that got us our first $10,000, $15,000 and $20,000 per month clients.
I think how unsophisticated it felt was actually a selling point; it just focused on what it was supposed to do – and I think the visitors coming here interested in getting a quote to work together knew that.
My conversion funnel throughout 2014 looked like this:
Google search => blog post on SEONick.net (ranked #1 for literally every variation of “increase traffic”) => SEONick About page => SEONick Contact page => IFTF website homepage => IFTF Application page => Email from me scheduling 15 minute call => Rip through their site live on the phone armed with (then) SEMRush (focused mostly on just flat out insulting their site) => Stupid simple SOW Template => Closed Deal
Fast Forward to the Beginning of 2018
In the midst of the dust storm of acquisitions, realizing we needed to scale sales to support the new larger team and to sustain the growth needed to see a return on investment from the purchases – I needed to figure out what we needed to be selling.
Just from being on Twitter and having conversations with a lot of prospects and other business (website) owners I was starting to see a lot of specialized demand for audits, further re-enforcing an opportunity for more specialization within SEO.
Realizing that technical acumen was something that most of our competitors didn’t actually have (or if they did, they were paying handsomely for it) made me pause and take note of this as a differentiator (and I’ll come back to this in a bit)).
Finding the language and aggregating the pain
We’re going to start with Reddit – now hold on, before you roll your eyes; this is not some bullshit pitch about how you should be using Reddit for marketing…
Reddit is nothing new to anyone in here, but have you ever mined the data there to identify trends and language?
Taking it a step further, have you ever really, intentionally tapped into all of the consumer intelligence it has to offer?
Reddit is called “the front page of the internet” for good reason; garnering almost a billion visits per day (yes billion, with a B).
Stop for a second and realize that not only are there dedicated SubReddits for virtually everything, but that in addition to those where you may hang out with peers (and direct competitors) to discuss your products and services (my most frequent stops are /r/SEO and /r/BigSEO) that the same SubReddits exist for your target audience.
So for example, I know that people who have a high likelihood of representing my target audience hang out on SubReddits like:
/r/SaaS//r/askmarketing/r/growmybusiness/r/wordpress/r/analytics//r/advertising//r/GrowthHacking//r/smallbusiness//r/startups/
and I know that my peers and direct competitors not only hang out on /r/SEO and /r/BigSEO, but also on:
/r/agency/r/consulting/r/content_marketing//r/digital_marketing//r/webmarketing//r/PPC/
Good artists copy, great artists steal
One of my earliest strategies for identifying what I needed to be selling as an agency owner (and even more importantly, what I needed to be calling it) was to simply steal product and service ideas from other established agencies — but based on patterns and volume.
Doing so is much simpler than you probably realize, let’s run through one together.
I’m going to use /r/wordpress for this example as I literally always get gold nuggets of market intelligence every time I visit that Sub.
I’m going to grab the all the post titles and descriptions from the first page of results (so 25 posts worth):
This is just a quick and dirty scrape to get all the raw data I need for this analysis.Now I’m going to create a new column in between B and C called “Theme” and start tagging for “themes” based on reading the titles and their supporting descriptions.
If I don’t get enough insight into what a post is about in the title, I can look at the post description and get the full text of the post right above in the function preview window.
Once I’ve tagged all the themes from this scrape, I want to review them and start too look for patterns.. and here’s what I see:
- Plugins (questions on solution-specific plugins and also requests for help and support with specific plugins).
- Theme questions an problems
- CSS issues
- Page builders
The last one is what catches my eye.
On just this page I see users posting about running into issues with formatting, functionality, and mobile display and citing some of the most popular WP page builders; Visual Composer, WP Bakery and Elementor.
A little further research shows me that the user population for just these page builders is over 4,000,000 (I also learn that WP Bakery is the new name for Visual Composer, the largest install base of any page builder for WordPress).
For now, just make a note of this – we’ll come back to it later.
Audience Intelligence Exercise
I want you to go through the same exercise, but the good news is I have a tool for you to make this process a bit easier.
- There’s a quick ~2 minute video in the members area showing you how to use it
Now go scrape data from 5 SubReddits on each side of the table; 5 from SubReddits in your industry where your Client audience is likely to hang out, and then 5 from SubReddits where your peers and direct competitors are likely to be.
(if you’re having trouble figuring out what those initial audiences might be – drop a question in the #intelligence channel and I’ll help you. If you’re a personal coaching member, hit me up in our private channel and we’ll do this whole thing together.)
As you scrape the contents from each target SubReddit, copy and paste the data from the Scraper into the corresponding sheet in your NEW GOOGLE SHEET FILE (i.e. a whole new file, not a new tab in the RedditScraper – it will cause issues – if you’re a Chrome user you can just type sheet.new into the browser bar and hit enter), and rename the Sheet to be the name of the SubReddit
In that sheet create the following new tabs:
- Dashboard
- ClientSub1
- ClientSub2
- ClientSub3
- ClientSub4
- ClientSub5
- CompSub1
- CompSub2
- CompSub3
- CompSub4
- CompSub5
Once you’ve gotten all 10 sheets filled up (5 of each) then go through each, create a new columns for “Theme” and distill down each row’s content by analyzing the post title and reading the description.
Keep this simple, trust me it’s more effective that way.
Building your ideal audience matrix
Here’s an audience matrix template you can use [7FA Members Only]
Go into your blank “Dashboard” tab, and format it like so (this is also already setup within the template, to make it easier to fill in):
Your Audiences (or SubReddit names) should appear across the top row, and then the “themes” you’ve pulled out of each should get dropped in the corresponding themes column under each audience.
Don’t limit Audience themes to just 4, you can have as many as you like; remember the idea here is to look for patterns across the language that is being used and group themes into bigger, more representative themes.
Under the “Service” column you’re going to then answer “yes” or “no” based on the following question:
Do you currently provide this product or service in your Agency TODAY?
Once you’ve completed this exercise, take a screenshot of it and drop it into #commitments using our 7FA exercise format:
- Post the following in the channel: [Month 2 Exercise]
- Then create a thread, and share your screenshot.
- If you have any questions or want to discuss anything specifically related to this exercise, please do so in the thread.
In the next lesson I’ll be running you through how to use this data to determine what you should be selling.
What You Should Be Selling
By this point you should have completed filling out your audience matrix, and it should look something like this:
We’re going to come back to this data a few times, but for now we’re looking for the fastest route to find a smaller offerings that we can test as “trust offers” for you to sell.
The question we’re trying to answer here is:
What are you already selling but not positioning best for your audience to buy?
The process you’ve just run through was a first take at analyzing natural language to pull out patterns for products or services.
We wanted to look at what potential customers are looking for (and what they’re calling those products or services) as well as what are your competitors are selling – explore what they’re calling the services versus what you may already be actually delivering (and simply calling something else).
You probably already see where this is going; but we want to start with services you’ve already identified that you offer.
You can use the filters in the Services columns (depending how long your theme lists are) to dive deeper into each 1-by-1, or you can use Format > Conditional Formatting > Apply to range A1:Z1000 > Text Contains: Yes > Yellow
To highlight all the “yes’s” and give you something like this:
In addition to the services you are already selling, try to be cognizant of services you are already getting asked about from your current client-base but you don’t offer.
These are more times than not obvious bolt-on’s for you to either white-label a product or service from another provider or to create a referral partnership to send that business along and collect a commission on the back-end.
I’ve highlighted 2 opportunities in this example where we get asked often about these services, we do not provide them (and strategically, I don’t want to) but we have put partnerships in place to refer that business off to, and it’s a win-win-win (the Partner wins, the Client wins, and We win).
Connecting Language Patterns to Revenue Opportunities
As I review this from the perspective of what we provide at FTF, I see a lot of givens on the marketing side:
- Increase conversion rates for B2B SaaS applications
- Provide blogging content and support for SaaS
- Support lead generation and overall marketing for SaaS
- Define a niche’s total addressable market
- Effective strategies for running Facebook Ads
- Designing an online conversion funnel
- Keyword research
Then I also see some language that affirms a decision I made to create new products a while back when I went through this process for myself:
- Discrepancies between Google Analytics and Google Search Console
- Channel and user group segmentation
- Ecommerce analytics visualization
What I Found
The last time I went through this process for myself and my agency, I learned that the word “audit” can mean a lot of different things to a lot of people.
More specifically I found that there was a drastic swing in not only pricing for audits, but that expectations were all over the board as to what that should include as well.
The average market position for an “SEO Audit” was something like $2,500 – $5,000 and included the whole kitchen sink ranking from rankings, links, code, speed, and so on.
But we didn’t sell this way
We initially sold what we called a “Tech Audit” which was focused almost exclusively on the way the website was built and how the crawl was managed from an SEO perspective.
We had additional, separate audits for Links and Content, but our Tech Audit also contained a lot of specific on-site information.
Selling The Sleeves Off Your Vest
This is perhaps my favorite strategy (and saying) from learning sales throughout my life.. cause it almost always directly translates into more profit.
When I ran through creating an audience matrix focused on products and services for FTF, I found bits of all of our audits being discussed as stand-along problems.
Furthermore, when I dove into review our Tech Audit deliverable – I found that our service includes a crawl, an analysis of the robots.txt file directives and NoIndex settings across the site, a rebuild of the robots file and any supporting updates through GSC (usually involving an audit of query parameters and their respective settings), a review of GA to diagnose tracking issues and set up of goals and content groupings, recommendations to change site architecture, internal links, and so on…
I realized we were:
- Undercharging for the level of value and work we were providing and
- We were creating an artificial barrier that was higher than it had to be to sell all the individual services we were including.
Based on the data I now had in front of me, I decided to chop up our service offerings into much smaller, outcome-specific pieces.
In doing this we achieved 3 high impact outcomes:
- Prices went down (or it appeared that way, in reality we were charging significantly more than we had been)
- Clients could pick and choose only the services they wanted instead of battling scenarios where clients wanted some but not all of what we were providing – causing us to lose sales
- The perception of value increased dramatically – clients were now getting separate deliverables, all packaged as such, instead of one larger deliverable that often times even felt too overwhelming for clients to take action on.
A Look at Our Sleeves
By breaking apart our Tech Audit, our then $5,000 – $10,000 total service package was now:
- Website Crawl and Analysis ($1,000 – $10,000)
- Google Analytics Audit ($2,500 – $5,000)
- Google Search Console Audit ($2,500 – $3,500)
- Google Tag Manager Audit ($2,000 – $3,500)
- PageSpeed Audit ($3,000 – $7,500)
- Internal Link Analysis ($5,000 – $15,000)
- Website Quality Audit ($3,500 – $25,000)
The biggest driver to where a service gets priced is the size of the site (and hence the mount of time it’s going to require to complete).
But we took what was formerly a $10,000 maximum revenue service and converted it into ~$60,000 in services, just by breaking them apart and packaging them up separately.
The beautiful part about packaging up services this way is you set yourself up for additional work and up-sells by delivering a set of deliverables and then asking clients what their plans are to address concerning components which you identified as part of the work you just delivered.
More times than not prospects will come into us from a referral or an inbound channel (thank you Growth Engine) and expect to get pitched a giant number up front.
We Sell Differently, and Why You Should Too
We’ll dive deep into my sales process and how to design a scalable sales process of your own later in this program, but for now I’d like to provide you some insight into a simple nuance when it comes to selling digital services that can have a measurable, and near immediate impact on your businesses top-line.
When a prospect asks for a steak dinner, don’t try to sell them the whole cow
They don’t really know you yet – and they don’t really trust you; why would they be comfortable stroking a 5 figure check?
Instead, this is your chance to surprise them (and deliver value to build trust).
An Example of Down Selling
It almost sounds like a dirty word doesn’t it?
What this means is when a prospect comes and asks you for a suite of services to complete a project, you break it up into more meaningful (and measurable) chunks to get the per piece cost down.
Cashflow is king in every business, and anytime you’re competing against other vendors and the playing field is level from a capabilities / reputation perspective — a strategic advantage you can always pull on to win is price (at least, at first).
When a company comes to FTF and asks us to quote a website development project, we down-sell them to create discussions they didn’t even know they should be having…
Instead of scoping out an entire project and responding with a $50,000+ proposal out of the gate; like all of the other vendors we’re competing against are likely doing – we send them a proposal for keyword research (to build a TAM) and a sitemap design (based on the TAM data).
This is usually 1/10th of the price of the site, but we position this as:
“we take an audience-first approach to building websites, and we need this data to make informed decisions on what the site’s page structure should be and how many views we’ll need to effectively execute on the opportunity”
Do you think any of the other website vendors are getting hit up for $50k proposals and responding with a $5k proposal?
Nope.
It immediately sets us apart because we’ve shifted the conversation and created doubt in the prospects mind; not doubt about us and our capabilities — the exact opposite; doubt about why none of their other vendors aren’t comfortable quoting a project without the data to inform the sitemap design.
The same is true in almost every initial client experience scenario as an agency, the opportunity to shift the conversation for agency services to first include a smaller “trust offer.”
Selling Your Sleeves Exercise
What services are you currently providing (per your audience service matrix) that you are currently including in other, larger services you’re selling?
Go into your [Month 2 Exercise] Thread, and answer the following 3 questions:
- Name at least one service you’re currently providing that could be separated out into a stand-alone product or service.
- What would you be able to charge for that service (approximate if you don’t have a general or competitive frame of reference).
- Do you have an existing or previous client that you know is in need of just this smaller service item?
Do so by adding a new thread message in bold (wrap the text in *’s) that says:
Selling My Sleeves
1)
2)
3)
Designing Your Trust Offer & How To Test it
Your “trust offer” is your low cost, high value offer that is used to:
- Create qualifying conversations with prospects
- Lower the barrier to getting a paying engagement done with a new client, and
- Establish your credibility / trust as a vendor
The best trust offers are strategic in nature; they set you up to show you know what you’re talking about – and they offer value that is so obvious to your prospects that it doesn’t really need to be explained.Remember that page builder opportunity I uncovered back in /r/wordpress ?
I said I’d be coming back to it, so I’m going to use that opportunity as my example of how I would translate that market intelligence into a qualifying trust offer.
If I Had a WordPress Consulting Business
Based on the theme from the audience matrix, and the approximate size of the addressable market, I’d design a trust offer around auditing a website’s implementation / configuration of WP Bakery, focusing on the 2 main themes described in the audience matrix:
- Display on mobile / the front-end of the website, and
- Functionality to control / edit / manage content from the back-end.
I’d use BuiltWith to build a list of websites with a WP Bakery footprint, then Hunter.io to build my initial contact list, and I segment that list into smaller test campaigns to work on dialing in the language to use in both the subject line and the value proposition within the email.
The deployment of the campaign to test the offer is something we’ll come back to.
The Best Trust Offers Are
Extremely low cost or free (whenever possible).
Some of my personal favorites are:
The free Google script checker site drives over $200,000/year in consulting business for Maciej; believe me trust offers are powerful client acquisition tools.
Now getting a trust offer to a point where you’re able to offer it for free can take awhile.. or based on your services you may simply never be able to offer it for free; and that’s totally fine.
The important part is testing offers until you have one that hooks, developing it to where you are able to offer it for the lowest cost possible (at a bare minimum it needs to be under $1,000) and then working to get your costs down.
Something to consider, if you’re able to build an offer that converts more than 50% of pitches, and then coverts over 50% of those clients into larger engagements – would you be willing to break-even (or worse, even lose money on it)?
You should be; it’s OK for a high conversion trust offer to be a loss leader in terms of services within the company; your focus needs to be on the back-end economics of what that offer drives in terms of net new revenue for the agency.
Our Trust Offer
Our trust offer at FTF evolved from first using it to build trust with new inbound leads, and then ultimately we’ve developed it enough to now use it as the sole offer we pitch when running outbound sales campaigns.
We offer a “free site crawl” and we target sites that we know will have issues reported back after the crawl.
The diagnosis comes from building a list of large brands we know we’d like to work with (a list I call our “Top100” which is something else we’ll come back to in the future), and then building the cold pitch campaign.
Here’s what the cold email looks like:
Here’s what the same offer looks like for warm leads (i.e. prospects that come in via inbound channels):
We use the “free crawl” or “crawl results” offer to get on the radar of some big companies, where we’re offering insight into potentially major problems on their website in exchange for no money, and just a bit of their time, i.e. low cost, high value.
Testing Your Offer
The easiest, and probably most obvious place to test your offer is with your current clients.
You’ll need to package it up a bit differently than you would to new prospects, and you may want to offer it at a lower cost than you would otherwise (or ideally for free) just to get the feedback.
Remember, the goal at this stage is to just test the offer. It may take a few try’s until you get one that’s sticky and engaging in the right way; i.e. it begs the question or prompts the conversation for more work. Even once you identify an effective offer, it’s likely the pricing and packaging is going to take a few tries until it’s able to be scaled.
If you’re able to create an offer that you are willing to offer for free, it does open up your test audience pretty significantly, i.e:
- Your email subscriber list (if you have one)
- A local chamber of commerce or B2B list-serve (we have one here in Philly I tap a few times a year called Philly Startup Leaders).
- Audience-focused groups on social channels (LinkedIn or Facebook)
One of my favorite tactics for offer testing
So this is going to seem completely counterintuitive, but one of the ways I like to test new trust offers is to go onto Clarity.fm, find an expert that represents my target client/audience, and request a call with them…
Yes, I actually pay people to test my offers. This offers the unique benefit of them being your captive audience.
The framework for doing so is pretty straight-forward, but let’s review it here:
- I find someone who fits my customer avatar (we’ll be creating yours in the next exercise)
- I request a call and add a note around “Hello Joe, I’m working on a new service where I provide free website crawls to ecommerce companies (like the one you work for) and am trying to make sure I’m offering something of value. I’d like to present the offer to you and get your feedback on how you think it could be improved.”
You may have to request calls with 5-10 folks before you get even your first call scheduled, but it’s worth it – I promise.
Then, on the call:
- Present the offer, starting first with what the outcome / deliverable is
- Ask if it’s something they would find valuable in receiving
- Ask what they would be willing to pay for it (always ask this question first before offering up what you think you want to charge for it – as you don’t want to influence there answer; pricing your offer is key)
- While you have them on the phone, ask them what their current biggest pain points are within their role (based on what’s relevant to YOU and YOUR AGENCY) and then ask them how they are currently addressing those paint points.
- Lastly, and this is key – ask them if it would be OK for you to send them the offer email to see what they think. Let them know you have no expectation of them purchasing, but you really value their opinion and any feedback they’d be willing to reply with would be sincerely appreciated.
Casting a Wider Net
If you’re game (and hopefully you are), once you’ve gotten some feedback on your offer 9including from me and the others within 7FA) I would encourage you to put it out there on the internet…
Whether in a blog post on your site, up on medium.com, or to leverage something like a partner webinar (co-branded webinar likely with a tool provider you use, this is cray easy to do if you haven’t already) to then push this offer out at the end.
Next Steps
I know, lot’s of exercises this month – but we’re getting moving here.
Go back into your [Month 2 Exercise] thread and drop in 3 ideas for trust offers. For each include:
- The name of the offer
- A short description (2-3 sentences, it shouldn’t take you more than that to describe it and it’s value)
- Who your target audience is
- What you would charge for it
- Your expected turnaround time (or TAT for short)
Creating Your Customer Avatar
You already have some sense of who your clients are – not only do you already have clients, but to get through even the first exercise this month you needed to have an idea of who you sell your services to.
It’s possible you’ve already gone through a persona creation process, i.e. created an imaginary person that represents the demographics (age, sex, education, interests) and possibly socio-economic status of your target clients.
If you haven’t, here are some decent baseline references (though you won’t need to have an existing persona to go through the 7FA process for building your Avatar):
The big difference between the persona nomenclature vs avatar is the level of depth involved in building out your representative targets for sales and marketing.
Just like in the movie Avatar, where humans wore suits that engulfed them fully into the experience of being in another world; another body – we want to build out a complete picture of your target clients.
Creating Your Avatar
Your avatar should be based on a mix of your current clients as well as your ideal clients.
The nuance in this exercise is you’re going to be painting a picture of your one perfect client.
Ultimately every business will have multiple “avatars” for clients, but based on your insight into your business and client experiences so far – we’re looking to create a prototype of what your ideal client looks like.
To do this, you are looking to answer the following questions:
- Who – Do they identify with professionally? – Do they read every week (people or publications)?
- What – Is their level of education? – Is there job title? Job role? – Is there company’s industry?
- Where – Are they located? – Do they hang out online (which websites)?
- Why – Are they looking for the service you provide? – Are you a good fit to help them?
- Motivations – What are their professional aspirations? – What does their career path look like? – What other jobs might they move into in the next 5 years?
- Budget – What is their budget for hiring an agency vendor? – What is their role in making purchase decisions?
Here’s a template to help you get these answers together [7FA Members Only]
Then add a name and image, you can have some fun here (as you’ll see below I did) but try to get this dialed in as closely as possible to the exact traits and characteristics of that one perfect client.
You can use a headshot from anywhere (just make sure it’s not someone you know, cause that would be a bit creepy). A few options for headshots are:
For building out your on-pager – you can do this in whatever format you are most comfortable with; Microsoft Word or Powerpoint, Google Docs or Slides, Keynote, etc. It doesn’t matter – all that matters is that you’re able to get all the information into a single-page.
FTF’s Customer Avatar in 2019
It’s important to note that as your agency grows (and evolves) over time, while the profile of your ideal customer may maintain a handful of characteristics.. it’s also likely to change.
You will end up feeding in your past good and bad customer experiences into informing the exact types of companies you want to work with.
IFTF’s Customer Avatar in 2015
It’s amazing to review both and see how much has remained the same (but also the small nuances that have changed), mostly in terms of 1) size of company and 2) size of our Client’s (or POC’s) team.
Next Steps
Time for you to build your 1-pager Customer Avatar.It doesn’t have to be all “design-y” like my current one, and be as simply as my 2015 one (done in a Word Document) the important part is to get it all onto one-age.
Also, as part of this exercise, I want you to write a story (like in my 2015 Avatar), this is what really lets you connect all the dots of your research into something more tangible.
I’ve included an example story for you to use within the members area.
Additional Research Resources
Expanding Your Client ResearchThere’s a lot of fluffy crap out there on the internet when it comes to what kinds of questions you can ask your clients to actually get useful data to cycle back into your sales and marketing efforts.
Setting Up Your Business for Success
First and foremost
Just getting this out of the way.The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on our Site constitutes a solicitation, recommendation, endorsement, or offer by NK Tech, LLC (DBA 7 Figure Agency) or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.
All Content on this site is information of a general nature and does not address the circumstances of any particular individual or entity. Nothing in the Site constitutes professional and/or financial advice, nor does any information on the Site constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. NK Tech, LLC (DBA 7 Figure Agency) is not a fiduciary by virtue of any person’s use of or access to the Site or Content. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other Content on the Site before making any decisions based on such information or other Content. In exchange for using the Site, you agree not to hold NK Tech, LLC (DBA 7 Figure Agency), its affiliates or any third party service provider liable for any possible claim for damages arising from any decisions you make based on information or other Content made available to you through the Site.
Ok cool, now that we’ve covered that, onto being useful.
In this module, we’re going to take a deep look at making sure you are making smart financial decisions, including but not limited to, your business structure, pricing, invoicing, and some of my favourite financial strategies reserved just for entrepreneurs.
Your Ideal Business Structure
Do you have an LLC yet? Cool. Do you make enough to take a salary, but are paying yourself in distributions (only)? Not cool.
I’ll explain why.
Pricing based on Profit First
How are you determining your prices? Did you look at one of the market surveys and picked a number that felt about right? Or worse – did you just pick a number that you thought you’d like to be making and start including that in your contracts to see if people would pay it?
You need to make sure that your pricing is like everything else in your business; intentional. We’ll take a deep dive into how to think about this – it’s pretty simple, but can have a huge impact on your bottom line; literally.
Invoicing to Support Cash Flow
This is another small win area. Maybe you invoice all up front (I know there are some consultants out there that preach this is the only way they do business) but this isn’t how the Companies with the budgets you really want pay their bills…
Maybe you figure you’ll just invoice everything Net30 and all your clients will magically pay you on time, every time? How’s that worked out for you so far?
I’ll explain some tough lessons I’ve learned and give you some tips on how to make sure you’re in a better place to pay your bills (and yourself).
Financial Strategies for Entrepreneurs
This is the real meat of this month – I’m going to introduce you to a whole mess of cool strategies that I’ve figured out, been shown, or stumbled across much later that I wish I had – so hopefully you can make some cool moves for yourself (and your business) much sooner; and keep more of your hard-earned cash in your pockets.
Your Ideal Business Structure
Understanding what you want out of your business in the end (remember starting with the end in mind) is what’s going to ultimately inform the type of structure you need to be considering.
Generally speaking there are 3 “types” of businesses:
- Sole proprietorship
- Partnership
- Corporation
In this section I’m going to run through a bunch of information based on my personal experienced buying and selling businesses but I’ve also included some reference information that I’ve sourced from my own research (online) and run past my business attorney to make sure it’s all accurate.
With that said, I’m still not an attorney and none of this is legal advice (or meant to be considered such).
LLC
Starting out simply registering an LLC is all you need to do to take advantage of the tax benefits of owning a company.
Most folks do this through online services (like LegalZoom) but I strongly encourage you to at least have a conversation with a business attorney to get an understanding of all of your options prior to do this (even if you go the LegalZoom route).
An LLC is a “pass-through entity” which means the entity itself will not be taxed, but that the tax liabilities for federal, state, and local taxes will “pass through” to you personally.
This sounds scary, but there are ways to leverage this (which I cover in detail in [financial strategies for agency owners]).
Some of the downsides of being a pure-play “LLC” are:
No stockLLCs are tough if you have several investors or raise public money, since you don’t have shares or stock certificates to offer. If you give a percentage of ownership to outside investors, you must decide whether they’ll be managing members.
You might need a partnerLLCs in most states require only one member: you. But if you live in Massachusetts or the District of Columbia, you must have two members, and that could be a deal-buster.
Fewer incentivesLLCs aren’t ideal if you want to give fringe benefits to yourself or employees. Unlike with a C corporation, you can’t deduct the cost of benefits with an LLC. And since there’s no stock, you can’t use stock options as incentives for your employees.
PaperworkLLCs file articles of organization with the State Corporation Commission or Secretary of State and must draft an operating agreement listing members’ rights and responsibilities. Some paperwork that must be filed, like an application for employer ID number (IRS Form SS-4) and choice of tax status (IRS Form 8832), are one-shot; others (annual report, quarterly withholding and tax deposit coupons, and business bank account) are ongoing. While it’s not an impossible burden, there’s more paperwork than if you’re a sole proprietor.
TaxesLLC members pay self-employment taxes, the Medicare/Social Security tax paid by entrepreneurs; it’s calculated on 15.3 percent of profits. Contrast this with an S corporation: Self-employment tax is due on salary only, not your entire profits. You’re caught in the self-employment tax net if: 1) you participate in the business for more than 500 hours during the LLC tax year; 2) you work in a professional services LLC (health, law, engineering); or 3) you can sign contracts on behalf of the LLC.
What’s important to understand is that when you plan to start paying yourself (or any of the business owners a regular salary, versus just taking distributions) you will want to change your tax status to an LLC that elects to be taxed as an S-Corporation by filing a Form 2553 with the IRS.
This will enable you to be paid as an employee of the company (don’t worry you can still take distributions whenever you like – which I suggest doing either based on a schedule or based on a specific financial threshold being reached, or exceeded).
Here’s An Example
Suppose you are an LLC owner taxed as a sole proprietor and your business makes $100,000 in Net Income for the tax year. You will report that $100,000 of net income, and you will pay Social Security tax and Medicare tax on the entire $100,000.
Now suppose you have elected to be taxed as an S corporation and have determined that your reasonable salary is $50,000. Your salary is a business expense, so the business now has a $50,000 profit against Net Income. You will still report $100,000 of income [$50,000 of salary plus $50,000 of profit], but you and your business will only pay wage taxes (Social Security and Medicare taxes) on your $50,000 salary.
LLP
LLPs are a flexible legal and tax entity that allows partners to benefit from economies of scale by working together while also reducing their liability for the actions of other partners.
By default, an LLC with more than one LLC member is also taxed like a general partnership, and a single member LLC is taxed as a sole proprietorship.
However, all LLCs have the flexibility to choose corporate taxation instead. This tax flexibility is one of the advantages of an LLC over an LLP.
An LLP is a form of separate legal business entities that gives the benefits of limited liability but allows its members the flexibility of organizing their internal structure as a traditional partnership.
An LLP is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore can exhibit elements of partnerships and corporations. In a LLP, each partner is not responsible or liable for another partner’s misconduct or negligence.
S-Corp
The big benefit of S corp taxation is that S corporation shareholders do not have to pay self-employment tax on their share of the business’s profits. But they will be taxed on the salary they pay themselves.
Does an S Corp owner have to take a salary?The short answer is “no”, as long as the S Corp makes no distribution to the owner-employee to avoid payroll taxes.
The reality is that the IRS cannot require a business to pay its employees a minimum salary.
In addition, other benefits of operating as an S-Corporation are:
Protected assetsAn S corporation protects the personal assets of its shareholders. Absent a personal guarantee, a shareholder is not personally responsible for the business debts and liabilities of the corporation. Creditors cannot pursue the personal assets (house, bank accounts, retirement accounts, cars, jewelry etc.) of the shareholders to pay business debts.
In a sole proprietorship or general partnership, owners and the business are legally considered the same — leaving personal assets vulnerable.
Pass-through taxationAn S corporation does not pay federal taxes at the corporate level. (Most—but not all—states follow the federal rules. For American business owners you can use this state guides to see if your state recognizes the federal S corporation election.)
Any business income or loss is “passed through” to shareholders who report it on their personal income tax returns. This means that business losses can offset other income on the shareholders’ tax returns.
This can be extremely helpful in the startup phase of a new business. (A corporation that does not elect S corporation status and accumulates passive income is at risk of being classified as a personal holding company.)
Tax-favorable characterization of incomeS corporation shareholders can be employees of the business and draw salaries as employees. They can also receive dividends from the corporation, as well as other distributions that are tax-free to the extent of their investment in the corporation. A reasonable characterization of distributions as salary or dividends can help the owner-operator reduce self-employment tax liability, while still generating business-expense and wages-paid deductions for the corporation.
Straightforward transfer of ownershipInterests in an S corporation can be freely transferred without triggering adverse tax consequences. (In a partnership or an LLC, the transfer of more than a 50-percent interest can trigger the termination of the entity.) The S corporation does not need to make adjustments to property basis or comply with complicated accounting rules when an ownership interest is transferred.
Cash method of accountingCorporations must use the accrual method of accounting unless they are considered to be small corporations. (A small corporation has gross receipts of $5,000,000 or less.) S corporations, however, usually don’t have to use the accrual method unless they have inventory.
Heightened credibilityOperating as an S corporation may help a new business establish credibility with potential customers, employees, vendors and partners because they see the owners have made a formal commitment to their business.
Stock ownership restrictionsAn S corporation can have only one class of stock, although it can have both voting and non-voting shares. Therefore, there can’t be different classes of investors who are entitled to different dividends or distribution rights. Also, there cannot be more than 100 shareholders. Foreign ownership is prohibited, as is ownership by certain types of trusts and other entities.
C-Corp
Most major companies (and many smaller companies) are treated as C corporations for U.S. federal income tax purposes. C corporations and S corporations both enjoy limited liability, but only C corporations are subject to corporate income taxation.
Here is a quick list of C Corporation advantages:
- They can have an unlimited amount of shareholders, from anywhere in the world.
- For Nevada and Wyoming corporations, officers and directors can reside anywhere in the world. This can be a boon for foreign investors. (Learn more about foreign investing here).
- They can have several different classes of shares.
- They have the widest range of deductions and expenses allowed by the IRS.
- They are the most widely recognized business entity in the world, and are the premier entity for going public. In Nevada and Wyoming, nominee (or stand-in) officers and directors can be utilized, adding extra levels of privacy.
One of the major drawbacks of C-Corps is double taxation; the entity is taxed at the corporate level, and the owners of the company are taxed on dividends paid from the corporation. Therefore, the corporation will pay corporate income tax, and the owners and shareholders will pay personal income tax on such dividends.
Here are three ways to reduce or possibly eliminate the problems of double taxation with C corps:
1. Retained EarningsOne way to avoid double taxation is simply to retain corporate earnings. By retaining the income rather than distributing it to shareholders as dividends, the second layer of taxation can be avoided. This is not an option for entities whose owners rely on cash flow from the corporation, but it works well when the owners can afford to reinvest the cash in the corporation to grow the business.
2. Salary DistributionsAlternatively, the corporation can distribute its income in the form of salary or bonus, rather than dividends. The salary or bonus will be taxable to the recipients, but it will also be a deductible expense for the corporation. This strategy may be more effective in a corporation whose income is primarily derived from operations. Since the company’s income is earned by the efforts of its employees, it is more difficult for the IRS to challenge a corporation that is paying out that income as salary.
3. Income SplittingIncome splitting refers to a situation in which business owners withdraw as much of the corporate profits as they need to support their lifestyle, but leave the rest inside the corporation.
Since C corps and individuals are both subject to progressive tax brackets, income splitting minimizes the effects of double taxation. By taking only a portion of the corporation’s profits out as salary (a deductible expense to the corporation), and leaving the rest of the profits in the corporation for reinvestment, both the owner’s gross income and the corporation’s taxable income are reduced.
A C Corporation can also set up medical reimbursement and other employee benefits, and deduct the costs of running these programs, including all premiums paid.
The employees, including you as the owner/shareholder, will also not pay taxes on the value of those benefits.
Interesting nuances to ownership
An S corp may own up to 100 percent of an LLC, or limited liability company. While all but single-member LLCs cannot be shareholders in S corporations, the reverse – an S corporation owning an LLC – is legal. The similarity of tax treatment for S corps and LLCs eliminates most of the common concerns about IRS issues. Both structures “pass through” profits and losses to their owners for personal income tax submission.
S Corporation Advantages versus LLC
S corps are not legally different from C, or standard, corporations. S corp owners simply choose a different tax treatment with other corporation issues intact. They enjoy some benefits including offering stock, the ability to be sold or purchased as desired, perpetual existence, tax-free benefits like insurance, retirement plans, and travel, and changing ownership doesn’t need to affect management. These features are unavailable to LLCs. For example, LLCs are legally designed to have a defined lifespan. Corporations are forever, unless liquidated by their stockholders. Conversely, some states even statutorily limit LLCs to having a 30-year maximum existence.
LLC Advantages versus S Corp
It is less expensive to form an LLC. Much less documentation and other requirements are needed to create and manage an LLC. Owners — called members — are not restricted in number or citizenship, as with S corps, with no limit on the number of owners or U.S. citizen mandates. This gives LLCs the opportunity for attracting foreign investors. Wide flexibility to structure the company as you wish, even treating it like a sole proprietorship in single-member LLCs.
Pricing Based on Required Profit Margin
In this lesson we will review the notion of designing your pricing to make sure you net your minimum required margin.
What is your required profit margin?
Have you ever stopped to think about this before? You may not have, and that’s OK.
There are businesses out there that are able to operate on margins as small as 9% (like airlines) but this is 9% of big numbers, with the top 5 U.S. airlines generating over $5 Billion in profits per quarter.
Profits are important because they give you the room you need to grow. With no profit, you cannot invest in the talent, equipment or other agency necessities you need to actually grow the business from a single-person consulting outfit to an actual business.
Historically, if we were to consider what we provide as a service to be “advertising” or “business and consumer services” the margins are pretty scary at 3.15 and 6.47% respectively, according to this NYU Study.
What I’ve found (personally) is that a business needs to be netting at least 20% (this means the money you can put in your pocket (or bank account, or under your mattress if you like) after all expenses (including taxes) in order to grow.
I have learned some hard lessons running all sorts of businesses including a painting franchise, food stands, real estate (both commercial and residential), retail, software, publishing, and agencies – that I will never get into a business that doesn’t net me at least a 30% margin.
It’s just too much work for too little reward on the money invested – I’m I’m not putting at least $0.30 in my pocket for every $1.00 the Company generates, I’m just not interested.
Creating a profit first pricing structure
With that in mind, what’s your true total cost of doing business – calculating total cost of wages (employees) as well as including all variable costs (mix of hard, fixed costs like rent, utilities, etc. with soft costs from operating an office like snacks, water, furniture, desks, etc) minus your effective tax rate?
Since you’re in 7FA you’ve likely heard me discuss the book Clockwork? If you haven’t, now you have – go read it.
The author, Mike Michalowicz, also wrote another book that was an eye opener for me as an entrepreneur called Profit First.
I’m not going to rewrite the book here, but the essence is creating a system that guarantees you your required net margin.
But first – you need to figure out what you want that to be.
So the way your price your various services should always ensure your net pay amounts to a minimum operating profit margin (which in my opinion for agencies should be 35%+) but that should also take into account your taxes.. so your net margin should likely by closer to 60% if your true net after tax savings is going to exceed 35%.
One strategy for doing this is to literally create multiple bank accounts for your business:
1. Operations2. Tax Savings3. Owner Pay4. Profit
Every time you make a deposit into your Operations account, you take out the money required to be deposited into the other 3 accounts.
This is what it would look like for receiving a $3,500 monthly check from a Client:
1. Deposit $1,505 in Operations (43%)2. Deposit $630 in Tax Savings (18%)3. Deposit $525 in Owner Pay (15%)4. Deposit $700 in Profit (20%)
The above breakdown is a scenario where a 35% net margin is being allocated to your Profit and Owner Pay accounts, with money than being set aside for taxes and the rest going into cash for operations.
This will force you to run your business using only the money in your operations account, while giving you a process that ensure 1) you’re proactively saving for those quarterly estimated tax payments 2) you’re making sure there is money to pay ownership distributions and 3) there’s profit left to grow the business.
Seem crazy?
It might, but it’s not. Out of sight is out of mind – especially for money. This is why the smartest activities you can do to drive savings is to automatically have the money pulled out pre and post tax into retirement accounts you don’t have visibility into from within your daily accessed bank accounts.
Exercise
What’s your required net margin?
Start by calculating your current total cost of operations (all fixed and variable expenses) to get your gross margin, then look up your current net effective blended tax rate (Federal, State and Local/City) and subtract that to get your current net margin.
Do your own run through allocating your current net margins to your 4 accounts for a client check of $5,000.What amount are depositing into each account?Post this as your first [Month 3 Exercise] in #commitments.
Invoicing to Support Cash-Flow
When running an agency there is one simple rule above all else: cash is king.
Invoicing is your cash lever
You are probably acutely aware of this, but your process for invoicing (the how and the when) is the easiest lever you can pull to increase (and stabilize) your agencies cashflow.
We used to sign a contract, and then invoice on the “kick off” date based on when we were slated to start the project. Then that date would be the auto-bill date set in Freshbooks (the invoicing software we first used when IFTF was born).
This meant we were invoicing once per month, on all random days, and when customers paid late, we had to keep the ship afloat with our own cash.
If your agency does design or development services (services that have more concrete, tangible milestones) it’s likely you’re invoicing percentages of the total project scope based on hitting those milestones, i.e.:
– Deposit at contract execution – Progress payment upon delivery of the first round of whatever’s – Additional progress payments for more whatever’s being delivered – Final invoice sent when final whatever is delivered.
It all can have a huge impact on your total cashflow and ability to cover down periods when they inevitably come.
Consider this instead
You need to make sure your invoicing process is thought about in a way that lessens your financial risk as much as possible and gets cash in your hands as fast as possible.
After doing this before (at my last agency) and testing out a dozen ways to run invoicing now, here’s how we now approach it:
For One-Off Projects
- Contract signed, invoice goes out for 30% of the total project scope.
- Create invoices for the remaining 50% of the project billables divided by the total timeline, and invoice every month for that amount to keep cash coming in.
- Upon sending the second to last invoice (the last of the 50% series of invoices) send an email to your POC letting them know the final invoice will need to be paid prior to final project delivery. You can let the Client know they can review the work before hand via screen-share, or read-only access to code / design repositories (whatever you prefer), but that the production files will not be sent or deployed until payment is collected.
For a $30,000, 4 month project this would look like this:
- Contract signed, invoice is sent for $9,000 payable according to negotiated terms (likely 15 or max 30 days).
- Invoices are created for $15,000 divided by the remaining 3 months, so at the start of each month an invoice for $5,000 is sent, due based on (again) the contract payable terms.
- During the 4th month when the project is completed an invoice is sent for the final $6,000 to be paid before the project is delivered.
For Retainer Clients
- Contract signed, first invoice is sent (always push for 15 day payable terms but be willing to expand this to 30 days – because frankly, you’ll need to to do business with bigger companies). If the Client pushes hard for 45 or 60 days this is where you want to consider adding a discount rate for early payment – and make it just as painful; i.e. if it’s a 45 days payable term offer a 2% discount for payment within 15 days and if it’s a 60 day payable term offer a 5% discount if paid within 10 days.. you’ll see how quickly the smart companies pay their bills.
- You should have 2 invoice cycles per month (remember, you’re invoices are best if payable terms are 15 days) so these will be on the 1st and 15th of each month. The next (and subsequent invoices) will be issued on the next closest billing cycle after the contract execution date. So if the contract got signed on the 7th of the month, then the first invoice is on the 7th, but starting in month 2 it will be on the 15th and remain on the 15th going forward.
Having 2 invoice cycles per month gives you a better chance that you have checks flowing in before the end of the month and then again before the middle of the month.
Try to align you payment dates (that you’re able to influence) with these collection cycles as well, i.e. since you’ll likely have to pay rent at the beginning of the month, push for credit card, utility, and LOC payments to be toward the middle of the month.
You may also want to consider staggering your payroll so instead f it being the 1st and 15th it’s the 7th and the 21st.. it’s all about stretching your cashflow to hold onto it as long as you can and ensure you’ve always collected enough to cover your financial commitments.
Invoicing Exercise
In #commitments, within your [Month 3 Exercise] thread, please answer the following questions:
- What are your current (or most frequent) payable term periods for contracts?
- What percentage of your accounts receivables is currently past 90 days aging?
- How often do you run payroll (for yourself, your FTEs, and contractors)?
- Do you currently offer any “net” terms (i.e. discounting)? E.g. Payable terms are 1%/10 Net 30 (or in other words you offer a 1% discount for payment within 10 days of invoice but the full amount is due within 30 days).
Financial Strategies for Agency Owners
This segment of information is a doozy, seriously. It’s a LOT, and it’s dense; packed together tightly.
Stop.
Get a glass of water and your notepad.
I’m brining together information from my own experience, presenting some wonderful information first shared by Noah Kagan, and also including insights shared with me by my financial advisors and wealth managers / coaches (yes I have a wealth coach).
So to be clear, while everything I’ve included here is not 100% FROM ME, it is all curated to be specifically useful (valuable) to entrepreneurs that own agencies.
Are you currently leveraging all the pre-tax expenses you should be?Probably not.
If you currently pay for any of the following with post-tax money, i.e. you pay yourself AND THEN pay for these things, you’re lighting money on fire:
Your Car
This one can be a bit tricky. While I’ve heard of folks who only have one car to their household putting it in the company’s name and paying for it with the company — that makes me (personally) nervous.
Instead, if you have a one-car household I would rather see you take a “car allowance” i.e. an additional amount of money that is paid out to you pre-tax each month before your car payment is due to pay towards the car.
Now, on the other hand, if you’re in a multi-car household (like I am), you can pick one of your cars to pay for with post-tax money and then the other car(s) can be company expenses. So for example we have 1 car paid for by the agency, 1 car paid for by our investment company, 1 car paid for by another entity of ours, and then the rest of the cars paid for post-tax.
Your Cell Phone
There’s simply no reason to not just pay your cell phone bill every month with your company credit card. In fact, I’ve even created an account under the company’s name (it includes our “office phone” which is an iPhoneXS cause social media / mobile testing) and then have my phone, my wife’s phone, and 2 MiFi’s all on the plan).
Your Home Internet (and Cable)
You work on the internet. And you most certainly work from home. Our internet and cable service is bundled so I just pay the whole thing with the Company AMEX. My accountant said not only is the internet a no brainer, but that since we work on social and with consumer facing brands that it’s important we have cable access for market research.
Your “Home Office”
Even if you technically don’t have an office in your home, allocate 10-20% of your total square footage to your “home office” to be taken as a deduction against your rent or mortgage.
Your Furniture (some of it)
That home office of yours needs furniture in it. Same goes with technology like laptops, monitors, iPads, and so on.
Trips and meals (some of it)
You have to travel for work; client meetings, conferences, interviews, and so on. All of that travel is able to be written off against the company’s tax liability.
Let’s say you and your significant other really want to go see a new city; make it a business meeting. I’m not saying commit fraud and lie – I’m saying find companies there that would make good clients for you and email, call, snail mail – PITCH them. You don’t even have to get a meeting; make it a lunch or a dinner. It warrants the cost for you to travel, stay, and eat to make that business connection.
After all, most of agency selling is all about the relationships.
Your Dogs
This was perhaps the most shocking to me personally.. my buddy from Portland, OR, who is a 5x CEO of big software and professional service firms told me this last time I was out there. Him and his wife actually set up their own trust for their house (this even gives them the chance to write off things like home improvements; editions, landscaping, lawn care, house maintenance, etc.) but he told me that you can classify Dogs as “security” for your small business and write off their vet appointments, and even their food!
Ask your accountant about this one.. but mine gave me the OK.
SEP vs. IRA
Can’t it be both? Yes, yes it can.
Maximize your retirement savings by having an IRA setup through your company but then as a self-employed person you can also have an SEP account.
It’s possible based on your state that you *may* need to open a separate business to do this (this part I’m unclear on as I currently own somewhere close to 20 “entities” between operating businesses, investment clubs, and investment properties).
Keeping cash in the business (and running a profit-first setup) – this can essentially function as another savings account of yours where you dog-ear cash that the business will need to pay taxes on anyway, but this is a reserve with your name on it that you don’t need to pay taxes on until you actually distribute it.. it’s a great way to save for bigger purchases, especially if you’re using the multiple accounts structure to keep your investment money out of sight (and out of mind).
Credit Cards
More so – strategies for leveraging points & rewardsThis is also going to sound completely unconventional, but I recommend you have 5 credits cards AND a personal line of credit, for a few reasons:
First is what I like to call “The AMEX Sandwich”
Amex Platinum
- You get the Priority Pass included, which gives you access to lounges across all of America (an in a number of other countries, like Sint Maarten and Bahamas for example).
- With Amex Platinum they have Centurion lounges across America. They’re amazing; I mean you literally get unlimited free alcoholic drinks – and this is top shelf stuff. The food is shockingly good too (also free).
- You get $300 in travel credit back to you. So if you spend on Uber or United, they’ll reimburse you.
Amex Gold Rewards
- This is an account you open personally, where as the AMEX Platinum should be in the businesses name.
- You can connect the 2 accounts so all points flow up to you for use.
- The Gold Rewards card pays 2-3x points on all sort of expenses – with the combined point roll-ups these add up FAST.
- AmEx seems to (almost) always be running a travel credit where if you book through AmEx travel and use points you get 30% back, immediately. I’ve literally booked more than 20 first class flights AND nice hotel rooms so far this year all with points (literally millions of points) and have gotten hundreds of thousands of points back, just because.
Chase Sapphire Preferred
I recommend this as a personal use card, to pay for expenses you don’t want to expense while traveling (and in everyday life). They are currently offering 60,000 bonus points after you spend $4,000 on purchases in the first 3 months and an additional $750 travel credit when redeemed through Chase Ultimate Rewards.
The Chase Bank is HUGE so the amount of places you can leverage to redeem these rewards (or just get straight cash back) is also HUGE.
Chase Ink Preferred
This is the card I recommend as your 2nd “business” card, because it gives you some nice options. One is to redeem points through Chase Ultimate rewards travel portal to get a 25% point bonus, essentially giving you 1.25 cents per point.This means if you have a 50,000 point balance it would be worth $625 instead of just $500 – just because.
This card also pays 3X points on travel and has a dining network that extends to thousands of restaurants around the world.
Seeing the pattern here?
I’m a big fan of Card programs that offer significant benefits for both personal and business use where I can get one for me, and one for the agency, and then connect the accounts so all the points and rewards roll-up to be used together.
A Hotel Visa
My personal preference is the Marriott Rewards Visa, but if you have another Hotel chain you really prefer, this can work as well. This is the 3rd Credit Card I recommend you have have for your personal life – if you travel significantly; i.e. 30 days per year or more.
My wife and I take roughly 1 vacation per year where we stay in a Marriott that we don’t have to pay a dime for (usually like a category 6 or 7 room that would otherwise cost us anywhere from $1,500 to $2,500 per night).
This is because in addition to using this card at all the Marriotts I stay at, you get triple points as a Marriott rewards member if you have the card as well.
Capital One Spark
Great for smaller businesses just getting started and all I need to say about this one is unlimited 2% cash back on all purchases. Oh, and I’ll also just mention that they are currently offering 0% interest for 9 months.
Line of Credit (for the business)
Don’t do this until you crack the $50k MRR mark.. it’s just not really necessary, but at a certain level based on how big your payroll is, especially before you’re able to get to the recommended minimum safety net (i.e. 3 months of operating capital including payroll in your account in cash) – having an LOC to fall back on can be a life saver (and an employee saver).
Line of Credit (for you personally)
This is for different purposes, namely this is one you’ll need to run a bit of debt through but not much (like less than 5% utilization) making sure to fully zero it out every 6 to 12 months to keep the bank happy and to continue to increase the amount of time.
This is your slush fund for when big opportunities come around; you’re an entrepreneur, so regardless of how risk averse you may be — you’re still way fucking risker than most, and this is your opportunity vehicle to allow you to potentially exploit that risk for massive gain.
I’m talking about if you get into a position where you need more cash than you currently have in liquid-able assets to seize an opportunity like 1) buying a business or shares in a startup 2) buying property 3) buying tax credits.. it goes on and on.
My super unconventional tax strategy
I do this ONLY for my personal LLC, and absolutely am not recommending YOU do this; I’m just sharing with you that it’s something I do – and since this is all about sharing all of the things, I’m sharing with you too.
I don’t make quarterly estimated payments to the IRS.
Crazy right? This definitely won’t work forever as technology improves within the government – but apparently they don’t miss these payments until you start making them… so instead of giving the IRS an interest free loan all year, I put this money into a money market account via E-Trade and trade high growth tech stocks – which for example netted me a 38% return in 2018 on the cash in my TAX SAVINGS ACCOUNT.
what do you know about tax credits? What about the “R&D credit”
R & D Tax Credit
A few months ago, some friends (you may know these guys, they recently sold a company called Stitch) casually mentioned that they took a tax credit for their software developers in the United States.
We build a bunch of software between a bunch of my companies (including the agency), but I’d never heard of this deduction. After doing a bit of research, I was shocked to realize this is legit. You can expense the salaries of your software developers and the government gives you a tax credit up to 40% of their salary in addition.
We did this in 2017 (and every year since) for FTF and have literally gotten back hundreds of thousands of dollars each year.
The US government wants to encourage innovation in America, so they give a 40% state and federal credit for software development.
That means if you have a developer that makes $100,000, you can write that amount off as an expense to your company. Then you can claim an additional $40,000 credit against your net income to reduce your taxes even more. You can do this retroactively up to four years and every year moving forward.
Generally it’s classified as innovation if the worker is in the United States and the work is software creation on “new” development.
Some friends companies just run the numbers themselves, but for $40,000 for the firm to do it and $15,000 for my accounting firm to redo our taxes, I felt more comfortable given we were getting (lat year) nearly half a million dollars back.
This is what it looked like on paper:
You can claim the R&D credit even if your company isn’t doing anything innovative. For example, if you hire a developer to build an in-house platform rather than using something on the market, you can claim the R&D credit. So if the costs are equal, it’s often more tax-efficient to do things in-house.
What you need to do: There is a highly recommended firm for this out there called BKD.com to come and do an analysis of your software development. They provide you a report of what’s actually R&D you can take credit on. You can amend up to 4 years of tax returns and future tax returns with this credit.
CDARS, or https://www.maxmyinterest.com
This is a service I was introduced to where the main thing this does is automatically move your money into the highest interest rank banks online. There’s no risk and they help maximize your earnings without doing a bunch of work. It also helps you reduce your risk exposure by moving your money into multiple banks to stay underneath the $250,000 FDIC insure limit.
CDARS is a similar service that spreads your money in CDs across multiple banks.
This company takes money from your main account and then spreads it evenly across whichever banks give you the highest return.
High-Yield Checking Accounts
New bank accounts are matching the federal treasury bill interest rate and passing those savings on to customers – meaning there are checking accounts you can get 2.05% annual returns. And it doesn’t look like the Fed will lower interest rates any time soon.
I’ve moved nearly all of my cash to accounts with a higher interest rate and now receive great return every month without doing anything. Marcus.com, Ally.com and Amex Personal Savings are offering near 2% on personal bank accounts. Low risk and downside, highly recommend. There’s no minimum, you can withdraw and transfer money up to six times a month, and they are FDIC insured.
Use Discount Services
BillCutterz.com is one service I’ve used to get a handful of service bills down (think cell phone, internet bill, etc.). I’ve tried others like asktrim.com and getservice.com as well. It doesn’t cost you anything and the majority of the benefits are compounding since you’ll get that rate indefinitely.
Primary Residence
Many states do not collect state income, as it encourages people to live in the state and those people make the state income in other ways (higher property taxes, gambling money, higher business tax, etc.). This can be a significant benefit if you have a high salary or you are going to be expecting a windfall from a company going public or selling your business. If you travel a lot then, I’d consider where your home base or “nexus” (the government term for where you live) is situated.
These states do not have income tax:
- Wyoming
- Washington
- Texas
- South Dakota
- Nevada
- Florida
- Alaska
For clarification, what is considered “living” in a state?
In theory, you need to be in that state for more than half the year – that’s at least six months and a day (183 days) per year – although you might still have to file a partial-year tax return in another state.
For some states like California, they will tax you if they find you working there even for a month out of the year. That can cost you significantly.
Puerto Rico
I have around ten friends who’ve made money on crypto, and all sorts of other internet / digital businesses who’ve moved to Puerto Rico for significant tax savings. The positive is that if you travel a lot in general this is a great deal; the negative is that you have to still live in Puerto Rico. It’s not a bad place when I visited, but how much is it really worth to live there?
I don’t want to spend too much time on this because there’s a good chance you know this already. But if you live at least six months a year in Puerto Rico, you can claim a 0% personal tax rate and a 4% corporate tax rate. This is because the US excludes Puerto Rico from its federal tax collection; they call it Act 20 and Act 22.
You can live where you want the rest of the year, but as long as you’re there at least 183 days a year you’ll get the low rate. But you must bring your USA business to Puerto Rico and your clients must be outside of Puerto Rico. This is so locals can’t claim this tax exemption.
If you make $100k in San Francisco, you lose 37% to federal tax and 13% to state tax. You only make $50,000 in actual money available. But if you move to Puerto Rico for half the year you only have to make $52,083 to end up with the same amount of money.
This is almost too good to be true, but there are a few catches with this tax code. But if you can meet the requirements, the payoff is huge:
1. You have to get a house in Puerto Rico2. You must donate $5,000 a year in Puerto Rico3. Only service-based business types qualify4. You must be doing work outside Puerto Rico5. Hire a Puerto Rican worker
Another alternative is very risky, but I’ve heard multiple people doing it. The strategy is to go Puerto Rico, declare yourself as a student there, and take your classes online. You get to register as you are living in Puerto and you don’t have to be there. But it’s not worth it if you get caught.
Low car registration fees (forever)
==> I haven’t done this yet, but I have every intention of doing it.I’m car obsessed to the dismay of my wife (and my bank account), but it’s definitely fueled by many of the folks I’ve met over the past few years with big, fancy car collections.
One of the businesses that I religiously bring my cars to the week I buy them (literally the 2nd stop after Shades of Gray Tint) is Fabspeed.com.
The owner, Joe Fabiani, created an LLC in Montana and has all his vehicles in that location. Why? Because there is sales tax on new car purchases and very low yearly fees in Montana.
Additional bonus: no state inspection so if you (like me) enjoy really open exhaust systems and being able to hear all of the beautiful notes of your big, forced induction engines – registering in Montana is the thing to do.Montana also does not charge registration fees, so many people find reduced long-term costs by creating an LLC in the state.
For $800 you can create an LLC in Montana and move all your vehicle registrations there. The lack of yearly fees may only save you $200 a year, but think long-term. Multiply that times 50 times the number of cars you have.
2 cars * 50 years * $200 year = $20,000
Here’s the service recommend by Noah Kagan; 49 Dollar Montana Registered Agent You can also use service like this one to register your vehicles in another state.
Hack Your International Travel
These services can help find the optimal flights for you and your team. Also can figure out the best way maximize your credit card points with flights, as well as more complex itineraries:
I literally used this in December, last minute to fly my wife and I to hop around Europe for 18 days last minute, we flew business class from NYC to Zurich, Switzerland roundtrip (plus flights to all the other cities) for less than $7,000 TOTAL.
I’m serious, check this out:
Introducing “Cash Flow Banking”
This concept was first conceived by wealth creation expert Garret Gunderson, but it is such a powerful building block of any financial foundation, that I personally have multiple active Cash Flow Banking policies.
Here are some of the benefits:
Consistent, Guaranteed Growth
If you put extra money into a savings account, it will likely earn less than 1% per year at today’s rates. (And any return you do get is taxable.)
Conversely, extra money in a Cash Flow Banking account has a minimum guaranteed rate of 4% per year or more.
That’s a 400% higher return than money put in a savings account. And those returns are contractually guaranteed by the insurance company.
As a bonus, non-guaranteed dividends can also add an extra 5-13% per year on top of that. That is the gross dividend and there are some expenses to be accounted for, but Cash Flow Banking has guidelines to make sure as much goes to the cash value as legally possible, while keeping your tax advantages, as to minimize your insurance expenses.
Guaranteed Against Loss
Most people save for retirement in a qualified plan like a 401(k) or IRA that’s heavily invested in mutual funds (which as mentioned earlier – I’m still all for).
But, as people found out in the financial crisis of 2008, just because your financial statement says you have $50,000 in your retirement account, doesn’t mean you have $50,000 in your retirement account.
If your retirement account is invested in mutual funds, it means you own $50,000 worth of shares in the mutual fund. And those shares could go down in value, or drop in half very quickly, and your money is simply gone.
That is not the case when you accumulate wealth in a Cash Flow Banking policy. Your account never goes down, regardless of what the stock market does. The only direction it can go is up.
Tax Preferred
Your cash value, which grows at a guaranteed rate (historically 4%), grows completely tax deferred. Loans against the policy, are completely tax free. The death benefit is completely tax free. And managed correctly, utilizing the cash value during your lifetime is completely tax free.
In fact, with the proper guidance, you may never have to pay taxes on any money taken out of the policy.
In comparison, a mutual fund would have to return 8-9% per year, every single year, to match the growth of a policy like this considering the fees and taxes associated with mutual funds.
Not Touchable By Creditors
The exact rules vary from state to state, but generally the money inside one of these policies is off-limits to creditors and the courts can’t touch it in a bankruptcy. So your cash value is safe and secure from financial predators and pirates.
The Policy Doesn’t Have to Be On You
Starting a life insurance policy later in life or after being diagnosed with a major illness can be costly. But that doesn’t have to be an obstacle to building wealth inside of a Whole Life Insurance policy. You can simply start a policy on a spouse or a child and get the same benefits.
Personally, I have Cash Flow Banking policies on myself and my wife, and when I have them – my kids too.
More Than Just a Death Benefit
If all you want is a death benefit – and none of the growth, tax, privacy and wealth accelerating benefits of a Whole Life policy – then you can buy term life insurance. But I don’t (personally).
Every dollar you pay into term life insurance is lost unless you die during the life of the policy – which is typically 10-20 years from the day you sign. That’s why 99% of policies end up not paying out, resulting in lost money.
With Whole Life Insurance, however, the policy is guaranteed to pay out as long as you pay the premiums. It’s permanent life insurance.
Which means your premium payments belong to you. They’ll either be added to your estate when you pass away, OR more likely, you’ll utilize the money in retirement or to accelerate wealth.
Allows You to Buy Your Net Worth
Because Whole Life Insurance comes with a guaranteed payout, if you sign a contract for a $5 million death benefit, then you just added $5 million to your estate.
If you pass away, your estate is $5 million richer. On the other hand, and preferably, you will grow that $5 million in net worth over time through your premiums and dividends without needing to kick the bucket.
Either way, if you continue to pay your premiums, your estate will be $5 million richer in the future.
2 Ways Cash Flow Banking Loans Accelerates Wealth Creation
Right now I’m growing wealth inside a handful of different whole life insurance policies, and they’ve allowed me to jump on several opportunities.
For example, at one point when the agency was growing consistently and I knew that I could accelerate this with more development resources – I had the opportunity to CoFound a new entity that would give me ownership over a 15 person development company in Belgrade, Serbia.
But to pay for it, we didn’t want to dip into our cash flow. And there was no certainty that a bank would approve us for a loan.
No problem. Because I had wealth inside of a policy growing at 5.5%, I simply requested to borrow against the policy. I received a check within 72 hours and paid for our share of the new company in full.
Having a liquid “wealth account” can allow you to jump on opportunities before they pass you by where otherwise you may simply not have the liquid capable to capitalize.
Not only that, but because you’re borrowing against your policy, you’re able to leverage someone else’s money while your money grows guaranteed and protected inside your policy.
This may surprise you, but “financing” everything you buy can make you rich.
Many financial gurus look down on financing – i.e. taking out a loan to make big purchases.
They say financing a new car will cost you in unnecessary interest payments, and that paying for the car outright with cash is better. That may be true in some cases.
But the whole truth is we “finance” everything we buy. Yes, you pay interest when getting a loan. But you also pay an opportunity cost when paying in full with cash.
And if you fail to understand and acknowledge “Opportunity Cost,” it can cost you thousands of dollars each year.
But it’s important to understand how and why it works so you can properly take advantage.
So the first question to answer is
What is “Opportunity Cost?”
Very simply, opportunity cost is what you miss out on when you choose one option over another.
Every decision you make in life includes an opportunity cost. If you spend $50 to eat out, you give up the ability to earn interest on that money. Or pay an important bill. That’s your opportunity cost for eating out.
On the other hand, if you choose not to go out to eat and save the $50, you give up a good time and great food? and you miss out on creating memories with your friends and family. That’s your opportunity cost for saving.
Every decision to spend or save has an opportunity cost attached.It’s the reason why “you finance everything” you buy.
Because even when you save up and pay cash for everything, your opportunity cost is a hidden “finance charge.”
It’s probably easiest to explain with an illustration…
3 Ways to Buy a Car: Which One Is Best?
So let’s use a practical example of buying a car. We’ll explore what happens if you:
- Buy a car with Cash
- Buy a car with Credit
- Buy a car with your Cash Flow Bank
For this example, we’ll see what happens over a 20 year span if you buy a new car every 5 years using each of these purchasing strategies.
First, since it tends to be the most popular way, let’s look at:Buying a Car With CreditBuying a car on credit means you borrow someone else’s money to get the car you want right away.
Then you pay off the loan over the next five years.
The opportunity cost is the interest you pay on the loan for using someone else’s money.You start at zero, of course, and then immediately get a loan for the entire amount of the car plus interest.
After five years, the loan is paid off and it’s time to buy a new car. Although, since it’s five years later and inflation has been steady at 2.5% per year, you’ll have to take on a little more of a loan to buy the same quality car.
Buying a Car With CashIf you start out with zero dollars, clearly you can’t buy a car with cash today. You have to save up before you can buy it.
To purchase a $25,000 car within 5 years, you’ll need to save $413 per month. But wait… just like in the last example, there’s inflation to account for. At 2.5% inflation per year, in 5 years, that car will cost $28,285.
So you either have to earn 2.5% on your savings to keep pace, or you have to increase your monthly savings to $468
Now during that 5 years, your opportunity cost is going without a car.
And once you buy the car, your cash reserve goes down to zero. So you now have a car that’s paid for, but it comes at a price.
The new opportunity cost is that you no longer have that money to spend on other things (including emergencies), and you miss out earning any interest on it.
Each year your balance builds up. Then at year 5, you spend it all on the car.
Over a 20 year period, you saved up and spent over one hundred thousand dollars.
You’ll have 4 cars, all paid for ? and $0 cash remaining.
When you look at it, it’s really just a mirror image of buying on credit.
As you can see, at the end of each five year period, the result is practically the same.
You end up with no cash and a car that you own outright.
The only difference is that with a loan you get the car first. When you pay with cash, you wait until the end of the five years to get your car.So is it better to buy a car with cash or credit?The simulation above seems to indicate it doesn’t matter if you pay with cash or with a loan. And theoretically speaking, there isn’t any difference.
Please note, however, that this is a simplified scenario by removing any interest earned on saved cash.
So let’s even the playing field…In order to make the simulation closer to reality, you need to make two adjustments and recalculated the numbers.
First, considering interest and inflation, adjust the monthly savings deposits to match the monthly payments you’d make on a loan.
That way, the monthly out-of-pocket expense is the same in each scenario.
Second, assume you’d save the money in a traditional savings account or CD earning at least a little interest. Currently, a 1% interest rate is about all you’d get.
But even with that, you’d have more at the end of each five year period than the car actually costs.
So if you earn interest while saving to pay in cash, you’ll have an extra $11,938 at the end of the 20 year simulation.
The only downside here is that initial 5 year capitalization period where you have to go without a car. If you’re able to do that, you will be better off over the long run buying with cash.
When you save up in a traditional bank, you must withdraw the full amount of your purchase. Once that money is drained from your account, you miss out earning interest on it.
If you were instead to leverage a whole life insurance policy for this, you continue earning interest on the full amount of your savings, even after purchasing your car. That’s because you don’t withdraw cash for your purchase, you take a policy loan out against the cash balance.
Like saving up and buying with cash, you do have an initial “capitalization period” where you are saving up.
And like a traditional loan, you also have the opportunity cost of paying interest on that loan.
However, you avoid the opportunity cost of withdrawing all your savings.
And here’s the where the “magic” kicks in. Since you continue earning compound interest on the full balance of your account, it ends up canceling out the opportunity cost of the loan.
It goes up quickly over the first few years during the capitalization phase (all saving, no withdrawing).
Once you’ve saved up enough, instead of withdrawing the cash to buy your car, you take out a loan against it.
At this point, you’ll have a car, plus savings of roughly $25,000 offset by a loan of $25,000. Net zero. Pretty much equal to the other two methods.
Your original savings compounds year after year. In the meantime, you are paying back your loan.
Once the loan is paid off, you’re not back to zero (like with a traditional loan), you’re back to your full account balance, plus all the compounding interest it has earned during that five year period.The end result:
- Financing against your owned policy asset value wins by 77.4%
- In any case, you finance everything whether you buy, save or borrow.
When you buy on credit, your finance charge is the interest you pay to the lender. When you buy with cash, you deplete your savings and your finance charge is the interest income you could have earned.
This is opportunity cost at work.
It costs families hundreds of thousands of dollars over their lifetime when you consider all the various purchases a family makes.
Wrapping Up
There’s no exercise for this lesson, well lessons.
Instead, I wanted to share a bunch of my experiences and little known strategies available for you as an entrepreneur. Let’s discuss these in #watercooler since it’s a LOT to digest 🙂
Setting Up Project Management for Scale
Active (and effective) management of tasks and resources is probably the #1 sticking point I hear when talking to other agency owners.
Funny enough, it’s usually from Founders jumping right into the deep end with a big, expensive piece of software thinking it will fix all their problems.
It doesn’t make sense to build the clubhouse before the club, and in the same vein, without the processes in place simply throwing tools at them won’t achieve anything.
A dead simple management process that works
There is a dead simple daily management process that will get you to 30 employees without software. I’m going to show you what it is, why it works, and how to use it.
Creating service specialization with departments
Delineating your services into departments will allow you to scale as fast as you need to support sales. There is a way to do this so it supports your service offerings and preserves your capital from large investments in pre-trained talent.
Creating a production schedule
How many clients can you currently handle? When will you need to hire to support additional client needs? If you aren’t running a production schedule – you can’t possibly have answers to these questions rooted in anything more than “your gut,” and that’s not how you build a sustainable business.
Instead you need to build out a pipeline of time that’s available across your employees and/or contract resources and operate with a buffer zone on total resource output so you’re hiring before it’s too late.
Building systems for reporting
For many agency services, you’re only as impressive as your client reports – I’ll show you systems for building internal reporting that will give you immediate insight into your resource utilization, profitability, and help you manage hiring and resource costs.
A Dead Simple Management Process, That Works
What if I told you there was a painfully simple system for managing your team’s day to day productivity, and keeping not only – but everyone else – focused only on what was most important?
Introducing the 3×3
- What it is
- How it works
- Examples of how to use it in a team of 5, 10, and 20 (which should put you well over your $1 million mark).
The 3×3 is a very simple email format that distills down the scrum methodologies daily stand-up into a single email.
I was first introduced to this method when I was hired as the CEO of angel-funded venture Factor Media, where we built a consumer review site in Japanese.
The guy that stroked a very large check to fund the idea – introduced this strategy to me as a way to manage what started out as me and a few contract developers but within 6 months scaled to over 30 people across America, Europe, India, and Japan.
This simple process was what allowed me to scale my team to 34 people over just 18 months and still keep a handle on what was going on day to day. The format of this email is important, but it’s also critical that the process for how this email is deployed and rolled-up is tightly adhered to.
How it Works
The way the 3×3 email works is to provide every person in the organization a complete view of what’s going on among their direct reports. This is achieved by having each tier of resources send the 3×3 email at the very end of their day to the person they report into directly.
In the beginning, you will be the only person receiving these emails – and it’s important that before YOU close out your day, you address the information contained in each. Where this email becomes extremely powerful is as your team begins to scale past your initial few people, when you won’t be directly managing everyone anymore.
When you have a level of managers underneath you (this tends to happen between 5 and 10 people) where the people who were your initial “doers” are now managing delivery of a group of people underneath them that are doing the work.
The beautiful part about this process is that when deployed and tightly managed, it scales pretty effortlessly up until about 25-30 people – at which point I’ve found resources become redundant at your higher levels and staying on top of all of the information becomes too much to manage or address in the needed time period.
What comprises a 3×3 email?
It’s 3 sections, each with up to 3 pieces of information in each section. Those sections are:
- What did you accomplish today?
- What roadblocks did you hit?
- What questions do you have?
Then within each section, if there are more than 3 items – they need to be coached to only place the top 3 most important items within each section, so; What did you accomplish today?
- Highest priority task completed or progress
- 2nd highest priority
- 3rd highest priority
What roadblocks did you hit?
- Biggest thing that slowed you down or held you back from completing a priority task
- 2nd biggest or most critical roadblock
- 3rd most important
What questions do you have?
- Most important question you need answers
- 2nd highest priority question
- 3rd highest priority
Then it’s the job of your folks who are receiving these to aggregate responses from their direct reports, and make decisions about what the priorities are.
A critical caveat here is that your managers need to be coached to handle the questions and roadblocks that they’re able to, and only pass on those that they too need support on from the next level of your chain of command.
This process is designed to get everyone on your team thinking in terms of priorities – and understanding that it’s their individual roles to handle as much as they’re capable of but then reach out and ask for help every day on the items they need additional support on – all the while viewing these tasks or initiatives through the lens of prioritization.
Examples of How This Looks in Practice
I’m not going to get into the specific roles of each person within your agency team right now, as this is a big part of the focus of the next section. So, the examples I’m going to walk through are based on the following assumptions:
- You have a main operations person who “runs the show” underneath you and manages communications with clients
- You have people in charge of sets of deliverables based on your service lines, these are your “service specialists”
- You have a PM that manages your service specialists against project plans and timelines
Here’s what your company looks like when you’re just starting out:
Here’s how the 3×3 would flow within a team of 5 People
Here’s how the 3×3 would flow with 10 people
Here’s the flow for 20 people
The nuances here are based on my preference which is to internally train for positions and promote from within (which works when you’re small).
I like to hire for “support” roles with the intention that these people will grow into the roles their supporting… as they become more and more familiar with the tasks related to fulfilling the larger components, they are uniquely setup to assume more responsibility and take over fulfillment.
Creating Service Specialization with Departments
Task grouping and assignment sounds harder than it is; it’s all about breaking down your services into checklists, and then grouping those checklists into buckets so you can build capability proficiency among your resources (contractors, freelancers, employees, etc.).
Breaking down tasks into checklists
What is something that gets done the same way every time? The most usual answer here across every agency is on-boarding new clients.
If you’re unsure think about it – when a new client signs on with you what happens? My guess is it looks something like this:
1. Upon contract execution, a welcome email is sent from the POC to the new Client letting them know all of the next steps they can expect, things like a kick off call or meeting (to hand off from sales to PM) to review scope and where they are introduced to their team, specifically their dedicated point of contact.
2. The PM introduction and requests for any access or data needed for the engagement.
3. A link to your PM system or client communication portal.
4. Notice of their incoming invoice and what email it will be coming from as well as confirmation of all parties who need to be included.Sounds like a checklist to me…
The same goes for every deliverable you have, if you have any semblance of a process that is repeated – it needs to live in a checklist so it can be “dummy-proofed” and trained against, otherwise you’ll never be able to scale.
Where is there overlap and opportunities to create flywheels?
A “flywheel” is a child task that can be done once but support multiple parent tasks simultaneously.
An example of a flywheel for my agency is the data that is collected as part of our keyword research process – we’re effectively pulling in a list of all of the top-ranking URLs for all the keywords that are relevant for our client at every stage of their conversion funnel – this also gives us competitive intelligence to know:
1. What the keywords are at each stage of the funnel to support content recommendations as well as2. Who’s currently ranking for them, and in what position – which gets handed off to our link building department to help inform their strategy. Having your trained resources who do the work you’re selling begin to train and manage people underneath them to handle more and more of their work is how you build up redundancy and begin to scale your team.
This also gives you the added benefit of reducing your risk for finding specialized talent – if you setup your fulfillment systems (your team) in a way where you’re breaking down the most basic tasks into their smallest possible counter-parts (usually data acquisition, entry, and organization) where resource turnover is high (due to burnout from remedial tasks, but also these positions tend to pay comparatively low hourly rates, i.e. between $3-$8) you make it easier to find replacements.
Over time your service specialists become well versed enough in how to build the deliverables they’re managing that they are able to move the support staff into end-to-end fulfillment of deliverables where they are just reviewing and course-correcting / delegating on getting those deliverables completed effectively.
This in turn makes them the product experts capable of managing teams doing the work they are already intimately familiar with – setting them up to move into a PM or “Team Lead” role capable of running execution as a “department.”
It often happens that you may have multiple “departments” doing the same work – this happens most in highly specialized service agencies (think of agencies who specialize in a specific channel for demand-generation like SEO and PPC, or even other non-digital services like Plumbers or Electricians).
When an agency gets to a place where they have multiple separate teams doing the same work to support the volume needed – you still need a centrifuge to manage those teams, and this is where the role of a “department head” comes into play.
A department head is a person who is managing a group of team leads underneath them that are all managing groups of service specialists and support staff where the support staff is managed directly by the specialists.
These “departments” work best when they are built around services that can be clearly delineated (usually on the SOW and invoice) but where the amount of overlap between departments is minimal – allowing for capabilities to be tuned at the individual resource level to create higher levels of efficiency.
Team evolution
When it’s just youYou’re everything to everybody but you’re likely still using contract resources to help you do data mining/entry or support the edges of your engagements that you know how to manage but either can’t fulfill yourself (or it just doesn’t make sense to).
You will be amazed at how fast you will suddenly have a handful of people underneath you and be in a position where team structure (INTENTIONAL team structure) is more critical than ever.
Don’t do what I did and wait until you are in a mad rush to hire to start thinking about what your team needs to look like to build the business you want.
Instead I want to present you with a handful of scenarios to think through, so you can begin to map out what you want your organization to be shaped like – to more intentionally guide your sales and hiring decisions.
I’m a HUGE proponent of hiring an operations person first – especially someone with ZERO agency experience but exactly the right attitude, i.e. someone who is ruthless with deadlines and has meticulous attention to detail… accountants and event coordinators work well in these roles 🙂
Especially if you can get them 3-4 years out of school where they’re not yet making the big bucks but are working like fucking dogs.
You would be amazed at how motivated these people can be to make a career change that puts them on a path to make more money faster, and with less 100 hour work weeks.
When there’s 5 of you
You will begin to spend your time focused more on sales and fulfillment and less on doing the work need to fulfill on your contacts. This is the point where your Operations person is straddling the roles of both Finance/Operations and also Account Management; where they are the person who is handling more and more of the communication with your clients.
This is also where your most capable and experienced service specialist is moved into an early role as a department head, serving as a PM, and managing 1-2 other service specialists and support staff members.
When there’s 10 of you
The big change here is this is the first time you begin to start layering resources to more formally delineate between departments. First and foremost you should have someone else helping you with Sales to begin to scale your demand generation and new client acquisition efforts. This might be a 3rd party vendor (like an appointment setting service) or this might be someone to handle spinning up the sales collateral and pitch support assets you need so you can focus all of your time and focus on generating new leads.
At this point you are maxing out what’s reasonable for your PM to handle, with 6 folks reporting directly to her. This may be a mix of service specialists and support staff, but it’s unlikely it’s 1-to-1, i.e. it doesn’t tend to work out that you’ll have 3 specialists and 3 support staff, and instead it’s more likely you’ll end up with 2 specialists and 4-6 support staff – but it all depends on what the processes look like within your fulfillment pipeline.
You will want to start paying attention to your specialists attitudes and the nuances of their performance more and more here as ideally one of them will be moved into a PM role as you continue to expand your fulfillment resources.
When there’s 20 of you
Immediately, you should be considering hiring an HR person… don’t wait til 30 people like I did, that was a mistake.
The biggest change between 10 people and 20 people teams is you’ve reached the tipping point where every function within your company has support staff underneath it; you (Sales), Operations, Account Management, and your fulfillment resources.
The most important thing to realize here is you’re creating career paths within what are most likely to become your departments; your Sales Support person is being trained to step into a Business Development Role. Your Account Management Support person is being groomed to move into a full-blown AM role. Your PM’s are being trained to lead individual fulfillment departments with PM’s underneath them, and so on.
Standard Operating Procedures (or SOPs) will begin to evolve at this point and some of your processes that got you this far won’t be the processes that get you to 30, 40 and 50 people.
You need to stay vigilant and continue to expand your professional network to find more agency owners at similar Company stages to your own — every one is making similar mistakes, but the faster you can find out about how and what worked or didn’t work from peers – the faster (and cheaper) you can fix it for yourself.
Exercise: Organization Design
Create an Org Chart for your company as it exists:
- Today
- With 10 People
- With 20 People
- With 50 People
Don’t use names, instead use titles or roles. For roles you know you plan to fill but don’t currently have someone in right now, use {Placeholder}
Use whatever program you like; Powerpoint, Keynote, Google Slides, it could even be Sketch.
IMPORTANT NOTE
Your Org Chart is very unlikely to come to fruition exactly like you envision it, for example here’s what FTF looked like in Q2 of 2018, and where I thought we were going to be going in terms of our team structure:
But as of Q2 2019, here’s where we ended up:
More so, I can tell you that in even just the past 2 months we’ve moved away from this plan and made changes to the Operations and PM sides of the business, BUT having this laid out as a guide has been incredibly helpful.
Creating a Production Schedule
A production schedule is not just something for movie companies – it’s a strategy that requires you to consider all of the resources you will need to fulfill on your client contracts – and then laying it all out so your client work makes it out the door on time.
At FTF we do this the last week of the month for the upcoming month.
The scope of the project is already built out within the project plan in our PM system (we’re currently using Asana) but this is the time to review the upcoming schedule especially since it’s likely new clients will be kicking off and will need to be worked into the plan and have resources allocated.
I like to run folks at a 75% utilization rate; this means if you have your people on a 40-hour work week schedule, then you would expect them to be logging 30 hours of billable time.
The other production caveat I think is important to mention is that I’ve found it best to hire for a role when the total amount of available production hours for the role hits 80% utilization.
What this means is if you have 5 people in a role that is responsible for producing deliverables that take 20 hours each, you have the “budget bandwidth” to produce 30 of those deliverables per month – but when you get to a run rate where your current resources are producing 24 deliverables – it’s time to hire.
Here’s what it looks like broken out:
1 resource = 120 hours of expected production/month = 6 deliverables @ 20 hours per deliverable.
5 resources = 600 hours of expected production/month = 30 deliverables @ 20 hours each.
When production volume reaches 480 hours (i.e 24 deliverables) it’s time to hire another person to support that role’s production output. The way you can begin to track this to understand it is to lay it out in a pretty simple spreadsheet that measures and tracks your resource budget versus utilization.
An important caveat here is you need to have your people tracking their time. I know, this is not fun – but it’s not to play big brother, it’s to make sure you’re not under-staffed or expecting too much of your folks.
On top of that, it lets your PM’s set reasonable (and accurate) due dates for client deliverables. For time tracking, there’s a 100+ tools out there to choose but some of the best free ones are toggl and clockify (what we use).
Running a production schedule will give you the insight you need to understand how your folks are being utilized, and empower your PMs to manage scheduling across your current available resources – making sure everyone’s total work load is maintained evenly, while also gaining visibility into when you may need to hire (or fire) resources to manage the load. Here’s what a simple resource utilization report looks like:
- Name
- Department
- Total monthly budget hours
- Hours booked (total hours booked across all resources in department)
- Utilization percentage
- Total budget hours
- Total hours assigned
Because it’s a pain to get these reports all set up from scratch, I’ve had one built out in Google Sheets for you 🙂
Important Note
The fields that are yellow are editable, i.e. you can type or edit them directly and the drop-downs in light blue are just that – drop-downs fro selection.
Everything is built with dependencies across sheets so it’s key you use the same names for editable fields and NEVER USE AN APOSTROPHE as this will break all the scripts – sorry, just a limitation of Google Sheets :/
The 7FA Resource Manager includes a:
- Dashboard
- Departments
- Resources
- Deliverables
- Deliverables Library
- Task Adder
- Tasks
- Clients
The Dashboard is your 30,000 foot view of what’s going on within your agency. At the highest level it’s showing you your total available resource hours (budget), the hours allocated, and your utilization rate.
This gives you a snapshot of how your doing — and if most of these hours are from Contractors (like they should be in the beginning) than it’s important to note that your utilization rate may seem artificially lower, even though you’re running efficiently from a profitability perspective.
This sheet also is your window into utilization by Department and at the individual Resource level.
The most important element of the dashboard is the DATE SELECTOR in the very top (cell B2) as this the controller for all the data displayed on this sheet.
Departments is what it sounds like, this is a simple roll-up of the total budget versus allocated hours within your departments – you will notice that ONLY THE DEPARTMENT NAME is marked in yellow (editable), this is because all the rest of the information is automatically pulled in via query scripts from the other sheets.
Resources is where you add in your actual folks doing the work, whether these are FTE’s, part-time folks, contractors or freelancers – this is where your fulfillment pipeline should be built out.
For each resource add in the name, Role ( this is optional but I may add additional reporting functionality around this down the road), Department, Hourly Cost, and Monthly Availability.
If the Department is new, add the Department to the Departments tab first and then come back to the Resources tab and it will be included in the drop-down.
Clients is a really simple view where you add new clients as they come on, not the ONLY field that is editable here is the Client Name, all the rest are calculated to track your profitability for the lifetime of your Client.
Deliverables Tracker is where this really starts to get cool. The MOST IMPORTANT thing to note here is that this view is 100% non-editable, and is intended specifically as a reporting view to give you insight into your profitability at the deliverable level.
There is a Deliverable ID column that is used to associate tasks to deliverables. When the script runs, it fetches the highest ID number from the Deliverables sheet and creates a new ID by adding +1 to it.
The Deliverables Library is where you create your deliverable templates. For each template you define the tasks and scoped hours.
The Task Adder (or “Add a Task”) sheet is driven by the 2 drop-down menu’s up top (one for clients and one for deliverable). The deliverables drop-down queries the Deliverables Library, so when you choose a deliverable it automatically populates the Deliverables and Tasks tabs based on the data in the “Add a Task” tab.
You can change the the due dates or resource assignment at any time – you just one to make sure you use the build in scripts;1) Fetch Tasks – will go get all the existing tasks for a specified deliverable.2) Add Tasks – will push any updates on the “Add a Task” sheet into all the other sheets and update all the associated date across the entire Resource Manager.Task manager – is where all of this data is pushed to, and you will notice all the yellow cells to see that if you need to make edits to any of your current tasks – this is where you can do this.
The Task Tracker is the last sheet and is incredibly important – this is another sheet that is 100% NOT EDITABLE, but has filters built to give you the on demand reporting you need to drill into your production schedule by Client, Resource, Department or Date Range.
A Friendly Final Note on The Resource Manager
While it hypothetically could be used as a PM tool, it is not meant to be – it is simply meant to supplement your PM tool to give you visibility into scheduling and resource allocation/planning for the month ahead of you.
I envision this being used as part of your resource planning during the last week of the month as you (and then eventually your PMs) are planning who is going to complete which tasks for which clients by when.
Exercise: Building your production schedule
Using the simple resource utilization tool I’ve provided, please run through the process of filling out each sheet yourself for your current workload.
Once you’ve finished filling it all in, shoot a 30 second screencast starting with the dashboard view and running through each sheet to show off your build out.
Then upload that video in to the #commitments channel within your [Month 4 Action] post.
Building Systems for Reporting
Reporting is a critical function of your agency, and must be approached (and managed) as such – both for internal and external stakeholders.
Internal Reporting
You should be designing systems to keep your finger on the pulse of your company from a few perspectives:
- Financial
- Operational
- Client Success
The best agencies find ways to stitch these components together to minimize the amount of reporting while maximizing operational visibility.
Financial Reporting
This should be the very first thing that is reviewed in your Monday Management Meeting. It’s not meant to be a comprehensive review, but it’s important to keep your fingers on a few key financial aspects of the business at the start of every week.
The main items that you as the Agency Owner need to be aware of are:
- Cash on Hand (this isn’t just the total cash across all your accounts but should also include any available credit so you have a complete picture of what the total “available cash” is at this point in time).
- AR Aging – how much is the total balance of all outstanding invoices and what’s the breakdown of what’s current (30 days or less outstanding) vs. 60, 90 and 90+.
- Accounts Payable – Use a similar timescale here; how much is due within the next 15 days (can you cover all your financial commitments based on total cash on hand), 30 days, 60 days and 90 days.
- Upcoming invoice schedule – based on where you are within your current invoice cycle, what’s the current expected total amount of invoices you plan to send out on the next cycle date. Yes, this is represented in your 15 day AP report but I like to highlight it as a separate discussion point in case the number needs to be increased – HERE is where you can discuss strategies for cashflow advancement, i.e. can you deliver something early and invoice early? Are there additional services you can sell to existing customers immediately as part of current service scope to bolt on additional line items to their next invoice?
Operational Reporting
The way we have approached this is to take a page out of Michael Michalowicz’ book Clockwork and define our Queen Bee Role (or QBR for short).
If you haven’t yet read the book, the QBR is the one core function that drives the success of your business. Just like in a bee colony the Queen’s sole job is to lay eggs to sustain the health of the colony — all other functions of the colony are to protect the queen (so she can fulfill her role).
FTF, as a digital agency that sells all of our services based on deliverables, the number of deliverables we send out is our QBR.
To take this a step further, it can be bounded by time, I know that if we’re growing we should be sending out more deliverables month-over-month, and conversely if the number is going down, we’re likely shrinking — unless they size (and scope) of those deliverables is getting much bigger, but the leading indicator would still be the score reported in the QBR. Regardless of what you end of defining as your QBR, you should set up a tracking process for measuring it, and reporting on it.
If your agency sells based on deliverables or hours, you can use the same approach I’ve developed.
Manually setting up reporting for QBR, you will want to use it as a dashboard for running meetings – asking the following questions:
- How many total tasks were assigned last week?
- How many were completed?
- What’s the % of our 100? If it’s under 80% or over 90% – why?
- Which tasks were not completed? Why?
- What department were they in?
- What was the cause; who’s ball is the court in – your team’s or the clients?
If you like the deliverable model, to make the most of it you need to start moving away from tracking your costs against tasks and instead roll-up tasks under deliverables (good news, the 7FA Resource Manager tool is designed to support this) – so you begin to track your true COGS against what you’re actually selling; your deliverables.
You need to have an understanding of all the tasks across all of your resources that are needed to bring a deliverable to fruition to make sure you’re billing enough for it.
To launch this initially, we built a Google sheet where department heads were responsible for keeping daily tally’s (pulled via custom searches in Asana) to report on this at our weekly operations meetings.
You can find a copy of this template in the 7FA members area.
Since then, we’ve developed an automated solution that pulls from the Asana API and can be filtered by Department (which is managed via custom fields in Asana) and Time Range. You can also check this out via the link in the members area.
Client Success
Part of how you can set yourself up for success here falls into External reporting, so we’ll get to that in a bit – but having an internal report on “client temperature” is just as important.
Have your AM or PM (or YOU depending where you’re at team wise) maintain a running list of each of your current clients in a separate document where you capture and track the following fields (or build this out within your CRM, for which we use Pipedrive):
- Client Start Date
- Current Proposal / Engagement End Date
- Project Budget (Revenue)
- Monthly Breakout
- Point of Contact
- Last Interaction
- Last sent deliverable
- Temperature
- Cold – Good
- Warm – OK
- Hot – Bad
Reason being is you don’t ever want clients to get HOT on you and your engagement. If they hit warm, then it’s time to cool them off.
I will be diving deep into this and giving you a bunch of strategies for dealing with this in the near future, but for now you need to at least start tracking it.
This is a completely subjective measure, but it’s also usually pretty easy to get a read on how satisfied your clients are with you and your team if you’re in contact with them as much as you should be.
External reporting
Setting up systems for reporting on project progress and priorities – this is almost more important than reporting on campaign metrics.
One of the best things we implemented at FTF is called a “strategic path” email which gets sent out every Monday to all retainer clients outlining the scope of work for the coming week – this a core responsibility of the AM but is also a task mainly involving curating tasks from Asana and any “critical path” items as noted by the Team Lead.
This keeps us “top of mind” with our Point of Contact and let’s you as the agency do the one thing that will keep you around longer than anything else – make your Client POC look like a fucking rockstar. If they get promoted – you’re doing your job.
Where this explicitly important is if/when your POC’s boss asks them what you (Agency XYZ) is currently working on. With a weekly email listing out all of the things you are presently touching – they’ll always have this information a few clicks away.
The worst place to be as an agency is in a position where your Client (and more specifically, your Client POC) doesn’t know or is unsure of what you’re doing… because while where there’s mystery, there’s margin — that’s not really the case in Agency world…
This weekly email is based on a constant management of Client Priorities, the core role of our internal Department Heads. Their daily duty is to make sure that the Client’s project team (specifically the people on that project team within their department) are working on the most important / highest impact items at all times.
The “Strategic Path” email is sent, and then the Client POC has a chance to shuffle any of the priorities for the week should something have changed at the Client Organization.
If not, these tasks are then moved into the “GSD Board” in Asana for that week (GSD = Get Shit Done). GSD Meetings are held with each department to review what’s on each board and based on the each team members allocated time (resource utilization) for that week and any changes to due dates – are moved around to balance out total resource utilization.
Building Your Brand
A brand is more than a name and a logo, but let’s start there.
An uncomfortable check against your “brand”
It’s likely that the name you have now (and whatever branding you have built out to date, if any) is not going to be suitable for getting your business to the $1 million level.
This is going to be uncomfortable, but it’s necessary to get your agency to the next level.
Is the brand you’re building right now going to be the one to get you where you want to go?
Does it exude confidence, trust, and have just a bit of flair?
Your answer might be “yes,” but I’d venture there’s a better chance that you’re answer is closer to “not exactly.”
And that’s OK.
I’ve built (and sold) a handful of sites and “brands” that I’m not proud of, at least not in retrospect.
The important part is being able to take an objective look at the brand, and identify that a ceiling exists; awareness is the first step.
A real world, embarrassing example
Back in 2011, right after moving on from Factor Media, I wanted to start a blog to share my experiences quickly growing a site in Japanese to over 100,000 organic visits per month.
This post first appeared on a blog I aptly named SEONick, crazier still, I thought this was such a good name that I even settled for the .net extension.
That post was timely and ended up ranking for pretty much every every variation of keyword containing “increase traffic,” and as such started to generate a decent flow of leads… at one point I was getting 10 or more per week.
I wasn’t consulting at the the so I stood up a site called SEOLeads.org just to sell these leads, which for 1-2 hours of work per month was netting me about $3,000 in revenue.
Eventually I got an offer to buy SEOLeads.org, so I sold it and then shortly thereafter, I sold SEONick.net.
It was a shitty name, on a shitty domain, with a shitty logo I got off Fiverr. I of course didn’t realize this early on or I wouldn’t have paid for the domain and put a ton of work into creating the content and the “brand,” I was building.
What I realized as a lesson from this website sale was that I had severely limited my site’s total attainable value by attaching to myself, more specifically; my name.
A key consideration to make when evaluating your brand is: would it add or subtract value if you went to sell?
I’m not saying you want to sell now (or ever), but the question remains an important consideration regardless if you plan to hold onto your agency until you’re worm food.
Let’s look at the big players
The biggest, most noticeable, and most powerful brands in the world share something in common; they’re all 1 word.
Even those that didn’t start out as 1 word, like Price Waterhouse, which after another acquisition became Price Waterhouse Coopers, have since been combined into a single term brand – this is an exercise in branding.
If you look at the top 100 brands across the globe, you’ll see the same trend.
I’m not saying that your brand needs to be 1 word to be successful (hell, my agency’s name is 3 words) but it needs to be high impact – and for the record.. we’ve started to move our brand towards just “FTF” — you can probably guess why.
Feeling uncomfortable?
It’s not fun to think back on the idea that the brand you used to build your first website, sign your first client, and order your first business cards (as an agency owner) might not be the one that is going to support your journey to building the business you want.
But we’re here to push outside of your comfort zone and spark sustainable growth.
The best brands are built intentionally, and need to be distilled down from all the things that make them up to be strong.
Your brand needs to represent:
- What you do – your mission (as represented by your core values)
- Who you are – your vision
- Your company’s unique value proposition
These are the baseline elements from which you can lay down a foundation stable enough to built on top of.
The building blocks of brand
These are going to seem old school and perhaps even a bit tired, but there’s a reason the most successful brands take this stuff seriously and take the time to execute on these activities.
Your mission and vision
Essentially, the purpose you have a company in the first place – and the identifying factors that convince people to pay you.Your mission statement should answer 3 fundamental questions:
- What do you do?
- Describe what you do in bullet points (it’s easier)
- How do you do it?
- Think through core values, examples could include “provide high quality consulting” or “Explore the latest innovation in {industry}”
- Why do you do it?
- What is the passion behind your business?
Missions Examples
My company’s purpose is to:
- Sell shoes of the highest quality so every customer can find a pair of shoes they actually love to wear.
- Provide educational services that allow all children to experience learning success and become life-long learners and contributing members of our community.
- Grow market vegetables using organic, sustainable farming practices to give people safe and healthy food choices.
Your vision should be thought of as a plan for where you’re going, and what ultimate success looks like.
- It’s to be a living document that is referred to as a north star to lead the company
- It sets a broader strategic plan for the organization
- A motivational vision statement will both motivate existing employees and also drive talent to the company.
- Use a vision statement to focus the efforts of the organization on the core competencies it needs to achieve its goals.
Vision Statement Examples
IKEA
“Our vision is to create a better everyday life for many people.”
That’s aspirational, short and to the point. More than that, it sets the tone for the company and makes it clear that they’re in the market to offer low-priced good furnishings that suit everyone’s lifestyle.
Nike
“Bring inspiration and innovation to every athlete* in the world. (*If you have a body, you are an athlete.)”
Nobody cared much for sneakers in the past. They were just another piece of sports equipment. But Nike saw a future that had not yet existed, in which they delivered products that inspired and motivated people. Notice how they include everyone as an athlete. It’s clever and inclusive.
McDonald’s
“To be the best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness and value, so that we make every customer in every restaurant smile.”
The power of this vision is that it’s constructed like a checklist. The word best is a word that requires definition, and McDonald’s provides it with qualifiers, making the roadmap to success clearly marked with signposts.
Tips for creating (and writing) an effective vision
Be ConciseIt should be simple, easy to read, and cut right to the essentials.
Be ClearOne clear objective is easier to focus on and achieve.
Have a Time HorizonDefine a goal based on achievement at a fixed point in time. At that time you should be prepared to evaluate your vision statement for refinement or readjustment.
Make it Future OrientedA future objective of where the company aims to be.
Be StableThe vision statement is a long-term goal that should, ideally, not be affected by market or technological changes.
Be ChallengingYou objective shouldn’t be too easy to achieve, but shouldn’t be so unrealistic as to be easily written off as impossible, and discarded by key stakeholders.Be AbstractThe statement should be general enough to capture the organizations interests and strategic direction.
Be InspiringCreate something that will rally your ream and be desirable as a goal for all involved within the agency.
Here’s the vision statement for FTF
By 2021, FTF will be a $20 million per year world-class digital strategy consultancy servicing up to 100 clients with a team of 60 employees.
Your Unique Value Proposition – representing multi-dimensional value
Sophisticated buyers do this intentionally as a way of focusing the dialogue on direct “apples to apples” price comparisons to competitors.
They do this to level the playing field, and compare your services on price rather than value.
Your job as the business owner is to instead sell the value of your offering.
When you (or your brand) focus on the outputs of your service (or worse, the inputs in the form of hours required to do the work), you pass up the opportunity to present the real value you create for clients.
Research done by Bain & Company has produced what they call a “Value Pyramid,” which features rational benefits that ladder up to strong emotional benefits.
An exercise that we went through when I realized we needed to move beyond “I’m From The Future” as a brand comes from Tim Williams, from Ignition Consulting Group, that he frames as a “thought experiment” that I would encourage you to go through for your own agency:
Using the list below, could you rank order what this client is most interested in buying?
- Saving time
- Reducing cost
- Making money
- Reducing risk
- Integrating services
- Simplifying process
- Reducing effort
- Improving organization
- Enhancing reputation
- Reducing anxiety
- Accessing expertise
Most of these factors also appear in the Bain & Company study and are shown to drive real purchase behavior in a variety of different categories from banking to high-tech industries.
Good value propositions
- Speak to your target audience
- Are clear and concise
- Communicate a brand promise
- Are descriptive
Examples of Agency Value Propositions
We design extraordinary customer experiences. We deliver meaningful and lasting results for our clients by improving the experience of their users.
We make interfaces. Since 2006, we’ve helped some of the world’s top companies design, build, and ship amazing products and services.
– Metalab
We’re a team of business-minded designers, developers, and thinkers who help you envision, design, and create great experiences for your customers and employees.
Here’s FTF’s value proposition (which is in near constant flux, no pun intended):
We design creative, effective, and forward-thinking digital strategies to drive customer acquisition.
And here’s something no one told me, but I’ve figured out sort of by accident that’s had a meaningful impact on the business from the inside; we have an internal value proposition that’s different from our external one.
Above is our external value-prop that we use to answer prospects, partners, clients, friends and family when they ask the questions “so what is it you do?”
Internally it’s different, because we want it to translate to something our team can tightly wrap their fingers around and feel ownership over; which is why the team is actually who came up with it, and here it is:
We’re a team of smart people that do dope shit with websites.
Month 5 Exercises
I want you to ask yourself some hard questions – and keep an open mind.
Please share all your answers (and the original question) in the #commitments channel under [Month 5 Exercise].
The questions I challenge you to ask yourself are:
- Am I completely satisfied with my current brand?
- Do I see this brand being capable of getting me to where I want the business to ultimately be?
- Would my brand add or subtract value in the event of a sale to another company?
Regardless of your answers to the above 3 questions, even if you love and standby your current brand (which is totally OK if you do), I want you to come up with some new names – but I’ll come back to this in a bit.
Next, go through the questions and tips in each section of this lesson and create the following for your agency:
- Your mission
- Your vision statement
- Your unique value propositionBONUS: think of one that you could use as a mantra internally.
Once you’ve completed these 3 exercises, you’ll have a pile of values, terms, and descriptions that represent all the things your company does, the how and they why.
You’re now armed with a new set of brand assets – so I want you to reflect on all this new found information, and come up with 3 alternate name brands for your company.
Don’t worry if the domain has already been taken or even if there’s another agency already out there with the same name (note: Future Brand is a thing, and a big one).
The anatomy of an effective sales page
I’ll show you why a smaller website, built in just the right way, is going to be far more effective to get you to $100k/month in revenue than a large, inflated one that doesn’t focus on your brand.
You don’t need big, flashy, whiz-bang websites to have it convert leads for your agency.
“Sales sites” actually tend to work better for driving sales (especially early on), and not just smaller sites – but sites with only a few pages built in a super specific way.
Example
Draft.nu is one of my all time favorite sales sites, because the “marketing site” is so small and tight in comparison to the blog, but that’s just the thing; it’s every thing it needs to be.
Nick Disabato understands the exact pain of his audience and knows how to present his solutions, agitate the pain just enough, and present trust offers small enough (and many times for free) to get them into his lead funnel.
Look at how simply this page is:
^That’s the homepage, and to be honest, it’s everything it needs to be.
Breaking it down
Let’s look at the specific components of why this page works so well:
The brand identity is very simple, and aligns directly with the UVP – draft is a fantastic name for a research and testing based design agency.
The UVP is succinct and in your face, I bet if you visit the website you catch yourself reading it almost by accident.
He set’s his CTA to be clear, use a stand-out, unique accent color, and be obvious. This is the most desired action on this page, so it’s presented as such.
The page starts with the value statement describing the product and service.
A trust offer is the immediate follow-on, with a corresponding CTA, but one explicitly designed to not compete with the primary conversion goal.
The page then contains just a few simple bullets that link down to deeper pages and content that demonstrates proof of the brand’s promise and capabilities.
Exploring Draft’s conversion funnel
One of the things I like the most about the way Disabato has built this site experience is how much strategy he put into the nuanced elements, like navigation.
The entire conversion funnel is not linear (it could hypothetically include the blog and absolutely includes elements of email nurturing from the trust offer) but leverages only 3 pages:
1. The Method PageThis is the only link above the crease on the homepage besides the main CTA to shop the store. The content on this page lays out the engagement process and walks the reader through an extremely straight-forward process to set expectations. You will also notice that on the Method page, the header changes to call attention to the next page within the conversion funnel, the Value page.
2. The Value PageWhile this page is linked from within the second bullet of the lowest content section on the homepage, this page is likely more frequently accessed with the header call out link on the Method. This is a true form sales page and sets up a narrative that walks the reader through connecting with them (if they’re within his target audience) and agitating their pain like squirting lemon juice on an open cut.
3. The About PageIn addition to the about page, is a page that is only (obviously) linked to from the about page, which is the Helped page – showing a list of companies and clients that Draft has worked with. As for the about page, this page is smartly linked to from within the minimalist footer on every page of the site.
The about page introduces the company and service, links first to the social proof page, then to the store, then goes on to present the experience of the Brand (or Nick Disabato). Also take note of the pre-header CTA linking to the Value page being back.
I like the simplicity of laying out the companies history in a simple timeline form since the company is now old enough (over 5 years, 7 to be exact) to include this in it’s brand positioning. All followed by a pitch for the trust offer to get you into the nurturing funnel.
Simple is hard, but simple is effective
Be honest, if you saw a screenshot of Draft.nu in a presentation of agency landing pages it probably wouldn’t catch your attention.
Simple design can be effective when it’s executed to translate exactly what it needs to for it’s target audience. Nick’s site has been enough to create trust and legitimacy to land him client engagements with DNSimple, WireCutter, and ConvertKit (which is crazy if you consider that Nathan Barry is himself an exceptionally talented designer).
One of the things I want to point out is that agency’s (and their corresponding brands) have lifecycles of maturity.
The come down to things like size, and age but almost always start at the same place – the experience of the Founder (that’s you).
In the next lesson I’m going to introduce you to a theory of mine that I continue to see proven true, but I’m curious to get your take on it – more on that in a bit.
Your Challenge
Not an exercise, because it’s optional. I want you to try crafting your own minimalist homepage just like Draft.nu. Leverage all your new brand assets like your mission, vision, and UVP.Write it yourself (even if writing isn’t your strong suit), and focus it on what’s going to tell the most important story to your target audience, and use the landing page anatomy as a guide:[Brand Identity][Tagline or Mission Statement][UVP][Brand description][Trust Offer][Social proof or examples of legitimacy / experience]As you begin to write it and lay it out (a simple Google Doc is all you need) hit me up if you get stuck.
Establishing legitimacy in your niche
I’ll share strategies for getting noticed, building your initial set of high-impact professional relationships.
The story you are able to tell as an agency owner is undeniably different at each stage of your business.
It seems to follow a lifecycle if you will, where the smartest agencies recognize which phase their business is in, and use the right narrative to grow.
Here’s what I believe this lifecycle looks like based on an agency’s growth curve over time:
In the very beginning, before you have a client roster and results to speak to, you’re forced to lean on the personal experience of you, the Founder.
Here’s what my personal website looked like in early 2014 when I’m From The Future was a company, but the website was essentially just a placeholder and I was the brand:
and for reference, here’s what the IFTF website looked like in “v1” albeit, missing some CSS:
All roads pointed to SEONick.net, since that was the best demonstration of my experience and knowledge at that time.
By year 2 you have a handful of client success stories and results you can showcase to prove your value and sell your services.
This was the focus of the IFTF website from 2015 through 2018, notice the strong focus on the results we had delivered to date:
Over time, your team grows and this sets you apart from the other agencies you compete against who have smaller teams and are still in the 2nd phase of their agency’s growth lifecycle.
Which is why the new FTF site strongly highlights our team members:
After a certain size, your narrative changes to “size based marketing,” i.e. how many clients you have, how much you’re doing in revenue, or how big your executive / leadership team is.
An example of this can be seen in how Huge Inc highlights their leadership team within their global site’s core experience:
Ultimately, you have a long history as a company and can use this longevity factor as proof your brand is to be trusted since you’ve stood the tests of time.
A great example of this final “stage” of agency brand is Ogilvy:
How do you speed this up?
One of the fastest ways to level up your “legitimacy factor,” as an agency is to get experience working with more companies within your ideal customer cohort.
At this point in 7FA you know who your target audience is, what language they use, and what your ideal customer looks like, as well as what their most common pain points are that you can alleviate with your services.
I accidentally came up with a strategy that I used to kill 2 of these birds with 1 stone. If deployed effectively, this approach will:
1. Earn you new clients with big important brands, or who at the very least, can be leveraged to expand your brand’s story, and
2. Expand your brand’s range of services. Because saying you can deliver a service is one thing, but being able to point to work delivered as part of that service for another Company, is a whole other thing.
I like to think of this as a spin on the “do work for free” strategy, because while it often does require some “free” work from you at the outset, it can ramp up to paid work from the same company very quickly if done right.
To explain this strategy I’m going to use myself as an example.
Back in 2014 when IFTF was barely 3 months old, and very much in phase 1 of our agency’s lifecycle, I was spoke with a company on Clarity called Dispatch. They were creating a new private video platform that ran on a subscription model and delivered exclusive content privately within “channels” on the app.
I spoke to the CEO about SEO but it quickly became evident that SEO was not the solution to their growth goals, and instead, what they really needed was an end to end paid social strategy, which I wanted to provide.. but there was one issue – I had never done this before.
I understood the concept behind running Facebook campaigns, and after some significant reading and testing on my own (I built ad sets to sell my then paid Ebook Master Keyword Research in 7 Days), but I had never built and managed a paid social campaign for a client.
I reached out to my contact and said I would like to set up some starter campaigns, at no cost to him, to test some ideas I had. He said sure as long as he could review and approve them first.
We spun up a handful of creative and built out a set of sample test ads in 5 ad groups, and launched the campaign with the conversion goal being to drive app installs.
We were getting results, but the CPA was abhorrent, at almost $80 per install. With an average LTV of less than $70 (in the app’s current form), this was not great.
Aside from the creative not being great, the landing page we were driving all the traffic to sucked, see for yourself;
What compounded this was that the page was even worse on mobile, if you could imagine — and as anyone who runs app install campaigns knows, 99% of your conversions are coming from mobile users.
So I really wanted a chance to redesign the landing page, but I wasn’t about to do it for free.. I just didn’t have the time as there was too much other client work to get done.
So I asked to be put in touch with their current designer (he was a freelance contractor as they were an angel funded startup at the time) and talked through my ideas for the page and made it very clear I was trying to set up more work for him.
I wanted to design the information and write the copy for the page but I would need him to do all the high fidelity designs, and then manage production with their front-end developer.
He saw the value and agreed, moving the client vendor relationship table from a triangle; where we were all seated on opposing sides, to a rectangle – with the client on one side and us, the vendors, on the other.
I pitched an engagement that would include wireframe design, copy creation, creative direction for ads, and ad setup, management, and split testing.
Dispatch.tv became a $5,000 per month retainer client, and I delivered my first ever wireframe sold under IFTF to a client (here it is for the sake of nostalgia):
This landing page had an immediate impact on ad results with CPA’s being cut in half within the first week, and better yet – it built up trust with the client and his other vendors.
This lead to me feeling confident enough to try more creative ideas with the ads, leading to the creating of this ad image:
Which drove CPA’s down under $1, and suddenly.. dispatch could scale.
It scaled so fast in fact that within 6 months it ended up getting bought out by an investment group that stood up a private video sharing community for more, well, adult topics we’ll call it.
Back to the strategy
I call this strategy the free ice cream sandwich, mostly because I couldn’t think of a better name for it.
The elements of it are:
- A free offer that can grow into a larger engagement, but has a low barrier (and cost).
- Work that utilizes existing client resources (either contract or employee) – this is key, as it builds trust with other members within the clients team ecosystem (and the client POC).
- A paid up-sell that extends the offer. This is the sweet part of the sandwich; the ice cream.
So it’s a free offer that includes new or additional work for the prospects existing resources (explicitly not you), that flows into a paid offer.
Designing your Growth Engine
Building growth engines is what I currently spend most of my time doing at my agency.
Part of the reason is because of how much of an impact it has on the growth of the business, with the other part being how much I love doing it.
The term “growth engine” in and of itself is misleading, it’s not truly representative of what it’s used to describe – and I’ll show you why.
I’ll walk you through my process for building growth engines; where, what, why, and how. Furthermore, I’ll do something I’ve never done before – I’ll walk you through all of the pieces behind my personal growth engine, describing something in detail is one thing – but physically showing it is another all together.
This module will cover:
What is a Growth Engine
We’ll walk through the more traditional meaning behind the term, what it means to put the pieces in place, and I’ll clarify my distinction, and why it’s different.
A growth engine, in more traditional terms, is a vehicle that if you put fuel in, will run like the engine of a car and produce new business (or growth).
On key distinction that I like to make, for the way I approach the design and development of growth engines is that it is not a single piece, but a system that together creates predictable and sustainable lead flow.
Just like a jet engine, a growth engine has a compounding effect that comes from stacking several components to exponentially increase output.
A growth engine is comprised of 3 components:
- Demand marketing
- Sales / conversions
- Customer success
The 3 pieces work in a cycle to create recurring demand and fulfillment and fuel growth.
A growth engine is based on 2 core requirements:
- A core customer
- A core solution
By now you should have already completed your audience matrix and design of your customer avatar(s) – and this is why it’s so important to have this built out, and to have your trust offers designed FOR those avatars.
Your trust offers are going to let you test your way into identifying a core solution.
This is where growth (from new business) comes from.
The best core solutions grow out of trust offers, where your customer is currently spending time (i.e. money) to alleviate the pain that your trust offer agitates and provides a solution for.
Your trust offer already needs to be irresistible and provide real relief to a pain your customer is experiencing. More so, that initial customer experience needs to be stellar from start to finish.
Core customer
Once you’ve identified your core customer, you will have the ability to look at 100 people and know which one (1) is the one you want to work with.
Your messaging (and the cogs within your growth engine) need to be built to specifically target them and them alone.
Don’t be afraid to go deep with targeting and segmentation; often times agency owners fear going too “niche” due to “there not being enough customers available.”
This is literally never the case.
On the flip-side, what’s far more likely is that your marketing is not specific ENOUGH.
Another common issue is not sharing your customer research with your team and not reviewing and refining your positioning per product of service (and often).
This comes back to your audience dashboard, and zooming in on the key phrases your audience uses and the key sources for information and expertise that they trust.
Core solution
People don’t buy a drill, they buy the tool to create a hole. The hole is the solution.
How you deliver your product or service is not your solution. The solution is the what, not the why or the how.
Identifying your core solution
It’s likely that if you analyze your revenue and explore the patterns (especially profits) the vast majority is coming from only a few key products or services.
So it’s highly likely that you are already providing your core solution, you may just not think of it that way yet.
Your core solution must be simple, especially to explain.
In a perfect world your core solution has the highest margin our of all your offerings, but even if it doesn’t – that’s OK — what’s more important is that the core solution is what has the MOST DEMAND, because you can optimize for margin later.
My nuanced distinction for agency growth engines
A true growth engine is never done being built, and they don’t all require content — but they do all require intention.
An agency growth engine supports your funnel, which can be simplified and characterized in 4 stages:
A true growth engine is full funnel, but for the purposes of 7FA I’m going to focus specifically on the demand and conversion portions of the funnel.
The balance of your growth engine depends on cost;cheap demand marketing tends to be slower (content marketing, social media, referrals) where as the faster acquisition channels are more expensive, i.e promotions, press, online ads (direct response and re-marketing), and sponsorship; specifically paying for promotion or distribution of your products or service.
Traditional growth engines & predictability
Growth engines of old are thought of in more straight-forward terms, i.e. you put fuel in the engine and the engine goes.
In this case, fuel is ad spend and the output is new qualified leads.
The growth formula you should be targeting with an ad-based growth engine is as follows:
- $1 = $3 in revenue at a 15-20% net margin
- $1 in marketing = $3 in gross revenue
- CAC (demand + sales) < LTV
That last point is critical to understand. Your total customer acquisition cost (CAC) which needs to include not only the cost of spend on demand marketing (creative + ads + partners, etc.) but also your cost of sales, so if that’s YOU (which it most likely is) than you need to include the cost for your time (easiest way to get your actual hard business costs on this is to take your total cost to the business (salary + benefits) and divide by 2,000 (total hours in a calendar year if you assume 40 hour work weeks for 50 of the 52 weeks).
This total cost needs to be lower than your customer’s lifetime value to the business, and, as long as this is true than you can scale customer acquisition.
Measuring the output of your growth engine
You can’t just hope your numbers are coming in within the formula guidelines, you need to be reporting on them and actively monitoring what’s working and what needs to be switched off (or tested further).
This is done through a simple dashboard you can set up to capture the costs per channel, which you then should be reviewing on a weekly basis.
The components you need to be tracking and reporting on are:
- Channel
- Cost per lead (CPL)
- Customer acquisition cost (CAC)
- Lifetime value (LTV)
- Mean efficiency rate (MER)
Channel is self-explanatory, cost per lead is your cost to acquire a lead from that channel, so someone fills out a form or creates a cart (in the case of something like an Ebook or self-serve sale item), lifetime value is the total calculated value per offer/channel and then mean efficiency rate is measuring how efficient your marketing investment is in that channel per dollar.
Any MER over 1 means that you’re making money, for example an MER of 2 means that for every $1 spent you make $2 in back — for growth engine purposes, you are looking for channels with an MER of 3+.
Here’s what that the dashboard looks like:
I’ve also included a copy of this in a Google Sheet in the members area to get you started.
Now that you understand what a growth engine is, let’s move onto the nuance between owned vs. hosted channels.
Owned vs. Hosted
An important note to consider when building assets for your growth engine is ownership and control. It’s not an either or, but it’s important to understand the nuance between the two so you’re aware of any repercussions before you make the investment.
This is a pretty quick segment, but I felt it was really important to make the distinction especially before you start evaluating channels to start investing in.
For the purposes of 7FA, again, I’m going to be focusing on the demand generation and conversion aspects of the growth engine (more than the sales, fulfillment, and customer experience aspects — but if you have any questions on these pieces, just drop me a note).
In addition, I’m going to be starting by exploring the development of assets that will make up your growth engine and then moving into expanding your promotion channels for those assets.
Examples of owned assets
The most obvious here is websites you own, whether that’s your agency site (with assets in play like service landing pages, trust offer pages, or your blog) or stand-alone assets that you build to support specific audiences or offers.
Examples of hosted assets
I want to start by clarifying that just because an asset is hosted (i.e. you don’w own it) it doesn’t make it bad – and actually, usually these perform much better over time as they tend to have larger audiences and wider distribution.
Examples of hosted assets would be things like posts on LinkedIn, Facebook Groups (you may be the “owner” but you’re not Mark Zuckerberg so this isn’t actually “yours”), posts on sites like Medium.com, communities you’re a part of (like Traffic Think Tank), or a site like Clarity.fm.
My important note
I just want to call this out individually because you need to be aware of the risk of investing significantly in channels that you don’t own.
Again, I’m not sayingdon’t do this, I’m just calling it out so you’re aware of the risks.
Depending on your long-term goals, and if those may include the ability to sell some of your growth engine assets along with the company – than in many cases hosted assets will not be transferrable, and hence won’t add value to the business as a sellable asset the same way they may add value to your agency with you as the owner.
My favorite owned channels
Of course your agency site should be at the top of this list, but surprisingly, it may not be #1.
I know a handful of folks who have built some amazing growth engine assets that get way more traffic (and generate way more leads) than their personal and agency websites do.
Some of my favorite owned growth engine assets (that I don’t own, but I know are performing really well for their owners) are:
- revive.animalz.co (new, but really slick)
My favorite hosted channels
If you didn’t know already, I’m a huge fan of Clarity.fm, it definitely takes some focused effort to get your profile built out to a place where it can become a contributing part of your growth engine — but in my personal experience it’s one of my best performing channels.
There are some ways to hack the system (just like Google) to get better rankings and conversions on the platform, and I’ll be going over those in the webinar.
I also really like Medium.com, especially as a channel to syndicate blog posts published elsewhere with the small caveat of changing up the keyword targeting ever so slightly by using a different (unique) post title.
For things like distributing free tools (where the goal is to grow your audience and get email addresses) I still really like Gumroad.com.
There’s still a lot of greta stuff coming out of communities like EcommerceFuel, TTT (of course), and even Reddit (if you spend time in those SubReddits you identified in Month 3 and not the industry Subs filled with all your peers and competitors.
I see some folks killing it on Quora, and while I absolutely see major benefits from being in the right place on that platform, it’s not a channel I’ve personally invested much in at this point.
Then there’s always YouTube, which I get to reap the benefits of by proxy as Ryan Stewart is a beast on there and has great reach and engagement which helps to flow leads back into the agency site.
Behind the scenes look at my agency growth engine
Some of these components will be obvious, and we’ve already discussed a few, however, others I’ve never shared before – at least not in this context. I’ll show you what they are, explain their purpose, and then show you the data on how they’re performing.
So I’m constantly thinking of ways to extend reach s a brand and create more awareness of our capabilities, services and of course – generate new leads.
When it comes to the growth engine that consistently supports our growth at FTF it’s comprised of our on-site content (generally BOFU focused) vs. branded content (written by me or on behalf of the agency (more MOFU) vs. guest posts, quotes, interviews on podcasts, medium articles, and bigger press outlet mentions.
A lot of those I would consider more “agency PR” than growth engine components though.
Let’s dive into the growth engine itself
Let’s start first with our agency site, which tends to be a conversion point for leads more than a source. While we do get some traffic through the blog posts, 2 things tend to hold true:
- Blog posts that drive leads are not the ones that do well in terms of rankings and organic traffic, and that’s OK – instead, we identify which posts drive conversions and then use these within our paid growth channels.
- The agency site itself acts as more of a conduit to legitimize the agency and our capabilities, whereby people find us through other means (or they don’t know at all they’re actually on one of our sites – I’ll get back to this in a bit) and then when they get to our site, this is where they convert through our quote form.
So let’s first look at the lead flow from the agency site itself (as this is likely the most boring part of this segment).
What you’re looking at is the lead pipeline in pipedrive (the CRM we use) for leads that come in specifically through the lead form on the agency site. As you can see by looking at the “Date Created” column, we average 2-3 leads per week.
Once caveat that is worth mentioning is why I wouldn’t say these are “qualified” leads, I would call them “pre-qualified” as our quote form has a required field for monthly budget that on the lowest end lists $4,000 per month.
This is a similar scenario for leads that come through the Webris agency site:
Which generates lower budget leads but in a much higher volume, which as you can see in the screenshot above is sometimes as many as 2-3 leads per day.
Same goes for Ryan’s personal site:
One of the better lead sources, not for volume but for conversion and quality, is actually my personal website.
So while not all of these are legitimate leads (I do occasionally get spam, but not as much as you’d think) overall as a lead channel my site does generate an average of 1-2 solid leads per week.
These are the conversion points for leads, but as mentioned earlier – these are not usually the source for these leads, i.e. what captures their attention and generates the interest.
That instead comes from other forms of content, both posts and sites.
Here’s an example of some of my content’s reach on Medium.com
and then on some of these posts, when I believe the topic is focused enough to be able to generate a lead, I’ll add call to actions to move readers into the funnel.
For example:
Another example from the post about ranking for free keyword tool, pushes visitors to several other sites in my growth engine:
and one more example of CTAs within medium posts:
This one won’t come as any surprise, but LinkedIn can actually be a solid source for generating awareness and generating organic leads but only exlcusively through the platform’s own distribution algorithms.. since none of the pages/posts on LinkedIn Pulse are indexable in search engines.
You can see if you look closely that post is just about at 500 views, so nothing to write home about but it does give me an content asset on LinkedIn that I can link to / reference in the future to build upon should I want to.
What’s more surprising is actually the visibility I’ve been able to drive on the platform from finding eye catching video content (not creating it, just finding it) and republishing it.
In one recent post, I’ve driven over 175,000 views which has in turn generated a significant amount of visits to my profile and then click-throughs to other content and agency assets.
As mentioned briefly in the last segment, a sort of random channel that I don’t think many people consider as a source for potential leads (and more so just focus on as a platform for sales and content distribution) is Gumroad.
Some of these things are for sale, but the best performing assets in terms of actual lead value have been the 3 free tools:
- Top winning and losing domains (from the August 2018 Google Update)
Communities can also offer great lead value as you get involved, contribute, and demonstrate your knowledge and capabilities.
Aside from Traffic Think Tank, EcommerceFuel.com is one of my favorite communities that consistently drives value in the form of new business. Another extension of this that I would add is Ryan Stewart’s Facebook Group: Digital Marketing Questions, that now boasts over 13,000 members.
As I’ve mentioned before, Clarity is probably my favorite consistent channel for new qualified leads.
If you’re already on Clarity, you may not be seeing much traction from your profile and are likely thinking I may be losing my mind for even suggesting it… so I’ll show you this:
Don’t get hung up on the ~$20,000 I’ve made in fees.. that’s chump change. I don’t take these calls to make money on the platform — but out of the 1-2 calls per week I do on the platform, I can honestly say that a strong 50% of them convert into agency project or retainer clients.
These are people that have read my profile and my reviews, and without knowing me or in most cases having ever interacted with me before – are willing to pay for my time. They are immediately qualified.
Furthermore, most of these calls are just 15 minutes, and involve me doing a live review of some element of their site or critiquing a current strategy in a way that (without trying or selling) pushes them to ask for a proposal or schedule a more formal discovery call.
In this month’s webinar I’ll be diving deeper into how the platform works, how to get ranked (most of my calls come from the fact that if you search for Search Engine Optimization Experts I’m ranked #1), how to build your profile and acquire reviews — and really take advantage of the platform.
Wondersearch & Semantic’s Free Tool
2 of the less obvious ones, since there’s no direct connection back to the agency, are 2 free keyword tools we built:
These are currently being used for one thing and one thing only; to build custom audiences on Facebook for targeting / re-marketing.
Growth engine assets currently in development
Like I mentioned at the start of this lesson segment, I’m literally always working on new assets to expand my growth engine.
Here’s what I’ve currently got in production as a little preview (and maybe to help give you some ideas).
[Update] This has launched! Linkbuildr – a free wordpress plugin that automates outreach for blog posts.
LinkFuel – a link prospecting tool (with a free forever option) that assists with the painfully tedious task of manually reviewing, qualifying, and organizing websites for outreach.
A keyword organization tool that allows you to quickly segment keyword lists based on common heuristics like intent (based on modifier patterns), volume, industry, difficulty, cost, etc. to create content maps bucketing terms into pages and then labeling them as hubs, spokes, resources, or supporting content.
A UGC content site for cataloging and organizing evergreen content examples.
Each of these assets directly supports a core line of business within the agency and is likely to prompt people to ask for help / support to scale their efforts that these tools assist with (but the agency provides as a service).
Building your growth engine
Now that you have your arms around what it is, how it works, and what it can do in terms of performance – it’s time to lay out how to approach building your own, and then getting started.
Step by step what the entire ecosystem looks like for you and your business, and starting with the highest impact on how to get started.
Beginning to build out your growth engine can take many forms, and over time often ventures into the abstract (like my UGC evergreen content site).
But this isn’t the smartest place to start out.
Instead I want you to approach the obvious and start with simple.
The simplest path forward here starts with just 2 components:
- Paid demand (because it’s fast), and
- Free content (because it converts)
When I say paid demand here I mean advertisements, not just necessarily ad sets (like on Facebook or LInkedIn) but any place you can pay for an advertisement, this could include influencer marketing on Instagram, YouTube, or one of my personal best channels — other people’s email lists.
I’ll come back to the ads piece and a simple testing strategy in a bit, but first
Looking at the free content funnel
I’ve found from an agency perspective, what works best is creating free content that directly supports your trust offers — where you use the trust offers in place of your more traditional content upgrade (essentially using them as your lead magnets – they just happen to be paid).
Here’s an example.
Let’s say you own a digital marketing agency (like me) and your trust offer is an audit of some form (whether SEO, PPC, UX, Copy, Content, etc – doesn’t matter) the content for your growth engine should be based on topics that agitate the pain that your trust offer alleviates.
Remember, people don’t buy drills – they buy a hole in the wall.
So even though your audit provides a list of symptoms that can lead towards a diagnosis, this isn’t the benefit to the customer.
You need to focus content that sells the benefit, in this case (at least if we stick with a top-level value prop of digital marketing) it’s more qualified traffic (regardless of the channel).
So you write about topics that surround the problem;
- how to do a technical audit
- how to do a content audit
- how to do keyword research
- how to expand your keyword footprint
- how to create an SEO content map
Then within that content (and on those pages) you promote your trust offer.
You can use the trust offer to run direct response ads (and most often times if you’re sponsoring email lists with a placement or mention, this is the best ROI) but for more TOFU ads as you’re dialing in your audience segments it’s better to use your paid demand to push people to your free content.
In this case your growth engine funnel looks like this:
At this point you’ve already built your audience matrix, and identified your customer avatar, and designed your initial trust offers (that hopefully you’ve also started testing in terms of offer; the what and the how much).
Where your testing needs to move to now is at the channel level; ads for the same audience work differently on different channels – so what works on Instagram may not work on Facebook, and what works as a video on LinkedIn likely won’t work on YouTube.
So you need to focus on your individual ad clickthrough rates (CTR) and test the 3 components that are going to move the needle on that CTR:
- Audience targeting (segmentation)
- Images / Creative
- Call To Action (CTA)
This is the entire recipe you need to start getting data to make directional decisions – it’s really this simple.
What you’re doing right now should not be expecting immediate success and growth, but understand that you’re investing in your own data (business intelligence), so you can begin to make smarter decisions.
This simple formula will give you the data you need to start filling out your Growth Engine Dashboard, even if the CAC and LTV’s are $0 when you start (and they will be) you can start to get numbers on cost per click (CPC) and cost per lead (CPL), as well as an understanding of which audiences and segments are producing CTR and at what cost.
Important note
Give your ad sets a chance to actually perform, i.e. run an ad set for 1 week each, and run each of them 3x before you start changing anything.
Furthermore, when you do make a change — change only 1 thing (this is the core principle behind split testing) you need to be able to isolate which change led to an increase or decrease in performance otherwise you didn’t learn anything.
So if you want to change the image, change only the image, ad copy, CTA, landing page CTA, copy, etc. just change one at a time and then re-run that ad set.
Leveraging organic lead sources
Because I’m an SEO nerd, I definitely put a lot more time and energy into creating growth engine assets that can perform without paid demand campaigns running to them.
I’d like you to find ways to leverage organic as an acquisition channel as well. Organic doesn’t need to mean traffic through Google, in my case I would cal Clarity.fm an organic lead channel – since I don’t pay for those leads.
What opportunities exist for you to:
- Stand up free tools.
- Write on topics within your spectrum of agitation around your trust offer (and publish them on the trusted publications within your customer avatar).
- Identify groups or communities where your core customer hangs out and begin to add value (committing to this by adding it into your block time as a big rock for a whole quarter).
- Buy the rights of paid projects or old blogs (that have free courses or ebooks already) and open source them (I did this earlier this year with Master Keyword Research and it has worked out tremendously well).
- Create a free course of your own delivered over email; this could be as simple as a sequence of 5 emails delivered over 5 days (lesser content need and very low barrier to entry for you since all you need is a simple email automation platform like Mailchimp or MailMunch).
- Pitch complimentary companies (service providers or tool vendors) on doing cobranded webinars to their audience (I did this for the first time many years ago with SEMRush and it resulted in over 1,700 email addresses added to my subscriber list for an hour of my time).
What you should be measuring for conversions
At this stage in building your growth engine – again, we want to keep things simple.
So there are 2 main conversions you are looking to build your ad sets to focus on driving:
- Leads (this can be as simple as just an email address or a full blown contact form submittal).
- Sales or Sign-ups for your trust offer.
You’re just looking to get data as a baseline so you can start making iterative improvements and measure impact.
Exercise
We’re going to have you to build out a full (but super simple) growth engine for your agency, and here’s how you’re going to do it:
- Pick a piece of content (can already exist, or you need to create it) but make sure it directly agitates the pain alleviated from your trust offer.
- Create a CTA to push from your content to your trust offer. This can be an in-content CTA, sidebar ad unit, slide-up, modal overlay — it doesn’t matter. Bonus tip: if you already have an email acquisition strategy in place add your trust offer CTA to your confirmation email.
- Create an ad set of of 3 ads, each containing; a) creative (image or video – if you want to use video you can source this from a marketplace online, you don’t need to create something custom) and b) ad copy and c) CTA.
- Use Facebook (for ease of completion) and create your audience; Geo, Language, Interests, Likes (based on pages), and set a budget.
Share all of the above in #commitments as your [Month 6 Exercise].
Then we’ll review them together, align on feedback and an appropriate testing strategy for your specific agency, audience and offer, and we’ll get this moving!
Remember, your goal is to have a CAC < LTV by a factor of 3x (the best companies get this to 5x+).
BONUS EXERCISE
I want you to share 1 idea (ONE!) for an organic component of your growth engine.
Developing a Sales Process
With your growth engines underway, we need to move onto making sure you are able to capitalize on your new lead-flow as it begins to increase.
To do this you will need to design a system that takes your warm leads, qualifies them in a way that gives you an unfair advantage, and then when they’re red hot – pushes them through a proven process for selling and closing.
My system is built around (mostly) free tools, with a few options for relatively cheap upgrades (like a lightweight app that costs $19/mo for example) that will allow you to focus your effort where it matters most.
I’ll explain why I’m no longer part of the sales process in my agency, what it’s done for the business, and how you can do the same.
We’ll then bring this all back to sales reporting so you can always have a handle on your numbers and understand what to improve and when.
Here’s how the process breaks down.
Crafting your lure
You are going to use a process-driven report . that highlights weaknesses within the prospect’s current solution – specifically highlighting opportunities. You’re going to deliver this information with a proactive nudge to speak to your best sales people; your clients.
Tightening your reel
This is an exercise in showing off your process. It’s critical to have a systematic approach to bring your leads through your sales funnel, and then meticulously execute on that process – demonstrating your keen attention to detail. This experience is what is going to make or break you in the Client’s mind, even before the proposal is presented.
The net
This is your actual proposal. I’ll show you what crappy proposals look like (using my own embarrassing example) and then I’ll show you what a million dollar proposal looks like. Best of all, you can take my presentation deck and use it for your own agency (just swap out the branding 🙂 ).
Designing your pipeline
The final crux of your sales process is to look at how things flow through your pipeline. More times than not, when I’m reviewing agency pipelines they’re overly simplified, in that they’re not setup in a way to track when the ball is in your court. More so, they’re not designed to consider handing off management of pieces to other people – as you step outside of your sales process.
Crafting Your Lure
At this point, you’ve built your lure – you may even have built a few; your trust offers.
What you need to do next is find opportunities to test distribution channels to generate leads and sales for those trust offers. Much of this will come to be parts of your growth engine – and the fastest way to get moving here is to take those free (or very low cost options) and put promo dollars behind them.
Remember though
The point of your trust offer is to prove your capability, and set the stage to up-sell additional services.
So the most important thing you need to be doing is demonstrating your capability to provide value.
Proving capability
The best way to demonstrate value is by alleviating business pain… but first you need to make sure it hurts, i.e. you need to find the exposed nerve and then push on it.This is most often done by leveraging competitors.
Start by asking for some competitors (2-3 is usually enough), but also use online research tools to identify online competitors (which may often times actually differ from offline or assumed competitors).
Look specifically for competitors who are much larger and use them as a benchmark to convey opportunity.
This is where I recommend doing a quick and dirty analysis showing opportunity – this is specifically meant to agitate the pain and flex on some of your professional capabilities.
One of the best ways to do this is to show a combination of existing issues with a site (I lean on DeepCrawl for this) and then to couple this with a demonstration of how much opportunity is being missed, for which I lean on a traffic opportunity analysis that looks like so:
This is an exceedingly simple report that I leverage as an add on to my trust offers (and don’t charge for it).. I used to include it in my proposals (and occasionally still do if the cadence of the process moves in a way that makes more sense, i.e. a lead move straight into a larger proposal and doesn’t come through a trust offer).
This report simply takes existing organic rankings for keywords ranking across the first 2 pages of Google, and then maps them to average click-through rates from AWR’s CTR study (which also happens to be a really nice growth engine component) and projects traffic increases if page 2 rankings were increased to page 1, if rankings in positions 5-10 were moved into the top 5, and if all top 5 rankings were moved to position 1.
It’s tangible, exciting for the prospect, and can be easily expanded to project revenue / conversions using their existing numbers.
Best of all, we can train someone to create this report in about 20 minutes.. so it becomes a no brainer to crank them out.
- NOTE:I’ve started testing a new cold email campaign including these in PDF form and letting folks know they can have the report, at no cost to them, by simply replying to my email. The whole point of the email is to get them onto a 15 minute discovery call.
Proving legitimacy
One of my favorite ways to do this is to be proactive in offering up client contacts / references.
I like to provide 3 references before being asked as I’ve found this to be nuanced enough to actually be a differentiator. So many times after we’ve closed a client they’ve mentioned that no one else was so up front and willing to offer up references – and that it really stood out to them seeing us so proud to showoff our work and relationships.
Many of our competitors will provide references (and happily) upon being asked – but you’re offering a breath of fresh air to your prospects by introducing your references earlier in the sales process.
One of my favorite ways to do this is to actually lessen the burden on your prospects by first letting them know that, with their permission, you would like to intro them to some references – and then being the one who sends the intro email introducing them, their business, and the purpose of the email to your references.
At first you will only have a handful of references, so don’t worry about them being the exact type of company / niche that you’re using them for in your pitch – and instead lean on them to speak to the experience of working with you and your agency, the depth and polish of your work, and the kinds of results your prospect can expect.
Over time you will build a bigger library of references and will be able to tailor the references more specifically to the niche / industry of your prospects.
Take good care of your references.
Your client references, especially over the long-term, will prove to be your greatest sales development asset. Send them thank you notes (I like to include a nice bottle of wine or whiskey, if that’s something they’re into). Send them holiday gift cards. Don’t ever let them forget how much you appreciate them.
Tightening Your Reel
The delivery process of your trust offer; actually creating the trust and over-delivering by setting up the next steps that need to take place – is the fastest way to create a revenue flywheel that throws off more work.
You’ve got them on the hook
This is the process that needs to be very intentionally thought out and then refined.
This includes consideration for every step of your sales process including the hand-off from one phase to the next. This process will be the basis for what becomes your pipeline, but needs to first start with you thinking through how leads get moved from initial contact to signed contract.
Let me walk you through a quick story to help paint this picture.
A few years back I had published a piece of content as part of my agency’s growth engine (we were very small still.. not even at the million dollar mark yet) it was about using technical SEO to grow traffic to over a million organic visits per month for a website called YourListen.
I received a contact form from a man named Juan representing a company called San Services, the marketing services company owned on behalf of Unique Vacations Limited (the parent company of Sandals and Beaches resorts).
Upon contacting me, my next step was to get him on the phone.
This does a few very important things:
- Gives me a chance to connect with him on a more personal level (email is only 7% as effective as talking).
- Let’s me ask probing questions to get an understanding of his exact pain points, desired solution, and success criteria.
- Let’s me plant the seed to move him into the next phase of my sales process.
The initial call
On the call he spoke to the need to have help leveraging data and experience to get buy in from Management on bigger projects.
He explained that he was essentially the SEO department and had virtually no resources to manage a lot of the on-going crawling, analysis and monitoring needed for websites who’s traffic was so valuable.
He expressed concerns about attribution and not having the analytics support internally to deliver the reports Management wanted (and that he would need to get budget allocated for SEO).
Creating the proposal
I took notes on all the points he mentioned and used them to specifically craft the pitch that I would deliver in the proposal.
What’s crazy is the proposal was terrible. I didn’t have a 7FA program or anyone coaching me through how to do the best job possible selling.. I was just winging it and figuring it all out by making mistakes.
Look at this abomination:
Upon completion of putting this all together, I reached out to schedule a time to hop on the phone and present it.
On the call were Juan (the SEO contact) and his boss, the Senior Marketing Manager. It took about 40 minutes to go through the process, they thanked me and said they would need to debrief internally and would get back in touch.
I presented the proposal on a Wednesday, and then followed up via email on Friday. On Monday Juan emailed me back and asked if we could hop on the phone for a quick call. On that call he asked if I would be able to come down to their U.S. headquarters in Miami and present this, in person, to the Managing Director and the rest of the web team.
NOTE: I never reach into my pocket to travel on behalf of a prospect – it’s just too much financial risk and opportunity cost; but sometimes the opportunity is big enough that you need to take the leap.
The presentation
I flew down on my own to go to the meeting. The presentation was much more focused on our capabilities than it was the actual proposal – which I’m sure helped, as my proposal was a flaming turd at that point.
But I came armed with a few specific tactical pieces of information; notably one small change that would likely result in a big win for the them. This gave me the chance to demonstrate my capability and also to build some rapport with their web and dev teams, who seemed to respect that I could speak to implementation more so than just the ideal outcomes.
Overall the meeting lasted about 2 hours, and then I thanked everyone for their time and headed back to hotel.
The follow-up
About a week later, Juan got in touch with me to schedule a call with the Managing Director whom I met while in Miami.
The MD had some questions and wanted to talk about the pricing. I prefer to always try to get as much of the scope and pricing/timeline laid out before putting it into a formal SOW as the SOW introduces so many other variables that are likely to cause speed bumps in the sales process.
With that said, it’s important to make sure you include a few elements within your SOW’s that you are willing to flex on in the name of negotiating, especially if there are things you absolutely aren’t willing to move on.
Negotiating is all about compromise, so if your first version of your SOW (or consulting agreement) is your final terms, you’re shooting yourself in the foot right out of the gate by showing your lack of flexibility to compromise with your client.
Some of the things that I like to include in SOW’s with the expectation of striking or changing are things like; payment terms (we always start out with payments due in 15 days – this almost always gets pushed to 30 days), travel reimbursement (I include per diem costs and clauses about travel arrangements, etc. – again, this almost always gets changed), and then day rates should a client want me to work out of their offices.
We got the deal
We ended up landing this first deal, on a lower negotiated rate, and for just Beaches.com (another agency was still handling the work for Sandals at the time – as they wanted to first “test us out” before giving us the “big brand”).
Even with my craptastic proposal, the process of demonstrating capability and bringing references to the table – and my willingness to invest in the relationship (by making the trek down to Miami to present in person), all came together to land us what was, at the time, our biggest client.
Moving forward
I’m now going to get into what a killer proposal is supposed to look like.
Catching Sales with Your Net
You’ve reeled the client in and they’re excited to see your proposal – now it’s time to scoop them up.
This exercise is going to focus on creating proposals that they can’t resist, and making sure you include pricing so transparent that it sets you up for up-sells that they will actually ask you about.
This part really all comes down to your presentation – so making sure you are:
- Starting off strong, and then
- Always adding to and refining your pitch
To do this here’s the recipe for an irresistible pitch deck for agency services:
1. Set the stage
Why are you talking in the first place? Create a slide that calls out the objective you are looking to address right out of the gate.
This is also the point in the deck where you want to push on the never that you found…
and then talk about the opportunity (remember that ranking opportunity analysis I mentioned.. here’s where it fits in):
2. Highlight your process
We do this in a way that I think is kind of slick; we always start with benchmarking because we want to:
- Demonstrate our technical ability by diving into the client’s analytics accounts – but also because
- It gives us a chance to demonstrate accountability – we want credit for growth and the success of our engagement.
3. Tell your engagement story
This is where we dedicate a slide to each component of the engagement process in deliverable form; this includes our audits, data collection and analysis, campaign design, strategy design, and so on.
It gives us the chance to create a compelling narrative about how we deliver our work and get the prospect excited about having all of these strategic findings (with tactical implementation directives) at their fingertips for deployment.
This part of the pitch follows the order we would do the work in, that is then later mirrored in the timeline and pricing breakdown.
I like to also drop in testimonials and occasional client references that associate directly with the deliverables being recommended.
4. Customize for Your Prospect
Make sure you include a section of the deck to customize specifically for the company your pitching – to highlight their biggest weaknesses or opportunities.
^In the above pitch we actually changed the color of the custom slides to “theme” them — I don’t think this little extra flare actually helped us at all, so we’ve since stopped doing this.
5. Timeline
One of the most frequently asked questions when presenting a proposed scope of work (aside from cost) is:
“how long is this all going to take?”
“when can we expect results?”
and while the results question is subjective to every campaign (and relative to the domain and niche), the timeline is a place where you can create some hard context to give your prospects reference points.
This is how we present proposed timelines:
Then, I’ve learned it’s important to set this expectation up front as well:
and then to make absolutely sure we hammer this component home — we add this on for good measure:
6. Transparent pricing
Lastly, everything you’re proposing (including your timeline) all needs to be reflected in your pricing.
The easier it is for your prospects to understand what your prices are, and how you arrive at estimated and total costs – the easier it will be to close the deal.
So within the deck we just include a screenshot as more of a placeholder:
This is done very intentionally, and for a few reasons:
- We want to control the conversation around pricing, and hence not have a static file dropped in, and
- It’s likely the pricing will change before finalized, sometimes during the call – so we move the presentation over to the actual pricing file – which looks like this:
7. The Company
Now you want to follow-up your presentation with some legitimacy creation slides (and also include mentions of services you didn’t pitch, but you offer).
8. The Case Studies Deck
Since after the presentation we send the links to the decks along to our prospects, we’re able to leave additional components to show of legitimacy, etc. in the decks that are likely to cause them to go back into re-open them later.
One of these slides is a link to a wholly separate deck that is just a collection of case study summaries:
9. The Info Deck
The 2nd to last slide in the deck is another slide like above that links to a deeper dive into the company itself, we call this our “info deck” – think of this as an “elevator pitch” for your agency in case someone had never heard of you before.
To help you along this process I’ve also included a full pitch deck as a template in the 7FA members area so you can go grab a copy for yourself.
Designing Your Pipeline
Your pipeline is your agency’s lifeblood – Nick Eubanks
it’s how money flows into the agency to fuel your growth.
As a critical element, it needs to be respected and meticulously maintained.
Before you can worry about having a strong pipeline, it’s first necessary to make sure your pipeline is designed in a way that will allow you to focus on keeping it full.
A proper pipeline is designed to track deal stages and leads in a way that goes beyond a simple CRM; it should provide insight into when and how you will realize revenue within your agency.
Furthermore, your pipeline should allow you to back into your daily, weekly, or monthly revenue targets to know if you’re tracking above or below your revenue goals.
Your #1 responsibility
Your job as the agency owner needs to be 100% focused on filling the top of your pipeline, and when/if needed, stepping in at the end of of the pitch to close the deal. Everything in the middle should be handled by team members.
Pipeline should be a daily management task for you, that will eventually be handed off to someone else.
But it all starts with knowing your numbers, which means you need to put a system in place for tracking them.
If you don’t already have a tool or system in place, good news is I built a handy little Google Sheets-based pipeline tracking tool for 7FA (pictured above) that you can grab the link for in the members area.
Building your pipeline
The initial hand-off phase will involve leads coming into you, you responding and looping in your BDR. It will be that person’s responsibility to follow-up, schedule an initial discovery call, qualify the lead, and scope the initial opportunity.
You can build different pipelines to manage different deal flow; you should have one pipeline for your trust offers, and another for your bread and butter work (whether project-based or retainer).
The components of your pipeline are going to differ for each business type, but generally they will include a step that let’s you track where the responsibility falls for each step:
- Lead In
- Discovery Scheduled
- Proposal Needed
- Pitch Scheduled
- SOW Requested
- In Negotiations
- Closed
This pipeline design for digital agencies allows you to track your throughput and ensure no opportunities fall through the cracks since every stage of this pipeline has a follow-up task associated with it — so the ball is always in your court to follow-up to move from one stage to the next.
This 7 phase pipeline also allows you to slot in additional resources as phases get overloaded, breaking them each down into their most focused, purposeful components.
Just like in HBO’s show “Silicon Valley,” you need to embrace middle-out. That is how you will begin delegating out the stages of your sales process within your pipeline.
So the first pieces to assign out are scheduling; the discovery call and the pitch meeting. These are simple boilerplate emails that can be set up as canned responses and handed off to a VA or junior member of your sales support team.
The next pieces to move off your plate are the creation of the SOW (essentially just taking all the components of the proposal, associated pricing and timeline) and moving them into a document template.
Then finally, you’ll have so many proposals that need to get spun up, you’ll need someone else to assist with the build out and customization of these as well.
Deep dive into each phase:
Lead in
This is exactly what it sounds like; this is a new contact form submission, phone call, or even a trust offer inquiry. The most important part of this stage is just following up – and as fast as possible.
One of the rarely discussed secrets to sales is speed. The biggest organizations, with the most sophisticated sales operations, know this – if you’ve ever purchased a house before and filled out a lead form for a mortgage you know what I’m talking about; how fast did you get a call from the mortgage broker?
All you’re trying to do is get in contact and get your discovery call scheduled.
Discovery Scheduled
Nice work, you were able to get in touch with the lead and get them to commit to a 20-30 minute call. At this point you should have sent them a follow-up email AND a meeting invite (yes, 2 communications are better than 1 here).
The follow-up email should include a few critical elements:
- A polite note thanking them for their time, and reminding them what you discussed and the next steps they should be expecting.
- A date as to when they can expect to their proposal. It’s OK if this is a range, i.e. “by the end of the week,” just make sure you set the expectation for the time range.
- Links to case studies (ideally relevant ones for their business type or industry) and any blog posts written by you (or your agency) that are relevant to the scope of the proposal.
Proposal Needed
At this point you’ve finished your discovery call, you’ve sent along your follow-up materials, and ideally – you’ve sent at least 3 client references (names and emails) for them to reach out to.
Proactively offering up references for them to get in touch with will help you stand out from 95% of the agencies you’re competing against. You will never sell yourself as well as your client references – so leverage them, and take good care of them (I prefer big baskets filled with meats, cheeses, and wine… unless they’re vegan or don’t drink 🙂 but for that exact reason you need to task your self to find out what they like. Worst case a $250 Amazon gift card always goes a long way).
Don’t forget that your proposal is your net; you have the prospect in your sights, you’ve reeled them in, now you just need to scoop them up.
Follow the 7FA proposal format and you will create a stand-out proposal that will convey the value you can provide.
Pitch Scheduled
Once you’ve completed the proposal, it’s time to reach back out and schedule your pitch.
You will use this ~40 minute phone call to present your proposal to them live on the phone, screen-sharing over something like Zoom, UberConference, Join.me, or similar.
Walk them through each slide, and make sure you don’t skip a single one. Each slide within your pitch deck is part of your overall cadence and the story you’re telling them about why they need to hire you.
At the end of your pitch, again thank them for their time, and give them space to ask questions and be ready to discuss anything they want to for at least another 20 minutes.
Questions at the end of a pitch are good; so encourage them.
SOW Needed
Occasionally right at the end of a pitch the prospect will request an SOW, in my experience this is the exception more than the rule – as usually the prospect needs to go back to other stakeholders within the company and share your pitch, proposal, and their thoughts.
Usually within a week or so you will be contacted with a request to create the SOW – do not wait for them to contact you.The early bird gets the worm, and the salesperson who follows-up gets the deal.Here is my recommended follow-up cadence once a pitch has been delivered:
- 2 Days After – This is a short and sweet follow-up email, asking if they have any questions and if they have had a chance to connect with your references.
- 5 Days After (3 days after last communication) – This is NOT a sales-focused email, and instead should be focused on providing value. Take this opportunity to share an article or study that is directly relevant to the work you’re pitching and demonstrates the value from the engagement scope you’re proposing. Bonus points if it’s written by you (or someone else at your agency) but it doesn’t have to be to be effective.
- 7 Days After (1 calendar week after pitch) – This is a soft nudge, where you casually mention that you and your team are planning next month’s production schedule and you’d love to get the client in on the kick-off schedule before it’s finalized.
- Once per Week Thereafter – This is a scheduled sequence you can build out in something as simple as Mailchimp’s automation platform, where once per week moving forward it drops them a quick 1-2 sentence email just sharing a link to an article, piece of news, or thought of yours relevant to the industry (these emails need to be high-level enough that they can be used for anyone that gets put into this nurturing sequence).
Closed
This is one of the more nuanced concepts within the agency pipeline, because so many owners just “mark deal as won” instead of actually having a “Closed” step within their pipeline.
However, this is a gross misstep, as without a formal stage in your deal flow pipeline, you don’t have a trigger event to signal the hand off from sales to operations (or PM) within the agency.
When an SOW gets signed, a deal gets moved into the “Closed” phase, the following should happen:
- Follow-up with an email introducing the (now) Client’s point of contact.
- Include the project team.
- Include a boilerplate paragraph setting the specific expectations for how on-boarding will work and how their kick-off call will be scheduled.
- Fill out your new client brief form to make the team aware of the details.
Customer Relationship Management
You already have a handful of services you’re selling, and maybe even a few products.
I’d be willing to bet that your competitors are selling the same products and services, and competing at the service level is a race to the bottom in terms of pricing.
Based on all of the work you’ve done up until this point; defining your niche, identifying your audience and their pain, building a PM system to support your business, and positioning your brand – it’s time to make sure you’re managing your relationships so you can grow.
This module will take you through:
- How to onboard your clients in a way that will actually create more revenue.
- A process for proactively managing your relationships.
- How to handle upset clients.
- Tactics for turning your customers into your best sales people.
The process behind on-boarding new clients is your first chance to deliver on the promises you’ve made them throughout the sales process.
Your on-boarding process needs to be:
- Thoughtful
- Exciting
- Smooth
Each of these components is meaningful in order to execute the first phase of your new professional relationship.
The on-boarding experience will set the stage for all your future interactions with your client, including how long they may stick around for, how enjoyable they are to work with, and even how much business they are likely to refer you in the future.
This is also your chance to reenforce expectations you set during the sales process.
Tip: Let clients know how your relationship will come to an end.
I know this sounds crazy
But it can make things so. much. smoother. when this days inevitably comes.
Most business relationships come to an end, whether it’s because of a change in ownership, leadership, pricing, clientele, etc. There are 100 reasons you might end up no longer working with a client, but letting them know exactly what to expect up front makes this far more painless if and when that time comes.
Be Thoughtful
More specifically, show your clients you respect their time by having everything extremely organized.
Your on-boarding process should include a specific, repeatable series of communications and setup that can all be driven by a simple checklist (so this can be tracked by your sales department and project manager(s).
Here’s how we do this:
The post-contract introduction (the hand off from sales to account management)
The important points to call out here are:
- Communication – introduce the point of contact on your team for the client, and let them know what the immediate next communication will be.
- Schedule – this let’s them know a more formal “kick off” will need to be scheduled.
- Billing – give them a heads up that their first invoice will be coming so it’s not a surprise when it shows up.
The Account Manager Introduction (or PM or point of contact)
The important parts of this email are:
- A personal introduction from the POC, letting the client know they are excited to begin work.
- A suggested date and time (with a note that other times are available should this not work — this is also a great use case for something like MixMax or Calendly).
- A reminder to fill out the discovery form (ONLY if it hasn’t already been completed).
- Request for any access or information that is needed to get started on the very first deliverable in scope (this reenforces that you are eager to begin and aren’t going to waste ANY TIME).
The kick-off call (introduction of the project team and review of engagement scope)
This call should take no more than 30 minutes (max) and should be used to:
- Review the scope and timeline of the engagement.
- Fill in any information gaps in the client discovery form, and
- Present the current (working) version of the project plan.
MOST IMPORTANTThis is your opportunity to up-sell and cross-sell additional work without having to do any selling at all; all you’re going to do is ask simple questions positioned as helpful… you’ll see what I mean 🙂
Kick off deckYes, we create yet another deck (bit don’t worry, this one is simple). This deck is used to guide this call and keep it on time and on agenda.Here are the slides in the kick-off deck:
- Title
- Agenda
- Project team
- Why you hired us
- Key activities
- Project plan
- Next steps
- Thank you / questions
Client discovery intakeThe discovery form is document that is created using the information filled in by the client in the form, but then is managed by the AM/PM during the kick-off call to ask any questions or make any requests during the call to fill in any gaps.
Our discovery intake document includes the following fields:
- Company
- Website
- Primary contacts (Name, Title, and Emails)
- Goals
- Timeline (from SOW)
- Budget (from SOW)
- What products and/or services would you like us to focus on?
- What areas of your business are you most struggling with?
- What measurements would you use to define success?
- What are all of the marketing tactics and activities you are currently doing?
- What are the primary areas you need help with?
- What are some of your strengths? Why would someone pick you over a competitor? Have you gotten any positive feedback?
- What are some of your weaknesses? Why would someone pick a competitor over you? Have you gotten any negative feedback?
- What are some of the strategies and tactics that have worked for you in the past?
- What is the average life of a customer? Describe your customer cycle?
- Is your business cyclical or seasonal (i.e. are there periods of natural dips in traffic and sales)?
- Who are your primary competitors?
- Describe your target audiences
- What do your customers really want or need? What are their pain points and problems that you can solve?
- Who are your company’s thought leaders and experts?
- What are the 5 most important keywords for your business?
- Are you interested in our link building services?
- Have you implemented a tag manager such as Google Tag Manager?
- What website analytics platform do you use?
- What social media channels is company currently using?
- Please enter your Youtube Channel URL
- Please enter your Linkedin Company Page URL
- Who manages your social media channels?
- Are you open to advertising on social media? Would you like our help?
- What would you want to accomplish with social ads?
- What will you budget for social advertising per month?
- What are you trying to accomplish with Content Marketing?
- What types of content are you currently creating?
- Whose content do you envy?
- What topics would you want us to focus on?
- Our Brand’s Voice is…
- Our Brand’s Personality is…
- Our Brand Feels Very…
- If you wanted to reach our brand, we would be…
- Our Brand’s Speed is…
- Do you have a brand style guide? (If yes, please upload or include a link)
- Do you have your logo in .SVG, .EPS, or .AI format?
- Do you sell products or services on your website?
- What CRM do you use?
Project plan (on project kick-off)All of our projects start with the same template:
which then gets filled out using deliverable and sprint templates for each service included in the engagement / SOW:
all of which feeds back into our QBR.
Be Exciting
Your new client just committed to investing a decent chunk of their businesses revenue in you and your services – they should be excited about the work you’re going to deliver.
The best way to create excitement is to set clear expectations on how communication is going to flow, how work will be delivered, and the cadence at which work will be delivered.
I realize this doesn’t sound exciting to you, but you’re being hired to solve a specific pain point, and that’s exciting.
You need to come to the meeting excited to deliver, one of the best ways to do this is to be competitive. Speak to the weaknesses you’ve identified among your client’s competitors and talk about how you’re going to crush them.
Every one gets excited about winning, and driving results for your agency clients is no different. Nothing will rev up your clients faster than speaking like you’re on their team ready to crush their opponents.
Make it Smooth
Everything needs to flow like a well oiled machine, which means you need to step all the way through it multiple times, find the friction, and grease the rough spots.
Mostly, this comes from taking feedback from your team and your clients and embracing a culture of constant improvement.
The way I’ve done this is to use a whiteboard and map out every single step as it occurs from the moment a client signs on to how their very first deliverable is sent.
Map out every email, phone call, and interaction; every piece is your process, which means you can measure it – and improve it.
Proactive Client Management
Managing clients as an agency is 101% about expectations.
And expectations start with being set…
and if you don’t set them, you still set them.
You should be setting expectations during the sales process, more specifically, letting your prospective clients know that things change; competitors, technologies, timelines, and even priorities.
You’ll need to make changes, and so will they; and that’s OK, as long as it’s EXPECTED.
Above all else, as an agency
Your client should never wonder what it is you’re doing (or what they’re paying you for)
Introducing the Strategic Path
A very simple, straight-forward way we’ve found to combat this, is to deliver what we’ve come to call our “strategic path” each and every week before end of day Monday, to our most important clients.
This is delivered both in Asana (our online PM tool) but also sent as an email to all client POC’s and stakeholders.
This communication sets the stage for exactly what is being worked on, and why. Plus, since it’s sent every week – the client’s come to expect it, which cuts down on back and forth, questions, requests for ad-hoc calls, and all the other time killers that you run into when running an agency.
What’s IncludedIt’s actually a bit different for every client, since different clients care about different things. The good news is that you have the opportunity to define what should be included in this communication during the on-boarding process.
Remember these intake questions:
- What areas of your business are you most struggling with?
- What measurements would you use to define success?
- What are the 5 most important keywords for your business?
At this point your client has already given you some direct insight into how they measure success and what they define as their most important KPI’s.
Don’t make assumptions, but you can lead the conversation with data they’ve already provided to you.
Here are examples of our strategic path for 2 different customers.
Here’s an example of one delivered via email (as this was the preference of the Client’s Executives who wanted to be included on this communication):
and here’s an example of one being delivered to our Client POC in Asana:
The Monthly “Check In” Call
This “temperature check” happens once per month with the project team, and eventually the AM + Team Lead.
We only do this for our biggest clients (and the time is billable). Right now you must be at $10k/month in retainer for a monthly call, as of 2020 this will be moved to $20k/month.
Not because I don’t love speaking to our clients, but because 4 people on your project team on the phone for an hour just cost you 4 hours of production time…
These calls can be run efficiently, and even gotten down to under 30 minutes. To do this the project plan needs to be up to date, the AM/PM needs to have their head wrapped around exactly where all the components of the work are at in terms of status (are things held up because of the Client? Is the ball in our court? If so, where’s it at? What’s being worked on?)
But, the most important questions to ask are those that will nurture your relationship and give you a chance to nip and disappointment or miscommunication right in the bud.
So here are 3 questions I recommend:
1. On a scale of 1-10 how satisfied are you with our engagement right now?
Regardless of answer, ask why they didn’t score you lower. This flips the question on it’s head and puts the client in a place where they’re actually selling themselves on why they scored you higher opposed to lower, if asked the other way around.
2. Is anything moving slower than you’d realistically like it to?
Timing is always something agency clients are frustrated with, especially since 9 times out of 10 the basis for how they’re paying you is based on trading your time for their money.
Give them the opportunity to let you know if they’re expectations aren’t being met and they think things should be being delivered faster… most of the time, Clients aren’t intentionally misinformed, they may simply not understand how much time some things take; and this is your opportunity to speak to your process and explain the exact steps that must be taken in order to deliver on the work they’ve hired you to perform.
3. Is there anything we could help you with this month to that would make your life easier?
We’re all human here, and most of the time, your client is an employee – and they want to do a good job for their boss, just like you want to do a good job for them as your client.
This question let’s them know that you’re present, you care, and you’re willing to go above and beyond to help out.
More times than not, you’ll get a “no, but thanks for asking,” but occasionally there will be a very real pain in the front of their mind – and you just prompted them to talk about it.
This is using behavioral psychology to build rapport and trust; but that’s what matters in client relationships.
Handling Upset Customers
Something you’re never told to plan for, but will absolutely happen at some point while running an agency; a customer will be upset.
Sometimes, it’s going to be your fault, other times – you will have literally done nothing wrong, delivered everything perfectly to the letter of your word (and contract), and you’ll still have a client that’s angry with you.
You’ve probably read posts about when it’s time to fire clients, and may have found yourself thinking “gee, that would be nice wouldn’t it?”
Where the thought of being able to fire a client, and say goodbye to the revenue you’ve been working so hard to grow, seems like a fairytale in wonderland.
Regardless, it’s going to happen
So you might as well be prepared for it.
The 2 most common complaints that Clients have about their agency partners are:
- Why is it taking so long, and
- Why is it costing so much
The most important strategy above all else; stay objective.Feelings are subjective, and emotions can turn on a dime. It’s your job, as the agency owner, to not bring emotion into this equation (even if your Client is).
Instead, lean on objective pieces of data like:
- Dates
- Times
- Hours
- And above all else; data.
Data is always objective.But be careful; don’t throw your data in their face. It’s important not to burn bridges; even if you’d take joy in watching your client burn to death (dark, I know – sorry).
Instead, tow the line and regulate your emotions. One great strategy to employ here is choosing your words very carefully… picking words that don’t create conflict and promote resolution.
Use words and phrases like
- We, us, and ours (in the context of your relationship with the client NOT them vs. you and the agency)
- I understand
- I agree
- I can see that
Make sure they know you’re listening and they’re being heard; you’d be amazed at how often conflicts can be resolved by talking through what’s causing the conflict; and to belabor the point; more times than not it’s miscommunicated expectations.
Don’t use words like
- My (or we, us, and ours in a you vs. them context)
- Calm down
- I know how you feel (or worst: I’m sorry you feel that way)
- Here’s what you need to do
- You should
Knowing when to walk away
It’s going to happen; there will be conflicts that you’re simply unable to resolve, and you’ll need to part ways.
Sometimes the choice will be yours, more often (especially in the beginning), it won’t.
But when it is, you need to be diplomatic.
Here’s an example of a small agency owner (not me) diffusing a situation and planting seeds about how separation might be the best resolution:
What this agency owner does is methodical, and perfectly executed, let’s explore:
- He moves the conversation out of a group thread where other team members are present (whether from either company or both).
- He calls out that he is concerned based on specific behaviors he has identified, and expresses this as a “concern.”
- He sends this message to a POC on the client team that he has built more rapport with, and demonstrates trust – by offering up that if they are to continue working together, he would like to change his main POC to this person.
- He then specifically addresses his main concern after setting it up softly in the beginning of the email; that he would like this person to be the sole source of approval / acceptance of the work delivered.
- He closes by using stern, but objective language that he would like to continue the relationship, but changes will need to be made (and addressed in short order).
When it needs to end
Sometimes, it just needs to end.
Here’s an email I was coached on writing by our contract General Counsel when I had to fire a Client from FTF:
This was years ago as of the time of writing this, so there are certainly some things I would do differently today – but the points worth calling out are:
- Once it was identified (and decided) that we were going to fire this client, this email needed to be sent immediately.
- I open with my opinion, to get it out of the way, that I do not think our companies work well together.
- I go on to make objective points about the concessions we’ve made, building the case that financial considerations (and compensation) has been considered in deference to the relationship (in case in the ugly even this would go to litigation).
- Here’s where I screw up (in terms of remaining objective) – I propose a “solution” that does not come across very professional, and then close the email with an open ended, and unproductive question.
What I should have said at the end of this email in retrospect was:
“I understand your frustrations with how our development team has built some of the components of your website and the specialized functionality you’ve requested. A solution to consider would be to roll-back the current production version of the site using the simple versioning functionality available within WP Engine.
I would be happy to create a quick video showing how this is done, or to put you directly in touch with our Agency partner Concierge member at WP Engine to assist you directly.
If you have any specific thoughts, ideas, or other feedback you wish to talk through with me personally, please let me know and I’ll send along my calendar availability for us to connect.”
Lesson learned
Hopefully all of the mistakes I’ve made (and lessons I’ve learned) and the insights I’ve gained from my network, team, and clients – can help you avoid some of the same blindspots I’ve had to fall into 🙂
The Client close out process
One more process that we’ve developed that I think is really helpful for all agencies to put in place, is a formalized process for how to close out a client when a relationship does end.
In the beginning, when we would receive notice of contract termination, or the end of a contract would come and the client did not want to renew or extend, that was it… we would deliver the work they were owed and say our goodbyes.
Over time we realized that this was also a missed opportunity; to step up and be professional – and remind the client again why they worked with us in the first place.
So we created a templated process for how to close out a Client, and it goes like this:
- AM meets with project team to review all commitments currently in our PM System (Asana), and review the initial SOW plus any executed change orders.
- If additional tasks are found or needed, these are added into the Project Plan within the final timeframe needed to close the contract by the end date.
- AM drafts closeout email to Client POC, which includes a full list of all deliverables (with links where relevant) or for larger clients, a link to their Client Google Drive file that includes all work.
Here’s what that email looks like:
The key points to highlight are:
- A friendly, still excited opening with a bit of humor injected to lighten the mood and set the tone.
- Categorization of each service we provided work for.
- An “at a glance” description where we use the titles of each deliverable to lend context.
- An offer for a final call.
- The specific date when the client will no longer have access to the online portal they have used for all communication with the Agency team up until this point.
I hope you find this helpful 🙂
How to Hire, Delegate, and Scale the RIGHT Team
Defining your culture
Why are you the agency you are? What does it mean to be part of your team?
Defining your ideal characteristics for great team members is the literal foundation of what is going to allow you to scale your agency, get out of the weeds, and start to create the life you want.
It starts with paying attention to people’s attitude and level of commitment.
Where it gets difficult is once you define your organizations measuring stick, it becomes imperative that you hold every member of your team accountable to that same base of measurement; and when members don’t measure up – you need to let them go.
What we’re going to go through in this module is a system for defining values that will dictate your agency’s culture.
Core values are more than just words
The core values of your agency are what represent the very fibers that combine to make up the DnA of the company; it’s the way your team members treat one another, your clients, and above everything else – the way people behave when you’re not around.
As you go through the process of defining (or updating) your team’s core values, here are some guiding high-level principles you might find useful:
- They should be detailed but, accompanied with summary headings so they are easy to remember (and reflect upon).
- They should be accessible, this means they live outside of your handbook and are present (and proudly displayed); this could be in the form of signs, art, sayings in your space or even something as simple as branded digital wallpapers that are distributed among team members. You might be surprised at how excited your team gets about your values and how proud they are to show off their support of them.
- They should be leveraged, not just within internal communications, but even reinforced weekly as part of a cadence of meetings designed to highlight them.
- They should be dynamic, and revisited, at a minimum on an annual basis; as your time changes, and your team changes, so will your core values. I realize that sounds counterintuitive; but the best values evolve to become even better versions of themselves.
Companies with strong cultures are known to perform better than those without.
Although creating and leveraging core values may seem daunting, the impact to your company culture can be tremendous.
Here’s an easy exercise to go through to get the ball rolling and gather your initial ideas. It starts with a bit of brainstorming (by you) on what you feel is important for your company (starting with you) to uphold and persist as an organization.
Write down 3 concepts you identify with, for example, mine are:
- Ruthlessly competitive
- Meticulous attention to detail
- Enjoy the work
These don’t have to be the 3 cornerstones you build on top of, in fact, they may not even be included in your final set of company culture tenets; but you need a starting point.
So start first on your own, and then early on – bring your team into the discussion, so:
- Take your first idea and discuss it.
- Is it received openly or shot down? If it’s shot down early on, that’s OK, just move on to the next.
- Repeat
- Regroup as a team and read aloud what remains thus far
- Refine and check for overlap
Here were some questions that guided our thinking:
- What’s important to us?
- What continues to hold us together?
- What ideas could be used to guide us through difficult decisions?
- What are the things you like about what we do and how we do it?
- What parts of our company are we proud of?
Then we waited
This is important, so I would advise not skipping it. But once you’ve gathered your first rounds of feedback on your ideas from your team, sit on it for a week, then come back to it.
You might be surprised by your next take on some of the thoughts you had and how steadfast you felt at the time about them – but how after some time has passed, they don’t seem as important “at the core” as they did.
Then run through each concept and ask yourself (again, aloud) the following questions:
- Is this something we’ll still believe in 5 years? 10 years?
- Is this something that we are willing to hire on?
- Is this something we’re willing to fire on?
- Is this something we can apply to client service? Team development? All of the above?
The following quote from Paul Bromen, CEO of UponaMattress.com, highlights the evolution of a team’s core values in a way that aligns with this process:
“When a company starts its core values do not need defining because they are embodied in the founders. Once a company is scaling, I insist on having its 3-5 “corest” core values codified publicly online, and privately in a employee guidebook. Annual or quarterly awards recognizing employees who embody core values are a great way to reinforce their importance. The ceremonies and communications for the awards can show how the values are lived out in real operating conditions and give leadership a platform to highlight values that need strengthening.”
Defining values is important because they provide guidance for ambiguous scenarios and tough tradeoffs. Their influence on daily decisions propels the company towards its mission.
Culture always starts at the top
Company core values are defined by the senior management in their daily work and how they treat clients and customers.
If you go the extra mile for your employees and your customers without regard to the profitability of a specific action, everyone will become aware.
If you pinch pennies with your employees and customers, disregarding their needs in favor of profit, everyone will know that too.
What behaviors will the company value over revenue?
In other words, if a team member chooses to honor the core value over making a sale or saving the company some cost of goods sold — will they be rewarded and not reprimanded.
Your agency’s values should act as guidelines “to hire and fire by”
And not just in the context of your team members, but the same must be upheld for your clients.
When is it appropriate to put the needs of the team above those of the client?
When and how should a client be fired — is it only before your team quits because of the customer’s bad behavior?
It’s about more than just signaling against your established core values, it’s about building a culture that transcends you (and your Partners if you have them).
Integrity is doing the right thing even when no one is watching– C.S. Lewis
On the flip side, when your team deserves to be rewarded, how will you ensure equal reward across all those deserving of recognition?
This digs at a deeper common issue, which is lower level teams that may be crushing it in terms of deadlines and work quality but it’s only their managers or directors that are receiving the recognition – how do you ensure the measuring stick is the same across the organization?
Core values can be measured in behaviors
If it’s a core value to keep things light and fun, you can require (and reward) that behavior.
If you need your folks to drop whatever they are doing to handle a client fire, once it’s settled take them out for a coffee, or perhaps have an impromptu happy hour.
Culture is best defined by highlighting what makes you different; how you stand out from your competitorsSome of the elements we celebrate at FTF are:
- Wins (even if small) – it might be a new ranking, new CPA record, daily high for (client) revenue or traffic; it should be called out and celebrated.
- Big picture strategy – the ability to understand how all the small pieces across different marketing channels fit together into the larger organizational goals.
- Full transparency – There are no black boxes, with team members or clients. The books are opened to everyone on the team and pass through all of our vendor costs (like content and link placements) directly to clients. We want to be seen as partners, so we act like it.
- Bold directness – We value candor, which sometimes includes an F bomb or 2 to be honest. We tell it to our clients straight (even if they may not want to hear it), and we do the same with our team members. There’s a fine line between sugar-coating, acting brash and mean, and being direct.
- Be a challenger – There may be nothing more dangerous to your agency than surrounding yourself with yes-people. You need team members that are not afraid to challenge your decisions – and that starts with you creating an environment that supports (and rewards) challenge.
- Embrace empathy – Knowledge is powerful, but without empathy it lacks impact. We embrace and support the “human factor” understanding that we are our greatest asset.
The mission is the why, the values are the how
If your agency’s mission defines what it does and why, your core values answer the important question of how you plan to achieve your mission.
This starts and ends with a support system that YOU put in place to support your team’s culture.Starting (and finishing) each week strongWe host 2 key meetings each week
- Monday “Stand Up”
- Friday “All Hands”
The Monday morning meeting, held every Monday at 10AM EST, is a 15 minute meeting hosted by a different team member via Zoom.
This meeting has a set format and gets the whole team on the same page at the start of every week to drive alignment on:
- What are the key priorities for the week?
- What clients / projects are kicking off or closing out?
- What events are there (in each location) both work-related but also socially?
- Who’s out of office, on vacation, or visiting?
- What in-person client meetings are there?
- Birthdays and holidays
Then every Friday morning at 10AM EST, we have another meeting for 15 minutes that’s a bit more informal – it’s less about what needs to be done and more about highlighting what was accomplished.
The meeting format and agenda is also standardized, and includes:
- Deals closed this week (so everyone can get excited)
- “Shout Outs” – a time for anyone to publicly call out a behavior that supports our core values as a team. This is often the bulk of the meeting with nearly everyone calling out 2-3 folks on their team (or on another team) for stepping up to help, crushing it on a client deliverable, or taking the initiative to do something for the team (this could be anything from cleaning dishes in the sink to picking up donuts on the way into the office).
I refer to these meetings as “book ends” for our weeks. They give the entire team a chance to embrace and directly contribute to our culture.
Over time, we have seen these meetings begin to trickle down into individual teams and departments; pushing accountability (and personal consideration) into every level of the organization.
Pre-screening and Hiring
Finding the right talent is hard. Here’s a system for hacking the hiring process and building an efficient process for scaling hiring and talent development over time.
Hiring can take up a tremendous amount of time and bear less than fruitful results.
The cost of making a bad hire is estimated at up to 30% of their first year’s salary, which means hiring the wrong person for even an entry-level position at your agency could cost you over $10,000. If you want to get deeper insight into what your actual costs could look like, here’s a cool free tool.
The best way to avoid making bad hires is to put a screening process in place that weeds out ~90% of potential bad hires before they take up any of your time (or whoever you’re paying to handle making hires).
Prescreening Process
Your screening process should incorporate your cultural values and consider the characteristics that are most important to your team.
For me, attention to detail and the ability to closely follow a process is critical for team members to be successful at FTF.
So I’ve built this into our screening process.
In order to even apply for a job at FTF you need to complete an initial questionnaire, which includes 7 questions, masked as 4 questions.
For our SEO positions it looks like this:
- What would you consider the most important aspect of a keyword?
- Search volume
- Intent
- Average CPC
- Optimization
- If 2 pages are very similar in content and purpose, what is the best way to make sure they don’t compete against each other for rankings?
- Describe a metric for measuring link authority (who created the metric? how is it calculated? what scale does it use?)
- You notice a large number of negative links start coming into pages on your website over a short amount of time. Your SEO rankings start to fall and you are seeing decreases in your organic traffic.
- Based on the above situation, what steps would you take to remedy the situation?
Someone who only answers the 4 surface level questions, and doesn’t provide answers to all 4 parts of question 3 would self-disqualify from a phone screening.
Phone Screening
Phone screening should be used for one purpose and one purpose only, does this person fit with the core values and culture of your agency (or the one you’re trying to build).
This can usually be achieved in ~20 minutes, and is best accomplished by preparing your questions in a way that they can be measured/gauged against one another across candidates.
The goal of the phone screen according to Lever.co are:
- Ensure they are experienced for the role
- Determine their qualifications meet the needs of the role
- Gauge interest in the company & company mission
- Understand their communication style & skillset
- Figure out if they’ll enhance your company culture to drive innovation
Questions to consider asking (taken directly from the Topgrading phone screen guide):
- What are some notable successes and accomplishments? How were these achieved?
- What were some mistakes you made or failures you had during your time in this position?
- What was your supervisor’s name and title? Would you be willing to arrange for us to talk with them?
- What was it like working under this supervisor? What do you feel were their strengths and shortcomings?
- What do you feel your supervisor’s honest opinion of your strengths, weaknesses, and overall performance were?
Topgrading
Topgrading is a hiring process created by Brad and Geoff Smart, and is based on a more thorough screening process methodology designed to leverage characteristic magnification.
I’ve written about adopting the methodology at FTF before.
It also includes a classification (or “grade”) for your team members, that includes 3 buckets:
- A Players
- B Players
- C Players
C-Players
These people are best characterized as those who do the bare minimum to get by. They get their work done on time, but barely. They also tend to make excuses, and need more attention / coaching during 1 on 1’s and quarterly reviews than others.
As a manager, these are the players you want to avoid because they’ll quickly turn into time sinks and even negatively impact your team’s culture and productivity.
B-Players
These folks are consistent and reliable performers. When something needs to get done you can rely on them to get it finished correctly and on-time.
They have a solid understanding of what is expected of them and do what it takes to deliver on that expectation. B-players are those who need little to no coaching but are still able to keep their productivity at the level it needs to be at. However, when something comes up that requires them to go above and beyond their job description or put in more hours than is necessary, there may be push-back. Regardless, these are still people you want to keep on your team as they are very important for keeping a well run and organized business.
A-Players
It’s well accepted that these are the individuals who consistently go above and beyond. These are the ideal recruits that you want to attract and retain as long as you possible because they will move your business forward.
The qualities of an A-player tend to be more subjective because different characteristics are more important depending on the manager and the industry.
That said, here’s a short list of qualities that would apply universally to an A player at an agency:
1. They reach for stretch goals and hold themselves accountable.Goals to an “A Player” are those objectives that are just beyond our reach and so many of us choose not to set them. Instead, we may opt for something more achievable so we can feel good about ourselves when we do meet our goals. A-players, however, do not share this same restraint. Instead, they put aside all fears and purposefully push themselves beyond their limits understanding that it’s only when they are forced out of their comfort zone that they are able to grow as a person and team member.
A-Players understand that mistakes happen, and they will call themselves out and take ownership.
This higher standard that they hold themselves to is specifically what makes them so valuable. Unlike a B-player who may be influenced by the lack of motivation they see in a C-player colleague and ultimately have their productivity drop, the A player will remain un-phased and continue to produce at their pace. They are completely undeterred by others and are motivated entirely by their own desire to succeed.
Best of all, where a C-player may negatively impact a B-player’s productivity, an A-player can bring up the motivational energy in both the B-players and C-players.
2. A Champions mindsetThey will have a deep rooted belief in the agency’s capability and drive to succeed. They speak positively about the experience (or they make efforts to improve it) and they champion the work of the company and the relationships with your clients.
Resources that internalize the agency’s mission and goals are more likely to make positive contributions and care about their impact.3. They understand the importance of teamwork and communication.A-player’s tend to prefer getting work done on their own, as they usually see themselves as the most capable people for the job. At the same time they’ll recognize when something is beyond their bandwidth and will effectively employ the help of their teammates to get the job done.
For example, in an agency that has a role for a Teal Lead or lead Strategist, an A-player will recognize that they don’t need to invest all their time and effort to preparing for an upcoming client presentation. Instead, they’ll make more effective use of their time by focusing their efforts on managing the relationship with their Client and effectively communicating the wants, needs and pains to their direct reports so that they can be topics of focus during the presentation.
When A Players deal with Clients, they ask questions like
“Am I understanding that correctly?” or “So you’re telling me x, y and z. Did I hear that right?”.
They understand that sometimes you need to slow things down to speed things up, and so they put in the extra effort to make sure that they are as clear as possible in their communication to avoid confusion and issues down the line.
“The most successful reps are often the most paranoid. They are always on the lookout for what could go wrong and take proactive measures to prevent them.”– Jon Miller, Co-founder to both Marketo and Engagio
A-players will readily give credit where credit is due, understanding that this builds trust and more effective collaboration amongst the team in the future. They are the true embodiment of a “team player.”
4. Fortitude and integrityA Players will speak their mind and do what they say. They are resilient and in it for “the long game,” seeing through projects and making investments of their time and energy into making sure things are done right.5. They are aligned with the company’s vision and take initiative.A-players don’t need to be told what to do. At any given point they understand what the company’s goals and objectives are and take action on their own.
They don’t worry about the minimum metrics required of them by the company and instead focus on results.
Additionally, these are the people who aren’t afraid to act on their own and don’t feel the need to always ask for permission. The reason these individuals have the confidence to do so is because they have the capability to put themselves in management’s shoes and understand what the best course of action for moving forward. This is particularly what makes them attractive to their managers in the future as candidates for promotions, and is often the reason they’re even considered in the first place.
6. They’re able to put the good of the company before their own.A Players will come in early, stay late, and even make purchases for the company (with no plans of ever seeing reimbursement). These aren’t required, but they ARE some of the patterns we see across the highest performing team members.
A Process for Hiring
By now I think you’ve realized that everything about building and scaling an agency requires process, and hiring the right team is no different.
But most agency owners don’t think through what that process needs to look like before throwing up a job opening post and starting to accept responses.
It’s important that you think through how the process will look and play out before even publishing your very first job posting, because that’s where it all starts.The Job PostingUse this as a chance to find out how people follow directions, use time management, and pay attention to details. Ask for specific items (like for them to complete your pre-screening questionnaire), so you can reduce the stack of applicants from the start.
You might ask for an application, cover letter, and resume. If someone does not present all three items when applying, they are showing they may not be able to follow directions or have the attention to detail that it takes to succeed at your agency.
You can even take this a step further by putting “easter eggs” in your job posting, such as “please include an example of XYZ as a screenshot in your cover letter.”
A-Players will actually enjoy this level of detail and take pride in following these instructions. Most B-Players will miss it, and C-Players won’t even read the full description in the first place.
The Application
Applications can either be online or in a paper format. These, along with resumes, can provide insight into applicants capabilities.
NOTE: Always be sure your application follows Equal Employment Opportunity Commission (EEOC) laws.
Asking for information such as education and work history is helpful because you can compare the information provided to what is on a resume to ensure everything matches up.
If you use online applications, Applicant Tracking Systems (ATS) can be a great way to manage submissions. ATS software can be used not only to keep track of applications, but to automate part of the screening process. For example, you can set an ATS to only accept applications that followed your submission instructions.
The Resume
Resumes are perhaps the easiest way for applicants to lie. It’s sad to have to mention, but this is the real world we live in. What I pay attention to more so is the format of the resume, taking a close look at the attention to detail that was put into the creation of the document.
Is it well formatted and easy to read? Are the most important accomplishments listed first? Does it use the same font face and size? (That one in particular kills me).
Then there are the soft skills that are all on display on an applicant’s resume; beyond their attention to detail, you get to see first-hand their organizational style, professionalism, and even writing skills.
All these things will tell you about their abilities and whether they may be a good fit for your company.
The Social Media Check-up
Checking popular social media portals such as Facebook, Twitter, LinkedIn, and Instagram can let you see if the information you have been provided is in line with their social media presence.
You can also get a sense online professionalism and if they will fit into the company culture. You may find what they post or share online is content that could potentially reflect badly on your company, so checking the online social media presence for potential employees is a great and FREE tool to use.
Exercise
1. Create your pre-screening questionnaire, and share a link to your form in #commitments as “[Month 9] Pre-Screening”2. Write 5 questions you would ask candidates that successfully made it through the pre-screening questionnaire as part of their screening call? “[Month 9] Screening Call”
What benefits employees
Employee benefits are more than healthcare and retirement. I challenge you to rethink of what you offer your team that benefits them as people and humans, not just employees.
mployee benefits have some common misconceptions, established from hundreds of years of the workforce being told what they should find valuable and “beneficial.”
When the fact of the matter is that it’s the 2020’s, and world is a fundamentally different place than it was even when our parents were up and comers in the workforce.
As an agency owner, you’re in a unique position to offer benefits to your employees that they actually want – and ultimately, when all other things are created equal – it’s often the “benefits package” that keeps team members around for the long haul.
What benefits your team?
This takes a bit of reprogramming of your brain, but take a step back from “health coverage” and “401k” and think about the things you would value most as a member of your team; both the team you have now and the team you’re in the process of building.
Table Stakes Benefits
The following list of benefits are the ones you need to be offering as “table stakes” in that these are common and expected at any modern company.
- Time Off and Healthcare benefits based on agencies within the United States.
Time Off
- Vacation days – standard minimum is “2 weeks” or 10 days per year. Often this can accrue over time so tenured team members can “earn” more vacation the longer they’re at the company.
- Sick days – standard minimum is 5-9 days after 1 year of employment.
- Personal days – Many standard employers lump these in / do no differentiate these from sick days; but don’t be standard.
Healthcare
- Medical – baseline coverage with copay allowing for employees to go to the hospital, doctor, and get prescription medication if/when needed.
- Dental – deductible based plan, usually around $1,500/year where first $1,500 in services provided are “covered.”
- Vision – Copay offered for eye exams and insurance coverage to offset cost for glasses or contacts. Rarely this can include coverage dollars toward surgery.
Retirement
- 401(k) – pre-tax savings with the option for the company to “match” contributions up to a certain %.
- 529 – A college savings account parents can open for their children that offers additional tax-free savings towards tuition.
Fringe Benefits
Fringe benefits are those offered by most modern companies, but these are usually differentiators (or marketed as differentiators) when used to help strengthen a benefits offering for hiring.
- Unlimited Time Off – A newish idea that is heavily debated as only being beneficial for the company. Often times team members feel pressured to not take time off when “unlimited” and the company is able to skirt around the need to pay out unused, accrued vacation days when an employee leaves the company.
- Maternity – Still not offered by all companies (which in my stark opinion is a sham) but even if your current team is young and not many have started families yet – it’s highly likely they will. Common Maternity benefits include paid time off for a period of 8-12 weeks.
- Snacks & Meals – For agencies with physical offices, it’s becoming more and more common to keep food stocked in your kitchens and even pick up a breakfast or lunch once a month for the team. In my experience these small gestures go a long way. I’ll come back to this in more detail in a bit.
- Team Activities – Happy hours are probably the most common leveraged “team activity” here, but based on feedback I’ve gotten from my team it’s not the one the team actually enjoys the most. This was advice I was actually given from a mentor, who suggested creating an event that becomes a “ritual” within your team. We took a poll and the most voted on activity was actually bowling (strangely enough for a bunch of nerds) so we now host an annual bowling tournament complete with obnoxious trophy. This year we’re expanding the events to also host a ping pong tournament. One of the keys to hosting team activities is to make sure you do them on company time — this is a benefit for the employees, so don’t ask/expect them to sacrifice their personal time to join in on these types of events.
Work From Home / Remote Work
This one is big enough that I wanted to expand on it in more detail.
A conversation I continue to run into over and over and over again is the benefits of “in house” vs. “remote” workers. I’d like to consider myself pretty open minded, but I’ll be the first to admit that there is something nice about having folks in an office with you when you’re doing highly technical or highly collaborative work (as is the case for much of the product type consulting we d at FTF).
But I’ve also come to really understand the tremendous benefits that come from not limiting your talent pool to just your geography. We now have team members in Cape Town, NYC, Miami, India, Philippines, Japan, Germany, Belgrade, Kiev, and throughout South America. Not only are there cost savings but in many cases the talent is stronger because the pool of people is ultimately limitless.
We currently encourage team members in Philly and Miami (our flagship locations where we have physical offices) to take 1 work from home day every week, but we don’t strictly enforce this, i.e. if folks have to drop off their car for service, have a dentists appointment, a doctor’s appointment, need to drop off someone at the airport, or pick up family from the train station — all totally normal things in life, and working from home makes it easier on them – than so be it.This all comes back to offering benefits that are beneficial to your employees.Humans aren’t meant to spend 8+ hours per day sitting in front of a computer screen, but that’s exactly the pressure that’s created in most work office environments.
So my challenge to you is to think differently about the culture you’re creating and sustaining within your agency, to focus on building a place people aren’t tempted to leave.
This brings me to my next fringe benefit, which is on the opposite side of the coin; the financial side.
Bonuses
Bonuses can come in all shapes and sizes, and be structured, fluid, scheduled, or ad-hoc.
Understanding some of the most common types and when to use them is important.
I come from a background in sales (and then was in real estate for 5 years) before I ever did anything in digital.
As you know from reading the Month 1 modules; I’m also money-motivated and obsessed with lifestyle engineering. So bonuses always really mattered to me as an employee — and have become a focus point for me as an employer.
The common types of bonuses include:
- Sign-on bonus: A bonus given to employees for joining your team.
- Retention bonus: Sometimes known as a “milestone bonus,” it’s a bonus given to employees on work anniversaries, birthdays (sometimes; I’m not personally a fan of this), or significant life milestones such as getting married or becoming a parent (this tends to be more of a cultural event in different countries, companies — but again, I’m personally not a fan of this).
- Year-end or holiday bonus. Usually made up of year-end lump sum payments used to reward an individual for hard work and goals achieved. We handle year-end 2 ways:
- Raise – If the team member hasn’t received a spot promotion or raise in the previous 6 months, they will be given a raise before year-end.
- Bonus – For team members who have been with us less than a year, or who have received a promotion or raise in the past 6 months, we give them a bonus. This is usually equivalent to ~5% of their salary.
- Referral bonus: A bonus given to employees who have referred a candidate whom was hired by your organization. This is usually ~10% of the hired team’s salary up to $100k.
- Spot bonus: A bonus given to employees “on the spot” or ad hoc for various reasons including winning a competition or a job well done.
How to think about Bonuses
When to use sign-on bonuses:
Sign-on bonuses are being used by agencies to fill the roles which are most difficult to hire. If you have a candidate or a particular department where prospective candidates are often on the fence (due to hyper-competitive industry), or a difficult job role (like a Senior PM or Head of Client Services) a signing bonus might be the extra nudge you need to close that person on joining your agency.
As discussed by Jason Pankow in The Art of the Sign-On Bonus, companies might consider offering a sign-on bonus for the following reasons:
- “To bridge a gap. If what the candidate is asking for and what you are willing to offer is off by a few grand, this is a swell way to make up the difference.
- To be competitive. If the candidate is considering another offer that is comparable or even higher than yours. Some money up front can be enticing.
- To cover a performance bonus. Often, when interviewing, candidates won’t want to leave their current company until a certain time so that they can first collect their annual bonus. If we throw out a sign-on, we don’t have to wait for that.
- Lost stock. Candidates may be hesitant to leave a company because they have stock that hasn’t vested yet. Sign-ons can help with this.”
When to use referral bonuses:
Many times if you have a critical role you need to fill and you’ve exhausted your network and online job boards, many agencies will use recruiters to find candidates.
These recruiters typically make 20 to 30% of the new hire’s first-year pay. Instead of paying this money to an outsourced recruiter who may not know your culture or business model, tap your employees to help provide referrals they know to work at your organization.
When to use spot bonuses
Spot bonuses are excellent for short-term incentives and to reward positive behavior; either for a job well done or to highlight when a team member is supporting your culture in the way that you want.
When to use retention bonus
Often referred to as a bonus given to employees who either reach a specific milestone anniversary at your organization, or given to employees to keep them at your organization after an acquisition, merger, or restructuring.
Culture thought leaders (like HubSpot) are combining retention bonuses with more than just money, some companies are partnering them up with sabbaticals so that they can create highly attractive reasons for employees to stay at their company longer.
What other types of bonuses are out there?
As people operations professionals become more strategic partners of the business, the ability and desire to innovate on old or out-dated HR practices has grown tremendously.
Don’ts:
- Don’t rely too heavily on them. They aren’t mean to take the place of your company’s mission, vision, values, or meaningful work.
- Don’t give out bonuses haphazardly. This can cause confusion as to what behavior is rewarded, lead to unintentional favoritism, and ultimately loss of trust.
- Don’t give awards for best attendance or the lack of sick days taken.
Do’s:
- Create a spot bonus program around organizational goals, culture and success metrics. Additionally, link rewards to organizational success.
- Make the criteria for receiving or winning a spot bonus clear; add it to your employee handbook and write it down where it can be accessed by all team members.
- Make sure you’re rewarding exceptional behavior that goes above and beyond, and not just work that is expected.
- Make sure you reward behavior immediately and with an appropriately-sized reward.
An employee bonus plan will motivate employees to improve their job performance and help the business achieve its goals.
A company tends to be more attractive to prospective applicants or candidates for a job if they know that the business has employee bonus plans for its employees. As a result, it is more likely to attract more skilled individuals who would normally have passed on the opportunity.
Employees need to be fully informed about their rights and privileges, including their compensation and benefits, and that includes the potential rewards that they can get. This will inform them in advance what they have to do to earn these rewards or bonuses.
If there is a bonus plan in place, the business will be better able to control the amounts that it will pay in bonuses to its employees. It can set limits and make the necessary adjustments if and when necessary.
This will also aid management when it comes to budgeting and forecasting expenditures. The company’s financial planning will most definitely refer to the bonus plan from time to time.
Elements of an Effective Employee Bonus Plan
There is no such thing as a perfect bonus program.
The best you can do at your agency is to make sure you have an effective bonus program in place.
An effective bonus program should have the following elements:
- Simple. The bonus plan should be simple and straightforward, so that it is easy enough to understand, not just by the management, but also by the employees, who are going to receive them.
- Equatable. The bonus program should be fair across the whole company. It would not be fair if one department has a bonus program, while the others do not. If you have a bonus program in place, make sure that the terms apply to everyone, not just a select number of divisions or departments or, worse, employees.
- Timely. This refers to the release or grant of the bonuses. The frequency may vary according to the achievement of specific milestones set by the company, or according to job level. It could also be according to department. Just make sure there are no unnecessary delays. If the bonus is given as a reward for good performance for a certain period, give the bonuses at the end of that same period or during the next period. It would seem anticlimactic, not to mention disappointingly delayed, if you pay it two or three periods later.
- Relevant. It should be meaningful to everyone – the management and the employees. There should be meaning attached to the bonus, so that the employee will feel a higher sense of fulfillment, knowing they are receiving the bonuses because they deserved it.
- Material. If the bonus is so small that it is almost insignificant, employees will not appreciate it. In fact, most of them may even feel insulted by it, and make their motivation to do their work go down. The amount of bonus must be large or significant enough to make a difference to the employee. Otherwise, it would not even be regarded as a bonus or reward.
- Per employee – In this approach, the plan revolves around the achievement of specific goals of each employee. The bonus is based on the individual performance of the employee, so it is almost entirely up to the employee whether he will be entitled to the bonus or not. If he does not perform up to the standards, then he will not be entitled to a bonus, or he may be entitled to a small amount than those who managed to achieve their individual goals.
- Per team or department – Each team or department has its own goals, and the employees who are members of the team or department will work together towards the attainment of these goals. The bonus plan may be structured such that they will receive incentives upon achievement of these goals.
Differentiator Benefits
The last category of employee benefits are those that many companies are not offering (at least not yet) and the biggest area of opportunity for you to differentiate your agency beyond just offering more money and a smart place to work.
- Required Time Off – This is our spin on unlimited time off. And we didn’t start out with this, it took several months and a lot of HR feedback until we realized that “unlimited PTO” without a baseline requirements is actually perceived as “no PTO” by employees. This was a crushing blow to me because I simply didn’t realize it. What we’ve done instead is change the positioning. PTO is still technically “unlimited” but as an FTF employee you are required to take off 5 work days per quarter (so a minimum of 20 work days off per year). What’s most important about this is that management leads by example and actually adheres to this policy so your team members feel comfortable being out of the office (and away from their computers) so they can actually decompress and stay healthy.
- Financial Planning / Coaching – As someone who is all about independent revenue streams and constantly building and launching new products, I’m fortunate to have enough cashflow that I need to take planning very seriously. This means that I have a better understanding than most folks about where and how to invest money, how to save for retirement, how to think about “disposable income,” and how to leverage many of the financial vehicles available to everyone (that a lot of folks don’t even know about). One of the biggest things I’m launching for FTF in 2020 is I’m opening my door once per week for team members to schedule time with me if they want to talk through financial planning. Now, I’m not a CFP (certified financial planner) by any means, but if my team members want to talk through strategies for saving for kids, cars, houses, retirement, investing, etc. I’m more than happy to – and I’m making the commitment to set aside the time to do so. If this benefit is utilized I’ve already budgeted to hire a professional financial planner to come in once per month for 2 hours to work anyone who wants the assistance.
- Mental Health – Mental health days are one thing. Stepping up to show your employees that you take their mental health seriously is another. Moving into our new space in January (fingers crossed) all FTF employees will be able to see a licensed therapist once per week at zero out of pocket cost to them. FTF will cover the cost of of every single employee going to see a therapist.
- Paternity – Women only having the option to take time off to recuperate after they give birth is honestly sexist. Father’s need to be afforded the same opportunity to be with their significant other and spend the first month’s of their baby’s life with them. Our Paternity leave program works just like our Maternity program; 6 weeks full paid time off, then 6 weeks of part-time work (still paid full time), so the family can transition back into work at the agency.
I’m very proud to say as of 2020 we offer all of the above benefits. It makes us a very easy place to come and work because we demonstrate that we genuinely care about our team members as people, not just as employees.
Scaling your client business
You now have all of your systems in place to grow, the foundation has been built with sustainable systems customized for your business.
You have leads coming in, a sales process, and a system for fulfillment.
Now it’s time to pour fuel on the fire.
I’ll share my tips for market positioning that will guarantee you close more business than your competitors.
You will develop an acquisition roadmap identifying the clients you’re specifically equipped to service.
I’ll share my strategies for getting on their radar before you contact them.
Becoming a Valuable Partner
What types of companies would benefit from working with you as a Partner?
For us, it’s often time brand agencies, and product / app development shops.
Some of the agencies that we’ve partnered up with to help them deliver services their clients needed (but they didn’t provide) are:
- Capgemini (formerly Electronic Ink)
and a handful of others. Almost all of them are “creative” firms, many with in-house design, development, and copy / content departments – but that lack technical acumen for digital marketing.
In the early days a lot of these relationships came out of referrals from my network and folks I’d meet at local Chamber events, professional networking events, and meetups.
But in year 3 (2017) when reviewing our client list for the year I realized there was a pattern, where we had a handful of these creative agencies that would come to us for 1-2 month sprint projects, but then keep coming back. Turns out, in 2017 almost 20% of our revenue came through these types of white-label relationships.
So in 2018 I made it a priority for me to block time each week to work on developing strategic relationships. More so, I wanted to broaden the types of companies we were partnering with to move beyond just creative and brand agencies (though we still did a fair amount of work with them).
Building Professional Relationships
The easiest way to build a new professional partnership is to provide value up front (nothing new there), however, the fastest way to provide universal value, is revenue.
What I started to do was identify agencies that could help supplement our services (stuff that we could and did provide in-house) and create those relationships to allow us to bid/pitch bigger and bigger projects where we would need their help.
This resulted in a lot of meetings, but we also ended up getting some big projects we wouldn’t have otherwise, where we leaned on new partners to deliver. We made money, and they made money. Always a great way to start a new professional relationship.
In 2018 we had only 3 devs, and only 2 in the States, so if I wanted to go after bigger development projects (especially $100,000+ migration and platform conversion projects) I was going to need additional development resources on demand.
Step 1
The trick here was to identify the projects first, before pitching the potential agency partners on the partnership.
I found that a lot of bigger RFP’s are uploaded publicly onto the company’s website’s (usually in PDFs) and are indexed in Google… so what’s an SEO to do?
Go looking.
One of the best root keywords I’ve found to consistently return results is wordpress migration RFP.
Step 2
Prior to meeting, scope the project as best you can breaking apart all the pieces into buckets that you plan to service with your folks vs. hand-off to the partner.
Go into the meeting with the RFP printed out and marked up with your notes; be fully transparent with your potential partner.
IMPORTANT, you’re not looking to profit on their work; you’re here to start a relationship and be a good partner.
Step 3
What you’re meeting to discuss is strategy, and how you’d like to pitch the project and lean on the development agency for fulfillment.
You need to understand their pricing, timelines, project management toolset, and willingness to have their project PM interface with yours, ideally in your PM stack.
Step 4
Once you’ve finalized your Proposal to be sent, share it with them first (ideally in person, but Zoom is also totally fine). Let them see the total price you’re bidding on the project and for each piece.
It’s critical to highlight that the exact number you are pitching is the exact number they quoted you at — this is where the foundation of trust is built for this relationship
With your new relationship
Do this a few times, with a few different agencies that provide the same services and alternating verticals.
You can now start pitching bigger projects with more varied scope, and the more work you bring to your partners, the more work they will start to bring you in on.
Currently about 30% of our annual revenue comes through Partner referrals (literally millions of dollars each year). It’s because we’re good partners; don’t be greedy and design outcomes so everyone wins.
A few of our current partners:
- RFS Ventures
Pricing
I think this is where most agencies have a hard time. In order for white-labeling to work, you need to be willing to lower your retail prices (think of it as selling at wholesale). Just make sure that you’re able to cover your minimum acceptable margins.. so if your usual margin is 30-40%, then your white-label margin should be 20-30%.
To be a valuable white-label partner, the person or agency reselling you must be able to make a profit on your services — otherwise it doesn’t make sense for them to scale the relationship.
Another thing that adds immediate value to your white-label partners (and your bottom-line) is creating reporting templates that allow you to quickly deliver reports to your Partner(s) that can make a copy and then slap their logo and branding on them for delivery.
This can most easily be done using open-source toolsets like: – data studio – google docs – google sheets
Building Your Client Acquisition Roadmap
Taking a page out of ABM, you need to first identify who your best fit clients are right now. I recommend starting by building a “Top 50 ” list, and zeroing in on 50 companies that would be ideal for your agency.
To do this you must go back to your customer avatar – what’s the criteria you can use to build a profile that you can literally buy data for (or go prospecting on LinkedIn for).
Start by identifying the company’s first, then worry about finding the right contacts later.
However, it is important to make sure your qualifying companies that at least have a person (or persons) in the role/title that fits your avatar.
This exercise will force you to go much deeper in terms of company level heuristics, so you need to create criteria ranges like the following:
- Company size (employees is easier to use than revenue, since most of your prospects will likely be private companies).
- Location(s)
- Country
- State (if applicable)
- City (if applicable)
- Language(s)
- Title(s)
- Tech Stack
- Services provided (key information for selling)
Based on the above, here’s the ABM profile for FTF:
- 100+ Employees
- USA (preferred)
- English or Spanish
- Titles (must have 2+):
- Senior SEO
- Director of SEO
- Head of SEO
- Director of Marketing
- Director of Digital Strategy
- Head of Growth
- VP, Digital Strategy
- VP, Marketing
- Chief Growth Officer
- Chief Digital Officer
- Chief Marketing Officer
- Tech Stack
- WordPress
- JavaScript (React / Vue, Angular)
- Hubspot (Marketo / Salesforce)
- .NET / Webforms
- Services Provided:
- B2B SaaS
- Ecommerce (B2B or D2C)
- Legal
- Resorts
- B2B Real Estate
- FinTech
A great example of a great fitting client for FTF would be Credible.com:
- Employees: 150
- Location: San Francisco, CA
- English
- Titles:
- Senior SEO Strategist
- Senior SEO Manager
- Director of SEO
- Director, Content & SEO
- Digital Marketing Manager
- Services Provided: Financial Services
Build your list in an Excel file, and be sure to include:
- Name
- Title
- Company
- Employees
- Location
- Tech Stack
- Titles
- Score
Add a weight column next to EACH column that is driven from your avatar criteria, so it looks like this:
Here’s how it works
For each of the variable inputs, i.e. employees (company size), Location, Language, Tech Stack, and Titles – you assign a weight.
It’s important that for each weight you assign, you also assign a counter-weight for if that individual criteria item is not met. This will allow you to score your target opportunities based on whether or not they are an ideal fit.
For my example above I used +10 and -10 for each. Also since for my ideal account “Tech Stack” and “Titles” can vary so much, I made these simple “checkboxes” so they are binary measurements for my weighting.
(there’s a link to the template file in the 7FA members area)
Exercise
Build your Top 50 list.
You’ll likely get stuck after you hit 20-30 accounts, and this is why having your criteria dialed it from a specific data-driven range perspective is so beneficial — because now you can PURCHASE lead contacts (for very cheap, usually less than $0.50 each) against your criteria to fill this out and continue to test and refine your heuristics.
Once you’ve built your list (must be AT LEAST 50, drop a message in #commitments with [Month 10 Exercise] and in the thread TAG ME and I’d like to review your list personally and offer my feedback.
Turning Customers into more Customers
What is the #1 reason you’re not getting referrals?You’re not asking for them.
It’s also likely that if you are asking for them; it’s occasional at best, i.e. you don’t have a system in place that ensures you’re constantly tapping your best sales engine; your current, happy clients.
One of my favorite ways to systematize your process for referral requests is to take advantage of an opportunity to provide additional value to your clients.
I bet you are currently providing monthly reports to your retainer clients, but are you doing formalized quarterly “check in’s?”
If not, you should, and here’s why
A quarterly review meeting allows you the opportunity to do 2 things:
- To check the temperature with your POC and any of the people they report to / make budgetary and vendor decisions, and
- To ask for referrals.
The nuance about doing this effectively is to make sure you wait until you have a bang-up quarter in terms of deliverables and/or performance before asking for referrals.
You should already know how you’re doing on a month to month basis in terms of campaign performance for your clients. If you’re having a great quarter (which you’ll know 2 months in), try to schedule a “quarterly review” for close to the end of the current quarter.
It’s key that you are in this meeting, even if you’re not the one leading it or presenting (ideally you wouldn’t be; it would be the Client Strategist or Team Lead).
The reason this is so important is the request for referrals needs to come from you.
Positioning the Referral Request
This is perhaps the most important part, as if not handled delicately it could damage your relationship.
I like to position the conversation around agency growth, and our continued need to hire the best and brightest talent.
For example, here’s a mock dialogue:
Me: “Helena, thanks so much for taking the time to meet with us today and review the progress we’ve made on your campaign this quarter.”
Client: “No problem Nick, I’m really happy with the direction things are moving and look forward to the next sprint.”
Me: “Same here.
And actually, speaking of the next sprint, I’m looking to expand your project team and add another analyst as soon as possible to expand the level of service and speed we’re able to offer.
Speaking of which, as we continue to hire more aggressively, we have bandwidth to take on a few more great clients like {Client Company}. Is there anyone you can think of that might be worth me having a conversation with?”
Now waitHumans are programmed to fill silence with speech, so you must activate your inner mannequin. Either your contact will offer up some names that come to mind or will let you know she’ll think about it and get right back to you.
Or, and this is the important part about being silent, she’ll stall and the moment will feel a bit awkward – this is not problematic (yet).
Instead, this is usually a sign your client may not be as thrilled with you as you believed – in which case I see this as a red flag that this relationship needs more nurturing; more personal attention from you specifically.More times than not though, in the next few days you’ll get a handful of new email introductions from your Client POC to other organizations in their network.
Better still, this tends to set off a chain reaction in the future, where as they connect with people they’ve referred into you over time, more and more it reminds them to ask you about more work.
PRO TIPIt’s 10x easier to grow existing client accounts than it is to create new ones. For this specific reason your agency growth plan should be split 70%/30% existing clients vs. new clients..
Incentivize referrals
Just like offering bonuses to employees for a job well done (or new business brought into the agency), offer the same to your best clients.
We have several dozen previous client POC’s who have left our client’s company and brought us in the door at their next career adventure. First and foremost this happens because we’ve built trust and they know we’ll make them look good — but we also make it financially rewarding for them too.
We offer referral bonuses the same as we do to employees (2% of SOW value) that we pay out via check immediately upon receiving the first payment from the new client.
This sets up your clients (whether current or previous) as brand ambassadors, not just within their organization but within their network as a whole.. as they hear about opportunities they know you’re uniquely suited to execute on, they’ll make introductions — just make sure paying them is a priority for your agency; timeliness is everything here just like it is with employee bonuses.
Exercise
When was the last time you asked your clients for referrals? If it’s been within the past 6 months, how did you do it?
Was it via email? (if it was – ASK ME WHY THIS IS TERRIBLE IN SLACK) If not email, was it on a call? If yes, was it a video call?
If you answered NO to asking for referrals in the past 6 months – why not?
Drop the answers to the above questions into your [Month 10 Exercise] Thread in #commitments.
Firing a Missile Across Your Prospects Bow
One of the fastest ways to get new client relationships moving is making sure they’ve seen the name of you or your agency before you ever reach out to them.
And with the modern internet, this becomes pretty simple – since you can build hyper-targeted lists based on email addresses.
Part of the reason the Top 50 list is so important is so you can start pushing MOFU and BOFU content out to just the people on that list…
Best of all, if you have at least 3+ emails (for matching titles) at each company you’re targeting, you can make sure that more than 1 person likely to be on the project team you would be working with if hired has already seen you or heard of you before you ever reach out.
Clicks don’t matter
The important thing to wrap your head around here is that you’re not after clicks. Impression frequency is your guiding metric.
The average person must see an ad 7+ times before they even remember seeing it. So your focus goal with our targeting, whether on Facebook, Instagram, LinkedIn (or all 3 – which is what I recommend), is just to get your average frequency counts over 7 across all sets.
Tips for an Effective (and affordable) campaign
1. Restrict your budget using a “total budget” setting (vs. a daily or bid based budget). This allows you to set exactly how much you’re willing to spend to test each ad set.
2. Start very small, with a total budget per ad set of $10. It’s likely you won’t get your messaging right out of the gate, so you want to restrict how much you’re spending while you get it dialed in. A good general rule of thumb is after 4-5 days, if you’re not seeing an average frequency over 3.0, then change your messaging and start over.
3. Select CPM based pricing since it will be much cheaper and since the goal here really isn’t to get clicks…
4. You’ll also need a minimum of 100 emails to build your audience, so for this exercise I highly recommend finding a 2nd email address at each of your target 50 companies.
If you get clicks
Great! yes it costs you a bit more, but it means your creative and pitch are resonating with your ideal prospects.
The KEY here is to not waste those few dollars you just spent on that click.
Instead, make sure you have rules set up in your campaign where if a contact clicks, they get moved from one ad group to another; moving them from a MOFU ad group to a BOFU ad group where the creative and copy should be focused more specifically on a particular pain point that you alleviate.
So the process for this “familiarization” strategy is as follows:
1. Your prospect has never been to your website (and likely has never even heard of you), so they get shown “Ad 1” which is a baseline awareness ad.
Here’s an example of ours:
The entire purpose here is to just build up on those impressions (frequency) and make sure someone has seen the ad.
There are 2 ways to advance this campaign from Ad 1 to Ad 2;
A) The prospect clicks the ad and visits your website, they are now cookied and the targeting logic within your campaign moves them from ad set 1 to ad set 2; moving them from your TOFU ad to your MOFU ad, or
B) The impression frequency is over 7, so they get moved from Ad 1 to Ad 2.
2. Your prospect has either now A) been to your website, or B) has seen your TOFU ad 7+ times and is ready to be shown your MOFU Ad.
The purpose of this ad is to communicate a value proposition about your agency. This one we want to turn up the frequency on, to 10+.
Same rules apply, prospects are advanced through your ad funnel based on either crossing your impression threshold or after a click.
3. Your final ad, your BOFU ad, should make an offer and have a specific conversion attached to it.
Again, the point is not to be measuring CPA or even driving conversions here; it’s to create the familiarity with your agency brand and create some residual awareness that you’ll be capitalizing on later.
The Pitch
Once a prospect crosses the 7x frequency threshold on ad set #3, now it’s time to send them an email.
This is where you’re going to lean into your avatar and make sure you’re pushing down on their most common pain point.
This is also where you want to introduce a trust offer, and try to get them on a qualification call.
Building your referral engine
At this point you have established yourself as a name in your industry and have set all your pieces in motion on a path for growth.
We will focus on how to extend your network and build partnerships that will continue to drive sales into the future.
You also cannot grow if you constantly need to replace revenue, and so client retention must be intentional.
I’ll share my systems for re-enforcing client importance and mindshare, and you’ll build a framework for controlling the outcomes fo your clients relationships whenever possible.
How to extend your network
In the last module we covered how to:
1) identify mutually beneficial partners
2) how to get their attention (and provide value), and then
3) how to be a good partner.
Now we’re going to take this one step further and look at ways to extend your network, and if you’re successful, your potential strategic partnerships.
This is going to sound counterintuitive
My best strategic partners (i.e. referral sources) have all started out first as clients.
When you just “click” with a client, work well together, and have the potential to provide shared value to both of your client lists, these can make for idealistic partnerships.
My strategic partners, we’ll call them Bert and Ernie, run a small digital marketing firm in Los Angeles. They provide a wide range of services, with a lot of overlap with FTF, but also a long list of additional services we don’t provide (and vice versa).
I was engaged as a consultant to help them build digital assets so they didn’t have to rely so heavily on client revenue. They executed my proposed strategies perfectly, so well in fact, that in many instances they actually improved them.
I genuinely enjoy working with them, so much so, that it made sense to start cross-selling each other’s services.
They would sell large-scale technical audits and implementation support (fulfilled via FTF) and in turn FTF has started introducing many of our clients to them to fulfill on a proposed traffic acquisition strategy that they are now better setup to execute (they have a very large outsourced operation and were able to break apart what I designed as a 10 step process and turned it into a ~40 step process that runs much more efficiently).
As soon as I realized the revenue potential we had by joining forces, it didn’t make sense to keep them on my consulting retainer, and instead to formalize our partnership and both start reaping the benefits.
The transition here was nice and smooth. We discussed the larger opportunity to Partner, and discussed what we wanted to cross-sell, and what we each needed in terms of information.
We signed a Mutual NDA with slightly different terms than my consulting agreement, allowing us to more freely share more proprietary agency information in both directions.
I then built a new shared Drive Folder and put all of our sales materials and pricing in there. The partnership agreement was kept clean and simple, with a mutual 20% discount off billing rates (so neither of us ever had to float the cost for the other).
How we structured our partnership
While I was originally engaged to help build a digital asset with a recurring revenue stream, I ended up helping out with a bunch of agency operation stuff too.
This included pushing Bert and Ernie hard on increasing rates, and “selling the sleeves off their vest.”
The beautiful part about this was they were now set up to sell through work at their new normal rates, and pay us 80% of the fees. Same on our end, we sell their work at their cost, and pay them 80%. So it’s a nice 20% margin that effectively functions as a sales commission, since all you’re doing is managing the sale and client relationship (which you still own).
When times arise where we would prefer to have them speak directly to the client about some of the fulfillment they are doing, we introduce them as our strategic partner for the specific type of “X” service, and never once has it created an issue with a client.
Leveraging Existing Referral Groups
There are already a handful of private groups, directories, and paid services that can all help to extend your referral network faster.
Getting aggressive
If you want to really pour gasoline on your efforts to develop your partner ecosystem, I’d recommend exploring a partnership ecosystem platform (like Crossbeam) which can open up a LOT of new doors.
You will need to have your “Top 50 Clients” list completed and cleaned up, then you’ll load it into the platform, fill out some questions about your services and what types of partners you’re looking for – then the platform goes to work to find key accounts that match you and the potential partners requirements – and will notify you when 1) you have matches and 2) if you’d like to proceed with an introduction.
Perhaps best of all – you can get started with the platform, including loading in your data and seeing matches, for free. If you decide to dive in and commit to more seriously running your partner program, then it’s $500/mo which, while not cheap, you’d make back with even 1 new client.
How to formalize your partner program
In order to turn your Partner Program into a predictable source of new, qualified leads and revenue, you need to treat it just like you would a client.
That means proper documentation, process, time and management.
Here’s a checklist to quickly formalize your program so it can start to grow.
1. Take inventory of all existing partnerships
Start with a spreadsheet (TIP: Make a copy of your top 50 client targets spreadsheet and start with that as a template) called {Agency Name} Partner List
Include the following:
- Company Name
- Company Address
- Company Website
- Company Industry / Business Type
- Products / Services
- Key Clients / Userbase
- Price Range
- Partner Name
- Partner Email Address
- Location
- Date of Last Contact
Next you’re going to want to score each of the accounts on 3 high impact areas:
- Existing userbase or clients
- Ease of partner communication
- Overall web and content reach, active social media, and co-marketing opportunities.
2. Set up reporting for existing partnerships
Who are you currently getting referrals from (or giving referrals to) on a monthly basis? How are they being handed off and where is it being measured?
In your Master file create a new sheet for each partner, and include the following information for every referral:
- Referral Type (dropdown)
- Client Referral (you were referred a lead)
- Partner Referral (you referred a lead)
- Company Name
- Contact name
- Contact Email Address
- Date of Partner Contact
- Date of Referral
- Budget
- Outcome (dropdown)
- Deal won
- Deal lost
3. Co-Marketing
Are your partnerships formalized? Have you announced them via your blog? Do you each have each other’s logo’s (and links) on your sites?
Audit your presence on existing partner’s websites.
If your partnerships were never intentionally managed before it’s likely that your company is not represented on any of your partner’s websites. A tip here is before you start asking for things, just like we reviewed in Being a Good Partner, make sure you demonstrate value first; so shoot an email to your contact and propose specific steps you’d like to take, i.e.
Hey Bert,
I’ve been reviewing our efforts to help promote our Partnership with Sesame Street, and wanted to share some ideas.I’d like to have a press release drafted for you to review, and ideally we would each lend a quote about the relationship, to be published on our website. We will then promote it across all of our social media channels.In addition I’d like to add a section to our homepage called “Our Partners” with your company’s logo and a link. In addition, for at least a couple months I would also likely add a bit of text in the container that says “Learn more about our partnership” which would link to the press release. Lastly, once the post is up on our site we will be sending an email broadcast out to our subscriber list announcing the partnership and asking any of our readers to inquire directly about how this partnership will allow us to {insert value proposition of partnership}.Please let me know what you think and if you’d be open to doing some similar co-marketing on your end.
Best regards,
Nick
4. Create a partner page
Partner pages can range from being extremely simple to being fully built out. Crossbeam has just published a great example of example B2B partner pages, and while it’s for “SaaS,” I think some of the patterns are great for agency partner pages as well , such as:
- Hero area CTO to “become a partner” that leads to a dedicated contact form.
- Logo’s of existing partners
- List of partner benefits
- Partner testimonials.
- Partner news (can be as simple as just creating a new category on your wordpress blog and having it only display on this page).
- Partner case studies.
5. Create partner content
To start, as I mention in my above email draft example, this could start out being as simple as adding a logo and announcement post to your agency’s website.
But over time, as your Partner Ecosystem grows, this includes setting up a partner page, writing case studies, and highlighting shared services / product offerings on your agency blog (and ideally even doing some deeper co-marketing like interview posts on LinkedIn, Podcasts, Videos, etc.).
If you want a great example of just how high-impact creating Partner content can be, look at Affiliate programs as a good example. Perhaps my favorite of this is how SEMRush has done this with their BeRush program.
Not only did they build it out as a dedicated brand, but they create a TON of marketing content, assets, and offers exclusively for their affiliates to use.
Think of your Partners the same way. The easier you make it for your Partners to promote your agency (and your partnership) the more it will benefit you.
Growth through strategic acquisition
What if I told you you could buy businesses without spending any money?
Is there risk, yes of course (without risk there is no reward), but even here you can limit your downside.
Imagine being able to use another agencies deliverables to finance your purchase of that agency?
But first
You need to decide on the deal structure:
- Asset sale
- Equity sale
An asset purchase is buying the agency’s book of business, including client contracts, and trade names, payables (liabilities), and receivables (assets).
An equity/stock sale is buying out the owner(s) interest in the business.Generally speaking, an asset sale is cleaner and easier to manage. It also creates a cleaner exit strategy for the seller so he/she can move on.
Now back to the money, or should I say, lack there of needed to do a deal…
Sound too good (or crazy) to be true?
I’ve done it. Twice.
Now to clarify, both of my agency acquisitions involved:
- Debt financing
- Equity
- Cash (but not much)
So I’m going to go into each piece, and explain how you can leverage it to strategically acquire other agencies that can help support your growth.
Debt financing
Much like it sounds like, this is a process fo financing your acquisition using debt.
The debt it self can take on a wide variety of different forms including borrowing the money (whether through a business loan or line of credit), to signing a promissory note guaranteeing payment on a set schedule or based on set terms, i.e. “X% of net profits until $Y is paid out.”
Equity
This is more common. One of the best ways to set this up is with some specific stipulations around how the equity is earned.
It’s common practice to have some of the equity vest immediately upon deal closing, with a remaining % set to vest on a schedule (usually monthly over 2-3 years).
One very important detail is considering what’s often called a “claw back,” which gives the buyer an extra level of safety to take back their equity and unwind the deal either if certain conditions aren’t met or within a set period of time.
So for example let’s say you buy Bert’s company for a mix of cash and equity. The cash amount is guaranteed to be fully paid out in 6 months, with a lump sum up front on close. Then they will get 50% of the total equity agreed to in the deal, with the rest vesting monthly for 2 years. But, you have a 12 month claw back clause that let’s you unwind the deal, return all assets (people, clients, intellectual property, hardware, etc.) and get your equity back.
In this scenario you’d have to make a sacrifice (likely all cash paid to date of the time of you liquidating the deal).
Cash
The most straight-forward of them, this is simply a payout of cash, but almost always on an “earn-out” schedule. Common earn outs range from 3-12 months with guaranteed payment amounts at specific intervals.
This is more common with the bigger acquisitions (i.e. when companies are paying over $10M to purchase an agency) and usually include a mix of up-front cash (say 30-50%) and then guaranteed monthly or quarterly payments (sometimes based on a % of net profit for that time period with a minimum guaranteed) until a certain amount is paid in full.
My preferred structure
As you’ve come to learn through all of this, I’m not a very risk averse person. I enjoy taking calculated risks, especially if I really believe in my capability to make them succeed, while limiting my total potential downside.
The way I like to structure agency acquisitions is a mix of all 3 vehicles.
Debt financing to cover any large up-front expenses that I can use our line of credit to offset so as not to disrupt our operating cashflow.
Equity so the new partners have skin in the game, with specific, measurable expectations around retained client revenue or new client revenue creation. New partner gets 20% of their potential equity on close, with a 2 year vesting schedule (monthly) that begins on the 12 month anniversary of the deal. In this scenario the new Partner only has 1/5th of their total potential equity for the first 12 months of the partnership.
I always include a claw back for 12 months without cause, i.e. I want to be able to unwind the deal and return everything (except the cash) back to the Partner in exchange for recapturing all the outlaid equity.
Cash sweetens every deal and more times than not is the leverage you need to get the deal done. I try to tie as much cash as possible to potential upside for my partners; paying out a minimal amount up front, guaranteeing them a base salary and certain benefits, and then giving them milestones to earn more money by creating more revenue in the business.
Agency valuations
This is always going to be extremely subjective to your individual situation, so it’s usually best to use current market trends and historical valuations to establish more mutually acceptable valuations.
According to Dave Balter, Venture Partner Emeritus at Boston Seed Capital:
Most of the holding companies have pretty specific deal terms that allow them to “share risk” with the acquired company. Usually it’s a multiple of EBITDA (sometimes top line) up front, say 1.5 or 2x + an earn out over multiple years. In the end, the total deal value is usually paid at 30-50% up front, and then the company must hit certain objectives to receive the earn out. Many of the holding companies have a formula that recognizes a certain # of the companies won’t achieve earn out, which allows for balance across the portfolio (think VC theory of winners vs. losers).
But there does seem to be some general milestone ranges for both revenue and EBITDA for figuring out agency exit multiples.
Interestingly enough, Ming Chan, CEO of Global Digital Agency The1stMovement said:
I’m seeing up to 10x EBITDA nowadays just because of the demand of digital agencies is so high. But they will still hold you to a 3-5 years “earn-out”. Interestingly enough, digital agencies are also starting to be acquisition target of non-ad holding companies , as well as PE. PE would give you a lower valuation but might not hold you to the 3-5 years earn out since they’re in the market to flip your company.
And based on my conversations with Transaction Advisors at both PreHype and Palazzo, these are the relative ranges and multiples they’re seeing in current deal flow for digital agencies:
So if you’re agency is doing $1 million per year in revenue, at a very healthy gross margin of 40%, you can expect to sell for 1-3x EBITDA, so anywhere from $400,000 up to $1,200,000.
THE END
Made with Bullet