Subjective and Objective Marketing | With Eric Siu, CEO of Single Grain

A question about like kind of the perception of marketing, because I feel— how do you feel the perception of marketing from a client perspective has changed over the past few years? From the inside, it feels like, you know, Marketing went from, I think, highly subjective to the past, and now, like you mentioned, it's a lot more data-driven and marketers, good marketers are now more number literate. Is it kind of widely understood from clients or do you often need to make them aware of the value you deliver and showing them the numbers?

I think, I mean, they still, it's probably still the second one first. I think they're still getting, I would say maybe they're like a couple of years behind. If you're living in the SaaS and the tech world, typically, you know, you're ahead and you're trying new things. Um, the clients aren't as savvy, I would say, um, because they have a lot of other things to do, which is why they hire like an agency in the first place. Um, and so, yeah, I mean, that's what I would say.

Okay. Yeah, it makes sense. Um, so, you know, I want to know a little bit more, what does your playbook look like? I know you mentioned some kind of trends of what's working, but, you know, you work with some of the biggest names in industry, the Fortune 500 companies, as well as venture-backed startups. Uh, how does the growth playbook look like to assess the, you know, unique value value proposition, who the target audience is, the market, and then drive the acquisition costs down, increase conversions, and grow MRR. Can you share a little bit of what that playbook looks like?

Yeah, I mean, I'll keep it simple. I mean, I'll probably keep it more, you know, top of funnel. I think a lot of people, especially in SaaS, I think the screw-up here is that, you know, people in tech think, you know, at least what I've seen, the majority is, oh, it's let's learn how to run demand gen, quote unquote, is just running ads. And it's a lot more than that, right? I think you have to understand how to do customer development. You have to understand the right questions to ask, right? The problems people are facing, and that actually guides your messaging, and your messaging actually guides your creative, right? So I think the number one most important thing when it comes to marketing is the creative. Like if you go to, if you do Facebook, go to Facebook Ad Library, which is free, go type in ClickFunnels. And so ClickFunnels is a SaaS company. They do about $150 million plus a year, and I believe they're bootstrapped.

Yep.

And the main thing about Russell Brunson, which is kind of the face of the company, the CEO, or I don't think he's the CEO anymore, but he's the face of the company. He's a great marketer. If you look at Facebook Ad Library, they have over 600 creatives running at any given time. But if you look at most SaaS companies, they might have like 2, 3, 4 or so.

That's right.

But with Russell, I would say he's a showman. He's done really well in terms of marketing the company. And so he's constantly thinking about, okay, what new angles can I come up with? What new pattern interrupts can I come up with? Because if your creative is good, your click-through rates are gonna go up, and all your down-funnel metrics are going to go up. are going to be better, right? Your cost per click is going to be better. Your cost per acquisition is going to be better. And so the creative actually drives a lot of your marketing. So, you know, whether it's an A, again, you have to understand customer development to get into the mind of your customer. That's going to guide your copy, right? And then if you're going to make videos and things like that, your copy is going to guide the videos. It's going to guide, um, you know, the images and stuff you make. So I just think, you know, people need to think more around, hey, like, you know, what, what is, uh, what does copywriting look like? What does customer development look like? Right? Um, how do I get into the psychology of my customers and, um, and then, you know, think longer term? Because it's not just, we're going to throw up a couple of image ads and then bug our designers and that's it. Like, if you do that, you're going to get subpar results.

Wow. I would never have thought of that. Just the creative side. Usually the copy and the targeting is probably the big factor.

Oh, absolutely. But I think that's table stakes now. Like, I think that's easy.

Sure. Yeah, it makes sense. How often are you guys creating? Yeah, I've seen that before, right? Like 4 or 5, 6 creatives. Maybe a month and then, you know, just cycling, just playing on the backend of targeting. How often are you guys adjusting or creating different creatives?

So when we were running ads for the Agency Accelerator program that we have, we, I think, you know, we don't have like 600 ads, but I believe each week we would try to come up with at least, you know, 4 to 5 new creatives. And basically my team would meet on Mondays and for, it's a 30-minute creative meeting and they'll just talk about, hey, like, Here's what actually looks cool in the market. Here's what actually pattern interrupted me. What influence can we draw from that? What images can we pull from, or videos can we pull from Eric's other content?

Mm-hmm.

And so we had a workflow going. So every single day, Tuesdays through Fridays, we'd have a 15-minute standup talking about, hey, what's working, what's not working? Mondays would be 90 minutes and we'd talk about the best creatives and what's not performing. So it's very, methodical, right? So having that type of process where you're actually meeting, because the meetings naturally force you to keep it top of mind. So I think that's important as well.

Makes sense. And how does the strategy change? So if you're focusing on B2B SaaS, they're targeting, you know, say mid-market or enterprise where they have longer sales cycle, versus, you know, the SMB self-serve focused clients who are driven by, you know, high volume traffic and conversions on the spot. Do you guys change strategy there?

Yeah, I mean, I think, you know, when it comes to, you know, mid-market enterprise, obviously, you know, the ACVs are higher, so you have a lot more resources and you actually have a lot more room for error. Um, so that, you know, it actually opens up the playbook, right? You know, we talk about the account-based marketing stuff, the customer data platform stuff. Um, you know, we're talking, you can have a sales team, right? You can have a field sales team and all that. I think, um, you know, most people in SaaS understand that. I think, you know, With the SMB stuff, I think the trend is generally, everyone's talking about product-led growth, right? How do you do freemium? I think you have a lot more self-serve motions like freemium, free trial, and things like that. I think that's just generally how we think about it. It's just you, I think it's different, right? One of my buddies, he gets a ton of traffic and he sells plugins for like $30 a year or something like that, right?

Okay.

Like to your point, it's just all volume. So it's just, it's, it's different playbooks. I would say in general, they're widely understood already. So.

Makes sense. I want to talk a little bit about the SaaS versus agency. So I know many agency owners, you know, including myself, I've ran agencies in the past. I know they eventually move to building a SaaS. I feel like that's a natural transition for many agency owners because they either, you know, burn out from managing a bunch of clients Or they hit that plateau or linear growth, which you talked about. So after running Single Grain for 7+ years now, you've run, you also run an agency accelerator program where, what are some suggestions you have to other digital marketing agency owners on how they're able to scale effectively if, you know, at least into a certain point?

Yeah. So one of, one of the reasons I took over Single Grain, A, was great cash flows. Once you get it stabilized, that was kind of the goal. The second goal, Was, um, you know, I'll share some numbers with you. I have a buddy that has an agency. They do about $26 million a year and they have, uh, 25 employees. So revenue per employee is very high, right? We're talking a million bucks plus, right? Um, I have another friend, um, his company does about, I think it's, uh, $24 million a year and he has 10 employees, right? So $2.4 revenue per employee. And then another buddy, His company does $500 million a year with 336 or so employees. So, you know, you do the math there. And we talked about exponential growth versus linear. I think the best way, if you're going to run an agency, if you're so good at marketing or whatever it is you say you do, you operate on performance. And so, you know, what I mean by that is, you know, Akeel, if you say, hey, Eric, like I'll pay you $500 per lead that you drive and I'm able to get the cost down to $200. Well, then I collect the difference, right? So the $300 difference right there, I'm gonna make $300 per lead. And so it's good for you 'cause all you care about at that point is I'm just driving leads. And all I care about is I'm driving leads at a good cost where I'm making a profit. And so that becomes very exponential and the incentives become much more aligned because I'm not trying to hold out on ideas to just keep the retainer going.

Right.

I'm gonna front-load all the good ideas and I'm gonna work with you almost as a partner, but at the same time, like, you don't get to boss me around telling me you want all these calls and all that, right? So that's how that works. And I think it's genius. You just need to kind of change things up a little bit, you know, if you're running like a paid media agency or even an SEO agency. And I think, you know, it sounds risky, but then, you know, like anything, I think a lot of people listening to this podcast understand that it's all about the terms that you set up, right? You can set up terms that are favorable to you.

Mm-hmm.

And, you know, at the end of the day, if you're still scared that it's too risky, maybe you set it up as a stock portfolio, right, type of thing where like maybe 5 20% of your client portfolio might be pay for performance. The other 80%, um, might just be, you know, that's the standard agency retainers. But, um, that's the only reason, or that's one of the only reasons, um, that I, that I kept Single Grain up to now. Right. I think it's still a very viable business. Um, if, you know, you can, especially if you can make a performance, the CEO right now is tasked with doing that. Um, so yeah.

Yeah, it makes sense. I see that with the different agency owners who tell me, you know, they do all the hard work, right. They get that retainer, but you know, 2 years down the line or whatever, now they're— it's hard for them to see, maybe see the value. They've, they've gotten all the growth out of the agency and now they just can easily take it on and manage it themselves or, you know, find somebody cheaper.

Oh yeah. It's a terrible business. I mean, it's like you're building, you're building someone else's business for them without building any equity in it. Um, you might as well like change the incentives and then collect some more upside. Um, and then people will like you more for that too. And then you don't need a ton of clients. You don't need a ton of headache there. Um, So, and by the way, like, you know, agencies are great. Um, the whole reason I did the Agency Accelerator thing is because I, you know, I talked with, um, Andrew Wilkinson on my Leveling Up podcast. Um, the agency is a great launchpad business. It's a great starter business. And so again, like, you can get great cash flows from it. Um, you are probably not going to sell it for a lot unless you get to like $5 million EBITDA or so, then you might get like a, you know, 10x valuation on that. And I've seen a couple of friends do that, but, um, you know, for the most part, you just kind of, um, you know, you can hold onto it and, um, you know, you again, use the cash flows and that is your funding mechanism to do all the other cool stuff that you might want to do.