Why Most Marketing Fails for Service Businesses | Ryan Chute

Having come out of the automotive space, I was a bit exhausted from, from that space, furniture before that. So what I recognized from those spaces was how hyper-transactional they were and frankly how many of the operators were just absolutely terrified of, of anything taking their foot off of the pay-per-lead kind of gas. That makes them naturally fairly twitchy individuals in the first place. And it's often driven by the OEMs that are forcing these things down their throat.

Welcome to another episode of The Profitable Creative, the only place on the interwebs where you will learn how to turn your passion into profit. I am your host, Christian Brim. Special shout out to our one listener in Porter Ranch, California. I have this vision of a ranch, a horse, and a post office. I don't know, maybe it's bigger than that, but in any case, thank you for listening. Joining me today, Ryan Schutt of Wizard of ads. Ryan, welcome to the show.

Hey, thanks for having me.

Appreciate it. And I realized I didn't verify the pronunciation of your name, so I hope I got that right.

Yes, right as rain.

Okay, I guess that Chute wouldn't sound really— yeah, that wouldn't make sense. Um, so Ryan, I, I would love for you to share with the audience your, your origin story, how you became Gandalf the Grey.

Indeed, yes. Um, I, uh, Started off in the world of selling. My family's been entrepreneurs their entire lives. My grandfather, father, parents all had that entrepreneurial spirit. And so, I grew up in the gulags of retail and had to do all of the classic things that you might think that you do in retail. And it wasn't the most pleasant of experiences. There's a lot of friction, a lot of transactional thinking and surviving. And that's a challenge, right? And that was the challenge that I needed addressed in my life when I was a younger man. So, as I evolved my careers and had the opportunity to meet Roy Williams, the Wizard of Ads from Austin, Texas, he has a fantastic academy in Austin, Texas, where he has a 16th-century Spanish tower and all kinds of beverages to partake in thinking about things magically. We got to know each other and I became a partner with them in 2017. Well, that very first meeting, I thought I might be, you know, doing writing or those types of things, and I quickly learned that that's not going to be what I do. These guys are absolute elite in the things that they do. So I quickly transitioned into selling and strategizing for Wizard of Ads, and I've been doing that now for a decade. Now I run an 8-figure agency out of that company, out of that agency, and we effectively are helping mostly service-based businesses.

Okay, so clarifying question. When you said you were in retail, what capacity were you working in retail?

I started off— well, it was a family business, right? Furniture store. So, you know, from cleaning toilets and huffing furniture around the warehouse to selling, management, went to university and went through all of the administrative roles that you'd expect in the furniture store and then moved over to the corporate world for a couple of years to learn how the big boys are playing.

So how did you end up with Wizard of Ads in Austin? Like, what was that? I mean, what was that connection?

Yeah, in the late 1990s, early 2000s, Roy released 3 bestselling books, and my father gave them to me as part of the things to read and learn about when doing business. And I'd followed him on the Monday Morning Memo ever since the early days of the internet. We used to get his faxes prior to that. Nice. Sent into the furniture store, right? So yeah, it was something that I'd always followed because he's an incredible writer and really was able to kind of move the imagination. In 2015, I saw that he was thinking about stepping back and thought, well, I'm going to— I'm just going to go experience this for myself and bought a plane ticket and a course spot. And the rest is history.

So you didn't have any formal education or experience in marketing before you did this, or did you?

Yeah, my experience was on the ground, real life marketing. It was picking the radio ads, approving creatives, choosing the prices, doing all of the nuts and bolts of what you have to do to market your business. And we fundamentally just kind of flew by the seat of our pants. And being that it was retail, it was a lot of transactional. Getting into the automotive space after that, my parents had sold their business and it was even more transactional. And I was good at it. So I just kind of dealt with it as part of the transition. Then I got into the automotive training space where we were doing both the marketing and sales training for companies all across the world. I was in 9 countries through 4 continents training all kinds of people how to do this while building out their marketing to run those events and show them real life how we sell.

Okay, so is Wizards of Ads a franchise model or what?

No, it's a partnership. It's not a traditional partnership. We have an LLP with Roy Williams himself, and there's 87 of us that each individually have an LLP with him. And ultimately, we then collaborate together and use our teams as assets to service each other. They basically provide all of the accounting and training. Aspects.

So they handle the back office and then you do everything else?

Pretty much, pretty much, yeah. And they do a fantastic job of training and, and, and, you know, creating a system and an infrastructure that is absolutely second to none.

So do they provide any other types of employees like designers or copywriters or any of that stuff?

Yeah, we've, we've found, uh, so Roy's very particular about who he brings on, so he, he's, he's hand-selected of these individuals and he has people who are extraordinary graphic designers, people who are digital people. We don't have a lot of digital people. We tend to focus mostly on strategy and mass media. Our biggest, you know, I guess biggest mover out of everything that we do is our writers. Our writers are just a whole bunch of really, really brilliant minded individuals who are very artistic and abstract in the way that they think about things and produce creatives in a way that, that kind of fits with what it is that Roy is teaching us about campaigns over cute and clever and the power of repetition and how neuroscience factors into the way we build our mass media decks and all of those other components that, that have us perform, you know, at above-average pays.

So you said you primarily work with service providers. Was that your, your choice, or did you kind of just end up there? Like, what was that decision like?

Yeah, I chose service providers, um, having come out of the automotive space. I was a bit exhausted from, from that space, um, furniture before that. So what I recognized from those spaces was how hyper-transactional they were, and frankly, how many of the operators were just absolute terrified of, of anything, taking their foot off of the pay-per-lead kind of gas. That makes them naturally fairly twitchy individuals in the first place, and it's often driven by the OEMs that are forcing these things down their throats. It's very hard to see the forest for the trees when you're in that space all the time and being exposed to it. And frankly, they make lots of money, so it's really hard for them to to recognize that a relational play would be more effective. So, spending time trying to convince them of that is exhausting. I'd rather work with people who wholly and holistically rely on relational operations. So, plumbers, electricians, HVAC technicians, insurance companies, and other things that require you to have typically a higher average ticket, typically something that is not pleasant, like they're not choosing it. It's not an easy sale, right? The harder the sale for me, the more I enjoy it, I find. And it's because you're coming from that weird space of negativity and we're trying to make them feel good about your brand.

Hey, listeners, are you ready to turn your passion into profit? Then grab a copy of Profit First for Creatives. Click the link in the show notes to purchase a copy. And if you're not ready to make that full commitment, you can download a free copy of the first chapter. Check it out right now. Yeah, I have said this multiple times, but I kind of came back to it in the last couple of weeks, having some conversations about our industry. And the reality is most business owners view their accountant relationship similar to an individual views a dentist, that they don't really want to go, but they know they need to go. And they're certainly not going to, you know, raise their hand to say, uh, I, I need to find a second opinion. Or like, I mean, you just think about it personally, like, yeah, the dentist says you need a root canal, maybe you might go see another dentist, but it's kind of like, I'll just, you know, bite the bullet and get it done. It's, it's, it's not a, it's not a, uh, I, I, I would say it's a negative sell, and it's, it's, if, if that's, if that's what you're calling a negative sale, but it's It's primarily driven by compliance and fear of like, I've got to get this right for the government and I don't want to screw it up. But I just got back from a conference last week where I was talking about to a group of business owners about, you know, everybody has to have that stuff done, right? But the real power of the numbers is helping you make business decisions, uh, future, like, you know, or in the current, like looking at the numbers, learning the story that they're telling you, and then helping it advise your, your decisions in the present and the future. But it's, it's like so much bandwidth in the industry is sucked up by compliance that those conversations are rare, and most business owners don't even know that that's, that's possible.

Right. No, 100%. And frankly, an awful lot of them don't believe it's even a real thing. A different way to frame the type of sale that I personally enjoy the most of the marketing that we do is externally triggered grudge purchases. Something out, some outside force is forcing us into this spot where we have to do the thing. Whether we like to or not.

So like your HVAC, your air conditioner dies, you gotta, you gotta get it fixed.

Your accounting needs to get done, right? Kind of do it yourself right up to the point where you can't, right? It's, uh, as things get more complicated, so do the requirements for you to make sure you're in compliance.

Have you heard the comedian Nate Bargatze?

Uh, love the guy.

And he's, he's talking about the guy coming to replace his hot water tank, and he goes, yeah, I've heard it's pretty bad out there for hot water tanks. Like, you He knows nothing. I'm like, I'm that guy. So give me that term again.

You said externally triggered grudge purchase.

Externally. And why? Why the word grudge?

Well, because they don't want to. No one wakes up on Saturday morning and goes, hey, honey, let's go buy an air conditioner. We've got other things to do. Now, everyone in the world is happy to buy themselves a shiny new car that makes them look cool. But there's no identity attached to your air conditioner aside from your self-worth of making a good purchase decision and keeping your family cold. These are very low on the what moves the who gives a shit meter versus the car where the whole world can say, wow, you really have good taste and are an affluent individual. You seem to have obviously not only kept up with the Joneses but far surpassed them. And we believe that you're probably next to godliness. So this is what the human condition is seeking is recognition for themselves, their inner tribes, their outer tribes, of their value and their worth in this world.

So phrasing it that way, framing it that way, it would seem to me that the compelling thing with your externally triggered grudge purchase is like not making the wrong decision. It's not an extension of yourself or a fulfillment of yourself. It's really more of the fear of making the wrong decision. Is that fair?

Yes, in a number of different ways. Right. So there's 3 different times that you can make a purchase before failure, during failure, and after failure. There's the wrong purchase in the sense of being taken advantage of, to buying the wrong piece of equipment, to being sold something that you didn't need to be sold. All of these are factors that have been rampant in home improvement and home services for decades, the scoundrels that are out there doing questionable things.

So, how do you tackle that problem then?

First and foremost, we identify where people's values lie, and the value is disproportionately different than a belief. A belief is easily interchangeable. You can believe that justice and mercy are both valuable and are true in their truest of senses, but it really depends on which side of the table you're sitting on. To be the accused murderer, you want mercy, and to be the victim's family, you want justice. But what happens when the victim's family murders the murderer? All of a sudden, they want mercy. And this is the duplicity of beliefs. They're relevant and they're valid. They're true. They are right and they're virtuous. But that does not make them worth anything. It's because there's no consequence. So, when we think about values, you know, what are you willing to die? What hill are you willing to die on? What hills are you willing to die on? What are you willing to sacrifice for the benefit of the customer? That's what customers see as value in any business regardless of what you're doing.

Okay, so, so play the— you're dealing with some pretty esoteric thoughts here. Uh, bring that down to an HVAC contractor. Like, what, what does the application of that look like?

I'll bring it down to both an HVAC contractor, and if I may, even a marketing company. Okay, um, so an HVAC contractor, um, if we don't show up within the hour, we'll pay you $1 for every minute that we're late, up to 60 minutes. So you're getting $60 from us if we don't show up on time because we respect your Okay. That's an example of taking a consequence. In a marketing company, we actually kick back 100% of the commissions that we get paid from all of the media companies, media sellers that sell us things. We do not take a single penny from something that will cost our customer, our client money on their expense. Why? Well, because when you are motivated to sell as much of the media as you possibly can to pad your pockets, then you're completely disaligned or misaligned with your customer's goal of profiting and growing. So just because you win, because you've said spend more money on your crappy pay-per-click that we're managing on a subpar basis so that we can get the actual dollar amount up for you, that's what customers see. And whether it's true or not, because there's lots of really great companies out there not doing that, but I don't know of any of them who say spend less, right? Particularly when they get more. When it's attached to the, to the expense. So how do you grow? Well, you spend more. No, that's actually not true. We have a considerable amount of companies that don't spend any money on pay-per-click and are growing at 40% and 50%.

So what you're describing there is an alignment of values.

Like, you find the values.

This is, this is what I value. I value my time, or I value my, my profitability. Um, and so you're lining the service offering up up with, or, or, or some consequence of, of getting it wrong with, with that value?

Well, there's, there's three treasures that all human beings have, three things that they covet and put in their vault: money in the various forms, be it a paycheck or how much they spend on something; energy, and that's ultimately the default that everyone is trying to, to protect, they're trying to feel better about something and not bad about others; uh, and, and time. Right. One of the very first things a person will pay us is their attention, not their money. And that attention allows us to access more of their energy and time if we're worth it. So time is a test.

Hmm. Yeah. Yes, that's very true. And I think about going back to the dentist analogy, you know, a long time ago we were, we were thinking, well, will, uh, give you a free review of your prior year tax return, right, to see what, what the recommendations are. And it's like, on the surface, that sounds fine, right? Um, but in application, like, the, the time element, uh, and the energy element, it's like going to get that second opinion on the dentist. It just doesn't rise to that level. It's like, uh, Yeah, right.

That's exactly it. And that's the truth about everything. That's why so much marketing is absolute nonsense because you're not breaking the who-gives-a-shit meter scale, right? Until you've busted past what matters, actually matters in the moment of the customer. It's no different than when I mentioned before, during, and after failure. And failure can show up in a variety of different ways. The service department of a car dealership is far different than the sales department. Well, if it's before and nothing feels broke, then no one's going to be moved to do anything, right? They're not situation or problem aware of anything and they're very unwilling to move. Then the second one is the, the, the actual moment of failure. Well, that now people are feeling stuff and it's all of a sudden an emergency. Well, that, that's where we're going to spend most of our budgets because why in the world are you going to try to convince people who don't feel like they have a problem to do something about the thing they don't know about or care about?

Right.

So as opposed to selling Lululemon pants, right, you can make somebody intimately aware of the desire to make your butt look fabulous, right? And all you have to do is advertise that way. That's not how air conditioning works, right? And that's what makes not all marketing advice the right advice. And most of it is towards internally triggered inspirational or emotional identity purchases.

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So, so where's the after in, in your, your externally triggered grudge purchase?

Well done, right? In home services, it's for the big sales. It's for the installations and replacement equipment, as an example. It's for the next sale, right? What marketing are you doing between the time that they did the purchase of a service or repair replacement install, whatever, through to the next time that they need it? This is a relational business, and most marketing companies spend their time doing, give me more, put more money in my hand like an impetuous teenager, right? And not being charming or pleasing or pleasant. It's right. It's like, it's, it's, it's no different than courtship, right? When we, when we're constantly begging for the, for the thing that, that is, is the treat, not the, not the reality, not the everyday, right? You have to fill it in with the conversations and the love and the care and the, uh, what's not in it for me, but what I can do for you that doesn't, doesn't cost you anything. That's all of the stuff that we talk about in the after. And that's where the nurturing happens. That's where the relationship occurs, and we often forget that.

Yeah, because it doesn't, you know, using the old marketing mantra, well, that takes time. You know, that seems like what every marketing person I've ever dealt with says, well, you know, this is a long game. And it's really hard to attribute and/or draw an ROI conclusion on, right? Like, I, I don't think I have, uh, wasted the most money on marketing out there, but I've wasted enough to, uh, have an opinion, that's for sure. And, um, it's, you know, I, I think the marketing I think marketing in general is probably the hardest business problem to solve because you're dealing with humans and human behavior, and humans are unpredictable. And you're dealing with the, you know, if you're doing marketing right, you're dealing with emotions, which are also squishy. Right. And so But, you know, the conversations that I mentioned earlier were centered around a workshop I did with Christopher Lockhead, who is an old Silicon Valley marketer turned consultant that he's developed the category design or category creation model. And it's really, from his standpoint, it's really about identifying the market and then designing the product around it as opposed to, oh, I've got this product or service and then I'm going to go find, I'm going to go market to the people that I think might want it. And I think, as I've said on this show multiple times, I think the biggest problem to solve for business owners is having a clear idea of what problem you solve for your customer and the value of it, because that makes the marketing so much easier. Otherwise, it's a lot of effort and not a lot of necessarily payback.

Yeah, it's like trying to start a fire with sticks in the woods. It's just a fervent amount of of flutter and not a lot of flame. I've broken it down into two kind of big buckets. And this comes from me not being a marketer doing marketing things. And the first one comes into the relational marketing model. And this comes from David Packard, who once said, "Marketing is too important to be left to the marketing department." And wiser words have never been said, particularly when you hang out with people who do marketing all the time who are just absolutely convinced that the moon sets and rises on them, sun sets and rises on them. And respectfully so, sales is also like the salespeople are going to feel the exact same way. And fulfillment's over there going like, why doesn't anyone ever love me? Right? It's the truth of it is that marketing is permeated into advertising, selling, and fulfillment. So marketing is difficult because fulfillment isn't in marketing, but marketing is in fulfillment. Because the people who fulfill need to fit the brand as much as anything else. The people who deliver the culture, you know, if you deliver the culture, the culture will deliver the buying experiences, is my perspective. And that's all people, right? And then, of course, you have to convince all the other people on the other side, those who you see as prospects, to buy into what it is that you're presenting. So, the second is your relational advertising framework. And I say relational because that's what I'm in now. Not everybody should be doing— doesn't need to do relational marketing. They don't need to go back for the second sale. A roofer needs to show up in some sort of level of integrity, which is fairly thin in the roofing world, and do a great job. And the chances of them ever selling to that customer again are basically zero. Yeah. So the best thing they can get is a referral, and, and that's where the relationship really needs to end. They don't need to spend a lot of time in the follow-up. So different marketing, right? It's a different marketing, which is also a home service, right? Roofing, then garage doors, or HVAC, or plumbing, right? Where you're going to be showing back up in the customer's house periodically to somewhat consistently in HVAC where you have filters to change and system twitchy systems and it's the biggest piece of mechanical in your house and it causes problems and you have a hot area or cold area, you need to solve those things. So maintenance, right? Right. Most people aren't maintaining their roofs, right? And if they are, they probably don't spend more than 2 or 3 years doing that before they realize they don't need to do that. Right. So you end up having these different dynamics. So advertising is a big piece. Sales is marketing. Don't tell the salespeople this, but sales is marketing. It's all people. It's all talk. It's all communication. It's all persuasion, right? Marketing and sales or advertising and sales don't sound the same. One of the biggest lessons I learned coming in was what you say in advertising has very little to do with what you actually say in sales. And that's why most salespeople are terrible at marketing or advertising if we were to be more specific. But operations needs to fulfill on those promises. So, that's equally as much marketing as anything else. So, when you think about advertising, which is what most of the people that are on this podcast are listening to, it breaks into 3 buckets. And this is research done by Binet and Field, famously well-researched individuals out of the UK talking about the marketing mix in a different way. And it comes down to brand building and sales activation. Well, Those are the messages that we focus on. And frankly, brand building and sales activation is lead generation. Those are the things that generate a lead. They are not the things that capture a lead. The rest of your budget has to go over to that spot where people go looking for what you, what you sell, or for you specifically, because they like you and they want to buy what you sell. That's lead capture. So if we really look at the framework from a different perspective now, it's not branding versus lead generation that you have to spend your money on. It's lead generation versus lead capture. And how do you spend that money wisely? Well, 60% of the messaging towards brand building, 40% towards some sort of lead sales activation, be it offers, promos, or even just letting a person know what the heck you do. And then you have to be where people go looking, right? And spend that money wisely.

Yeah.

Yeah.

I think what you're saying is very intriguing because you're talking about perspective shifts. And that's also what Christopher Lockhead was talking about is that you spend the majority of your time talking about the problem. And the emotion there. And then you, you know, via a story paradigm, bring in the solution. And then at the very end, you talk about yourself and your product or service. But it's really— that's kind of like the tail end of it. And most people lead with, you know, features and product and this is what we do, but never talk about the problem, right? Yeah.

Or the pain that comes from that problem. Exactly. And, and, and there's nothing more painful than an externally triggered grudge purchase because you didn't put any money in the wallet to, to spend on that, right?

Most households don't have a sinking fund. No, no.

So it, it becomes this, this, this paradox of like, how the heck do we solve our customers' problems and in a respectful and ethical way? But, uh, It comes back to those things that people value. And the first thing that people value from you is your empathy and your competence. They want to know that you're showing up for them, not for you. And then they want to be able to get it done conveniently based on what they define as convenient. It doesn't get much more complicated than that in the very philosophical sense. It gets much more complicated as we start to break it down and get carried away. Which is my nature as a rule.

So I'm going to pivot here for a second. What building this 8-figure agency that you have, what was the— what comes to mind when I say what was the biggest unknown that you didn't know that you had to learn? Like what was the like moment where you're like, oh shit, I wish I had figured that one out.

Up earlier? Well, I mean, there's the obvious one of, of pricing models and structures and what, what true value we do bring to the, to the table. And it was pretty astounding to see how much impact that we actually had, um, when you started to do it on the aggregate and see how it would actually affect revenue and profitability. But getting more tactical, you know, the biggest things As I did the research and did the studying and pushed through all of the different ways that we look at branding messaging and structuring out the relational advertising framework, I came up with the framework. Bonin and Fields stops at message and brand building and sales activation. And I always struggled with that. It just wasn't, it wasn't quite all accounting for everything, right? There was a missing part on the balance sheet and that was the infrastructure. When you set up a pay-per-click campaign, it is neither a sales activation or a brand building, but it is still a cost on your, on your P&L. So looking at it from an operator standpoint, which is really how I kind of put, put the lens through of entrepreneurship, I don't look at it as a consultant. I look at it as as a guy sitting in the seat dealing with these things and also having to pay payroll on Friday. And the truth of it is, is like, no, no, I have these expenses. And like you telling me this, this fancy stuff about messaging is great, but that doesn't do anything. So I had to kind of have to work through it. And that took a couple of years and I had a lot of pushback. And, you know, you're, you're, you're an absolute lunatic until you're a genius. And sometimes you never get to be a genius. So genius is only just spending more time with a problem than other people do. And I just spent more time with this problem. It's fascinating to come to that realization because that realization makes all the difference in the world and how I decide to structure out my business, how I structure it out for strategically for clients and who we bring into the mix. You know, we rarely bring our own digital people into the mix. So we're often using outside people. We're often using outside production. Production houses when it comes to graphic designs or other assets, but they follow our creative directives. So, we do a creative brief and we go through the iteration process together. Ultimately, this helps us get a lot clearer on where the money needs to be spent and how much needs to be spent so that we stay on budget, on task, and get the highest result for the money being spent.

Okay. Can you dumb that down for me? I think I understand what you're saying, but I'll ask the question again. What was the lesson you learned there? And you, you started talking about pricing and models, so like, give me a simplified version of that.

Regardless of which marketing company or agency that you're a part of, stay in your lane and be the best best at what you can be in that lane. Just know what your role is and don't think that us as a strategist is the boss of you kind of thing. That's not how we think of ourselves. We're very humble from that perspective. It's we need a Michael Jordan and a Scottie Pippen and a Dennis Rodman on every single team to win the championship. The only goal I have is to win the friggin championship for my clients. So pay-per-click, essential. Graphics people, essential. All of the different roles and the value that you bring to the table, absolutely important. If it shows up, it matters. How do we put that together? But don't try to be something that you're not because, man, I'll tell you, I have seen some messes that we have had to clean up for people who are claiming that they're something that they're not. And it's tragic. Like, it's big money, both in what you make and what you spend, and frankly, some cases what you lose.

So not only are you Gandalf the Grey, you are also Phil Jackson, is what I took from that.

I hope to be at least a middlin' mentor to others, to be a bit of a guide and to give some clarity on things, because if we can work as a team, we're going to We're going to win.

I love that. Ryan, how do we find the Wizard of Ads if we want to learn more?

That's— well, wizardofads.com, .org. Wizard Academy is our school that we have in Austin, Texas to teach people, .org. And you can find me at ryanshoot.com and also wizardofads.services for my subsite that's all about me.

And of course, your own website, you have ryanchoot.com.

I do have— yeah, I have ryanchoot.com, and that pretty much takes you pretty much everywhere.

Perfect. Listeners will have those links in the show notes. If you like what you've heard, please rate the podcast, share the podcast, subscribe to the podcast. If you don't like what you've heard, hit the little message button, tell us what you'd like to hear, and I'll get rid of Ryan. Until next time, ta-ta for now.