Explaining the value of video to clients, Retainer work vs. productized services valuation, & more

So this next episode is covering a portion of our Agency Owners Association 1.5-hour call that Neil and I did. So if you're an agency owner and, or if you're looking to just learn more about how to scale an agency, there are a lot of questions that we get from the community members in here. This is basically a sneak preview into how the group works and one of the major benefits of the group. So if you're interested, please listen. And without further ado, here is the episode. All right, let's go to David. What do you got?

Hi, so I'm a creative for video and I'm starting like my agency. I'm very new at this, but I have a problem explaining the value of video to people so they understand that the video on social media, for instance, it's valuable to make their brand stand out. But each time I get to the hurdle that they say, well, I understand its value, but I cannot measure it. So how do I explain to them that it's, well, it's valuable what I do?

So there's already enough companies that want that service. You're talking to the wrong potential customers. That's the real issue. What you want to do is create marketing material or collateral around how you can help people create the videos, how you're getting tons of engagement, how the quality's better, stuff like that. Because there's a lot of companies that already pay for that. What you don't want to do is find companies that spend money on marketing, you have to convince them that your format of marketing is great. You want to find companies who already have the need for video content and then go from there. So for example, you can go on social media, look at all the companies that are already producing video content, but it's crap quality and show them how you can produce better quality and see and just message them and tell them what they're doing wrong and how to fix it and how you can just fix it for a monthly fee and they can do a trial with you.

Right?

That's a great way to get customers because they're already creating the type of content that you offer and now you just have to convince them to work with you versus doing it on their own.

Okay, that's very valuable.

Yeah.

Neil, are you using the mic?

No.

Son of a bitch.

I knew it. All right.

I forgot.

All right, let's go to Noman. Noman, what do you got? Is it— did I pronounce that correctly?

Noman?

It's actually Noman, like Norman, no R.

Okay, got it. Noman.

Yeah. Hey guys, so it's a pleasure to meet you guys. Been a longtime listener, first-time caller. So hey, so I'm actually focusing more on my startup. I'm based in San Francisco Bay Area. I've been in and out of startups for the past, I don't know, 10 years. So focusing on my agency, trying to grow it and scale it. So it's been mostly a side hustle for a long time. So we do website development, SEO work. A lot of my clients come from referrals and from personal network. So I'm just trying to figure out, like, if you guys were to start a new agency today from scratch, where would you guys focus and try to get leads for?

Well, let me go first, Neil, because you said SF, right? So Noman, like, I, I'm heavy into tech. Like, I'm really into it. I'm studying all the time. And actually, there's a, there's a YPO company we, we actually knew. I don't know if you know this guy, but this guy named David Rodnitzky, he founded a company called 3Q Digital. And 3Q Digital was based in Silicon Valley and they had billboards all the— this is when things were really hot. I'm talking 2010 or so. Everything was tech, tech, tech, tech, tech, right?

Right.

And he's like, I'm just going to focus on the tech industry. And that's how they really grew. And I, I think they sold like 3 times or something like that.

It's some weird story.

You can go buy his book. Um, so you can go find his book on Amazon, David Rodnitzky, and he talks about the whole agency, like his entire journey, right? So I recommend checking that out. Um, but personally, to answer your question directly, because I have an affinity for tech and I've been in it for a while and I have a lot of relationships in that world, that's where I would start. So I think you're in a great spot. Um, you know, we have a lot of B2B SaaS clients and then e-com. That's kind of our, our mix. Um, so I, I think it's really, you, You pick whatever you have an affinity for in the beginning and hopefully it's a money-making area. And then you do that really well. And once you think you've kind of started to kind of milk the most, you've milked the most of it, then you can start to expand into other areas. But I'm sure Neil has a different answer here.

Yeah, so you're already doing web development, you're getting customers. Referrals are the best source of customers. As you grow, you're going to get more of them. There's a site and I should know the name of it. It's one of the most popular sites. It works really well for web dev. Eric, what's that agency site that a lot of agencies pay for leads?

Clutch SEO?

Clutch, there you go. So Clutch, and there's a lot of sites like that where they charge you a fee and they'll drive you leads. Great place to get web development clients by the boatload. I know a lot of people who spend money on that and they're making an arm and a leg in profit.

Hmm, okay, awesome. Thanks guys. Appreciate it.

But for Clutch to work well, you gotta upload your portfolio and you have to have good work and ask your clients to give you some ratings on Clutch. If you can do that, then it can work. If you can't do that, Clutch doesn't work well.

Noman, you're on Behance too and Dribbble, right?

I'm assuming. I haven't been on Behance or Dribbble. We've been on, we've been getting a lot of stuff on from Upwork and Thumbtack.

Yeah.

Yeah.

I would just post to all these portfolio sites and like if you're getting from Upwork, wherever else you can post to. So So yeah, Neil, I'm curious, the Clutch.co people, we've never paid for it. I don't know if you guys have paid for it before, but there are, I think there's people spending like a healthy 5 figures minimum on it. I'm just curious if we can share more stories here.

I know people who spend 6 figures a month on it.

That's amazing. By the way, the way they started, they just, that's a whole nother story. We'll share it on Marketing School maybe. Scott, go for it.

Hey guys, thanks for hosting amazing sessions. Question on agency valuations. Is there a difference between valuations for agencies that do retainer work, right? So you close someone on 12 months, 2 years, 3 years versus productized services, you know, so digital PR agencies, for example, popping up and they give you a package, you buy a package and then you keep purchasing them over time. They seem to be generating a lot of revenue, but I'm wondering, is there a difference in valuations between the two or it still comes down to how long you can retain a customer in general?

People prefer recurring— let me rephrase. People prefer recurring revenue where they're annual contracts and your churn is low, where they end up paying you for more than 1 year. Valuations for project-based businesses tend to be the lowest.

Got it.

But if your project-based business is recurring, which even those projects, people keep paying you and they almost all renew, Investors will look at that as recurring in essence.

Ah, because it's the same customer staying with you for a long time, so it just shows as recurring.

Bingo. But the moment you have project-based work and you have to keep getting new people, your valuations drastically go down. Like if a business is doing $1 million in profit, they're not gonna get— it's hard to get 5x when it's one-off projects.

Yeah.

Makes sense. Okay, thank you.

I gotta take a minute to tell you about the Agency Owners Association. This is a peer group for agency owners. Think YPO or EO, but for agency owners. And I just wanted to read you a couple of testimonials. So this first one comes from Carrie, and we asked her, what do you like most about the group? She said, having a group of people to discuss and bounce ideas. The leads are great too. Yes, we share leads in this group as well. This one from Aliyan, he says, the ability to really post whatever I want and need, and the group responds. Great experienced members, getting a lot of insights from conversations with other members, getting a lot of value from sessions from Eric, getting advice from others as well. And so if you want to grow your agency faster and you want a peer group to do so, just go to marketingschool.io/agency. This is a group that both Neil and I created, and our hope here is to create a vibrant community of agency owners and do a lot more with it in the future. So again, marketingschool.io/agency. And we'll see you inside. All right, let's go over to Gabriel. Is Gabriel here?

Yes, I, uh, yeah, so just, I had a question. I have a lot of, um, uh, broken motor, uh, clients, and some of them, you know, I can tell the, the results or the conversions from marketing campaigns happen, you know, as much as we try to push on phone call and tracking forms and web chats, You know, a lot of the Google Ads campaigns end up sending traffic physically to locations. Specifically, I have some medical clients that they see appointments. So I was just wondering if you have been in a situation where you have any tips on tracking and attributing offline conversions that will make also sense to the client.

So if it's offline conversions, the easiest way is the client needs to ask where they came from, how they hear about you. If they don't, it's really hard to Correlate. That's sad, but it's true.

Yeah. And, you know, we, we actually, the, the great thing is we track also the phone calls. We have been in situations where we ask the user, we can tell they click on a Google ad right from search, and they call. And we ask them and they say sometimes, I was just driving by and I saw the business, you know. And so I'm just trying to find a way instead of like listening to every single phone call and things like that, And a more automated way to attribute it. Because that happens a lot. Sometimes I'm running YouTube ads, and it has a specific tracking number for YouTube. And we asked them and they say, I saw you on TV. So they're probably playing TV, YouTube on their TV and their smart TV. But that's kind of like, it has become a lot of really like manual reporting to make sure we also get credit for those conversions.

I don't— Eric may know of an automated way, but I don't know. I do.

When you're Yeah.

So Gabriel, what are you, what are you using to listen to all these calls right now?

CallRail.

CallRail.

Okay.

So Neil actually pays for the same product that I pay for. We both pay for this product called Gong. So Gong, what it does for you is you can actually set keywords to track for, to look for. You can also look for key phrases or questions like, hey, did Neil ask this question on a call? Right? And then it'll like show a check mark or not. So you can, Actually have a report that shows, hey, were these things discussed over here? Were these things said? And then it'll also track, um, you could, again, they have like different keyword trackers. So you can, you can probably, I hate to use the word streamline, but you can, you can streamline that process quite a bit. Um, it's not cheap. I think, um, it's like a couple hundred bucks per user or something like that, or maybe $100 per user. And then they have different AI features that, uh, that will connect with your CRM too. Um, and you basically just work within Gong. So, um, you know, maybe that's a bit overkill right now, but if, if it sounds like you're looking at a lot of calls at the moment, um, this, it might be a solution.

I think Freshworks has a competitor to Gong that's affordable.

Freshworks?

Yeah, I'm pretty sure they have a competitor to Gong that's affordable. There's a few Gong alternatives. Just Google Gong alternatives. You'll find a lot of them out there that are really cheap.

Neil, you remember when we were coming back?

G-O-N-G.

What?

G-O-N-G. But just Google Gong alternatives.

All right, quick note. This is about my company. It's called Single Grain, and Single Grain is an ad agency where we're focused on driving innovation. Want to talk about a couple of new strategies. And if you need help with marketing, great. If not, here are a couple of new strategies that you should try out. One is programmatic CRO. So we are doing programmatic conversion rate optimization on our site. So it's building products that will automatically optimize your site to increase conversion rates. We're also auto-optimizing, auto-updating from an SEO standpoint. And we're constantly thinking about what else we can do in terms of enriching the visitors that are hitting your website and also tailoring custom messages for them using AI. And so there's a handful of things that we're doing from a marketing standpoint, and our mission is just to drive more innovation. So if you want to learn more, just go to singlegrain.com, grain like rice. So singlegrain.com to learn more, and we'll see you inside. Neil, remember when we were sitting next to that guy on the plane last year coming back from HubSpot, the inbound conference?

Uh-huh. Okay.

So this guy has a company called grain.com. It's not quite Single Grain, it's grain.com. Um, so G-R-A-I-N.com, and it's conversation intelligence made simple. So I remember meeting him, I was like, oh, I heard of your product before. And it's like $15 per seat billed annually, $29. And you can, you can also do monthly as well. This might be a cheaper solution for you. Oh, and, and they, they, they ripped off the design of Gong. So just, just use that.

So nice.

Yeah. Sorry, Gong. We love you guys. We, we, Neil and I pay for you. So there's that, I guess.

I don't think we use Gong anymore. I think we switched to a cheaper alternative a long time ago.

Oh, wow. Good for you.

Oh, Gabriel, does that answer your question?

You're good?

Yes?

Yeah, it gives me a path right now to start researching into this.

Thank you.

Okay, perfect.

Cool.

Well, look, I think that's it for today. Ezra's going to send you guys a survey just to see what we can do better here. How you— what you— please be brutally honest with us. And we look forward to doing the next one.

Thank you.

Have a great weekend.

Bye, guys.

Very much appreciated.

Thanks, guys.

Thank you.