The Key Strategy to Hit $1M as an Agency Owner

All right, so we have a little treat for you. So this is a coaching call from the Agency Owners Association. This is a group that Neil and I have for agency owners to help you grow faster. So if you're in the agency space, you are a services business, this is applicable to you. It's a little preview of a call. It's probably 10, 15 minutes or so, and you get a sense for what it looks like to be in the group. If you want to learn more about the group, you can go to marketingschool.io/agency. Again, it's marketingschool.io/agency. Hope you enjoy the episode.

My question is the following. Where's the balance between quality and scale? Every massive brand is known for its flaws, from Comcast to GoDaddy to AT&T to Dow P-Engine, and the list goes on. How do you balance out the scale chart and poor feedback/retractors by unhappy clients, online trolls, course users, or webinar attendees? For example, how do you make sure that the negative wave of feedback is introducing the brand affinity instead of accelerating it to 10x?

Yes, you're always gonna get some sort of negative, assuming you're growing. You know, if I had a call with someone today, and this person told me how their agency was growing 5% over the last six years. So when I was like 5% growth, I was like 5% year over year, which even is slow. They're like no no 5% over six years. I was like that's pretty much no growth, right? And you're not even keeping up with inflation at that point. So when they were telling me this, you know they were just like we want to be really. careful on the clients we bring in because we don't want any bad reputation. That's just another way of saying we're not able to grow at the pace we really wanted to. It's kind of like an excuse, right? Like 5% over 6 years is really terrible because that's way before the COVID period. You're going to get negative backlash whether you want to grow at 5% or whether you grow at 50% or 100%. You're going to get some sort of negative backlash. And when you're talking about scaling and quality in whatever you're doing, it's never going to be perfect. Whether I order, you know, some people love Amazon. I love Amazon too. But if I order glass bottles from Amazon, which I've done for water, no joke, like around 50% of the time it comes shattered and just broken, at least a good chunk of the glasses.

That's never happened to me before. They must not like you.

Yeah, I've had it quite a few times. Also, when I do order, I order like 10 boxes at once, right? So I'm ordering like large quantities. Um, but what I'm getting at is you're never going to be pleasing everyone. Don't worry about that. Instead, the people that you're working with, do things like measure your NPS score, right? Survey them on their satisfaction. When you're doing things like that and you're seeing your numbers go up, it doesn't matter if you're getting haters or not. The people who are paying you and using your services or whatever you're selling, if they're liking it and overall you're improving the experience, you're doing something right. That's what matters. The people hating on you that aren't paying you, it doesn't matter what they really have to say.

Good stuff. Good stuff. Yeah, thanks. That's pretty insightful.

Cool.

All right. Um, Aliyan's got one here. What type of agencies can be sold as a business 3 years into the future? What are the key differences compared to what is selling now? Aliyan, do you want to give some context?

Uh, it's about like mergers and acquisition. I know that both of you, uh, do a lot with your agencies. So yeah, what are the— what kind of agencies will you guys be buying when you forecast into the future, 3 years into the future? We're being realistic here. And because, yeah, my main goal would be to just sell my agency at one point.

Neil's got a good checklist for this.

What kind of agency do you have? So we—

I personally help Japanese tech companies from Japan. to go global. So we help with their global expansion.

And mainly—

Mainly the USA.

Mainly English?

Yes, mainly English-speaking countries and Africa. That's what we have.

How big are you guys in Japan?

No, we are still very small. We have so far, we have been sold, we have sold over $100 million, but that's just for very small companies of number, uh, number of companies. So right now, uh, because I'm still in the 6 figures, we, we are not that big. We are just, we're very small.

Sure. So the big thing that people look at is not about the type of agencies. You could have an agency that helps people from Japan expand to the US. Someone else could have an influencer marketing agency. Someone could have an Amazon marketing agency, which was hot years ago, but not as much today. Um, someone today could have an agency in Europe that just specializes in going after Gen Z or the younger generation, right? Which would be hot. The big thing that people look for, those hot agencies get a higher multiple, but you can't control when you sell them and you can't control if you're the hot thing at that time.

Yeah.

But one thing that's for certain is agencies of all sizes continually sell. The big thing that people are looking for, if you're really trying to do well and get a big exit, one built-out management team, because no one wants to rely on the founder because they assume after a founder gets a check, eventually they leave. The second thing that they look at is what's your growth rate on an annual basis. So people want growing agencies, not declining. The third thing they're looking at is churn. The longer you keep your accounts, the better off you are. The fourth thing they're looking at is what are you selling your customers and what are you not selling your customers that they can sell them to grow faster, right? And those would be some of the main things that you got to optimize for. If you optimize for some of those things, then you can do quite well. And I'll give you a good example of this. We bought an agency in Southeast Asia. We announced it, I think, last week or the week before. And when we bought them, they have accounts like Domino's, Hyatt, you know, Levi Strauss, and the list goes on and on of like enterprise customers. Cigna, the health insurance company, L'Oréal, Clarins. Again, the list goes on and on. They mainly serve Malaysia, Singapore, and Hong Kong. They don't do tons of business in Hong Kong. They do a little bit of revenue generation for Singapore. Then most of their money is coming from Malaysia. But the reason they're in Singapore and Hong Kong is a lot of the decisions for APAC come out of Singapore, right? A lot of the RFPs for agencies are run out of Singapore. So even though this agency does the same thing we do, we looked at it as, oh, they mainly sell people on Hong Kong, Singapore, and Malaysia. but their decision maker also controls, in many cases, Australia and India, which are much bigger markets. They also control China, but we don't do a ton in China. But their decision makers also control Japan and a few other regions where we do business. And again, the GDP in those markets like Japan, India, Australia is not bad. They're much bigger than, let's say, Malaysia. So we bought the agency knowing we can just go to their existing person who approved the account, And sell them on all the other countries that we're in that they're not, right? So the buyer will look at not just how much they're paying, but how much more they can grow and make by just adding synergies. And that is a huge component of how much they're willing to pay. So think about that when you're ever trying to sell, because you can pitch that to someone to try to help increase your multiple. Yeah.

Yeah.

I want to have that. I wanted to have that picture as well to that, uh, what kind of company that I'm selling to in the future. So yeah. Thank you. 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 Alien, he says, the ability to really post whatever I want and I 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.

Great.

James, you have a question here. Do you want to ask it?

I have a—

I actually have a follow-up to your question, but James Sowers, go for it. Did I pronounce that right?

Yeah, you got it. You nailed it. Thank you. Yeah. So I think the spirit of my question is like, if the two of you, or if we're just speaking to Neil here, if Neil, if you could flash back to that 6-figure agency founder, let's say you're doing $500,000 a year and you're trying to break through into that 7-figure level. Let's say you have 10 to 15% of top-line revenue available to invest in growth. So just call it around $50K or $75K. Knowing what you know now, having access to the data and the connections, you know, now and all the experience you've gained, where would you invest those dollars? And let's just say that any salaries for W-2 employees are excluded from that. This is more like contractor spend, ad spend, tools and tech, that kind of stuff. So how would you allocate that money to try to break through into $1 million plus?

Wait, I have a follow-up real quick, Neil. So, James, what is— is growth your primary challenge right now or is it something deeper?

Well, I'm kind of Growth's my primary challenge, basically. Like I have an avatar, I have some traction, but you know, just trying to figure out where to allocate spend.

Go ahead, Neil.

What kind of agency is it and what region?

We don't have to use mine, but I'm in the US and I do podcast repurposing for agencies, coaches, and consultants. So we take that podcast asset and turn it into kind of a multi-channel blog article, newsletter, social posts, video clips, that kind of thing.

You have, you have 2 opportunities.

Okay.

I'll actually give you one opportunity and this is the easiest one. What else can you sell your existing customers that they would pay for? So for example, if you're doing podcast repurposing and you're helping them turn into assets, are you offering the social media marketing services where you're pushing them and you're helping them grow their social following? Are you offering the services where you help them collect leads from their social media? Are you offering services where you help them collect emails?

The—

if you already have customers, the easiest way to make money as an agency and get to 7 figures isn't closing more accounts. It's actually getting your existing customers on more services. And it's twofold for that reason. So let's say if you have a podcast repurposing agency, I don't know how long your customers stay, but I'm assuming if they stay for a year, you're happy.

Yeah, that's true.

And if they stay for 2 years, you're lucky, right? I'm assuming you would agree with that.

Yeah.

And the reason I made, uh, the reason I made that assumption is because what you just broke down is one kind of service agency. Most agencies don't have a customer problem. If you look at like the big companies like WPP, Omnicom, etc., they actually don't close tons of new accounts percentage-wise. What they're really good at is keeping their accounts for 5, 6, 7, 8 years. What a lot of small agencies struggle with, almost everyone on this phone call, even if you're at $1 million, $2, $3 million, $4 or $5 million, is actually retention. The key to retention is actually getting your customers to pay not for one service, not for 2 services, it's actually 3+ services. If you get them to pay for multiple services, they tend to stick with you much longer. So you got to figure out what you can upsell to them, and then what you'll find is your churn will go down. So not only are they paying you more per month, they're paying longer. So instead, if you're closing one customer a month but the customer lasts 2.5, 3 years instead of 1 year, you're making almost triple the money just because of the retention. Then if they're paying you double because you're doing more services, you're not making triple the money, you're now making 6 times the money. You get the point, right? Because you're getting more per month and they're staying longer. That's the real key to growing an agency. Most people focus on new customers instead of figuring out how to upsell into multiple services, which causes more retention.

James, let me add something real quick. So Neil and I, we have this, um, this, uh, he helps us with audio video for our podcast. His name's Brad. And you've heard us mention him on the podcast a couple of times because we tried to get him more business. But Brad, right now, the struggle with him is he's actually losing podcast clients because most people are— a lot of people are saying, hey, I'm good on the podcast stuff right now. I'm going to go reallocate my budget somewhere else. So he's like, okay, well, how do I add more value? Sorry, there's like flies in this room. I promise I smell. But so he's like, you know, I'm trying to figure out what else can we do? He tried to go down a strategy route with us. Now he's like, oh, if we can get— if I can get you guys, you and Neil sponsorships, like, would that be worth something? We're like, yeah, go get us some sponsorships. We'll see what happens, right? But the key thing is here, he's trying and he's realizing that especially in the podcast space, like, it's kind of a down market right now. In fact, I had like another podcast company here reach out and said, hey, Eric, do you know anybody that needs, you know, help with podcast editing? And I'm like, no. Which means like it's not a good market right now, right? But point is, our guy Brad, he's actively trying to add new things. For all the reasons Neil added, right? Higher lifetime value and, you know, just better retention overall.

Yeah.

Yeah, that makes a lot of sense.

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. I 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 So 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.

But I do have one follow-up if you'll entertain it for a second. Um, what we're talking about here is, is basically layering on additional services or kind of expanding our footprint inside of the client account. Um, at what point do you think that that might be a little too early in terms of like muddying our positioning? Because right now we're crystal clear. Like we do podcast repurposing for agencies, coaches, and consultants, right? But if I branched out and I started to say something like, uh, maybe we also repurpose webinars or we help you, um, get more marketing mileage out of a live conference event that you recorded or something like that, or we do personal branding, right? Like we'll take your podcast and fill up your personal content queue. Does that kind of muddy the waters in terms of my frontline messaging to say like who we are and what we do and who we serve?

It does. I mean, Neil, you can go first. I have some thoughts, but you can go first.

It depends on how you position it. Instead of we help podcasters repurpose their content, I would just go change it to we help podcasters grow. And then you work with repurposing, you do social media, email lists, Your messaging is still really clear at that point. There's not really much of a difference.

I'll tell you what, remember, Neil, I talked about that one company, Media Scaling, that's so, you know, they help you get 100 million views a month. They charge $45,000 a month or so. And then like that reel got 200,000 views or so, and 16 people asked, who's the agency? Who's the agency? Who's the agency, right? Interestingly enough, I went to lunch with the guy yesterday and He runs like a mastermind, kind of like a coaching offer, and they got 2.4 billion views across organic social in 12 months. And I said, what do you do? It's the same exact strategy, right? He's like, hey, like, you know, they get 100, like 200 million views a month or so. And I'm like, that's very valuable because that media scaling company, going back to that, one of our mutual friends, Neil and I's mutual friends, they're spending the $45,000 a month for that service. Because it's so valuable. You're getting so much organic reach, and then you can take some of those videos that perform well and slap an ad after it. And so you can see there's actually a couple of services in there, James. But what you're doing now is like you're helping people leverage the future, which is right now at least organic reach is very strong with short form.

Yeah.

Who knows how long that's going to last too? That's another issue, right?

So.

Right, right.

Yeah.

Okay.

That's super helpful. Thanks so much.