Ryan Deiss | Scaling a Business Using Systems that Sets You Free

I took this business, scaled it up, had not one, not two, but three different companies on the Inc. 500 and 5000 list in one year. From the outside looking in, everybody's telling me how great I am. You know, I'm on top of the world. I've got the Midas touch, but I'm miserable and I'm burnt out. I'm missing family dinners and I'm missing soccer games and I'm leaving for the office before anybody's awake and I'm getting home after everybody's asleep. You know, I've got my wife, I've got four kids. Nobody knows who I am. They don't. I don't ever get to see them. And it wasn't until I came home one night and there's my wife sitting up in bed and she's know of now 15 plus years and she says, you know, look, I know who I married. You can keep doing what you're doing, but you can't pretend like you're doing it for us anymore. That for me was the breaking point when I realized, okay, I can have all the ego in the world, but this ain't working.

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What does it really mean to scale a business? Not just grow it, but truly scale it. And what does it take to build something that thrives without us at the center? In this conversation with Ryan Deiss, an innovator in digital marketing and systems thinking, we go beyond the buzzwords to explore what sustainable scaling really looks like. Ryan shares his journey from college side hustle to running an influential portfolio of businesses. And he breaks down the core shifts that every founder must make to grow from scrappy entrepreneur to strategic leader. We talk about why ego is often the biggest bottleneck to delegation and how to build operating systems that create transferable value. And the vital difference between making money and building a business that lasts.

My name is Dr. Fleet Mall, your co host for this session, and I'm.

Thrilled to be here today with none other than Ryan Deiss.

Welcome, Ryan.

Thanks so much for having me.

Fleet, we're so thrilled to have you.

You've been a huge influence on our own success at Heart Mind Institute.

And you know, I hate to ask anybody to encapsulate their story in a couple of minutes, but I'm going to ask you to do it anyway. So, you know, just get a sense of how you got started. How did you end up becoming an entrepreneur and getting into digital marketing and how did that happen and what's the backstory behind that?

Yeah, it's really simple. I met a girl. I was a freshman in college and I had no ambitions of being an entrepreneur. I had no vision ambitions of doing marketing. I had no idea what I wanted to do. I actually thought, I don't know if I ever told you this, Fleet, I thought I was going to go into vocational ministry. That's what in my head, I thought I was going to go and be a pastor. And so. But I went to college. I met this girl within a couple of weeks of dating. I knew, like, this is the woman I'm probably going to marry now. I didn't tell her that, by the way, because I knew that was kind of creepy. Which there's a marketing lesson, by the way, just in that. But I did. I mean, I was like, whoa, okay. And it was the first time in my life that I wanted something and I knew I didn't have what it took to get it. And specifically, like, I knew that I wasn't the kind of person who had the means to be like an Adult who could support another human being. And specifically, I knew that I didn't have enough money to buy an engagement ring. I knew that diamonds were expensive and I was broke. So I decided to start this little side hustle, selling little ebooks and things like that online, truly, just so that I could make enough money to buy this woman an engagement ring. That was it. And this was my freshman year. I didn't tell her that, but I got to work. Well, fast forward a couple of years. I had made enough money to buy the ring, I got the ring, I got the girl. And that little business eventually ballooned into, you know, initially a digital publishing company empire, mini empire, if you can call it that. And along the way, all I did was I talked about publicly what I was doing privately. And this was kind of before blogging was a thing. You know, I launched my first business in 1999, you know, so you gotta think Google back then was a science fair project. You didn't have a lot of this stuff that we have. There was no social media, but I had a little email list and I invited people to subscribe to it. And every week I would just tell them what I was doing. And I did it as much for accountability as anything else. And so I kind of got a reputation and I gained a following as I guess being an expert, not because I actually knew what the heck I was doing, just because I was talking about what I was doing and I was sharing the wins and the losses, the good, the bad and the ugly. And so that was really where it all began. So I've always started businesses, I've always run businesses, and I've always talked about what the heck it was that I was doing. And that's how digital marketer came into being. It's how scalable came into being. But I've always had businesses and then I've always had businesses that talked about what I was doing in business. And so that's kind of how I've operated really for the past 25 plus years.

Our focus today is scaling.

And obviously you could share so much about marketing to your company. Scalable has really helped so many companies and so many founders and entrepreneurs figure.

Out how to scale their business.

You've got something that's working, you're probably wearing all the hats. Maybe you're a solopreneur or maybe you have a small team, but basically you got a small team of helpers. You're the expert, you're doing most of it, you're directing everything.

And then where do you go from there.

So I know you have a whole.

System for scaling and we're going to go through some of those elements. But what kind of needs to be.

In place before someone can even think.

About scaling a business? Before it would make sense to start.

Thinking about how do I scale my business effectively?

Yeah, I think, I think we first kind of need to find the difference between growth and scale. Right. So growth is increasing any particular unit of measurement. Right. So if you're saying I want to grow my sales, right, then that's growth. What we're talking about with scale is really talking about increasing the capacity so the ability for growth to occur. And that's important because early on growth is all that matters because your capacity is fundamentally, you know, massive. Like it's limitless compared to what you have. Because what you have is nothing. Right? And most people when they're starting their business, they're high performance individuals. If you're watching this, you know right now, you're a high performance person, you can do a lot of stuff. You know, you're a bigger container than the average person that's out there. And so that's plenty to get launched. That's enough to get started and that's enough to grow. The hard lesson that I had to learn is that growth does not equal scale. And that scale is not simply growth and then more growth and more growth. So long winded way of answering your question, it's realizing the difference. What it takes to scale is realizing, number one, it's a fundamentally different playbook, it requires very different tools, but most importantly, it requires a different operating system. So to go basically from zero to a half a million, really up to about a million dollars in revenue, just about anybody can do that. And I don't say that to suggest that it's easy because it's not. Lots of people do hard things all the time. But just about anybody who's motivated can do that without having to go and figure out all the, you know, tricks of the trade. But going from a million to let's say 10 million revenue, now you're talking about needing to scale beyond yourself. You need to have an operating system that's more than what we just referred to as a UoS, that U operating system, because you're still just one person who only has 24 hours and who probably needs to sleep some of those times and maybe has people around you who want to hang out with you some. So the big thing that you must have if you want to go from startup to scale up is you have to upgrade that operating system. It can't just be the UoS, it can't be about you. And it's the hardest thing in the world fleet because, number one, nobody told us that we needed to do it. Number two, nobody gives us a playbook for how to do it. And number three, we kind of have to die a little bit to ourself because we're so used to being that person who does everything. So in our success, we wind up getting humbled. That's, I think, the hardest thing of all.

Absolutely. And with my own company, I've been going through that and with your support. And fortunately, your company does provide a playbook for this. And so let's talk about the operating system. We're going to talk about three core components of scaling here today. And the idea is to really get the company to where you have options. And, you know, you could exit if you wanted to, or you can exit from being an operator to a true CEO, from a CEO to a board or investor, whatever. Or you want to sell your company someday, but it's getting something that has real value, that's a marketable company. And so part of that, I know you talk about transferable value and the way you transfer that from just yourself being, you know, you're the owner, operator, and the value is all you. But if you leave, what company is there? So it probably doesn't have a lot of market value. You build that into the system and you start building that operating system. So I wonder if you could talk a bit about the concept of transferable value and about. About some of the core elements of building that system. It's more than we can cover all of it today, but some of the key principles.

So what it takes to scale, scale does require the three elements. And three elements are, number one, you have to have leveraged sales. So not just sales, but leverage sales. I think everybody gets that, right? We need to have sales. Okay, fine. Number two is you need to have bankable profit. So you need to have profit that is there to continue to fuel the sales. Right. Those are the two that most people think about. It's this third one that you brought up that nobody thinks about. Most people don't know about, and they certainly don't optimize. And that is what's known as transferable value. And transferable value comes in two forms. The first form of transferable value is transferring the value creation process from you as the founder to other people in the organization. In other words, you're not the only person who can do all the things, that's the first type of transferable value. The second type of transferable value is transferring the value of the company to somebody else in the event of the sale, or at least being able to do it. But it's at first have a transferable value that must occur first. And this is where business owners get trapped. It's where we get trapped in our own businesses. When our businesses start owning us is when we are the only ones who can actually create value in the company. Now this is going to come very often it manifests itself as you're the only person who can do the marketing, nobody else does it as well as you, or you're the only person who can close the sales or where I see the majority of time is you're the only person who can deliver the service, you know, or who can deliver the product. Nobody else can do it as well, you know, as you can. And what we have to be able to do as business owners, if we truly want to own our business, instead of having our business own us, we need to have an operating system that allows for the value creation process to occur without us. So the question that we ask is, does the money still show up if you don't show up? If the answer is no, then you don't own a business, you're self employed, you don't own a business, your business owns you. And so that's where the operating system comes into play.

Let me interject just something there. So I think there's two blocks, you kind of referenced one of them that I know I ran into and a lot of entrepreneurs run into is nobody can do it as well as I can. And it's quicker to just do it than train somebody to do it right. And those two things will just block you forever from appropriate delegating, getting smarter people on the team, building the systems and so forth. So I wonder, how do you see, how did you get through those blocks? How do you see people get through those blocks?

Yeah, well, and the brutal thing is in the beginning it's true, right? I mean, so in the beginning no one can do it as well as you can. And it is faster just for you to do it. And so that's what makes this so tough is because everything that is the exact right answer early on is the exact wrong answer. It's like somebody who's very like, show me the things that make you great and I'll show you the things that will ultimately destroy you. And this is true in business. So how did I get through it? I Mean, I got through it by, frankly, nearly imploding. Know, the very relationship that was the thing that kicked this off. You know, I brought myself and my family to the point of, you know, break. I mean, that I took this business, scaled it up, had not one, not two, but three different companies on the Inc. 500 and 5000 list in one year. From the outside looking in, everybody's telling me how great I am. You know, I'm on top of the world. I've got the Midas touch, but I'm miserable and I'm burnt out. I'm missing family dinners and I'm missing soccer games and I'm leaving for the office before anybody's awake. And I'm getting home after everybody's asleep. You know, I've got my wife, I've got four kids. Nobody knows who I am. They don't. I don't ever get to see them. And it wasn't until I came home one night and there's my wife sitting up in bed and she's, you know, of now 15 plus years, and she says, you know, look, I know who I married. You can keep doing what you're doing, but you can't pretend like you're doing it for us anymore. That for me was the breaking point when I realized, okay, I can have all the ego in the world, but this ain't working. And that was when I finally said, okay, I've got to figure something else out. And that is to answer your question, like, that's the honest answer to your question. Fleet, how did I do it? I had to get to an absolute breaking point where I. Cause I mean, I tried for years to do it all myself and I succeeded to a very big point because I'm a high capacity, high performance individual. And I'll tell you, the better you are at this stuff, the deeper grave you'll dig for yourself is the reality. Like, show me somebody who's a high performance, high capacity individual and I'll show you somebody who's dug a very deep hole for themselves. I don't want people to get to that point. So the reason that the scalable company exists is to let people know you don't have to go there. It's two things. One is mindset, and the second is tactical. So the first thing that I'll tell you is a mindset issue is understand that, number one, nobody will probably do everything as well as you, but lots of people can do one thing better than you. That's the first really important mindset shift that needs to take place. You're not looking for people who can do everything as well or better than you. They're not going to. It's your business. You birth this thing. But you gotta know that there are absolutely, positively people out there who any one little thing better than you. They exist, they're out there. We just gotta find them, Especially if we can equip them with the right tools. The second mindset shift is there's freedom on the other side of that. Right? There's freedom on the other side of that. If we can begin handing these things off one at a time, not exiting completely from everything, but doing it one at a time, that's how the process occurs. So how do we do it? Like, tactically, practically, how do we do it? Let me tell you how. You don't do it. Oftentimes, it's easier to know what not to do. So first and foremost, it's not about you becoming more productive. So you don't need another time management system or another productivity system or another, you know, timer planner, journal kind of thing. I'm not saying there's anything inherently wrong with that, but your goal should be to do less, not more. Okay? Also, we don't just want to hire a bunch of people and throw human beings at it when we do that. What we're actually doing is trading menial tasks that we're pretty good at for a new job, a new role called management, which most of us are pretty terrible at. Okay? So we don't simply want to throw human beings at the problems, because what winds up happening is they don't know how to do it any better than we do. We don't have time to train them how to do it. We believe going into it that they're probably not going to do it as well as us. We kind of want them to fail, if we're being honest, because that validates who we are and our identity. And so when they fail, we get to swoop in and be the savior. They quit or we fire them, and we then begin this cycle of like, well, I guess I'm the only one who can do it. Don't try to make one magical unicorn hire of the integrator who's going to run everything for you that doesn't actually work. And don't just try to grow your way through it, because that's not going to work either. What you got to do is you got to get your business out of your brain. And it starts with just taking a step back, getting up to 30,000ft and asking yourself a really simple question. Well, two really simple questions. Question number one, how do customers happen? It's one of the most basic and yet essential questions that every business owner needs to ask. How do customers or clients or patients happen? How do you get them? Many people I'll ask a business owner this question and they can describe it to me, but can you show me? When we work with clients, when we acquire a business, when we're integrating a business, this is the first thing that we do. We literally get sticky notes and we go to a whiteboard and we map it out in visual flowchart form. Okay, what do you do first? Well, we run Facebook ads. Great, Facebook ads. What else? We're also running Instagram app. Great, Instagram. They all get sticky notes. Great. Then what happens? And we visualize and map out the flow that occurs from the point of awareness until somebody buys something. This is not complicated rocket science, you know, complex business process mapping stuff. Anybody can do this. Now, once we've answered visually the question of how do customers happen? Then we answer the second critical question, which is, what do we do once we've got them? How do we fulfill on the promises made during the sales process? And we do the same process, we visually map that. And filet, I know you know this because you've gone through this process with us, but once you visualize those two things, you've got a visual process map of what we call a growth engine. So the visual process flow of how you attract and convert new leads and customers, and a visual process map of your fulfillment engine, how you fulfill post sale and the promises made. What you've done is you've visualized the customer journey. You can now see literally how value is created in the business. Then you can look at step by step and stage by stage and say, okay, which of these sticky notes can I start handing off to other people? And the way that you do it, the way that you delegate, tactically speaking, is one sticky note at a time. And the mistake that people make is they try to hand everything off. They try to hand off unclear jobs. If you can first visualize the value creation process, why your company exists, how you add value, and then if you hand off the tasks and the roles one or two little sticky notes at a time, before long, everybody's doing everything and you're just kind of monitoring, you're optimizing. That is the first step in creating the operating system of a business.

And I know you call these sticky notes eventually become playbooks that somebody owns. And that's the term used in your company for SOPs or standard operating procedures. I like the term playbook. I think it really gets to the point, and I love what you said before about, you know, one indicator of to the extent that we have transferred value from our head and our abilities into the company into a system is whether if we don't show up, do the sales keep showing up. And. And I love an analogy you use about the dancing bear. Like you're the dancing bear in your business. If you stop dancing, what happens? If you dancing on that ball, what happens?

That's the circus bear.

Right.

The circus bear is big and powerful and a little bit scary, but at the end of the day, bear stops, dancing bear doesn't get paid. And there's a lot of business owners out there who. They're big and they're powerful and they're respected and even a little bit feared, but the second they stop dancing, they stop getting paid. And so we don't want that. We don't want to be that. We want to own our business. We don't want our business to own us. And so we get the business out of our brain and we put it in sticky notes on a whiteboard. Right. And we do it here. I did this recently. If people can see this. We do this all the time. We think in terms of business process maps, because. Yeah. Then every one of those sticky notes. Which of these sticky notes are really critical? Great. Let's create playbooks of these. We're going to assign names to each of those sticky notes in the beginning, every one of those. Who does this one? Me. Okay. I don't want it to be me on every one of these. So what's the person called who does some of these things? And this is how you begin hiring one sticky note at a time. How do I know these things are working? What are the metrics that I would need to track to know this is working? This is how we begin to build scorecards. Right now, when we're meeting with our team, we're talking about the metrics on the scorecard. That's how we can begin optimizing the flow. And so this is how we build operating systems within businesses. But it starts with just the simplest question in the world. How do we add value to the marketplace? And that starts with, how do we get customers? How do they happen? How do we serve them once we have them?

So understanding these growth value engines and then the scorecards that can really track the metrics to see how you're succeeding with those all contributes to the next thing we'd like to talk about, leverage sales or recurring revenue. And a lot of people here, recurring revenue, they think of subscription membership programs or SaaS.

And that can be one kind of recurring revenue. But also whatever business you had, if.

You know that you just keep doing X, you're going to get X amount of sales, right? Because you've got repeatable processes that systematize you keep doing it. I mean, there may be market changes.

You got to adjust to, but in.

General, you've got a business you keep running, the sales are going to show up, right? So I wonder if you could talk a little bit about how people shift from just going after elephants all the time. I go out, I do this big program, I brought a bunch of, oh great, now what's next? And I do another thing, it makes my now what's next to really building a system that's creating that revenue. Even if you step off the circus ball for a moment.

One of the most terrifying days, you know, in the month for business owners is the first of the month. Because for most business owners, they start back over again at zero. And so, yes, there are certain tactical offer based strategies, whether it's subscription revenue and membership and things like that that we can implement that may or may not make sen for your business. But one of the first things that every business needs to do is simply again, to visualize, well, how do we get sales in the first place. And so one of the reasons that businesses have to start over every month and that they practice these random acts of marketing and they're always flailing around and trying something new and doing something new all the time is because at the end of the day, they have no idea how they get their customers in the first place. They seem to just magically show up from thin air. And when we pin them down and we ask them, okay, how do customers happen? 99 times out of 100, if it's a business of any scale at all, they can tell me. And when we lay it out, when we, when it gets visualized in one of those growth engines, they go, oh, that's it. And they're as surprised to see it as anybody is. They just never took the time to do it. So if you want leverage sales, the first thing that you need to do is just to document how sales happen. And in just about every business that we're in, it's one, two, maybe three different ways. In general, it's not dozens, right? It might be five or six in a really big company, but for most businesses there's going to be 2, 3, 4, 5, 6 ways that you generate new customers, clients, patience. That's just it. And if you can visualize that and then you can do the next step, which is to measure it. So now we're going to build scorecards that measure each and every step and stage in the process. Now we're going to look at those scorecards. We're going to have goals for each one of those metrics. We're going to say, are we on track or are we behind? And our scorecards are really simple. Red, yellow, green. If we're on track or ahead, it's green. If we're behind, but we got a plan to catch up, it's yellow. If we're behind and we don't have a plan to catch up, it's red. And so my job as a leader becomes very simple. Help my team execute the projects that turn red metrics yellow and yellow metrics green. As long as you're always turning red metrics yellow and yellow metrics green and executing only those projects. This is how we avoid shiny object syndrome. This is how we stay focused, and this is how leverage sales begins to occur. Right? And this is how we make sure that we're not starting over at zero every month. Because we know that this works. If we just execute this, we've got a process in place. Let's just do this. We know it's going to work, we know it's going to be predictable and we know it's only going to get better. And our efforts are going to compound. We're not reinventing the wheel every single month. But it starts again with the documentation, the visualization, then with the tracking, then with the optimization based on what are the metrics that are red, what are the metrics that are yellow. And it is that a continued repetition of gets the flywheel spinning. That's what makes this process go. And if you'll just implement that, tactics can come and go. But that process of optimization will always work. It'll always work no matter what business you're in. It'll always work no matter the tactics that you're seeking to execute.

It makes management so much easier because it takes all the vagueness and ambiguity out. Employee wants to know, how are they doing? Well, look at your scorecard, right? The whole thing is move red, the yellow, the green, right? And it's right there in black and white. And so you get a metric driven business. It's so much easier to manage, right? Because otherwise there's all this perception and Opinion and, you know, so getting it into these metrics. I done a lot of sales and management consulting in my past and I worked with a lot of organizations who were still doing belly to belly sales. They didn't even have a CRM that, you know, and convincing them to get everything into a CRM, have a visible sales funnel and get to where, you know, x lead generating behaviors will create X number of leads, X sales behaviors will create x number of prospects and then closures and being able to manage that whole thing. And then, you know, instead of managing a salesforce of 20 people as a sales manager, managing a funnel. Right. And it's all visible and it's all metrics. It makes it so much easier and.

It removes, it eliminates the politics of it.

Yeah.

Like you said, somebody can't say, oh, you're being mean to me. They must not like me. It's like, well, no, your metrics are red and I love you to death. But like, if you're going to sit in this seat, if you're going to occupy this role, if you're going to keep cashing this check, it requires that you be able to turn these metrics yellow and then ultimately green. And if you can't do that, it doesn't mean that we don't like you and it doesn't mean you're not a wonderful person. It just means you can't occupy this seat, you can't stay in this role. Similarly, what project should we do? Why do you always pick Tina's project instead of mine? Well, because the projects that she suggested turn our red metrics yellow. In the yellow metrics green. The projects you suggested have nothing to do with any of them. Red and yellow metrics on the scorecard. Right. This, by the way, will also protect teams from the bosses. So I'm talking now to all the USINs out there. So the CEOs, the founders, the leaders, we oftentimes are the worst offenders at throwing shiny objects at our people, at going to an event, at coming to something frankly like this and seeing, getting all these like amazingly great ideas and taking all of these notes. And I'm begging you, before you go back and you tell your people to go and implement this stuff, I ask you what metrics are red and yellow that what you're implementing are going to turn green. And if you don't know the answer to that, we got to get these other things in place first before we jump into the tactics. Okay, That's. We always want to make sure that we have this flywheel to plug the tactics into. Not that we're just practicing random acts of marketing and chasing shiny objects. So it, it protects you from the politics, it protects you from the shiny objects, and it just gets you operating more strategically and objectively.

I would just ask our audience to.

Just reflect for a moment and you know, kind of look in the mirror. How many of us are practicing random acts of marketing and chasing shiny objects? Right. I think a lot of us do that until we don't. Right.

So only all of us, by the way. All because again, probably all we're high performance individuals, we see opportunity everywhere. It's what makes us great. We need sometimes to be protected from ourselves. And so these processes are going to do that as well.

So let's talk about the third dimension.

Of creating a really scalable, marketable, valuable company. Whether we want exit or not, but bankable profit. So a lot of entrepreneurs, especially early on, they forget about paying themselves or we forget about paying ourselves.

Maybe we're just running the business out of our pocket.

And at the end of the day, I got some money in my pocket, I'm okay. I paid all my bills, I made payroll this month and I still got some money in my pocket. You know, that's not going to create a sustainable or marketable company.

So what do we mean by really.

Designing bankable profit into our business and into the whole way we construct and operate our business?

I continue to believe that the ultimate sign of a healthy business is not revenue, it's not valuation, it's not nps. It is that company's ability to distribute large fat chunks of cash. And people are going to fight me on this and they're going to say no, no. It comes down to are you achieving your mission? And things like that. Your effectiveness as a leader is measured in free cash flow, period. Because it is the measurement of number one inflows. So are people actually paying for the work that you're doing while also simultaneously measuring your ability to effectively allocate and be a good steward of the resources that you've been given? Right. So you have to create enough value in the marketplace such that people want to give you of their hard earned resources. And then now that you have them, you need to steward them effectively. And the outcome of that is there's profit left over. Now what you choose to do with that profit is up to you. But I'm simply saying that if you don't have anything to distribute, at the end of the day, it either means that nobody's giving you money or you're not a very. A particularly great steward of the money that you're receiving. So bankable profit is essential. Now, there's seasons in the business where we're going to have less and seasons where we're going to have more. I get that. But the goal should be bankable profit, distributable cash. So how do we get there? You said it. I mean, step number one is to make sure that you're paying yourself. Got a buddy of mine, Mike Michalowicz, wrote a great book on this called Profits First. And that is essential. I remember when I started my first business, I mean, I didn't know that I was supposed to pay myself a salary. I kind of thought that paying yourself a salary is what you did if you were a wage earner. And I'm not a wage earner. I'm a business owner. I don't pay myself a salary. I take distributions. And so practically, what did that mean? Well, it meant if we had a good month, I took out too much. And if we had a bad month, I was freaked out and starving to death. And thankfully, I had a good mentor who said, ryan, you're an idiot. Pay yourself a salary. You know, you're doing the work of a CEO. Pay yourself a salary. At a bare minimum, pay yourself enough to live on so you don't need to worry about bills. I remember the first salary I paid myself was $10,000 a month. I remember thinking at the time, I could never imagine needing any more than $10,000 a month. Well, guess what? Four kids and braces and private school and Disney vacations and soccer camps. Suddenly $10,000 wasn't enough anymore. And, you know, now on good months, we still had distributions in addition to the salary. So it was fine. But I didn't have a process in place for managing cash flow, for doing the distribution. So again, I'm back in the feast and famine mode. So it said, like, you should give yourself a pay raise. So one of the first things that you could and should do as a business owner to make sure that you have bankable profit is simply to pay yourself first. It's amazing. If you make that decision, the money has a way of showing up. Because an optimistic entrepreneur's ability to spend will always outpace their ability to earn this again. We see opportunity everywhere, and we expect all opportunity to have an roi. Oftentimes we're right. Oftentimes we're wrong. The way that you ensure that there's some leftover for you is you pay yourself first. So that's the very first thing that you need to do beyond that, the other way that you increase your profitability is you need either need to lower your expenses or you need to increase your average client value. That's how we do that. Most of the time, people focus on lowering of expenses. It obviously has a limit. You can only ever lower expenses to zero, and you really can't do that because you need some people going. So we do some things. I can tell you a very tactical thing that we do at least once a quarter that I'll tell everybody to do. We send out an email to all of our leaders, anybody in the company who has a credit card, and the subject line is, this stops now. I'll tell you, if you send that subject line to anybody in your company, they're going to open it, all right? That's going to freak them out. And what it basically says is, hey, as it stands right now, we're currently spending too much money on stuff that we don't use. And so I want everybody to evaluate their credit card statement. You know, pull it out, sort it from highest to lowest. I want you to make a list of all the things that, you know that you can cut immediately. Make a list of the things that are a question mark and make a list of things that you should keep. Let's have a meeting. I'll buy the pizza. And let's add up everything that we can cut. Every time we do this, we save about five figures, a minimum of five figures, $10,000 a month. Except when it's more.

Yeah, well, that's gotten all the more important because there are so many sasses and AI tools out there, and a lot of them don't cost that much by themselves, but they start adding up. And you tried out, didn't work, but you're still paying for it by the month. I mean, this stuff can really build up if you don't keep your eye on it.

Yeah. And if you. And as your team grows, a lot of people are making their own decisions, which is good, Right. We want to empower people to make decisions, but very often they make a decision that made sense in the moment. And sometimes these people will then leave the company, but their decisions linger. Right. So now we've got like, these orphan tools and software that are always like, I don't even know what that is. And so, yeah, every 90 days, you just need to do a quick audit, check it out, make sure that it's there. But the most, like, valuable thing that you can do if you want to increase your Bankable profit is, I mean, you can raise your prices, but looking to add things like how do we add things to the sales so that we can, you know, improve our average client value? That's the thing that a lot of people don't think to do. That's one of the easiest things that you can do, is just get the people you already got to be worth more money. All of that just drops straight to the bottom line. The other thing that we look to do, big question we ask is how do we improve the customer experience? So we'll also do an audit. I mentioned before the importance of documenting your fulfillment engine, visualizing what you do with the customer after they're done, if you will then go back and audit that and go stage by stage and say, how do we make sure that this is a seven star experience? So not just a five star, how do we make sure it's a seven star experience? If you'll go step by step, stage by stage, you'll always find, you know, opportunities to wow your clients, wow your customers. When you do this, you decrease the chance that they're going to refund or cancel, which again, that's going to drop straight to the bottom line and increase bankable profit. And you increase the chance that they're going to leave a positive review, which is going to help create more customers and clients. And you increase the chance that they're going to send you referrals, which is ultimately the only way that any company is going to be able to grow at scale. If we can't get to the point where our customers are creating more customers for us, then our businesses will cap out. We've got to get word of mouth going because in any business the cost of acquisition just gets too dang high. And we will never get word of mouth unless our customer experience is remarkable, worthy of remark, worthy of talking about, unless we're producing amazing outcomes. So yes, cut your expenses, yes, look at raising your prices. But ultimately, if you want to create bankable profit, create an amazing customer experience. And you do that by auditing that fulfillment engine and asking, is this seven stars? And then lastly, but firstly, pay yourself first.

Yeah, I also want to follow up there on what you said about increasing average customer value. Because I think a lot of us, when we, you know, we know we need more revenue, we're trying to control expense to get down. We know. So we say, I just need more customers. And that gets more and more expensive. And we've got all these existing customers that could be, if we bring them value, they're going to be willing to transform more value to us. So I mean, that seems to be the deeper view and the more reactionary view is I just need more customers.

I'm just going to go out and.

Do more of X and that's not that sustainable in the long run.

Yeah. Here's two questions I would have you ask before you go out there and try to get more customers. Do this math. Number one, how big would my business be and how much more profitable would it be if every customer we had was worth twice as much? Just run the numbers on that, right? So if you did a million dollars last year, top line, and let's say you dropped 200,000 of that to the bottom line, so you had a 20% profit margin. Well, if now all of a sudden all of your, you know, customers were worth twice as much, now you did $2 million, but let's say you did it on basically the same expenses, right? They're just magically worth more. You didn't drop 2,200,000, you dropped 1.2 million. Right. I mean, and typically the now maybe the cost of fulfill is more, but it's going to be marginal. Okay, so how much bigger would your business be and how much more cash would you have to distribute to yourself and other stakeholders if every customer you had was worth twice as much? Now, not every business can double their average client value or average customer value, but some can and many can increase at 50%. So that's the first question I'd ask. Second question I would ask, how much larger would your business be if you had every single customer that you had ever sold, if every single one of them were still giving you money today, if nobody had ever left, nobody had ever refunded and everyone were still giving you money, how much bigger would your business be? If you will ask those questions and you will run that math, you will realize, holy crap, I never need to get another new customer again. I just need to get the ones that I got given me more and I need to get the ones that I got to never leave. Focus on those and you're going to have massive bankable profit. Because the single biggest expense you will ever incur as a business owner is the cost of acquiring another new customer.

This focus on profit altogether, because I think it's easy to get caught up in revenue. I've been guilty of this myself and I love why I think it was. Vern Harnish in one of his book on the Rockefeller principles said that revenue is just vanity. Revenue numbers are pure Vanity, it's profit in the end of the day, it's profit that drives the business and grows the business and that, you know, gives you a reason to be in business. Right. And I love what you said, are looking internally to increase the bottom line rather than constantly thinking I'm just going to reach out and get more, find more and more customers, get, create more of this, you know, chase all the shiny balls in the world and throw all the spaghetti at the wall instead of looking at my core business. How can I increase average customer value and how can I increase customer retention? That's so powerful. So I do want to ask you a question about the whole world of digital marketing. Obviously you're one of the leaders in that field with Digital Marketer and you originally founded the Traffic and Conversions Conference, a very successful live conference in IT today. So that world is going through a lot of transformation. AI is kind of changing everything as we watch and participate in it. And I know your colleague and partner Roland Frazier, also one of our summit co sponsors and interview guests. It's just amazing how he's out there, you know, on the leading edge of developing, integrating these tools to do really interesting things. But we do need to be pretty nimble and innovative today if we're going to stay abreast of what's going on in digital marketing. So I wonder if you could just talk about that because it could look to new entrepreneurs just so complex and changing so fast that how do I possibly learn this stuff and get a handle on it?

So what I'm doing is I'm asking myself how can I use AI to make myself and my team more effective at, from an output perspective, so at doing the work that we do so that we can free up bandwidth to leverage the other kind of AI from a customer facing perspective. And the other kind of AI is actual intelligence. I'm seeing a lot of brands looking to leverage AI customer facing like they, they want to leverage AI to make it more efficient so that they don't have to talk to their customers, they don't have to deal with their customers. Right. We're doing the exact opposite. I want to get as efficient as we can in all of the non customer facing things so that I can take those efficiency gains and pour them back into incredibly inefficient customer facing things. And I think the combination of that is what's going to work because I believe that we're, and we're already starting to see it. You know, there's a lot of bots and stuff where everybody now can tell if you're talking to an AI thing and you know stuff like that, and you're starting to see the rejection of that. And there's times when it makes sense and it's fine. Where if I'm on a website, I'd rather just be able to poke around and find it myself than talk to another person. But if I want to talk to a person, then I want to talk to a person. I don't want to talk to a fake person that's a robot pretending to be a person. So let's use AI as the tool that it is. You're a lumberjack and you've had an ax and somebody just handed you a chainsaw. If you don't take the chainsaw because you're scared of the chainsaw and you just are like, no, the axis, for me, you're a fricking idiot. All right, I'm sorry. And that's where a lot of business owners, they're like, I'm scared of this new technology. I don't think it's a tool. Just like if you were a graphic designer in the past and Photoshop and Adobe Illustrator comes along, if you don't use these tools, you're going to get left behind. So for me as a marketer, for me as a writer, for me as a. I use AI all day, every day. I'm having conversations with it. I'm using it as the ultimate research assistant. The ultimate. I don't want to say person, because it's not. But the ultimate kind of buddy that I can bounce ideas off of. Hey, how would you do this? What do you think about this? So using it from that perspective, whereas in the past you would have just had to Google it or ask somebody in your team to do it, Amazing. I'm using it not to write, but to help me come up with prompts and ideas for what to write about. So I think it's great for the first 10%, then I want to make sure I'm doing the middle, and then it's great at the end. So if, like from a 10, 80, 10 perspective, help me with the 10%, I'm going to do the middle 80 thinking and then the last 10%. I also think it can be great on the inverse. I'm going to bring the first 10% of the idea, you do the middle, and then I'm going to go clean it up. So I think as long as you're operating with it that way and it's never 100% of anything, then you're doing a really, really good job.

So I talk for just a little bit about, you know, whether people are selling online products or, you know, some kind of widgets, physical project or whatever business is done online today. And so, you know, in whatever format that takes, we have some kind of funnel that's happening, right? We're getting leads in some way, we're nurturing leads in some way. We're presenting them with an offer, hopefully we're getting conversions, and then we're doing fulfillment, nurturing them, and working on customer retention and all of that. So if you have funnels and our audience out there, and I'm sure many of times the funnel stops working or you learn everything, you couldn't build the funnel. It's not working. And so if your funnels are not, what are the. Some of the key things to look at? And from a digital marketing perspective, what are the key things to look at?

I think that the visual of the funnel is, to a certain degree broken right now. And so when, most of the time, when we're thinking about the funnel, what we're thinking about is we're going to bring people in and we're going to kind of nurture them through until they are ready to buy, and we're going to walk them through a journey and through a process until they're ready kind of in our, you know, in our time. And that's got a couple of problems. Number one, the customer journey is nonlinear. Prospects have options. They can learn about you in so many different ways. They can bounce all around. They can do their own Google searching. They can check you out on YouTube. They can ask around. They can, you know, ping people on social media. They're moving in and out of your funnel, hopping all around. It's way more like the old, like, chutes and ladders. They'll get right up to the top, see something, and then go all the way back down, see something else, and pop right back up to the top. So from that perspective, the funnel is anything but linear. The other issue is that the traditional classic funnel of let's bring somebody in for something free, then let's offer them something kind of inexpensive and then a little bit more expensive and a little bit more expensive. We're going to march them up low to high, up the value ladder. That works. And it kind of mirrors normal human relationships, like of dating, right? So it's, hi, nice to meet you. Want to go grab coffee, go to dinner? The problem is that traffic costs are so freaking expensive. We simply can't wait until These leads are nurtured to be able to pop the question. I mean, when traffic costs are super cheap, you can afford to wait. Now we can't. And so what a lot of marketers have done is they flip the funnel and they've said, okay, well, what I'm going to do is I'm going to bring everybody in. I'm going to make my best offer, my most expensive thing, day one, and I'll march them back down. Now, the problem with that is you are gonna sell the people who are ready now. The people who are ready to buy now. You're gonna get them. Problem is, that represents about 3 to 6% of your audience at any given time. And everybody else you're gonna piss off and alienate. And that 3 to 6% more times than not, is not enough to completely offset all of your costs. And because you've alienated everybody else, you're not gonna be able to nurture them. And so you're gonna lose all of that. So we can't go low to high. We can't go high to low. So here's the key to marketing today, and it's why funnels, we need to think about them a little bit differently. The key to marketing today is we need mechanisms to determine who are the 3 to 6% who are ready to buy now so that we can make our best offer to them today. And we can nurture the ones who are qualified who will likely buy later, but who are not ready. That is the great game of marketing. And so in business, we really kind of need to have two funnels. We need to have a ready now funnel that's going to get the people ready now. We need to have a later funnel that'll nurture the later people. And we need to have mechanisms in place to get the ready now people to raise their hand and say, I'm ready now, and have the later people not do that and not get in funnel. So we don't think about it so much as a funnel anymore. We think about it as a popcorn popper. If you've ever popped popcorn, the kernels go in the pot and they're popping at different times. Heat is applied evenly. Right. And yet some of them pop almost immediately. That's your now people. And what a lot of marketers do is they get a couple of pops and they turn off the heat and they wonder why their funnel stopped working. Well, you didn't nurture other marketers. When it doesn't pop fast enough, they crank up the heat and they burn a Bunch of them. And they wonder why their funnel didn't work. Right. What we need to do is we need to figure out who are those people that are ready to pop now. And there's a. Tactically, there's a lot of ways to do that. We can do hand raiser campaigns, we can do better audience segmentation. But that's where marketing is today. That's the game. Who is ready now? Let's make our best offer to them. Who is not. Let's nurture them. We can't treat everybody the same anymore. It just doesn't work.

Well, that is absolutely gold. And that, that's exactly the place and the tension and the confusion that where I've been sitting, my team's been sitting and you have a framework, but I think you call it raise your hand campaign, which is great. How do you get those folks that are ready now to identify themselves? Absolutely. Because I was always terrified of pissing everybody off to try to get an offer in front of those people. Right? Yeah, yeah.

And I can give you a quick tip to come up with that if you want me to.

Sure, absolutely.

We have time. All right, here's the question that you need to answer. Under what circumstances will the right prospect always buy? This is the question that you got to answer. There's two elements to that. Number one, right prospect. So you got to know who your ideal client is. And when I say ideal, I don't mean just somebody who you can sell to. I'm talking about your 10x buyer. Who are the people who are likely to spend 10 times more than the average. So not just your general avatar, who are the people that are going to go all the way to the tip tip top of your value ladder. You need to know who those people are. So at Digital marketer it's marketing agencies and consultants. It's not just your random one off marketers, it's not your startup people, it's marketing agencies and consultants at the scalable company. It's companies that are in the 2 to 8 million dollars range. Okay. We just, with like 10 to I think 40 employees, like we just know who that ideal client is. So that's right client. So under what circumstances will the right client always buy? So now what circumstances? That's the triggering event. Every business has a triggering event that causes somebody to enter into that I'm ready now moment. Everybody has it, right? Like I'll give you a very simple example that everybody understand. Let's say I sell very high end winter coats. Okay. That's what I sell. As a business. And I'm located in Austin, Texas. Now, if you don't know much about Austin, Texas, we have two seasons. We have scalding hot and we have fricking freezing and almost nothing in the middle. It's like the opposite of California, right? Where it's like always 73. Like in Austin, it's like 153 and it like, you know, in the winter it's like two. Okay, so a triggering event could be, hey, it's wintertime, but what do you do when it ain't? Now you have to ask ourselves, what are some other reasons that somebody might buy? What could be somebody's taking a trip to Australia in the summer because it's winter there, Right. So asking that question, under what circumstances? And understanding the triggering events, if you know the circumstances under which the right person will always buy, you know, now you can structure campaigns and it could be an email campaign where again, if I'm that company that I have those coats, I might send an email campaign saying, planning a trip to South America. Now, the people who are will respond. The people who aren't will forget about it and ignore it and not be annoyed at all because it was just such a simple short email. I could take that and apply that to Facebook copy. All in all. So if you can answer the question, under what circumstances will the right prospect always buy? You put that messaging out there, the right prospects will raise you their hands. They will signal that they're ready. Now you then filter them off, market to them separately. Everybody else, you just leave them be. Leave them alone until they are ready. Now that's the secret to marketing today.

More gold and more diamonds. I hope people are picking up on this, our audience and where can they find out more, access more of this gold from you? What are your. Where should they go?

Yeah, so if you're really liking the marketing stuff, digitalmarketer.com is where we talk about that. If you're at the point where you know that growth is not enough and you need help with scale, then Scalable Co. Scalable Co is the company. So we kind of have you at both ends. You're ready to grow. We got Digital Marketer, you're ready to scale. We got, we've got Scalable and my own YouTube if you want to check me out. Ryan dice, official on YouTube. I just post a lot of free videos there, sharing the stuff that's working and what I know and so tons of free content there as well.

Wonderful. Well, thank you so much. So Ryan, I know you have A really amazing free gift that a lot of what you've been sharing today is available in this gift that people audience can share. So could you tell us about that?

Sure. So I wrote a book called Get Scalable that's available on Amazon and it costs what a book costs. One of the biggest benefits of the book is if you buy the book then I give you all the tools and resources and stuff like that we use to build out operating systems plus a digital copy of the book. But I don't want to tell everybody to go out there and buy a book if you don't know. So if you'll just go to get scalable.com forward/resources and we'll drop the link below. You don't even have to buy the book. Just go there into your name and email address and you'll get access to all the resources as well as a digital copy of the book. No purchase or anything required.

It was wonderful. Thank you so much. Yeah, this has just been golden and you've added so much value to our company and everything. You've been talking about the journey that we've been on for a number of years now and your guidance has just been incredibly valuable. So I really encourage people, I want our audience to take advantage of that free gift and to really check out your work at Scaleblam Digital Marketers.

Thank you. Appreciate that.

Thank you, Ron. Be well.

Thank you for joining me on the radical responsibility podcast. Remember, real change happens when we commit to our growth, face our challenges with compassion and stay open to transformation. If you found this episode helpful, I encourage you to subscribe and help us spread the message of healing and personal empowerment. Stay grounded, stay present and stay true to you. Take care.

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