Your Marketing Company Might Be Killing Your Growth

There's a reason home service business owners hate marketing companies. When I was trying to grow my home service business from $3 million to $5 million, every single conversation with our agency sounded the same. Spend more on ads. Give it another month. Let's just keep testing. How are things going on your end? And deep down, you know what this feels like. It's a black box. It's smoke and mirrors, black magic and voodoo, and you're stuck funding it. Everything changed when I realized the problem wasn't our marketing. It was about how it was being run. There were 5 specific things that were killing our growth, and once we fixed them, we grew from $3 million to $5 million and then ultimately sold the company. In this video, I'm going to break down exactly what those things are so you can figure out where your growth is stuck. The first killer of growth is the Google auction that you can't win. So we had a company, they came to work with us, they were spending $2,500 a month on Google Ads, and they were up against $100 million competitors right in their backyard. And most marketing agencies are going to say you need to spend money on Google Ads, Google Ads, Google Ads. The problem is, is that if you cannot compete with these people, $2,500 is going to get you maybe 3 leads, $400, $500 a lead. And that's exactly what happened for them. They were getting $400+ per lead and they didn't have the sales infrastructure to support that. A $400 lead and they ran out and went and did a $200 service job did not make sense for their business at all. And it was why the return on ad spend was getting crushed because a $2,500 budget was not good enough and the sales infrastructure that they had was not good enough to support those numbers. The reason is, is because With Google Ads in particular, there's an auction. What that means is that you are literally bidding, competing against your competitors for those keywords to be shown and clicked on. So if there are large competitors in your area and your marketing agency says, well, you got to spend money on Google Ads if you want to get leads, which I'm not saying Google Ads are bad, we all know that they can work, but if you're in a really competitive market and you have a small budget, you can't believe that that's going to be the biggest lever of growth for your business and even maybe not the best use of the funds that you have available. The problem is, the reason that this kills a lot of growth is because the agency still gets paid. The agency wants you to spend money on Google Ads because you're paying them to run ads for you. And specifically, a lot of times with Google Ads, they get paid a percentage of whatever you're spending. So they don't want you to ever stop running Google Ads. They're going to keep trying to figure out if they can get cheaper and cheaper leads. The problem with cheaper leads is that they might get lower and lower intent. They might not even speak English, might not even be in your area. This creates what are called misaligned incentives. The agency wants you to keep spending money on ads and get you cheaper and cheaper leads. The business doesn't want cheap leads. They want leads that's going to turn into high revenue, but at a, at a cost per lead that makes sense for them and have a true return on ad spend picture. This is probably the number one growth killer that I see in a lot of businesses with dealing with marketing companies is this hurdle of the Google auction that you can't win because one, you don't have the full picture. Two, you don't have the budget that's there to compete against these large competitors. The second one is the channel shift. So this is another thing is that they would never kill Google Ads for you because they get paid that way and they won't help you fully optimize. This is what happened at my home service business. I would get on the calls with them and they would say, "Okay, Phil, so we spent $5,000 and we got you 20 leads. How were the leads? How's business going?" That was the extent of the conversation. And I would say, "Well, who are these leads that you speak of? Who are these Google— who are these?" Conversions that you talk about that are coming through my Google Ads? Well, you know, they probably came from your website. They came from over here. You know, all we can see is the number. We can't see the actual people, blah, blah, blah, blah, blah. You probably heard the same thing. What they don't do, they will never reallocate after ROAS. What that means is they will not pull return on ad spend for you. This is what I had to figure out in my home service business was how do I track return on ad spend? So you're telling me Google Ads, how do I track that? So what we did was you set up landing pages and tracking phone numbers so that way we could track every single month Google Local Service Ads, Google Search Ads, Yelp, Angie's List, Meta down the line so that way we knew we spent this much money, we made this much money. So what they won't do is they won't necessarily tell you to reallocate after return on ad spend reporting because they won't know the return on ad spend reporting until you tell them that something's working or not. But again, they get paid off of this, so they're not going to reallocate your budget. The second thing that they're not going to do, and this is a huge killer of growth, is that they will not optimize your sales process. And this is why this is such a big killer of growth. Is because when you're focused on cost per lead, it's the misaligned incentives because this, you know that the leads are trash because you know that they're Spanish speaking or whatever, or you might have this feeling that the leads are not good. Your agency will not listen to the leads. They'll not go through and say, were these good leads or not? Like what was the lead quality on these? And it creates this friction where they're going to tell you that, well, you're not calling them fast enough. Your sales process is not good enough. And you're going to say the leads are not good enough quality. And there's this middle ground that is— y'all, most— you both might be right, but they're not going to help you fix that in your business, which we know is one of the biggest growth levers. So talking about the channel shift after full optimization, and the reason that full is underlined is because once you get return on ad spend, you'll know, should I, should I transition this to another place? And then the second thing is, once you optimize your sales process to know that the leads that are coming in that are good leads are going to get booked into jobs and they're going to get estimates and they're are going to get closed. When you feel confident in that process, and hopefully you're working with a marketing company that helps you optimize that process, then it's just about finding the right channel because you have the data and you also have the sales process. So the example that I gave before, a $2,500 a month ads up against $100 million businesses, we ran this playbook for him for 6 months and we wanted to kill it after 3 months, but he said, no, I know Google Ads is the thing. I know Google Ads is the thing. And we said, dude, Let's just try another channel because we know that you can perform on other channels like Yelp, Thumbtack, Angie, Meta. There's other channels and we know that we have a good playbook with Yelp. We get 10x returns for a lot of companies. So let's just take the $2,500 and try it on Yelp. And he's like, all right, Yelp's a scam. I hate Yelp. You know, the whole thing that everyone says. And trust me, they used to call me every single day at my home service business trying to get me to spend more money. When you work with an agency that works with Yelp, that doesn't happen because they work through you directly. They don't work, they don't bombard you with things. So in the first 30 days, he generated a 10x return. He had spent $2,500 and he made $25K and he got 2 installs. He was HVAC contractor, 2 installs out of it. And so this is the thing is that once you know the return on ad spend and you have data to track the stuff and you've optimized your sales process, it's all just about finding the right channels in your market that make a lot of sense. The problem is that your marketing agency will kill your growth because they're not gonna want to shift places cuz they get paid off certain things and they don't, they're not able to be nimble enough to go and try another ad platform. And optimize for return on ad spend and sales process. The thing is, is that— and I'm not saying that Google Ads are bad because we have a lot of clients that generate really good results with Google Ads. It's all about different buyer intents and making sure that that matches up. So for example, we know that Meta Ads is cheaper leads because the intent is not there. They're just scrolling. They're not necessarily looking for demand. You're trying to attract them to your business by showing them something on Facebook or Instagram. So this is why when you reallocate funds, a lot of agencies default to Meta ads or Google ads, more demand-driven, more branding. But there's other platforms out there when you just track return on ad spend and optimize your sales process that work. It's all about the system before the spend, in my opinion, the system to track return on ad spend, the system to manage your sales process and know your booking rate and your close rate. If you get those things dialed in, boom, gas on the fire. Alright, the next thing that they're killing, and I just alluded to this, but we're going to go deeper on this, which is the channels that you're not using. The reason that they will not bring channels to your attention is because they might not get paid off of doing more work and their scope creep of recommending certain things. This is again why you need the system of return on ad spend, the system of optimizing your sales process, opposed to paying a cookie-cutter agency for outputs instead of outcomes. You don't want to be paying for outputs, you want to be paying for outcomes. So we had a company that started working with us and they're in the United States. They were working with the agency that was in Canada. In Canada, they don't have Google Local Service Ads. Instantly when we started working with them, they had the most reviews in their area and they're a remodeling company. We're like, hey man, let's set up Google Local Service Ads. What are we doing here? This is the number one spot. He said, what are those? My agency, I worked with them for 3 years. They never mentioned them to me. Like, Why would they never mention them to you? We set up Google Local Service Ads. In 30 days, he generated $84,000 in revenue off of about $4,000 in ad spend. And he's like, oh my gosh, what are we doing? This is amazing. The second month he generated like $400,000 because he does remodeling and he got some big jobs out of it. When you are focusing specifically on outputs, you as a business owner end up leading the scope of what you're doing and you're trying to guide these marketing companies and puppeteer your way to growth. This is why you need to be working with a marketing company where you are not paying for outputs, you're paying for outcomes, and you want to make sure that you have the systems in place to get there. Another channel I just mentioned before is Yelp. Yelp, again, the scam and Yelp sucks and all this stuff. We had a client that literally told us his password was Yelp sucks because a lot of people hate Yelp and I get it. I did too, like I said. But if you have a system that runs through Yelp that generates a 10x return on ad spend, like how can you compete against that? How can you say no, that doesn't work? Another one is B2B partnerships. Your marketing company will never tell you, hey, instead of spending $400 a lead on Google, why don't you go spend $400 to a referral partner and let's help you build a referral system for that. Then you don't have to worry about algorithms changing. You don't have to compete with the auctions and you probably don't have to spend $400. You could probably spend $100 and get a warm lead from a referral partner that you can close at 50, 60% because it's a warm lead. This is the thing. They won't tell you that because again, it's the outputs versus the outcomes. So Using different channels like a B2B partnership is crushes. At my home service business, this was about $1.5 million of our $3 million when I started there. The $3 to $5 million jump that we made was a little bit of B2B partnerships and then optimizing all this other stuff on top of it. Another big one is home shows. Your marketing company might say, "Cool, yeah, do some home shows and see." What they're not going to do is help you build the system on top. Again, outcomes versus outputs. The system is, okay, well, let's do a giveaway and let's drive that giveaway to a landing page with a QR code, from a QR code. And then let's have that go into our CRM and let's have nurture it with a second place offer and a first place offer and get leads coming in and get deals closed. This is why you would want a company that optimizes for leads, jobs, estimates, revenue, new customers, and not just leads. Cheap leads. Very frustrating. I will say this, agencies have blind spots. Specifically when I was working with cookie cutter agencies, you know, I was spending $2,000 a month, whatever, for a cookie cutter agency. The reason that they can't do this is because they do not have the time to devote to actually customizing what they're doing for each client. They don't have the time to building out the resources and the systems for each client, which is fine. But usually when you get to about $1 to $3 million in revenue, this starts to unravel and break and the frustration starts to sink in heavily, which is exactly why I built my company to fix that problem. And it's the exact problem that I had and it's the agency blind spots. It's not their problem, it's not their fault. It's just this is what happens as you try to systematize your business down to the nth degree. You can't be as custom as like a consultant agency would that would be able to communicate with you and build things through the cookie cutter playbooks that I just mentioned. Real quick, I actually put together 7 playbooks that $1 million to $10 million businesses are using. Last year it generated $250,000 to $1 million in revenue over a 12-month period. So our average client grew 27%. And these are the 7 playbooks that they use. I put the link down below. You can get them and hopefully they'll help you grow your business as well. All right. The fourth one, and this is the revenue leak piece. Okay. I can't stress this one enough. If you don't get anything else from this video, take this away from it. And that is the revenue leak in your business. So we had a client, his current close rate was 31%. So let's say that he generated 100 estimates and he closed 31 of them. That would be a 31% close rate. We know that in home service you should be closing around 40 to 60%. So we said, is it realistic to increase this by 15%? Sure. Let's even just say 10%. Let's get that one to 41%, like the minimum, 41%. How are we going to do this? Okay, we can add an automation sequence after your estimates. We can talk to your, your sales guys about their actual close rate. We can make sure that what we're estimating, we're following up on those. We could incentivize a customer service representative to call out and close estimates. There's a bunch of things, right, to get your close rate higher, but we know that 41%, like, we could have videos in your process anyways. We know that 41% is the close rate. Then what we did was we took his current estimate count year to date. So year to date, 1,180 estimates. And if we increase this by 10%, that's 118 closed jobs that he should have closed if he had a better process for closing deals. The average ticket was $1,314. The way that we did this was we looked at how many estimates that he closed divided by his total revenue. That gave us the actual average ticket. What this tells us is that if he were to increase his close rate by 10%, he would have had 118 more jobs at $1,300. That would have been an additional revenue of $155,000 year to date, which would have been a 23% revenue growth, all by fixing a 10% increase in his close rate. This is why this is the hidden gem of revenue growth and killing growth. It's not just spend more on ads to increase your revenue. It's fix the system and optimize the funnel to then grow your business and pour more on top of it. Okay, so as I mentioned, he was 31% close rate, benchmarks 40 to 60%. He had no tracking, so he had no control. If you increase this even 9% or 10%, 11%, whatever the example that I just gave, he could increase his revenue $150,000, $200,000. It all depends on your numbers, but you get the gist of how this is. You need to fix the bucket first, pour the leads on top, and then the business is gonna grow. And then here's the last killer of growth. I can't stress this one enough. It's the incentive problem. Agencies get paid off a percentage of your ad spend model. Their salespeople, their account managers, they want you to spend more money on ads so that way the business makes more revenue. And it's a misaligned incentive. So you want to make sure that whatever agency that you're working with, you need to ask them, how do you get paid? Like, ask your account manager, how do you get paid? Do you get paid on retention and churn? Or ad spend or ancillary upsells and products? Like, what do you give? How do you get paid? Be honest with me. It's very important to make sure that you have aligned incentives. Do they get— do they want you to spend more money and then the agency wins? That might be beneficial for them, but is it beneficial for you in hiring them? No incentive to reduce waste. Okay, well, what's the incentive for them to reduce waste in the sense of this ad channel's not performing, so let's shift to something else? Is there incentive there for that? If there's not, then there's not. And this is something that you need to be mindful of. Do they help you build systems in your business, or do they just say, hey, we got you these leads, why don't you close them? These are all the incentive problems. What is missing from this? Do they help you build partnerships? Do they help you do email newsletters? Do they help you build referrals? So how did I address this in my business was we do not get paid off of percentage of ad spend. We don't make more money when you spend more money. We have an incentive to reduce waste. So what we do is our consultants, they get paid a percentage of what you pay us. So when you pay our company, the— our consultants only get paid when you pay us. The beauty of this is that if you are not happy and you don't want to work with us, then the consultant loses a client and then they essentially lose the pay for that client. So they don't care how you grow your business. They don't care if you use Yelp, Meta, Angie, Home Shows, whatever, they want you to grow your business and help you build systems to grow your business so that way they have a client that they're actually helping grow. They don't care how you do it. They're going to come with strategies and ideas and playbooks, and they're going to make it happen as long as you show up with that as well. It allows for aligned incentives on both sides of it so that way we're proving ourselves every single month, and you never have to question, do we have your back or not? Because we don't have an incentive to do anything that's outside of you saying that you love working with us. With that being said, if you want a company that cares about this stuff, I'll put a link down below. You can schedule some time to talk about your business. I'd love the opportunity to, to look at your business and see if we might be able to help you grow.