Smart Agency Masterclass with Jason Swenk: Podcast for Digital Marketing Agencies

Want to achieve growth through means beyond just new client acquisition? What is profitable for one company may fail another. Today’s guest knows profitable strategies demand contextualization. He built an agency helping ecommerce businesses optimize profits by leveraging his analytical skills and his desire to help people and make an impact. Learn about the many aspects beyond just creativity where an agency can come in and help drive their client's profitability. He recalls his start as a nurse and his transition to working in ecomm, as well as some lessons on how to achieve growth without focusing solely on reducing acquisition costs, and why you should never lose sight of the bigger picture. William Harris is the founder and CEO of Elumynt, an e-commerce growth agency focused on maximizing their clients’ profitability with a team that gets obsessive about data to build the best-performing and most cost-effective ad campaigns. William has published over 200 articles on e-commerce and advertising leadership and will detail the ways in which he uses intelligent strategies to help eCommerce and SaaS businesses accelerate their revenue. In this episode, we’ll discuss: Analyzing customer lifetime value to determine profitability. Taking comprehensive approach to advertising. How the P&L unlocks a client's full value. Remembering what matters most. Subscribe Apple | Spotify | iHeart Radio Sponsors and Resources E2M Solutions: Today's episode of the Smart Agency Masterclass is sponsored by E2M Solutions, a web design, and development agency that has provided white-label services for the past 10 years to agencies all over the world. Check out e2msolutions.com/smartagency and get 10% off for the first three months of service. Podcast Takeover!! Get to know your Smart Agency Guest Host: Dr. Jeremy Weisz is the co-founder of Rise25, an agency that helps companies launch and run podcasts profitably. He followed Jason’s podcast and eventually joined the mastermind and has been a guest on the podcast before. Today, he’s helping Jason bring something new to the Smart Agency podcast audience by interviewing a special guest and getting a new perspective to the show.   Combining Problem-Solving Skills and Desire to Help People Growing up, William had a passion for inventing and problem-solving to come up with new ideas. He also had a strong desire to help people, which he pursued through a career in nursing. While working as a per diem nurse, he witnessed the hospitals’ staffing challenges. Their ineffective system was leading to problems in providing adequate care to patients. This was probably a problem at a lot of hospitals, which sparked his interest in finding a solution. It was 2013 and hospital schedules were still done on paper. William met with Chad Halverson, who ran a company called When I Work, and discussed using his API to develop scheduling software specifically designed for hospitals. It was a project that could truly have an impact on both hospital administrations and patients. During their time working on this, Chad recognized William’s marketing skills and offered him an opportunity to lead his marketing team. It was a chance to combine his problem-solving skills and marketing expertise. Analyzing Agency Customer Lifetime Value After his time at When I Work, William transitioned into the e-commerce industry helping different businesses achieve growth and success. The eCommerce industry was still very young and many founders entered the field with innovative ideas but lacked a deep understanding of business concepts. Rather than solely focusing on minimizing acquisition costs, William helped clients view higher acquisition costs as wise investments given sufficient customer lifetime value. To attract valuable customers, William leveraged advertising supplemented by lifestyle partnerships seeking to get involved in customers' hobbies and lifestyles. By sponsoring events or activities related to their target market, businesses can establish themselves as part of the community and build a loyal customer base. This approach not only increases brand awareness but also allows businesses to better understand their customers' needs and preferences. William attributes this focus on customer lifetime value to his background in SaaS where it is common to analyze the customer acquisition cost (CAC) to lifetime value (LTV) ratio to determine profitability. To him, it became a sort of fun math problem. Understanding where a business needs to be in terms of this ratio is crucial for long-term success. What may be profitable for one company may not be for another, and each business needs to determine its own profitability threshold. Maximizing Profitability Using a Comprehensive Approach to Advertising Many eCommerce stores fixate too much on immediate transactions over long-term profitability. A lot of these businesses just look at the return on ad spend, which while commonly used as a metric to measure advertising success doesn't necessarily reflect the overall profitability of the business. William and his team take a more comprehensive approach to advertising and marketing strategies. They look at maximizing profitability on both a unit basis and an aggregate basis. This means considering factors such as the cost of goods sold (COGS), overhead, shipping costs, and returns costs. By incorporating these numbers into their advertising strategies, they can optimize campaigns to focus on the most profitable products. Why the P&L Are Key to Unlocking a Client's Full Value Ideally, when his team is starting to work with a new client they look to get access to some basic numbers like their percentage of sales on an average basis. They understand their average overhead, shipping costs, and returns costs. Many clients will directly share their P&Ls with them or at least some kind of an analog to their P&L. While it is not common for agencies to delve into P&Ls before signing clients, William believes it becomes crucial once the client is onboarded. Surprisingly, the marketing teams themselves are often unaware of the P&Ls, which can hinder their ability to make informed decisions. Some smaller companies may be hesitant to share this information due to privacy concerns; for larger companies with complex organizational structures, obtaining P&L information may be more challenging. If a client is unwilling or unable to provide P&L information, William may choose not to work with them. Not due to a lack of willingness but rather a recognition that the client may not be ready for the agency's value-driven approach. Learning it's Not a Matter of Life and Death Before starting his agency, there was a moment where William tried to change up some things and as a result of that, he lost three good clients. At the time, he just saw it lost a lot of revenue and was concerned. What could he do? He went to his mentor, Dave Mortensen, who to his surprise, just started laughing. “It was exactly what I needed,” he recalls. That reaction helped him realize he was freaking out about something that was not that big of a deal. Customers come and go. Since then, those clients have been replaced by better, bigger clients who are a better fit for his agency. Remembering What Matters Most as a Parent and Founder Parenting and running a company simultaneously can be one of the hardest things you can do. William admits that he doesn't have it all figured out. There are times when he has to go all-in on the agency to figure out particular issues. On the other hand, he also makes sure to make time for his family. As a former nurse, William remembers times when he had to hold someone’s hand as they drew their last breath. Not once did someone express regret for not working more. When they had anything to say, they usually wished they'd spent more time with family and doing things they loved. Ultimately, William's advice to entrepreneurs is to prioritize and find a balance between work and family life. As entrepreneurs, it's easy to get caught up in the immediate pressures and decisions of running a business. However, if you’re not making time for things you enjoy you may end up feeling burned out. Do You Want to Transform Your Agency from a Liability to an Asset? If you want to be around amazing agency owners who can see what you may not be able to see and help you grow your agency, go to Agency Mastery 360.  Our agency growth program helps you take a 360-degree view of your agency and gain mastery of the 3 pillar systems (attract, convert, scale) so you can create predictability, wealth, and freedom.

Branding expert Jaci Russo discusses earning your brand by understanding prospects, focusing on quality over quantity, and speaking in their terms. She emphasizes answering 'What can you do for ME?' and tailoring solutions for deeper connections in digital agencies.

Did you know time is the most valuable resource for clients? How are you helping clients maximize their time with your services? The relationship between agency responsiveness and revenue is something more agencies should be looking at closely and something that will surely give you a competitive advantage. No matter how good you are at what you do, clients are noticing the time you take to do it. They no longer tolerate months of no communication to then arise with a magical strategy. They want to know what’s going on and how long you’ll take to deliver results. In fact, they’re even willing to pay more for speed. Tune in to hear from an expert on how you can use time and responsiveness to your advantage without making big changes to your process. Jay Baer is an author and business growth and marketing expert with over 30 years of experience in the field. He’s written seven business books and owned a series of agencies for most of his career 30 years. Currently, he’s “sans agency” as he just sold his global consulting firm 18 months ago. Jay shares his insights on how to create a competitive advantage for your agency. To this end, he emphasizes the need to adapt to changes in customer behavior by focusing on the importance of time and responsiveness in capturing customer loyalty and generating revenue. In this episode, we’ll discuss: Prioritizing responsiveness when working with clients. Agency responsiveness as a distinct competitive advantage. A small change to make a great difference: Response without answers. Closing the uncertainty gap. Subscribe Apple | Spotify | iHeart Radio Sponsors and Resources E2M Solutions: Today's episode of the Smart Agency Masterclass is sponsored by E2M Solutions, a web design, and development agency that has provided white-label services for the past 10 years to agencies all over the world. Check out e2msolutions.com/smartagency and get 10% off for the first three months of service.   Other Smart Agency interviews with Jay Baer: Converting More Clients by Helping Rather than Selling Talk Triggers that Get Clients Knocking on Your Door Are Agencies Conscious of How They Spend Clients' Time? Jay has gotten into the habit of writing new books and frameworks every three years, which is the time it takes for customer behavior to change. Clients’ needs and competitive advantages will change every couple of years and it’s important to keep this in mind to stay ahead of the competition. His more recent research revolves around our relationship with time and how it’s changed after the pandemic. “I think time is actually the only resource on this planet that we actually share equally,” Jay explains. The pandemic was a harsh reminder that nothing is guaranteed and tomorrow is not promised. We have become more conscious of how we spend our time, which has led to various trends in business and personal life. After conducting extensive research on the relationship between responsiveness and revenue, Jay found that, surprisingly, two-thirds of customers now consider speed as important as price when making purchasing decisions. Causing customers to waste time can lead to financial losses. His research findings resonate with agency owners, who often find themselves in a dilemma. As customers, they desire immediate responses and efficient service. However, do they prioritize responsiveness when working with their own clients? Agency Responsiveness as a Way to Get a Distinctive Competitive Advantage  Based on these findings, agencies should be using responsiveness as a distinct competitive advantage in business. Basically, with current expectations in customer service, the fastest business will win. Of course, you can also be TOO fast and lose customers’ trust in the process. This is commonly seen with chatbots, where an immediate response is seen as indicative of not dealing with a person who can answer your question. In his book, Jay clarifies business owners should be looking for “the right now”, which takes a clear understanding of an agency’s performance. He recommends implementing a Got it audit, by answering how long does it take your clients to get a response? To get an invoice? To get a report? Basically to get any of the services your agency offers. It may seem like a basic question, but all too often agencies can’t answer it. Only by knowing this can agencies identify areas of improvement and make informed decisions to enhance their operations. After all, the perfect amount of time will always be just a little bit faster than the clients expect. Teaching Agency Teams to 'Respond Without Answers' According to Jay, every agency team should be trained to “respond without answers”. Basically, it’ll happen from time to time that clients ask a question for which you don’t have an immediate answer, so you set out to look for that answer and respond once you have it. However, what happens while you’re looking for that answer? The person who asked the question has no information and they’re freaking out. Instead, by acknowledging their client inquiry and informing them that their question is being addressed, you can alleviate client concerns and build trust. This small gesture completely changes their experience and helps manage client expectations. Furthermore, it can also buy you more time now that the client knows you’re on it. Not only will it help you run your agency better, but improving your responsiveness efforts can have a huge impact on all your relationships. How to Close the Uncertainty Gap with Clients We live in an era where we interpret speed as caring and responsiveness as respect. As consumers, we take notice of a company’s responsiveness before any money is exchanged. If there’s no respect before a deal is made, there won’t be respect after. Jay sees this as "Closing the Uncertainty Gap". Many agencies’ tendency to make a deal and then disappear for three months while they build a strategy creates an uncertainty gap; Jay defines this gap as “the difference between what you know about what’s going on and what the client knows”. Clients hate waiting and hate not knowing what’s going on. Technology has transformed the way we receive services, providing us with real-time updates and information. Hence, long periods of nothing while the agency works on a strategy is just not acceptable anymore. Agencies tend to fall behind in this aspect as they cling to opacity believing that clients will appreciate their "secret sauce." This is categorically wrong. Close the uncertainty gap whenever possible by creating a visual map that will inform your client of at least the main steps of your process so they understand what’s going to happen and everyone’s on the same page. Do You Turn Down Rush Jobs? You Shouldn't In his research, Jay was surprised to find that, not only do clients appreciate speed as much as pricing, a lot of them are willing to pay up to 50% to avoid waiting. In light of this, he urges agencies to reconsider their processes. Most agencies work with a “first come first served” order. But what if for whatever reason needs instantaneous service? “Don’t turn down the rush,” Jay advises. It’s a great opportunity. Agencies willing to be flexible and willing to accommodate rush jobs can charge a premium for it. This way, you can cater to clients' needs and preferences while also maximizing your revenue. You’ll be surprised at how many clients are willing to pay for it. Now what happens with the client who was next in line and gets bumped back? Offer a 5% discount for those 3 or 4 days of delay in delivering their project. Everyone will be happy and you’ll make 15% more just for reorganizing your project plan. Do You Want to Transform Your Agency from a Liability to an Asset? If you want to be around amazing agency owners who can see what you may not be able to see and help you grow your agency, go to Agency Mastery 360.  Our agency growth program helps you take a 360-degree view of your agency and gain mastery of the 3 pillar systems (attract, convert, scale) so you can create predictability, wealth, and freedom.

Offering a unique customer service experience is a sure way to stand out from all the competition out there. With people focusing so heavily on technology and automation, customers are many times left to fend for themselves when a problem arises. When it comes to urgent matters, they crave having a human to reach out to and have experienced guidance to solve their problem. Today's guest realized this need and has worked to build an agency with a 'Yes' mentality. For him, being a service company comes first and is one of the top reasons why clients choose his agency. Tune in to learn why his vision was to offer that yes mentality and customer-centric approach. Jeff Hastedt is the managing director and co-founder of Brkthru, a service company that helps companies harness the selling power of digital advertising. They focus on providing immediate assistance and handling media execution for brands and agencies. Most notably, they believe in “starting with a yes" and accommodating any size campaign, last-minute needs, fixed budgets, unique audiences, and tough challenges. In this episode, we’ll discuss: Building a service company with a yes mentality. The importance of centering relationships in sales. How his staff training became an important element of company culture.   Subscribe Apple | Spotify | iHeart Radio Sponsors and Resources Gusto: Running payroll and benefits is hard. Especially when you’re a small business. Gusto is a tool that helps make payroll, benefits, and HR easy for small businesses. You no longer have to be a big company to get great technology, great benefits, and great service to take care of your team. For a limited time, Gusto is offering a deal to Smart Agency Master Class listeners. Check out Gusto.com/agency for 3-months FREE once you run your first payroll with them. Podcast Takeover!! Get to know your Smart Agency Guest Host: Dr. Jeremy Weisz is the co-founder of Rise25, an agency that helps companies launch and run podcasts profitably. He followed Jason’s podcast and eventually joined the mastermind and has been a guest on the podcast before. Today, he’s helping Jason bring something new to the Smart Agency podcast audience by interviewing a special guest and getting a new perspective to the show.   Finding the Right Combination to Succeed in Digital Advertising Jeff’s digital experience and expertise date back all the way to 2000, working at companies like CBS, Clear Channel, and Powerheads assisting brands and leading international digital campaigns. He and his co-founder were colleagues at a previous organization and shared a dream of starting a business. Jeff’s previous attempts at entrepreneurship did not go as planned. However, he now sees he didn’t have enough experience at the time. Years later, he and his co-founder’s combined experiences and knowledge in the media and advertising industry, particularly in digital advertising, were the right combination to succeed with Brkthru. Is There a Right Time to Start Building your Agency Management Team? Six years after starting his business, the mission remains pretty much the same; being the preeminent service company in digital media and having no minimums. In fact, the latter is still one of the top reasons why clients continue to pick them. Even though Jeff fully believed in their mission, their growth has been greater than expected. In 2017, when he and his co-founder agreed to let the market decide, they couldn’t have imagined the level of growth they’d seen. But Jeff mostly attributes this success to an amazing management team that was willing to take a risk working with a startup. At the time, he wasn’t thinking about a management team. His business was barely two years old and technically he couldn’t afford one yet. However, he was presented with a wonderful opportunity to add his current COO. He decided to take the chance. Sometimes opportunities like this one will come up before you think you’re ready. It won’t always happen at “the right time”. However, if it’s worth the risk, it may be something you’re very glad you took on when you had the chance. Benefits of being a Digital Agency with a ‘Yes’ Mentality In an industry enamoured with technology, Jeff's agency Brkthru defiantly declares itself service-first. He knows automation leaves clients craving human connection when challenges strike. So he staffed support with savvy experts, not chatbots. Real people solve real problems in real time. Jeff built Brkthru around "yes" - embracing each client's unique needs and budgets. While other agencies balk at last-minute requests or limited funds, they are willing to work with clients regardless of the size of their campaign or budget. They understand businesses may have unique needs and are willing to take on last-minute needs, work with fixed budgets, target unique audiences, and tackle tough challenges head-on. Being flexible and adaptable has allowed them to offer the necessary support and solutions to overcome obstacles. This is why it’s so important for Jeff to center his entire business model on the service element. The Customer-Centric Approach to Building Successful Relationships in Sales Before starting his business, Jeff was laid off in 2009 during the economic crisis. He had to take on different jobs while trying to keep his entrepreneurial dream alive, including a job as a violin salesman, an unusual turn for someone who’d never played this instrument. Despite this, he became the number 1 salesperson in that industry. His formula for success? It all starts with relationships. Jeff knows genuine connections precede sales, even in transactional roles. Too many reps see clients as data points, prioritizing efficiency over empathy. But leads longing to be heard offer precious clues when we listen first. Many people miss the opportunity to understand clients’ needs, interests, and backgrounds and just go straight to pitch mode. It can be hard to convince some people of the importance of the human element, especially with so much talk about technology replacing everyone. However, taking the time to understand client’s needs and interests can greatly contribute to building successful relationships in sales. Even if it takes more than one call to build a rapport, it’ll be worth it. In the end, if clients don’t trust you, you’re doomed. An In-Person Staff Training for a Remote Agency  In their beginnings, Jeff and his co-founder were on every client call and email. As they grew though, it was time to create a glossary for new hires to follow to break through to clients. This is how their training program Brkthru U was born and it’s since evolved into an online and offline training program for staff. People usually attend thinking they're going to gain a lot of product knowledge. “There’s a time and place for that,” Jeff says. But this training is solely about being better communicators. It’s a week-long training that Jeff chooses to do mostly in person, even if they are a remote company. For Jeff, it’s about going beyond work-related discussions and activities. They encourage employees to have dinner with their colleagues and engage in conversations about various topics, whether it be sports, stocks, or pop culture. This time spent together in a non-work setting allows colleagues to get to know each other better and strengthens their relationships. Culture Is Built On Traditions Other than Brkthru U, other traditions with a significant impact on their company are Pizza Friday and Coffee Break Trivia. Pizza Friday started as a simple idea to bring employees together and create excitement around a shared experience. Many employees were posting pictures of their pizzas on Instagram, which showed how much they enjoyed this tradition. Over time, it became ingrained in the company's culture and is now one of its longest-standing traditions. Similarly, Coffee Break Trivia was introduced during the pandemic as a way to check in on employees' well-being. Initially, it was going to be discontinued at the end of 2020, but employees were adamant that they should keep it going. These traditions may not solve all the company culture problems, but they play a significant role in fostering a positive work environment. Focusing on what employees like to do and creating opportunities for them to engage in non-work-related activities is a simple way to build a good culture. Do You Want to Transform Your Agency from a Liability to an Asset? If you want to be around amazing agency owners who can see what you may not be able to see and help you grow your agency, go to Agency Mastery 360.  Our agency growth program helps you take a 360-degree view of your agency and gain mastery of the 3 pillar systems (attract, convert, scale) so you can create predictability, wealth, and freedom.

Do you spend too much time securing new business for your agency? Are you constantly scrambling to attract new clients? You could be missing opportunities to provide more value to existing clients. It’s also time you’re not dedicating to your agency, which leaves you marketing yourself last. Pouring effort into your own marketing fills your pipeline with your perfect clients and the ability to pick and choose who you’re working with. Today’s guest saw fast growth early on with his agency until he ran into this very issue: new business from referrals was drying up and finding new leads took a lot of time and effort. What changed everything for him? Content marketing. Jon LaClare is the founder of Harvest Growth, an agency focused on video marketing and, to a lesser degree, infomercials. His team helps high-growth companies selling consumer products and services grow sales through the power of direct response. Jon shares how he went from one-off projects to a predictable recurring revenue model and some of the challenges he’s faced, like the difficulty of consistently finding new leads. He also reflects on the tendency among agency owners to prioritize their clients over marketing their own agency. In this interview, we’ll discuss: What to do after referral leads start to dry up. Transitioning from project work to ongoing campaigns. Why you have to stop marketing yourself last.   Subscribe Apple | Spotify | iHeart Radio Sponsors and Resources E2M Solutions: Today's episode of the Smart Agency Masterclass is sponsored by E2M Solutions, a web design, and development agency that has provided white-label services for the past 10 years to agencies all over the world. Check out e2msolutions.com/smartagency and get 10% off for the first three months of service. What to Do After Leads Dry Up: Challenges Following Early Success Jon always envisioned himself as the future owner of some type of business, although not necessarily an agency. Now he sees every step in his career journey always had this intent in mind. A big moment in his career was working at OxiClean. It was a phenomenal opportunity and a great place to work until it was eventually sold. At first, Jon figured it was time to look for another job. He realized, however, this was a perfect opportunity to start his own business. It took him some time to finally figure out what he wanted to do and, in a way, he feels he lucked into the agency business. Growth came fast in the early years thanks to a handy list of contacts made during his time at OxiClean. However, at some point, those leads started to dry up and businesses slowed. This was the first big obstacle he found as an agency owner, as he admits he didn’t realize the time and effort it would take to bring in new leads. Pivoting from Charging by Projects to Ongoing Campaigns Jon’s agency used to heavily rely on video production projects for revenue, which was great when times were good and very difficult when they weren’t. The ups and downs made it ultimately not sustainable in the long run. He spent a significant amount of time and effort getting projects in the door but fell behind on his agency’s marketing and sales efforts as he focused on delivering good work for clients. This would lead to drought spells where he and his team would have to scramble to find new projects. This reactive business model wasn't sustainable. So they pivoted from one-off projects to ongoing campaigns, becoming a long-term partner maximizing value over time. Instead of just delivering a one-off TV spot or infomercial, they started focusing on how they could help their clients launch and grow their products over time. This shift allowed them to not only provide ongoing value to their clients but also stabilize their revenue stream. They started small as they found their niche, slowly raising prices as expertise and confidence grew. Jon learned that sometimes the time and energy spent on finding and selling new clients is time you lose on existing clients. This may lead to missing out on opportunities to provide more value. By stretching out the revenue of their clients over time, the agency was able to alleviate some of the pressure and focus on being more strategic and creative. Embrace Content Marketing and Stop Marketing Yourself Last Jon wishes he'd embraced content marketing sooner. Now he cultivates posts showcasing expertise for ideal clients. However, he stresses the importance of choosing formats that play to your strengths. Look for something that resonates with your audience and showcases your agency's expertise. In his case, it was launching a podcast where he interviews business owners, inventors, and entrepreneurs. It’s a form of content that aligns with his strengths and allows him to share his knowledge and expertise in a way that resonates with their audience. He struggled with writing blogs in the past and found it time-consuming and challenging. However, finding a content format that fits his skill set helped him be more consistent with creating valuable content. Are You Using Video in Your Marketing Strategy? Video works well and the science of video marketing is very similar today as it was 20-30 years ago. The look and feel are very different, of course. But if you're thinking about using video for your business, the core is still about communicating the benefits, not just the features of the business or agency. It’s all about getting credibility and, for Jon, applying what he preaches to clients. He recommends getting clients to do testimonials, which are an incredibly powerful tool to demonstrate success. Furthermore, remember to have a call to action and a compelling offer in everything you do in terms of marketing material. But those same scientific approaches, apply today, even for an agency video. So if you’re looking to use video to boost revenue, Jon recommends following that same structure. Do You Want to Transform Your Agency from a Liability to an Asset? If you want to be around amazing agency owners who can see what you may not be able to see and help you grow your agency, go to Agency Mastery 360.  Our agency growth program helps you take a 360-degree view of your agency and gain mastery of the 3 pillar systems (attract, convert, scale) so you can create predictability, wealth, and freedom.

Have you made hiring mistakes that affected your agency's growth? How long did it take you to course correct before it was too late? Wrong hires can become a cancer inside your agency that leaves you exhausted and overworked. Today’s guest started her agency as a very small operation and turned to friends when it came to hiring. However, she soon realized that friendships don’t always translate to the best work relationships. She was micromanaging, losing money, and losing confidence in her ability as a leader. In a bold move, she took control of the situation by shutting down her agency at the end of the year. She decided to create new rules, enforce them, and see who really remained after the agency’s direction was made clear. Tune in to learn she saved her agency, gained confidence as a leader, and built the team she needed. Danielle Reid is the owner of DR and Associates, a creative agency specializing in communications, diversity, and multicultural marketing. They do brand and project development, and growth campaigns for start-ups and helps all size business and achieve results through strategies that connect while using innovation and expertise. In this episode, we’ll discuss: Rapid growth and getting to 7-figures in four years. Why you should always ask for a budget. Pulling the brakes to correct hiring mistakes.   Subscribe Apple | Spotify | iHeart Radio Sponsors and Resources Gusto: Running payroll and benefits is hard. Especially when you’re a small business. Gusto is a tool that helps make payroll, benefits, and HR easy for small businesses. You no longer have to be a big company to get great technology, great benefits, and great service to take care of your team. For a limited time, Gusto is offering a deal to Smart Agency Master Class listeners. Check out Gusto.com/agency for 3-months FREE once you run your first payroll with them.   The Biggest Challenge with Getting to 7-Figures in Four Year Danielle worked for a Big 6 agency as a senior manager for a long time and loved being the person pulled into projects that needed saving. However, she craved new challenges and eventually got bored. She left agency life to work for the Navy, a new and exciting challenge that validated her leadership talents. She realized she was the expert in the room, which fueled her motivation to one day own her own agency. After a brief stint at a corporate job she realized it was the right time to become a business owner, so she started her agency, DR & Associates. Looking back, the growth they’ve seen since 2019 has been amazing, hitting over 7 figures in just four years. However, despite the rapid rise, pricing was the first big obstacle she struggled with. Agency owners often see low pricing as a strategy to get started and build a client list. Like many before her, Danielle wasn’t thinking about her profit margin. She figured she’d just charge low prices to have a competitive advantage. How did she measure success? It was all about making an impact on companies she believed in. Many businesses couldn’t afford a $25,000 retainer but had great potential for growth. This approach is often driven by a desire to attract clients and gain experience in the field. However there are risks associated with low pricing. It’s important to consider the implications of this strategy and its long-term effects on the agency's growth and profitability. A Crucial Turnaround: Why You Should Always Ask for The Budget The first moment that represented a crucial turnaround for Danielle was her first 6-figure contract. A non-profit client needed help with social media strategy and ended up hiring her agency. She was stunned to find their budget was $180,000 but was glad to have asked for a budget beforehand. This contract dwarfed her previous record of  $4,000 so it was a huge step in the right direction. This enormous deal affirmed her value while fueling accelerated growth. Still, Danielle doesn't apply a one-size markup. Especially with budget-limited nonprofits, proposals embody custom assessments of needs, goals, and ability to pay. Her agency balances mission and margins through context-based pricing. Pulling the Brakes to Correct Past Hiring Mistakes As she went through expenses at the end of last year, Danielle had the dreadful realization that she had been scammed by some employees, considering how much they cost and how little value they provided in return. This brought about a moment of radical changes, as she fired some of her team last December to figure out how to move forward in 2023. We've all been warned about the difficulties of hiring friends. In her experience, these friends turned out to be less productive than expected. Unfortunately, it came to a point where Danielle had to babysit her employees, having to do more direction of everyone else’s duties than her own work. So she put certain parameters up, knowing these employees wouldn’t choose to return after the rules were enforced. It was a tough lesson but it had to be done, especially considering how much money she’d lost while still having to do the work herself. She had to realize that not everybody would enter a working relationship with a friend and know how to separate the boss from the friend. Having employees who are unwilling to follow your lead will leave you exhausted and unhappy. Your agency will need direction to truly succeed and if you’re being unclear about that direction or have a team who refuses to follow it, you won’t get to where you want to be. Since this experience, Danielle has taken full control of her leadership and reassessed her hiring decisions to prioritize the agency’s overall direction and the impact she wants to make. Embrace the Benefits of Collaboration Danielle encourages agency owners to not be afraid of collaboration. We often miss out on good opportunities that could help elevate and grow our businesses to new levels. Given the chance, the right collaboration could help take your agency to a Big 6 level. However, the competition mentality ruins those chances, as every opportunity for collaboration is also seen as competition. This is an example of thinking too small and failing to see the power of collaboration to further build your brand. Do You Want to Transform Your Agency from a Liability to an Asset? If you want to be around amazing agency owners who can see what you may not be able to see and help you grow your agency, go to Agency Mastery 360.  Our agency growth program helps you take a 360-degree view of your agency and gain mastery of the 3 pillar systems (attract, convert, scale) so you can create predictability, wealth, and freedom.

Have you nailed down your agency's ideal niche? Are you attracting clients that ignite your agency's growth? Could you be standing in the way of your ability to raise agency prices? After years as a generalist agency, today’s guest decided to turn his business into a dual agency launching a niche firm alongside his broad shop. This calculated risk revealed his true north while preserving the existing revenue streams. Now their work inside the niche outpaces the generalist division of the agency. He talks about the decision to create two agencies and his revelation to let go of limiting thinking in order to raise prices. Matt Banker is the owner of Banker Creative, a business he calls a dual agency since it has two different brands under one agency. Matt shares his experience running two brands, Banker Creative and Benchmark Growth, which specialize in web design and marketing for accounting firms, respectively. He discusses the benefits of having a niche focus and the importance of building processes to delegate tasks to his team. Tune in to learn from his insights and strategies for growing and scaling an agency. In this episode, we'll discuss: Shedding your limiting mindset in order to raise agency prices. Building a dual agency to explore the ideal niche. Who is the first hire you should make as a new agency?   Subscribe Apple | Spotify | iHeart Radio Sponsors and Resources E2M Solutions: Today's episode of the Smart Agency Masterclass is sponsored by E2M Solutions, a web design, and development agency that has provided white-label services for the past 10 years to agencies all over the world. Check out e2msolutions.com/smartagency and get 10% off for the first three months of service.   What is the First Hire You Should Make as a New Agency?  Matt's career began in consulting, but he craved solving business challenges hands-on. He moved to an agency, seeking a consultative versus task-driven role. However, it wasn’t the greatest experience. Ready to merge his design and storytelling skills on his terms, Matt built a web design shop. In the early days, Matt advertised his services on Craigslist and charged around $1,500 for his first websites. He quickly realized the need to hire additional help to handle the growing workload and started with a part-time designer. It was an area he knew well enough that he could hand it off to someone else and still manage that process. If he could do it over again, Matt would hire an operations manager sooner. However, he fell into the trap of hiring help to support him in whatever projects he was taking on. As the agency continued to grow, he made a crucial shift in his mindset and focused on building out processes and handing off tasks to his team. Once he stepped back and trusted his team, he started to have the freedom to focus on sales and business development. Initially, delegating proved difficult. Matt's hands-on interest complicated empowering his team. But as momentum grew, he realized it was time to “become more boring as a company” and create efficient systems and workflows. Structure and trust paved the path to scale. How to Stop a Limiting Mindset and Raise Agency Prices Looking back on that initial $1,500 fee, Matt sees what held him back from raising prices sooner was just his own mindset. To him, running an agency is 30% being good at the thing you're selling. The other 70% is learning things you didn't think you needed to know and dealing with self-worth issues. You start to doubt yourself when asking: How much do I deserve to make for this project? Those are limiting factors. Your agency will only grow to the level that you as the owner, are at, so you need to always find ways to keep leveling up. With time, Matt realized he and his team were gaining more knowledge and providing amazing value to their clients. If they were to charge based on performance, they could definitely get paid more. He raised his prices and soon realized in most cases he was more price-sensitive than his clients. They had no trouble paying what his agency was worth and he was the one standing in his own way. Currently, he puts his pricing on his website as a form of self-accountability. To him, having the price out there means making one decision in advance instead of making it on every single call. This, however, could deter bigger clients from working with him, as they could be expecting to pay much more than is announced on his website and assume his agency lacks the experience they want. Building a Dual Agency to Explore Their Ideal Niche Matt's agency has since expanded to include two brands. Banker Creative, specializes in web design using the StoryBrand framework, and Benchmark Growth focuses on marketing for accounting firms. The decision to niche down and target accounting firms was a strategic one, influenced in part by the agency's name, "Banker Creative." While they have worked with banks and other financial professionals, they found that accountants are the ideal niche for their services. The first five years after creating the agency Matt had no clear idea of exactly what they did. That was a big part of why they ended up splitting into two different brands. They wanted to niche down and offer more marketing services but realized they couldn't build a repeatable system for an unlimited number of businesses. On the other hand, they knew they could run website projects for any type of business. As a result, they decided to build a system for one type of business, accounting firms. Then they split the company to focus on one client type while still not turning off the faucet on the website work. At the time, this is what was paying the bills. In just two years, it was the other way around. Now most of their business is coming through the accounting firm niche. With a defined niche, Matt can now refer clients who aren't a good fit to other people. He has found that the willingness and the ability to refer work away is freeing because it allows him to be picky with clients. Furthermore, it builds a good referral network for his agency. The Who Framework to Find Your Audience and Build Scalability Building systems for scalability is a crucial aspect of growing a business. As the owner, Matt initially found himself involved in every aspect of the business. However, he recognized that in order to grow and scale, he needed to let go and trust his team to handle these responsibilities. By doing so, he was able to focus on the parts of the business that he truly enjoyed and that gave him energy. There are certain aspects of the business that agency owners won’t necessarily want to delegate and that’s okay. The end goal is to be able to pick and choose the things that you want to do. However, you have to build a business where you don’t HAVE to do it, just choose to. In this sense, Jason recommends leveling up by answering 3 important questions of WHO: Who do you want to go after? Who do you need to hire? And, who do you need to become? Once you create a framework, you’ll be able to identify your ideal team and clients much faster and create more freedom for yourself. The more you’re able to build repeatable systems, the more willing you’ll be to refer work and trust your team can handle it. Do You Want to Transform Your Agency from a Liability to an Asset? If you want to be around amazing agency owners who can see what you may not be able to see and help you grow your agency, go to Agency Mastery 360.  Our agency growth program helps you take a 360-degree view of your agency and gain mastery of the 3 pillar systems (attract, convert, scale) so you can create predictability, wealth, and freedom.

Have you struggled with turnover post-pandemic? Looking for insights on adapting and fortifying your agency? What about outsourcing strategies that enable growth? The pandemic has had a profound impact on the IT industry, with one of its major consequences being the mass exodus of employees, resulting in the loss of experienced staff members who had been with companies for 15 to 20 years. This has posed a tremendous challenge for IT companies, compelling them to adapt and fortify their processes. Today’s guest is an Indian entrepreneur who managed to learn and adapt to these new challenges after previous experiences surviving failure and rising again in a new niche. Tune in to gain insights on scaling your agency and the benefits of outsourcing IT services. Shamit Khemka is the founder of SynapseIndia, a premier IT outsourcing company. They are a Microsoft-certified gold partner that provides software development, custom web and mobile applications with 23+ years of experience. Their focus is open-source frameworks and ecommerce. In this interview, we’ll discuss: Surviving failure and turning it into opportunity. Choosing a niche and retaining top talent in a competitive industry. Keys to effective leadership at your digital agency.   Subscribe Apple | Spotify | iHeart Radio Sponsors and Resources Agency Analytics: Tired of endless manual reporting in order to show your clients the value your agency delivers? It's time to check out AgencyAnalytics, the best automated client reporting solution for marketing agencies. Try it for FREE for 14 days when you head over to  AgencyAnalytics.com/Smart and sign up. It's time to see how life feels on the other side of manual reporting madness! Podcast Takeover!! Get to know your Smart Agency Guest Host: Dr. Jeremy Weisz is the co-founder of Rise25, an agency that helps companies launch and run podcasts profitably. He followed Jason’s podcast and eventually joined the mastermind and has been a guest on the podcast before. Today, he’s helping Jason bring something new to the Smart Agency podcast audience by interviewing a special guest and getting a new perspective to the show.   From Belly Up to Up and Running: Surviving Failure and Turning it into Opportunity Starting over after failure can be a daunting and challenging task. It requires resilience, determination, and a willingness to learn from past mistakes. However, it can also be an opportunity for growth and success. Shamit’s current company is the result of starting over after his initial venture went belly up. Despite the failure, he saw an opportunity to try again with the computers and talented programmers he had left. This gave them the opportunity to explore new possibilities and start building websites and developing software. Shamit's mindset at the time was crucial in his decision to bounce back. He was young and willing to take risks, which allowed him to see failure as a learning experience rather than a setback. He also had confidence in his technological skills, receiving continued inquiries even during the dot com downfall. This indicated there was still a demand for their services, and they could leverage their existing resources to meet that demand. However determined, starting over required a strategic approach. In this sense, Shamit attributes his focus to what he learned during his participation in the MIT program, which provided him with valuable knowledge and insights that he could apply to his business. Of course, it was not easy, but it is possible. Rising from the ashes requires a positive mindset, a willingness to learn from past mistakes, and the ability to adapt and pivot. Finding a New Niche in a Mobile App Development At the time his first company went under, most people would’ve probably just gotten a job. Instead, Shamit decided to give entrepreneurship another try. His passion for technology played a significant role in his ability to persevere. He firmly believes in his ability to create and build a successful business using his technological skills. This new endeavor started with an offering of simple website and hosting services. With time, they also started developing straightforward software, as well as developing interesting projects with US companies. Slowly but surely his agency started moving between different technology solutions, which led to working in mobile applications. First, an EO mobile application built by Shamit himself, followed by hiring a mobile application developer. To date, the mobile division has grown to a team of 35 people. Advantages of Partnering with Indian Startups Shamit links his ability to think creatively and find solutions where none existed to a unique problem-solving approach known as "Jugaad" in India. For him, Indians are born entrepreneurs in a culture Jugaad refers to finding innovative and unconventional solutions when traditional methods fall short. Many people think of Indian labor as cheap labor and shy away from working with Indian companies. In reality, the Indian value proposition goes beyond affordability. Indian professionals have excellent English language skills, both spoken and written, which sets them apart from other countries and enables effective communication and collaboration with clients from around the world. Indian companies are hugely successful in mobile development, thanks in part to the availability of talent. With a population of over a billion people, Shamit estimates India has at least a million great engineers. This immense talent pool allows Indian companies to scale their operations and take on large-scale projects. Other than that, the biggest downside for their competitive stance versus other countries like Mexico is the time zone. For Shamit, this doesn’t necessarily make things more complicated, considering the overlap between Indian and East Coast times at one point of the day and West Coast at the end of the day. This is enough of a window to have efficient communication with customers, deliver on a project, and achieve their goals. Retaining Top Talent in a Fast-Growing, Competitive Industry Recruiting and retaining top talent is a critical aspect of any successful business, and it is especially challenging in the fast-growing mobile development industry in India. Building a reputable brand and establishing trust with employees and clients is essential for attracting and retaining top talent. In his case, Shamit knew he needed to improve the agency’s hiring process, which they did after participating in a program at MIT that focused on top grading. This program introduced a more objective and process-oriented approach to recruitment, reducing subjectivity in the hiring process. Another positive influence in improving their process has been studying the best practices in the industry and other verticals. However, when it comes to retention, Shamit admits it’s been a tricky and challenging aspect. The IT industry is still in turmoil post Covid and what worked in the past seems to have no effect now, which meant it was time to get creative. At his agency, they offer loyalty leaves and loyalty bonuses, providing employees with additional time off based on their years of service. They also incentivize employees to take paid holidays and provide incentives for significant life events such as anniversaries, birthdays, and the birth of a child. These initiatives have proven successful in retaining employees and creating a positive work environment. They’ve also moved to using new tools like ChatGPT for copywriting and being overall less people-dependent. Proactive Systems, Outsourced Non-Essentials & Other Keys to Effective Leadership Shamit credits peers for leadership lessons that enabled growth. Chief among them - continuously evaluating processes, systems, and technology. Every 5 years as they expand, he reviews which processes must evolve. It was this proactivity that ensured a smooth remote transition during the pandemic. He also delegates non-core tasks through outsourcing. Why let yourself get distracted on these tasks when focus fuels success? External partners handle catering and other tangential activities. This liberates resources to deliver mobile mastery. And fun fosters engagement. Annual retreats including families strengthen bonds and morale. At work or play, Shamit's priority is a supportive culture. The whole person thrives when work has meaning and teammates feel like family. Do You Want to Transform Your Agency from a Liability to an Asset? If you want to be around amazing agency owners that can see what you may not be able to see and help you grow your agency, go to Agency Mastery 360.  Our agency growth program enables you to take a 360-degree view of your agency and gain mastery of the 3 pillar systems (attract, convert, scale) so you can create predictability, wealth, and freedom.

Are you struggling to get a handle on your agency’s growth? Have you established the right strategies for formalizing growth beyond referrals? Today’s guest grew organically for a long time but eventually saw the need to clearly define his agency’s direction and business goals. His team lacked a clear understanding of the overall direction, resulting in the constant need for guidance. He talks about the moment he knew it was time to hire an operator and how having clear processes and systems benefitted his team. He also shares how starting a podcast revived his agency, fueled their social media, and helped him become a better leader. Paris Childress is the founder and CEO of Hop Online, a performance marketing agency for SaaS companies. Having run his agency for 14 years, he’s seen many ups and downs and come out stronger. Today he shares how to identify and navigate the hard times of entrepreneurship and advice on how to overcome challenges and make informed decisions. Tune in for an inspiring conversation with a seasoned agency owner. In this episode, we’ll discuss: Becoming a manager of systems, not people. Formalizing growth with a three-fold marketing strategy. Establishing a brand and leadership through podcasting.   Subscribe Apple | Spotify | iHeart Radio | Stitcher | Radio FM Sponsors and Resources E2M Solutions: Today's episode of the Smart Agency Masterclass is sponsored by E2M Solutions, a web design, and development agency that has provided white-label services for the past 10 years to agencies all over the world. Check out e2msolutions.com/smartagency and get 10% off for the first three months of service.   Learning to Manage Systems Instead of People to Grow Beyond Referrals Paris is an accidental agency owner who rushed to create a company once he realized invoices were an important part of getting paid. At the time, he didn’t fully understand what he was creating but luckily organic growth soon followed. As time went by, Paris realized the agency was not set up to see real growth past initial referrals. The challenge now was to get the systems and the structure in place to grow his small team. It was time to move from managing people to managing systems. Basically, managing the agency was getting harder because he had to manage more and more people who didn’t always know what to do. They needed systems to fall back on. He needed to clearly define their services, implement SOPs, and figure out what they were good at. Step one was hiring an operator. As the agency’s visionary, he recognized it was time to get someone to focus on processes and execution. His agency greatly benefitted from that clarity and setting up the systems for real growth. More recently, the pandemic presented new growth opportunities as SaaS businesses were red hot during COVID-19. Now, Paris is getting ready to tackle new challenges as SaaS businesses are seeing their valuations go down. It’s definitely a tougher environment with marketing budget cuts so they’re focusing on developing their brand. Formalizing Growth with a Dedicated Team and a Partner for Outbound One of the first steps to have a more serious focus on their marketing was formalizing a growth team working on generating more leads for the agency. It includes two full-time marketers, one salesperson, and himself. With a decrease of new business coming their way, Paris made the conscious decision to dedicate agency resources to the problem. This helped them avoid downsizing. With the margins being way too low for way too long, he had been pondering that option. However, he realized it was not a marketing problem but rather a sales problem. In terms of strategy, Paris was clear he needed to develop the 3 marketing channels: inbound, outbound, and partnerships. To tackle their lack of inbound strategy, he launched a podcast, which has become his favorite part of his week. It’s still very small but it’s starting to attract the right audience. A podcast can make a huge difference in your brand even with 50 to 100 downloads per week. It’s not about building a huge audience, but rather building a relevant audience. As to the outbound piece, Paris is surprised at how well it’s worked. They’d previously tried in the past with internal teams but this year they found a qualified partner to help them on this front. The result has been a steady pipeline with pretty good leads for them. Of course, it is a longer sales cycle than inbound or referrals. Discovery calls should be approached with a much more consultative approach and guide the conversation to get them talking about their business so they can start to realize they do need help in some areas. Establishing Thought Leadership Through Podcasting Starting a podcast has helped revitalize his agency in many ways. For instance, they now get to repurpose that content. It’s fueling their social media and creating assets for salespeople. Additionally, and perhaps most importantly for Paris, it brought a lot of clarity for him as an agency owner. Since having the podcast, he has had new exciting ideas and gets to have interesting conversations with influential entrepreneurs. It has made him more focused and a better leader for his team. Paris strives to find guests he knows his audience will enjoy and benefit from. It can also be a strategy to invite people he’d like to be clients but this aspect is not a primary concern for him. He focuses on generating great conversations. In his opinion, if that person is ready to work with him they’ll come back based on that first exchange they had during the podcast. As a strategy, a podcast will take time to bear fruit. Building your brand and establishing your agency as a leader in your niche takes a lot of effort. In the end, you will have a machine that creates predictability, freedom, and wealth but it all starts with creating content that helps and using that to build the business over time. Real Growth Also Relies on Client Retention One key aspect of building a successful agency is client retention. Once you have the strategies to maintain a full pipeline, you’ll also need to work on having sound processes. Separate yourself on your processes and you’ll see the positive impact on your client churn rate. It’s not always about constantly getting new clients, maintaining those clients also requires a lot of work and will help you experience real growth. The frustration of constantly having to replace lost clients is not conducive to the growth and success of an agency. If you’re experiencing this, it may be time to think about what you can do differently in terms of service delivery and marketing. After all, bringing on two clients and losing one is better than a 1:1 win/loss ratio. Do You Want to Transform Your Agency from a Liability to an Asset? If you want to be around amazing agency owners who can see what you may not be able to see and help you grow your agency, go to Agency Mastery 360.  Our agency growth program helps you take a 360-degree view of your agency and gain mastery of the 3 pillar systems (attract, convert, scale) so you can create predictability, wealth, and freedom.

Is your agency's profitability falling short? Do you lack clarity about your real margins? Many agencies struggle to maximize performance due to a core issue - not accurately calculating gross margin. Misconceptions around margin math sabotage profits. Today’s guest specializes in increasing agency profitability by solving the single but costly problem of suboptimal agency margins. He shares how he helps agencies boost margins by correcting common errors in delivery margin calculations. Marcel Petitpas is the founder of Parakeeto, a technology-leveraged service firm, specializing in helping agencies measure and improve their performance. His firm exists to solve one problem: Agency Profitability. Marcel discusses his experience helping agencies increase their profitability and shares what many firms are getting wrong about how to calculate their delivery margin. In this episode, he'll share valuable insights and strategies for agency owners looking to boost profitability. In this episode, we’ll discuss: Calculate gross income and delivery margin. 3 Ways to increase agency profitability. Specialization is the key to improving profitability. Subscribe Apple | Spotify | iHeart Radio Sponsors and Resources Agency Analytics: Tired of endless manual reporting in order to show your clients the value your agency delivers? It's time to check out AgencyAnalytics, the best-automated client reporting solution for marketing agencies. Try it for FREE for 14 days when you head over to  AgencyAnalytics.com/Smart and sign up. It's time to see how life feels on the other side of manual reporting madness!   Before pandemic-fueled virtual tours, Marcel built 3D home models in a glacial 2015 market. With houses languishing for years, his niche hobby lacked scale potential. So he pivoted into software, soon meeting an agency owner drowning in spreadsheet tedium. This agency owner spent up to two precious days a week answering questions about his business like Can we take on more clients? Do we need more staff? Who's performing and who's perishing? There had to be a better way to operate and strategize. In that moment of shared pain, Marcel's purpose sparked - a business focused on solving that problem and making it easier for small businesses to answer those questions. And so Parakeeto was born, to liberate founders from manual metrics and maximize their potential. Opaque Profits: Shedding Light on Delivery Margin for Agencies The big issue Marcel sees in many agency owners is that they don’t know what their gross margin is. Personally, he prefers to call it delivery margin to prevent any confusion. You can obtain an agency's delivery margin by answering how much of every dollar that clients paid to you after fulfilling on your promise is now left to you to have a profit? Most firms can’t answer that question when looking at their financials. In most cases, they're just a few steps away from being able to answer it but don’t know how to. For Marcel, it all starts with how we measure profitability, which is a framework still stuck in the past. The growth of a firm still being predicated today is getting more bodies and utilizing them to grow. However, this is not necessarily how it works in a modern context. A lot of companies are doing at least some amount of flat-rate or value-based pricing so they don’t actually know how much money they make spending a certain amount of time on a client. As a result, the basis for their profitability is opaque and they're unsure how to do better. How to Calculate Your Agency's Gross Income and Delivery Margin According to Marcel, calculating your delivery margin shouldn't be so complicated if you've first established your revenue and pass-through expenses (which are third-party expenses the agency incurred by outsourcing work to satisfy client demand). The formula is: Revenue - Pass-through Expenses = Agency Gross Income (AGI) Once you have the Agency Gross Income (AGI), you can calculate the Delivery Cost, which is what it costs you to earn that revenue. Most of this will be your team’s time. On an agency basis, you are looking at the amount of your payroll is allocated towards delivery. On a project basis, you’d need to answer how much time you spent completing a project and the cost of that time. The formula is: AGI - Delivery Cost/AGI. Ex: If you made $1 million and spent $400K on Delivery Costs, then you have a 60% delivery margin. The challenge a lot of agencies have to really get a clear idea of their delivery margin is that in many cases they have all their payroll costs on the P&L in one bucket. In those cases, they may think they have a great gross profit, but what they’re looking at on the P&L is their gross income including delivery costs. Three Ways to Improve Agency Profitability According to those formulas, Marcel identifies three ways to increase delivery margin. You can either decrease your costs or increase the amount of revenue generated with the costs you have: Decrease costs: Do you know your average cost per hour? This is the cost of every hour the team spends on client work. You can lower it by reducing the level of judgment required for the majority of the work in a deliverable. When there are no clear processes or requirements, it often takes a senior team member to ensure a successful outcome. Having clear processes, conducting thorough intake with clients, and leveraging technology and templates will allow you to lower the total payroll you need to get the same results. Improve Average Billable Rate: This metric measures how much revenue is earned for every hour the team spends on any kind of work. It applies to businesses that bill by the hour as well as all other billing models. You can improve your average billable rate, either through pricing increases or by decreasing the time it takes to complete a deliverable. By doing this, agencies can effectively increase their revenue without needing to make any changes to their team or resources. Utilization or "The Darksaber": This strategy comes with great power but also great responsibility. Used improperly, it can cause all kinds of damage to the agency. Utilization rate measures team efficiency by looking at the percentage of a team's capacity that is being used to generate revenue at the average billable rate. It’s a metric for the management team and it should not be used to hold individual team members accountable. Calculating this metric will allow agencies to make informed decisions about strategic moves like hiring more staff. Why Specialization Is Key to Improving Your Agency's Profitability Specialization is the key to improving your profitability. Specializing and eliminating non-profitable services will help you streamline operations and allocate resources more effectively. Identify the services not generating sufficient revenue and determine whether they contribute to your agency’s overall profitability. If these services do not lead to profitable outcomes, consider eliminating them. For Marcel, instead of offering a wide range of services, agency owners should focus on providing a complete solution to a specific problem. In addition to specialization, agencies can also consider outsourcing certain tasks or partnering with other agencies that excel in areas where they may not be as proficient. Some of the most profitable agencies Marcel has audited outsource part of their work. This deliberate choice can be beneficial in terms of efficiency and profitability. In his opinion, just like the last 10 years have been about specialization in terms of what the client can see, the next 10 years are going to be about specialization inside the agency. It’ll be a time for agency owners to ask themselves, what are we good at doing? And cut the fat in terms of what they're doing operationally. Outperforming Outdated Benchmarks It’s really important to remember that no single path dictates profitability. With the right processes, even unconventional models like 4-day weeks can succeed. Explore various strategies aligned to your specific circumstances. The key to profitability is to hit at least 50% delivery margin, enabling 30% for overhead and 20% EBITDA. Adjust billable rates and utilization to reach targets based on goals, constraints, and positioning. But beware of over-reliance on benchmarks, Marcel warns. Definitional differences in billable hours or capacity distort comparisons. Instead of arbitrary standards, evaluate metrics in your context. Profitability demands knowing your specific business, not the abstract industry. Define success on your terms, for your team. Then design the path to get there. With creativity and commitment, agencies can prosper on their own terms. Do You Want to Transform Your Agency from a Liability to an Asset? If you want to be around amazing agency owners who can see what you may not be able to see and help you grow your agency, go to Agency Mastery 360.  Our agency growth program enables you to take a 360-degree view of your agency and gain mastery of the 3 pillar systems (attract, convert, scale) so you can create predictability, wealth, and freedom.