When it comes to clients and your profitability, you can’t simply raise your prices all the time. Some people have small businesses with limited budgets and yet still require services. They still need agencies… So, today we’re talking to Zach Rego, VP of Sales and Marketing at Unstack.com about how best to deliver for Small Budget Clients while also running a profitable business for yourself.
About Zach Rego:
Prior to becoming VP of Sales and Marketing at Unstack, Zach was a General Manager at search marketing company WordStream. In short, he’s helped thousands of agencies to improve their business and services for a vast array of clients, both big and small.
When he’s not working, Zach is either golfing or heading to car shows. Soon – he’ll be hanging out with his new baby!
Points of Interest…
- How Unstack helps agency’s accommodate small budget clients 1:46
- Overcoming Misconception of Small Budgets = Small Profits 4:47
- Utilizing Your Ecosystem of Tools for Small Budgets 7:08
- Using SaaS to Bolster SMB’s with Small Budgets 16:33
How Unstack Helps Agency’s With Small Budget Clients
After the usual bants regarding my comparatively abundant enthusiasm levels, we settle down to discuss Unstack‘s raison d’etre – to enable founders and marketers with the necessary tools to scale.
“SasS businesses and startups are nimble. So, we’re trying to build something that makes it really easy for founders, marketers agencies to build, measure and scale digital businesses.”
As the intro suggests, Zach has A LOT of experience in the small business agency space, thanks in part to his time at WordStream. So, what are the more viable options to merely “raising your prices”, while working within the expected constraints of servicing smaller businesses, with smaller budgets, higher anxiety levels, and making it work?
“They’re needy, right?! They got small budgets, they got big dreams and they’re going to come to you and ask for whatever that next great shiny thing is! You should say ‘YES’, but you need the systems in place. You need to understand the hours it will take for me to do it? Who has the skill set to do this? And what resources am I going to dedicate to it?”
This is where SasS products can help lighten the load while optimizing efficiency. You don’t have to replace your entire workforce; merely start looking at adding new services, or ascending into new offers for your client base. We delve into this at the 4:01 minute mark.
Overcoming Misconception of Small Budgets = Small Profits
There’s a misconception in the industry that small budgets mean small profits… that’s not necessarily true. So, the natural question to ask Zach is ‘Where do you think that belief comes from?’ And ‘How do we overcome that if we’re in a position where a lot of potential and existing customers happen to have those small budgets?’
“Tracking your team’s efficiency and knowing where they can be super-efficient, allows you to offer services that are easily scalable.”
In short; you need to hone in on situations where you can mirror work, add another service, thus generating a value-add for your client. It’s a lot simpler than it sounds and Zach expands on the potential of adding profitability to PPC around the 5:19 minute mark.
Another scenario you should consider is acquisition costs. If you are an agency and gleaned a lead either through a referral or through any of your other channels, you’ve already paid to acquire that lead – find a way to maximize it.
Additionally, you need to build your service offering around highly leveraged services. Therefore, seize opportunities to utilize a piece of software, or platforms, or templates – or a very specific scope of work/productized services – to bake the profitability into your specific service.
You can solve big problems for your small budget clients without actually having to do a large swathe of work to get there.
Utilizing Your Ecosystem of Tools for Small Budgets
This brings us neatly to building a form of downmarket service offering either around, or on top of, existing software solutions. How can you make that really scalable and profitable? According to Zach, it boils down to three things – starting at the top of your funnel.
- Acquiring leads with a low CAC can be incredibly impactful
A lot of SasS partner programs and software partner programs have referral programs for agency partners. Obviously, try to become a part of that, and build a partner program for your clients.
- Referrals are crucial
If someone was referred to you, not only are they more likely to sign up, but they’re less likely to leave. Therefore, it’s really important to acquire your leads from a solid source to minimize churn.
- Systems make you money
Define the services that have systems (either in place or easily implemented) to optimize the efficiency and profitability for you.
“It could be a low-cost service, but allows you to ascend into other offers. So, you basically build your value prop on something that you might not be making a lot of money on and can be a loss leader, but allows you to go and add two, three, four services over the course of four to six months.”
For example; if you look at a lot of e-commerce businesses, their first transaction typically results in either breaking even, or even losing money… The upside? You now have this customer on your mailing list. Hopefully, you’ll build some brand equity, plus loyalty, resulting in a purchase. You should be thinking about your agency services in this way.
What’s the best way to go about cementing that relationship? Well, for starters, make sure your potential SMB client’s shop window is on the right track; there is literally no point in them investing in PPC if their website is an html horror show. Throughout his career, Zach has endured a recurring conversation with clients, which goes a little like this…
“I can tell you, right now, I’m going to charge you five grand to send traffic to this site. But people aren’t buying; you have no forms, your phone number is not highlighted appropriately, you don’t have click-to-call… We can help and get you some business, but you’re not maximizing your budget.”
As an agency owner, how are you going to help them? Say you can help them to drive traffic – but only if they let you update their website/systems with the requirements to engage customers.
Often, what the client believes they need to solve their problem is not actually the problem at all. It’s down to you to look at things more impartially for them. I’ve seen this kind of stuff happen all the time; take the time to sit down to get an understanding of what they’re trying to accomplish. Then, be prepared to have a service offering designed to really own that space – making it successful in a way that’s streamlined and optimized.
Myself and Zach nerd out on SMB’s niching down via SaaS and Utilization Rates from the 13:07 minute mark.
Using SaaS to Bolster SMB’s with Small Budgets
You can build services around experts on your team that perhaps only span one area of expertise. With SMBs, however, you need to be spot on with how you manage your expert’s time. We talk a lot about systems and processes here, but there are so many amazing SasS products out there, helping you train more junior-level employees to service a market you might not be tapping into.
“At WordStream, we would not only be the systems, we would also be the training arm for a junior-level employee or an intern that just signed on as a full-time employee. We’d coach them up on PPC, on Facebook, and then we’d give them the tools to do it. Then, it’s like, ‘This agency built an entire business unit around a junior-level employee that can do Google, Bing, Facebook – hey, that’s a profitable business unit now!’ Then, you can really scale from there.”
This brings us to the people you hire. You can easily hire experts for big-budget clients, but with SMB’s, you need to be more nimble. You must be willing to supplement junior-level employees with the tools and expertise elsewhere.
Key Takeaway… Be Diligent With Your Metrics
If you’re working with small clients with small budgets, you must be very diligent about your metrics. You have to be diligent about your processes.
You have to be keeping track of these because details matter so much more when you’re dealing with SMBs.
Think about compartmentalizing activity; if you are going to go out and stretch yourself to bring in an expert in a certain space, you want to make sure that their time is solely allocated to doing the thing only they can do! Therefore, you need to foresee/identify any mechanics that can easily be outsourced to a junior resource or freelancer so you can pay your expert for your client while getting that all-important ROI.
If you are an agency that is building on top of more expensive CMS’s for larger clients, and if you’re interested in going downmarket, Unstack could be a great platform for you to set your clients up on. This would increase accessibility for them thus making it easier to build those downmarket offerings that are still going to be profitable.
Need more Zach in your life? Check out…
Did you learn anything new from this episode? Let us know in the comments below! Our next installment of #APP, on April 21st, will see us chat with Andrey Baskov. Our previous blog with Nathan Hirsch is here…
Marcel is an agency profitability optimization consultant, keynote speaker and the CEO of Parakeeto. He’s on a mission to help the average agency get the information they need to be more profitable. From sharing educational content and resources to creating tools at Parakeeto to make measuring the most important metrics easier – everything he does is aimed at making agency profitability more accessible.
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