Have you ever wondered what goes on behind the scenes of a seven-figure agency?  The staff and team pulling the levers and the organizational structure and strategies driving growth?

I know when I first started out as a freelancer back in 2013, there was virtually nothing online about the topic. I had to figure everything out for my own and this meant I made some pretty epic and expensive blunders along the way.  Was I meant to hire before cash flow could sustain it or wait till I had enough clients and then hire quickly? How did the big boys land the million-dollar contracts and what sort of margins should I be working towards?

With the boom of the internet and pure online markets, it’s been a gold rush for agencies and now the opposite can be said – there is almost too much information online about how to grow this type of business that it can be overwhelming.  Not surprisingly, most of this information comes from “gurus” who have never actually built or managed agencies themselves – leading many down a costly road of misguided advice.

So for the curious who care to know what the set up of a seven-figure agency looks like,  I wanted to take a moment to share some insights that I wished I had gleamed during the formative years of my business in the hopes to help give you clarity on how to structure and grow the machine that is your business.

Some important distinctions:

• You don’t need investors or large startup capital to make this work (although disclaimer, growing business will always require an investment of either time or money, the benefit of a service-based business is that you only really need $5K-$10K to get yourself going as long as you’re willing to reinvest profits back into your business)
• You don’t need inside connections or a huge audience
• Your agency is a gateway to other ventures. For example, if you start working with eCommerce clients it will probably make sense for you to invest in your own ecom shop and use your own strengths and internal resources to grow another income stream for yourself.

Here’s what I’ cover in the below:

• The organisational structure of our agency and the team behind it…
• Core viable final products, and how these are costed…
• How leads and referrals are generated and tips to keeping clients on for longer…

At the core – growing to seven figures isn’t very complicated, it actually boils down to three key parts.  The beauty in this “keep it simple” system is that you don’t need to incur massive staff overheads, you won’t be required to micro-manage every aspect of your business and you will be able to position yourself in a way where you never have to get into process wars with other agencies again.

Overview of Eight Loop

Ok so before I dig into the juicy stuff, a quick intro of Eight Loop (my agency).  I founded the agency in 2014 and initially, I was offering all kinds of services – from social media content through blogging and email marketing and Facebook ads.  This lead to burnout and I quickly realized this wasn’t going to work so I refined our core offer towards Facebook ads.  Through the years we have changed our niche from coaches to ecom and now specialize in building out marketing systems for other agencies.

Another big mistake I made at the beginning was to fall pry to the desire of having a big team and office for the sake of having a big team and office – call i9t ego and pride.  I quickly realized this was going to make me bankrupt and – in light of the pandemic and current economic conditions – many agencies have come to appreciate that running a small and lean ship is far less stressful than having massive overheads.  This, of course, is only possible if you refine your service offer and positioning.

Our Team & Structure

We currently turn around $130K/mth in revenue and work with about 20 clients max at any one time. 

Surprisingly, we only have THREE core offers in the agency:  a done for you funnel and lead generation ad campaign management. We offer additional bolt on services such as promotional video creations and email nurture sequences but these only represent a small fraction of our revenues and some of this is outsourced externally.  We also work with brands (usually lead generation or awareness campaigns) but this is only 5% of our client base.

Although we are based in NZ – local clients only represent 2-3% of our client base.  Most of our clientele is overseas and the average lifetime value of a client is about $9,000. International clients and deals from even the most remote place on earth.  So the thought of – “my town or city is too small” is no longer a viable excuse.

We have five key team members behind the agency:  an account manager, a business developer (sales), funnel builder, media buyer, and copywriter.  As we grow of if sales are up we have trained account managers and copywriters we bring on to support as required on a client per client basis. This keeps our overheads low. 

How to Avoid Micro-Management

This is something that took me a very long time to crack! I am a perfectionist at heart and couldn’t figure out how to hand over the production of services without getting anxious over quality or needing to come in and fix everything (doubling up my workload!). It all came down to processes.

I used to hate processes and systems – “I’m a creative, the strategies I come up with are intuitive and can’t be taught” is maybe a line you’ve used yourself.

This type of thought pattern is the fastest way to burnout and bankruptcy.  You will never be able to scale your revenues if you are keeping yourself as the main person behind the production side of your service offer.  Think about it – there’s only one of you, how many clients can you realistically look after before you start to lose the plot.

The good news – processes are VERY easy to build once you refine your core offer and positioning.  And when you have solid processes in place, the scale can be achieved very rapidly without it doubling down your own workload and stress on your plate.

The Final Piece

Finally, the most important part of any business is arguably it’s the ability to generate new business.  Your leads and clients are the life-blood of your business and if you’re like most agencies out there you’re likely completely dependant on referrals or word of mouth and this is essentially stunting your ability to grow at the rate that you would like to.

After running lead generation campaigns for clients in the agency I began to realize that I too could automate my marketing.  Instead of having to attend conference after conference or have to cold call or harass people on LinkedIn I figured out a way to drive interested prospects straight into my calendar using paid ads to drive interest into an online funnel.

These would be highly qualified and vetted leads in the market for the services we offered. 

What I never expected was just how quickly and effective this strategy would be for growth. Within two months of automating the agency’s lead generation we had scaled from $10K revenues to $100K/mths. 

To this day, this continues to be our main and most reliable source of lead generation for the agency. 

Now, cracking one of these funnels isn’t as easy as it sounds – and maybe you yourself have experienced the frustration of spending thousands with little to nothing to show for it.

The key comes down to your positioning and messaging as well as the UX of your funnel and quality of the traffic you’re buying. If any one of these parts is off the whole thing is broken.

Another big issue we encounter when agencies try to run their own funnels and fail is that they are often too close to the source. When it’s your client ads and campaigns you crush it, and yet, when it’s your own it’s like nothing works. This is really common and is the same phenomenon of a writer trying to edit their own copy – they are too close to see the spelling mistakes and their brain fills in the gaps. 

RECAP

Ok, so as a recap, here are the three essential parts of a seven-figure agency:

1. Having the right team and organizational structure
2. Positioning yourself around a core offer(s) and building processes around these
3. Having a reliable and consistent way to generate leads

With these three things in place, growing to seven figures no longer becomes rocket science or luck of the draw and you’ll be able to:

• Increase your profit margins, reduce your workload, AND pay yourself more…
• Retain clients for longer and generate more testimonials and happy customers…
• No longer need to rely on word of mouth and be able to put a plan in place for growth…

If you’ve made it this far hopefully its because all of this is making sense to you and resonates.  Likewise, it’s probably because you yourself are hungry to grow your business and ready to start implementing systems that are actually proven and tested by agencies. 

Over the years, my team and I have helped over 700 agencies and freelancers implement the exact same system above by:

• Refining your core offer(s) and pricing these correctly
• Building processes to guarantee quality for each and every client (without you needing to micro-manage everything)
• Nailing your messaging and positioning
• Closing your leads and sales calls scripts & processes
• Your lead generation pipeline and automating your marketing with paid ads and funnels

All of this for less than the cost of building your own agency website!

So instead of trying to continue to trial and error everything on your own, spending thousands of recruiting the wrong staff or team members and tanking thousands on lead generation efforts get a structure and marketing system in place for your growth to take you into the future!

To find out more about the system and if it’s a good fit request your free discovery call today: https://agencyfunnels.eightloopsocial.com/form-application

Cat

Katya Sarmiento’s Ultimate Hiring Hacks

It’s happened to the best of us. We’ve all been burnt in the past by people who seem to have the right skill set. But as soon as you onboard them, they drop the ball. Whether this is your current situation, or you’re only just expanding and new to the hiring process, hiring and on-boarding a team are essential steps in the growth of your agency.

Katya Sarmiento shared with us the three most important steps in anyone’s hiring process. Starting with…

The mock test

Often, potential team members present themselves as skilled and qualified but fail to deliver when put to the test. Which is why it’s of massive importance to put them to said test before you officially on-board them.

Take a salesperson for example. For them, this could be a sales project in the form of an actual situation or task. This shouldn’t necessarily be something you can use in your business, but something that can help them too. It’s a win-win because this could potentially be something they can use in their portfolio.

Remember, you’re not paying them for this so this could easily be just a quick one-hour-or-less project.

The trial period

If they can deliver the outcome you were expecting from this project, you can start them on a trial period – to avoid anyone is “king of the castle” straight away, which sadly tends to happen when a new recruit is given too much, too fast.

In the trial period, you’ll want to establish what the working relationship looks like. Make sure they’re involved in your vision, your company’s culture, your company’s family, so that they can also understand what your expectations are and how to best deliver them.

The on-boarding process

After a 90-day trial period, they’ll need to have established their own OKR’s and KPI’s to track within the company. They need ownership over the results of something in your company, whether that’s sales, client accounts, marketing, or anything else, to ensure commitment and involvement, rather than this being “a job”. Basically, keep them incentivised. 

To recap, you’ll want to follow three clear steps:

• The mock test
• The trial period
• The on-boarding process

Follow this simple rule-of-three, and you’ve got a pretty surefire way to avoid rushed hires who lose interest after landing the job.

How Agencies Calculate Internal Hourly Rates

While I don’t recommend ever sharing your hourly rate out to clients (they are paying you for an outcome, not time and doing so runs the risk of teaching clients to price hunt), it’s important that you have an understanding of what your agency internal hourly rate is in order to build out your Service Document and price properly. Here’s a rundown on how agencies calculate internal hourly rates.

Generally speaking, the way you come about this is to use your team’s salary or fees, add overheads, and then use a profit multiplier.

Here’s how it works: 

Step #1: Find the Effective Rate of Your Implementer’s Hourly Rate

Let’s say you have a staff member on a $50,000 salary. Your staff, over the course of a year, we give you 1,600 hours of time (this is the average taking into account leave and sick days). This means, his effective rate is $31.25/hr.

Step #2: Add Overheads 

Now, of course, you and I both know that just because he’s doing the implementation work, doesn’t mean other team members or overheads are not going into the production of servicing the client.

So, on average every $1 of direct expense will carry with it $1.34 of overhead. This means that the hourly cost is $31.24 + $41.86 = $73.06/hr. But of course, you want to make a profit as well.

Step #3: Add a Profit Multiplier

Here’s where you use the multiplier. We use a multiplier of 3, other agencies use a multiplier of 2. I would recommend you stick with 3 to protect yourself.

This means that your internal hourly rate is $73.06 x 3 = $219

Once you understand your internal hourly rate, you can then break down time requirements of client deliverables and cost projects properly.  Some agencies will choose to add a 10-20% buffer to invoices in the situation of projects running over scope. Some choose to charge for this upfront and refund any amount remaining once project is completed.

Whatever approach you use it’s important to understand your own costs – without this it will become difficult to built teams and run a profitable business.

If you’d like to swipe our service document, you can do so here: https://academy.cathowell.com/sd

My palms were sweating.  I could feel the lump in my throat tighten as my fingers clenched the corners of my blouse.

Keep it cool, Cat. 

I straightened my back with the clearing of my throat and eyed his profile as he was reviewing the proposal.

I had had the front of it laminated to try and make it look as professional as possible – because, well to be honest I really didn’t know how this whole process worked but felt like that’s what the bigger agencies would do.

They’re going to ask me, I silently cringed.

I wasn’t sure how I was going to respond if they did, despite the fact that the question had been plaguing me from the moment I set up my freelancing business.

In my mind, I couldn’t understand why a business would bother spending $7K/mth on my services when – really – they could just hire someone in house for probably less than that.

He closed the proposal with a nod, “Alright, so just to confirm this would include the copy as well? ”

After clarifying the details and agreeing to a non-compete with competitor brands, we shook hands and the deal was done.

“In my mind, I couldn’t understand why a business would bother spending $7K/mth on my services when – really – they could just hire someone in house for probably less than that.”

Just like that.

If you’ve ever landed your own clients you’ll know what I mean when I say it’s one of the best rushes on this planet – a validation of all your efforts and work!

I was on cloud nine the whole rest of the day.

But – to be honest – it took me a few more years before I full understood why businesses would even bother hiring agencies when, oftentimes, the cost are much higher than trying to hire internally.

Why Don’t Businesses Just Hire Internally?

The truth is there are different motives, depending on the size of the business. And there are pros and cons for both situations. 

For large brands – you know, the Coca Cola’s of the world.  The reason they outsource to agencies is mostly due to something called Opex, which stands for operational expenditure.

These are basically funds used by a company to cover expenses such as wages, maintenance services, rent and utilities and brands.  Directors are given budgets around these and – while you may think your agency costs the brand a lot more more – many of these brands don’t have the budget bandwidths to add more staff to payroll due to Opex and CapEx (capital expenditures) restrictions.

A reminder here – as an employer myself – I have come to learn through the years that staff are actually very EXPENSIVE.  They get sick, they take time off, they need training and go on maternity leave.  A $5K/mth employee will cost a company a lot more than a $8K/mth agency – who can fulfil work year round and around the clock – will.

But surely in the long run hiring internally is a much smarter idea?

Perhaps, but let’s have a look at why smaller businesses choose to recruit agencies vs internal staff.  PS – this isn’t a scientific study with a thousand data points, it’s based of my own experience (and from working with hundreds of agencies & clients).

Firstly – most businesses have no idea what they’re doing when it comes to anything digital marketing – let alone specific marketing activities such as Facebook advertising.  The platforms and tactics are so new and ever changing that, unless you’re on top of it all the time, you get left behind.

And the reality is that in order to manage staff, you need to have a concept of what needs to happen or how to know if they’re even doing a good job.

So for most entrepreneurs and business owners – trying to become an expert in something that would just consume a lot of their time makes no sense.

They simply don’t have the knowledge to even know how/who to hire for such a role nor do they have the time/patience to try and train/manage said individual in their business.

Secondly – for most digital marketing services offered in the market – the skillset needed to complete the full picture often requires a whole range of skills.  There’s a saying in the industry of “looking for a unicorn” and it’s not far off.

Take FB marketing, for instance,  in order to be a good FB marketer one must be able to:

• Write copy
• Have an eye for creative
• Understand funnels (and potentially even build them)
• Have an analytical mind able to interpret data
• Be a strategic and adaptive thinker

So you’re needing someone that can use both their left and right brain!  Not an easy feat as most of these people are already doing their own thing!

When a startup or small business wants to grow fast and has needs for competence, tapping into an agency means they essentially get the whole package – all the skills required – in what would otherwise oftentimes require three people internally to complete.

So – plain and simple – businesses just want the headache taken off their plate and want results. And they want a solution NOW.

Pros & Cons of Hiring An Agency – Why Bother?

Pros

• Less headaches
• Faster results
• Access to bigger suite of skills
• “Round the clock” service
• Oftentimes cheaper than internal staff

Cons

• Long term, once Opex stabilised, wiser to hire internally
• As business scales, can get costly
• Human resource not “owned”

So What’s Right For You?

Every business has different needs and will require different solutions based on where they’re at.  As a general rule of thumb:

If you’re still in a start up phase – hire an agency or contractor. It’s the same premise as why you would lease vs buying a building, doesn’t make sense to put that overhead on your shoulders when you’re in a volatile and/or active growth stage of your business.

If you’re well established business that has had great results from your digital marketing activities already and are spending more than $15K/mth on an agency it may be time to start shopping for your unicorn.  Use your agency to train said person (they will obviously charge this for you) to help save you time and you can even set up a solution where the agency comes in to help our with strategic direction until your “unicorn” can get off their feet! Please note, to hire a competent Digital marketer you’re looking at roughly $70K-$120K per annum – so it’s not cheap either!

How to Find Your Own Agency/Contractor or In-House Employee

If you would like to get matched with a FB Marketer or Agency Partner use the form below.  We will match you with up to three suitable candidates based on your needs (no cost to you), please allow up to 5 working days.

Find Your Unicorn, Agency, or Contractor:  https://goo.gl/forms/3JHwdaW2Jd5iml1H2

If you’re working with clients, chances are at some stage or another you’ll want to be able to leverage their customer testimonials or influencer marketing efforts.

In the past – businesses would ask influencers to post to their pages and then get access to the ad account via Business manager (making things really messy and FB wasn’t a fan)… and then Facebook rolled out the Branded Content tool!

Using this tool, businesses can gain real insights into the organic reach metrics of a post, share the post to their page, and put ad spend behind it (and retarget a custom audience of those that watched from ad spend).

I scoured the web for hours on instructions on how to use Facebook’s branded content tool but to no avail so wanted to put something together for you guys.

Here’s how it works.

Step #1:

The content creator will need to have access to the Branded Content tool. If they don’t they can apply using this link (Facebook will normally approve within an hour: https://www.facebook.com/help/contact/1865970047013799)

Step #2:

The content creator should then go ahead and create their post as they normally would on their Page – except now, they’ll see a little handshake icon at the bottom.  If they select this they’ll then be able to tag your page or your client’s page into the post (will show up at “With – [Page Name]).

Step #3:

The Page that was tagged will receive a notification and can approve the tag.  You can also access any tagged branded content posts from your Page’s Insight tab (left hand column > Branded Content).

To run the post in an ad – at the ad level of your campaign select “Use Existing Post” > you will then see a brand new option called “Branded Content” and you approved post will show up here.

And that’s it – super simple yet super effective!

Facebook announced a feature – Facebook Appointments that allows leads and prospects to request appointments using the native Messenger platform – Facebook appointments 2 years ago, there are new things of it that works to optimize your Facebook lead gen in 2020. 

Currently, there are some limitations to the feature – such as the inability for the customer do just directly book in and confirm appointments, but one of the big drawcards (and a reason why this feature, once fleshed out a bit more, will be HUGE in the lead gen space) is the push notification reminders sent to customers from Facebook by using Facebook Appointments.

So let’s have a look at how to set Facebook Appointments all up:

STEP #1: Go to your Facebook Page

Click on the button bottom right on your cover photo and select ‘Edit”.

STEP #2: Click “Book With You” and then select “Book Now” – click “Next”

STEP #3: Select “Appointments on Facebook”

Note: you can actually choose to have your button redirect straight to your third party booking page (such as ScheduleOnce) by punching in the URL.  You can also choose to use integrated third-party tools (like MyTime) – the drawback here is that these won’t have the native push notification reminders due to the limit of Facebook Appointments.

STEP #4: Create a Service

You can add in the price of the service although payment won’t be able to be made at this stage via Facebook. Click “Finish” once you’ve added in the services.

IDEA:  Working with realtors?  Why not show all their active listings as separate services, that way when someone books in they can choose the listing they’d like to view.

How it Works

Once you’ve set up your Book Now button you can create a post to promote the new feature and invite your fans to book through Facebook Appointments in some time.  You can also run some ads to this post (just pull the post ID) – so, for example, if you wanted to retarget people in your funnel with the post you could.

Once someone clicks on Book Now it triggers a Messenger appointment request.  They advise you on their free time and once they send this off, you will receive a message or the request.  You then need to confirm the appointment (and you can add in phone numbers in the confirmation text box here).

Syncing Your Calendar

You can view all your Appointments by clicking on the top tab “Appointments”

If you go under your Page settings, you will also see “Calendar” on the left had column.  You can sync your Google calendar here so that when appointments are made they go straight into your calendar.

Want more?

For more live weekly training – check out adhacks.cathowell.com