Helping a $2.2M/Year Cold Email Agency Scale to $10M

0:00Unternehmer/Gast I run a uh uh very high volume cold email agency basically. >> Okay. >> We work with a lot of uh B2B SaaS companies that have TAMs over at least 10 million users. >> Yeah. >> Or um B2B service businesses that have LTVs over like 50 grand uh typically, right? We're good at the meeting pathway and also a PLG pathway with SaaS. >> Okay. >> Um I currently do uh 2.2 million. Um I'm pretty sure I can take it to 10 million within the next like year or so.

0:26>> Okay. >> Um primarily because um uh because I think I know what to do next based off of this weekend, even before here, a lot of stuff like that. So, if anything, it'll be interesting to just hear you criticize maybe what I think I should do. >> Okay. >> Right? Um so, we got to 2.2 by doing having like $10,000 a month retainers. >> Okay. >> What we're doing is switching to performance models at scale. >> Okay.

0:51>> Where it's like, "Hey, let me understand your LTV. We'll do a third of uh we'll charge a fee roughly equal to We'll make sure your CAC is a third >> Okay. >> Maybe that needs to be different, you know, but that's the idea. Um switch it to a 5K, so it's really easy to close cuz most people when you tell them five, it's really easy for them to hop into the funnel. They'll just go, "Yep, let's try this out." >> Mhm. >> And then we have performance set up on the back end. >> Uh-huh. >> Um the advantage is that like um >> What do you think the biggest problem's going to be?

1:18>> Uh systems that will break. I think private data and analytics to be able to actually know what probably to do for each client at that type of scale. Cuz some of our clients will send like 10 plus emails a month written with AI. One to one. >> Uh-huh. 10 plus or like 10,000? >> Uh 10 million. >> Okay. Yeah, okay, got it.

1:44Alex >> per month, yeah. >> Um So, this is so interesting. So, like the fee sounds wildly underpriced. Like you're sending 10 million emails and you're charging $10,000, that sounds absurdly low. >> Yeah, I would say um we started to get them in and we'll send 100,000 test message market fit. >> Yeah. >> The second we find the multiple um that or we go, "Cool. I know if I target SAS founders with this message, there's 800,000 of them. If I hit that list, I'll sign up 601."

2:15Uh we can crank it that way, right? So, it's almost to get them in there where we have the >> Is the biggest issue you're running out of lists? >> No. >> Okay. >> No, cuz basically it's like, "Let me email your entire town every 2 months." >> So, what else uh what else do you think is going to be the uh the biggest problem with this model? >> Um keeping clients honest potentially. >> Uh-huh. >> Um on collecting if it's based off of percentages or whatever it may be.

2:42Alex >> Yeah. >> Which is where I also think it's maybe like a systems problem in that I need to have proper integrations to their CRMs to keep them honest. Which maybe I need to acquire uh or like uh get the right developers or something like that to be able to do that better. >> Yeah. So, um >> What stands out? >> Yeah. So, the the problem that I would foresee is the one that you just brought up, which is what I was hoping you'd get to.

3:11>> Mhm. >> Um whenever you switch to performance, performance is always always the best model on paper. Not always the best model in practice. >> Mhm. >> And it's strongly predicated on the quality of the prospect. >> Yeah. >> So, if you have enterprise customers who are basically who have obligations and have assets and have to lose, >> Mhm. >> they tend to follow and adhere to their contracts. >> Mhm. >> Smaller, even sometimes medium business owners, less so. And um are you US?

3:41>> Yeah. >> Okay. Yeah. And US contracts mean basically nothing. And so, um all of these things are kind of like stacked against you. >> Mhm. >> Um and Alan was a performance-based model, so I like very much understand this business. >> Yeah. >> Um Now, we were able to do it only because I controlled the flow of payments. I got paid. >> Mhm. And then gave them >> remitted their part. So, >> Yeah.

4:06>> you always want to control the the money flow if you do performance. >> Mhm. >> Or you have to have absolute transparency. So, like you run the Shopify store. That's why Shopify agencies can do performance. A lot of email marketing for Shopify, they do they do performance percentages uh you know, using Klaviyo and whatnot. And that that model works great for them cuz the tracking's clear and most people no one's going to start a second store to try and cut you out. >> Yeah. >> Brick and mortar, guy walks in and he didn't show.

4:34Alex Guy closed for 50 grand. >> Mhm. >> How do you know? I You you set up a unfortunately, you set up an incentive system that incentivizes them to cheat you. >> Mhm. >> And if they have to cheat them or cheat you, they will cheat you. >> Mhm. >> So, I'm not a huge fan. >> Mhm. >> I would prefer to just factor in um basically scaled based on what you know the ROI is roughly to kind of like a North Star metric, which might be uh you know, for every million emails, it's this.

5:04And you might have to just do that custom up front in terms of like, okay, based on your customer, based on your avatar and your segment, >> Mhm. >> this is the rate. I'm not the biggest fan of custom pricing, but based on the model that you have, it might make sense given you probably have fewer customers that are worth more. >> Mhm. >> I'm assuming. >> Yeah. >> What's your churn? >> Um but probably uh 30% or something like that. >> Annually? >> But also I've I've changed my offer. >> Okay. >> Yeah, annually. I've changed my offer enough to where it's kind of hard to be like, what's the actual churn on the current offer, but

5:33>> Okay. Um why do you why do people leave? >> Um >> Cuz you charge nothing. >> You um Well, we used to charge 10K's flat to be like, here's how many emails we'll send, right? Most of the time when they would leave it wouldn't be because of performance and because their offer wouldn't what we weren't able to find a good offer message uh message market fit for them especially, right? >> Have you been able to separate cohort churn as in like first 3 months versus 3 months plus?

6:03Alex >> No. >> Okay. >> No. >> So, I would consider >> Mhm. >> pause it uh having a two two-part structure where you charge a one-time fee that's significantly higher up front but is zero recurring. >> Mhm. >> To do the one thing which is we're going to find message market fit. >> Mhm. >> After that, you solve that problem you say, "Hey, if you want you can go send 10 million emails a month uh with this messaging." And they'll be like, "Well, we don't know how to do that." And you're like, "Oh, that's crazy. You know, we do that if you want." And then you can say, "Let me introduce you to our other tier of pricing."

6:32>> Mhm. >> And that might be a a best-of-both-worlds model. And you will be astonished by the way at how much easier it is to sell a one-time thing versus an ongoing thing. >> Mhm. Interesting. I wonder um >> Like you can double our triple close rates from a $1,500 a month membership to a $5,000 one-time up front. You can triple close rates at triple the price. >> Mhm. Yeah, for sure. >> Which is a 9x. >> Does it Does it change your thought process at all when like uh the like monthly reoccurring we've been able to achieve with these performance models in huge TAMs? Like we're billing some clients like 75 or like 100 grand a month.

7:06>> Okay. >> All of a sudden, right? >> said you did 2 million. >> Um Yeah, because the reason I got this idea for the performance is because we got a a whale. I was like, "Holy shit." We're going to get in 100 bucks per thousand sends. >> one customer. >> Um we just closed another up-sold them into performance and we start like this month. And >> you have one customer who's doing the big the big whale that thing. >> Yeah, correct. >> trying to I'm trying to understand. >> Yeah, yeah, of course. >> Okay. So,

7:33Alex >> So, there's one there it looks promising. >> To go back to what I said earlier, if you have enterprise customers cool. >> Yeah. >> The fact that you said many cuz I'm using the data you gave me. So if you say I'm doing $2 million a year, we're charging $10,000 a month, I'm going to back back of a napkin and be like, okay, they got 20-ish customers. And if they're paying $10,000 a month and sending 10 million emails, it doesn't make any sense, but okay, let's keep going. Um beyond that, it's like, okay, well, if they've got 20 customers at that price point, they're probably low, they're SMBs. They're not They're not even mid-market. This whale is mid-market, and if you had said, "Hey, we only deal with uh businesses that are doing over 10 million in ARR, and are venture-backed, or what you know, whatever whatever the the the criteria are, then I would say I have high confidence that one they can pay and two that they even track, then I would have much higher confidence in saying, "Yeah, go for it on the performance model."

8:20Alex >> Okay, cool. >> But the biggest risk that you're paying down is that they don't pay you. >> Yeah. Yeah. Yeah, that makes sense. >> Basically, if you have high confidence of the payment, then performance >> I'm all for performance. I mean, I would do $0 up front. I don't even care. If I know that I can get paid, I'm all in. >> Mhm. >> I just got to know that I can get paid. >> Yeah. >> That's the problem. That is the biggest hinge in this thing. >> That's like the biggest risk of going down that path. It's you're just stuck. >> Yes. Yes. >> Mhm. >> You solve that, you solve the business. >> Yeah.

8:45>> That's the That is the whole business. You solve that, you solve the business. >> Yeah, exactly. Own that. >> Yeah, I built a software to solve it. Like, I get it. >> Yeah, exactly. [laughter] Makes a ton of sense. >> Yeah. Cuz I was going after small guys, so I had to. >> Yep. Thank you. >> If you like this video and you're a business owner who wants to break through your current revenue ceiling, I distilled every lesson from scaling 10 businesses past 10 million, and three businesses past 100 million, into a completely free scaling roadmap that I've used to go from zero to one, zero to 10, and zero to 100 plus. And so you can click here and you can check it out.

9:13Again, absolutely free, and since you're a business owner, I appreciate you, and uh enjoy.