Helping a Cold Email Agency Scale From $1M to $10M

0:00Unternehmer/Gast My name is John and I run a cold email agency and I sell to other agencies. We're making 1 million per year and we would like to go to 10 million. And what's stopping me is high churn rate. And I think it's because I mean the core issue is when we deliver the leads to the agencies, they cannot close them. Or if they close them, they're on full capacity.

0:29>> Yeah. >> Yeah. >> Uh my guess is that you're serving customers that are too small. So um this is probably going to be really good for like a third of you in here. Or like rather it'll be really relevant for like a third of you. So there are some business models that small business owners look at from large businesses and say I'll do that same thing for the bottom end of the market.

0:59The problem is that that strategy typically only works with a fully fledged business. And so if you look at a small business, these agencies that you're selling, they're volatile. Like they have good months, they have bad months, they have good months, they have bad months. And their volatility now reflects onto your volatility. And so let's say you make them some money here, then they make more money here, and then all of a sudden they make less, and then they make then they cancel.

1:32Alex Right? And so these things are called structural churn, which is that um kind of things that are inherent to the industry. And so I'll tell you a story that might make this relevant. So I was talking to a friend of mine who owns a CRM in the gym space and I was asking him I was like, "What's your churn? I would imagine it's like zero." He said, "Ah, it's about 3% a month." And I was like, "3% a month for a CRM?" He's like, "Yeah." He's like, "About a third of the gyms go out of business every year.

2:00And so like there's nothing they could do to improve the product anymore. Just a third of the businesses go out of business every year and there's nothing you can do to the product. And so it's kind of similar here, which is like if you look at and this is a great exercise. If you look at the ultimate version of your business, because there is a a much bigger version of your business, which is you look at Ogilvy, you look at NP Digital, you look at Vayner, right? They're big agencies that exist. Who do they serve?

2:27Alex Fortune 100. And so the reason that those work that way is because those businesses can pay on time, they have sales people that know what they're doing, they have a process in place, they have margins, their checks clear. And when they sign contracts, they keep them. Right? And that's because they're good businesses. And so it's very likely that you're not in the wrong business, you might just be serving the wrong customer. And so if you were to look at your spread of customers right now, I would bet that there are some that have been with you for a little bit. Right?

2:55And then all the new ones just turn out, it's just like they're the ones, right? And so those ones that have been with you for a little bit probably look a little bit different than some of the ones who are coming in. >> We did an analyze and >> like you can't really always see this from from the outside because they can just sell. So this is hard to say like like from the outside if they can sell. So the ones that stay with us, they can sell and they can close the leads.

3:23>> Were they at a certain size already? >> Um yes, but the same size like other people who are training. >> Sure. And so if there are intangibles that someone has to have, um you can test for that or you can just go upmarket. So think about it this way. If somebody does a $5 million a year agency, they have to sell. They there's no way they'd get to $5 million without being able to know how to sell.

3:49Right? And so you can just put like you can try to test for it or you can just make a requirement that would make it impossible that the person didn't know how to do that. Does that make sense? And so I try like if I can get something that's really small and testy that like allows me to go a little bit lower market, that's okay. Otherwise, I'll just put a bar and say it's got to be this. But likely and so many of you I think are in the same boat though is that you serve you have a business model that is better served to a bigger customer.

4:15And you charge too little and then they churn and then you keep trying to like think about what new thing do I need to add to my offering? Like what new guarantee, what new onboarding process? Like you're keep adding things and it doesn't matter because they are volatile. And that volatility will not change. Does that make sense? >> Yeah. >> Thank you. >> Yeah. Oh, by the way, the equal opposite of that is that if you are in that in that position, if you do want to serve that market, then you have to make the entire business model around being the low-cost leader.

4:46And so you can serve that market if you have like a very tech-enabled service or software where you could charge those people $300 a month which is always going to be below their volatility level of cash flow. But it has to cost you nothing. And so the idea of like I will, you know, $1,500 a month for lead generation or whatever it is, like which is kind of like the standard like that model doesn't work cuz it just won't scale.

5:14>> Okay. >> But you can always make 1 to 3 million bucks a year with it. >> [laughter] >> And just always be like looking on the hunt for the next lead. If you are a business owner and you are not growing as fast as you'd like, I'd like to give you a free gift. So, my team and I put together the $100 million scaling roadmap which is basically 200 hours of us looking over all the portfolio companies we've had and what stages of growth they went through and more importantly where they got stuck and how they got past it. And so we broke it in these 10 stages and we made this little kind of quiz thing where if you put in your business information, it'll tell you where you're at and the most important part for you, what to do for each of the functions of the business across product, marketing, sales, customer success, recruiting, IT, human resources, and finance. And so, no matter what you're struggling with, someone else has already struggled with it and solved it. And so, I'd like to give you this thing absolutely free. You can go to acquisition.com/roadmap, plug in your business information, and if you want us to actually help you deconstruct the business and you're trying to scale, we'd love to help you out. On the thank you page, you can just book a call with my team and we will look at your business, see if we can help, can, we'll invite you out to Vegas and we'll do this in person live.