Pay-per-Show-Agentur für Umbaubetriebe optimiert ihr Preismodell

0:00Unternehmer/Gast I run a performance-based marketing agency called Smith and Paul kitchen and bathroom models and outdoor living companies. Currently at 8K per month profit is 7K. We work on a pay per show model and position them for high-end projects. So not like discounts etc. Without retainers or ad spend on their end. So we take the risk there. Right now it costs me yeah, right now it costs me around $250 to acquire a customer on the last that's where I run the ads. Mhm. I have a $1,000 setup fee and I charge $500 per qualified appointment show.

0:37I get them one appointment show. >> Yeah, to get them one appointment show it costs at the worst times like I'm aiming for 210. Mhm. And if I don't get them at least 10 appointments in the first month I refund them the setup fee. Now currently to let you know I do have two clients in this but I have three other clients still in free service which I kept for cash flow because that's what I ran before.

1:02My question is from just what I told you guys now and from your experience what do you see which I currently don't see? So what would you do in my position to absolutely like scale this or maybe do differently. Um Are you keeping the customers? >> Um until I'm basically I wanted to keep them until I'm at 10K sufficiently in the modeling and then completely ditch.

1:32He's cutting out or you >> to ditch the free service. Oh you want to ditch the free No no Layla is Layla is asking question. Also I think Layla's audio is low for anybody on our team. If you can boost her audio a little >> Yeah I I didn't I don't hear Layla at all. That's right. I'm just on mute. Just on mute. Okay. So the question was I mean I don't think you should cut your cash flow. You have you only have like four customers right?

1:56Um currently it's at five. Okay. So, you have five customers and that means that if you're doing $8,000 a month that you said 8,000 top line, 7,000 bottom line, but you said your cost of getting a show is 210 on 500. Those margins don't make sense. What am I missing? Um yeah, because so base Okay. Uh I'm I didn't So, for the 8K, I'm not basically counting in the $200, which is lost. I just count in the 300.

2:26Okay, got it. >> one guy I'm currently the one guy I'm currently onboarding, so I only have one guy currently on it. Uh yeah, the other guy is currently on onboarding. And when you say guys on onboarding, you mean a client? Uh yeah, the one company I'm currently onboarding to get them into the $500 thing. I got his $1,000 setup fee basically, but he's not actively [snorts]

2:49Alex >> And you have five clients, right? Uh yes, currently I'm looking to scale this now, but yeah, that's >> Yeah, I mean, go for it. I know you're going to say what you're going to say. Well, I was just thinking that we have to run some more water through the well. Yeah. Can you do your line up? What? No. What did you say? Run some water through the well. You hear that? So, I need to get more data. You need to Yeah, you need to get more data. I mean, at that point that sample size is so small. I think we need to focus on getting a bigger sample size.

3:23Alex And then we can go from there. I I understand. Okay. Well, what is what would you say what is just your opinion about the model, the offer? I'm you know, I'm running this because all other agencies are basically running this paper appointment and Yeah. Uh yeah, they you know, and they pay for the ads, but like the trust is really low in that market, so I was thinking about doing that. Dude, I think everything's fine. I think everything's fine. The the the I'd say one risk that I see that's relatively significant is your cost per show relative to the revenue per show is kind of low. I would say the guys who I see like really murder it are at like 20%. So, you're you're at like 60. Uh I'm sorry, 40. So, I would I would want to see if we could drive that down cuz my fear of the business is that when you take this to scale, you'll be less efficient and your margins are going to compress. That's like I would say like that's kind of like my biggest red flag.

4:14Overall, the model of lead cost and arbitrage, there's nothing wrong with it. I've seen some massive um agencies that run that model. The next issue that you're going to run into is the types of businesses that you're serving. So, you're going to want to go up market for people who can spend 50,000, 100,000, 200,000 dollars a month in ads. That's that's what you're going to want to go after because the volatility of your business is going to be predicated on the volatility of their business. So, when you go after and this is super common for small business owners, everyone who's listening, is like you go after if you go Most people who are poor, I'm not saying you're poor, but like most people who are starting out in business go after other people who are also starting out in business because that's where your confidence level is, but their they don't know anything either, right? So, it's the blind leading the blind and you're like, "What's wrong with my business? All these people are churning." And they're churning because they don't know what the hell they're doing in their business either. And so, you're going to want to earn the right to go up market as fast as you can. Um and if you have five clients that pay you what they're paying now versus having five clients and each one pays 100,000 dollars a month, you could run the same op ops and have 100 times the revenue.

5:20Yeah. The biggest Can you hear me? Yes, I can Oh, okay. Fantastic. You can you can hear me? Sounds okay? Yes. Okay, great. I I was going to say the next The next thing that you're going to want to realize is that like we've done the paper show model and we also had a software that used to enable the paper show model. There's two things that you want to watch out for, which is one, when you're doing paper show, a lot of times the businesses are going to think, "Well, if they show, but they don't close, why the [ __ ] am I paying you? And so then you're going to be really tempted to be like, "Oh, can I just help them sell these people? I'm just going to also maybe I should start a sales agency and close these motherfuckers." That's the next thing that's going to happen. The The second piece to it, and by the way, don't do that. Go upmarket instead cuz people that are upmarket have their own sales team, and they understand that concept that even though you get somebody to show, it doesn't mean that they're guaranteed to close you. So, they have trained sales people. So, do not give in to the temptation. Don't try and serve an avatar that isn't best for you more.

6:16That's the biggest mistake people make, which is like you're serving an avatar that isn't your best avatar, and you try to go above and beyond for it. You just don't want to do that. The second thing Yes. is that Okay. >> It's good. That's like I feel like that's like 2010. >> That was good. Um bringing it back. >> Yeah, that's fire. >> [laughter] >> Uh the second piece is that with the paper show model, here's the place where it goes wrong, which I saw firsthand, which is why agencies have churn with it, which is that um customers want to be able to predict how much money they're going to spend with you.

6:46So, if you look at churn, and you look at customer retention, the customers who retain the most are the customers who understand how much they're going to pay. And so, one thing that you can do is you can give people a range estimate, or you can give them a heads-up different times through the month as to how much you're going to be billing them. Now, it seems contrary because you think, "Okay, well, if I tell them how much they're going to be paying, they'll be like, 'Oh my god, that's so much.'" But the reality is actually if they get a bill that's unexpected, that is like it looks and it's like once you get one unexpected bill from a company, it's like by the second one, there's a 50% likelihood that they're going to churn.

7:19So, think about how you can communicate with those customers. Maybe it's every other week, maybe it's every week to show them what their tab looks like. >> increment of revenue. >> Yeah, or by increment. That's a great one, too. Yeah, just like every 5,000 or whatever, whatever, every thousand, every 5,000 they spend, you just let them You just automatic just letting them know that this is happening. We can turn it off whenever you want. So, So think another piece that you could also ask is when you're getting the sale, when you're onboarding them, ask them what their budget is.

7:46I know it seems contrary, but it's like if you want to get them to spend more money with you, you also need to show them that you're okay spending as much as they're comfortable to start. Does that make sense? And you can coach them up from there once you get buy-in. Yeah. Okay. Yeah, that makes sense. I currently what I currently do is I build like this lovable thing where I put in the numbers, so close rate, average contract value, etc. And um basically I do that on the sales call though, so that's a big nugget That's right.

8:14uh because then I can always like weekly tell them like, "Hey, this is how much you should spend and that's what you should expect in the long term to get a return." So thank you for that tip. Um I mean, if you were me here, how would like you think about going from like 8K per month right now to like 50K in this exact model as fast as possible and also as sustain- sustainably? Dude, this is uh we we answered it. So I I want to ask you, what do you think we What do you think we just uh Just I want to make sure you retain it in your mind. that I that I that I need to get more that I that I need to get more data and like just sell more probably. And?

8:51And? And that I should not uh switch my business model and get them to basically uh convince me to get them to sell. And also make sure that they know how much they get charged. And go up market. >> [laughter] >> And go up market. Yes. Um but up up market though, one thing I want to ask, what do you think about the avatar?

9:181 million above? Because I was reading about Just go up. >> have an opinion on this? Just go up. Just just like in your ads or your outreach, look for people who are doing 10 times those numbers. Number go up good. >> Yeah. Big number good. Okay. Okay. >> Cool. Like you could literally have the same size company you have in terms of head count, literally just add a zero to what the people that you're trying to attract are and you will make significantly more money and love your life more. Mhm.

9:44Okay. Cool. Yeah. Thank you. All right. Rock and roll. Oh, should I should I should I increase status page? No, I don't think yet, dude. It's five people. Yeah. You got to get more water through the well. Also, there's a like for everybody listening, like it's like okay okay increase your prices, but like you haven't even gotten to the threshold of delivery. So, until you get to the point where your delivery is stressed and you can see how your team and how your company operates when you are stretched when it comes to your client load, do not increase your prices. You increase your prices when you know that your product and your delivery is rock solid. So, we got to get more water through the pipes first.

10:18Okay. Okay. I got it. Thank you very much. I appreciate you. Thank you. Have a good Thursday. >> man.