Episode 104

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Ryan Meo has worked with hundreds of agencies and built thousands of websites over the years. About 10 years ago he started a company called Sitetology which turned into TheWebsiteProject.org and has been recently re-branded to ScaleSquad.com. They are a private label website services outsource solution for freelancers, small agencies, and even big agencies. They have helped more agencies than they can count go from trying to do everything on their own, to having a dependable, scalable, and affordable solution.

“The only way to scale a service-based business is by learning how to say ‘no’ appropriately.” - Ryan Meo

What you’ll learn about in this episode:

  • How Ryan started selling websites — even though he didn’t know how to build them
  • Taking a custom service like web design and making it scalable
  • Why you have to prevent scope creep by being firm with clients on what their deliverables are (or by moving them up to a higher package)
  • How Ryan is able to charge a low, flat rate for his websites and why he puts a lot of focus on what isn’t included in those packages
  • Why you shouldn’t turn away customers who can’t afford your bespoke services
  • Why agencies make a big mistake by talking too much in the initial call with a prospect
  • Building a strong relationship with an outsourced web-dev shop like Ryan’s
  • Why your project manager makes or breaks your agency
  • The importance of over-communication
  • How to mitigate unrealistic expectations
  • What the ideal agency looks like for Ryan

The Golden Nugget:

“The only way to scale a service-based business is by learning how to say ‘no’ appropriately.” – Ryan Meo Click To Tweet

 

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Speaker 1:

If you’re going to take the risk of running an agency, shouldn’t you get the benefits too? Welcome to Agency Management Institute’s Build A Better Agency Podcast, presented by HubSpot. We’ll show you how to build an agency that can scale and grow with better clients, invested employees, and best of all, more money to the bottom line. Bringing his 25-plus years of experience as both an agency owner and agency consultant to you, please welcome your host, Drew McLellan.

Drew McLellan:

Hey everybody, Drew McLellan here with another episode of Build A Better Agency. For many of you, the whole idea of scaling your business and the ebb and flow of keeping the right amount of staff when the work comes and goes as it does in agencies is a challenge. You’re trying to sort of find the balance between having enough people on the team to get all the work done, without having a lot of idle hands. But on the flip side, it’s really a pain point for many of you when all of a sudden a bunch of projects come in at once, which they always do. And you find yourself a hand or two short. Today’s guest I think is going to have some interesting ideas around how to handle that scalability.

Let me tell you a little bit about him and then we’ll jump right into the conversation. Ryan Meo has worked with hundreds of agencies and his company has built thousands of websites over the years. He originally started the company about 10 years ago and it was called [Siteology 00:01:30], which then turned into TheWebsiteProject.Org, and now has been rebranded to ScaleSquad.com. Basically they are a private label website service outsource solution for agencies. So, they help agencies ebb and flow all hands on deck when projects come in. Part of what I want to talk about is that service, but I also want to talk to Ryan about the fact that he had to figure out how to scale his own business and how to do that in a way that allowed him to have a life and to create profit. He talks about the fact that he too, like all of you, have read the Four Hour Work Week, and who doesn’t want that life? But he found a different kind of reality, obviously, like most of us have. But it’s still working out well for him. He is able to do the kind of work that he loves for clients that they love to serve. And that all is scaling and working for him. So, we’re going to dig into all of that. Ryan, welcome to the podcast.

Ryan Meo:

Thanks for having me.

Drew McLellan:

Tell us a little bit about the evolution of your company and how you got from I have an idea to something that’s working today, as well as it is for you?

Ryan Meo:

Absolutely. So, I actually started out in the fitness industry about-

Drew McLellan:

Of course you did, yeah.

Ryan Meo:

… 10 years ago. Not unusual. I was living overseas helping run some fitness facilities in Thailand and all good, great, traveling the world, exactly what I wanted to do. But the end of the day, my problem was that with fitness at the time, and my limited understanding of how to run a business at the time was I was just charging for hours, changing hours for money every day. So, if I wasn’t working, I wasn’t making money. And I absolutely hated that. I’m a philosophy major. So, I had some weird internal issues with that, that just drove me up the walls of trying to put some sort of value on my actual time in the day. And it’s just a terrible model in general for a business, in my general opinion. That’s where it started.

I ended up having some life changes. I switched it over, I moved back to the states. I probably spent four or five weeks trying to figure out how can I make recurring money? And that was my only thought and it was right after I read Four Hour Work Week, all that good stuff. How can I make recurring revenue? And what it came down to is my previous experience of running businesses and being a small business owner, one of my biggest headaches was websites. They were expensive, it was painful to get them updated and supported. So, what I decided was I was going to sell websites. I went out and I sold some websites and I did it a little different. Instead of charging some big setup fee, I said, “Hey, here’s a website, we’re just going to charge you a monthly fee for it and give you unlimited support.” And I only put the price at like $49 because I just wanted to see if it would work. I wanted to see if people would buy into it. Obviously I wasn’t making much money off of it. And people bought in. But then the problem was I didn’t actually know how to build websites. So, I-

Drew McLellan:

That does seem like a flaw in the plan. Yeah.

Ryan Meo:

It was, it was. So, I had a really long week after I sold some websites, watching YouTube tutorials on how to build WordPress websites. And I learned pretty fast, so fortunately knocked those out of the park. Some of those are actually still up to those day as customers, about nine years later surprisingly. With some rehashed work. So, ultimately that’s where we started. I brought on a partner about six months in. We started selling websites. One of my, probably the things I’m really good at, which was not web development at the time, one of the things I was really good at was managing people and building teams.

What we eventually started doing was building our teams and found that we had a really scalable solution for web design and dev. And about a year and half in, we were just killing it with this. We realized that we had a bigger opportunity and that was helping agencies scale their low end web dev and design work. So, small-

Drew McLellan:

I’m assuming that your price up at that point had raised from the $49 a month?

Ryan Meo:

Yes, we ended up charging a setup fee and still charged a monthly support fee to build that recurring. Basically, what we had always done is set up to always make 60% to 70% margin on anything we did, which was a big part of our success, was us really focusing on the financials from the beginning and not guessing, but creating … tracking everything to make sure we were being profitable, even when we were direct to the end customer. And that makes a big difference. And that’s a big thing we teach our agency partners, is you have to plan your finances out. Make sure that those margins are there, or you’re just going to be on a hamster wheel.

Drew McLellan:

Well, especially with web projects.

Ryan Meo:

Especially with web projects. We were trying to change the landscape of that. For us, now working with agencies, we’re able to flat fee everything. So, technically they can work out those numbers pretty well, as long as they are using their time appropriately. That’s where it can get tricky, a lot of people have trouble saying no to the million requests you get as an agency.

Drew McLellan:

Right. And everything is not considered scope creep or out of scope, that’s the problem.

Ryan Meo:

Right.

Drew McLellan:

“Of course we can add 10 pages and we won’t charge you anything more.”

Ryan Meo:

“Sure, no problem.”

Drew McLellan:

Right.

Ryan Meo:

We’re trying to solve that with agencies. And we realized we could. So, that’s about a year and a half in, we switched over to just white labeling only for agencies. We weren’t going direct to customer and doing white label on the side, which you see quite a bit these days. I find that a little bit problematic sometimes. And have just evolved from there to really focusing on helping agencies scale a piece of the market that I think is highly untouched, even to this day, which is small to medium sized business. It’s just, most people haven’t figured out a way how to make money off of that small to medium sized business, even though it’s 80% of the market. While a lot of the agency businesses agencies are going after 20% to 30% of the market that can afford much higher fees. There’s lots of opportunity, just not a lot of people have figured out how to do it consistently and consistently well.

Drew McLellan:

One of the things that I think is interesting about your model is that for many agencies one of the reasons why they lose their shirt on web dev is because everything is so custom. If you’re able to offer a flat fee and kind of crank these things out, it sounds like you’ve figured out a way to give someone something that looks and feels custom, but actually has some standardization under the hood. Is that true?

Ryan Meo:

Exactly. Exactly. We do two types of projects when it comes to web dev. We have a custom website project and then we have what’s called a semi-custom website project. With our custom, everything’s built on WordPress, that’s step one. Step two is we force everything to be built on two different theme types within WordPress. That immediately starts the consistency train all the way through. That means as we trained our team on those, we can create things faster because we’re used to how to build things. It doesn’t matter how custom they are really. And then at the end of the day, we can support it better because we’ve got about 8,000 websites under our belt now. There’s not too many issues that pop up that we can’t tackle really, really fast because we’re so used to the platforms we’re using.

That’s a big mistake we see with agencies is they’ll go out and buy themes from Theme Forest or they’re not really setting any rules as far as how they’re building things. And it doesn’t matter if it’s websites or SEO or Facebook ads. When you’re just trying to do everything ad hoc all the time, it becomes incredibly difficult to scale that, if not impossible at some point. You have to have some sort of strategic way to build things and some consistency and templated … Everything can be … You can have custom and still be some sort of templated version of it. Whether that’s your process or the actual theme doesn’t really matter. But that’s a big piece I think people miss out on, are those processes.

Drew McLellan:

I think one of the challenges with websites is obviously everyone wants one that’s unique and built specifically to their business. I think one of the things sometimes people don’t understand is just because you’re building it on a defined theme, doesn’t mean that it can’t look and feel the way you want it to. It’s really just about the bones of the website and elements under the hood work together, right?

Ryan Meo:

That’s exactly right. And what we’ve found … So, we used to only do custom work, which was fine. We basically set up a … our team basically looks like a car manufacturing. It’s an assembly line of websites. So, there’s about five different stages and we’ve got five different teams. So, five different teams touch one website every single time, which seems complicated. But at the end of the day, it makes it flow really effectively because we’re always moving forward, instead of forward, back, forward, back. But with websites, what we found was interesting is we do a lot of custom. To this day, we still do a lot of custom. But particularly with the small business, smaller medium sized market, is the minute we launched our semi-custom themes, our semi-custom sites, which is basically we’ve got a bunch of themes the agency can show their customer, the customer can choose from. And then we customize a theme.

That became a really big win on two levels. One, we cut the cost down. It was easier to deal with the customer. Because the problem with custom and a small business customer is they don’t have a marketing team in house. They aren’t marketers, they’re not designers. So, trying to get them involved in some sort of design project becomes really destructive at the end of the day.

Drew McLellan:

Yeah, painful.

Ryan Meo:

Yeah. Not only is it painful, but it actually starts hurting the end effect of the project for that type of customer particularly. Because they don’t know what works and what doesn’t work. So, they end up destroying … If you can say you can do whatever you want with this design, and then you do that, they’re most likely going to make it worse than when it started out. And that’s what we love about the semi-custom approach with small business. You can make really good money off of it as an agency, but you’ve already boxed them into something that works. And then everything outside of that, you can just say no. You paid this price, no you don’t get that.

Drew McLellan:

That’s hard for agencies. They’re not good at that.

Ryan Meo:

Yeah. It’s a really, really challenging issue for a lot of people. But one they have to get better … It’s the only way to scale a service-based business. You have to learn how to say no appropriately. Or say, I always like to say the positive no, which is, “Well, you didn’t buy that package, but yes, we can do that if you go to this package.”

Drew McLellan:

Right, “For a nominal fee.”

Ryan Meo:

Exactly. And move them up into another level of recurring revenue. You’ll get a lot of people saying yes and you’ll make more money.

Drew McLellan:

What’s interesting though is oftentimes, and I try and make this point with agency owners and when I’m teaching account service folks in our AE Boot camps is oftentimes when you have the courage to say, “We absolutely can do that, but it’s not included in what you’ve already purchased, but we can certainly add it on for this nominal fee.” Many cases, the client goes, “Oh, well then nevermind.” So, they weren’t really that invested in it in the first place. But when you teach them it’s an all you can eat buffet, and it doesn’t matter if they throw away half of the food on their plate, they just keep loading up their plate, which is painful for you as the provider to try and service and to make money.

When you say, “Yeah, you paid for the buffet, but that didn’t include dessert. But for $5 you absolutely can go over to the dessert table.” A lot of times they go, “Oh, never mind, I’m kind of full anyway.” Right?

Ryan Meo:

Right.

Drew McLellan:

But agencies, you never can find that reality in your pricing model or in your client service model if you don’t have the skills and the courage to say, which is all you’re doing is stating the truth, “You didn’t buy that.” It’s like, I don’t walk into Target and just get to put stuff in my pocket and walk out. Target would go, “I’m sorry, Mister McLellan, but you didn’t buy that. And by the way, put your hands on the wall, the police are coming.” We just have to be better about that.

Ryan Meo:

Yeah, absolutely. And I think another good way to approach it as well, we do that ourselves all the time. Something else that works really well, I think particularly with the end customer that the agency is dealing with is … For some reason I don’t see a lot of agencies asking this question, is when a customer comes with a request I always say, “Ask me as many questions as you want. You have ideas, let me know, I love that you are thinking outside the box.” But I always like to return whatever their suggestion is, if it’s not a big yes and I’m like, “Eh.” I always like to return with, “Well, why do you want to do that? What do you think this is going to do for you?” And once you start engaging in that conversation of what is the value of this extra thing you want? What is your expectations of it?

That can tend to break them down to saying, “I don’t know, I just saw someone post it on Facebook.” Which also ends up giving you other opportunities to upsell them to other things. But also can easily start knocking them down back to where they need to be, which is you don’t need this. You don’t need this right now. Which also can, instead of just saying no sometimes, can also set you up more as an expert in their eyes. That you’re actually bringing in some consulting of, “Why do you want to do this? Well, let me tell you why this is not right for you right now and your expectations aren’t going to meet reality.”

Drew McLellan:

I’m guessing that a lot of the listeners heard you say flat fee and they clutched at their chest a little bit because they’ve tried to do that with websites but for some reason websites seem to always grow extra arms and legs and heads. So, how do you manage setting a fee? And at what point do you actually set the fee? Walk us through a little bit of your process of how you figure out what it is you’re about to build and how you assign a value to it and then how you make sure that that value is protected so that you’re not upside down by the time you’re done building out the site.

Ryan Meo:

Yep. Yep, so what I’m going to do is I’m going to start first with what we offer, and then I’m going to knock back … remind me if I don’t, then I’m going to come right back to the very beginning of how to start the process with a customer. Because that’s a big piece of it as well. With our services when we’re helping agency organize their productized packages basically, with a flat fee it can become really attractive to an end customer to say, “Yeah, a flat fee is great instead of getting charged $150, $200 an hour for something we’re not sure of.” I always like to make sure people understand the buying, the people buying are also in that state of mind as well, of if it’s an hourly fee, they get really concerned of how much they’re going to end up paying at the end of the day and if they can afford it. So, it’s two parties in that same situation.

What we do with our packages, for example, we’ve got custom website project. It includes a home page design and one interior page design included in the price. And then there’s unlimited revisions on those. Once the design’s approved, then we build it into WordPress and then it goes through to getting the content added up to the 15 pages that we allow and then the launching. And then preferably putting them on the support package, which creates the recurring revenue as well. We charge $600 and then $19 a month for that. So, pretty low in general.

Drew McLellan:

Wow, right.

Ryan Meo:

Most of our agencies, and these are … When I say the price, you’re going to think really crappy websites.

Drew McLellan:

I promise, I didn’t think that.

Ryan Meo:

Everyone does. And it makes sense because our pricing is low. But for me to help agencies scale, I had to figure out how to make 70% margin off of those prices.

Drew McLellan:

Wow.

Ryan Meo:

So, for me this is an incredibly important subject of how to make this work. With our prices, we got agencies charging on average probably $2,000 to $3,000 for a small business website. But I’ve seen people sell these websites for $30,000. So, they’re not cheap, ugly looking websites. These are exactly what you would get from a local developer that knows what they’re doing. But what we do, everything is about putting things in a box. So, with our custom websites, like I started, is you get these types of designs. And then we put unlimited revisions in. If they want a third interior page design, we’ll do that and it’s an upsell, an extra $50 to do that. But as we go through the process, as we break it down, we just are really clear of what you don’t get. We spend more time focusing on what you don’t get than what you do get, which is a little counterintuitive for most agencies to think about.

But if I’m sitting down with a customer and they only want to spend … If I have my package services and then I have my Bespoke services at the top here, my white glove services that I’m charging $10,000 for. And you should, as an agency you should have both. You should be … The agency game is really how many customers can I capture? And it always amazes me that agencies are shunning away the smaller ones because they can’t afford their Bespoke services. Don’t shun them away, just make better smaller packages for them that you can box them into. Because some of those customers are going to become Bespoke customers eventually and it’s going to be easier to resell to them as a smaller customer than someone you told no, that they couldn’t afford your services.

So, we focus on helping them package those and focus on really determining what’s not included in those packaged services. So, you can take our $600 project and you can sell it for $3,000, which is great margin. You’re sitting at that 60%, 70% margin right there. Even if you have to spend a little bit of time, so we average on … Agencies with us spend about one to seven hours per project with us, from start to completion. So, even with your hours in there, you’re still making good margin, not including the support that you might get on with them. So, number one is package up your services well. Be very clear of what’s included. And then be very clear of what you don’t get.

Drew McLellan:

Yeah, detailed scope documents would be critical, yeah.

Ryan Meo:

Absolutely. And I find it really helpful to sit down with a customer and say, “Hey, here’s all the great things you get. But let’s talk about what you don’t get in this package, just so we’re on the same page and everyone’s expectations are correct.” Is actually talk to the customer about what they’re not getting so their expectations are set. The minute you do that is the minute the project is off to an incredibly smooth start. And you don’t have customers calling, “Why isn’t it doing this for me? Why isn’t it doing this for me?” They might be saying, “You built me a website, why isn’t it getting ranked?” And it’s because you never talked to them in advance that, “Hey, this doesn’t include SEO, this is just a website.” But that happens all the time.

Drew McLellan:

“But we have SEO and you can buy it for this package,” right?

Ryan Meo:

Exactly. Exactly. Exactly. And you might have, and that might be part of your service packages, is hey, just a website. Or a website and SEO. Obviously you can ad hoc some of these services. But build up those packages so you can make it a gradual increase with the customer of that buying ladder. That helps a ton doing it that way. And it helps you maintain your margins and your time. Now, that flips back to the beginning of the conversation with the customer is sitting down with them and actually figuring out what they want and then making sure you explain what they get and don’t get, like I said. That’s the piece I find where agencies mess up most, is the first initial consulting call with the customer. Agencies love to talk. We’re all marketers, we’re sales people. We like to just sell stuff and talk. I find that to be very problematic when you’re particularly dealing with smaller customers.

If I’m sitting down with a customer, I will try to spend at least the first 30 minutes just asking them questions and listening. And asking them questions on, “Okay, great to meet you. Now, tell me what you’re looking for. What do you need?” They tell me, then I ask them, “Well, what do you expect this to do for you?” I basically have them break down to me what they want, what they’re expecting. And that gives me all the ammunition I need to say, “Well, here’s what we can do for you. Here’s what you should realistically be expecting.” I let them sell themselves and tell me all their problems. And then I can step in for 15 minutes and be the hero and tell them how I’m either going to solve those or their expectations are unrealistic.

Drew McLellan:

One of the things I think that’s interesting is that most agency owners think that they listen really well, and often. But when you do actually a study, you record an hour meeting or even a new business pitch or something like that and you actually time it, they’re sort of stunned and perhaps a little embarrassed by how often they’re talking.

Ryan Meo:

Yeah. Yeah, I believe that.

Drew McLellan:

Yeah.

Ryan Meo:

I’m a talker myself, so it was something I had to break down personally to get better at.

Drew McLellan:

I want to dig into how you work with agencies. Because a lot of agencies, especially a lot of agencies sort of in the AMI world who are a couple hundred employees or less, they often have decided that it is better to outsource web dev than for them to try and interview and hire and keep good web dev folks on staff. So, I want to talk more about how you work with agencies and how you recommend, whether it’s you or somebody else, how you recommend agencies come at that relationship to make that a win-win. But first, let’s take a break and then we’ll come back and dig into that.

One of my favorite parts of AMI are our live workshops. I love to teach, I love to spend two days immersed in a topic with either agency leaders, agency owners or AEs in our AE boot camps. But most of all, I love sharing what I’ve learned from other agencies from 30 years in the business a