I know and work with a lot of agency owners who do incredible work for their clients but very few of them are willing to guarantee that work with predictive marketing and write their clients a refund check if it doesn’t deliver the results. Are you willing to guarantee your work?
To make that kind of promise — you’d better be ready to bring the goods. In my podcast conversation with Stephen Woessner we dig into how today’s agency needs to understand their client’s need for verifiable and predictive ROI and that the agencies that can deliver on that expectation, can plan on a long and fruitful existence. To build that kind of agency — it takes a brilliant methodology, incredible transparency and more accountability than most agencies have in their processes.
But it is possible. And highly profitable. Stephen and I talk predictive marketing specifics about how agencies can deliver leads and sales for their clients and best of all — get credit for doing so. We get into the nitty gritty of issues like bounce rates and the impact that has on sales and we talk philosophically about recognizing that your clients exist in a holistic ecosystem and their agency had better be able to influence every facet of it.
You’ll be taking notes through this one so be prepared.
To listen – you can visit the Build A Better Agency site (https://agencymanagementinstitute.com/stephen-woessner/) and grab either the iTunes or Stitcher files or just listen to it from the web.
If you’d rather just read the conversation, the transcript is below.
If you’re going to take the risk of running an agency, shouldn’t you get the benefits too? Welcome to Build a Better Agency, where we 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+ years of expertise as both an agency owner and agency consultant to you, please welcome your host, Drew McLellan.
Drew: Hey, everybody. This is Drew McLellan, and I am stoked to be with you today. I know how tough agency ownership is because I am still walking that path right next to you with my own agency. But along with running MMG for the past 20 years, I also work with over 200 small to midsize agency owners every year, helping them improve their businesses, and as a result, the life that that business affords them. The Build a Better Agency podcast is my way of extending that work and trying to help more agency owners just like you. But today I want to dive right into our conversation with my guest Stephen Woessner. Stephen, thank you for joining us today.
Stephen: Well Drew, thanks very much for the invitation. Very kind of you. And I’m excited about the conversation. I think it’s going to be awesome.
Drew: I think it is going to be awesome. So for those of you who are not familiar with Stephen, Stephen is the CEO of Predictive ROI, and the host of the Onward Nation podcast, which is really brilliant. He is the author of two bestselling books. He’s a speaker, a trainer, and his digital and predictive marketing insights have been featured in all kinds of places like SUCCESS, Entrepreneur, The Washington Post, Forbes, Inc. Magazine, and other places. He also is the CEO of the agency Predictive ROI. Stephen, what else does my audience need to know about you?
Stephen: Well, I think that maybe what makes us a little bit unique and different is the fact that we blend a lot of this education, private sector or public sector I guess education academia because of my background at the University of Wisconsin, the La Crosse campus, into the fact of blending it into an agency. And so we have this model, as you know, that we just really love to teach, and in a very fully transparent way. And sometimes we get criticism from that. It’s like, “Why would you teach this stuff? Why are you giving all this stuff away?” But I really love to teach and share. So we have very transparent recipes. We take people behind the green curtain and teach them exactly what we do for search engine optimization, and I love to do that. So I think that that, aside from the fact that we guarantee increases in traffic leads and sales, I think the fact that we’re so transparent about what it is that we do, we actually train our clients on what it is that we do. I think all of that blended together makes us unique and different.
Drew: Well, it’s interesting that you say that because I think for a lot of clients, the whole SEO thing and anything that happens digitally on the web, it feels a little bit mysterious and scary. So I suspect that your willingness to open the kimono allows them to build trust much quicker with you. That they understand what you’re doing and it’s not some secret potion. Or worse yet, that you’re not doing anything and they’re paying for nothing, right?
Stephen: Yeah, and that’s actually a great way to put it. I’ve actually had more than one client or prospective client say to me when I said that, “We will do this for a period of 12 months. We will guarantee increases in traffic leads and sales. And during that process, we’ll actually teach you all of the recipes, all the strategies, all the ideas, all the tactics, all the step by step ingredients and stuff that we’re doing, so you know exactly what it is that we’re doing and how we drove those result outcomes. And we will transfer all of that stuff over to you. At the end of 12 months, we’ll just give it all to you so that you can take it in-house if you want to.”
And literally that CEO said to me it’s like, “Where did you come from? Why would you do that?” And my response is, “Why would we not? That’s kind of awesome, to be able to do that.” And by the way, we still continued to work with that company after that 12 months, because that really builds trust, being able to do that, being fully transparent. Or using your words, opening the kimono.
Drew: Yeah. Well, I think the misperception, and I think a lot of agencies and agency owners have this, is if they share their secret sauce and show a client how they do what they do, they’re going to want to do it themselves. But the reality is, most clients don’t have the time or the energy or the focus, and they would rather spend the money and let the expert do it. But it is reassuring to know how it’s being done.
Stephen: I think you said it perfectly. That is exactly what our experience has been. That when you’re fully transparent, that when you show your client it’s not mystic dark magic voodoo and you share those recipes, they look at it and say, “Oh okay, this isn’t mystic dark magic voodoo. I don’t have the time or the bandwidth or quite frankly the interest in mastering this. Now that I know that you know what it is that you’re actually doing, then just go get on with it. Increase our traffic leads and sales, we’ll be happy to continue paying you. Just do that.”
Drew: Right, right. Well, this all leads into the idea that really Predictive ROI is sort of a different kind of model for an ad agency or a marketing agency. It’s sort of the new wave of how agencies are beginning to think about how to talk about the work they do and the results they deliver for clients. And so my perception of Predictive is that you’re an agency that is all about measuring and delivering results using predictive marketing. So talk to us a little bit about that model, and why you think it resonates with your clients and business owners, in general, today. And what agency owners, particularly traditional agency owners, maybe a branding agency or an agency that has won a lot of creative awards, how they need to think differently about how they interact with their clients.
Stephen: Boy, there is a lot of really great questions in there to unpack and to build a conversation around. And I think why it’s of interest first with an owner or a business owner is because that’s what they care about. That’s the income statement, that’s the P&L, right? And so this kind of cost per acquisition or the sales model or guaranteed sales, when other agencies are like running away from that, we run toward it. Because that’s where you can then command a premium price, right? When you tackle the biggest pain point, and also the biggest pleasure point too if you’re successful, but the biggest pain point in a business owner’s business. If you can confidently do that, well, then you’re no longer a vendor. You truly are a partner, because you’re moving the needle in the right direction.
So the reason why I think we’ve been successful at that, in being able to charge a premium fee to be able to deliver that, is because we’re conquering the biggest fear, the biggest pain point, the biggest challenge in that business owner’s business. And I would encourage other agencies to consider that. Look, our model is not for everybody. We’re burning the candle at both ends, we are moving at a pace and tempo that is uncommon, and I get the fact that there are not maybe a bunch of agency owners around the country saying, “Ooh yeah, I’m totally all in for that, I get that.” But I think the reason why I would encourage other agency owners no matter what your specialty is to consider something like that, either a hybrid or maybe the model itself, is because at some point your business owners, your clients will demand that of you.
We’re getting into, and we’re already in there, but we’re getting to the point where business owners will say, “No, I really appreciate the track record of creative, that’s awesome. And I’m not trying to take that away from you, agency principal, but how does that make me more money? How does that generate more traffic leads and sales, and how will you back that up? How will you measure that? Everything from the initial opt-in or somebody just going to a landing page all the way through to my transaction, my cash register ringing.” And if you can’t do that, I think at some point you’ll lose. And so, I don’t think it’s me saying that, that that should be the reason that you jump into this or to maybe transition your agency toward that. It’s your clients that will force you into that at some point, whether that’s now, five years from now, whatever. But it’s coming.
Drew: Well, one of the things that I do for AMI network members, for the agencies that belong to an AMI network, is I talk to them about the trends and what I’m seeing across all of the agencies that I work with. And without a doubt, you’re absolutely right. One of the things I’m seeing are the agencies that are the most profitable and that have the least client turnover are the agencies who are crawling inside their client’s sales funnel with them. And are able to document and measure how the work the agency is doing is moving people through the sales funnel. And especially those agencies that can tie it directly to a closed sale. Those agencies are knocking it out of the park. So you’re absolutely right that is not only coming, but for many agencies the time is here and it’s now.
Stephen: Amen to that. And you just really articulated our relationship with clients perfectly. We are so intimately involved. We are helping our clients hire and sometimes fire their sales team. We are helping them train their sales team. We are so involved in the vital metrics up and down that funnel, and helping them optimize those things in various different ways and strategies and so forth. And in our world, we call those recipes. But we are so intimately involved in the customer experience, their customer experience, because we’ve got skin in the game. And also, it’s pretty darn fun being involved in all those different things.
But also, I think mostly the traditional agency will look at that and say, “But that’s a client’s responsibility.” That’s not the way that we look at it. We look at it as we’re a team, and if we can jump in with some of our experience in other industries before Predictive and we can apply our predictive marketing recipes here to make improvements now, we’re going to do that. And we’re going to help our client win no matter what it is that we have to do. But I understand that that will create some indigestion for some agency owners.
Drew: A valid point. But let’s talk about from an agency’s perspective. And again, from an agency that’s a little more traditional in its structure. What are some things that they can do around this idea of being results-focused? What are some things that they can do or begin to think about that will allow them to at least begin to weave that thinking into the DNA of their agency?
Stephen: Well, here’s what’s interesting. Sometimes it isn’t necessarily this big technical shift. Sometimes it’s just a little bit more of awareness and paying attention to the vital metrics and being able to measure them all the way through. And so we’ve got these 23 different recipes. Is it okay if we just talk about a few of them? Is that all right?
Stephen: Okay. And so it’s been my experience that one of the most expensive, and we take some of those recipes and we break those down into what we call like money draining mistakes. These are things where we find business owners, or businesses, where they’re just leaking money out of their business. Like just money falling out of the bottom of the boat essentially.
So the first one that tends to be the most expensive is bounce rate. Now, I know that that in and of itself, maybe some agency owners, maybe some of your listeners are like, “Oh.” Rolling their eyes, “Yeah okay, we’ve heard bounce rate before.” But let me just break that down to be more specific about what I mean by that. So the typical “unoptimized” website if you will, has a bounce rate of between 50 to 60%. And sometimes landing pages have bounce rates of between 70 to 80%. And if you’re doing like paid traffic to a landing page and it’s getting 80% bounce rate, it’s like, “What in the world is going on there?” Something is going on.
So our goal for bounce rate is about 30%. And so what we have found over time is that if we can reduce the bounce rate of a particular landing page, let’s say, from a 50 to 60% down to 30%, and there’s a paid campaign there, you can essentially keep the paid budget the same. But by reducing bounce rate, your conversion rate actually goes up. And the only thing you changed was making that a better experience. So we have a three-step process, or three ingredients, to reducing bounce rate. And I’ll tell you what they are right now.
So the first one is XYZ. We put an XYZ statement on a page so that very simply the customer avatar knows they’re in the right place. So XYZ means, we do X for Y so they can Z. Meaning we, as in the company, we do X, X being the product or services. I know that sounds really fundamental, but hopefully the owners listening right now or agency staff listening right now will take and go, “Do we have an XYZ on these landing pages?” So we do X, X being the products or services, for Y and Y being the customer profile. So somebody goes and says, “Oh okay, you do this. Oh, and you do it for me. Awesome. And so now I’ll stay.” And then so they can Z, and Z being the result outcome. “If I stay on this page because you’re doing this, this product or service for me, and I need that.” Then Z, “So that I can do this, and this is how my life improves, right?” So then just by having the XYZ clearly defined, bounce rate can go down by like 10% in like two days.
So then we take that deeper, though. We eliminate visual clutter. Don’t give the avatar 15 things to think about, give them 3, right? Remove the options, right? Still give them options but instead of 15, it’s 3, and then just very, very clear calls to action. Dr. Flint McGlaughlin from Marketing Experiments and MECLABS and it was so amazing, he and I did a video interview together when I was at Jacksonville at their headquarters. And he said to me, he goes, “Stephen, clarity always trumps persuasion.” I’m like, “Oh.” So stop trying to be cute, stop trying to be overly creative. Tell the avatar what they need to do and how to do it, and they will. So if we follow those 3 steps, bounce rate goes down to about 3% or less, your lead gen goes up, and you haven’t spent any more money. So that would be just like a real quick thing to fix. And then I can certainly share any additional recipes you think would be helpful. We can do as deep of a dive as you want to, Drew.
Drew: Well, it’s interesting when you say that. First of all, I’m sure there are a lot of agency folks who cringe at the idea that being clever and being creative doesn’t matter. And I know that that’s a hard pill to swallow for all of us who came up through the business. And it’s not that there’s not a place for it. There will always be a place for great copy and great design. It’s just that it can’t get in the way of the sale.
Stephen: Yeah, and that’s absolutely the right perspective. You’re 100% correct. And so on a longer term nurturing campaign or some sort of brand awareness campaign, whatever, there definitely is a place for it. In our world, we’re working on like really immediate lead gen. Typically business owner wants to go from X to Y in 12-month period of time. So we’re essentially like on the clock, if you will, in our model, right? “Stephen, I want your Predictive ROI team to ignite my leads in this period of time. This is what the conversion metrics are for my sales team. And if you do that and we do this, wow, we’re going to make magic happen.” So that tends to be our world, which I know is not suitable and appropriate for every owner who’s listening to this interview. But that’s what really drives our model.
Drew: So thinking about one of your other recipes, or one of the other sort of methodologies that I think you guys have mastered that a lot of agencies really struggle with, is the whole idea of the scorecard. So even if you’re not doing any work with a client online, just the idea of identifying, “Hey, client, let’s mutually agree upon how we are going to measure whether or not we’re being successful together.” So talk to us a little bit about that and that your scorecard calls…again, think of this in terms of the agencies that have clients that don’t do transactions online or may not even be doing a lot of things other than brochureware on their websites, but who’re doing business in brick and mortar stores or salespeople out in a territory, that sort of thing. Because I still think your scorecard is perfectly applicable to those kinds of agencies and those kind of clients.
Stephen: Okay. And so we just had one of those calls this morning at 7:30, where we are going through the vital metrics over the last several weeks with a particular client. So we start at the top-end of the funnel, and we look at, “Okay, how many e-book downloads did we have?” Now, that’s not an online transaction, it’s an online opt-in obviously. But how many e-book transactions did we have? Now, I’m just going to turn around real quick and look at my whiteboard. And we had 118 e-book opt-ins. Awesome. So very top-end of the funnel, now we can start to nurture that relationship. And out of those e-books, we then have…once you download the e-book then you get this opportunity to take that further right away and that ignites our lead gen. Plus then we also have targeted ads going to that landing page as well.
So then we take that further. So how many leads did we generate? And it was 199. And so in that few week period, there was 199 people who raised their hand, and then that goes over to our sales team. And from that, how many of those opportunities then converted into actual demos of the service? And that was then 45. And so out of the 45, how many of those demos then converted into new clients? And that was 23. So at the top-end, we took in 199 new leads, we converted 23 at the back end, which was 11.5% conversion rate. There isn’t anything mystic dark magic voodoo about that process. It’s just understanding the metrics and how the client makes money.
Now, we do use a CRM, we do use Infusionsoft. So all of that stuff was in Infusionsoft. But then we’re just able to serve that up in a scorecard and then being able to understand, what lever do we need to pull to accelerate those things up and down the funnel? So it’s not overly complicated, it’s just the fact that we have the discipline to do that, and we know what our client’s numbers are all the time because we have access to that data. And then like I said, we know what knob to turn and what button to push to accelerate results or to bring results back. Which I know sounds odd, but let’s say that a person leaves the sales team. Well, we don’t want to have 200 leads flowing to people if they’re not there, right? So we do need to regulate lead flow from time to time either up or down.
Drew: My point I think is that even if none of that happens online, the idea of having a scorecard, or having an agreed upon set of metrics, that, “Here’s how we’re going to measure.” And I know, I guarantee you that half of the agency owners listening to this say, “I don’t have any of that. When we ask our clients what their conversion numbers are, they don’t know.” Or, “When we ask our clients what their sale cycle, how long their sale cycle is, they don’t know.” And I think your response would be, “Then you’ve got to help them figure it out,” right?
Stephen: Yeah, you’re exactly correct. Not only do you have to figure that out, but I love when that happens. Because now your client has just sort of in code said to you, “I don’t know, I sure wish I knew. Could you help me?” And so we look at that as like, okay. That is awesome, what a great opportunity to jump in. Because the numbers are there, the data is there, they just don’t know how to find it, where to get it, how to calculate it and what does it all mean. And that is a huge, huge, huge opportunity for us when that happens.
Drew: Well, and again, even if none of it happens online. Let’s say you’re marketing a regional law firm, and you’re sending out paper invites to “How To Build A Will That Will Protect You And Your Family” seminar that’s going to be held at a hotel. It could be so down and dirty old school. But the point is, still being able to say, “Okay, if we want to have this many sales, how many people need to be at the seminar? And if we want to have this many people at the seminar,” being able to help a client walk that backwards to really understand what they have to put in at the top of the funnel to get out what they want at the bottom of the funnel, and then measuring that all the time and being able to tie your activity and your efforts to those numbers is what makes an agency not have to worry about another agency poaching their business, right?
Stephen: Amen. And the predictive marketing metrics that I gave to you starting at 199, moving all the way down to 23, 25 transactions, that was all offline, by the way. Those were not 25 sales made online. It was, we generated the leads online, moved those over to the offline, to sales team. And then the online essentially stopped. We have a funnel in place as far as nurturing them all the way through the process. So there is a little bit of nudge, essentially digitally, but after that, we generate the leads, move them to the sales team, sales team then moves them through the demo, the demo is not online. Moves them through then to starting, becoming a customer. That is not online.
I think maybe one of our gifts that maybe I’m not naturally aware of, or maybe that I should say that I take for granted, is the fact that we understand that it’s not just an online and an offline ecosphere. It isn’t just digital anymore or just offline or traditional anymore. I think the agency of tomorrow, or the ones that are winning today recognize this is a totally holistic ecosphere. It’s not moving them from online to offline, it’s just a blending of that, right? So we pay attention to that constantly because it matters.
Drew: Well, it’s no different if we thought about the business world the way we think about our own lives. How many of us sit on our couch watching TV with an iPad in our lap immediately and without thinking about it blending the offline and the online? And that’s the reality of our world today, there are no two separate worlds. It’s just that they have completely interacted and are completely interwoven into each other. And it’s just that’s the way life happens today.
Stephen: Amen. That’s exactly right.
Drew: Okay. So all of that being said, as you know, and some of the listeners probably don’t know this about you, but not only do you serve clients directly, but you also partner with agencies. And I know you’ve partnered with some AMI agencies to teach them your methodology, and to help them bring these recipes or these practices into the work that they do with clients. And I suspect that some agencies have been more receptive to this than others. So my question to you is, given what we know about the business landscape today, and how demanding and ROI-focused clients are, tell me why an agency or an agency owner would push back on this idea? And why it might be difficult for some agencies to adopt this sort of mindset and methodology that you’re talking about.
Stephen: Well, that’s an awesome question. It really cuts to the core of it. And really it isn’t because what we do is very hard or that it’s mystic dark magic voodoo. And I don’t mean to like simplify our model; it is complex. But it isn’t the inability to learn it, I guess is the point that I’m making. And it really just comes down to maybe the culture within the agency. How the agency has grown over time, and is it more of a creative shop versus a digital shop that’s like rightly aligned with what we do right away?
Because, there has been an experience before where an agency owner has asked us to help and so we did. And we ended up just conceptually or philosophically butting heads with a very strong creative director, strong personality within that agency, because that particular creative director felt like creative is what drove the shop. And for many years and decades, it did. And that creative director felt that he knew the customer avatar and should be able to decide what great creative was. It didn’t matter what the data said. It didn’t matter that after that landing page was created, there was still a 60 to 70% bounce rate, and that the lead gen was awful. And in our world, if the lead gen is awful and remains awful, you get fired.
So there has to be a willingness to be able to make decisions that are based on data. Make decisions based on these vital metrics, versus what creative ought to be or what you think it should be. Because what matters is the performance of that creative. So, if an agency owner is open to that in changing everything that’s necessary in order to align with that, then awesome, we’ll win. If an agency owner says, “We need to be able to do that within a construct of this, so you can’t change anything else,” then I think you’re setting yourself up for failure.
Drew: Well, I think for a lot of agencies the challenge is how do you blend the two? So it’s not that good creative, as we said earlier, isn’t important, it’s just what is the ultimate job of the agency with this client? And that’s where that scorecard idea really aligns both the agency and the client with, this is what we’re trying to accomplish. And anything that gets in the way of accomplishing those things needs to be considered a barrier that should be removed, not something that is enhancing the process.
Stephen: Yeah, that’s a great clarification, because I sure don’t want to seem to your listeners that I’m anti-great creative, because that couldn’t be further from the truth. I grew up in this business, mostly on the account side. But with that said, that doesn’t mean that I don’t have an appreciation for really wonderful creative. In our world now, it is how is that creative performed. And if it didn’t perform then how come? It’s not that we just throw that out and start over but what could be changed? And we test everything about that creative. Everything from headline and imagery or photos and colors and all of that stuff.
And so the agency that really rightly aligns with this has to be able to have the mindset of saying, “Okay, there are no sacred things,” right? That, “Everything is up for change. And it’s awesome that we have this creative style that we want to adhere to, but we also have to recognize it’s like it’s okay that we’re going to make these changes and so forth. That it’s not like put into stone that we can’t change this thing. We can change everything else except for this over here.” That just puts too many constraints.
Drew: Okay. So we talked a little about their resistance to doing this. And although I’m a little loath to follow it up with this question, I want to make sure that we dig into this. I suspect that things have not gone perfectly at your agency, and that on occasion you have bumped into a brick wall or two around this methodology and around the work you do with clients. So what I’m going to ask you to do is talk to us about a mistake or two that you’ve made. That in hearing it, other agency owners can hopefully avoid some of the pain that I’m sure the mistake cost you.
Stephen: Oh yeah, and just in being fully transparent is I always try to be unless I forgot something. Sure, I sure don’t mind admitting that there has been a project that we missed on. And we fully guarantee. So there is a time where did I have to write the check back and that’s a painful process. And what we learned through that is, sure, that was really bumpy. And there were some missed data points in the beginning. And then a client didn’t introduce five new products like they thought that they might. And I didn’t hold them accountable. So absolutely. And there are instances too where the checkpoint meetings, it’s not all unicorns running through the meadows. Sometimes we’re not performing at the level and the intensity that we ought to be. So then we have to dig in and make rapid changes. And sometimes we’re far exceeding our goal and we accomplish our goal well in advance of what we expected. But that doesn’t always happen.
So absolutely, there are bumps in the road, which is why in the process that we have set up, is we have tactical checkpoint meetings every two weeks. There are much more kind of like production meetings, but we also have ROI scorecard meetings every 30 days, so that our client feels comfortable that they can call us on the carpet if need to be, or that we can celebrate big wins. And so it’s very, very important to make sure that we keep our vital metrics in clear and present view so that we can make rapid adjustments. Because sometimes that is very necessary. It is not all smooth as silk all the time.
Drew: Okay. So I want to pick at that scab a little bit because I want you to get more specific. So a couple of things. First, for the listeners’ benefit, Predictive ROI in their contract says to a client, “After doing some due diligence and finding out what some of those metrics are, look, client, here is the deal. Here’s going to be your monthly fee. You’re going to pay that monthly fee for a year. We promise to deliver X. So some exponential growth over these metrics. So if let’s say your fee is going to be…” I’m just going to make up a number, “$50,000, then you’re going to have $150,000 of new ROI. And if we don’t do that,” whatever those numbers are, “we’re going to write you a check back for our fee of $50,000.” So first of all, listeners need to understand that.
But secondly, let’s drill down a little bit into some of the lessons or some of the mistakes that were made with that client where you did have to write that check. And specifically, I want you to talk about the things that you learned, or the ways you’ve improved your process from that mistake. So I don’t care that the client didn’t release product, but what I do care about is what did you do differently with the next client to make sure that didn’t happen again? You know what I’m saying?
Stephen: Sure, yeah. Boy, we could have an entire interview or show on just those learning outcomes.
Drew: Just give us one or two. And if you start to cry during it, it’s okay.
Stephen: Well, and first of all, just in complete disclosure, I still have a good relationship with that company today. It’s not like after that contract was ended that we became enemies or anything like that at all. And so where we had kind of a failing in our process early on is because we said that we need these four, five data points. Well, the reality is, we needed more than four or five data points. And what he’d asked for was essentially Google Analytics access. we asked for some basic…when you convert a unique visitor into a buyer, what is that rate? What is the average purchase price? And then like what’s the size of the list? Then, within 12 months, what percentage of the list became a buyer? Well, on the surface, that sounds like pretty decent due diligence, but really we’ve added now about 18 or 19 additional questions into that data collection process. So first of all, we’ve now taken our due diligence deeper as a result of we’ve got surface data but now we need much deeper data. So that was the first thing. We improved our data dive.
Then if I remember correctly about 90 days into the agreement, or into the actual contract, fulfilling the engagement, we discovered that the baselines were actually wrong. They were inaccurate. And sometimes the skew, or the deviation, of accuracy was very significant. And I didn’t do anything about it. I was the engagement manager. I was running the point on that. And instead of raising the hand and saying, “This data that we based our contract on is actually inaccurate and we need to stop.” There was nothing in our contract at all that would have given me the permission to do so. Nothing.
So the second thing is not only did we improve the process, the depth in which we collect data, but then we completely rewrote our contract. We engaged our attorney and rewrote the contract so that…in fact, when they first read the contract, they were like, “I can’t believe that you would ask people to sign this. This is so anti-Predictive ROI. This is very customer-friendly, but this is awful.” I’m like, “Oh okay, that’s a great thing to hear.” And the truth be told, it was awful.
So then we put an entire section in there about client responsibilities. Like for example, if you’re driving a bunch of new traffic to some landing pages to buy widget A, don’t you think it’s reasonable that the client has widget A in stock? So that’s what happened to us, is that we ended up finding out that several months in, it’s like their top selling products were out of stock for six weeks or more and people were canceling orders. And those canceled orders came right out of our sales bucket after the sales had been made. They came right back out again. Well, that’s a process improvement and it’s a contract improvement. So better data going in, better contract, and then much more disciplined effort of holding ourselves and client accountable to that performance.
And then also putting into the contract not only the better data but then also that if the client’s baselines change, then the guarantee is null and void, right? So like if somehow the client’s performance all of a sudden blows up, they had a sales team that was operating at 30% conversion rate, and then now all of a sudden we’re working together and the conversion rate becomes 10, well, we’re going to jump in and help the client get that back up to 30. But then we’re also going to have conversations about how, well, we shouldn’t be held responsible for that, right? That is a significant change in the client’s business. So all of those three things are probably some of the biggest outcomes. Obviously, there’s a lot more, but those are probably the biggest.
Drew: Okay. So let me distill that down and check with me to make sure I’m getting this accurately. So number one, ask bigger, better questions, and more questions. So a deeper dive in the discovery process. And probably a trust-but-verify element in there as well. So when clients are giving you data, also having backup ways to verify that data to make sure it’s relatively accurate or at least ballpark accurate, right?
Drew: Secondly, what I heard was make sure that your contract is specific enough. And sadly as you know, many agencies don’t even write contracts or scope of work documents. But having a document that sort of says, “Here’s the deal. As we enter into this partnership, we ,the agency are going to do this list of things. You the client, are going to do this list of things. And when everyone does what they have promised to do, that’s when we know that we can accurately measure against this scorecard that we’ve also created. And we will know that we will march into success or miss the mark together.” Right?
Stephen: That’s perfect, yes.
Drew: Okay. Great lessons and good reminders for all of us that it is that old adage of ‘measure twice and cut once.’ Certainly applies in our business as well.
Stephen: Well, and you and I had so many conversations, which is why I’ve really appreciated your mentorship. And shameless, I guess, plug for AMI here, but why AMI membership has been so valuable. Because you have been behind the green curtain now for years of Predictive ROI, and so your mentorship has really helped us improve our process. But when I was going through that and I said to you what was going on, you were like, “What are you doing?” And I’m like, “What do you mean what am doing?” You were like, “Why do you continue to strap all of these boulders on yourself?” These are client responsibilities, and that’s true, they are.
Now, the reality is, can we help our client make those smaller boulders with our predictive marketing methods? Yes, of course. But why would we want to expose ourselves to more risk than what’s necessary? Now, if we fall down and we don’t do what we said that we were going to do, should we have to pay for that? Yeah, I get that. And we have done that before. But why make it harder on yourself when you don’t have to? And so you have really helped me through that process.
Drew: Well, I’m happy to be helpful. And whether an agency guarantees…as you know, you are one of the crazy few who guarantees a return of fee. But the reality is, we are all doing that when we enter into a project or a contract with a client. What we are in essence saying is, “Look, if I don’t do what I say I’m going to do, you have every right to fire me.” And for an agency, regardless of if you have to write a check and give the money back, having a client fire you, especially a good-sized client, rocks the stability of your agency so badly that it is, albeit not as painful as returning money, it can really, really damage the agency. So everybody is at risk of that. And that’s why it’s really important to have clarity around who’s responsible for doing what. And do we have a mutual understanding, at the very outgoing beginning of the project, who’s responsible for what? And how does that contribute to the outcome that we’re both working towards?
I think the other thing that does is agency owners are always grousing at me that they’re tired of being treated like a vendor. And I think one of the things I like most about your business model is, because you are elbow deep into your clients’ business, and you’re talking about business issues, not marketing issues, you’re talking about sales and conversions and all of those sorts of things, they look at you like a full-on partner. You’re not a vendor to them, you are in it with them.
Stephen: Yeah, exactly correct. And that comes with good and it comes with bad. It comes with enormous amount of responsibility, but it also comes with an enormous amount of respect at the table too because they know that you’re all in just like they are.
Drew: So let’s switch around, let’s do a 180 now. So we’ve talked about sad things. Tell me a success story. Talk to me about what can happen when an agency applies this results-driven methodology for a client. So look at one of your clients and talk to us about how you were able to really change the trajectory of that client and the relationship you have with that client because you both could clearly see that the work that Predictive ROI was doing was literally delivering to the bottom line of that company.
Stephen: Awesome. Okay. Well, so we had a client, and we still are working with this client today, but they had told us that their annual growth rate was about 6% per year. And once we dug into the data and we did our final scorecard at the end of 12 months, and we did a real deep dive, much deeper than they ever would have suspected that we did, we discovered that actually their annual growth rate wasn’t about 6 or 7%. When they were really, really rocking the business, which is obviously what they wanted to get back to, it was 19%. Eighteen to 19%, which is obviously pretty phenomenal. So we actually helped them uncover that. It’s like, “No, actually it’s not 6%. When you guys were really rocking, it was 18, 19%, and thankfully we’ve gotten you back to that point.”
So they invested $100,000 into Predictive ROI. We turned that back into $545,000 in new revenue, which is amazing. So they were like, “Okay, I give you a dollar, you give me back five.” And the reason why that’s a reasonable scenario is because they have a very, very high margin and some products are 70, 80% margin. So it was literally, “I give you a dollar, you give me five back, how often can we keep doing that?”
So then we grew their list. I don’t remember exactly what percentage it was but I think it was about 50 to 60% that we grew the size of their email list. We also took average conversion value and we moved that up. We also took the 12-month value of a customer and we moved that up by about 10 to 15%. So essentially we got more customers to buy and spend more money within a shorter period of time. But ultimately what we got held accountable for was, “Okay, I give $100,000. What do you turn that into?” And in this case, it was $545,000. So awesome, because that tends to be the only litmus test that matters.
Drew: So at contract renewal time, what happened?
Stephen: Well, we’re still working with them. So what that did was, in our first 12 months where the guarantee was really, really important, then sitting in a room with all of their owners, the CEO looks to me and says, “When we didn’t know you, the guarantee was really important. But in these last 12 months, I can tell you the guarantee doesn’t really matter anymore. And the reason why it doesn’t is because you guys have proven to us that we can trust you. That you have a high degree of integrity. That you’ll do what you say that you can do.”
So now we’re still at that same fee, and right now we actually don’t have the noose of the guarantee around us. But we will do that again if it’s important to them so that we can guarantee their increase in sales and so forth. But I think the point that I’m trying to make is we were willing to do that and put that on the line. And now it’s no longer important. Will we still have goals in place? Yes, of course. But will we have sort of the “threat” of the guarantee in place? Probably not. Which I think your listeners would be like, “Oh awesome, you really put a lot of skin in the game. Now you’ve built all this trust, the guarantee is not that important to them, but you’re still getting the premium fee and delivering great results.” That’s a great win.
Drew: Well, I think the other part of the great win in that is when it came to contract renewal time, they didn’t put it up to bid, they didn’t interview other agencies. You just kept doing the work.
Stephen: Exactly. And then you’re no longer competing to keep the client. There’s no like goofy RFP or, “Hey, I think I found somebody to do it a little bit cheaper. This company over here will do it for 90 grand.” There is none of that, right? And that’s amazing. Now, we take this as a very serious responsibility, right? We don’t take client relationships for granted. We don’t get complacent. Our guarantee ensures that we never get complacent. And clients love that because they know the ultimate importance that we have on each of these relationships.
Drew: Yeah, great thought. Okay. So as we sort of wind down the podcast, I want to make sure…as you know, I’m a huge consumer of books and podcasts and anything I can get my hands on that makes me smarter. Which as you also know is not all that tough. But for me, the litmus test of a great podcast or a great book or a great webinar is can I take action on it? Is it something I can do something with? So I want you to give our listeners one or two things that they can do immediately in relation to our conversation.
So again, are they all going to jump on board and adopt your full 23 predictive marketing recipes of methodology? No. But how can they be a little bit more results-driven? How can they work with clients in a way that the client can see with great clarity the value that the agency brings in terms of ROI and revenue or sales or profits? Give us a couple of things that agency owners can implement or at least bring to their leadership team to discuss right away that they should consider doing.
Stephen: It’s great. So the first thing that I would suggest that those listening right now would do is go back to the middle part of this interview where you asked me to kind of articulate the vital metrics and how that’s measured. And then you asked me a couple of pushback questions and then we made that really crystal clear. So go back and understand that. Draw out a funnel on a piece of paper, and then take the 199 that I had mentioned all the way down to the 23 and all of those things that happened in between, and articulate or illustrate that funnel.
And then take that and make that your recipe in which to build conversations around. Have that funnel in place, go out and talk to a client and ask them questions about the behavior of leads going into the top-end of the funnel. The behaviors that are happening in between kind of the middle part of that funnel. All the way down to the bottom of the funnel, so that you can understand the psychology of their buyer. Just doing that will enable you to ask better questions, and elevate you from a vendor status trying to sell them like a PPC campaign or a lead page campaign or an email campaign to like partnership level.
Then when the client says, “Oh wow, awesome. You understand my funnel, you understand my consumer behavior” and so forth. And you’re like, “Yeah, we’ve got…” And then you can say, “What is your bounce rate on these landing pages?” And they’re like, “Well, what is bounce rate?” Then you can define bounce rate. “Bounce rate is when somebody comes to your landing page, they puke, they hate it, they immediately leave without making one single click. And guess what? We have a three-step process that we can use to reduce bounce rate.”
Now you’ve just proven to the client you understand the funnel. You understand the customer avatar. You understand what’s going on in the middle part of the funnel, and how to produce a better result outcome at the bottom. And, “Oh, by the way, we can reduce bounce rate from your 60 to 70% down to 30% or less by doing these three things. Let us do that for you.” So now you’ve given a very practical and tactical understanding of how the customer makes money. How your client makes money. And a very powerful optimization series of steps in order how to improve that, and you’ve elevated the conversation.
Drew: Awesome, awesome. Okay. So I’m going to give you an opportunity. Any last thoughts or something you think agency owners need to hear, again, in relation to our conversation today?
Stephen: Well, I literally think the biggest constraint, and I know this may sound simplistic, maybe even a little bit naive for some people, but the only thing that’s keeping you from doing this, it’s not the technical skills within your agency. It’s just because you’re afraid of it. And stop being afraid of it. I know that it sounds like mystic dark magic voodoo, but it’s maybe the fear of criticism. “What will my internal team think if we move in this direction?” Maybe the fear of criticism about your peers in the marketplace and so forth. But really your clients are going to continue to start demanding it if they’re not already doing that. Right? So really the only thing that is keeping you from mastering this is you. That’s it. The actual technical side of it is not that complicated. It is not mystic dark magic voodoo when you have the right strategy, the right recipe, and the right steps to follow.
So trust me when I say that your team from a technical perspective can absolutely handle this. It is just you deciding that will we actually make the transformational shift and move our agency in that direction? And if yes, the resources, the education, all of that stuff is absolutely there at your fingertips. It’s just you need to decide if you’re really going to be open to doing it. And if you are, there are so many great things, of course, painful things too, but there are so many great things on the horizon if you actually choose to make that decision.
Drew: Okay, that is a great way to end our conversation. I know how crazy busy you are, so I thank you for your time, I thank you for being so transparent both about the upside of the predictive marketing business but also the moments of pain that I know that you, like all the agency owners, have endured. And I’ve got to tell you that I think one of the things that I respect most about you is whether you have been knocked to your knees, or you are flying high with a client, you always keep your eye on the prize, which is serving the client well. Knowing that will serve you and your agency well. And I think that’s one of the reasons why you’re as successful as you are today.
Stephen: Well, I appreciate you saying that. That means a lot coming from you because you meet with so many agency owners and so forth. And I’m grateful for the invitation. Thank you for allowing me to be here and share some of this stuff. And I treasure being an AMI member, I treasure your mentorship, which is very kind of you. So thank you, Drew.
Drew: So Stephen, if anybody wants to a hold of you, if they want to follow up on any of these, if they want to start reading the content that you write, they want to find out about your books, what’s the easiest way for someone to get contact information or reach out to you?
Stephen: Well, my email address is pretty simple, it’s just Stephen with a PH, so S-T-E-P-H-E-N @predictiveroi, and you can, of course, find us at predictiveroi.com. Or if you want to take a listen to some of our stuff, onwardnation.com. That’s our headquarters if you will, for our podcast. Onward Nation daily podcast for business owners. So those three channels would probably the best.
Drew: Awesome. All right, to my Build a Better Agency listeners, thanks so much for investing the time to listen to this. I hope you took away a lot of great ideas, I hope some of it frightened you a little bit, I hope some of it inspired you a little bit. But remember that the goal at the end of the day is for you to build an agency that takes care of you and your family in the way that it should. So with that, I will sign off for today, and we will be back with you next week with a new issue. Thanks so much.
That’s all for this episode of Build a Better Agency. Be sure to visit agencymanagementinstitute.com to learn more about our workshops and other ways we serve small to midsized agencies. While you’re there, sign up for our e-newsletter, grab our free e-book, and check out the blog. Growing a bigger, better agency that makes more money, attracts bigger clients, and doesn’t consume your life is possible here on Build a Better Agency.