#120 – The Agency Model & Selling Services

What you will learn

  • A quick update about HealthAmbition and how we’re doing
  • The benefits and drawbacks of client work
  • The pros and cons of various business models for doing client work
  • Useful tips on doing client work to avoid mistakes we made in the past

What is it: something we did in the past, and you would need to pay at least $10,000,000 to convince Mark to do it again?

If you guessed agency work, then you’d be correct. Here’s a cookie.

cookie

As many in our audience know, we started our online marketing life working at an agency, enjoying all the benefits and drawbacks that entailed. After a few years we finally had enough, started working on our own authority sites and never looked back since.

The Authority Hacker Pro FB group wanted to know our experience and thoughts on doing client and agency work, so consider this episode brought to you by the AH community!

Note: By the way, we published had a podcast on this topic a while back. Our thoughts have changed a bit since then.

Quick HealthAmbition Update

Before we jump in, a lot of you have been asking about the state of HealthAmbition.

In short: yep, we lost 45% of our traffic. No, it’s not that big of a deal (at least financially), as our other sites are doing just as well or better than before.

We’ll keep an eye on analytics, there might be rollbacks or other factors to consider. We’ll probably do some testing as well to see if we can climb back up.

When Should You Consider Client Work?

  • If your job is too time consuming to grow your sites.
  • If you don’t have enough extra cash to grow your sites.
  • If you’ve been grinding at your sites for a while without any real success.
  • If you like working on many projects but didn’t get there with your portfolio.
  • If someone is ready to pay a lot for your services.

Business Models

Selling a Deliverable – Guest Posting, Link Building, Content Production

  • Service can be sold via automated funnels
  • Easy to understand
  • Limited responsibility
  • Priced on outcome instead of time, so you can gain leverage through efficiency
  • Easier to sell
  • Not responsible for results
  • Lower profit margin
  • Variance in monthly revenue
  • Lower-end clients (often with high expectations)
  • Competition
  • Low dependency

Other Variation: Productized Service (i.e Design Pickle)

  • All you can eat design for $x per month
  • Harder to set up – the Design Pickle guy had agency experience before

Custom Services

  • Limited responsibility
  • Higher prices
  • Needs proposals
  • More responsibility for results - without full control (e.g if content is crap)

One Stop Shop – Do All Their Online Marketing for Them

  • Control (well, sort of - might have to deal with their developers, etc)
  • High price
  • Clients are less experienced and prone to freak outs
  • Sucks when people drop off, especially with big clients
  • Often time-based (bad idea). Hard to scope outcome-based. Ideally % of growth but few people make this happen.
  • Difficult to sell due to personal relationships

One other model is to do a full time / part time contract.

Main Benefits of Client Work

  • You only need to master a few skills
  • Quick money
  • Get to job-replacement income levels real quick

Main Challenges of Client Work

  • Time trap – you don’t have enough time to build other business (e.g authority sites).
    • The last thing you want to do after your work day is work on another website.
  • Poor leverage on your time.
  • Clients can be demanding.
  • Clients can be irrational.
  • Can feel grindy – not that different from a job.
  • No full entrepreneurship experience.
  • Growth is tricky as there is a need to respond fast to demand (new clients).
    • You end up hiring non A-Players
    • Client volatility can be hard on profitability/cash flow
  • You are actually just as reliant on google updates as with an authority site
  • You have to keep a steady pace of work for clients
  • Asset value is much lower than authority sites
  • Even as you grow, it’s hard to move away from day to day work (e.g client relationships)
    More people-heavy

Tips If You Want to Do Client Work

  • Decide if this is a long term thing or a means to an end.
  • Have an exit strategy.
    • This type of business is difficult to sell unless it runs without you
  • Seek profit, not growth/revenue. Economies of scale are not that great.
  • Set clear limits
  • Template your work
  • Reply to emails fast
  • Price high and discount if necessary

The Ultimate Question: Would We Do It Again?

Mark

Hell no!

With authority sites it’s like night and day. Yes there was a grind for a year or two – but it was infinitely more rewarding financially and creatively.

Also, it’s just more fun – even with a penalty. Not “oh what are the clients gonna do” but rather “ok how do we solve this.”

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6 Comments

  1. Interesting podcast gentlemen, I didn’t know you guys ran an agency before!

    I’d like to share something with you and your readers – especially for those who run a service and want to transition to authority sites – that I hope will be of value.

    Like yourselves I’m quite in love with the authority site model (or the idea anyway), so I’ve adopted a sort of hybrid approach with our productized service business in which our team members also write our content, and we’re slowly turning our site into an authority site with that very same content. :)

    We’ve already started generating decent affiliate commissions (albeit not consistently) and we haven’t touched outreach and link building yet. Any rankings we have are based on a few backlinks and a pretty modest domain authority.

    To give a bit more context so you can understand this strategy, our service is called MemberFix and is basically “unlimited” tech help and tasks (WordPress, GravityForms, integrations, 3rd party apps, membership sites, a bit of design / coding, etc.) – kind of like a bigger, badder WPCurve and not confined to just WordPress.

    So the basic strategy is to help customers with their tech issues and tasks, and then document it on our site in the form of an article.

    For instance, one of the tasks we did for a customer was integrating ClickFunnels with MemberPress. This was a bear of a task because of a number of unique features in this particular case. E.g.,

    – The customer has both Paypal and Stripe active (need 2 sets of Zapier zaps)
    – Customer uses payment plans in ClickFunnels which send out notifications only on the first payments for some reason unlike subscriptions

    …and a few other details I won’t bore you with.

    The point is, when we finished up the work I then wrote a big ass article (2 actually, plus YouTube vids) covering the “how to” in a step by step format. Almost like an SOP but for public consumption.

    I did some keyword research in Ahrefs to try and target the article but there wasn’t much in the way of volume for any terms that I could target specifically. So I just said “screw it” and figured if our customer had this problem there are probably other people who do, too (considering that both ClickFunnels and MemberPress are really popular apps).

    So I wrote and published it anyway. It took probably 10 hours, which is a lot for a founder to allocate to content. But writing is the activity I enjoy most in my business so I rationalized it as important. :D

    Well, as it turns out, within the next 60 days or so that article had brought in 2 new customers to our service (who asked us to set up the very integration we documented), plus we got us 2 commissions for MemberPress (~$120) and 2 commissions to ThriveCart ($650 total).

    So that pretty much vindicated my harebrained scheme of using the tasks and tickets our customers send to us, resolving them, and then writing them up as mini case studies. A lot of the tasks we do are kind of esoteric, niche solutions to particular problems around particular apps or themes. But they’re not so esoteric as to occur just that one time for our customer; there’s got to be others.

    And at the same time, I’m racking my brain trying to figure out how to silo and sub silo the site using your siloing article when there are so many interrelated plugins, themes, apps and categories!

    I’m not totally certain whether this hybrid approach would work for any and every productized service, I think probably not. But I would imagine any kind of service where you’re solving unique problems that other people may have, that you can document, presents a great (paid) opportunity for you and your team to make headway on an authority site in your space which not only generates commissions but also drives business.

    Failing that, you can always document what you’re doing in your own business. I had a podcast production business which is now defunct (site is still up if you want a laugh: https://justrecord.it). There’s nothing about the deliverable that one could blog about. But you could certainly write about editing audio, different audio editing apps, write about transcription, podcast statistics, etc.

    Long term, if we can manage to build THE authority site in our space, and I think we can and are well on our way, it will give us the option to either continue on with the hybrid model or focus entirely on the authority site model.

    Because for all the reasons you mention in this episode and more (including resale value of a services business vs an authority site), services can be a headache!

    However, to try and keep things objective, I’ll also say that moving away from an agency model to a productized model has allowed us to become very process oriented, which has made this business far less demanding and stressful than it was under an agency model. So I wouldn’t mind scaling our service if I can maintain the same freedom I have now with our relatively modest customer base.

    I wholeheartedly agree that #AgencyLife sucks and I agree with you guys that productized services are a different beast entirely, almost to the point where you can’t even really call it a service or an agency. It’s more of a product. I wrote about this transition in our business on WPCurve’s blog a few years ago. A lot has changed since then as you can imagine, but it’s still a relevant description of the transition to a service where hard terms throttle workload, stress, and abuse from unreasonable customers:

    https://wpcurve.com/productized-service/

    I would also imagine that even though you guys are doing authority sites now and they’re superior to services in virtually every respect, a lot of your skills around systemization, processes, automation, organizing workflows, etc., comes from that formative agency world where that level of fastidiousness is the difference between coming into a relatively cool job vs a disorganized nightmare. :) Do you think that’s true? Or did you learn most of your authority site skills working ON authority sites specifically?

    Finally, I want to make an important note for other services business owners.

    The final piece of the puzzle that made things really start coming together for us with the business itself, and with the authority model specifically, was hiring “rockstar ninja samurais”, or whatever the hell the cool, Silicon Valley term is. >_<

    Specifically, I scrapped any hiring attempts in Asian countries and focused entirely on Eastern Europe. It helps that I'm Ukrainian and know how Slavs think. But even if I weren't, it would still be obvious that the quality between Eastern European team members and virtually everybody else (adjusting for price) is like night and day. It completely changed the economics of our business.

    Our guys are mostly developers and they weren't super excited when I made writing articles a requirement. But with that beloved Slavic stoicism they've adapted and now they're producing some really, really excellent content.

    I have to note that it took a few months to get going on this because they were a bit timid to write. I also realized that I had to remove all friction which meant assigning topics myself, giving detailed briefs, assigning word counts, hard due dates, and trying to match topic with a given team member's areas of expertise. I basically told our guys to write the steps and include the screenshots and I'll edit it all myself and turn it into a nice post.

    So that's what's been working so far for us, hope it's useful to somebody. :)

    And thanks to Mark and Gael for publishing this episode and providing this platform to discuss these issues!

    Best,
    Vic Dorfman
    Founder, MemberFix

    1. Hi Vic,

      You win the comment of the month award. Thanks for the detailed response. I learned a new word too: fastidiousness. And yes I do think some of that came from the agency side of things. But I’m also innately quite an organized person.

      One thing that turns me off of the hybrid approach is spreading yourself thin. When I look at businesses that are 5-10x the size of ours, I look for commonalities. Almost all of them are hyper-focused on doing one thing exceptionally well.

      We do get a lot of people ask us if we can build sites or do link building for them. We always say no, but one option could be to work with certain vendors and create some kind of community there. Again though, it’s a distraction from making new content which is at the core of what we do.

      I definitely agree with your hiring approach. Check out the book ‘Who’ https://www.amazon.com/Who-Method-Hiring-Geoff-Smart-ebook/dp/B001EL6RWY if you haven’t already.

  2. Unique Article Wizard and BuildMyRank….guys I kinda got misty-eyed hearing those names again.

    Back in the day? Absolutely. Simpler times, but way more spam

  3. Really enjoyed this episode.
    So from the different models you talk about, can you direct me (us) to a couple of examples of funnels and agencies that are doing what you talk about? It’s nice to see an example tha models what you described in the episode. Thanks!
    Ps. So pumped for TASS 2.0!!

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