Transcription
What's up, ladies and gentlemen? Welcome to Drink from Spotlight. We're going to jump into all the notes that I have from my, uh, technically $40,000 consulting day. I paid 40,000, but when you factor in all the other costs, it was closer to 50. But let's go ahead and jump in.
So, before we even got there, we had to give a really large brief about our company, and I'm just going to share my screen just to make this easy on everyone, and uh, we'll go from there. Paraphrasing, uh, not nearly as eloquently as my Heros does, but here are a few of the major things that contribute directly to the success of your rollup.
Right, so you want—for all my accounting homies out there, my dream clients—you want to make sure that everyone is using the same financial structure. Right? You want to make sure that the financials read the same across all the businesses; that there's no weird variances between their financial structure, colors, branding. Now, we don't do this, but we may in the future, which is you can just recommend that your clients use similar color schemes when they onboard. Now, all of your clients are going to be outlined with the colored blue. And of course, the structure and the way in which they get clients, deliver their services—the more similar those things are, from their technology—the more recommendations you make, the more they adopt those recommendations, the more likely they are to have synergy across all their departments.
Churn is proportional to how often you bill. If you bill every minute, people will cancel your service very quickly. If you bill every day, a little less; every month, a little less; every year, a little less. So, often times, what I have been obsessed with was what you'll see here, which is I really like weekly billing, and that the clients are invested in our service every week, feeling the pressure of giving them deliverables every week. Whereas, if you're only—if you're only billing every month, you really only need to give a deliverable every month. And so, while I agree that this will, uh, decrease your churn for sure, I think that this increases—if you do a good job—it increases the buying into your service. So there's a balance here, and I—I want to emphasize this: this isn't either/or. This is one of the big unlocks we got from the event, which I'll explain later on. You can increase how much you get paid because there are 52 weeks, but if you divide 52 by 12, you get 4.3. And so, if you're billing monthly, you can basically get an 8% increase. So, if I say $2,000 a month instead of $500 a week, and I will end up making whatever the difference, you know, obviously $2,000 a month is $24,000 in a year; $500 a week, I think is closer to like 26ish. So you basically get a—you get an automatic raise just switching billing from monthly to weekly. And what's crazy is most people don't recognize the difference, but you do have to pay attention to your churn.
And if I'm an accounting firm, one of the things that I'm likely to do is if I have a client that's very consistently at the same level of revenue and complexity each year, I am more than happy to give them the opportunity to pay me in full at the end of the year for next year's services, because it will decrease the chances that they quit in the middle of the year because they already paid for a full year of service in advance, and their whole business model is about fighting churn.
So this was another big question that I had had for Alex that I really struggled with because when I looked at his compensation model for how he pays sales reps, and he basically said, "We only pay our sales reps on cash collected," that basically means that—so if you sell something for $20,000 and they only collect $5,000, they're getting a commission on the $5,000, and they're not getting a commission on the $15,000 that gets paid after to the company. I realized that that we introduced complexity into our own sales process by—by using this language, and I wasn't properly equipped to train people on how to do it well because I had no experience actually doing it myself. And so I passed it over to my sales team. I said, "This is the new way to do it; this is the script," and we literally didn't make a sale for 45 days. I've—I've never not made a sale in 45 days before. And while I certainly could have probably pushed through it and figured out how to, uh, get off or how to make this work, because clearly Alex did make it work, I just realized that this was not the right strategy for my particular business. And again, like we don't have—we don't have a churn problem, so we—we were solving for a problem we didn't have. And so I just immediately went back to the old way we did it, and sales immediately recovered.
So this was another interesting point, which is like how do you determine how much to discount your, uh, a full pay? So, for those unfamiliar with full pay, which just means if you want to pay the full amount of the thing, what's the discount that you get in exchange for this? And he just said, "It's—it's basically just a calculation based off of LTV." Right? So if you're—entirely based on LTV, 20K LTV, churn of 10% of LTV, LTV is 20K. So, in other words, you'd offer a 2K discount if you had a 10% churn on a 20K product, because that means that if you're collecting 18K, uh, you're—that's—you're basically just offsetting what the likelihood is of—of them churning. Um, so that's the way it works.
So this is—this was the big unlock for us, and I'm probably going to be giving things away in terms of the way our sales process works internally. I don't really care because I—I just want to educate people on stuff that actually works, and this will also work in the context of an accounting firm. But I—I kept thinking we had a churn problem, but we had an ascension problem. People didn't churn out of our program; they love the initial 16-week program, but I was shocked that more people didn't want to work with us over a longer-term basis. Like, I—I was just really surprised that people would be like, "This is amazing," and then I'd be like, "I'm good." I'm like, "I'm confused. Like, you're—" I literally had someone who's like, "You changed my life; I made 100 grand." I'm like, "Cool, let's keep working together," and they're like, "Nah," and I'm like, "What? I'm so confused. Like, I made you so much money." So, and they left the most glowing review you could ever imagine, and I was like, "This is so weird." And I explained this to him, and he's like, "Well, it's—it's basically just because you're already trying to sell them a steak after they just ate a steak. They don't want more steak right now; it doesn't—like, they don't need it right now." And I was like, "Okay, what do you mean?" He's like, "You should introduce this—this upsell earlier in the process and credit them." In other words, when they're the hottest in experiencing what you have to offer, give them the chance to work with you on a longer-term basis. And so this is—this is the best example I've ever seen of treating upsells like downsells. I didn't really understand what that meant. When people are loving what you're doing, when you're delivering maximum level of results, that's your opportunity to move them into a longer-term contract. And the way that you treat the upsell like a downsell is that if you premium—if you've actually used premium pricing to your advantage and you've said, "Hey, you know what? You've got this service proposition for," and it's over 10 weeks, and then you go, "But you know what? In week three or four or whatever, when you're really loving what we're doing, we're going to give you the opportunity to accelerate your contract, and we're going to go from, uh, 10 weeks to 50 weeks or 40 weeks or whatever, and we're going to do it for $20,000 or $30,000." And so, in the prospect's mind, they're like, "I love what I'm getting," and you needn't tell me I get to work with you for longer for less money over time. And the answer is yes. And so what you did is you increased the size of the contract both in monetary value and in length, but what you—what the prospect feels and what is very true is they received a much better deal in comparison to what they just purchased. And as long as they love what they just purchased, the likelihood that they're like, "Oh, I want to do this," is extremely high. So, in the other video, I talked about how we went from 30% to 80%; this is what we did. This—I went from talking about the thing at the end of 16 weeks to talking about the—the 52-week program way earlier on, and people were just like, "Oh my goodness, this is amazing; of course we'd love to work with you over the long term," and I'm like, "Well, that's awesome; we'd love to work with you too." And so that's effectively the way it works.
So this one's great: um, delayed unlockables. Um, so what does that mean? So, often times, we give too much value too fast, and it took me a while to realize this because, like, you don't want—want to—you want to prove your value, but you don't want to overwhelm the client, and there's a big difference between the two. And so what is that—what is a delayed unlockable mean? It's basically just within time in the program or within time within your service model, they gradually get additional things. So you don't want to give them everything immediately because then the value spikes super high and then it drops off super fast. And so you want to intentionally plot out when they get certain things. And so, in our—in our, uh, 16-week service, we have an extremely detailed roadmap of all the things that unlock as the clients participate in our service model. It's extremely—it's—it's eternal for us. I mean, the clients don't know, but then they're like, "Whoa, I get this; whoa, I get this; whoa, I got this." This is really all—and this is exactly—you want to basically—you want to plot out all of the processes. And we had done this before, uh, Alex, just to be fair, but we kind of got away from it a little bit because we wanted to really wow people, and then we went back to it, and it's worked really well again.
So I—I struggle with offer creation for cold audiences. When I say cold audiences, like they have never heard of you before; you're—you're making an outbound dial to them; you got to make a—you got to spark some interest with them. Uh, tough, you know what I mean? Tough. So I would—I would just encourage that when you're thinking about offer creation, you're thinking about how does what your offer does increase their overall status? Okay? And when you think about status, it's usually like, "I'm seen in a better light; people respect my expertise more." Yeah.
So this is obviously the big one: uh, keyman risk. Every accountant knows this: too much of the work falls on your shoulders. And so one of the huge—huge pushes we have for this year is getting our clients out of doing any fulfillment; that's our primary, like, focus for this year, because we know if we can get them out of doing the work, we make the business basically bulletproof. Because as long as they've got good marketing and lead gen, and they've got a good system for getting the work out the door that doesn't depend on them, uh, we really have no—we have really no ceiling on our clients' growth or the—the—the potential growth of a rollup.
And then how do you make it a good deal to join the rollup? So I think this is quite interesting, and again this is just like smart deal making. If you know you've got a really big payout in the future—whether it's two, three, four years down the line—you can afford to be patient; you don't need to make tons of money on your existing clients; you basically just need to do—do okay; you just need to like break even on them because you know you've got something big in the future. So you can afford to give them a discounted service model in exchange for their participation—or joining of the rollup. Uh, which I love this—I just love that—I just put this to him: "If I could do all of this with my own accounting firm, why wouldn't I just do this?" Like, if I could just grow my own firm, why wouldn't I just do that instead? I mean, it's been a question I've wrestled with for a long time, and a question I get from, uh, I'll just say high-to-low, uh, prospects sometimes. They're like, "If you're so good at this, why aren't you running your own firm?" And, uh, you know, there are a lot of different ways to answer that, but I think it just has to do with size of opportunity, and a lot of it is also just like staying in my zone of genius. Like, I love what I do; like, I truly love what I do. And I think the other part of it is like it would be the—the level of difficulty to getting to 100 million dollars with my own accounting firm compared to already having a vehicle that brings me really awesome accounting firm owners that are all aligned on the same—I already have the systems to do it—to just aggregate us all together. And he just, you know, again, he just made it super clear: "Your pathway to getting to this level of win is so much easier than that pathway." In other words, like the grass always looks greener on the other side; it always is like, "Oh, if I just go do that instead, that'll be easier, and I'll make more money doing that," and it just completely discounts the level of work you've already put into your current vehicle, often times.
This was just breaking down, uh, some of the different content strategies that he has. He—he has a bit of a different approach than I do. I just do once a week, like I'm doing right now; I just invite a bunch of people to a topic, and it forces me to do it. He's much more like, "Block a—a specific time; you just want to be able to get as much content in that block of time as possible; let the team cut it up and put it everywhere else." I'm a big fan of, "Let the team cut it up and put it everywhere else." And this is an interesting point: shorts have zero value except for facial recognition for when you run ads later. You know what's the most effective way to—to do paid advertising? When people interact with your organic content, you retarget them with paid ads. Reframing this is like: there's people who became aware of you because they like what you put out there for free, and then you pay to get back in front of those people, which is middle and bottom of the funnel, right? So I—I just like that; I just think that that's—I think it's a—I think a lot of people think ads are at the top, uh, because you're going out to cold audience and trying to bring them in. I much prefer the—the inversion of that, which is get good at regularly producing content that's valuable and useful, and then people who like it, you can retarget them with money, and then that's more likely to actually give you a return on your advertising dollars.
Yeah, just like how do you not run out of content? You can just tell—you can teach the same lesson from a different perspective. If your thing cost you $10,000, don't be afraid to pay $3,000 for a referral as long as you know what your margins are. And if you know what your—you know your LTV, excuse me, what your CAC is—how much it cost you to get a client—what—what works really well in a referral situation is what's known as a give-get strategy. Okay? And it's not probably on here, but—so give-get basically means what does the person who refers—the referee—uh, get, and what are they giving to the person that is the referral? So, uh, in—in, uh, just you know, if I'm—if I'm going to use the example in front of me, and it's—it's worth $3,000, I would give $1,500 of the $3,000 to the referee, and I would give the other $1,500 to the referrer from the referee. So you can create email copy that essentially is like, "Hey, Tim, uh, was thinking of you; just join this amazing thing—accounting firm, this amazing—this amazing marketing program, whatever—and as a heads up, uh, I got—I'm going to get $1,500 if you decide to work with them, but even cooler than that, you get a $1,500 discount if you decide to work with them just because I decided to refer you. And they love to help out the clients that give them referrals." So again, I get $1,500; you get $1,500; here's the person that you're going to be in contact with; they help me out; they're amazing; go ahead and talk to them. And you just literally copy and paste that; be like, "I'm going to give you this email to send." Okay? You make it easy for them to give you referrals. Again, it sounds so stupidly simple, but it works so well; it's ridiculous.
So, for those who don't know what hyperbolic buying means, I just want to—I want to unpack this—this point here, um, because this is really—this is really useful. Once someone buys one thing in a category, they're extremely likely to buy a lot more things in that category. So if I buy a pair of running shoes, I don't usually just stop with a pair of running shoes; I'll buy socks; I'll buy a tank top; I'll buy the—the like armband for the iPod; I'll—and so if you're like a business owner and you're like, "You know what? I'm going to buy my QuickBooks Online subscription today," well, guess what? You're not going to just buy your QuickBooks Online subscription; you're probably going to buy access to an accountant; you're probably going to consider buying a tax plan; you're—you're going to enter this—this field of—or excuse me, this phase where you're just like, "I need all the things to solve this specific problem," and then you're not going to probably spend money on it for a while again. Like, you're just—you're going to—you're going to scratch the itch as hard as you can, and then you're done. So the question is how do you start to trigger hyperactive buying cycles? Like, how do you make that—that process start? And then how do you get them into buying most or all of those things from you? Right? Like, that's the goal; that's what you want. So you want to think about this as like, "What are the easy wins that you can deliver to your audience that have—again—low costs to the business but high value to your audience?" And so, you know, I oftentimes try and just make the point that—so you want to think about this is like, "What are the easy wins that you can deliver to your audience that have—again—low costs to the business but high value to your audience?" And so if you were to try and be like, "Instead of not all the stats of your business correct, but get the five most important statistics of your business in front of you right now; make sure they're right," and get them to spend a little bit of money on that—seven bucks, 11 bucks, 100 bucks—"Data is more valuable than oil; I gotta get that; I gotta take care of that"—get some copy wrapped in there, and then all of a sudden, light bulb goes off, and now they're like, "That was amazing; I really like the way you did this thing," and now you want to make the offer; you don't want to wait on it. And this goes back to the point I was making earlier; it's like you think when someone has just spent tens of thousands of dollars with you, "Hold up; can't ask them for anything else; should not ask them for anything else." Like, no; they're still in their hyperbolic buying cycle. You know, when you buy a house, you enter a hyperbolic buying cycle; you got—you've got all these things you gotta get into your house; it—and sometimes that—that cycle takes a couple of months; it doesn't just immediately end. That's my point is like if I just bought the software, you can probably easily upsell me into a, uh, some form of, uh, accelerated onboarding or at least make your onboarding feel pretty damn good to reduce your overall churn and get me using it quickly. I mean, yeah, I—I find this one is, uh, fascinating. I talk about this a lot with, um, our clients. Often times, they're so—so excited to sell a client and have them on a regular recurring engagement that it just goes in perpetuity forever. Um, it doesn't even have fixed end dates to force the ascension conversation, or we don't strategically target a three- or four-week interval or three-month interval in which we go and we have a conversation about upgrading their level of service intentionally. Uh, so again, I—I think it's just again important for you to say like, "What's the next level, or what's the next step in the sales process? What does it look like? And when's the optimal time to implement it?" And, um, you know, the optimal time is not at the end of when they have finished their steak; it is before that. And the second best time is, of course, after they finish the process; ideally, you—you've continued to deliver results, and then you can again re-engage them or at least ensure that there's a new contract with a new price reflective of the next term of service. Yeah, this is—I—I emphasize this: clients add value rather than take away the price; never discount; change the offer if needed. I—this is—this is—this is a piece of advice we give in the program all the time. If you—if you just follow the best pricing advice in the world, it basically says you look at your top 20% of your clients—the ones who pay the most, who are the most engaged—go get more of those.
Was curious about the—the way their, uh, sales department was broken up. And so basically they have four business development people per closer. I thought that was shocking. That's the exact structure we have right now too, but, uh, four BDRs per closer. Just, uh, for those who are like, "How many outbound people do you need to keep a closer fed?" You have your answer.
Yeah, this is cool too. Um, so if you have some sort of process in which you sell a lower-ticket item and it involves some sort of like consulting or coaching, or if you bring them through the activation point on the call—in other words, whatever the breakthrough is that you know contributes to them sticking as a client or becoming a client—well, guess what happens? They're—they're way more likely to become a client. So, um, again, just don't leave the activation point to hoping they do the work; make them do the work with you; there's a huge difference between those two things.
So this—this took me a while; this was a big project that I finished last quarter, but geez, so—um, it's a pre-sale video. Right? So what—what are you trying to do in advance of a call with a—with a prospect? Ideally, you're getting the prospect to show up more prepared to buy. And of course, how do you do that? Well, you leverage video marketing, and within the context of that, these are the three things that you're trying to do: you want to kill objections before they even come up—time, money, fit, right? Uh, if you need to know the format, Jason Flagg—he runs a—or he has a book—what is it called?—one of the many great books, and you—you basically want to give them a lot of proof about what you do works. So it's a story of—of your journey with sprinkled in with tons of people who had the beliefs that the prospect has that holds them back, and then those beliefs are broken—not because you tell them—but because other people who are just like them are saying, "This is my experience." Big claim; address everything that is a reason why you don't believe me; start with not having the price, and then always have a price anchor. So, in other words, how much would it cost you to have an in-house accountant? How much—how much would it cost you to buy a franchise that gave you all these systems and took 30% of your—
Net, or 10% of your net, every single year? How much would that have cost you? And so you can, you can do that. So this is literally just, this is just the text to use. It works really well in, uh, in recruiting. Alex looks for a maniac; in other words, you want someone who loves to hunt, not someone who stops hunting when they get fed. This is, this was again just a huge one, um, for sales training. I had the big problem, which is you wait till the end of the role play, and you've got like two pages of notes of all the things that they screwed up, and some of the things they did okay or well. And then you just bury them in all of that, and they're like, "Yeah, boss," and then you do another role play, and they didn't fix literally anything, and you're like, "This is so true."
For even like when you're onboarding a new team member, especially in, like, in a fulfillment role, they don't know if they're doing a good job unless you tell them they're doing a good job. And the only way you can tell them they're doing a good job is if you're actively monitoring and working with it as they're trying to learn the job. It's time-consuming, but literally, like, bad behavior sets in super fast, and so does good behavior. And so if you want good behavior to set in fast and not bad behavior, you have to course-correct quickly, especially when you have this level of, like, sales training, like aggregated and structured. And like a lot of guys just don't want to put in the work.
Those are all my notes. Now I'm, I'm going to go ahead and just say the, the quiet part out loud here, or the what everyone's probably thinking: Was that worth it? Again, I'll just go back to what I said in the last video, which is you don't really need a lot to make your business a lot more money. Because if you just make one really good decision and you implement it over a long enough time horizon, you'll make a lot more money from that one decision, as long as you stick with it. Sometimes you'll implement something, and it won't work at all. I already referenced that earlier in the video: I made a change in my sales process, maybe could have worked through it to make it work, but I was solving for a problem I didn't have. And then you go back, you learn from it, and keep going.
So anyway, I hope you enjoyed that, and if you did, let me know in the comments section down below. I appreciate the time and attention as always. Remember that only you can create your dream firm, but we are here to help you every single step of the way. Have a fantastic rest of your work week, and we will see you in the future.