The Blog

B2B

Double Your Customers Overnight with Channel Partnerships

You’re grinding to get more customers. Cold calls, social media, sales sales sales… But despite running yourself ragged, new customers still seem painfully slow to come. What if I told you there’s a way to dramatically multiply your customer count without burning yourself out?

What if I told you that I used to be an executive hired to build this exact kind of machine – resulting in 2x the number of customers a regular sales team could close?

Enter: channel partnerships.

Channel partnerships are when you team up with other businesses to access their customers. Instead of selling directly to end users, you sell through a channel partner who delivers your offering to their existing customer base. This opens up entirely new avenues of customer acquisition by leveraging your partners’ efforts instead of trying to do all the heavy lifting yourself.

I was hired for Strategic Partnerships because I’d spent a decade negotiating these deals. And it was time for my new company, Reef, to ramp up sales. Now you get the benefit of that:

I’ll describe what they are, how to create them, and then give you a free worksheet so you can shortcut finding the right partners for your business.

Why Channel Partnerships Are a Game Changer

Relying solely on direct sales forces you to start from scratch with each new customer. You have to generate leads, nurture prospects, and guide buyers through every stage of the sales process. That require tremendous time and effort – and you’re limited to the number of leads you can generate on your own.

You become the bottleneck.

Channel partnerships blow the doors wide open. By accessing an established company’s customer pipeline, you can quickly scale the number of customers and revenue with far less hands-on work.

Here’s why this strategy can supercharge your sales efforts:

1. Get Instant Access to Qualified Leads

Cold leads are hard to convert. With channel partnerships, the leads are pre-qualified. They’re already customers of a partner who knows them well. You already know referrals are the highest quality leads out there. Channel partners are referrals on steroids.

2. Leverage Existing Trust

Your partner has already established trust and credibility with their customers. Now you get to ride on the coattails of that hard-earned goodwill. Customers are more likely to buy from a familiar source.

3. Let Your Partners Do the Heavy Lifting

Why try to scale a sales and marketing team when your partners already have an existing process? They include your product in their sales materials, email campaigns, and client communications. It’s not hands off (more on that later) – but it’s a great form of leverage.

4. Gain Customers in New Markets

Every partnership opens a doorway to an entirely new customer segment. You’d spend a small fortune trying to reach and win those customers through traditional channels. Not just in marketing dollars, but in trying to deeply understand that segment and spending time trying to figure out the channel.

How to Identify the Right Potential Partners

With so much to gain from partnerships, how do you pinpoint the best companies to team up with? Here are 3 characteristics to look for:

1. Existing Customer Base with Demand for Your Product

This one’s obvious but essential. Your partner should have a large base of customers that map closely to your ideal customer profile. Even better if their clients have already expressed demand for a product like yours. See the worksheet for more on how to think through this.

2. Non-Competing Products and Services

You want to identify partners, not competitors. Seek out companies that offer complementary, non-overlapping products and services. This way you’re expanding each other’s ecosystem instead of just stealing market share.

3. Strong Reputation and Industry Connections

Well-respected partners give you instant credibility with their customers. And companies with large networks provide access to their extensive web of connections. Make sure their values align with yours and your company’s. Then leverage their reputation and reach for maximum impact.

Crafting Win-Win Partnership Proposals

Once you’ve identified prospective channel partners, it’s time to make your pitch. The key is crafting a compelling win-win proposal. Here are proven tips for putting together a partnership proposal that closes deals:

1. Do Your Homework

Remember that partnering isn’t always an obvious choice for them. While you’re short-cutting direct selling you still need to sell the partner on the idea. Take time to thoroughly understand each prospective partner’s business model, pain points, and goals. This allows you to tailor a pitch that solves their specific problems.

2. Focus on How the Partnership Benefits Them

Don’t get overly distracted selling them on why your product is great. Explain how partnering with you helps them achieve their business objectives. Make it all about them. Once they’re sold on that, then you bring in why your product is the right one to get them there. But start with them, not you.

3. Limit Required Effort on Their End

The easier you make the partnership, the more receptive partners will be. Develop turnkey materials and programs that require minimal heavy lifting from them. Remember, their organization is going to have a lot of inertia. They’ve been doing things without you for a while. For example, sales reps won’t know who you are and why it benefits their customers to pitch your solution.

4. Offer Incentives and Perks

Special discounts, bonuses, and added perks make the partnership more enticing. Sweeten the deal for them. This goes for their sales reps too – unless reps are comped on selling your stuff, don’t expect much traction

5. Outline a Clear Revenue Sharing Model

Define the compensation structure upfront so they immediately grasp the revenue opportunity. Make sure it’s generous enough to get them excited. Build in checkpoints so that you can tune what’s working best.

Managing Partnerships for Maximum Impact

You worked hard to establish these strategic partnerships. Now it’s time to manage them for continued growth and profitability:

1. Assign Partnership Managers

Appoint internal reps to manage partnerships as their full-time role. Partnerships are NOT set and forget. They require attention to be successful. This ensures your partners receive the dedicated focus and support they deserve.

2. Set Clear Objectives and Metrics

Work with each partner to define shared objectives, performance metrics, and processes to track progress. This keeps everyone aligned. Check in on those metrics at checkpoint meetings.

3. Communicate Openly and Frequently

Set recurring meetings and calls to touch base, address concerns, brainstorm improvements, and keep the relationship strong. Make them feel valued.

4. Collaborate on Marketing Campaigns

Work together on co-branded campaigns and content to educate their audience and promote the partnership’s shared offering. This amplifies reach and impact.

5. Make Partners Look Like Heroes

Provide exceptional service, resources, and support that helps their customers succeed with your product. When partners look good, the relationship thrives.

6. Continuously Refine the Partnership Model

Solicit regular feedback to identify ways to improve the partnership and increase mutual revenue. As their needs evolve, evolve the partnership model.

Time to Stop Doing it Alone

If constantly chasing new customers has you burned out, channel partnerships can be a whole different way to approach customer acquisition. When you reduce the burden on yourself and get leads through trusted partners, you’ll be working smarter, not harder to get new customers and revenue.

Want a free worksheet to launch your first successful partnership? You can find it at CEOworkbench.com.

August 28, 2023
Link

How to Exit Your Agency (Or Any Services Business)

Discover a weekly list of short, actionable steps to get out of operational deadlock, build a self-managing team, grow strategically, and increase company value in the Boardroom Bulletin™.

August 26, 2022
Link

Crash Course: How to do YouTube Advertising

Raj and Hanna uncover what you need to be successful getting started with YouTube advertising

July 22, 2021
Link

Q&A: Business Matchmaking Platform Strategy

This platform successfully matches people for business meetings. What’s the best way to get traction and position for acquisition?

March 10, 2021
Link

Q&A: Building a New Startup Community

Jonas is building a new community for startup founders and had questions on how to grow the community, the business model, and how to give value.

Transcript:

Jonas: I would really like to talk about a project which I’m working on and I would like to hear your thoughts about it. I’m working on this project called Affordance and basically, we are just focusing on very early-stage founders who are working on on-site projects, and we are looking at how to scale that into startups. So you might see it as a pre-accelerator kind of startup, pre-Y Combinator startup. We are looking at some of the bottlenecks that they have in the very early stages, and you’re trying to remove those and help them. 

Raj: Gotcha. And is this a service? Is this a platform? How are you doing that?

Jonas: So it’s a platform. Inside the platform, there are different kinds of services, like consulting as well. Something like what we are doing now, so you can consult with experts, but you can also find people to work with. You can find deals that reduce your startup costs. Some of the things that usually startups have to pay for. Those kinds of things.

Raj: Gotcha. What’s the goal of this project? What are you looking to get? Are you looking to take equity in these things? Are you looking to sell them services?

Jonas: Very good question. That’s the long-term view. The long-term business plan is to have some equity in the product. Also to be able to raise a fund and also inject it back into the platform for projects, which we are growing. 

Raj: So now I understand what you’re trying to do. What’s the problem that you’re trying to solve today?

Jonas: The problem is we already know that there’s a big mismatch between side projects and investors. Investors really don’t pay attention to that at all. When you’re talking about a side project, it’s probably not yet found its customers and probably haven’t really grown that much in terms of revenue. So it’s very hard for investors to really connect with that. Getting investors on board; I would say the main problem is there’s a two-sided marketplace, whereby investors are not really on board and the founders are really on board. But the other parts, which are really the anchor, are not really on board, such as investors and experts.

Raj: Let me ask a big question, which is maybe there’s a reason why the investors aren’t on board, which is that so many of these projects don’t go anywhere or are actually bad ideas. So how do you address that? You wanna get investors on board, so how are you addressing the issue? That’s 90% of these, 99% of these will go nowhere.

Jonas: Right. Very good question. So that’s pretty much it, we know that there is a high rate of failure, but we really don’t know the reasons. We really don’t know the reasons why those failures happen. The hypothesis is that if we remove the very common obstacles, perhaps we can also increase the rate of success and on the platform will be able to filter as well. It’ll be an application batch by batch basis. That’s another way to reduce the risk of a high failure rate.

Raj: So you are gonna be doing some filtration before they get into this platform. Now, are they paying you for the platform? Is it a free community? What’s your model? Because if you’re talking about raising and you’re building a two-sided marketplace, which I’m telling you right now is the hardest thing in the world to do. How are you gonna get there financially?

Jonas: I would say, to be honest, I really did think in the beginning about making it a paid platform, but then I look at my customers, I’m thinking of side projects, early founders. I feel like they’re not the best people to be asking them to pay so much. So for now, I just made it free. But some of the core services, like talking with some experts, perhaps can be paid.  It’s experimental. I don’t know what you think about that one. 

Raj: It’s possible. Let’s say you got an accountant, you get a lawyer, you get a hosting company. For some of them, like lawyers, you can’t share fees. You can’t share in any of that revenue, but for accountants, you can get referral fees, affiliate commissions for various platforms. Presuming that they’re consumed, my gut is that’s not gonna be a material amount of revenue.  Certainly, not enough to do paid advertising, to get these people. That my gut, feel free to prove me wrong. Because you’re looking for people with side projects. It’s really hard to identify who these people are because they might have a day job at Cisco and they’re coding at night. They want Cisco to know about this. So they’re not posting anywhere. It’s not on their LinkedIn. There’s no way to know they have it. You have to be doing some pretty broad-based marketing or organic marketing on LinkedIn to get these people in there. It’s gonna be simply too expensive to pay, to get people on your platform compared to the revenue that is gonna be offset there. So, you’re gonna have to bridge that somehow.

Jonas: Yes. Right. That’s absolutely fascinating.

Raj: Yeah. I guess then, your question is how do you start building the marketplace? Is that what you’re getting at?

Jonas: I guess it might be something like community. I guess the community is more towards founders and experts. 

Raj: Exactly. I think you’ve been thinking about this a lot longer than I have, but I would think about running events, online events.

Jonas: Right. Beautiful.

Raj: You’re building this in your closet. Doing more like a webinar-style, inviting some of the experts who would be in the community. Go find those experts, invite them and then do specific events that you’re building a product in your basement. Here’s what you need to know. You bring the experts, they give 10 minutes about it. And then after 15 minutes, give some value. And then you say, if you want more help, here’s how you apply. Then you give them the way to apply and get in there. And essentially use that as a marketing engine. Linkedin is gonna be your friend. Absolutely. You can stock up on product hunt looking on LinkedIn, all these places and start doing that. And I do it with events

Jonas: Wow with events! Absolutely a great idea. I like that one. I definitely think that would be the approach that I will take with this one.

Raj: Good. You’re gonna get it there. And that is a way you can do it with pretty much zero cost. I mean, close to zero cost. If you’re doing it with events, it’s just all your time. Then the community itself, have you built that, or is it something you’re building now? 

Jonas: The community of founders is, there are people waiting for the product to launch and they are really interested in grabbing it. The one other idea that I’ve been thinking about is that if it’s batch-based and you also create those aspects that will help them if they go. Let’s say for three months. So that could be another way once there is a community, that would be another way to accelerate the whole thing.

Raj: I like the curation idea because a pure marketplace is really hard if you’re waiting for the lawyers and the accountants and the tax experts and all these folks to show up and you don’t know who’s gonna participate. If instead you go and you say, “Hey, you’re a good startup lawyer. You’re not a partner at a big firm. You’re still looking for a business. You love the startup scene. Come in here, you’ll be our guy while we start this thing.” And you get those stable people. Then it’s not really a marketplace and it becomes a lot easier because now it’s a curriculum.

Jonas: Exactly. That’s how I’ve been recently thinking about it; that it’s more becoming a curriculum and knowledge base.

Raj: Yeah, exactly. I think if you do it that way and or not that’s gonna depend. I mean, you could do it in a batch because if you are making a curriculum, one good way is to do your first batch and you develop the curriculum as you go. All you have to do is the outline. And then you do a series of training, you record the training and there’s your curriculum. Everyone else can go through it.

Jonas: Okay. That’s beautiful. I’m just wondering about something, is this recording available? 

Raj: This one that I’m making right now? Yes. I’ll send it to you.

Jonas: Oh, that would be great. Appreciate it. I’m finding this very interesting. And perhaps, for the last few minutes, I was just wondering if you could tell me about Five Minute Accelerator and your approach, what you’re doing.

Raj: Yeah. So essentially I’m doing these because I’m doing some investments in companies, but I’m not always available to do that. I make these recordings because I think it’s a kind of thing that is very educational. I share these recordings so other people can see the kind of expertise that I can bring to the team. And it’s a way for me to attract good companies to me. And at the same time, give you free value. Hopefully, as you succeed in the future, you’ll think of me. 

Jonas: Definitely!

Raj: It’s a combination of giving out the best advice I have for free and guess what that’s marketing

Jonas: Now, I’m really curious about this idea because as you mentioned, this marketing route is very interesting. I’m thinking about what would be your interest if you are on the platform and you’re able to do this. Let’s say like once a month or whenever you are available.

Raj: I can try it. So set up the platform. If you can make sure that people will show up because what I don’t wanna do is to be waiting around, have no one to answer questions. But if you wanna either promote a Five Minute Accelerator to your community or we can do something that’s similar to it there. Let’s talk about it. You just shoot me an email. You should ever need a reminder for the session. You just reply to that. Tell me when you got it set up. Once you’ve got people in the community, then let’s talk about what we could do.

Jonas: That’s beautiful. I’m very happy and honored to talk with you. I really appreciate it. I have to say your advice is priceless. 

Raj: Well, I’m glad it’s helping. As you’re building and you’ve got some more questions, just hop on another one of these sessions. I do them pretty regularly. As you’re growing, you have more questions just pop on and we’ll talk again. Okay?

Jonas: That’s beautiful. I very much appreciate it. 

Raj: Okay Jonas. Well, great talking with you. Be in touch. Email me what’s your community set up or pop on here and we’ll talk some more. Okay?

Jonas: Right! Thank you very much. Take care.

Raj: Take care now. Bye.

For beginner and basic business articles, visit here.

March 5, 2021
Link

Q&A: Increase Customer Engagement in SaaS

The key to this SaaS platform’s success is end-customer engagement. How can they make sure users stay involved with the platform?

Transcript:

Greg: Basically my question is this. So we’re a B to B to C solution. If I don’t create a low friction, high engagement environment. If we can’t keep those applicants involved and engaged. Working with us, if you will, to stay in the game, to win that job we suck. Right? If we’re not successful at retaining C in the process, B doesn’t pay us. And if we’re not successful in delivering a totally new and amazing experience that C tells everyone on LinkedIn and Instagram, we fail. It’s as much of a recruiting exercise, it is what’s called recruitment marketing. Anybody talking about recruiting marketing, I think is defining it differently. That’s what we’re in search of. We’re trying to really figure out what makes us sticky, what keeps people involved. And at the end of the day, of course, if we don’t reduce our client’s cost of hire and increase their number of candidates and the value of the candidate, and again, we fail.

Raj: Let’s get really specific. So your customer is the corporation, right? It’s a company that’s hiring, they’re going to be paying you. Your question is more an engagement and retention question in terms of, they post a job posting, they’re running whatever kind of system that they’re running right now in order to have applicants. They’re going to layer you on there. And your question is one about engagement? How you keep the applicants engaged.

Greg: Yes. So you’ve got this big funnel, where they’re spending millions of dollars advertising and getting all these applicants in. Today with a large number of unemployed, indeed making it a LinkedIn, making it really easy, just to push a button, apply, apply, apply. We’re getting many candidates who are just simply not eligible. Shouldn’t have applied to this place. And so by this old-fashioned technology, you’ve got this process of just “Dear John, thanks for applying to us last year.” Even if you shouldn’t have applied, you’re off. And if you spent the weekend building a cover letter and applying, and that’s all you get, we’re still off. So that’s where we take over.

Raj: Your question is how do you engage the applicant to stay excited about the process and build a brand for your client who’s paying you the company?

Greg: Yeah. By a series of questions that are innate to me when I’ve done for many years and how I would qualify someone. Keep people engaged in that and essentially weed out those that the recruiting team should not be spending time on.

Raj: I think there are two things, but you’re right. It is a marketing question. It’s marketing to the applicant’s question. It typically would be about consumption and engagement. Is there enough content there that’s going to the applicant telling them what’s happening? The more that you can provide a skeleton template for your clients, or do that for them because what they’re going to do is they’re going to plug this in and think it’s magic. But it’s not magic because their brand voice has to come through. They have to communicate certain things. The more you can create that campaign for them and the structure that works and test it across multiple clients that are going to pay out a lot. And the other thing is to consider using multiple channels of communication for the applicants. For instance, not just email, try text messaging and things like that. Much higher engagement with text messaging, super high engagement, especially if you send videos about here’s, what’s happening more about the company. Think of it as a drip campaign and that you wouldn’t in a marketing context.

Greg: Correct. Completely used to that. We assume or come to expect that. So why are we treated differently?

Raj: We’ve got about a minute left Greg before the next person will hop in. Is there anything more that you want to talk about? Any specific questions about what you’d like to do?

Greg: I’m not really sure… I guess there’s a phase next if this is something that’s interesting to you. Maybe you could tell me what that might be. And if you think this is interesting enough.

Raj: Why don’t you shoot me? I think you’ve got a reminder email for this. You can shoot me just a little deck or something and I can take a look at it. Then we can see if there’s a match there. Typically I’m just not really actively doing something stuff this quarter, but I’m happy to take a look. 

Greg: Yeah. Perfect. 

Raj: Okay. Well really nice to meet you, Greg, and shoot me that note.

Greg: Thank you for taking the time. I appreciate it. 

Raj: Alright, Take care.

February 26, 2021
Link

Q&A: How to Increase Sales Before Going to Investors

Anton’s company wants to get funding, but can’t answer when investors ask his cost to acquire a customer. In this Five Minute Accelerator session, Raj breaks down how he can answer the question, and what to do first.

Transcript:

Raj: Hey Anton! How are you?

Anton: Hey Raj, I’m doing well.

Raj: Good. This is your 5 minutes to ask any questions you have. It’s not a pitch. It’s really designed to have you get any questions that you have and prepare you for a pitch. Anything that you want to talk about? 

Anton: Yeah. Essentially the stage we are at is that I’m basically a developer myself. I’m not a business founder. And we do have a lack of sales or business, founder’ sex appeal. Do you know what I mean? When you actually talk the talk that investors do like. And when I start explaining stuff, investors get bored, and they’re like, “Oh, this guy is a nerd guy. We don’t like him to be the boss.” What I’m trying to figure out really is that we basically don’t like to waste time, which has got to the place of figuring out the problem. We are pretty much fanatical about it. We are deep there. We would talk the language of our customers. They are not necessarily sometimes on the level they should understand us. We were really working with marketing people.

So it’s all work in progress. The issue here is that when I’m bringing to the table, this is what we’re selling; this is how we’re doing. This is the money we are taking from the clients. That’s what they are paying us for, blah, blah, blah, all this stuff. The next question is, “What’s your cost per acquisition?” And I’m like, “Yo, Great question!” That’s why we are talking. Give me the money. I will hire like PPC, all of these marketing, money-burning machines. They will throw it to Facebook, Google, and stuff because I burned 15K of my own funds and had gone like this. This goes crazy because we seed 1 million, 2 million, 5 million, in some cases. So how to explain properly that you are basically raising to figure out those numbers because we now make sales throughout the box. We do cold emailing. We do LinkedIn. We do numbers. We do feed developers on the payroll. All of this stuff, obviously it’s not impressive. It doesn’t go like this. Nobody’s excited when I’m showing, “Okay, we can sustain.” But how do I answer this kind of thing or how I’m going to explain to them that it’s actually the cause I’m coming for the money. 

Raj: Okay. I Got it. Let’s take a step back and help me understand what’s the price point of your product and who is the ideal customer?

Anton: The customer is the merchant who uses platforms like Shopify or big commerce. They do have a marketing span. They are actually concerned about their front-end performance. They are concerned about not only how fast their front-end is but how fast they build things. They are also concerned about how much it costs them to build custom things for their own store: the development, cost of labor, cost of bringing time to market, and stuff. And the price point is we do charge them a free license. If they have their own developers, “You take it, go, and good luck.” There is a 399/month, which has the ability to influence our roadmap and ability to buy our hours. Our core engineering team hours to help them tackle their own challenges and stuff. And there is a 1K/month. It’s like Shopify plus, but twice cheaper and five times more sexier. At the end of the day, it’s for someone who wants to have a managed approach. They just pick up the phone, “Yo guys, we need this thing, like I don’t care.” And this has three pricing plans free, 399, and 1K.

Raj: Okay. What’s the breakdown in terms of service delivery of product versus services? Because it sounds like there is a managed services component to it. And how does that scale? I guess this is my first question. 

Anton: So it scales badly. And that’s the problem, obviously. We’re solving it by hiring partners. We are solving it by recruiting freelancers that would feel out of the marketplace. We do understand that investors don’t like this labor part of the thing. They want pure MRR recurring stuff that comes without the attached meat of the humans. Humans are not sexy; we know about it. My goal is to bring to the table themes marketplace because one of the byproducts of what we did is basically a cross-platform front-end, which means that if you build a theme that works for us as a middleware, it works for any platform. That would also bring the outdoors together. I actually don’t think which platform I should choose for my next theme. They just choose the storefront. And it would work on Shopify, on big commerce, and we’ll launch Magento then. Basically, it would work on any of those platforms. They build once, and they have three different platforms. This is something that would also bring in additional revenue and additional stream simply by having a marketplace of different templates.

Raj: Gotcha. Now that I understand a little bit what you’re doing. Let’s get to the meat of your question. Your immediate question is they’re asking what’s your CAC, and you don’t have one because you’re looking for the funding to prove out the CAC. Right? Chicken and egg problem. However, you told me you’re doing outbound. Let’s reduce this to a number somehow. If you can show that for every 1000 outbound emails, you are getting this many opportunities to take it through the sales pipeline,

Anton: Yeah, I can show it. 

Raj: And then, now you build-out. This is what it would cost if we did this based on SDRs. Now for just hiring prospectors, this is what my capital needs would be. I know that this works because I’ve backed out the numbers, and you say, “Look, we can scale this way.” And while we’re scared of it this way, we also want to start to reduce the cost of the dependence on the SDRs by using some marketing dollars to get inbound leads to feed them because that’s going to be cheaper. We’re going to start this way, and you’re going to build your economic case based on evidence that you have that’s provable. Then you’re going to say, “I’m also going to allocate this much budget to testing.” The PPC or whatever methodology you use, whether it’s going to work on Google or you’re going to need LinkedIn ads, Facebook ads, whatever it’s going to be. I’m going to be testing this as a lead generator for that. Then our prediction is that the model will cut the cost by whatever. Then you can show your costs going like this, and then the performance going like this. That’s what they want to see. And it might also deal with the kind of investor you’re talking about. 

Anton: Oh, yeah. For sure.

Raj: If you’re getting the question, which I would ask before, “What’s your CAC?” That’s because you’re looking at an investor who’s typically waiting for something that’s more proven in the marketplace versus an angel who would be willing to take more of a flyer. But if you can build that case based on your outbound, then I think that’s how you guide that conversation.

Anton:…Got it. Okay. 

Raj: If you haven’t testing. You said you blew 15K on testing right away. You should be able to test a little bit, 5 grand a month budget unless you’re in those hyper-competitive markets. You should get, after a quarter or so with 5 grand a month; you should at least get some early signals directionally about what’s it costing per click per lead. How many MQLs do you get? You shouldn’t need to burn 15K and have no data to show for it.

Anton: Oh yeah. I do have the data. The thing is that to actually make it properly, the reality is that we need to go and use very focused media outlets, like the CSS tricks or web designer depot, where the cost of sponsoring just to put this thing is 5k starting. It’s not even disposable like Google AdWords. That’s the issue. Because we figured out that the targeting on e-commerce or targeting on merchants is broad enough that you are just gathering from the market, all of those teenagers that are overdosing on TikTok on things like “I would be drop shipping of selfies.”

Raj: You’re going to drop shipping to Shopify stores. Yeah. That’s garbage. 

Anton: Exactly. And that’s what we proved. We sacked the garbage. 

Raj:…So now that’s good. You have some evidence. I think your keys made building it off of the SDR model. And that’s version one of this because even for yourself, you prove what it’s going to take to stack it based on SDRs. So if you can show that math works at a smaller scale, I think that’s the key.

Anton: Got it. Because what got me confused is all of those voices, everything that is below X amount per month. The pricing is below X thousand a month should be autopilot sales; SDRs are involved. If you do it manually, you are in the wrong business. You’re doing it wrong. You’re wasting your life doing it.

Raj: Yes. That’s going to be the hindsight this 2020. Because, of course, no one’s going to be manually selling a $399 product there. It’s just not going to work, but they didn’t start there. Because it’s not like you launch the product, and everyone all of a sudden comes running. What happens is they slogged it as you did, and you’re doing a bunch of manual sales, and it’s painful, and you’re doing it again and again. Until you figure out something that clicks, whether it’s a subsegment of the market or a campaign that works whenever you do outreach to this kind of store, and it happens to be a retail store in apparel, run by a woman between 35 and 45 years old. You’re like, “Okay, this is gold.” Now you know where to go. And that’s how it goes that way. I think it might need the kinds of investors you’re talking to.

And some of them might get disinterested when they hear services. It might be that you’re going to slug it out for a little longer, but that’s going to be without investment, but that might be the best thing that can happen to you. Because if you build it a little bit slower and get to that point, you’re going to retain more of the company. And frankly, you’ll probably learn a lot more and be able to take off faster when that does come. I wouldn’t try to rush into it unless you’re running on fumes.

Anton: Got it. Okay. That’s pretty good. It’s making me calmer because of all of this successful success, that is, to get pro and to you for the tech crunch and stuff. You see, the guys build nothing, have 9 million seeds, then six months later, have 43 million hay. You’re just like, “Wow, how do we compete with those..” 

Raj:…Well, that’s not reality because tech crunch reports what’s sexy, and what’s sexy is when somebody gets a big slug of cash. They’re reporting on a big number. What you don’t see is how many of those fail, which is the vast majority of them and those that succeed, how little the founders end up with versus if what you do is something that is sustainable and you keep it closer to the best for longer. I’m like the opposite of all the other investors. I’m just saying, don’t give me equity. Hold onto it for longer. Don’t have someone take a big slug at your company, especially this early on. Take it easy. Don’t worry about what everyone else is saying. Do what’s right for your business. Do what’s right for you. Just ignore all the noise.

Anton: Because what made me sort of nervous is the fact that there’s so much money in these investments. It is inflating the price of ads because everybody can afford that. So why those publishers should make it cheap, and you go and see the banner costs, you just 5K. And you’re, “Wow, come on, guys..” 

Raj: Yeah, and you don’t need to go. Then again, I think using the outreach and cold outreach with SDRs is going to get past all of this stuff. Then you’ll figure it out and then be on social media, promoting just on LinkedIn, especially what you’re doing. And that will get noticed. 

Anton: Yeah. I was able to attract some deployed e-commerce people to the clubhouse, and I would become a clubhouse star person, I guess.

Raj: Fantastic…For what that’s worth.

Anton: At least for that, it will be useful, overall. We’ll see…

Raj: Exactly! 

Anton: Thank you very much. It actually brings back some good months…

Raj: Good. That’s excellent. Anton. I check it on another one of these calls down the line. I want to hear how you’re doing. I want to hear what’s working, what’s not working. If I can be helpful to you, just hop on, and we’ll do another one. All right. 

Anton: Thank you very much. Have a good rest of your day. 

Raj: Thank you. Bye-Bye. 

Anton: Thank you. Bye-bye.

For beginner and basic business articles, visit here.

February 24, 2021
Link

Case Study: Growing Service Company Revenue

Services businesses may be easier to start, but growing can be a challenge. In this case study we tackle an IT services business that’s looking to generate business beyond referrals.

Trascript:

Raj: Hi there and welcome. This is our first case study that we’re doing together. I’m Raj Jha. I’m here with Hannah Mears, and we’re going to be doing a case study of a company and talk about their demand generation, their branding, and all things around that. If you’ve got any kind of business, listen to this today; you’re going to learn a few things. So Hannah, why don’t you take it away and talk a little bit about this case study and this question that we got?

Hannah: Yes. Our first case study says, “I founded a company that does IT consulting for mid-sized businesses that are moving from legacy systems to cloud-based systems.” First of all, Raj, this is not just a problem that IT consulting firms are facing. Why don’t you go ahead and explain how this issue is widespread across the business world while possibly touching on the difference between a cloud-based system and a legacy-based system.

Raj: Okay, a couple of things here, just some definitions for a cloud-based and legacy-based system. This organization is a consulting company, and they’re helping folks move from, for instance, I’ll give a high-level example. If you only used Microsoft Office on your computer in the old days, it would be something installed on your computer and then their cloud-based systems like the Google docs, and all of those. Now, of course, Microsoft has also gone from things that you install on computers on your premises, and then they’ve gone to the cloud as well. And there are so many different providers here. This particular company is a services-based company that’s helping companies move from here to there. What we’re going to talk about here today are some issues that they’re having around demand generation and how they’re going to be able to attract new customers and their customers. These consulting firms, companies, customers are companies, their businesses. So if you are anyone who deals with or sells to businesses, this is going to be particularly interesting.

Hannah: Great. Here’s the situation to further elaborate on what our client is going through. They said “our average contract is about $50,000 to a $100,000 per year. We have a team of 12 consultants, including myself, 4 of them senior. I founded the company 12 years ago, and I’m the sole Rainmaker. When I started out, it was just me, and I networked to get my first few clients. All our businesses now come from word of mouth, and we’ve plateaued at our current level. We have many steady clients, and after we do their initial migration, they usually retain us on an ongoing basis.” Let’s go ahead and digest this further. Raj, first of all, why do you believe that this company has hit a standstill? They’ve plateaued, right where they are.

Raj: Right. This is a really typical services business problem. And that is where a lot of services businesses started with a sole owner that is both the means of production and actually doing the work and getting the business, and then they can grow. The margins are pretty good growing in that way, but what’s happening is they’re doing the work, and then they’re getting some more work and then they’re doing the work, and they’re getting some more work, and that hits a certain equilibrium. Then they say, “Oh, well, I have to grow this somehow, so I’ll hire some more people.” 

But there’s always this trade of time between doing the work and getting the work when the only means you have of getting the work is networking. It’s always going to reach some kind of equilibrium unless you kind of break out of that mold. Any kind of services business can face this because the owner is doing everything. And it’s really hard to break out of it unless you’re going to change the pattern.

Hannah: Right. Let’s say this company needs to break out of this pattern by separating some of the functions that they’re doing on a daily basis, but they’re not necessarily big enough to give everyone in that business a job. Someone may have to wear multiple hats per se at a time. So what are the major functions of that a business should look to separate at any level?

Raj: That’s a really great question. There’s something implicit in that question, which is that you need to separate the function from the person. We tend to think that there are small businesses where everyone’s running around doing everything, and it’s all just a big mush. Then there are big businesses where you have the accounting department, which is headed by the CFO, and there’s a controller. You think of those roles as people, but ultimately any size business needs to have roles that are independent of the business. You think of almost having an organizational chart, just like a big company. You’ve got the finance function, you’ve got a sales function, you’ve got a marketing function, you’ve got a delivery function, customer service. And then you write the names of those boxes, right? It’s a concept that if anyone’s read the book the E-Myth by Michael Gerber, he goes into great detail about that concept of you need to have an organizational chart, which is independent of the business. And your name might be in all the boxes. If you’re just a sole business owner or it, you might have a, Sally is in two of these boxes, you’re in one of these boxes, et cetera. 

But as long as you have the big things handled, you need to attract your customers, you need to convert them into being customers. You need to deliver your product or service, you have to have good financial controls. As long as the big things are there, then you’re good. But just conceptually, separating people from a function is the way to think about that.

Hannah: To clarify a little bit with that, it’s okay. If one person is doing multiple jobs, as long as those jobs aren’t overlapping one another, they are separately functioning in the business as their own entity.

Raj: Correct. I mean, think about it this way. At some point you want to get big enough to hand it off to somebody else. You want to think to yourself, “okay, I’ve got multiple hats,” just like the owner of this business has multiple hats. One is the owner of the business as the investor in the business. This was a concept actually flagged to me by my friend, Adrienne Dale. And she encouraged me when I was running a business to separate myself from Raj, the investor from Raj, the CEO because the CEO is running the company, but I’m as an individual and also investing my time and effort into it. That’s one split that should happen. 

This person who’s running the IT company daily, they should also say, “Okay, well, I’m going to dedicate 5 hours a week to do the finance function.” At some point, I’m going to say, “Hmm, if I took these five hours out of that finance function and I hired somebody to do it part-time and use those funds hours in the sales and marketing function, I could generate more business pay for the other.” You could start to think that way when you separate it out. 

Hannah: Well, let’s start to utilize some of those then. This business also is facing an issue where they’ve said; “unfortunately, we’re not getting enough new clients to grow. And while our profits are good, they’re not great. I’m not sure my company is sellable at this size, which means I’m working at a salary level, and there’s not much equity in the business. Also, I can’t offer my staff a career path without growing the company. The question is, we’re stuck on how to generate new clients other than by networking. I tried advertising online but mostly brought in small clients with no budget.” Can you explain to them how they should set up a new business plan that focuses on generating new clients?

Raj: Yes. I can, actually. They’re stuck in this very typical business pattern of doing the work, getting work, doing the work, getting work, and kudos to them for trying some online advertising, because that is the way to go. But what they focused on really is not the best path for their kind of business, because for the kind of advertising that they were trying, Google AdWords, they’re there; that’s a bottom of the funnel. In other words, they’re looking for folks who are ready to buy now. Very often, that’s not how the decision-making happens at these larger clients. If you looked at what was their average client value, $50,000 to a $100,000 a year. So is a company that’s able to write that sort of check, searching on Google, best IT consultant they might be, but ultimately that’s not really going to generate them the kinds of leads that they want. Instead they need to take a step back and say, “okay, who am I now? How am I positioned in the market so that I can attract that right kind of clients?” I think the very first thing to start thinking about dispositioning, where are they? Who are they to the customer? What positioning they have in the minds of the market and their prospects? What do people think about them for?

Hannah: I think you’re talking a lot about something that’s called a target market. When they’re thinking about the target market, in this case, in particular, since we’re focusing on this client’s profile, who is their target market, and what’s the difference between having just a specific target market and a very, very specific target market? How can that change?

Raj: Yeah. Perfect question, Hannah. That is that most folks try to go too broad, right? They’ll either say it. You ask them, so what’s your target market? IT consulting company and say, “well, anyone who writes a check” is really what they’re going to say. But that sounds great. Doesn’t it? And you want to write a check, but that doesn’t mean that that’s going to be the right kind of business. The best way to do this, especially for any company that’s been operating for a while, is go back and think about who has been your ideal clients in the past and what are all the commonalities between them because let’s go try to find some more of those successful engagements and you’ll do this little analysis and take yourself for a day and just do nothing.

But think about what are the commonalities there? You’ll find it. Oh, well, wait a minute. We’ve had a lot of success with small to mid-sized businesses as our clients that are doing $5 to $10 million in revenue. And they’ve got a part-time IT guy, who’s just doing a terrible job, and they’re in manufacturing and you can find all kinds of weird things. You might find, what I do really well when the CEO’s a woman, you’ll find these really weird things that you would never think about. And then you can say, okay, you know, what if I’m going to specialize in that and really niche it down to women CEOs of companies doing $5 to $10 million in the manufacturing sector. Now you’re going to think, well, I couldn’t possibly do that. Right? It’s too small. There are only a few thousand of those.

But imagine if you were the only go-to solution for those 10,000 businesses. I’m just picking a number here, obviously, but how great would that be? You’re the name that they know that would be fantastic. You don’t need to be everything to everyone at $50,000 to a $100,000 per year per client. It only takes a few of them to really change the course of your business. That’s why I always encourage people just really niche down and be incredibly narrow, because for all the other stuff we’re going to talk about in a moment. It’s going to be really valuable.

Hannah: So you have that foundation of your target market. What you ultimately want to do is then take your target market and have them almost expand for you. How do you get people to just think of you? Something I did in a lot of personal branding is I want to be so obnoxious with my brand that when someone scrolling on LinkedIn and sees a job that may not apply to them, they’d be like, Hannah would be perfect for that. How can these companies learn to do that? Get everybody to instantly think of them when they see something applicable.

Raj: Yeah. That’s exactly what you need to do. You need to be unique, but really you have to spoon feed it to your audience that they don’t know when to think about you. For instance, I’ll give you a personal anecdote right now. I’m on like my 10th career at this point. I started out way back in the dark ages, and I was a computer guy. And then I went to law school, and I was a lawyer for years. Then I did marketing for attorneys. Being in my fifties, now I can have had slices of things like that. But you have to tell people when to think about you. What you and I are doing here, Hannah, people will now start to know that if they’ve got these branding, these demand generation questions where some folks that you should talk with us because we know a thing or two about that.

But you have to educate the market on the window. Think about you. These IT consultants need to start thinking about, okay, I now know that this woman CEO of this $5 to $10 million business in manufacturing is who I want to go after. What do they need to know about me to know that I’m the solution for X, for moving my IT to the cloud? Think about what’s the experience that they’re having. If presuming that the CEO is the buyer, the economic buyer of the service. Well, what are they feeling right now? What’s the challenge they’re having? What pain can I alleviate from stress? Can I alleviate from them? What do they want to hear about? And that will all roll into the marketing and the media and the branding. And that’s going to start to sharpen up, helping educate them about when to think about you.

Hannah: When they start thinking about you, and you mentioned a really interesting point, and there is a communication that’s going to happen eventually between you and the last thing you want to do is be vague. You want to be extremely specific and everything that you’re saying so that you’re not misleading them, steering them to a different company. It’s all unique to you. So it was prompt. They used words like quality and responsiveness that didn’t necessarily need anything. What words can you give them as alternatives that are less vague?

Raj: Yeah, exactly. Right words like, we’re the best, right? We’re the highest quality. That doesn’t mean anything, right? Because I can say that I’m the best cloud IT now, I’d be totally lying. “The best IT firm,” but I could say that too. So think about saying, is there an outcome that you can have. So either a benchmark or 99.97% customer satisfaction. Where you can say cloud migrations in two weeks or less. I mean, that might be ridiculous. I don’t know because I’m not an IT guy. But for instance, I think about the pain point that they’re having. “I’ve been with this IT company. I hired them for this engagement. It’s been six months, and it hasn’t happened. Everything’s a disaster.”

Oh, okay. Well, what is that? Are they not responsive? We respond within the hour. Maybe that’s something that the market really wants. So you really have to reverse engineer. What do they want? And that whole looking back over your successful engagements, your successful customers, seeing what those work and you don’t just pick up the phone and call folks. I mean, that’s actually a really good marketing tool in and of itself is get that list because you’re in B2B, that’s fantastic. You know exactly who your customer is. You can pick up the phone and say, hi, their CEO, we’re in the space. And I’m just calling to survey; what are you looking for in this? Because we’re trying to be better as a company. Just have that discussion. Make 20 phone calls, guess what? You’re going to get a client out of it, too, by non-pushy sales. And you’re going to learn a ton.

Hannah: How can you make sure that your target audience is also seeing everything? Because the last thing you want is to have this target audience and know that they’re loyal to you. But if they’re not seeing your stuff on media and web platforms, odds are no one is. How do you get someone to be directed towards you at every type of media platform they can go on?

Raj: I think there’s two parts to this. Number one is media production. You can’t expect this, we’re here in 2021. You cannot expect that all you can do is put up your website, and that’s enough for you or even a website and an email list or a website email list and a newsletter that goes once a month. None of those things are good enough. That was good enough in 1995, we’re not 1995 any more. It is really about having a platform and that platform being a media presence. You have to generate those assets. Again, you and I are going to do this a lot. Look at what we’re doing here. This is an example of what you should be doing.

But to be in the marketing business and have crummy marketing does not really work. You need to produce enough that if when someone goes looking for you, they’re going to find a whole bunch of stuff. And it is all consistent with your target market and what you’re trying to accomplish, et cetera. You have to have that presence. And then that’s number one. So thank you for yourself first as a media company that happens to have a business attached to it. And then, second of all, how do you get that shown? That kind of depends on the kind of business. Now, this is a B2B business. Linkedin is your friend. LinkedIn is a fantastic place. One of the best things about LinkedIn is organic reach is still really good on LinkedIn.

I did a post, I think it had three lines in it or four lines or a few sentences. Within three days, I had 3000 views on my posts, and that wasn’t even video or anything sexy. LinkedIn is a fantastic way of publishing for free organic reach. And then using paid media, and that’s the big unlock. Because the one thing that this company needs to understand, and anyone who’s got a higher ticket type of sale, they’re looking at $50 to a $100,000 per year per client. You’re telling me that you wouldn’t be willing to spend 5 grand to acquire a client, 10 grand. I mean, I don’t know what their margin is, but their services business pretty good margins.

To get a hundred thousand dollars customer, I might write a check to $90,000 if I had no cost of goods. A lot of these companies, they don’t have that marketing mindset, but if I can say, “you could pay X thousand dollars and get another client.” They’d say, “Oh, okay, well maybe I should start thinking about it then. Maybe this is a way to get out of that networking trap”. We talked about it at the beginning because you’re now leveraging assets. Using paid media, paying to have your post seen on LinkedIn, I think could be in this case with the best route they could go.

Hannah: And I think something let’s say, maybe even for people of older generations pre-technology, or in this case for everyone, maybe post-pandemic, we can hold an event. If I’m a company, I’m having people come and gather and say, “this is a fun environment to be a part of. We can help you with your professional needs, but we can also have a relationship on a personal level to make sure we’re both benefiting in the same amount.” Have you seen that work out for companies where they’ve had a fun event, and it’s really paid off?

Raj: Yeah, absolutely. In-person events always great. This has to do with geography, and if you happen to have really tight geography and you’re in St. Louis, and you’re going to get all the folks in that area together, that can be fantastic. But I think actually one of the few benefits of the pandemic situation is we’re all getting used to this. It’s really easy actually to hold a live web event. I think one of the key things to think about that is the event does not have to be about your service or product. It’s anything that could be of benefit to your target audience. Think about what are the challenges they’re having? What if we’re just going to do a round table, challenges that we’re having in the manufacturing sector or if it’s going to be about, how to make the most as a female CEO in today’s manufacturing world, which is male-dominated, you want to hold a round table about that. There’s all kinds of things that you can do about that. As long as it’s going to be valuable and you’re issuing the invites to the party, you’re going to be the center of this. If you’re giving them value, they’re going to look you up, and it’s going to be an excuse for further conversations, et cetera.

Hannah: Yeah. It doesn’t have to be holding a huge carnival, making it really hard to get an audience and beneficial information from people, bouncing ideas off of one another. We have talked about so many different solutions for this company, and it sounds like a lot of information to process. I’m sure, over a 20-minute span, all this information being thrown at you. Can you just sort of give a summary of where they should start? Just give them a starting point.

Raj: Okay. Yeah, we have gone over a lot. Haven’t we? So the starting point, I think, is a mental shift. And it’s a mental shift from realizing you need to separate yourself in your roles and your relationship with the company and not just think of yourself as I’m doing the work, blinders on. And then I’m getting the business, blinders on. If you detach yourself from the business, where do we need to go as an organization? What are the ways to get there? And in my hat, my marketing hat on, I’m going to stop thinking about just networking to get business. I’m going to think about giving value to a specific kind of person. And then how do I do that? 

If you just make that shift, the rest is tactics. Whether you’re on LinkedIn or whether you’re going to do this on Facebook or even if you’ve got any listeners left who are in B2C markets. The medium is almost secondary to the strategy. And the strategy is to understand who you’re really going after and what are they worth to you as a business? What value can you bring to them, even outside of the products and services that you give? Just that mental shift, and the rest is details. And, of course watching Raj Jha and Hannah on future episodes, we’ll probably educate you a little bit, but that’s where I’d recommend for that.

Hannah: Yes, I love it. Keep us in mind for all of your future business needs. Hopefully, we have answered a lot of this consultant firm’s questions, but also, maybe if you’re just tuning in and you needed some tips and tricks, maybe Raj has helped you out there as well.


Raj: All right. Well, thank you, everybody. And we’ll see you on the next one.

For beginner and basic business articles, visit here.

February 12, 2021
Link

Subscribe to the CEO Workbench

Business growth the scientific way

© Raj Jha. All Rights reserved 2024

Leave a message below:

Scroll to Top