Stop Thinking Like A SaaS Company

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Agencies Aren’t Built Like SaaS Companies

Agencies are different than SaaS.

I know they seem a lot alike - big focus on MRR, focus on client retention, focus on upsell, focus on case studies, referrals, and right fit clients…but the are different.

SaaS only works at volume. Klaviyo has something like 507,000 clients. At their roughly $700mm in revenue, they generate about $1400/client

Agencies are different. Tinuiti has ~500 clients and at about $250mm(?) in revenue, they generate $500K/client.

In the agency space, it is a whole lot easier (and more profitable) to manage hundreds of $500K/yr clients rather than hundreds of thousands of $1400/yr clients.

It’s a totally different game

As an agency leader, why are you acting like you are trying to win 507,000 clients? Why are you chasing things like “leads on autopilot” or “80 booked calls a month or you don’t pay”?

Here are the things you shouldn’t be thinking about:

• How to send MORE spray and pray emails

• How to come up with your “Home Run” offer (for those of you who don’t know, that’s from Alex Hormozi’s $100mm Offer book - worth a read to get you thinking but it isn’t the right way to build an agency that can do amazing work, IMHO)

• How to scrape more contact info from anywhere

Think About Meaningful Business Growth Without Making Yourself Crazy

In a recent post (Agency Inner Circle #39 - Is Scale My Agency The Right Answer?) I introduced the idea of The Next 5. If you are interested in thinking through the whole framework, I’ve written a decently long post about it, The Next 5 - UNSCALE in Action. But today, I want to walk you through how this idea works in practice:

You want to win 𝗧𝗵𝗲 𝗡𝗲𝘅𝘁 5.
Then 𝗧𝗵𝗲 𝗡𝗲𝘅𝘁 5 after that. (So now you have 10 clients.)
Then 𝗧𝗵𝗲 𝗡𝗲𝘅𝘁 5 after that. (So now you have 15 clients.)
Then 𝗧𝗵𝗲 𝗡𝗲𝘅𝘁 5 after that. (So now you have 20 clients.)
Then 𝗧𝗵𝗲 𝗡𝗲𝘅𝘁 5 after that. (So now you have 25 clients.)

If each cycle takes a quarter and you keep your churn low, in 50 months, at $5K per client, you have a $6mm ARR agency servicing high-alignment clients that value your contribution.

If you hire 2 sales resources instead of doing it all yourself, in 50 months, you'll be a $12mm agency.

Your bank account will be happy, I promise.

News & Notes

Are AI Agents Coming For Your Job? Via Marketwatch, the tech world is crazed for AI agents. Salesforce has got ‘em, Agent.ai is on the case, and basically everyone is prepping for a future where you describe what you want done, and AI agents go do it. But listen up, agents aren’t going to eat your agency, or your job. Mariel Lopez of Lopez Research says “With AI, mediocrity is death. You have to either not know much and be cheap, or you have to know a lot and be really good at what you do.” By that she means less expensive human resources who are newer to their careers will get upskilled with the help of AI, but expertise is still really valuable. (And those who are just “mid”, well they will face the same fate they’ve always faced…

Demand Gen & Lead Gen: We’ve just finished up a GEN+ cohort and here’s the feedback we got:

Are You Ready For Gen Alpha? I’ve been lucky enough to work with some great GenZ focused agencies like Carson & Doyle. But those demographic waves keep on coming, so the next ENORMOUS consumer group stepping into their buying power is Gen Alpha. And according to MarketingBrew, the up and coming channel to engage with them is….ROBLOX. You’ve got that right - we are tipping into an age where we don’t just advertise around text, image & video content, experiential content - like games - is becoming a primary way of capturing audience attention.

Thanks To Our Sponsor - Hubspot

Just as an FYI, I am a big Hubspot fan…

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