Latest / Revenue Problem Solvers / Jason Kraemer Shut Down a 16-Year Agency on Purpose. Here's What He Built Next.

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Jason Kraemer Shut Down a 16-Year Agency on Purpose. Here's What He Built Next. · Revenue Problem Solvers

0:00
As an example, you could have a bucket filled of water, and if
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there's a leak in that bucket, no matter how much water you put
0:04
in that bucket, it's still going to be leaking.
0:06
Welcome back everybody to the Revenue Problem Solvers podcast,
0:09
where we look to crack the code on growing your business by
0:11
tackling the challenges that keep revenue leaders up at
0:13
night. I'm Karl Orbans.
0:15
On the today's episode, we're going to dive into the topic of
0:17
shifting your pricing models. Stay tuned.
0:21
Today's podcast is sponsored by the great team at Virtual
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Causeway. Imagine your sales team spending
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less time chasing and more time closing because buyers already
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know your name before that first call.
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Well, that's exactly what Virtual Causeway does.
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They help B2B companies get found earlier in the buying
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What's the result? Well, it's fewer cold motions,
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better conversations, and pipeline that moves faster.
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You can visit them at virtualcauseway.com and make
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0:56
Now there are three words that every service business owner
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needs to hear. Stop chasing projects now.
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My guest today is Jason Kramer, the founder and CEO of
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Cultivize. So Jason spent 16 years building
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and running JLK Creative, one of the first virtual agencies in
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the country. He was doing project work,
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deliverables in, invoice out, repeat.
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And he was good at it. But at some point he looked at
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his own revenue data and saw what he now helps other
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businesses see in theirs. Money sitting in the pipeline,
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uncollected because the model wasn't built to hold it.
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So we made a decision most agency owners never make.
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He shut it down on purpose and in 2018, he founded Cultivize,
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it's ACRM consultancy firm built entirely around retainer
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relationships and lead nurturing.
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His clients have since tracked nearly 40 million in recovered
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pipeline revenue. Not new leads, not marketing.
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Spend money that was already there.
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It was just falling through the cracks.
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He's one of a handful of platinum C certified CRM
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partners in the world. He cut his teeth on brands like
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Virgin Atlantic and Johnnie Walker.
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And in my view, what makes him worth listening on this topic is
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simple. He didn't read about this
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transition. He lived it.
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Jason, welcome to the podcast and thank you for being here.
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Carl wow, what an amazing, amazing intro.
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Thank you so much. It's a.
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It's a hard act to follow, but I'll try.
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Well, it's my pleasure and hopefully I didn't say anything
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that was out of out of truth and and it was all OK.
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That sounded great, yeah. Awesome.
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So let's get kicked off and can you tell, can you share with us
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a little bit of the context of your world, What industries or
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verticals do you work in? What are the selling motions?
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What size companies do you work with?
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Yeah. So we are agnostic to to many
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industries. The bulk of our clients are
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gonna be B to B service providers or selling products to
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businesses. Another sector for us is home
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service based businesses or companies that are selling
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services that are north of usually you know 5 to $10,000 in
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terms of a sales price where that sales cycle is a little bit
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longer. So the commonality across all
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the industries, whether it be manufacturing, education, non
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profit, even where we're helping with communication issues,
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right, and communication deliverables is that there is a
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cycle, right, to be able to build relationships, to
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communicate. And a lot of companies don't
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have those processes really well defined.
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And like you and I know Carl, a lot of it lives up here in
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somebody's head, right? And So what we do is we help
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build better processes to build and scale companies, to find the
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hidden data that's in your company, but also to beat build
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repeatable systems. So as you onboard and grow your
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team, you can do that at scale. And so our world hovers and
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centers around CRM platforms and either helping companies fix the
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CRM they already have and get it working the way it needs to, or
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realizing that technology that they have or don't have is
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missing. And then we'll find and
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recommend the right solution and build that out, train the team
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and stay on board with them to see that success through.
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Awesome. I worked for AVP one time and he
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said the longest string in the world is the one between your
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ears to the tip of your finger to actually write it down.
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And that's what brings me back to that.
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But I do like the CRM world is one that I'm such a fan of and
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have done a little bit with it and my time of Salesforce and
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implementing it and etcetera, doing it with some others.
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So it's exciting, all right, How the heck did we get to this
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topic is probably the question that we're starting to think of.
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So how we got to it is I asked Jason like everybody, what's a
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successful revenue initiative you've LED or an existing
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challenge that you've either that you have solved or one that
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you've currently that you have been trying to solve.
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And with a great conversation became clear it was how to grow
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your business by shifting your pricing models and your
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structures. And so maybe if we start here,
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how come so many service businesses hold on to that
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project model even when it's, well, clearly not working for
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them? Well, I think it's a few things.
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I think it's one of the the being scared of the unknown,
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right and and being nervous that if you switch you might lose
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customers. And it's so a fortuitous that
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we're talking today, Carl, about this.
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Just yesterday I had that they his name is Steve.
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He's a local plumber and heating guy.
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I've known Steve forever. We we, we own boats and we have
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things in common. And anyway, so he's like, Hey,
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I'm setting up this, you know, annual plan, the service
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contract, which I've never done before.
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He's like, it'll be the exact same price you're paying now,
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but instead of paying like 300 a year, you're going to break out
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onto 12 monthly payments. And I'll give you 10% off any
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work I do. And if there's an emergency,
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I'll come out for free instead of charging you up to three
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times a year. No, no extra fee.
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I was like, well, that's a no brainer.
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Like how you making any money on that?
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You know, And he's like, well, he's like, it's not about making
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more money. It's about building consistent
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cash flow so that I have, you know, a hundreds of customers
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paying me each month that smaller fee.
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But also when they have a problem, they're not going to go
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hire another plumber or heating company.
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They're going to hire me because I have a service contract with
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them. And he's like, what happens
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often is that I'll come in and do a job, but then when I come
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back, I see another plumber sticker like on the equipment,
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you know, and so it was, it's smart, right?
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It's, it's because he's building.
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He sees the long term value in that, right?
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He's not looking for the quick gain.
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And so I think to answer your question, and that's hopefully a
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good story for the audience that it's you have to have a plan and
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understand why you're doing it. You can't just say, OK, we're
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going to start doing retainers tomorrow.
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You know, when I made the pivot and I'll talk about it a little
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later. It took me several months to put
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together a plan of how I am I going to pivot from doing
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project based work to retainer work.
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So I think that's why is they don't understand how to make
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that transition and they they're scared or they're frustrated or
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they just think it's simpler to keep things the way it is.
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It takes me the, what's interesting I think from what
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you just said is in the SAS world, we change pricing models
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regularly and the whole thing of SAS is having that repeatable
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pricing model. But what it also sounds like is
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that pricing model theory of SAS pricing of that monthly retainer
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is now starting to showcase into those other industries that are,
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I don't want to say behind, but they're more of a legacy
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industry where it's I'm calling because I have an issue.
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I want it done. Even with your friend, when you
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were talking to them about that service, that service side of
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things and connecting it, how did that connect with the some
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of the things that you did previously or did you give them
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any tips or words of wisdom, words of advice when you went to
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make the change? I did so.
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The funny thing is, so talk about old school, he shows me a
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trifold brochures. Like who uses those anymore,
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right? He whips out a trifold brochure
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that's printed in a dark brown color and it's on.
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There is the information about the the service contract, but
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there's also places for me to fill it out and to sign up
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basically. But like, he's giving me a black
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pen to write on a dark brown background.
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And I'm like, Steve, I'm like, this is like, you need to have
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like a Sharpie with you. Like you can't even read
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anything. And then I said to him, well, I
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said, why are you doing this? Why not just have digital
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contracts, You know, just say, give somebody a fly over the QR
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code and say, if you're interested, scan the code and
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then they'll get a Panda doc or what the DocuSign, whatever they
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get. And he's like, oh, he's like, I
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didn't know you can do that. Like, is that difficult?
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I'm like, no, it's really easy actually.
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And so, so, yeah, so he's, he's trying to make the change, but
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he's making it in a very like, you know, 1985 way, you know, so
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and that, but that's good, right?
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Because he sees the potential of it.
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And now I he just needs to take it to the next level.
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And that's what I find, especially in the service based
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businesses, but not even there even like a lot of manufacturers
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we work with, believe it or not, Carl, who have been around for,
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you know, 4060 years doing business, they're just used to
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doing something a certain way. And their mentality is like, if
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it's not broken, you know, don't fix it.
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But it there could be, it could be, you know, you could, I
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always use an example. You could have a bucket filled
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of water. And if there's a leak in that
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bucket, no matter how much water you put in that bucket, it's
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still going to be leaking and it's still going to keep going
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down. And so if you don't see those
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leaks and spot them, then you're just really creating a whole lot
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of more energy and effort to fix something that is almost never
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going to get fixed. Yeah, I agree with you.
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The, I mean, the revenue leakage is one thing, but it's also the
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shifting of models and, and the way that you're doing business.
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It's funny, you said the trifold.
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My, my oldest son, he's in HVAC actually.
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And so he's, he was doing something for his company.
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And what did he build? He built a trifold portfolio.
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And I was like, OK, and I said, well, why don't you use exactly
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what you just said is why don't you just use AQR code and have
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people scan it? He's like, well, how would I do
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that? And so we talked through it.
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And anyways, because it is a thing of I want to be able to
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have that Peace of Mind. So in case something happens,
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right, It's kind of like the insurance and carry on.
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But those other industries that you're right is, you know, how
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many times do you see somebody in in the trades?
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If I just sort of generalize in the trades, they come to your
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house and they have either a metal portfolio that opens and
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they've got they take a bunch of notes and then they hand it to
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you. It's not as digitized as we
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might see. So even they're shifting into
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the, the way you're, you're, you're carrying on the
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relationship is different. It's no longer a handshake, it's
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no longer cash, it's no longer pen and paper.
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You're now, you're now shifting to this digital world.
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So you have that flex, the repeatability and that
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consistency like most of the SAS companies are looking for.
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So for me, when I went through looking at all the work I was
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doing at the agency that was on the project model, you know,
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really the challenge for me is the constant hustle.
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Now, I don't say that I don't hustle at my Business Today, but
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it's not knowing what 3 months from now the revenue's gonna be
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or six months or nine months from now.
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And so you're always constantly trying to fill the pipeline with
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those projects. And then a lot of times, to me,
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the real core, I think of why, going back to your original
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question, why people don't make the switch, it's about building
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the value, right? So if someone's hiring you to do
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a project, they see the value you bring for that project, but
11:22
what you're probably failing to do is showing the value you can
11:25
provide to them throughout the year.
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And so if you focus on, OK, well, how can I find other
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things this company or person would need from me throughout
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the year and show them that I'm a good valuable asset to help
11:39
them solve those problems or handle that work.
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Once they see that if they already like you and work with
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you, it's much easier to say, well, OK, well, why don't we
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just continue to work every month together?
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And I'll get into more detail of kind of how I wound up deciding
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to make that transition and present it to the existing
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clients we had. But I think that's the key
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fundamental is it? You have to show that there's
12:03
value. And like even Steve the plumber,
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like his value was, I'm going to give you 10% off everything and
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I'm not going to charge you for emergency visits, you know?
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And I'm like, well, that's a no brainer, right?
12:13
I mean, that's valuable, right? Because I'm saving money and
12:15
it's just easier. So that's where I think people
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need to focus their time is understanding how to build more
12:23
values for the existing clients they have.
12:26
Jay Baer, who actually has been on the podcast, he wrote a book
12:29
called Utility, and if you've ever read it and he talks about
12:33
using examples of helping people, right?
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The difference between selling and helping is 2 letters.
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And so if you're selling something that you're genuinely
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helping somebody, because we've all had, I don't know, I've had
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the situation where the furnace doesn't come on, it's cold.
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What do we do now? And you hire you right away.
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You're on the phone, you're trying to find somebody and
12:53
instead of knowing that I have a resource available.
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So agree with you. So take us back if we can.
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Like let's go back to the point where you were looking at it.
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And I think there's a part of the hustle that you said when
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you, when you talk about the hustle, and I don't think it's
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like your work ethic or how hard you work.
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What I'm, I'm thinking is that it's, I know that I have these
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number of projects, I finished them and even though they're
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complete, I might not get the money for another thirty, 6090
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days. And is that where that hustle
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comment comes from is because of that inconsistency in the cash
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flow that you were trying to solve for?
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That's part of it. It's also part of it is, you
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know, I used to build with the agency towards the end of that
13:40
business after doing 16 years, I'd say for the last easily 1012
13:46
years of that business, we were doing a lot of website
13:48
development work. And so you know, you build the
13:51
website, you're like, OK, we can knock this out in three months
13:53
or in six months. It's more complicated.
13:55
Those projects, especially the easy ones that you think you'd
13:57
knock out in like, you know, three months took like 12 months
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sometimes to get done. And so now you have can't charge
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anymore, right, because it's the lease from the client.
14:06
I mean, sometimes you can. So it's not only about delays on
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payment. The way that I used to get
14:13
around that though was I would have installments, I'd have
14:15
milestones. So like for example, like once
14:17
the wireframe is approved, you pay this, once we get to this
14:20
milestone, you pay this. So it was never a 50%.
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It was always like, you know, a 20, then another 30.
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And by the end, when they were, we were almost done with the
14:29
whole project. All they owed me was like 10%
14:31
left of what the project cost was.
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So like that wasn't really an issue because that would prevent
14:36
them from stalling because they knew that, you know, we would
14:40
have to get hit those milestones to kind of keep moving through
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and, and get payment before we moved on to the next milestone.
14:47
So that kind of handled that, that piece of it, which was a
14:50
learning curve, right? I didn't do that in the
14:51
beginning. I'm like, yeah, give me like 30
14:52
percent, 50%, we'll start, you know, and, and then like months
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and months go by and you're like, OK, well, this should have
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been done already, right? So, so that's definitely, I
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think a lot of businesses kind of realize, you know, the, the
15:05
hard way and the only way to really kind of learn from.
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So, so that's, you know, I think an important part of of that is,
15:13
is having those expectations and, and, and being transparent,
15:16
you know, with your clients. And that also falls in play with
15:20
some of the other like in manufacturing, we were talking
15:22
about manufacturing has has milestones as well.
15:25
You have a certain amount due upon receipt, right?
15:27
So I got to go and buy some stuff or I got to be able to
15:30
invest in, in doing the work. And then you have the milestones
15:34
of like factory acceptance test and site acceptance test and
15:37
blah, blah, blah. But you have those milestones
15:39
along the way so that you can say, hey, by the way, pay me for
15:42
the thing that I'm doing. But it does bring up an
15:44
interesting question of the, the question that I think I should
15:48
ask you is when you went through this whole thing of the
15:51
realization that you needed to shift into a different model,
15:55
did you look at it from a value to time aspect?
15:58
So the value that somebody's getting is equivalent to the
16:01
time. So I'll give an example.
16:03
You build a web, you say, hey, it's going to take me 6 months
16:07
to create a website for you. Great.
16:09
And you do it in actually two months, like as a customer, do I
16:15
go back and well, Jason, you're always going to take actually
16:17
longer. So I don't want to pay you all
16:19
of this money because you did it faster than I anticipated.
16:22
Was there any sort of pushback on value to time when you made
16:26
this transition? No, no, that never came up at
16:29
all. Yeah, OK.
16:31
In fact, in fact, it was always kind of like the opposite with
16:33
the like, well, why does it take so long?
16:35
It's just a website, you know, Well, let, let me, that's a
16:39
whole other conversation of let me explain to you the technical
16:42
aspects. And, you know, and I started
16:44
building websites before you even could see a website on a
16:46
phone. So I mean, I'm going way back
16:48
where, you know, we were just, I mean, I was building websites
16:51
in, you know, flash and, and, and using all sorts of
16:54
technology that don't even exist anymore today.
16:56
So, so it was a whole other thing once we got into the world
17:01
of like, OK, now the phone's got, the websites got to be
17:03
compatible on all these different monitors and devices
17:06
and tablets. And, you know, people don't
17:08
realize the complexity of making sure that actually functions
17:11
correctly. Yeah.
17:12
Yeah, agree. So what was the, what was the
17:16
launch point or the, the moment when you and and not to go into
17:19
the very specifics of the details and cash flow etcetera.
17:23
But when you when you looked at this and you said, all right, I
17:26
have to make a change away from these project based to retainer
17:30
based, what was that? What was the challenge that you
17:34
experienced and for you, like I got to, I got to solve this.
17:37
Well, the challenge was of simply like, how do I
17:40
communicate this right to the customers?
17:42
That was a challenge. And and how do I, to your point,
17:46
show that I'm a problem solver to be adding value throughout a
17:50
longer period of time than just for the projects they were
17:53
doing. That was that was the biggest
17:55
part of it. And I, and because I'm a data
17:58
guy kind of, and that's, I mean, I have to be, I guess if I got
18:01
into the CRM world. So like, I was always intrigued
18:03
even when I was, you know, a graphic designer just out of
18:06
college, you know, like kind of that part of the same things my
18:09
brain always was interested in. So I started looking at the
18:13
numbers of things and that's how I was able to put the plan
18:16
together to present it to the clients.
18:19
OK. And did you have, did you have
18:21
any sort of issues or did you look at and go, it's taking me
18:26
more time for accounts receivable or I, I'm looking at
18:31
our bank account and it's like, I'll say chunky because we get
18:34
chunks at a time and we need to smooth it out.
18:36
Like where's was there anything else that went into that
18:38
discussion other than the communication?
18:41
Well, it was also about, you know what I wanted to to have
18:46
like in terms of goals, right. So like, you know, there was
18:48
always, every business has a revenue goal, right, quarterly
18:51
and whatever. Often you have a monthly goals.
18:53
And so it was looking at prior years of revenue, seeing where
18:57
the growth was and saying, OK, well, here's the number I want
19:00
to hit for like my first year doing like this on, you know, it
19:04
wasn't full on retainer. I want people to understand,
19:06
it's not like I told people we're not doing project work
19:08
anymore. It was really going to with the
19:10
existing, you know, at that time, I don't remember the
19:14
number, maybe it was like 60 or so clients, you know, and, and
19:17
presenting to them, Hey, let me try to get you on to this
19:19
retainer model. And here's why it'd be
19:20
beneficial. But for newer stuff, it was
19:24
pitching the retainer right to new to new businesses.
19:27
Yeah, we'll build you the website, which is a project, but
19:29
here's all the other things we'll help you with after the
19:31
website's done, You know, and it didn't always work, right.
19:35
I mean, some people just want the project.
19:37
But, and there was and I got to the point, fortunately enough,
19:40
where I was able to turn work away, which is always a thing
19:43
every business wants to get to that point where you could be
19:45
like, you know what I don't need We, you know, we, the money
19:48
would be nice, but like this isn't a fit for for whatever
19:50
number of reasons. And so that was also a great
19:53
feeling, you know, as a business owner getting to that point
19:56
where we could start turning away work that we just felt
19:58
wasn't a good fit for, you know, a number of reasons.
20:01
Yeah, yeah. What went in, what were the
20:03
insights or what are the things that went into you to actually
20:06
decide on what that new pricing model look like?
20:08
Did you just do it yourself? Did you hire somebody?
20:11
Cuz I think pricing models is one of the most challenging
20:14
things to solve. Of course, so this is what I did
20:17
and and, and this is my like, this is going to sound
20:19
absolutely insane. So even even today, we're a team
20:24
of five people. All right, Carl, back then we
20:28
our team was about the same size.
20:29
We were never like a huge. That's why you brought up in a
20:31
good point. You know, I was built a virtual
20:34
agency before there were even virtual agencies.
20:36
Like when I started my business in 2001, there was no Upwork,
20:40
there was no fiber, there was no like, you know, so I built my
20:43
freelancers based on people I knew in the industry.
20:46
And so I grew, grew the agency which is hiring people to work
20:49
on a project basis to keep my low, my cost low.
20:53
Because the angle I had was, you know, agencies are known
20:57
especially like in Manhattan where I used to work with my
21:00
former agency I worked for, I've worked for a few, but you're
21:04
paying for like the name, you're paying for like 30 people
21:06
sitting at a conference room table and only two people do the
21:08
work. And I was like, OK, well, if I,
21:10
if I need to get rid of all those expenses, like how can I
21:14
operate more effectively, you know, and efficiently to bring
21:17
more value? So anyway, I, I was running, my
21:20
point is I was using a project management software.
21:22
I think I might even been using like high rise or base camp or
21:25
something at the time, maybe. But I had everybody taking
21:28
diligent notes of how much time it took to do things right.
21:32
And so I had a lot of data. And So what I did is I went and
21:35
built spreadsheets to analyze, OK, you know, for example, this
21:40
company I had was a big HVAC distributor manufacturer.
21:45
I did all sorts of work for them.
21:47
I said, OK, let me list out in the spreadsheet all the projects
21:50
I did, how long it took me to do them, how many hours.
21:53
And then let me look at that amortized over the over a year.
21:57
And I wound up being, let's say it was like, I don't know, I'm
21:59
Speaking of a #250 hours a year. I said, OK, 250 hours a year at
22:04
let's just say $100 for an easy number.
22:07
I said, if you were to continue the project work, right, this is
22:11
what you'd be paying me at, at, you know, $100.00 an hour.
22:14
I said, but if we did a retainer, we would divide those
22:16
hours so they're usable throughout the year and I'll
22:19
give you a 10% discount on the hourly rate.
22:22
And so, and then what, what it did was I said, well, but
22:26
there's other things we don't know about that you'll probably
22:28
need from me. So while last year we only did,
22:31
let's say, you know, 200 hours worth of work, I said it
22:34
probably makes sense to add another, you know, 5 or 10 hours
22:37
a month on top of that to cover the unknowns, right?
22:40
Because a lot of clients had unknown requests that came up.
22:43
And So what it did is even though I gave them a slightly
22:46
discounted rate, I was selling them more hours, but I was able
22:50
to then show to them they were getting us basically, you know,
22:55
at their call. It was like their back phone,
22:57
right? Because a lot of the companies I
22:59
work with, Carl, and this is the other big piece of it which
23:01
we're going to talk about, which is important.
23:02
When you do project work, especially if you're a company
23:04
of like, you know, maybe let's say north of five million, 10
23:07
million in revenue, you have to have purchase orders, you got to
23:10
get approvals for things. And all those things take time
23:13
and slow things down. But when you have an existing
23:17
relationship and they're paying you a monthly fee, all that
23:20
accounting stuff goes out the window.
23:22
You don't have to worry about that.
23:23
So now you're working with the CMO or, you know, somebody in
23:26
marketing or someone in sales and they're like, hey, I need
23:28
this project. And it's like, OK, like, like
23:32
we'll get started, right? Because like you don't need all
23:34
those other approval processes anymore.
23:36
So that's a huge piece of it too.
23:38
It's just we really get momentum and moving things a lot quicker.
23:42
There were times in my experience where it cost more to
23:46
cut the purchase order than the purchase order was worth because
23:50
all the steps you had to go through.
23:51
So I certainly remember that. Then there's another question
23:56
that you that I'd like to ask you about.
23:58
And because when you shifted from project to retainer, it
24:03
seems, it sounds like this is how I'm hearing it.
24:05
So tell me if I'm way off. Sure.
24:06
It sounds like each of your customers, you brought them a
24:10
situation said here's what the retainer would look like on what
24:14
it is for the year. And that was more specific to
24:17
work you've done with customers looking back, right, did you
24:20
have a, did you have different retainers and different models
24:23
for them because each of them was different and then anybody
24:26
new coming in, how did you handle them?
24:29
Love that question. So yes, so, so every existing
24:32
customer I put together like a PowerPoint presentation, giving
24:36
them a history of and a lot of these customers, mind you, I've
24:39
been, we've been working with for a couple of years.
24:41
So it wasn't just like brand new clients.
24:43
So I had like a lot of good data, luckily that I just was
24:46
able to, to, to pull out. But I created, you know, I think
24:50
maybe it was a 10 or 15 page, you know, presentation.
24:53
And I just, you know, documented like kind of what we did, the
24:56
transition, where were you able to get them, what the things
24:58
look like before they work with us, what things look like now,
25:00
what things could look like in the future.
25:02
And then towards the end of that, I basically had like a
25:06
comparison like the good, better, best, you know, and it
25:09
was, you know, here's what you've been doing with us for
25:11
the last couple years. This is what your average
25:13
monthly costs have been, your average annual costs, you know
25:16
what the deliverables have been. And then I basically just did a
25:19
comparison and said, well, we can do all that other work, but
25:22
here's where we would actually save because a lot of those are
25:24
the bigger companies, right? As much as they value me, they
25:29
have budget. So if I can save some money for
25:31
them and deliver the same amount of work and maybe even a little
25:34
bit more to them, like they were the hero, because now they're
25:37
coming in on their budget, you know, and saving a little bit of
25:40
money. So the, so that worked for the,
25:43
for the existing customers and, and, and I'd say, you know, we
25:46
signed up, I don't remember what the number was, it's so many
25:47
years ago, but I would say probably at least like, you
25:50
know, 70% if not more signed up for the retainer model.
25:54
So it's a pretty high conversion to get people to that point.
25:59
The new customers, you know, talk about all right, so we, so
26:04
if we go back, right, this is before AI, this is before all
26:08
the tools we have. This is like you have your
26:10
calculator, right, like a spreadsheet to figure things
26:12
out. And so one of the challenges I
26:15
had when I did project work was how do I quote things
26:18
accurately? You know, somebody's asking me
26:20
for this website, you know, and they have this functionality.
26:23
They need this number of pages, they need copywriting.
26:26
They don't need copywriting, whatever it might be.
26:29
And what I found was after doing it for a number of years and
26:33
looking back, some jobs we were highly profitable on some we
26:37
lost a lot of money on, right? And so I said, well, how can I
26:40
be more consistent in my pricing?
26:42
And So what I did is I analyzed hundreds of website projects
26:45
we've built and how much time was spent doing that project and
26:50
not just the projects as a whole, but like programming
26:52
design, you, you know, you know, wire framing, like all the
26:56
different elements. And then I built a pricing model
26:58
in Excel. And so then when I got a new,
27:01
you know, RFP coming through, I just had to go into Excel and
27:04
say, this is how many pages the website's going to be.
27:06
This is this, this is that. And I just filled in all the
27:08
variables and it spit out a price for me.
27:11
And then what I realized to cover my basis for us, about 20
27:17
to 25% of the total fee usually cover project management.
27:21
So now I no longer had to guess a project management cost
27:24
because the formula that I built would automatically calculate
27:27
what the project management would be and how many hours were
27:30
expected to be needed to manage that project.
27:34
And I will tell you that was huge because not only did it
27:37
create more profitability, but it allowed me to quote things so
27:41
much quicker. Like if you asked me today for a
27:43
quote, I could get a quote for you tomorrow.
27:46
Before that, I would spend weeks probably, you know, trying to
27:49
figure it out to make sure I was going to be profitable.
27:53
There's a, I've actually had two people that on the podcast, 1
27:56
was Doug Landis and one of the things that he said to me
27:59
because we were talking about pricing models and how so how
28:01
challenging it is of like, and we, he talked about the
28:04
willingness to pay. He said that was one of the
28:05
things he said, the willingness to pay.
28:07
What are the customers willingness to pay for us to
28:10
build our models? And then I had Roey Hartuve, who
28:13
actually is from willingness pays and he works with them.
28:16
And we talked about pricing models and how hard it is to
28:20
find it. And the fact that you came to
28:21
good better best is, is great. And then you had all this data
28:25
to go into it because you, what you're trying to do is be able
28:28
to pitch somebody pretty quickly to say, oh, you know what, based
28:32
on what you heard, based on what I'm hearing, you're going to be
28:34
in the better category For these reasons.
28:37
And it's going to be somewhere around $25,000.
28:40
I'm just making stuff up. It's going to be around $25,000
28:43
for it. Oh, actually what you're going
28:44
to need, it's much more complex. And we've done 300 of this and
28:49
our pricing insights go into it. When did that shift the
28:52
conversations? Like were you having that type
28:54
of conversation with new customers being like, OK, you
28:57
know what, you're in better or you're in best For these reasons
29:00
and then you've and then you give them the ability to go, oh,
29:03
you know what, Jason? I don't want that.
29:05
I actually want to be in good. Right.
29:08
Yeah. I mean, sometimes it happens,
29:09
right. You come in with the
29:10
recommendation, I mean, even today.
29:12
So I'll give you another scenario.
29:13
Even with cult device, a lot of our work, Carl is consulting for
29:18
people that already have ACRM, right?
29:20
So they have something they have, but what do they have?
29:23
They have something and they need help.
29:25
And so the way that we do it is we do block timing, right?
29:28
So we say, OK, you know, we think it's going to be this
29:31
number of hours. And usually for the most part
29:33
when we're coming in and fixing things they already have, it's
29:35
usually a phased type approach. We're like, OK, let's say phase
29:39
one is, you know, 15 hours. Phase 2 might be 20, Phase 3
29:42
might be, you know, 15, whatever it might be.
29:45
I said you can pay each phase, you know, and this is our rate
29:48
or you could buy a block of time that would cover a phase 1-2 or
29:52
phase or all three phases and we'll lower our hourly rate.
29:56
And so that's and that's always people are like, well, yeah,
30:00
sure, we will do that. I even have which to my
30:03
surprise, not to my surprise, I should say, but a little bit
30:06
when I started Cultivize and we started selling CRM software to
30:10
new businesses just like the SAS model, right?
30:12
They do it. Almost every SAS model does what
30:14
I'm about to say, but is pay upfront for the year and you get
30:17
the best savings. And, you know, and, you know,
30:20
it's easy to pay upfront when it's a few $1000.
30:23
You know, we had clients paying us, you know, 50-60 grand
30:26
upfront, you know, and I wasn't sure how it was honestly going
30:29
to take, you know, given like the current economic situation
30:33
at the time, you know, like the political, you know, environment
30:35
and everything else that comes into it.
30:37
And so I was kind of starting to be surprised and how many people
30:41
were like, yeah, like that's cool, we'll do that.
30:43
You know, no problem, we'll pay upfront.
30:45
Now again, you know, one of the things we talked about offline
30:48
about that model is keeping the cash flow right, because it's
30:53
great to get those big chunks of cash.
30:55
But if you're not carefully, you know, watching that, then you
30:58
could quickly spend that. And then in, you know, if that's
31:01
supposed to pay your expenses for the next 11 months and now
31:04
that money's gone, that that could actually be a, a
31:07
detriment. So what we do is we actually
31:09
have a separate business checking account.
31:11
So we get money from a client paid upfront for the year, we
31:15
figure out how much money that divides into each month that
31:17
needs to cover our expenses for what they're hiring us for.
31:21
And then we just put it in there.
31:23
And then every month through through the bank account, I have
31:26
an automatic withdrawal. So it automatically every month
31:28
transfers money from one account to another just to cover our
31:31
costs, you know, for all those types of projects every month,
31:35
which is been phenomenal, you know, because it keeps cash flow
31:39
at a nice steady line and to make sure that all those, you
31:43
know, future expenses are covered for.
31:46
And all of the things that you, you have to go through as you as
31:50
you go through the, the challenge of either one lump
31:53
sum, it's going to be monthly, it's going to be quarterly.
31:55
What are the paying terms and what are the billing terms?
31:57
And how do you make sure that you don't do it and don't, don't
31:59
spend it all. And some of the complexities
32:02
there. So what, what I'm, what we've
32:05
kind of talked through is you, you recognize the problem
32:08
statement. It seemed like, right.
32:09
The problem statement was you're constantly trying to follow the,
32:13
the bouncing ball or trying to follow the dollar.
32:15
If we say it that way to try to get it and you recognize it was
32:18
not a good, good way. So you brought in a new way of
32:21
thinking, which is this moving to retainer model.
32:24
You rooted it into a new pricing model with data and insights.
32:29
You create this presentation, you go to the, you go to talk to
32:33
the customer and you say, all right, Carl, I know we've been
32:36
doing work for a long time. Here it is.
32:38
How did that conversation go? What did it sound like?
32:41
Well, so I, I didn't just kind of go into the presentation,
32:44
right. So once we were ready and, and I
32:46
had everything, all the ducks in the row, as they say, I reach
32:49
out to every customer and say, this is what we're working on
32:52
and I'd love to just have some time, you know, and at that
32:54
point we, there weren't very many zoom meetings back in,
32:57
like, you know, when I was doing this.
32:59
So I'd, I'd go in person, you know, and, and meet with them
33:03
and say, This is why I want to meet.
33:05
This is what I'm, what I'd like to talk about.
33:07
And I just want to seek out your feel for it, right.
33:09
So I wasn't forcing it on them, say, Hey, we're moving to this
33:12
model, either take it or leave it.
33:13
And you know, if you, if you don't take it, we're walking
33:16
away. It was like, just want to get
33:17
your thoughts right because I wanted it to be their idea to
33:21
make the switch versus my idea of telling them.
33:24
And so the way I presented it was, you know, I, I found some
33:27
ways where I think we could, you know, do some more things
33:29
together, help you out more, bring some more value and at the
33:31
same time save you some money. Like, would you like who would
33:34
say no to that, right? I mean, so that's the way I
33:37
framed it. And then in person, you know,
33:40
presenting it I think worked a lot better in my favor because I
33:43
had those personal relationships and I wasn't just sending them
33:46
like a proposal or a document to review.
33:49
It was more focused around a conversation and just using my
33:52
presentation as data points that I can reference during that
33:57
discussion. It's a great way, it's a great
34:00
way to do it because your person, you're in person, you,
34:02
you can read everything, you can ask some questions.
34:05
Hey, what if we did this? I remember doing this way back
34:08
with a, with actually, I don't know, I'll say it with Vidyard,
34:11
but we went through a pricing change.
34:12
And I remember having the first conversation with the customer
34:14
saying, hey, you know what, we're going to go through a
34:16
pricing change and it's going to sound like it's going to be
34:21
more, but it's actually better for you.
34:23
And I laid it out and they're like, yeah, that's way better.
34:27
Let's do that. And the conversation was was, I
34:31
don't want to say simple, but because of how prepared I was to
34:36
go in to say, here's everything you've done in the past year and
34:38
here's all the things. And then by the way, this is the
34:40
new model and this is how it helps you.
34:42
But if you give people that ability, I think is what I'm
34:45
hearing. And you gave the the people to
34:48
go, OK, he 1 he understands. Two, he quantified and three, he
34:53
translated that to me for a better path.
34:55
So you went from what is to what the future is and how it
34:59
connects the two dots. So it sounds like you did a
35:01
really good job of explaining that with with them.
35:05
So they went, yeah, Jason, no brainer.
35:09
Like your HVAC guy. Yeah.
35:11
Or plumber. No, no brainer.
35:13
Sign me up. Right.
35:15
Exactly. That's that's what we all want.
35:17
We, you know, take some, some efforts and, you know,
35:20
skillfulness, I think, to get to that point.
35:22
But and we all, you know, try our best.
35:25
But yeah, it's, it's yeah. And that's like I was saying,
35:28
you know, a shotgun approach to this is never going to work
35:31
because there's just so many unknowns, right?
35:35
So you have to come prepared with a plan, right.
35:38
That is, I think, yes, you're doing it.
35:41
Maybe I don't wanna say for selfish reasons, but you're
35:43
doing it to help your business. But you also more so you have to
35:46
show like you said, like and I that sounds awesome, by the way,
35:49
Carl, like you're what you did. So that's that's what you have
35:54
to focus on. Like how does how do I get the
35:55
client excited about this right to see that this is actually
35:58
beneficial to them? Yeah.
36:00
From your experience going back to it, what's the downside or
36:04
what's the gotcha for somebody that would, if they're going
36:07
through, what's the gotcha for them to consider as they're
36:10
they're approaching this? Like is it, you know what
36:12
somebody's going to opt out be like, you know what, Jason, I
36:14
only want to do project based. I'm not interested in retainer
36:18
and you lose business or do you start to see some, I don't want
36:21
to say culling of your business, but what did it, what did it do
36:24
or what are the things to for people to be aware of?
36:27
Well, I think you have to figure out what you're going to be
36:29
offering, right? So like most people think
36:30
retainer, they think, OK, there's like ongoing
36:33
deliverables, right? There's something being
36:35
delivered maybe every week, every month.
36:37
And so understanding what that is.
36:39
So when I first started this, you know, I did, you know, the
36:43
naive thing to be like, oh, and this is when like, you know,
36:45
blogs were first, not, not first starting out, but like, you
36:48
know, it wasn't like today I was like, oh, we'll build you like A
36:51
blog every week and we'll do this.
36:53
And and I was more forcing on them deliverables than not every
36:56
client really needed or had value for.
36:59
And so I'm like, OK, well, this isn't going to work because I
37:03
can't build a package. That package isn't going to be
37:05
suitable for everybody. So I had to find a way to be
37:08
more flexible. And so I think one of the
37:10
challenges is when you, if you're building a retainer, how
37:14
is there like levers in there to make it where it's flexible that
37:18
it's not giving somebody something they don't need,
37:21
right? Or that they're not going to get
37:22
value from. And so that's one of it.
37:25
The other part of it is just the logistics of that, right?
37:29
Making sure you have like good project management tools, good
37:32
billing tools to track hours, right?
37:35
Because now if you're going to be doing something that is over
37:38
the course of 12 months versus maybe one month or three months,
37:42
you need to be able to roll all that up and see where you're at
37:44
and engage it. Like, are we spending more time,
37:47
especially in the agency world, you know, it's notorious where
37:51
you're spending way more time than you ever thought you would
37:53
spend, you know, working on a project, you're talking to a
37:56
client. So managing all that is
37:58
extremely important as well. Yeah.
38:01
So it's, it's, I think it's an operational piece as well as
38:05
making sure you're not just selling something to sell
38:08
something that doesn't ultimately bring value.
38:12
People buy people buy things for a few different reasons, right?
38:15
And if, if one, if it's making them better or they're able to
38:18
save money or make more money, then it makes it a lot easier.
38:21
So I told you I would get you out of here within an hour and
38:24
I'm looking at the time going OK, I don't want to, I don't
38:27
want to break my promise. So when I I like to move in, so
38:32
if we move in towards sort of the wrap up and I ask everybody,
38:34
I say everybody likes a new and nobody likes different.
38:36
And when you do both at the same time, it can cause friction or
38:39
uncertainty. And I don't know that there's a
38:41
better example than this one exactly.
38:43
So for somebody thinking about how they can improve their,
38:47
their building models or their pricing models and shifting away
38:49
from that, that retain of that project base model, what are two
38:55
or three actionable things that you would say, hey, by the way,
38:58
go do these three, two or three things on Monday morning and
39:02
that'll help put you on the path for success?
39:04
So the first thing to do is anybody listening hopefully has
39:08
some type of data that they could go in and look at.
39:11
So I would say, you know, look at data for the last two to
39:14
three years, look at not maybe every customer, maybe you pick
39:18
out your top, you know, depending on maybe you have, you
39:20
know, top 50, top 100, top 200. And just looking to see what
39:24
those customers were spending and to see over what period of
39:27
time are they, you know, were they getting invoiced, you know,
39:30
doing a project once a month, once a quarter, once a year.
39:33
I think that high level data just to see how much you were
39:36
actually doing for those customers and how often they
39:39
needed you. I think it definitely for sure
39:41
is the first step. The second step is seeing where
39:44
there's commonalities. A lot of times, sometimes, you
39:47
know, depending on the business you might offer, especially
39:50
manufacturers, you might sell a lot of different things.
39:52
And so I've talked walked into situations where they don't even
39:56
realize what the sort of top product, top services that they
40:01
sell. And you and you say you sell,
40:03
you have 100 SKUs, which are your top five.
40:06
I don't know how do you know that question, right?
40:09
And so that's something you could look at too is so if
40:12
you're let's say an agency or somebody you in whatever
40:15
industry and you offer ten 20-30 different services, whatever the
40:19
number is. Look at your data to see what
40:21
are the services that are most popular in terms of what people
40:24
are buying from you, because you may also be putting a lot of
40:27
your effort into trying to sell stuff that nobody even wants.
40:30
And so that that can help with understanding how to position
40:33
the retainer model or just how to sell the core things that you
40:37
guys are really good at. And then the third piece is I
40:40
would say systems. You know, it's a good idea like
40:43
if you're the owner of the business, you know, talking to
40:46
the head of operations or head of of different departments,
40:49
what tools are you like? If you don't know the answer
40:51
yourself, of course, like what tools are you using for project
40:54
management? What tools are we using for
40:56
time, You know, time tracking. If you track time, what tools
41:00
are we using for, for invoicing for, you know, our CRM.
41:03
This is a good time to understand what technology you
41:07
have in place and what the functions of those are.
41:10
And the other part of that is just don't take somebody's word
41:15
for it and be like, Oh yeah, we have this tool, it's our CRM and
41:17
it's great. Well, have them show you, right?
41:20
Say sit with them for 1/2 hour and say, can you log into the
41:22
CRM and show me how you use this everyday?
41:25
You know what, where do you click?
41:26
What do you look at? What reports are you looking at?
41:29
Because that's where you start recognizing, oh wow, yeah, we're
41:32
paying all this money for software.
41:33
No one's even using it. And so those are the the few
41:37
things I would that are very relatively easy to do without
41:41
any investment of cost. It's just a little bit of
41:44
investment of time. There's two things you said
41:47
there. There's two things kind of mine
41:49
from everything you just said there one is.
41:51
Again, I can't remember who said it, but they said they attached
41:53
himself to an invoice and a CEO sat and watched one of his team
41:59
members review it. And I, I said, I could already
42:03
anticipate to see you being very frustrated for the amount of
42:06
steps and clicks and everything. It was like, OK, got to fix that
42:09
because sometimes the systems do get in your way of solving it.
42:12
So I really like the call out. Jason, this has been so much
42:16
fun. And I know we could talk for
42:18
probably a couple of hours and and I keep asking questions, but
42:22
if somebody wants to learn a little bit more about you, where
42:25
would you suggest that they kind of look into and connect with
42:28
you? Sure, crawl the best place is
42:30
going to afterthelead.com and so there you can connect with me on
42:35
social. So all my socials there.
42:37
There's also a link to book a call with me.
42:39
Love having these types of conversations.
42:41
No pressure, no obligation. Schedule a call, happy to talk
42:45
to anybody who's listening today, answer any specific
42:47
questions. And then we didn't really get
42:49
into too much of the other things, but there's some really
42:51
great free downloads and and e-books and guides there that I
42:55
think could be really helpful for people that are listening
42:58
say with other aspects of the business that we talked about
43:00
more with process driven things. They need to bring the leads in
43:06
and and nurture them and get them through the sales process.
43:09
Yeah, there is a lot to do from all the process side, so having
43:14
having guides and resources is super.
43:16
Lots of guys there, yes. Yeah, yeah.
43:18
So Jason, I, I appreciate you doing this.
43:22
You know, we haven't had, we don't have a relationship before
43:25
this. So it's a, it's a new one for
43:27
me, but I've definitely enjoyed your, your energy, the way you
43:30
think about it, the data side of things and bringing find,
43:34
bringing everything together to find a better way.
43:37
It's been a lot of fun and I hope that I get the chance to
43:39
meet you. And by the way, I have to throw
43:41
it in here because Jason already talked about it.
43:43
You know, if you're if you do listen and you do connect with
43:46
him, he's got a couple Easter eggs inside of his his picture
43:50
there. So just in case you want to take
43:52
a look, there are some that, you know, it's a lot of fun to go
43:55
with. So, but yeah, thanks so much for
43:57
doing this today, Jason. My pleasure.
43:59
It's been a lot of fun. That's going to wrap up another
44:01
episode of Revenue Problem Solvers podcast.
44:03
Obviously want to thank Jason for the sharing these incredibly
44:06
valuable insights. And as you heard, there's some
44:08
strategy you can put in action. Remember, success leaves clues
44:11
in every revenue problem has a solution.
44:14
Sometimes you just need the right conversation to find it.
44:17
Until next time, it's Carl with the Revenue Problem Solvers
44:19
helping you turn your obstacles into your opportunities.
44:22
Thank you for investing your time with us today.
44:24
We'll see you in the next episode.