There's a place between 1 million and 10 million where most agency owners get...
Nickavaria calls it the Swamp.
He's bought and sold seven agencies and he says the Swamp is an talent problem or a marketing problem. It's a missing middle problem. The systems, the data, the management layer, nobody signs up to build. Today he breaks down why up to 65% of middle managers add negative value to a small business.
Why the manager you promoted from inside is quietly costing you money and why lifetime value not customer acquisition cost is the number that actually gets you out. If you're an agency owner stuck in the swamp, this episode is your way out. This is the vault. Let's unlock it.
Nick, we'll come to the show. Thanks for having me, Cable. Listen, for anybody that's listening right now, we are going to be deep diving into the
pitfall falls of how business is struggle and they stay between now 1 to 10 million
and agency owners. And if you have agencies, how you can get out of the day to day, so you can actually be able to enjoy your life, get your time back, and still have the business in front of you. Nick, I know you're an absolute expert in this talking to you before.
You've talked about, I think, selling multiple businesses, all profitable, but yeah, tell us a little bit more. Yeah, so I mean, like look, I've bought and sold seven agencies by this point. One of them were roll up M&A kind of plays, and I started or bought eight other businesses as well.
Like pubs, things in the wedding industry, like I used to hold a portfolio of real estate
before I sold it recently, and in all of this, I think that it really comes down to the
story that my uncle told me, which was like, and he's a serial entrepreneur, like he owns more businesses than even his wife knows about because he just has that many.
“So I mean, Nick, you got to be independent, and what you need to realize is that if you're”
the boss in a business, you're actually not independent because you're beholden ethically two-year employees, and you owe them something. So the only way out is to actually be the owner, not the boss. And so in all of these businesses, my goal is to work myself out of a job, and install somebody that actually runs a business so I can be an owner rather than an entrepreneur.
Yeah, I love what you just said there, and I think it's so important. There's such a nuance there, is you just say, "Work yourself out of a job," and I love that he said, "Behold it to your employees," he's like, "So important that as a business owner," and I think you agree with this, is it is our job is our duty to make sure that we keep the lights open.
I mean, this is what being an owner sometimes sucks, right? Being an entrepreneur is hard because it's not just about you and your own personal family, it's everyone that works that aren't neat to you, and you have the responsibility there.
“Yeah, you're putting food on the table for other people, right?”
Like, it's like, their salaries are what pays for their house, their kids, et cetera. Like, and you can't, you cannot take that lightly. I couldn't agree more, and I love what you just said is, and if you're the one who's being the boss, you're not being the owner, you're being the boss. You might as well go work in corporation, if you're doing that.
I think there's three different roles that entrepreneurs take on that they blend seamlessly and like, this is the actual mistake in thinking. They look at entrepreneurship as being the CEO and being the owner, and I'm like, "Look, you know, that's not what this is." There's a difference between being a founder versus a CEO.
You graduate from founder to CEO, then once you get to CEO, then you can get out of being CEO because you can then actually define what being the CEO at the company is, and then you can replace yourself, right? But I want to be very specific about the difference between the founder and the CEO. The founder is a person that figures out product market set, you're super scrappy.
“You get your business so like a million bucks a year at minimum, right?”
Maybe, maybe two. The graduation from founder to CEO is can you attract and keep top talent that will actually build the business better than you can because they're smarter than you. If you look around your leadership or executive team and everybody there is not as smart as you, you're still a founder.
If everybody is absolutely smarter than you, and you're like, "Look, I could take a vacation for six months." And what do we grow, baby, baby, not, would we be slightly misline, maybe? But it would be fine and we would still like organically grow, just maybe not fast. Then you have the makings of like, okay, yeah, like I'm a CEO now, because here's the reality.
If you want to attract this top leadership talent, like the strong follow the...
And if you're not strong as a leader, like strong leaders follow a CEO, they don't follow a founder, right? Because founders are chaotic, they lack emotional control, they hunt the shiny penny, and they don't know how to say no. And therefore, they just swing their companies around from end to end, making huge pivots
where you can't actually like make forward traction, because you're too busy just like taking three steps forward and then three steps back. I couldn't agree with you, Mar.
“So then the question is, how do you go from founder to business owner and/or on board?”
Yeah.
I think like the first step is really like, look, the problem is is when we sign up for
entrepreneurship, or we start this business, right, as a founder. We usually start these businesses, because we're like, look, there's a gap in the market, I can do this better than other people, like I think this thing sucks, I'm going to just do it better. And so you're very like mission and vision driven, like look, I'm going to make the world
better through my service. Well, I don't care if that's like construction or an agency or whatever, you saw a way to make it better. And that works really well, because like from a leadership perspective, you're very charismatic, you're very passionate about the thing, and you don't need to be charismatic in general,
you're just charismatic about like this topic that is your business. And so people are going to ultimately follow you, like this is not the hard part, okay?
The problem is is that you're probably really good at delivering that thing, that product,
that service. The thing that you didn't sign up for as being an entrepreneur founder is figuring out what I kind of call the missing middle, okay? So the missing middle is really like that gap between strategy and planning at the top, where you're like, this is the mission, vision, values, like you're straddle, like how
you're going to go to market, like all that stuff, right? And then data need delivery, and you're amazing at both by the way, because like data delivery means like the product and service is like awesome, and like you're passionate about it. And so that works, and you train people up to do this stuff, and it works really well.
“The problem is that because of your success, that success is going to lead to failure.”
And this is the failure that's going to happen. You're going to grow because you're really good at the delivery and the planning and the strategy. But you're directly connected to the front line. At some point, you're going to need middle management.
And this happens when you're like anywhere between like five employees to 10 employees, you're going to get your first middle manager. And chances are, you're probably going to hire somebody in that position that currently works for you.
And this is where the problem is actually begin.
And to understand what the missing middle actually is, it's actually like behavior change systems that you can deploy for a middle management layer. And the problem is is that as you disconnect from the front line, you're getting a whole bunch of like qualitative data because like you know how the things should work. Now you don't have direct line of sight.
So now you need like dashboards and data systems to take that front line stuff and funnel it back up to the top so you can actually understand what's going on. And then you need the behavior change systems and like systems in general. To give to those middle managers so that they can actually implement the behavior change to the front line without you being present.
See because like all entrepreneurs are the same way and founders are the same way. It's like if I talk to the front line, I can fix it. And it's like yes, you can, but that's not the point, right? If you walk around being with the superhero wearing the cape on your back every single day, you are going to need to bail absolutely everything out.
And this is why founders end up working like 60, 80 hour weeks, right? Because it's like you're the hero, it's like, oh, they did this poorly. Let me fix this. Oh, they did this this other way. Let me fix it.
You basically let me fix it your way into working in saying hours. And then guess what happens when you're fixing things, you're not moving your business forward anymore. And now you're done the water. And this is why people get stuck.
“And that's why you're kind of stuck in that I was reading a book, I forget what it was”
but it was like, they called it like between like that, what you're kind of saying like that two to like six million like you just can't get out of it. And it's the worst parts of being in business. You don't have enough finances and room to get the big shots in. You're still stuck in the day to day and you just can't see a way out and it's painful.
And you're shaking your head for those that you're just listening. So I want, and you're shaking your head with a smile. So I wanted to break that down a little bit because you did say something earlier to the further show I want to bring up, but I want to just finish with that thought. So why, you know, something came up for you there.
You smiled and you were like, it's like it's funny that you mentioned two to ...
like the transition between one and ten, that's like the swamp. It's like it's the worst of the worst of the worst. Like the absolute, like it's just like, yes, people get like, look, and I'm not going to tell you otherwise. People do get stuck at like six, seven, eight, even nine, like after ten, by the way,
it all becomes a sales and marketing problem. And like, and there's reasons for this, right? So like, when you hear other people give advice and like, like, really big businesses, right?
Like, 50 million, 100 million plus.
The reason that these guys come out and they're like, it's all about people and then your sales and marketing is because once you hit 10 million, that's the only problem to solve. There's only two problems. The top line leadership, like your, your most senior executive sees sweet people and sales
and marketing.
“That's your only living factor because here's the thing that nobody tells you.”
The things that you do between one and ten will stick with you forever more. Like, that's, that's the reality of it. And two to six is like this formative time in the business where this is actually this missing middle idea of like improper data systems, improper behavior systems, improper systems in general and how we manage through other people to actually get the results that we want.
This is the actual problem that we need to fix.
And by the way, we never signed up to fix this, right?
Because like we just want to make a cool product, right? Middle management, like the numbers out there are like crazy up to 65% of middle managers that have negative value to the business. Negative. I'm not talking about break even value.
I'm talking about negative value to the business. And for small business, this is a specific way to say that again. In small businesses, up to like this was a study, up to 65% of middle managers have a negative value to the business, meaning like they're not even neutral.
“What is, I hear that, when you say small business SMBs or what are we talking about?”
I'm talking under ten million. So, so think about it, it's like if you have ten managers in your business and you don't have these like missing middle systems, up to 65% of them are actually dragging you behind. And I want you to think about this through this lens.
How many times, and like, for any of you listening, it's like, you hired a manager, okay? And you realized that the manager was supposed to free you up and it was supposed to give you back your time, only for you to actually like check over all their work, you're still doing a bunch of their work and because you're not doing it yourself, you're doing it through them.
It's actually taking you more time. So before you were working 60 hours and now you're working 70 hours or 80 hours, even though you have this person in place, and by the way, this happens all the time. And so, and then it's like, well, tell me about the ROI of this individual when you're working the same amount, if not more, you're fixing all their work, and you maybe even
“have people complaining that they don't like their new manager.”
And by the way, this is why it happens, right? The swamp, it's this 100%, and the swamp is because moving even from like zero to a million, like look, I'm not going to say otherwise, it's hard. It is hard. They say the first millions are hardest.
It is, but once you have the first million, it's like you technically have product
market fit, right? Because like the market wants what you have, you figured that element out. One to two is actually like pretty simple at that point comparatively, and then you get to the swamp part. And the reason it's the swamp is because there are so many things that need to be built
out between two and six that it's crazy. And like the thing about this swamp area of like two to six is that some people get stuck at two, some people get stuck at four, like everybody gets stuck in a different place, and it's generally because it's like a combination lock. You need the right combination to get out of this thing.
And where people get stuck is because they hit the maybe the first three numbers out of the four number of combination. And so they get stuck at a little bit higher, and some people maybe only get one number right, and they get stuck at like two and a half. And but what I can tell you is that the biggest mistake people make is that when they promote
from within, they promote technical experts, you know, into manager roles. Like this is the number one problem. Like that I've seen every agency, every business period, like I don't care what business it is. And it's because like this, you know, individual, like I call frontline people individual
contributors, right? Because they work individually. Yeah, they are part of a team, whatever, but they're individual contributors. They take an awesome individual contributor, like 10 and a 10, this person's amazing. You can count on them for everything, and then it's like hey, this person inevitably
says like look, I know I'm performing well, I need more money, I need a promotion.
In our infinite wisdom is like young founders, we say great, like we'll just ...
you a manager.
And the problem is that a lot of these technical experts should be promoted into a technical
expert role. So quite literally like somebody like, hey, like I'm the, you know, I'm the best at like meta ads. Like you're the meta ads lead. You don't need to be the digital director, the digital manager for the team, right?
And so what you end up with is a whole bunch of these technical experts that actually, you know, the end up as a manager is what does a technical expert do when something goes wrong, they fix it. And that's, you're like Nick, like, but isn't it their job to fix it? It's like, no, no, no, no, no, it's not.
It's their job to fix it through others. The key part is the through others part, the through the through. And so this is what Fortune 500's have gotten right every single time, by the way, when you want to get promoted, what is the last task of Fortune 500 will give you before you get promoted?
They're like, great, you're, you're hitting all your numbers, you're fantastic.
“You need to replicate yourself, you need to recreate yourself in somebody else you need”
to train your replacement. That is the last task, because they know that your job in that promoted state of management, whatever layer that is, you've got to be able to replicate your top performing self, multiple times underneath you in that new position. So if you can't do it once, you sure as hell can't do it five other times or ten other
times, whatever is required of you. And so this is why it's the last test. So like, the number one fix you can do right now to figure out whether or not, let me sure be promoted is like, can you replace, can you train your replacement to be autonomous? Because remember, they need to be trained on an ongoing basis, but they must be autonomous.
If they're not autonomous, the problem that's going to happen is that you're going to end up doing their work for them once you get promoted. And here's a problem. Like, okay, you need to do ten percent of this person's job. Does that sound like a problem?
It's like, let's sort of low number. It's like, well, what if you have five to seven people that you're doing ten percent of everyone's job?
So you're doing 70 percent of your time on other people's jobs.
Your management position is 100 percent. So you have 170 percent work to do. How do you get out of that? Right? So it's like, okay, well, this is what happens.
And this is why the negative value of manager thing, right? The manager now has like 150 to 170 percent of work. They're not going to work a six year 80 hour day because they're not the owner. So where does the surplus of management work go to? No, where?
You go to the owner. That's what the owner works. 180 hours. Right? 100 hours.
I've seen people work 100 hours a week because they have to because I hired this manager and they're not doing their job and like, I'm doing half their job still. And they were supposed to give me back time and they don't. Right. And I think that people misunderstand what like management actually is.
“Like, do you need to train people technically?”
Sure. Like, that's maybe 30 percent of your job. With the other 70 percent of your job is like completely different, right? Good managers are about setting expectations and accountability. Like what?
Teaching people what actually drives company results. How to manage time well? Like it seems like a BS thing, but like do people actually know how to manage their time? Because it's the only reason that they really have control over as individual contributors. How do they work well with others?
How do they hit objectives? Like, how do they prioritize alignment to culture? Like, this is 70 percent of a manager's job, right? It's literally cleaning up the mental models of the front line and or whoever they manage to be in alignment with what success and performance actually looks like.
And so when we talk about performance management, right? Like a lot of companies are like, oh, it's all about performance management. It's performance management and technical proficiency are two totally different things.
And the problem is is that most people do the technical training.
It's like, yep, I got my PPC guy up to snuff and, you know, meta ads or SEO or whatever. Like, they're technically sound. It's like, my job's done. It's like, oh, you mean like one quarter of your job is done.
“Because the other three quarter is, can you teach them performance and manage them?”
And then the actual like managing, like managing and get the most out of them. The reason I say that is I run a sales agency and I took a chance. I had someone I knew that was just a winner. They had the winners mindset and they worked hard. They had no sales experience, never trained a sales man, like never been in sales management.
But I watched them for eight years, always crushed their jobs. And I finally reached out and I said, listen, I can do the sales training.
That's the easy part.
It's the day-to-day management of people that I don't do, that I can't do, that I can't be doing. I need you to do what you're doing over there. It's the same thing. You come over here and just do what you do.
Don't worry about not being the sales or that. My number one manager, by far.
“My biggest, uh, would you get profitability center in the company by far?”
I hired from outside, I had no sales management experience and the best sales manager, I have of all the managers I have. But think about what you just said, right? And I think this matters a lot.
It's like you basically hired, and this way a lot of people say it's like you hire for attitude
and like the technical comes later. We'll think about it. It's like, what I just said is that a quarter of its technical, three quarter of it is teaching people how to win, right, because like, I mean, you can translate performance management, like teaching people how to perform, how to win, same thing.
Technical is only like a quarter of it, those things can be taught. But like teaching people how to win is its own skill. And like this is, you know, and like, I think management, um, language on the round training that are like change management to this and like all these, and they matter by the way, like these topics do matter, but they dance around the core of what being a manager is.
Like the core of being a manager is showing people how to succeed. Not only themselves within the business, but how that success that they themselves can generate for themselves in the business is going to help the business and the customer all at the same time, right? And like I call this like triple net wins, right?
So a triple net win is a win for yourself as the employee, which the manager is training on how to do. A win for the company and a win for the client and or a customer. And for a win to be real, it needs to be all three at once.
“So all three wins need to happen simultaneously, otherwise it doesn't count, right?”
Yeah.
And what the problem is is that a lot of people don't structure this correctly.
And like if you're thinking like, oh, like this is really intangible and like, raw, raw. It's not. It's quite literally how we structure people's jobs. Okay. So like this is very tactical at its core.
We need clear objective metrics and KPIs. And this is what I mean by that. You need a role in a business, you need objectives, you need measurements, and you need to then coach people against those measurements. So the role is the job description, right?
It's like all the bullet points that they're going to do, all the things that they're going to do, right?
More specifically inside of the job description, there's going to be some key objectives.
And then this is going to be three to five objectives that is based off of their role. And these are going to be the objectives are not, hey, this is what your role is. And or like this is how like these are the key items for you to win. These are the key objectives that will generate business and client level wins. Okay.
So like the missed number one thing that people make in small businesses is that they tune those key objectives to like things that people have full control over. And those things are very small. Like it's like, oh, do your work on time and you know, oh, like, you know, just make sure that like this thing is designed well or whatever else it is.
And it's like, okay, but they can do those things and be a detriment to the business. They can do those things that not be profitable. They can do those things without actually doing good work. That has a positive effect on the client and the business. So you need objectives that are aligned with business level.
Success that it also dive into like client success. Then you need measurements for those objectives, right? Metrics and KPIs metrics are rear view mirror stuff. KPIs are front windshield, right? So a metric measures money and what happened before a KPIs a key performance.
It's an indicator to an indicator of performance, but it's not performance and of itself. And then you use those measurements to coach the person and behave your change them to be able to hit those numbers, right?
“And so like that's why this actually works like in a tactical setting.”
This is what you need to set them up to win because here's the problem. Everybody in their brain has a different definition of what winning actually is. If you don't align what winning is, it will be misaligned and it will not work. Meaning you're going to get stuck in the swamp. Yep.
Wow. Okay. So let's deep dive in here a little bit because what I kind of heard contradiction thoughts here, but I think I'm getting it is managers. The swamp is the worst place to be as an entrepreneur because you're stuck in the middle
Of it.
What I'm hearing was most people were stuck in there because they have a management problem because management are not creating that alone, not even just being neutral, creating profit. They're actually costing money. But then the same man you're saying when you do have the right management, what the
right KPIs and okay, you never say what Keras, but KPIs, okay ours.
All of which the understanding where it's going, the definition of winning all those things,
“then that's what gets you out of the swamp.”
That's exactly it. So the same problem is the middle management problem, by the way, like this is why I call the missing middle, it's not just middle management, it's like what are the systems, what are the data systems, what are like all these other things, that is the swamp. It's like people get stuck because of this missing middle part of their business.
They have all the strategy, they have all the frontline delivery, but that middle piece is missing and that is the swamp.
And until you build enough of that middle piece of your business, you will never get out
of the swamp. You will just remain stuck there forever. So what I'm hearing from you is your genius at a fine here is, because you did mention before we got on the call, which I thought was great, was you said, you know, business is easy, like seeing this is easy and as you were talking, I was thinking, oh, this guy
just looks at checkers or chess, let's just say, like you're looking at business, there's like a chess game, and you know how to move all the pieces properly. So, and then you mentioned, and then you kind of suspensioned to me, so easy, anybody can do it, and I was like, no, not necessarily, not everybody can do this.
“So what I'm seeing is your genius that you've instilled, I think, it sounds like from”
your uncle and from your passing, from all your multiple mergers and exits in all different industries, is that you can walk into a business, look at it, I'm just going to use example, look at it as like a chess game, and then no exactly when to use the move, the
piece, or what pieces need to move to get past a 10 million.
Because I love what you said, you said a 10 million plus, it becomes easier, I've heard that multiple times, and I've been in business is where it's beyond 10, and it's so much easier. Like, the cash flows there, the systems are there, the people are there, you kind of choir better people, and things just the duplication and/or the acts, like the two acts
of things happening quicker faster, results coming in just happens. How do you work with people, or when you walk into normal, let's just say, agents send or businesses, and you see that they're in the swap, what are some of your KPIs that you're looking for, or you're seeing that you know boom, like, change those, change is everything. Yeah, I mean, like, let's go super high level, okay? So when I walk into a business, the first
thing I want to understand is what the lifetime value of a customer is, like, first and foremost, okay? And people are like, why? It's like, well, your lifetime value dictates what you can pay for a new customer, right? It also shows me whether or not the product or service is good enough, right? So, and by the way, this is relative to your type of business, and, like, you know, I work with agencies, for example, like, that's kind of exclusively what I do at this point.
I've worked with, like, lawyers and accounts before, but their businesses are different, but ultimately, every type of agency or every type of business is a different,
“best practice lifetime value number. And you need to figure out what that is for your industry,”
like, real quick, okay? And like, this is stuff that's carried me even through, like, the pub time or like, you know, when I own these other types of businesses, the first thing I would do, figure out what lifetime value is. And then figure out, okay, can I measure it? And if I can't, that's a problem in itself that I need to go fix. And if I can measure it, great, what is it? And how does it compare to industry best practices for my industry? So, like, if I own, like, a
content agency, it might be different from like a design agency, it might be different from a strategy agency, it might be different from a sales agency. All I know is that, like, I do need to beat that average, because if I beat that average, I can pay more for customer acquisition costs. And if I can pay more for customer acquisition costs, I can beat everybody else, like at a very high level from the sales and marketing. And like, that's that's I don't. The other reason I look at lifetime
values, like, one of the very first things is because I want to understand if there's a product or service problem, okay? And those are two different things. I want to be very clear about this. I assume that if you're over one million dollars, that you have product market fit and then your product is reasonable. And what I mean by reasonable is that when you're in a sales conversation, you're making certain claims or promises that you can do certain things. You can actually do those things,
okay? Reasonably. And obviously in service based businesses, it's not like a hundred percent, but it's like,
Hey, can you do the thing, 80% of the time, or more, because you understand y...
and you understand what elements they need to bring to the table for you to be able to run your product or service successfully. By the way, any agency out there that is not full service,
“this is what you need to understand. It's like, you understand what are the brand elements that”
they need to bring. Like, if you're a lead gen agency, what's their closing process? Because, if they're answering all the leads, like, three days later, like, it's not going to help you. You're not going to help them, right? Yeah. So, you need to go beyond your product or service, to understand, like, what are the success drivers of the client? Because remember, like, when you're in kind of like any kind of B to B sale, your goal is to be strategic partner. It's not to be a vendor.
And a strategic partner understands the business implications of their service beyond their service, right? So, LTV helps me understand all of this, because I'm like, okay, is this at the product sucks? And it just doesn't do what we says it does? And if that isn't true, like, meaning, like, we actually do deliver on the thing, then we have a service problem, which is like, okay, well, the product and if it's not as good, but the packaging sucks, okay? And like, what I mean by this is like,
the metaphor always uses Apple, because everybody knows Apple. And I'm like, okay,
does Apple's brand stop when you buy the phone? It's like, no, it doesn't. When you take the phone home in the box, you cut the little thing. It has a little peel like, they'll peel back, like, zip-tight cardboard thingy. And like, you open the phone and like, you grab it and it like, slowly comes out, because it's so perfectly designed that only a certain amount of air gets through it, so like, the box opens super slow. And then the packaging, how it's laid out and there's
good, crazy. And it has like, it's very simplistic, but you can tell that they spent, like, unbelievable amounts of time designing the box. And then you turn the thing on and it's like, hey, do you want to transfer all your data from the other, like, it's, they've gone through this trouble to extend the brand experience beyond the sales and marketing aspect, okay? And what most companies do incredibly poor job of is onboarding their clients, well, right, especially in the
B2B space. And I've kind of broken down this experiential layer, because remember, I assume you're if your product's good to go, then it's this experience that there's other problems, right, to increase lifetime value. And this is comes down to things like experience. So what is the experience that you're providing? Like, this is the emotional side of the equation. Number two, expectation setting, what work do we do, what do you owe us as the client? So we owe you certain things, but you
also owe us certain things. And if you're sitting here thinking, like, well, the client doesn't owe us anything, they're the ones paying us. It's like, you are wrong. This is a strategic partnership.
“And that's why your lifetime value is bad, because you're not thinking of it as strategic part of”
and then lastly, is like the layer of, like, do we actually generate results, which is the logic part of the brain? Is there cost benefit to the thing that I'm buying in a business of business setting, right? And all three things need to be true, right? Are we giving great emotional experience? Are we sending it to two-way expectations? Are we actually delivering the thing? Right? And if you hit all three of those, your lifetime value is going to go up, right? And one of the lifetime
value to be as high as possible, because here's the thing. And I've had this conversation more
times than I can count with an agency. Hey, Nick. So my customer acquisition costs 5k. I've talked to a bunch of people. They say that my customer acquisition costs without paying salespeople just like on media should be like 2,500 bucks. And I'm like, okay. So they're like, well, it's a problem. I'm like, problem relative to what? And they're like, well, you know, they're paying back. They're customer acquisition costs in like a month and a half, right? Based on their sale. And
“I'm like, right? So why did it? Okay. If you retain a client for four years, do you?”
Here, if you pay the first six months of the entire top line of that revenue to customer acquisition costs? No, I don't care. I have clients that are agencies right now that have $40,000 plus customer acquisition costs. And people are like, that's insane. I'm like, yeah, except that there are retainers 8k a month on the low end. And they retain clients for 36 to like 50 months. Yeah, it's like, okay. It's like, oh, so you're not making profit off that client for the
first, like, four or five, like, who cares? So you're going to retain that client for like three
more years after that. It doesn't matter. It just goes off. Like, if that company is competing against you, and you're like sitting, you're out here, like, I can only afford like a $4,000 customer acquisition costs. These guys are going to bury you. Yeah. Because it's like, oh, yeah, like, we just spent like, you know, $45,000 getting a lead, let alone a close. Like, they don't care.
They can do anything they want.
It doesn't matter. They're like, like you said, they will, like, that's a big one as they will
“bury you. Like, I got the competitors. They spent $2 million a month. I like good luck competing against”
that. If you don't have $2 million a month, it's been on ads to go out for the same exact client
on Facebook, by the way, right? Yeah. Ah, good luck. You got to use the thing, like, look, I've, like, I'm not going to make name names, but I've seen under the hood of like, Google ads accounts for like big holding companies in the marketing space. And like they're out here paying like $100 a click. A click. Okay. They don't, they don't give a shit. And then it's spending a billion plus dollars per month on clicks. Like, no sales costs added yet. No sales prices added,
like, like, not even just clicks. So how does the swamp company compete against that? Well, that's the thing. It's like, the, the advantage that you have is that because you're not this, like, 1000% entity or like, this, like, multiple hundreds of employees entity, you can deliver
better service to these clients. Like, you just can. And so the problem is, and this is why
I go to lifetime value first, your lifetime should be superior to the benchmark. Because if you're telling me that a faceless corporation of like a thousand people who generally pay their people not as well for certain roles, can retain a client for longer than you? It's like, how, like, why? Like,
“you should be able to white glove service. Yeah. So much better than them that you can retain”
clients for longer than them. Therefore, you can afford higher customer acquisition costs that they
have. This is their version of optimized by the way. Like, and you're like, oh, that's crazy. Like, that's a crazy cost. It's like, that's their version of optimized. They have to like pick like three quarters of the tree worth of the fruit to be able to even like remain in business. You only need like the most bottom part of the tree and pick the fruit to feed your business. They have a monster to feed, and you don't. And that gives you flexibility that they, they can
contribute. The key is the flexibility when you can move and you can pivot your lighter. You're, I mean, and with AI, all of that. Now, as we come to an end here, I think this is gold. I think we deserve another episode. So we'll put in the show notes and see what the responses are like. For those, for those that are, are into this right now and listening and in the swamp,
“I mean, I think specifically an agency owner in the swamp, where can they find you?”
You can find me on LinkedIn, Nick of area, NICK, last name, AVA, RIA. Just add me on there. Send me a DMTEL. Tell me if you found me on the show. I was happy to chat and hop on a call. My website agency acquisitions.io. And yeah, like, I mean, reach out if you have any of these kind of swamp problems. This is exactly what we fix. Nick, thanks so much for stopping by. Appreciate you and if you're an agency owner, you know, and you're in the swamp, you know what to do.
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