How a Results Oriented Philosophy Generated 40x Revenue Growth
A case study of an agency that grew its top-line by putting skin the game.
In our vertical, many of our partners have internal teams that have similar skill sets to what we offer. These teams are busy with daily operational tasks and so they hire us to create the digital solutions for the purpose of launching new businesses. It’s an expensive investment that’s proxy of success isn’t winning awards. It’s driving real business results.
Seems simple in concept, but I’ve been in a number of meetings where the final deliverables score well with customers and press, but barely move the needle. In fact, for us, winning awards (though we love it) have had little impact on our business growth or new leads, instead it’s the result of surpassing our partners KPIs that have lead to new interest.
Early in my career I was fortunate to meet an individual at an agency who taught me the importance of this attitude and the value it can return. One memorable case study that has stayed with me showcases the benefits of focusing on your client’s business growth. For them it resulted in new agency revenue for a single a client by 40x in twelve months.
It was the early 2000’s and the agency had just won the business of a major hotel chain that was starting to dip its toes into the digital space. New to the platform, the hotel’s digital media budget was in the low hundreds of thousands, fairly small in comparison to the millions they were spending on traditional platforms (TV, Print, Direct Mail). Seeing the opportunity to capture a bigger chunk of those dollars, the agency presented a model that focused around the client reinvesting the positive return the agency was confident it could deliver.
The model went as such: using the $150,000 in media dollars allocated to digital, the client would reinvest a percentage of dollars earned on every new reservation made that was below the max cost per customer acquisition the hotel was willing to pay.
Because the agency charged a fee of 13% of dollars spent, the opportunity to increase revenue was tied back to their ability to hit these milestones. The breakdown: $150,000 in media spend meant $19,500 in agency fees.
Not surprisingly, the client agreed. It made sense, if the agency was able to generate strong qualified results that actually converted into real revenue, why not reward them with increased spend.
Within a year and on the back of Google Adwords, the agency successfully drove qualified results that grew the media spend by 40 times. In real dollars this meant an advertising budget of $6,000,000 allowing the agency to collect $780,000 in fees.
Their approach was so simple but the results was very clear. Today we look for our version of this for each client we partner with.
Gartner Group once found that 80% of future revenue will come from just 20% of your existing clients. Acquiring new customers is awesome, but growing with existing ones seems and has been our key to accelerated growth and profitability.
Hi! I’m Alex, a seven-year veteran entrepreneur who has recently become a first time CEO. I’ve made it my goal in 2017 to share my experiences in this new role. I look forward to your feedback and sharing this experience with you.
