How Stevie Johnston 10Xed His SMMA To $500K/mo Recurring | Ep #669
Are you trying to grow your SMMA but can’t get past the referrals stage? What’s holding you back when it comes to continuing your growth and reaching eight figures? Today’s guest may not have written the book on how to start a SMMA, but he sure read it from cover to cover and then threw all the rules out the window. He is a young agency owner who started out with dreams of outgrowing his post-college job and gaining the sort of independence and success he knew could come from entrepreneurship. He endured long months of looking for his first client and the hardships of trying to stand out before finding the right niche. Tune in to hear about the challenges and advantages of being a young agency owner and his experience and insights in growing a SMMA.
Stevie Johnston is the young entrepreneur behind Digital Ox Zero, a specialized marketing agency that offers turnkey digital marketing solutions, expert appointment-setting services, and business coaching for Chiropractic, Dental, and Integrated Medical Clinics. Stevie niched the niche and doubled down on a bold strategy, allowing him to scale his modest digital agency from operating out of his apartment to a $500K/month recurring industry-leading powerhouse with over 20 employees.
In this episode, we’ll discuss:
Finding the right formula for SMMA growth.
Going beyond referrals to build a scalable agency.
Focusing on creating a steady recruitment pipeline.
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E2M Solutions: Today's episode of the Smart Agency Masterclass is sponsored by E2M Solutions, a web design, and development agency that has provided white-label services for the past 10 years to agencies all over the world. Check out e2msolutions.com/smartagency and get 10% off for the first three months of service.
Unlocking His Marketing Potential & Finding His Drive
Stevie describes himself as a Tai Lopez case study, as it was one of his ads that inspired him to build his own agency. He figured if he managed to get at least ten clients to each pay him $1,000 per month he’d be able to have freedom, travel, and enjoy life as an agency owner.
Having recently graduated, Stevie found himself working his same college job at 23 and feeling stuck. He knew something needed to change and entrepreneurship offered a straightforward solution to his desire for a better life.
Tai Lopez’s ads promised exactly the type of opportunity he needed to do something different. It seemed simple, but of course he soon realized it was actually very hard. However, it was a proven business model so he trusted that getting through the learning curve would land him on the right path. He held strong for seven months waiting for that first and ended his first year with 20K in revenue.
But how did he stay motivated? Even though he had a hard time finding that first client, Stevie felt this was his chance. Going back to working at the juice bar was not an option. He felt he had a lot to offer as a great communicator with good work ethic; he just needed that first client to make it work.
Once he had his first clients, prospecting, learning sales, and working 10-14 hours from his small apartment was nowhere near the pain of going back to a job that only offered financial constraints and lack of freedom.
Initial Turning Points & Finding the Right Formula for SMMA Growth
The big turning point for Stevie was finding the right niche. Although he started out working with chiropractors, which seemed focused enough, it was still hard to stand out in a market with so much competition. When a client asked him to help them advertise their spinal decompression machine, he found a specialty within a specialty that actually needed attention and had lots of demand. Focusing on this niche he not only saw more consistent results, he became a niche leader.
A more specialized focus also helped justify a higher price point, which helped him get to 20K. As the agency continued to grow, however, Stevie realized they had no big differentiator. Anyone can run ads and it seemed like everyone did at that point, which started a big race to the bottom while high turnover rates were impacting his agency’s growth.
It was very frustrating to realize that his clients weren’t getting the results they wanted as they kept complaining the leads were bad. In an attempt to keep a client, Stevie offered to take over sales calls for one month. It was his moment to “get in the trenches” and figure out what was not connecting. That month they 4X the amount of leads turned into appointments. The model did work, they just needed someone at the phone with basic sales skills, energy, and that would follow up with clients.
As momentum built, Stevie first hired a dedicated sales associate and then continued staffing specialists internally, subsidizing expenses by raising prices. It was the differentiator they needed. It required more employees, more expenses, and a lot more headaches, but they were solving a problem no one else was willing to solve. As a result, referrals went through the roof, churn plummeted, and prices continued to climb.
Building Systems to Create a Scalable SMMA
As the agency gained more clients, the demand for their services grew exponentially, largely due to influential clients in the industry spreading the word about the agency's effectiveness.
This rapid growth came with the pressures of going from a small team of two to having ten employees and an office. They needed to set goals, track key performance indicators (KPIs), and develop effective hiring and training processes. The overwhelming nature of these tasks prompted Stevie to seek guidance from Judge Graham, a prominent figure in the agency space who had achieved a significant exit and subsequent sale of his agency.
With this guidance, Stevie began implementing a more structured approach to building his agency. This included focusing on enterprise value, establishing values and meeting rhythms, and honing hiring and management techniques. The goal was to create a scalable agency that could continue to grow and provide value to clients.
Moving Beyond Referrals: Diversifying Client Acquisition
Throughout their growth, referrals remained a significant driver of business for the agency. The influential clients who initially spread the word about their services continued to refer new clients, contributing to their ongoing success. However, at 400K high turnover rates became a problem again. With referrals bringing in five to eight clients per month and the agency losing eight clients per month, they found themselves at the same plateau as they did at 50K.
This realization led Stevie to understand the limitations of relying solely on referrals for business growth. Referrals alone were not enough to sustain the agency's growth.
It was time to start focusing efforts on inbound and outbound marketing, starting with paid ads. Additionally, he started building a sales development representative (SDR) team with two people responsible for cold calling potential clients and setting up demos for the agency's account executives. This new channel of outbound sales proved to be successful, as the agency was able to land five clients in one month solely through cold calls.
With the SDR team starting to bring some good results, Stevie’s already thinking about establishing other channels to drive growth. Agencies should aim to have at least two channels in order to break through the million-dollar mark in revenue. Once this milestone is achieved, additional channels can be added to further scale the business. For Stevie, it’s just something you have to do if you’re serious about year-on-year growth.
What Next: Focusing on a Full Recruitment Pipeline
Now close to hitting eight figures, Stevie has been meditating on what it takes to get to the next level. What people say about “what got you here won’t get you to the next level” is ringing very true to him as he reassesses the agency’s core values.
One key aspect he realized could be holding them back is not having a full recruitment pipeline, which is why he is hiring a full-time recruiter. Once you’re around the 20-million mark, it’s time to bring in a dedicated recruiter instead of relying on external recruiters and paying fees. As your agency grows, having a pipeline of talented individuals will be just as important as having a pipeline of clients. This way, agencies can better position themselves for success and overcome challenges associated with rapid growth.
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