Maximize Agency Profitability and Unlock Your CLIENTS FULL VALUE with William Harris | Ep# 655
Want to achieve growth through means beyond just new client acquisition? What is profitable for one company may fail another. Today’s guest knows profitable strategies demand contextualization. He built an agency helping ecommerce businesses optimize profits by leveraging his analytical skills and his desire to help people and make an impact.
Learn about the many aspects beyond just creativity where an agency can come in and help drive their client's profitability. He recalls his start as a nurse and his transition to working in ecomm, as well as some lessons on how to achieve growth without focusing solely on reducing acquisition costs, and why you should never lose sight of the bigger picture.
William Harris is the founder and CEO of Elumynt, an e-commerce growth agency focused on maximizing their clients’ profitability with a team that gets obsessive about data to build the best-performing and most cost-effective ad campaigns. William has published over 200 articles on e-commerce and advertising leadership and will detail the ways in which he uses intelligent strategies to help eCommerce and SaaS businesses accelerate their revenue.
In this episode, we’ll discuss:
Analyzing customer lifetime value to determine profitability.
Taking comprehensive approach to advertising.
How the P&L unlocks a client's full value.
Remembering what matters most.
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Sponsors and Resources
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.
Podcast Takeover!!
Get to know your Smart Agency Guest Host: Dr. Jeremy Weisz is the co-founder of Rise25, an agency that helps companies launch and run podcasts profitably. He followed Jason’s podcast and eventually joined the mastermind and has been a guest on the podcast before. Today, he’s helping Jason bring something new to the Smart Agency podcast audience by interviewing a special guest and getting a new perspective to the show.
Combining Problem-Solving Skills and Desire to Help People
Growing up, William had a passion for inventing and problem-solving to come up with new ideas. He also had a strong desire to help people, which he pursued through a career in nursing.
While working as a per diem nurse, he witnessed the hospitals’ staffing challenges. Their ineffective system was leading to problems in providing adequate care to patients. This was probably a problem at a lot of hospitals, which sparked his interest in finding a solution. It was 2013 and hospital schedules were still done on paper. William met with Chad Halverson, who ran a company called When I Work, and discussed using his API to develop scheduling software specifically designed for hospitals. It was a project that could truly have an impact on both hospital administrations and patients.
During their time working on this, Chad recognized William’s marketing skills and offered him an opportunity to lead his marketing team. It was a chance to combine his problem-solving skills and marketing expertise.
Analyzing Agency Customer Lifetime Value
After his time at When I Work, William transitioned into the e-commerce industry helping different businesses achieve growth and success. The eCommerce industry was still very young and many founders entered the field with innovative ideas but lacked a deep understanding of business concepts. Rather than solely focusing on minimizing acquisition costs, William helped clients view higher acquisition costs as wise investments given sufficient customer lifetime value.
To attract valuable customers, William leveraged advertising supplemented by lifestyle partnerships seeking to get involved in customers' hobbies and lifestyles. By sponsoring events or activities related to their target market, businesses can establish themselves as part of the community and build a loyal customer base. This approach not only increases brand awareness but also allows businesses to better understand their customers' needs and preferences.
William attributes this focus on customer lifetime value to his background in SaaS where it is common to analyze the customer acquisition cost (CAC) to lifetime value (LTV) ratio to determine profitability. To him, it became a sort of fun math problem. Understanding where a business needs to be in terms of this ratio is crucial for long-term success. What may be profitable for one company may not be for another, and each business needs to determine its own profitability threshold.
Maximizing Profitability Using a Comprehensive Approach to Advertising
Many eCommerce stores fixate too much on immediate transactions over long-term profitability. A lot of these businesses just look at the return on ad spend, which while commonly used as a metric to measure advertising success doesn't necessarily reflect the overall profitability of the business.
William and his team take a more comprehensive approach to advertising and marketing strategies. They look at maximizing profitability on both a unit basis and an aggregate basis. This means considering factors such as the cost of goods sold (COGS), overhead, shipping costs, and returns costs. By incorporating these numbers into their advertising strategies, they can optimize campaigns to focus on the most profitable products.
Why the P&L Are Key to Unlocking a Client's Full Value
Ideally, when his team is starting to work with a new client they look to get access to some basic numbers like their percentage of sales on an average basis. They understand their average overhead, shipping costs, and returns costs. Many clients will directly share their P&Ls with them or at least some kind of an analog to their P&L.
While it is not common for agencies to delve into P&Ls before signing clients, William believes it becomes crucial once the client is onboarded. Surprisingly, the marketing teams themselves are often unaware of the P&Ls, which can hinder their ability to make informed decisions. Some smaller companies may be hesitant to share this information due to privacy concerns; for larger companies with complex organizational structures, obtaining P&L information may be more challenging.
If a client is unwilling or unable to provide P&L information, William may choose not to work with them. Not due to a lack of willingness but rather a recognition that the client may not be ready for the agency's value-driven approach.
Learning it's Not a Matter of Life and Death
Before starting his agency, there was a moment where William tried to change up some things and as a result of that, he lost three good clients. At the time, he just saw it lost a lot of revenue and was concerned. What could he do? He went to his mentor, Dave Mortensen, who to his surprise, just started laughing.
“It was exactly what I needed,” he recalls. That reaction helped him realize he was freaking out about something that was not that big of a deal. Customers come and go. Since then, those clients have been replaced by better, bigger clients who are a better fit for his agency.
Remembering What Matters Most as a Parent and Founder
Parenting and running a company simultaneously can be one of the hardest things you can do. William admits that he doesn't have it all figured out. There are times when he has to go all-in on the agency to figure out particular issues. On the other hand, he also makes sure to make time for his family.
As a former nurse, William remembers times when he had to hold someone’s hand as they drew their last breath. Not once did someone express regret for not working more. When they had anything to say, they usually wished they'd spent more time with family and doing things they loved.
Ultimately, William's advice to entrepreneurs is to prioritize and find a balance between work and family life. As entrepreneurs, it's easy to get caught up in the immediate pressures and decisions of running a business. However, if you’re not making time for things you enjoy you may end up feeling burned out.
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