Last week I had the pleasure of grabbing a quick lunch with my buddy Dave. He’s a founding partner at Anchor, Inc 500’s 16th fastest growing company, a former client, but more importantly a friend.
As we do, we sat down at Westville on Hudson St ordered some grub and got to talking about a bunch of industry crap. What is and isn’t working in the ever-evolving marketing game. How agencies could capture additional revenue, and a bunch of other topics that would be of no interest to anyone. Like how our families are doing, in case you did care, the general sentiment is – we’re all well.
One of the topics about agency growth had to do with something that I’d seen be a pivotal part of my agency’s success. Something that I’d really only seen executed by a handful of other shops.
Building an Inbound Engine for New Business
Back when I ran my agency, passive channels accounted for ~$22MM of rolling Sales Qualified Leads (SQLs) that we had coming in. Project sizes were between $30k – 450k, with about 10 deals coming in a week. It got so overwhelming that we had to build out a better filtration model for our inbound channel development.
What are MQLs? MQLs are leads that marketing deems are qualified and ready for sales follow-up. Marketing brings clicks to the website landing page and captures leads engaging with content. These people are initiating contact, but their level of interest is undetermined. As marketing engages with these leads and provides relevant information, these individuals can be scored based on the actions they take. These individuals become a Marketing Qualified Lead at the point they are deemed ready to be handed over to the sales development team.
Now I would love to say that every MQL was also a SQL, which was not the case. Many brands that reached out were prospecting, but what it did was established a brand – agency relationship.
What are SQLs? SQLs are prospects that have been vetted to determine if there’s an interest to connect them to the next stage in the buying cycle, sometimes called the Discovery or Demo stage.
AB InBev, IBM, Monster.com, Emmys, Kimberly Clark, P&G, Unilever, Liberty Mutual, Toys R Us, Verizon et al. brands that I now had relationships with, could network with, provide pro-bono guidance to, and stay top of mind. Some converted, others did not, but at this point, it was about nurturing those relationships, versus trying to establish them.
This strategy worked and took about two years to implement without any dedicated resources being put on it. If we invested the funds into a proper inbound strategy, I’m sure the results would have been much better. Let’s take a look at what that would look like.
How to calculate ROI on an inbound growth strategy
Based on this model, with an investment of $235k (less than 20k/monthly), you would be able to generate $1.935MM of revenue, and with an operating margin of 20% see an operating profit (EBITDA) of $387k on a decent inbound growth strategy in year one.
|Total Inbound Leads||511||$362.04|
|Total Year 1 Investment||$235,000|
|Total New Projects||20.4|
|Total New Project Rev||$1,908,000.00|
|Total Referral Rip||$26,760.00|
|Total Inbound Revenue||$1,934,760.00|
|Target Operating Margin||20%|
See the whole working sheet here, copy it into your dive, change inputs, and calculate what your inbound revenue could be.
The dollars you’re investing go into strategy development and positioning (50k), and hiring and inbound marketing manager, a content strategist, and paid content creation (Monthly expenses ~15k).
There are ways to save on this, but in my opinion, would take away from other operating activities you should be focusing on instead, such as maximizing operations to drive bottom up revenue, and building and optimizing your top down funnels, outbound and inbound, and bench-marking performance.
Inbound growth is inexpensive, sustained, and highly effective
What’s particularly great about content marketing is that it’s inexpensive compared to other performance marketing channels like social, influencer, or ad spend.
Looking at our example in the chart, if a CPC average out to $3.62, and comparing this to an AdWords campaign for keywords relating to Marketing Agency, or Digital Agency, you would be bidding in the ~$17/CPC range. Ouch.
With content, the more you have of it, it will mean your CPCs will go down over time because your older content will continue generating leads for you. We hit a bulls-eye with a piece written by Michael Horton, that generated thousands of page views monthly and was re-posted by something like twenty design blogs.
A solid content strategy will pay dividends on dollars (time) invested for a long time, even stale content drives traffic, it’s a long tail strategy that has proven to work. For example, this blog receives thousands of views from a negotiations article that’s been rehashed a handful of times and gets quoted and reposted.
For professional services organizations, it’s a must for brand building and valuation. If you increase your revenue by even 1MM/annually that’s 1MM more that your agency is worth when you go to sell it at you 1x multiple. To me, it’s an absolute no brainer.
Make your content good, and searchable.
The two caveats to the inbound marketing game are that the content your team writes needs to be excellent. Listicles may get clicks, but they won’t establish authority. In establishing authority, I see this as somewhat obvious but feel it should be mentioned anyway. Your content should speak to your audience, give them insight, and provide value reinforcing your own value proposition. It also needs to be searchable, so write with SEO in mind.
Did I forget anything? Want to work with me? Let me know.