The Power of Paid Discovery: Boosting Client Retention and Revenue with Simon Chin

Episode 112 May 10, 2024 00:26:04
The Power of Paid Discovery: Boosting Client Retention and Revenue with Simon Chin
The Agency Hour
The Power of Paid Discovery: Boosting Client Retention and Revenue with Simon Chin

May 10 2024 | 00:26:04


Hosted By

Troy Dean Johnny Flash

Show Notes

Join us as we chat with Simon Chin, founder and CEO of Flowstate Agency. Flowstate is at the forefront of email marketing, enhancing customer engagement and value for e-commerce stores.

We unpack the transformative approach of using paid discovery to streamline agency operations and increase recurring revenue. Simon shares his journey from a generalist in digital marketing to spearheading a niche agency. Learn about the pivotal changes that helped his agency scale, from hiring key roles early on to implementing strategic paid discovery sessions that solidify client relationships and ensure project success.

If you've ever struggled with scope creep, client retention, or converting one-off projects to long-term engagements, this episode will provide you with a blueprint to redefine your agency's approach to client engagements and secure a stable revenue stream.


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Episode Transcript

[00:00:00] Speaker A: If you weren't doing paid discovery and you were trying to just present a twelve month contract straight off the bat cold, the conversion rate on that is going to be a lot lower and it's a lot harder conversation to have. [00:00:13] Speaker B: Welcome to the agency hour podcast where we help web design and digital agency owners create abundance for themselves, their teams and their communities. This week we're joined by Simon Chin, founder and CEO of Flow state agency. Flowstate is an email marketing agency dedicated to increasing engagement, revenue and lifetime customer value for e commerce stores. And in this episode, we dive into removing the big problems that most agencies face using paid discovery and growth plans, overcoming resistance from prospects, ensuring a presence in the market and increasing your recurring revenue so that you can hire a team of a players and stop doing everything yourself. If you're tired of giving away free strategy sessions, writing proposals, only to be ghosted by prospects, and you're looking for a way to say goodbye to scope creep forever, then you won't want to miss this episode. I'm Troy Dean. Stay with us. All right, ladies and gentlemen, without further ado, please welcome to the agency hour, Simon Chin from Flow State. Hey Simon, how are you? [00:01:10] Speaker A: Hey Troy, how you going? [00:01:11] Speaker B: Thank you very much for being here. I'm very well, thank you. Thanks for joining us on the agency hour podcast. Now, full transparency. Simon is a member of our Mavericks club mastermind program, so we're not going to spend too much time making this an ad for that, but it will come up during the conversation. So I just wanted to flag that right from the get go. For those that don't know, which I imagine would be most people listening to this, who are you and what do you do exactly? [00:01:35] Speaker A: Good question. So flow State is an email marketing and SMS agency for e commerce brands. [00:01:43] Speaker B: What were you doing before flowstate? Like how? Because that's a very specific offering for a very specific customer and I don't imagine it's always been that way. I don't imagine that's where you started. [00:01:53] Speaker A: Not at all. So, long story short, always had a background in digital marketing. Had a number of corporate jobs, for one of a better word, looking after digital marketing for a number of different organizations. Always had the itch to do something on my own and began with more of a consultancy around e commerce, but very quickly realized that without niche focus, my message was getting diluted and people were struggling to understand what it was that I did really well and how it could help. Spent some time reflecting on that and realized that most people needed help with email, SMS and CRM systems. And that's how we basically ended up where we are today. [00:02:29] Speaker B: When did you start flow state? When did you go out on your own? [00:02:32] Speaker A: So in its current form, flow state's about three years old now. [00:02:35] Speaker B: Wow, that's been quite a trajectory for you. Quite a journey. [00:02:40] Speaker A: Yeah, it's been good. I mean, COVID was kind to a lot of digital businesses, especially e commerce. So we rode that wave really nicely and it sort of gave us the opportunity really establish ourselves post COVID. [00:02:53] Speaker B: Who was the first team member you brought on, and at what point did you, did you go, okay, I need to hire some people? [00:02:59] Speaker A: There was two people I brought on almost at the same time. One was a graphic designer. So believe it or not, I used to do all of the designs for all the templates, and I realized very quickly that was not going to work. And then the second person I brought on was, I call them ahead of fulfillment. So really someone who could look after the day to day client management and just make sure that my eyes are more so on sales, marketing and that someone else was looking at the actual client, managing the client and their expectations. So those two hires happened almost simultaneously. I was at the point where if I didn't hire someone to help me with that, it was just going to be impossible to scale any further. [00:03:33] Speaker B: And how old was the company when you hired those two people? [00:03:37] Speaker A: I'd say about a year. So I've had various freelancers and contractors coming in and doing work, but they were the first sort of full time hires that came on board. [00:03:48] Speaker B: I have this conversation on a daily basis with people who have all sorts of psychological barriers about hiring staff, myself included. When I first started out, I was determined just to sit in my spare room at home and run a business and not talk to anyone because it was super comfortable. That's changed. What were the big barriers for hiring? Were you worried about? Some of the things that come up is like quality control, letting go. They won't do it as good as me. I'm going to have mouths to feed. What if I ran out of money and I can't? What were some of the things that you had to overcome in order to make those decisions? [00:04:18] Speaker A: All of the above. I'll be the first submit. I still struggle to let go enough and trust my team do an amazing job. Now we've got 17 on the team now, and I still struggle to let go of stuff. And my team come back to me now and say, you know what? We're good. You can let us manage this, and we'll do a great job for you. And that's why I appreciate them so much. And I think, yeah, I think just making sure that you've got the recurring billing there. You've got the pipeline of work. You can pay for the staff, basically, to make sure that that's not keeping you up at night. They're probably the biggest things. [00:04:55] Speaker B: Yeah. And your business is predominantly recurring revenue based, right? [00:04:58] Speaker A: Yeah. So we're about 90% recurring revenue and 10% project based. [00:05:03] Speaker B: Yeah. Well done. And that does give you the confidence to be able to hire people knowing that, you know, I mean, agencies that we talk to that are, you know, 70% project based and 30% recurring, I just panic for them, I lose sleep for them, you know, because I'm like, how do you know, how can you hire someone if you like? Because then you've just got to wake up and find another 30 or 40 grand that month just to make payroll. Was that a decision right from the start that you were going to work on a recurring revenue business model? [00:05:31] Speaker A: Yeah. So I had a sort of way back when I had a product background before I actually went into digital marketing. So I knew from a product space that that's sort of the right business model to generate consistent revenue and some predictability. Our business hasn't always been like that, though. Like, I reckon way back when, probably more so when we started, we're probably more likely 60 40 between recurring and project, and that was less certainty. And it's taken a bit of effort over the journey and, you know, this is probably where you come in as well, where you've sort of really helped us structure that up a little bit differently. You know, recurring revenue is great. It is there, yes, of course you can plan for it, but you've still got to deliver for the customer. You know, they can still pull notice if you're not doing a great job that they can still say, look, we're going to go elsewhere. So whilst it allows some predictability, you still have to do what you say you're going to do and do it well. [00:06:18] Speaker B: Totally. I think the relationship changes when you're working with someone on a recurring basis because it gives you. And I think this is one of the things that clients struggle to understand, is they hire an agency and they expect rainbows and unicorns in the first months. And sometimes it just takes a minute to get stuff dialed in and undo some of the clutter that the clients kind of collected over the years, get rid of some technical debt, sort out some processes. And so the recurring relationship gives you some time to get those wins for the client. Do you have a minimum contract that your clients sign? [00:06:51] Speaker A: So again, this is work we've done with the Mavericks crew over the last few months as we're really trying to structure up twelve month agreements or contracts. The reason we're able to do that is because we do employ, again your method around paid discovery. And I think that that method upfront is so comprehensive and it builds a lot of trust and rapport or with that customer before you've signed any retainer. It's just a project base to begin that when you sit with them and you present the growth plan for twelve months, you know their business so well on how to and what needs to happen. But it's really hard for them to go anywhere else in a very ethical way as well. Like this is not, you know, we can do a great job. We know what to do next. But you've got to give us a Runway to do it. And it's been great. [00:07:35] Speaker B: Totally. I mean, you know, thanks for the segue too, because I could talk about, I mean, paid discovery and growth plans are really the only things I want to talk about these days because, you know, we've been doing this a long time. Been, you know, running agent, my own agency since 2007, been coaching since 2013. Paid discovery is the closest thing I've seen to a magic bullet in terms of removing some of the big problems with the agency model, like scope creep, writing proposals, managing expectations. And then. And also, you know, I think when you work with a client, it's, it's like I make the analogy, it's like government who are elected for three years, they spend one year passing legislation and then two years trying to get reelected to the next election. Right. And so how much can they really get done in the time that we give them? I'm not saying we should elect them for longer, but I'm just saying the model is flawed. And I think it's similar with agencies is that if we're only working together for three months, I'm forever going to be trying to pull a rabbit out of the hat to impress you long enough to get another three month contract. Right. So, absolutely. Paid discovery. You know, during lockdown, I engaged a financial planner to. Because, you know, we were sitting at home, the government was handing out money, we weren't spending it. It was like, well, you know, we should really figure out what to do to buy a new home. So we engaged this financial planner to develop a financial plan for us and it cost us $4,000. And 400 GST. So $4,400. And for that, we got a really nice PowerPoint presentation and a spreadsheet. Right. That was deliverable. But I will say this. We bought a house based on. We bought our new family home. We had an apartment before that. We bought our new family home based on the work that we did because of the advice that we got from the financial planner. Now, there were a bunch of other things that the financial planner could have done. He could have taken over managing our super funds, which I haven't pulled the trigger on yet. He could have taken over putting some of our money into managed share funds or investing, which, again, I haven't pulled the trigger on that yet. There's a bunch of other things that he can do which are going to cost me more. But I paid 4400 for a plan, which was life changing. Right. And I remember calling Hamish not about six months after we got the PDF and the spreadsheet, sorry, the keynote presentation and the spreadsheet, and saying to him, you know, mate, I just got to say, I'm having conversations with my wife now that I never thought I would have. And it's because our mindset has changed so much because he put the data in front of us, he put the hard numbers in front of us and said, this is what's got to happen for you to get the home that you want. Right. And we wouldn't be here without that plan. Right? Again, I haven't paid him for anything else. I haven't paid him for any implementation, but I paid him for the plan. And that's the way I think about paid discovery is, you know, and I'd like you to talk about, you know, your process, because what I've seen you guys do is take what we've taught you and really augment it and make it your own and completely redesign all the assets and, you know, really run with it. And. Which has been fabulous to see. But what, not only from the client's point of view, but what I'm hearing from agencies is that team are way happier because they now know what the client expects and that everyone's on the same page from day one. So can you just talk to us what has changed since you've introduced paid discovery? And again, what kind of mental barriers were there for you to overcome to introduce paid discovery? [00:10:56] Speaker A: Yeah, that's a big question because it's changed a lot about our business. I'll start with the. So we call them customers. I'll start with the customer we're talking to. So I think the initial conversations with them are a lot easier because we're not asking for a big subscription or we call them subscriptions or retainer upfront. We're asking for a considered amount of a project fee upfront to provide that plan that you've just spoken about right now that is a lot more palatable for most businesses because I understand at that point, and you coach this, that they either choose us to implement the plan or they can go and do it themselves. That's completely their call. So that resonates really nicely and removes barriers. [00:11:33] Speaker B: Yeah. [00:11:33] Speaker A: What we do is we work through our system, which is four steps to get to a growth plan. And we've incorporated a lot of the processes that you do teach and we've augmented some, but I think largely we stay pretty true to what you have taught. And, you know, we have a vision workshop as our first step, understanding their strategic objectives. We then do a performance maximizer, which is a fancy word for an audit. We then do lifecycle journey mapping. So in our space, lifecycle journey mapping is very important because most e commerce brands don't have a visual artifact to understand the start to finish of the customer. And then the fourth part is the growth plan. So we have all this great information about the business that we throw into a growth plan for them, which is extremely comprehensive, very data driven, very focused around KPI's and what we're looking to move the needle on, and we present that back to them. So as I said to you earlier, like by that stage, we've got such trust and understanding in the business, it's very difficult for them to say, well, we're going to go somewhere else because you guys clearly know what you're doing. [00:12:31] Speaker B: That's right. [00:12:32] Speaker A: Once that growth plan has been accepted, which in most cases it will, because again, for the reasons I just mentioned, the team basically just take that growth plan and we use Asana in house and they are just translating that growth plan into a project plan in our project management software. So from a handover point of view to the team, it's so crystal clear. And for the person who will be leading that engagement with the customer. So in our world, it's an email specialist. They have crystal clear vision on what needs to happen in order of priority. There's no sitting down trying to work out the strategy from day one. They start from day one because they know what to do. [00:13:09] Speaker B: Yeah. [00:13:10] Speaker A: So it's been really good. [00:13:12] Speaker B: What's the feedback been like? Has there been. Because one of the, you know, this is, by the way, thank you for, I mean this wholeheartedly. Thank you for taking what we've given you and really running with it and getting these results, because it makes it all worthwhile and it kind of vindicates. What I've been saying for a long time is that this is, I believe this is the model moving forward and particularly with AI. Right? AI. AI will never be able to sit with a client and empathize with their needs and their objectives and come up with a bespoke strategy for that client. Right. AI can do a lot of the other stuff. AI can do, you know, can do 70% of the heavy lifting when it comes to writing copy or, you know, designing things or giving ideas or even producing bloody assets like short films and movies and music. Right. AI is incredible at a lot, that stuff. But I think the most valuable part of the relationship with the client is the ability to sit with them, hold space for their needs and their challenges, and come up with a bespoke strategy. What I'm hearing from a lot of agency owners who are scared of this model is that nobody wants to pay for discovery. Don't be silly. They're not going to pay me for discovery. They're not going to pay me to have a chat about what they need. Did you get any resistance from clients? And if so, how have you overcome that? [00:14:26] Speaker A: Not really, to be honest with you. I mean, we have been in our game for a little while, so our team speak very confidently about the outcomes we can drive for a customer. So I think that's important. It's more of a mindset shift as well for our team. They know we can do, or we know we can do great work. And that's why presenting a paid discovery is something that is quite natural. And I think, you know, by giving customers the opportunity to choose what they do after that growth plan, as I mentioned, go themselves, do it in house, use us. It's up to them. If they do use us, we actually credit back part of that growth plan and all that paid discovery fee that they paid, so they feel like they're getting a little bit of a win in the first month or so. So just subtle things like that. I think, again, just reduce the friction. And if you think about the flip side, like if you weren't doing paid discovery and you were trying to just present a twelve month contract straight off the bat cold, you know, the conversion rate on that is going to be a lot lower and it's a lot harder conversation to have. [00:15:24] Speaker B: Absolutely. And then the conversion rate from paid discovery into growth plans you're seeing. I mean, most of our mavericks are seeing an 85% plus conversion rate, which is very difficult for me to talk about publicly because no one believes it. But I don't want to get sued by anyone. But what are you seeing in terms of people going through paid discovery into an ongoing engagement? [00:15:43] Speaker A: Yeah. So our metrics are pretty similar to that. I probably should frame it this way. I would be disappointed in myself if we weren't in. If we didn't continue on to that subscription. Because I think we know, again, we know that business so well by that stage. We spent a lot of time. When I say a lot of time, we spend enough time to develop the rapport and the trust, which is really big. I'm disappointed if we don't convert a paid discovery growth plan into that ongoing contract. Yeah. [00:16:11] Speaker B: This is what we're seeing across the board, is a lot of mavericks are converting at 100%. And again, it makes sense because, you know, yours, the cost to a business of then engaging another agency is not just that they've spent this money with you guys, but it's the time they now have to go and re explain their whole situation to someone else, which is just sends, you know, sends them backwards by week. So it makes a lot of sense. What's the biggest challenge you've got right now? Like, you know, you've adopted paid discovery. You've got a team of 17. [00:16:42] Speaker A: What's the. [00:16:42] Speaker B: If you could wave a magic wand, what would you want to fix in the next 30 days? [00:16:46] Speaker A: Yeah, just those things don't change, at least for me. And it's just more leads. It's getting more qualified leads through the business. We have a done for you and a done with you option of our business. So at the end of the day, it always comes back to having, I suppose, a presence in our market and having enough of those inbound leads coming in. That's really always the focus. [00:17:07] Speaker B: And you mentioned the done with you. And I know you and I, in full transparency, I am Simon's coach in Mavericks Club, so we spend a lot of time talking about your business. So I feel like this is a bit meta, because I know the answer to these questions, but talk us through the done with you option. And why are you. What is that? And why are you exploring that and why are you adding that to the company? [00:17:27] Speaker A: Yeah. So it's really more for a factor, scalability. We think we can do a great job for more brands, e commerce brands, by having that option of what we call flow state academy, which is essentially done with you strategy and then we have the premium service being done for you. But I will say we go back to the paid discovery and the growth plan. Again, every single one of our customers goes through those steps I mentioned to get a growth plan. And then from there they have two options. They can either do it with us or they can do it or we do it for them. So it really sort of triages nicely into one of those two options that we have as business. [00:18:04] Speaker B: And how does that, what's the done with you? I know that it's a relatively new thing that you're building out. What does that look like when it's done for you? What's the vision with the done with you model? [00:18:13] Speaker A: Yeah, so, well, the first vision is they've got a growth plan for twelve months. They're not turning up to, you know, coaching calls cold and just trying to come up with questions that they think they need to ask. We're actually using that as a single source of truth where they're coming to the calls and saying, well, I'm stuck here. And we look, we know their growth plan. We built it for them and we just show them and guide them through, how to get through that, you know, roadblock they might be facing. So that's provided a lot of clarity. And I think for in our space is a little bit different. And I've been part of many coaching sort of programs of courses where you dropped in a little cold to those, you know, calls and you've got to come up with your own questions that you think are the right ones to ask. But without that plan, you just don't necessarily know if it is the right question. [00:18:54] Speaker B: I've been in that situation myself, too. And what happened during COVID what we found is probably in 2021 after we'd been in, you know, Melbourne had been in lockdown for almost a year, living under a curfew, mind you, for every other part of Australia that thought they had harsh lockdown conditions, you don't know what you're talking about. Melbourne had some of the harshest lockdown conditions in the world anyway, not harboring any bitterness or resentment about that at all. But what we found is that we actually dialed up our one on one touch points during lockdown because we found that people were just overwhelmed with looking at the screen, getting all the incoming messages from social media and email and all the automations and people just wanted to talk to someone. And so we actually dialed up our one on one accountability, which is a big part of our program now. And again, I've been in that situation where you turn up to a call and you go, well, and the coach that you're talking to has no idea what your objectives are, what your plan is, what the strategy is, and they're kind of giving generic boilerplate answers, whereas I'm going to ask you about how you get your team involved this in a moment. So I'll tee you up there. But what we, you know, similar, similar model is what we do is we work out the strategic plan for the client and then we keep them accountable and meet with them regularly, make sure that they're working on just the next most important thing in alignment with their plan. [00:20:13] Speaker A: Absolutely. [00:20:14] Speaker B: I think one of the biggest challenges is, and I'll put myself in this situation as well. Right. You come to work on any given day and there's like 800 things that you could do and that you want to try and that you are convinced could be the thing that's going to get you to the next level. What I've learned, we have a saying here, plan the work and work the plan. What I've learned, you know, as someone who is very optimistic and energetic and probably has a little bit of undiagnosed addiction, I just want to do everything at once. And having decided in advance what we're doing this quarter, my team are now very good at saying, let's have a conversation about that next quarter. You can do whatever you want in your own sandbox, but don't distract the team. The team's working on this for the next 90 days and that's what we're staying true to. How are you going to involve your team in the done with you and how have your team responded to that idea? [00:21:02] Speaker A: Yeah, so, yeah, again, really good question. So I started really from day one, I shared a lot of my thoughts with the team about where I wanted to take the business. I shared with them all structures of how I see it in a few years time. I even started to nominate potential opportunities for some of the team to move into some of those new roles, which I was super excited with. So I think taking them on that journey, which I know sounds really elementary, but just including them in the conversation from the start, no matter how basic it is, I think was a really good thing. And they can now understand where the growth plans sit as that central source of truth, regardless if you're an academy or done with you or you're a premium customer being done for. So they, they understand the landscape now. And I think for our coaching program, you know, we've got a. We've. We've broken down email into a number of different specialty areas, strategy, design, building, reporting and analytics. Like, I've got people on my team who just focus on those areas. So depending on the question that comes up in those calls, the right person from my team will be there to answer it. [00:22:06] Speaker B: That's great. [00:22:06] Speaker A: That's how we're going to sort of share the load with the coaching calls. [00:22:09] Speaker B: I'll tell you, the other thing is, you know, between you and me, don't tell your team this, but your team are going to get a lot smarter and a lot sharper and a lot better just by giving advice and coaching people who are doing it themselves or doing it kind of with you. Because if you think you know something, teach it and it forces you to fill in all the gaps. Because we've all got gaps that we just kind of fill in on the fly and we know things from experience, but if you have to teach it, you have to codify it. You have to kind of work out a framework and it really forces you to sharpen the saw, which is great. What are you most excited about over the next 90 days? Rolling in the done with you and also continuing the done for you. What's the thing that's got you most jazzed over the next 90 days? Apart, of course, from coming to the Gold coast to come up to Mavcon. [00:22:50] Speaker A: From Mavcon, yes, of course. [00:22:53] Speaker B: Which will be the first time we meet in real life, right? [00:22:55] Speaker A: Yes. Yes. We're literally geographically, we're only a few kilometres away from each other, but we've never met in person. So for me it is all around. So we have a flight plan. That's how you sort of help structure my focus and my flight plan is all around the done with you flow state academy. We are still very much obviously focused on our done for you service as well, but I'm really looking to see how we're done with your side of the business. So we've set some metrics about the number of leads we're looking to generate for the academy. Specifically, we've got some metrics around the conversion rate and it is early days for our academy side of the business as well. I think it will. It already has added a lot of value to the people who are members, but we're just really trying to build that initial customer base of those academy members, which is really the core focus. [00:23:43] Speaker B: And it would be remiss of me to let you go without asking this question because I'm also hearing from a lot of agency owners that are terrified about AI putting them out of a job. What's your take on this and how are you using AI, if you are at all, to augment what you guys are doing and improve your productivity? [00:23:59] Speaker A: Yeah. So email scripting was probably the first place we looked at AI and chat GPT and seeing if it could actually write emails that were better than and potentially what our human team could do. Our customers, as feedback, started noticing they're like, you're using chat GPT. And we said, yeah, we told them that. We told them we were testing it. We've actually gone back to humans. We think to your earlier point, by sitting with someone, understanding their objectives, understanding the tone of voice a bit better, we're getting better outcomes from human copywriters. We've got a fantastic copywriter on our team who can write the best copy for email. So outside of that, we haven't really tested much more. Certainly we haven't tested the design element. We've got a really strong in house design team and I think they could outperform AI at the moment as well. [00:24:48] Speaker B: Look, it's got a long way to go. I see the benefits of it. I'm having a lot of fun with it. It does help us little things like adding chapters to our YouTube videos. It does that in 30 seconds rather than half an hour. So there are gains there to be made. But, you know, I'm not worried about it replacing this, this human connection, the connection that you and I are having right now, the fact that I'm looking forward to meeting you in real life. We've been hanging out on Zoom for a long time now. I'm really looking forward to hanging out in real life. AI will never be able to replace that. And I think we really need to lean into that as humans because that is the unique strength that we have, is that ability to have empathy and hold space for each other. [00:25:22] Speaker A: Absolutely. Couldn't agree more. [00:25:23] Speaker B: Hey, Simon Chin, thanks for joining us on the agency hour. Really appreciate you taking some time out to share your journey with us and look forward, forward to hanging out soon. [00:25:31] Speaker A: Thank you so much for having me. [00:25:34] Speaker B: Thanks for listening to the agency hour podcast and a huge thanks to Simon for joining us. I can talk about the benefits of paid discovery and growth plans all day long. Ok, folks, remember to subscribe and please share this with anyone you think may need to hear it. I'm Troy Dean, and remember, you spray two and a half drops of saliva per word. Now let's get to work. It.

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