Top 3 Competitive Advantages You Need to Hit $10m in ARR

For the last six months, I've been on the hunt.

Not on some safari or going after big game, but I've been hunting for the top digital marketing agencies.

When I encounter one, I learn everything I can about it.

I study their architecture.

Their positioning and the market.

And, the essential strategies that have enabled them to hit huge revenue numbers.

In part two of my How to Build a $10m Agency series, I will break down the 3 competitive advantages you need to hit massive scale.

I will also be including references to material I have created based on my studies which you can use right away to grow your agency.

Side Note: I have also scaled my agency to $185k per month in sales so this analysis also draws from that experience.

ADVANTAGE #1 - CURRENCY ARBITRAGE OR MASSIVE SOCIAL MEDIA INBOUND TO GET A BUNCH OF CHEAP LEADS

I've always been a proponent of globalism.

I think that the world should be as connected as possible to facilitate commerce, good relations, and peace.

Globalism is an intrinsic part of business in 2022, so you must utilize it to your advantage.

The two ways that I've seen agencies do this to much success is through currency arbitrage and social media.

Currency arbitrage is when you find talented people in another country (or state) to provide similar services to people you would hire in the United States.

What I found interesting from all the companies that I've interviewed is that not a single $10m + company ran most of their operations from California.

Why? Well, because the cost of living in California is EXTRAORDINARLIY HIGH.

I should know, I run my business out of California as well as most of my operations.

However, we have recently begun hiring more sales and operational talent out of the Philippines and it has made a HUGE difference.

Check out the below image to see the difference (a 90% difference!):

Now this is not limited to outsourcing overseas.

The largest company I've interviewed to date (ABSTRAKT Management) runs all of their employees out of St Louis.

Want to know where most of their clients operate out of?

You guessed it, Los Angeles!

Why? Because the cost of living in St. Louis is 50% less than in Los Angeles (see image below).

By having a lower cost on talent (substantially), top agencies are able to grow way faster.

The other way to get super cheap leads is through social media.

Our agency partners with Neil Patel Accel, and you would have to have lived under a rock for the last five years to not at least have heard the Neil Patel brand name.

The guy is EVERYWHERE.

My Amazon Guy is an example of a fast growing agency who is about to break $10m ARR this year.

They grew from $2m in 2020 to $6m in 2021 and are showing no signs of slowing down.

Why? Because over 80% of all his leads come from his YouTube channel, isn't that crazy???

He gets over 1,000,000 views on his YouTube per year and has built a $6m business from it.

Oh, and I should also mention that he also has an international team as well (very smart!)

If you combine these two factors together, currency arbitrage and insane social media inbound, then you will grow exponentially faster than your competitors.

ADVANTAGE #2 - A LEAN MEAN CLOSING TEAM

I'll be the first to admit it.

Last year, I hired too many people in my sales team.

As we were hitting $150k MRR and $160k MRR, I thought we needed more people closing deals.

So I had, at one point, 6 closers taking about 30 calls per month each.

Bad idea.

Instead of maximizing my production, I ended up bloating the sales team and ended up handing off too many unqualified leads to these closers.

I also made it harder for these closers to make $200k per year, since the best leads were being spread out among all the closers instead of concentrated into the hands of the best.

We ended up figuring this out and leaning out our team, but I should never have done it.

See, I didn't realize at the time that you actually need very few closers / account executives / inbound sales representatives to hit massive scale.

Here are a few examples I've seen recently:

• WiseGuys Digital Marketing = $8m / year, 3 account executives (listen to interview)
• My Amazon Guy = $6m / year, 3 account executives
• Mode = $40m / year, 8 account executives (listen to interview)

The point is that you don't need a lot of people to close deals for your agency in order to scale.

And, you should push your team to hit the highest level of scale possible with the least amount of hands on deck until your systems absolutely breakdown.

Agencies with too many people on staff lose out to agencies with a lean sales machine.

ADVANTAGE #3 - HAVE A MINIMUM $2k / MONTH RETAINER

Here's the thing: it's a common problem for agencies to charge too little for what they do.

I can see why, because I used to do the same thing.

It's hard to feel appreciated when your clients are constantly trying to squeeze more work out of you without paying you more.

That being said, it is still extremely important that you focus on getting your average minimum retainer to above $2k per month.

I say $2k per month as the cutoff, because there is only one near $10m agency that I have seen be able to operate with this low of a retainer is WiseGuys Digital.

Here are the average monthly retainers for near $10m and over $10m agencies I've worked with or interviewed:

• ABSTRAKT Management = $3750 / Mo, $54m / year in revenue (listen to interview)
• Four15 Digital = $8,000 / Mo, Between $5m - $10m / year in revenue (listen to interview)
• Hive Digital = $5,000 / Mo, $10m / year in revenue (listen to interview)
• 1SEO = $3,000 / Mo, $10m / year in revenue (listen to interview)

I also want to clarify something.

If you are a full service agency, this needs to be your minimum.

However, if you a SaaS enabled service (like Marketing 360) or a SaaS marketing product (like Clickfunnels) you can drop it much lower and hit massive scale.

If you're a full service marketing agency, you need to constantly push your team to hit over $2,000 / mo if you want to stay competitive.

If you can nail competitive advantage #1 (currency arbitrage + social media), then you should have no issue hitting this minimum.

Mainly because you will have extreme trust from your customers from social media.

And, because you can do so much for the price because of your currency arbitrage that they are going to be willing to spend a TON of money on you for more production.

WRAPPING IT ALL UP

It's easy to hit $1,000,000 in sales as an agency.

All you need is time + consistency + hard work.

There really isn't a secret formula to get there, and you don't really need a lot of luck.

However, once you crack that $1,000,000 mark, then you start eating into your competitors market share.

That's when they start to notice you and when they start to CRUSH you.

It's at this point that you have to find a competitive advantage or die trying.

I hope by following the above three advantages you won't waste hundreds of thousands of dollars like me figuring it out.

Save yourself and scale faster.

If you would like to learn more about how to scale your agency faster, I make a ton of my content free on YouTube.

Here are some introductory courses you can try out yourself and get you started:

How to Cold Email to Get Clients With Gmass | Best Cold Email Templates

All My Cold Email Marketing Secrets...

Day in the Life of a Digital Marketing Agency Owner | ($2mil+ Agency Owner)

1,731+ Meetings Booked Per Year: How Did I Do It?

Also, I have an amazing community of 250+ agency owners who make (at minimum) $100k more per year from applying my principles and using the software I built.

If you want in, visit AgencyGo.io to sign up today.

It's a 30 day money back guarantee, because I am so confident you'll ad $10k MRR in that first month from following my process exactly.

Even if not, subscribe to this newsletter to get more content just like this every week. I'm here to serve you.

P.S. Check out last week's video on how to build a $10m agency below...