Dennis Yu

The mindset of an employee versus a profit maximizer

One of our team members asked if they should increase the budget on a campaign from $80/day to $140 a day.Here’s what I said. Please choose whatever budget you see fit in your expert opinion.You’re the pro! You know our business goals and are best positioned to determine what tweaks to make to maximize revenue at the target ROAS. As we know in eCommerce, unlike most agency work, it’s not about a daily budget (which is about managing expenses), but about maximizing profit (at whatever spend maximizes this). A typical agency employee has the goal to spend exactly $X as the budget– which can be too low if the campaigns are profitable, but too high if we’re wasting money. So use your pro skills to test and optimize, while we’re here to advise in our areas (me on strategy/optimization), the client on content/financials, Daniel on analytics, etc…

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Want to know the #1 reason why your products and services fail?

Because you aren’t starting with empathy. When you show you care about people– not as a marketing ploy designed by a fancy New York ad agency– you’re showing you understand their pain. And when they know you can relate to their situation, and have a clear solution to their problem, then they’re in a position to buy from you. When you share your WHY story (via a one-minute video), you’re demonstrating you can relate, have the expertise, and can solve their problem. And only then can you talk about the features and benefits. Most businesses go straight to selling on price, features, and technical specs– failing because they don’t earn trust first. They want to know that every marketing dollar is driving sales– sounds reasonable enough. But they’re unwilling and unaware that they have to build sequences that start from empathy and then sequence through to a sale. Do you have that initial ingredient and have you set up digital plumbing to track the ROI from it?

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A billionaire friend told me not to charge by the hour or the month.

If you want to stand out as an agency or consultant, measure and charge by business results. The level of incompetence among marketing agencies is astronomical. So to talk about business results, whether or not you can deliver, is what drives sales. Demonstrate you have a detailed process you follow and emphatically state you don’t do what’s not in a process. Don’t say you do everything and serve everyone, big or small. Don’t say you’re affordable and serve small businesses. Even if you’re desperate for business, if you get cheap and cut corners, you’ll shoot yourself in the foot by attracting nightmare clients that even pros wouldn’t be able to make happy. The more you say what you don’t do, the more confidence your clients have in what you say you do well. When you start with their financial goals and tie your effort to them, you shift from an expense to a profit center. Then it doesn’t matter what your fees are. Your goal is not to reduce your fees, but to increase their profit— probably from your efforts.

A billionaire friend told me not to charge by the hour or the month. Read More »

How much should I charge for social media consulting?

The money discussion is an awkward one for most people, right? Want to know how to charge more, while not being guilty of overcharging and under-delivering? Hint: if you charge by time, you’re always selling yourself short, since you must keep putting in time to get paid. And you’re seen as a “cost”, instead of a source of profit, for which businesses will find unlimited budget. Sure, charge hourly or a retainer to get going. But move to a performance model, so you can be paid without needing to deal with daily client headaches to drive you nuts. Make more money with people you like being around while ending the insanity. Why not overcome whatever fear or blockage you have to start now?

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I’d like to pay you a MILLION dollars.

And I have a budget of $100,000 per day to spend with you. But first, you have to make me $10 million dollars– and only then I’ll pay you. +++That’s what someone basically said to me a while back. I’ll take the risk and you take the profit. I’ve been hit up thousands of times with a similar pitch… +++I’ll give you 20% equity in my company if you can grow my idea into this billion-dollar company I assure you it will be. Drop Content Factory and all your people, since this is the biggest thing you’ve ever seen. You fund it, promote it, hire people for it, and run it. I provide just the idea, which is the most important part, of course. I need you to sign a super secret NDA before I can tell you what it is. +++You gotta admire the hustle of the folks who don’t have money, knowledge, or the team to drive their business. And they can’t pay your fee to start, nor are they serious. If you’re an entrepreneur or agency, you know the “partner” hustle. But don’t miss the key point– that if you are driving profit, the budget is unlimited. And if you’re just an expense, then your budget is limited. AGENCIES like to charge an hourly or monthly fee– which is usually an expense– something the client wants to negotiate down. They trade time for money. ENTREPRENEURS want to maximize profit– since they know a rev share or related performance deal has a larger upside and aligns interests. The way to balance both models, so you have fair risk and reward on both sides, is to have a pilot phase allowing your agency to test– risking their labor and your money, discounting their fee, and spending enough to get some data. Then if the pilot is successful, move to a performance model, since both parties now have an idea of what’s possible and have experience working together. You want to date before you get married. Save yourself the headache, lost time, and wasted money by following this PILOT + REVSHARE model in growing your business.

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As a consultant, you sell your time.

As a powerful, profitable entrepreneur or agency, you should be selling performance. Nothing wrong with selling time, so long as you understand the pros and cons. Easy money but limited upside. My friend, Naveen, calls this chasing pennies, instead of going for dollars. But if you want a performance-based deal, you must explicitly be able to measure the business result, have the competence to achieve it, and have documented process. If you’re selling monthly service packages, that’s consulting, which is selling time. If you charge by project completion, you might still be selling time, if the cost is based on labor instead of profit. When the client sees you as an expense, the budget is limited. But when they can directly see the profit from your actions, the budget is unlimited.

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Money or meaning?

*** Traffic is more important than ranking.*** Revenue is more important than traffic.*** Profit is more important than revenue.*** Impact is more important than profit. Therefore, those people that are famous don’t necessarily have any money. And those with money don’t necessarily do good in this world. Do you seek to make money or make meaning?

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I fail 90% of the time– and it’s painful every time.

But I know that 1 in 10 of my ads makes money– enough to cover the 9 failures. The trouble is, I don’t know which of the ads will make money. And the more confident I am about what will win versus what will perform terribly, the worse things are. It means I’m not listening to the data or open to other viewpoints. Here on LinkedIn, the simplest of posts win. If you’re overthinking it, the initial spark you had has now been convoluted into a complex, noisy beast that has lost the purity of your original spark. Here’s one I did a week ago that got 1,000 likes and 75,000 impressions. YOUR TURN: Are you willing to post raw content? And what do you observe that’s working or not?

I fail 90% of the time– and it’s painful every time. Read More »

A client called me this morning to cancel their $ 10,000-a-month retainer.

Ouch, that hurts. That’s $120,000 a year that could be helping create jobs and training programs. How would you feel if you lost $10,000 this afternoon? I believe the fear is causing more damage than the actual virus itself. What we need to do is not allow this to spiral into a massive catastrophe– less employment leads to less spending, fewer people being able to pay rent, and more rounds of cuts. Don’t think that a $1,200 check from Uncle Sam is enough to cover 3 months of living expenses. Now is when we need to get online to let customers know we’re still here, still open for business. While other people are laying off people, I’m going to be hiring. Since there are a lot of good people out there that are willing to work, but are in tough circumstances. Now your turn– I want to know what you think. Are you training and hiring– or are you learning and earning?

A client called me this morning to cancel their $ 10,000-a-month retainer. Read More »

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