As marketing trends rapidly change and evolve, it can be challenging to keep up. But the reward for making marketing a priority in any business is undeniable. In just 5 years, Grayson Lafrenz and his team found a sweet spot in the digital marketing industry which launched them to #351 on the Inc 5000 list in 2017.
In today’s episode, you will learn from one of the industry’s top performers how to build a business from the ground up in a smart and sustainable way. Grayson shares the unexpected path that led him into the business, how he found his niche and the winning strategies that helped them become one of the fastest growing businesses in San Diego.
He also reveals how digital marketing has changed over the years and how his business has adapted. Grayson rounds out our conversation by sharing some insightful advice on how to create a positive company culture and the importance of providing massive value up front.
What You’ll Learn:
- How Grayson’s firm provides value in advance for their potential clients and why it’s extremely effective.
- The exact elements that ensure your company can scale and grow consistently.
- Why revenue is a vanity metric for them and profit is more important.
- What exactly they consider digital marketing to be.
- Why really good digital marketing strategies take time.
- How digital marketing, social media, and online searching has changed over the past few years.
- Why they focus on finding clients that are the right fit for them rather than convincing clients to work with them.
Resources for this Episode:
- Grayson Lafrenz: Twitter | LinkedIn
- Power Digital Marketing
- Flip the Switch Podcast
- University of Arizona
- Google Analytics
- Inc. 5000 2017
- Entrepreneurs’ Organization
- Positive Adventures
- Societe Brewing Company
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Full Transcript: Grayson Lafrenz – Power Digital Marketing – The Power of Digital Marketing
Taylor: Grayson, welcome to the show. Thank you very much for being the first official University of Arizona alumni to join me.
Grayson: It’s a prestigious thing to get to be — appreciate it, Taylor.
Taylor: Absolutely, bear down. Let’s jump right into it. In 2012, you guys were working out of a plumbing supply warehouse with just one client, five short years later and you’re number 351 on the Inc 5,000 list, number two on San Diego Business Journal’s fastest-growing list and you’ve got people like Neil Patel giving you guys testimonials. What does it feel like to be the co-founder and CEO of this company? When you hear those stats rattled off, what does that feel like?
Grayson: Yeah, it feels amazing. I think for me at least when we set out to start this company and build an agency, I definitely didn’t have the vision that it would be what it is today. Obviously, we hoped that we’d have success and we felt really confident we’d be able to be successful because we’re good at internet marketing and we’re well-connected in the business community and felt that there were people out there that wanted us to help them grow their companies. Definitely wouldn’t have guessed that we’d have 50 employees here today and have had the growth that we’ve been able to have.
Taylor: Yeah crazy, in such a short time period. People would kill for that kind of success in such a short period of time. Take me back to the very beginning here. So you’re working out of this warehouse, you’ve got just one client, what led to the launch of Power Digital marketing? What problem existed in the marketplace that you were trying to solve by starting this company?
Grayson: So my partners and I had actually founded a couple of other technology companies and so the original two were more software and service businesses and so throughout that process and over those years kind of in the trenches building those companies and trying to get them off the ground and to scale, we had been on the other side of the table and had actually hired various marketing agencies. And so the experience was always really a mixed bag. Most of the firms that we worked with or that we would interview and talk with, they were really focused on kind of what I would consider some of the more fluffy stuff in terms of here’s how we need to position you within the market and here’s how the customer’s going to feel when they encounter your brand.
And these types of things which without a doubt are very valuable but what we’re really looking for is a partner that can help us grow our user base and grow our revenue, and there was just a big gap of those types of firms out there. We really weren’t able to find one that was truly able to do that and able to do it in an efficient scalable manner that at that time the earlier stage companies needed. Where you can pivot and really be that battleship that can turn on a dime as opposed to that partner that has to have a clear scope of work and stick to that scope and not be able to pivot as things occur.
So that was kind of our first experience. And then with the agency we were actually working on a manufacturing company and it had really taken off and was doing great and we ended up getting into some litigation and having some challenges and so one of the things that we were really good at was driving leads through the Internet and so during that time, we kind of had some downtime and weren’t really able to pursue clients due to the legal situation. We started providing marketing services for a few companies, it really took off from there. We did really good work and focused on that and helping those brands grow and make money, and then they kind of referred us. Very organically the company started to grow in that first year.
Taylor: How did you get that first client or those first few clients?
Grayson: So I mean it was a couple of different ways that we got those first clients. One of them was through a referral. So a gentlemen that we had helped and he referred us to a brand that he was kind of consulting for and they needed somebody to really come in there and not just tell them what they should be doing and how to grow their business through internet marketing but execute for them. And so that was one of our first clients. Another one we actually got through a cold call.
We literally picked up the phone and were calling on prospects and one of the first clients we have who we still have to this day funny enough, five years later it was literally a cold call, one call close. Which is not the norm at all in this industry but we were just out there hustling and we knew we can help people and we were being aggressive in what we were able to offer them and so it was a variety of different referrals and partnerships and then also even some traditional sales.
Taylor: Yeah, digital marketing is obviously really important for any growing company these days but it’s kind of funny sometimes you have to go back to basics and just pick up the phone and make the phone call like the good old days.
Grayson: Yeah and we’re lucky because with what we … people hire us to grow their revenue for them and it’s super measurable with internet marketing and so pretty much any CEO that you’re going to call on or a person, they are very interested in ways to grow their revenue and drive profit. It’s not like you’re trying to convince somebody to help them automate this workflow or softer value propositions where maybe you’re trying to save them a small amount of money. We’re being hired to come in and to scale their revenue for them.
So I think that that in a nutshell helps and there’s definitely been a lot of snakeskin cells men in this industry and people that will make big promises and can’t deliver. So that takes some overcoming. But the bottom line is that we’re hired to kind of drive revenue and that’s something that every business is looking for.
Taylor: Yeah, I mean you guys have obviously done a really good job at it in the last three years that you’ve grown over 1,200% which is just insane. You kind of touched on it but what do you attribute to this growth? I mean obviously, you did some good work for clients early on but I mean to grow that much, you guys had to do something pretty tremendous. How did you achieve that? Was it through digital marketing yourself or just continuing to pound the pavement and make some of these big phone calls?
Grayson: Yeah, we honestly did it kind of in reverse. So we focused very much on just taking incredible care of our customers and the nice thing with what we do is once we start working with a customer, if we’re fulfilling what we’re supposed to do which is to grow their revenue, they’re going to just spend more money with us and they’re not going to want to go anywhere. And so we focused on that. So we got that first client and made sure that we were able to grow them and keep them and then you add the second and then the third and just making sure that we don’t churn out clients so that we’re always moving forward.
So we really focused on that and as we did that, those clients began to introduce us to other people. We obviously were out in the business community and we helped a lot of people for free. So we get in and we’d consult and we provided a ton of value to businesses in advance where we’d literally audit their digital marketing for them, show them where the opportunities lie and by the time we were asking for them to engage and pay us, we were their trusted adviser, they’d already gotten a ton of value from us.
So that was kind of our approach to getting that original client base is to really provide them the value and prove it to them before ever asking for their money and then making sure that once we had them as a client, that we delivered on everything we said and we actually went above that to really delight them, so that every time we added another client to the mix, we had taken five steps forward and we never really had that situation where you take one step forward, three steps back and whatnot. So that was really our focus as we got that critical mass of clients and grew in the early years.
Taylor: You grew a tremendous amount but it sounds like it was a controlled growth too. Like you said you don’t want to take on too many people that you can’t handle and then you’re taking a few steps back every time you get a win. Is the growth rate that you guys are experiencing right now, do you think that’s sustainable? How do you maintain that kind of growth rate?
Grayson: Yeah one thing that my partners Nick and Robert and I had always talked about was we always felt we were growing really slow and we were very conservative in it. And for us, it comes down to our team. So if we have the best team then we win and our philosophy has always been we’ll continue to scale and grow as long as there are three components in place. Number one is there’s the available talent out there that’s going to be fantastic team members and they fit our culture. And then number two is that our team has the capacity to manage those people in a really efficient and empowering way. So we’re able to help those people get better and we have the leaders in place and then the third is market demand. Are there clients out there that want to pay for our services.
And so we really always focused on those things and so we felt like we’ve grown really slowly funny enough. And so in terms of looking at 2018 and beyond, we think that we’re just hitting our stride right now and we’re building things like technology within the organization that’s making us more efficient and allowing us to onboard team members and clients in a more efficient way which we think gives us a ton of scaling upside and really our product is better than ever. So we certainly think that there’s a lot of growth. I do think one of the things that we look at really carefully is we look at revenue as a real vanity metric. Profit is the more critical metric in our opinion and for our type of business.
So as we look at 2018 and beyond obviously we want to see top-line revenue growth but if our profits aren’t following and in fact improving, then we really need to re-evaluate but this year in 2017, we are able to pretty much double our revenue as well as increasing our profit margins and so that’s going to be the same mission for next year.
Taylor: Very cool, so let’s maybe take a quick step back. Digital Marketing is a really popular term these days, what exactly is digital marketing to you? When you tell people that you do digital marketing, what does that actually mean?
Grayson: So what we really focus on is performance-based marketing. So we’re the team that comes in and basically helps a brand connect with their target customers and then lead them to that transaction. So typically for us, that’s either going to be an e-commerce transaction or lead generation. So acquiring a lead of whether that’s a farm or a phone call or a subscription or whatever it is and we look at digital marketing landscape very non-channel specific.
So we don’t try to pigeonhole brands into certain channels and we conduct pretty much all the digital channels that are out there and so when I see digital really working well for brands, it’s that they do a really good job of evaluating all those different channels, looking at how they’re positioned in the market and where they can compete based on how long they’ve been around. Their specific competitive advantages, their budgets and then really looking at where their customer is and testing and putting those to use.
And so we do that through search channels both paid and organically, we do that through content marketing, through P, through influencer marketing, through a lot of social media and social advertising and it’s really a matter of just finding that right mix for that company and each company is unique based on their industry and where they are in their product lifecycle and then putting those to work and testing them and putting more of the resources into what’s working and move away from what’s proven to not work.
Taylor: And talk to me a little bit about digital marketing being a long-term play. A lot of people want really quick results. They want to see their page views spike overnight or they want to collect a bunch of e-mail addresses in a short period of time. But you had previously shared with me that really good digital marketing strategies take time. Can you explain that a little bit further?
Grayson: Yeah totally and I think a lot of it comes down to the business itself. So if you’re a brand that’s been around for 50 years and you’re very well known and people recognize you in all this and you haven’t really invested in digital and you’re going to invest in digital, you can get results much, much faster. You have a lot of advantages online. People are looking for your brand, your website is trusted and generally powerful. You don’t need to build as much trust, the education process online is usually smaller but for most businesses that are a small or a medium-sized business, as they venture into digital marketing, they think it’s going to happen overnight and it just doesn’t happen.
Because consumers online, they’re very smart. They need to be educated, then they need to start to trust a brand. Then they move to that buying cycle and so I think one of the biggest misconceptions is with entrepreneurs, is they want to do digital marketing, they want to hire a firm and it seems like a really easy way to scale and seems like very little friction as opposed to maybe more traditional ways of scaling like sales, but they need to be patient and understand that all of those steps in terms of establishing the brand online and then educating consumers and then ultimately gaining their trust and showing them that the brand can be trusted and is valued and then going for the sale, those steps need to occur and it simply takes time.
Taylor: Yeah, and I think it takes consistency too. It makes me think of like the people that got into the blogging game back in the early 2000s before any of us knew what a blog was and you hear these stories about them saying their mom was their only reader for a few years until traffic actually picked up and they gained a following and they built a community but they were consistent with it. They stuck with it and I think that’s probably really important too in the digital marketing space or even any sort of marketing or advertising.
Grayson: Yeah totally, I think you’re spot on with that. So content marketing is the perfect example and when I say content marketing, that could be blogging on your website, that could be a video blog, it could be a podcast like this. But it takes consistency for sure and it takes a lot of producing really great content and kind of iterating on that and tweaking it on a daily or weekly basis and it’s like a very small snowball. At the beginning just like you said, your mom is the only person listening to it or reading it and then it just slowly snowballs. And so for a good example, is power digital on our blog, we didn’t invest a ton in our blogging early on, we went more with the sales methods that I mentioned. And about a year ago, we really started focusing on our blog.
It probably wasn’t until about 12 months or 10 months of really pumping out a lot of great content that we started getting the leads that we want from it. And even to this day, where we maybe get 15 leads a day, only a fraction of those are the leads that we want but we’re at that point where that snowball is rolling and we’ve been doing it enough to where now we can start to see really, really steady progress each month and it’s paying off. So I think you’re spot on where content marketing is a great example, it’s just a long path. There’s no way around it. Certainly you could put more resources behind it and create more content and shorten that path at times but no matter how you put it, one of the beauties of content marketing is it’s a long path because it’s hard for other people to come take that away from you once you’ve established yourself, but there’s really no shortcut for a lot of that.
Taylor: How has the digital marketing landscape changed since 2012 when you guys kind of got into this business and maybe let’s start with what worked in 2012 that doesn’t work today?
Grayson: That’s a great question. The landscape and digital changes every year. I mean even more rapidly but looking 10 years back, 2007 let’s say when you and I were kind of getting out of school, social media was just taking off. There weren’t really even ads on social media and SEO, for example, was kind of the Wild, Wild West. You could win pretty quick. There was a lot of I guess shadier stuff that you can do on SEO, like link building and getting lots of sites to link back to your site. And then even things like taking a page that ranked really well in Google and then duplicating that page and then having two pages that rank well in Google. So there are all types of stuff like that that worked ten years ago-
Taylor: They call that black hat SEO.
Grayson: And Google combats that. Google wants the user, the searcher to have the best experience possible. They’re in it for the searcher, not the business and obviously, it’s just not a good search if I’m finding two of the same thing in the top three results. So they’ve really combated that and that is just no longer the game and then even things like Google Pay Per Click advertising back 10 years ago, it was far less competitive and so when there’s less competition in the auction which is what it is, it’s an advertising auction, then you can get that traffic at a far lower cost and you can acquire clients much more profitably.
And then I’d say when we started in 2012, what was different from now was a lot. First and foremost there’s social media, monetization really started taking off and I’ll tell you now that social advertising is like our biggest offering. So it wasn’t even part of our offering when we started in 2012 and now social advertising and social marketing is probably our biggest offering that we offer.
Taylor: And when you say social advertising, you mean something as simple as putting out a Facebook ad.
Grayson: Yeah, Facebook advertising, Instagram, LinkedIn, Pinterest, YouTube and what was beautiful with the social network is they just have so much data and they even have third-party data partners that we can use like Oracle, where we can really get to the customer that the brand wants to get to. So that was something that wasn’t even really … I mean, it was around and it was in its infancy but compared to where it is today, it’s night and day.
And then the other big thing that’s different now is SEO used to be a little bit more stand-alone five years ago when we started. And now SEO, content, and PR they are married at the hip. They’re one in the same, if you do those things, three things really well and in unison, then it all works. If you do one of those things or two of those things you’re going to realize a much, much smaller impact.
Then the last thing that I’ve seen really, really change in the last five years is consumers are smarter than ever online. All of us are shoppers online. We’ve become really intelligent in the way that we evaluate brands, the way that we find deals. Even the way that we research things that we want to do. So to win in 2017 and beyond your really need to look at that online marketing ecosystem as a funnel. And really understand the top of the funnel, and how to fill those types of people in that are just very much not ready to buy.
They’re doing their research and you want to control those people and then how to move them down to the middle of the funnel where they’re really starting to realize that they have this problem and they need a solution and controlling them there. Then ultimately to the bottom of the funnel where it’s the transaction point. That’s where the brand is able to make money and sell them the product or service so they’re able to generate that lead.
So five years ago, and certainly 10 years ago we were able to get away with not mapping that out as clearly. We can go straight for the transaction and it was lower competition and it worked, whereas now the transaction point is so competitive that if that’s your sole focus, very rarely will you will you be able to do that in a profitable fashion.
Taylor: To kind of sum of that up are you kind of saying that it takes time for the consumer to make his decision. That you can’t just put something up for sale today, throwing out there and get people to click? You kind of have to warm them up a little bit, take them through maybe a series of emails or some sort of a giveaway in order to get them to the end sale? Is that my understanding of that?
Grayson: Yeah, I think that’s always been the case. I think the bigger difference now is that we used to be able to get away with just skipping the top part and that’s a lot of hard work in skipping that and going straight for when they’re ready to buy and winning there. But now it’s so competitive that if you try to do that, you could probably win that customer but you’re going to pay more than their worth. So if you’re selling a $200 product, you may pay $400 to acquire that customer. And it’s probably not going to make business sense. So now with that big rise in competition, your better chance of winning and being really profitable is to start from the top and work that prospect through so that you control them along the way and you don’t need to pay that huge premium to get them at that sale point.
Taylor: I think you had mentioned that you had some digital marketing tips for people interested in boosting their online footprint. Like if somebody just wants to kind of start out today and do some of this stuff on their own, do you have few things you could share? Where they’d even begin?
Grayson: Yeah, for sure. I think the first thing that I would focus on and we do a lot of education with our clients. I mean we work with some really large brands that have large marketing teams. And there is a level of education we provide them and then we work with a lot of venture-back-startups where the entrepreneur isn’t necessarily focused full time on the marketing but we really want them to understand. Because the more educated they are, the easier it is for all of us to be successful.
So, the first thing that I’d always recommended that they start with is really understanding analytics. The easiest platform for most beginners to learn is going to be Google analytics and it’s free. The reason why I’d really encourage entrepreneurs or business people to study this and to learn it, is you’re going to learn about things like digital channels. So you can see how much traffic is coming from direct, people that navigate directly to your website, how much is coming from organic, SEO. How much from social? How much from referral? That’s a channel where somebody clicks a link on another site and comes to your site. How much from email?
So you can really start to understand these different channels, what they mean and how big of an impact they have on your business, and then you got to start diving into metrics like conversion rate. Conversion rate is like the king metric of digital marketing. You can always bring a lot more traffic and I can go from bringing you 100 people a day to 5,000. But if my conversion rate declines, then I just have a bunch of visitors and I have no one doing what I want them to do. Turning into a lead or buying. So you get to understand conversion rate. Metrics like bounce rate, time on site. And the great thing with Google Analytics is Google actually offers a free certificate that you can take, and if you’re able to get that certificate, you’re going to have a pretty good understanding of general analytics.
Two other kind of quick tips I’d say would be to consider hiring a pro to teach you. Because if you sit down with somebody that really knows it, a marketing person, I think that you can typically learn in a five-hour session, maybe a couple of two-hour sessions. I think that you’re able to learn what you can spend months and months and months reading because you get that context and they can tie everything down to your business and what you’re doing.
Then lastly, is just keep really paying attention and keep your eye on competitors. The neat thing for us as consumers these days is that there are ads everywhere. Digital marketing is happening all around us. If you really kind of open your eyes, you’ll start to notice it. You might start to notice a website that you visit, and then they’re cooking you and now you’re being retargeted and you’re seeing their ads everywhere. These are the type of things that you’ll begin to notice and you’re really just beginning to educate yourself.
Taylor: Yeah, I really like the idea of Google analytics. Like you said it’s completely free and I can put a pixel on your website so it tracks everything coming through your website. Like you said, you could be getting 10,000 visitors a day but if the average time they’re spending on your site is 20-30 seconds, there is something wrong there. People are not liking the content that’s on your website. I know you can dive in a lot deeper but there are some really, really high-level metrics there in Google Analytics that could be helpful to anybody.
Grayson: Totally, and Google does a great job of making it pretty intuitive. Their products are typically pretty easy to use. So I really think that that’s a good starting point for a beginner that wants to get the lay of the land.
Taylor: Yeah, I think people will quickly find out, I mean this stuff takes a lot of time too. I mean all this information’s out there, you can Google digital marketing all day and find out all the tricks of the trade. But it takes a lot of time to implement too which is why people hire you, I guess.
Grayson: Totally, and it’s a science. Like within our company we’ve got five core departments. So we’ve got about 50 people and they’re broken out into five core departments. For example, I would never have one of my SEO’s run a Google PPC campaign. They’re just not going to be cable of doing it at the level that a PPC would do it. And I would never have a PPC run an SEO campaign. So they really are sciences and you need disciplines, there are very few marketers out there that are those unicorns that are going to be top of the line across more than one channel. They don’t really exist. If they did, I would try to hire them and I would pay them a lot of money.
Taylor: Right, it’s like finding a website developer who’s also a good designer, like they’re two completely different people. Let’s talk a little bit more about power digital and what you guys do and the types of clients you work with. Who is your ideal client? Like how does somebody know if they should hire somebody like you guys?
Grayson: Yeah, so interestingly enough everything we do is totally custom. So we don’t have any packages and in terms of the ideal client, the typical variables are they are business to consumer. So they have a large audience. They’re B to C. They’re established in some capacity, so they’re not a startup. So they have an established site and they have budgets. But outside of that it can really depend. We do a ton of e-commerce so that’s definitely a strong industry. But our process starts with this assessment that we do and typically when I’m doing these assessments, I’m able to tell two things. One is, are these guys a great fit for us. Like do I see a gold mine of opportunity where I feel that in six months from now I’ll be able to show them a huge ROI? That gets me really excited and it really varies based on the type of company.
Then two is do they have realistic goals and expectations. That’s why we really like educated client and we really work hard to educate clients if they’re not, because it’s just not fun to do our job if the client doesn’t have realistic expectations. It’s hard to win. Outside of that, I mean we have a great client that doesn’t have a single employee. So one man shop and we do everything for him on marketing. I’ve got a team of about eight people around his business and we do every component for him. Then we have large brands like Jenny Craig, J. Crew or Berkshire Hathaway or Spanx that are super established and have really big marketing teams. And we plug into those marketing teams and then really augment and support them in the areas that they are weak.
So it kind of starts with these assessment process that we do and if you were to send me a website I can look at it and typically within 20 minutes tell you if I think that there are some really good opportunities in low hanging fruit or if it’s going to be a little bit harder to find ways to really scale their revenue.
Taylor: Is that assessment something that you guys offer for free or do you charge for that assessment?
Grayson: It varies, we do both, so we typically start with this discovery call where we’ll really just talk to the business owner or the head of marketing and get a feel for what they’re doing and what’s going well and what’s not going well and their goals and their budgets. And if after that call we determine that there’s a really clear path that we think we can help them, then we’ll do that assessment for them for free, because it’s as much as understanding if we think that they’re a good fit for us, as us trying to convince them of that. But then there are tons of brands that will cause in and they want to get a roadmap and they want to see maybe where they’re missing the mark and they want to give their current partner a grade, and these types of things and for those deeper level assessments, we’ll just charge a project fee for that.
Taylor: And where do those projects fees range from? Like, give me some kind of idea of what that costs?
Grayson: So those project fees are typically for larger brands and so they typically range from $20 to 75,000 and then typically the reason why is that the larger brands a lot of times they like to lead with that, because making changes to their digital marketing is it’s a bigger company. It’s again it’s like turning that aircraft carrier around. Whereas typically the smaller brands that are maybe that 5 million to 150 million, it’s typically us doing that assessment for them to layout that roadmap, because there we can really help them and they want to make a move quick. If I’m going to show you a way that you can increase your revenue for your business by 50% or double it, you’re not going to be like, “Oh, that sounds great. Let’s wait until the end of Q1 for that.” You’re going to be ready to do that right away and so it makes a mutual opportunity for both of us.
Taylor: Got it. And how do you handle a small mom and pop here in San Diego, maybe they’re at the $500,000 revenue mark and they want to get to a million and beyond. Is that just not a good fit for you at this time or do you guys have a solution for the smaller businesses as well?
Grayson: It can vary. Typically we’ll kind of do the quick audit for them and get on the phone with them at the very least at no cost obviously and try to give them a roadmap and set expectations. And I’ll just tell them, “Hey, if I were you, here is how I’d approach it.” And sometimes that means, “Hey, I can introduce you to a couple different freelancers and let’s get your content strategy pumping, and you can kind of manage those people and here are some good resources for you.” And other times I’ll refer them to an agency partner that we have. He’s really good at that size client.
But then there’s also times I mean that the brand that I mentioned that doesn’t have a single employee. I mean, when we started with him, he wasn’t much bigger than what you’re describing and it’s been just a great relationship for both of us. But with him, he had these huge competitive advantages and we saw a really clear path to that. So my philosophy is I love to talk to those people and just try to shoot them straight and tell them, “Here is how I would do it if I were you,” because those $500,000 businesses become the next $5 million or 10 million businesses. Again if you can give them that value in advance, you have a really good chance of being that phone call when that time comes.
Taylor: You’re the co-founder and CEO of this company. Are you always the one having these phone calls with the prospective clients?
Grayson: No we’ve got about probably four people that take these types of calls. So we’ve got our Head of Business Development Mike Jocko another Arizona Wildcat, and then Robert who’s our COO, another Arizona Wildcat funny enough, and then Mark, our VPO Client Success and then our heads of our departments will take these a lot too. So if we thought PR was going to be a fit for that, then maybe we’d have Kate take that original strategy call. So it just really kind of varies based on the brand and the size and then the potential channels and areas of specialty that we think would be most efficient for them.
Taylor: Sure. I also want to dive into this … you shared this term with me that you guys are a performance-based agency, which you’re kind of suggesting is different from the norm. So, what is a performance-based agency? I think you called it ROI something as well. What does that mean exactly?
Grayson: Yeah, so the way that you measure us and the work we do is based on the dollars and cents. So for e-commerce brand, it’s, when we engage we have a benchmark and here’s your revenue from the last few years and here’s what you were doing each month. And then we’re measured against growing that revenue you know month over month, year over year, and we’ll typically look at both those; month over month growth as well as year over year, because most of these businesses have seasonality and so you may see a month trend up drastically from October to November. Well with Black Friday and what not that’s to be expected.
So how are we growing this November compared to last? And so that’s how we’re measured. And if it’s a non-e-commerce brand, it comes down to lead generation. So volume of leads, quality of leads and then cost per acquisition of that lead. So we’re measured very clearly on those metrics, not on maybe some of the softer metrics like even what we talked about before, how engaged are people with your brand and whatnot. And those are all critical too and we pay attention to all these metrics, but at the end of the day, what keeps us employed and allows us to grow our client relationships is when we’re showing them revenue growth to those metrics that I mentioned.
Taylor: So if a client doesn’t experience revenue growth, does that mean you guys don’t get paid?
Grayson: No. Occasionally we’ll do partnerships where we have a performance kicker, so we charge a base and then the majority of the earnings is based on results. But those can be with the bigger brands, they typically shy away from those because there are so many different variables. They could be doing a huge TV push for example offline and it could cause online to surge, or they could have a new product release that can cause sales to grow in a major way. And so typically they like to stay away from that, the startups are typically more drawn to that because they want as performance-based as possible.
And it’s something that we look at regularly, but more so what I mean from performance-based is that if we’re not hitting our metrics at the end of our campaign term, then the client’s not going to renew for us. And the way that we structure our engagements is the first contract of the client is typically not profitable for us at all because we’re trying to get that snowball rolling like you and I talked about. We’re trying to get that momentum building and build that marketing platform for them. So we invest really heavily in doing that for them upfront. So for us, it’s super critical that we prove ourselves in that first engagement and that we win the second, the third, the fourth, the fifth contract with them.
Taylor: So you guys focus on this client’s revenue, you call it performance-based. What do more traditional firms use as a metric?
Grayson: So a lot of the more traditional firms are going to measure things like impressions. So how many people saw your ad? And I could honestly care less about impressions. I look at that metric because it’s like a very small metric that leads up to a cost per acquisition or a return on investment, but the bigger firms and honestly some of the bigger brands do a really poor job. They look at that as a really important metric. So impressions would be an example like reach, how many people did it reach? These types of things as opposed to more revenue and sales or in metrics.
Taylor: Right, they’re like, “Look how many eyeballs we got on your brand.” And you’re like “Great, but it didn’t do anything for us.”
Grayson: Yeah, and you hear it all the time. I mean I’ll talk to brands that are doing newspaper marketing and they’re like, “Well, this circulates to 100 million people,” but then you’re like, “Well, it goes to 100 million people, but there’s like 100 of pages in that. So what are the odds of those 100 million, how many of them actually grab it off their driveway? And then of the 100 million, how many of them actually flip to the page that your ad’s on? And then of that 100 million, how many of them are not totally zoned out reading another article when they are on that page? Very, very few.
And it’s the same thing online, you know like Facebook or Google with display ads, for example, they’ll count impressions. It’s not like you necessarily always saw that ad, it means that the screen served the ad, and so I just think it’s a really poor metric overall to use when performing on results.
Taylor: Sure and that’s really good information. Where do you see Power Digital in five years or even 10 years? Where do you see you guys going …when 10 years from now, you look back, where you think you’ll be?
Grayson: What makes Power Digital so special is our team. We’re a service business and we have some technology that we’re rooted in, but we have the most amazing team out there and we have a team of leaders. We’ve really focused on that leadership development and we have a leadership program and although our team is really heavily millennial, very driven people that want to be leaders and are entrepreneurial in their own regard. And so our vision is to build those leaders up and my goal is to have one of our team members that are sitting out there in our office take my job. If that happens next year, that’s a huge win. That would be the ultimate. If it happens in two years, great.
But what we really want to do is build this agency that can last and grow forever and give our team the opportunity to move into these roles and do bigger things. Then where we really feel that we have a great opportunity as a platform is when it comes to entrepreneurship, we have capital. The agency model is a cash machine; it makes money every month and it grows. So we have capital, we have the know-how, we have designers, we have developers, we have data analysts, we have marketers, we have access to hundreds of different analytics accounts, you know the brands that we work with and we’re constantly looking at the market. And so we think we really have the opportunity to incubate some additional businesses whether they’re in the software space or product and really use Power Digital as that central hub to launch a bunch of brands and to have a really big impact.
Taylor: Do you think that you guys will ever raise outside money or get outside investors?
Grayson: Yeah, we’ve had that offer many times and we’ve obviously looked into it and done the due diligence and it just hasn’t made sense for us at this point and I don’t think that I see it making sense in the near future simply because we’ve been very conservative in the money that we keep in the bank. So we keep a really healthy bank account and have those dollars to invest. And we’ve never been held back from investing in either people or technology or tools that have been needed to grow our business and so until that occurs, I don’t really see a reason why we’d want to take on that investment and give away any of that ownership.
Taylor: Sure, makes sense. So I want to kind of flip gears here. We’ve talked about a lot of your successes, but going from one client to ranking number 351 on the Inc. 5,000 List certainly does not come without its challenges. So I’m curious, what problems or what big problem have you guys encountered along the way and how did you guys overcome that?
Grayson: It’s that entrepreneurial journey, I mean it’s funny. I mean, myself even I’ll have one week where I’m just flying high on top of the world. This is the best thing ever, then I’ll have another week where I’m like, “Man, why am I doing this? Should I work for someone else?” And I know that we all have that. But some of the ones that really stick out to me, back probably in 2013, it was our first year, we were doing great, we couldn’t believe the growth we were having, and we had about probably five, six employees. And a couple of the early employees we had they just weren’t the right people.
The first guy we hired is one of our superstars and he was certainly the right guy and if we didn’t get lucky enough to convince him to come on, there’s no way we’d be where we are and his name is Bill Wilkinson. But a couple of the other early people they weren’t quite right. They were super talented in their own regard, but they were people that were much more focused on pointing out problems and not coming with solutions. So for a startup that’s trying to move fast, that’s really hard.
So what ended up happening is we actually lost one of those team members and I remember at the time I was just devastated. He was so critical to us, I mean he was like one of six people and he was a workhorse and super talented and I felt like we had lost like half of our product, and I just thought it was going to be the end. But it was really interesting, we really just catapulted up from there. You know that negativity component … I don’t even want to say negativity, but just that different mindset, probably somebody that’s better suited to be a part of a big corporate environment and not that startup environment. That really freed us.
And so even though we lost some real talent, it ended up being a real blessing in disguise. And I think our culture was really defined by the group of people that we brought in after that, and like I said I think our culture is one of our biggest strengths. So that’s definitely one that sticks out and I just remember being so low and concerned at that time. Another one that I would say is just getting that client critical mass, so in 2013, 2014 it’s like you’re kind of scrapping and you’re taking almost anything you can get, and that comes with some real ups and downs. It comes with some tough clients, and I remember one, in particular, that was just like abusive to our team and more than anything I wanted to just get rid of this client and move on, but we needed that revenue so badly at the time.
There is definitely a handful of mistakes in the early years where we took clients that we knew we shouldn’t, but we felt we needed that revenue and that business to get to where we need. And then there’s been … over the years, there have been clients that we’ve lost where I’ve just been so bummed because the results have been so good and the relationship is so tight, but things like management turnover will occur. So the key point, the CMO leaves the company or the CEO moves on or the company is sold. And then a lot of times is what we do when the new regime comes in, they kind of want to bring their own people and put their own spin on it.
So I’d say those have been some of the kind of ups and downs, but not to be cheesy, I feel really blessed because a lot of the really tough lessons that I think businesses have to deal with, you know whether it’s around cash flow or rallying the troops, we’re really getting the team to work hard. You know, those have just never been problems for us. We’ve never had that cash flow crunch, made money every month that we’ve been in business, our team is just so dedicated and committed and it’s really their company. They’re the ones that have made the company and we do employee profit sharing and things of that nature. And so when the company wins and makes a lot of money, they win and make a lot of money.
And so I think we’ve just been really blessed and not have to deal with a lot of those traditional challenges that businesses have to deal with.
Taylor: And perhaps it has something to do with … I know you, in your office, you’ve got that list framed the eight rules that your company lives by and one of them is something along the lines of having fun and don’t take yourself too seriously. And I think that theme is really consistent across everything you guys put out there and everything I’ve seen about your company from guys playing ping pong on the front page of The Business Journal to you guys taking trips to Hawaii and Costa Rica. I mean, maybe you can talk a little bit about why and how you kind of built that into the culture because it obviously resonates with your team and has created a lot of internal success.
Grayson: Yes, so in our industry with agencies and I think this is true in a lot of industries, but typically it’s super political. There’s just a lot of politics and when we set out, we really Nick, Rob and I said, “Look, we want no politics in the company. And in digital marketing, there’s no roadmap. There’s no, “Here’s what you need to do to be successful,” it just doesn’t work that way. You have to try stuff and you have to fail and you have to learn. And so what we really wanted to do is embrace that, and so preached to our people, “Hey, take a chance.” Obviously, let’s be calculated with it, we can’t risk tons of money on a client’s behalf or something, but we need to take those chances to really find what works for them.
And so when a team member makes a mistake, it’s not a negative. It’s actually viewed as a positive at times and we build them up and encourage them and make sure that we all take the lesson from it but we move on. And so I think what that’s done is it’s just made a really open environment where people are willing to take chances, people are willing to voice their opinion and disagree with things and just cut the politics out of it. So I really think that’s probably one of the smarter things that we’ve done.
And our team is really self-aware, and so I think that that’s helped us to be able to do that, is team members don’t get defensive when you give them feedback. They encourage and I literally go on one-on-ones. I usually go to breakfast with team members about twice a week. These team members are like begging me for feedback, like for critical feedback. I’m not shy to give it to them, but it’s just, it’s neat to hear that and to hear them say that because I think that’s really rare in a company. And our team is really seeking it out and wanting to get better.
And I think that’s part of the power of the millennial group, in general, is that they really want to get better and they want to see themselves developing and growing and so if you cater to that, it’s like your secret weapon. They will respond in a major way and you will win and they will win. And so I think that that has been a big part of what’s been able to drive kind of that, not taking yourself too seriously and not being afraid to make mistakes.
Taylor: Yeah, well, good on you guys. I mean it’s really challenging to build that kind of culture, a positive culture in a company. You guys are doing something right. Winding down here are a couple of my last few questions here is what advice would you give to a young person out of school, maybe you know young Arizona Wildcat out of Eller who wants to start their own business and chase their dreams and maybe even follow in your footsteps and get into the digital marketing world. What kind of advice would you give to a young person out of school?
Grayson: I think it’s really key to develop your unique skill set. So, what makes you great? For me early on in my career, it was sales, that’s what I went into right off the bat and that’s what I learned. It’s certainly served me well. But for other people that could be marketing, but even more specifically like if you want to get into digital marketing, I would encourage people not to try to get into marketing and be a generalist, but to really pick that channel and become the best of the best. Let’s say that’s Facebook advertising. Well, what’s need is that it’s a pretty new segment and if you’re really dedicated to it and really talented, you could become the best of the best within a year or two years.
And so I think the first thing would be if it’s more of a general business person, like what is going to be your core skill set? Is it finance, is it management, is it sales? What is it and just become really great at it. And I think a lot of times the best way to do that is to get yourself a mentor within that first company that you work for that will really take you under your wing and teach you. And then for a marketer, I’d say really picking that specific channel. So, what is your passion? Which of these digital marketing channels are you passionate about? Which one do you think is going to be the most relevant and have the biggest impact in five years from now?
And then pick it and then just go all in on it. The second kind of step I’d say is just reading a ton. Be a big reader, read those books. I mean what’s neat these days is there’s audible. You can literally listen to books while you’re working out or while you’re in the shower or driving to work, and there are great podcasts like your podcasts and the Power Digital Flip the Switch Podcast, had to plug that one in there. But listening to those things, you just get such good context and you gain experience much quicker from hearing it from other people.
So as a young person, you can get six years of experience in one year if you get that mentor and you really make a point to educate yourself and read and listen. And then the third and kind of what my motto always was and I think our team really embodies it but is just that hustle. I think a lot of people lack it these days but if you outwork the competition and if you work harder and are relentless in your pursuit of what you want, you’ll win, you will. You’ll get to where you want if you say, “I will not be stopped, I’m going to be relentless, I’m going to put in whatever it takes.”
So if you really want it bad enough and you put that hustle in, you’re going to be successful and you’re going to get to where you want to go.
Taylor: Yeah absolutely. I have a couple of thoughts on that but you did mention your guys’ podcast Flip the Switch which you recently launched. Maybe you can quickly tell us what that podcast is about, how can people find that.
Grayson: Yeah Flip the Switch you can find it on iTunes also if you come to the Power Digital website you’ll see it up in the header under company I believe. We have a group of guys that have done podcasts in the past on our team. So it’s Pat Kreidler on our paid media team. Austin Mahaffey on our SEO team, Joe Hollerup who’s on our content team and then John Saunders who heads up our Web Dev and Design team. So they bring really good diversity and background from a marketing perspective. John and Joe had a podcast with some other guys in college that was super successful and it was kind of a music podcast and then Austin had some good experience at a really fun funny fantasy football podcast and so we wanted to keep pushing our thought leadership.
We talked about it and it was just a really great thing for the guys to own, and it’s a great opportunity for them to have ownership of it and get better and I’ve already seen them get better in terms of what the research that they’re doing and whatnot and then it’s also a great thing for Power Digital, so it’s a win-win. And they talk a lot about what’s trending in technology, so what Amazon is doing, what Google is doing and what’s kind of trending around tech. They talk a lot about cryptocurrency. We have some good experts in that group that really know Bitcoin and crypto and so they’ve talked a lot about that. And then every kind of, a couple episodes they’re bringing on guests. Entrepreneurs in San Diego and just different people to get different perspective on things like Amazon, AIRBNB, where tax going overall and kind of what’s trending in the news.
Taylor: Yeah, I love it. It kind of goes on what you said about finding a mentor for these young kids. What’s amazing to me is the amount of free content that’s out there. I mean there are over 250,000 podcasts on iTunes and they’re all free. And you can listen to CEOs of huge organizations and world leaders. I mean whatever floats your boat but I mean you have access to these people for free which wasn’t the case 10, 20 years ago. You had to subscribe to a magazine or subscribe to a newspaper. I just accidentally subscribed to though I don’t read The Wall Street Journal or subscribe to it but I accidentally got hooked into it and I caught it on my credit card and it’s 30, I think it’s like $39 per month and I’m thinking like there’s so much free amazing content out there, why would I pay $40 a month for this newspaper. But I love what you guys are doing and yeah, I think you could find a mentor through a podcast.
Grayson: Yeah totally and it’s funny because I think everything you said is super on point but there’s also just a simple … we have a team member here, one of our best guys. He really wanted to work on his management and so I literally called an associate of mine through the San Diego entrepreneur organization and just asked him to mentor this team member. They actually met this morning, I think it was their third meeting this morning and they meet up once a week or every other week and they have coffee and chat and the growth that I’ve seen from this team member has been tremendous. The gentleman mentoring him is getting a ton out of it as well and it’s free. It’s a great experience for both of them.
So I think it’s just that thoughtfulness for businesses and again, especially with the millennial group. If you’re just thoughtful and you do those types of things or the book club or the mentorship programs, it will definitely drive retention for you and it pays off big time for your business.
Taylor: Yeah absolutely, couldn’t agree more. All right a couple of more questions and I’ll get you out of here. As you know this is a San Diego focused podcast. So one of my last questions is what’s your favorite up and coming company here in San Diego that nobody knows about.
Grayson: There are so many great companies in San Diego. Like I said, one of the things I feel really blessed in my entrepreneurial journey is I joined EO the Entrepreneur Organization and the San Diego Chapter is awesome and there’s a company in the San Diego Chapter called Positive Adventures and the CEO is a guy named Ryan Shortill who I respect a ton and the reason why I think so highly of them is that they’re not the business super focused on making the most money, they’re really focused on making the most impact.
So they do a lot of facilitation for brands and for schools and they work hard to get kids outdoors and do things like building bikes to give back to the community, and they’re just super creative in what they do and I think that they stand for a lot of really critical things that companies just they talk about a lot or they’ll put a social mission on their brand to try to increase conversion value but these guys are truly living it, and it’s what they do. So I’ve used them at Power Digital to facilitate a few events for us. It’s just felt amazing. We’ve been able to really make an impact, our team has loved it way more than the events where we go to the bar and cocktail hour and whatnot. And so I think really highly of them.
Then the second one that’s probably a little bit more mainstream would be Society Brewery and so you probably know Doug, he’s one of the co-founders over there and went to Arizona. I think those guys embody a lot of what Positive Adventures embodies where they’re all about the beer. They put that before everything else, way before the money or anything else. It’s been just fun to get to witness them grow and just create amazing products and really build a reputation, a name for themselves in a really competitive industry.
Taylor: Yeah, they’ve grown rapidly and they’re dishing out some pretty amazing craft beer. Two really cool companies, we’ll definitely link to them in the show notes. My last question, you know the name of this podcast is Stay Wealthy San Diego, but obviously, wealth means different things to different people. To some, it’s about money but for most, it’s something much more than that. So my last question to you is, what does living a wealthy life mean to you?
Grayson: I kind of bucket it into three groups and obviously the first one is family and health. I’ve had that health scare with family a few times and as soon as it happens to me or even one of our team members, I’ll see it happen to them, everything else gets put into perspective. I literally don’t care about anything other than family and health when that happens. So I think really balancing that well and focusing on individual health but also the health of your relationships with your family would be number one for me. I try to make a real effort of speaking with my parents and seeing them in my extended family every week, and just making sure that they know what I’m up to and vice versa.
And then two I’d say is really having that passion and so I know I have been in that position. I’m sure many of you all have but where you’re doing something that you just are not passionate about. There’s nothing worse than that and so I think making sure that in your career specifically that you are doing something that you’re passionate about and maybe it’s not like the product that you’re creating that you’re passionate about but it’s the people that you’re working with and it’s the mission that you’re after and what you’re trying to accomplish. So I found when I have that burning passion that a lot of these other things outside of my family and health fall into place for me.
Then lastly on the wealth side, is I do care a lot about financial freedom. That’s something that I’m striving towards and I think if I can accomplish that financial freedom and have that financial wealth, that I can focus on family and health and I can focus on passion. I can just really leave that abundant wealthy life. So that’s something that I’m really striving for and hoping to get at a young age so that I can use those prime years to really make a difference and go after that passion.
Taylor: I love it, man. I think that has to be the best answer that I’ve heard yet. So you’ve set the bar high for our future guests, so I really appreciate it. Absolutely, I appreciate that. Where could people find you?
Grayson: Power Digital Marketing is our website and then also on LinkedIn obviously Grayson Lafrenz and on Twitter, I think it’s Grayson M. Lafrenz and yeah, would love to link up and talk business and just connect with more entrepreneurs in San Diego.
Taylor: Very cool, well thank you for coming on, thanks for supporting this podcast project and sharing your story with the San Diego community. I really appreciate it, looking forward to seeing you around.
Grayson: Yeah, thanks a lot, Taylor, I appreciate you having me.
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