Blog. For Companies Who Want to Grow

Professional Services Marketing: How We Increased Our Profit Margins

[fa icon="calendar"] October 17, 2016 - Fred Thompson

This is a little different -- because we’re giving something away here. That “something” is a recent key to our success as a professional services marketing agency. The thought occurred to me, if we’re in business to solve for our customers, why not give away some of our secret sauce?

We often like to ask company owners and marketers about their marketing challenges. The two pain points we hear all the time are, “I need to increase margins,” and “I’m up to capacity. I’d like to take on more work but I don't have the personnel.”

Both of these issues are connected. In their simplest form, they can be solved by:

  1. Cutting costs and raising prices to solve for margins.
  2. Fixing HR issues by better recruiting and higher compensation packages.

You know if your margins increase, you can afford to hire better people – or more of them, fixing capacity issues. Why not be like Nike, and “just do it?” Here's our story:


New Destiny Media’s Two Pain Points

When Fred and I formed New Destiny Media, we both had exactly the same pain points.

Paint point #1: Selling based on price alone.

Issue: We were being hired to build websites based on price. We’d find out what the customer wanted and what they wanted to spend (which was never that much – can’t blame them, right?). Once we sold a few websites – we'd be at capacity. Then we’d take a break from selling and happily get going on building these websites. Because they were low cost products, we’d end up working at low margins thinking this was what the industry dictated -- (Hint: This was bad thinking).

Problem: Because we were selling based in price and not value, we were stuck; there was no way out. Note that no business person buys on price alone. You may think you do, but you don’t. What if you were told that if you were to invest $10,000 today, in one month you’d receive a guaranteed return of $20,000? You’d drop everything and invest in a hurry. Why? Although $10K is a chunk of money, you saw the value in the investment. What if you knew that a certain spend would yield more or better customers at a positive ROI?

Pain point #2: Not solving for our customers.

Issue: Most of our customers could have cared less about having a website or doing any marketing at all, for that matter. What they wanted was what we wanted: More sales – but not just more sales, more profitable ones. Like us, if you're a company doing professional services marketing, you need to have something to market.

Problem: We were solely focused on delivering affordable, mobile-friendly websites, without regard to what those websites might accomplish for our customers. Oh, don’t get me wrong, it’s not that we didn’t have the compassion or desire to see our customers flourish, we lacked both the tools to really help them or the guts to simply be honest and help them bring to light their real marketing goals. But why even ask about goals when you can’t provide solutions?

Basic Marketing Metrics 101

Before I delve into our solution further, let’s look at some basic marketing metrics. You probably are familiar with some of these, but let’s take a quick look anyway. And if you want to really dive in deeper, we're giving away a free e-book on marketing metrics.

Cost of Customer Acquisition

CAC is your total Smarketing (sales and marketing dollars) divided by the number of customers you actually sold. You need to factor in every cost: salespersons’ salaries, marketing salaries, marketing programs, all advertising, AdWords, website expenses -- and divide by the number of customers sold. So let’s say you spent $10,000 and you got 50 customers, your acquisition cost per customer was $200.00. It’s important to know how much it costs you to acquire a customer.

Sales Velocity

SV simply is how many customers you acquired in any given month, year, etc. Most everyone talks about this metric. Its antitheis is Retention Rate. You want to be gaining more customers then you’re losing.

Lifetime Value

LTV or Lifetime Value of a customer is your revenue per customer over time. Let’s say your customer buys $1,000 per year, that’s $10,000 over 10 years. This metric is important because your LTV should exceed your cost of customer acquisition.

Thus, if the total revenue you will ever make on a customer does not exceed the amount of money it took you to get that customer, something is really wrong.

And if revenue per customer is not profitable enough, you’ll fail at forward growth; you’ll not grow enough revenue to hire more people to fix your capacity issues. So you can see profit is not just about putting food on the table, it's also about the forward motion of your business.

Success typically only happens when someone dares to break out of the normal and take a risk.

What New Destiny Did

Knowing these pain points, we put our heads together and said, “We simply cannot just raise prices to get better margins, because we’ll lose customers. And we can't cut costs." (It takes a finite length of time to custom-build a website. There’s just no way around it.)

Customers would ask us, “So, if I’m going to spend thousands of dollars on a new website, how much will that grow my business?”

We had no good answers. None at all.

Revelation #1: Since we couldn’t just raise prices, we thought, “How about building better products?” What a great idea! So we reinvented ourselves, brought in a little outside help, and developed a much better website platform along with many more features and options.

Did that help? Nope.

Revelation #2: To our shock, we discovered the only customers who really cared about a website at all were the tech-savvy ones. Guess what? They didn’t need us anyway because they’d just build a website themselves.

Revelation #3:

Most of our customers really weren’t too excited about web technology, so we had to find out what did excite them: growing their businesses did.

Right in the middle of our agonizing, almost like magic, I got a phone call from a Hubspot consultant. Hubspot wanted to invite us to become a partner agency and do inbound marketing. We already thought we were doing content marketing and some inbound, but when we found out what they were doing, we were deeply impressed. We drove to Boston, met with them, and signed on.

We had made a massive shift in our business. Yes, it cost us money and many months of hard training. But we now had the tools and the resources to help businesses with their marketing goals – really to solve their growth issues through the amazing power of the Internet. So now, when someone asks, “How much will your product grow my business?” We’ll naturally respond by asking, “How much would you like to grow?” You know, it's like... your choice.

Our Business Model

We really don’t “sell” anymore. We solve.

We’re looking for those customers who are looking for us -- those who need our help. And if they’re not looking for us, chances are, we’re not looking for them either. Sounds like a happy marriage, doesn't it?

And this brings up a point: If you only sell to those who are looking for your products or services, don’t you think you’ll start off with happier customers? To keep our customers happy, we used to send cookies in the mail (we actually used to do that). Now, we hope to keep happy customers through solving, through better products, and through the kind of customer service everyone expects.

We’re no longer trying to evangelize everyone.

We're no longer reaching out to all businesses. Do we dislike them or something? Nope, not at all. It’s just that if we think their CAC is too high, we'll back off. It’s that simple.

Who are we looking for? Happy customers. Our main persona is business owner of a professional services company who has a website, and who wants to take his or her content marketing to new heights by moving into inbound marketing.

We're even so nutso about having happy customers, we even have metric in our Hubspot SaaS app for it. It’s called the Customer Happiness Index (CHI). We measure customer happiness on a scale of 1-100. I'm totally serious.


I suppose instead of taking more than 1,500 plus words to say it, I could have said, “If you want to increase your profit margins and begin to fix your capacity issues, just find a way to get happy customers.”

And don’t stop there. Once you find your secret sauce, keep trying to find ways to improve on it. We spend an enormous amount of time keeping up with trends, reading the blogs of thought leaders we subscribe to, and just plain old brainstorming. Not to mention listening carefully to our customers. This is a big learning process. We surely don’t want to convey, “we’ve arrived.” But I can now say with confidence, we’re headed in a very good direction.

What did you learn from this article? Were you inspired, turned off? Have questions? If so, ASK ME ANYTHING in the discussion form below. Now go grow your business!

Key take-a-ways from this blog post:

  • Profit margins rule. Once you solve for margins, you can deal with capacity issues.
  • You do need to sell top quality products and services but they must solve the need issues of your customers too.
  • Once you identify the kind of customers you're looking for, chances are, they're looking for you too.
  • You don't need to give away cookies to get happy customers. Just have the quality of products or services they want, and the stellar service levels to match.

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Topics: Inbound Marketing

Fred Thompson

Written by Fred Thompson

Fred Thompson is the owner of New Destiny Media; Fred loves working side-by-side with business owners to create successful marketing campaigns that grown their business. When Fred is not working, he is spending time with his three very active children at home. He is an avid problem solver (MacGyver), Loves anything Martial Arts related and Social Media gets him excited about work.