I sat down with Garrett Mehrguth, CEO and founder of Directive – a leading search engine marketing firm for SaaS brands.
Garrett has an interesting story. He made his first money in SEO selling one off services on Fiverr. He quickly grew his skill set, built an A team and scaled up to reach $1.5m in a single month.
He stopped by to share his growth story.
Let’s get into it!
- 3:48 How did you attract larger clients?
- 5:11 How did you increase your agency pricing?
- 7:50 How do you price your services?
- 10:02 How do you structure your services?
- 12:50 How is your team structured internally?
- 14:25 How often do you visit clients in person?
- 15:25 SEO vs SEM?
- 17:49 Have you build tools in house?
- 22:50 How do you go through the consultant hiring and training process?
- 25:57 How has it been running your agency completely remote?
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How did you attract larger clients?
We started by advertising, a lot – over $80k each month on Facebook to build a demand engine.
While we attracted a lot of leads, they were mainly small businesses.
Working with small businesses is the cocaine of the agency world. There’s nothing more addictive and bad for your agency than small business because you get addicted to it.
The same happened with us and we couldn’t keep up with the demand and our gross profit wasn’t strong enough to hire consultants that were good enough.
In the end, I tripled my rates and fired a lot of clients.
Jump to 3:48 in the video to hear more
How did you increase your agency pricing?
Few agencies know what their gross profit is and that is shocking for me because that is the most important aspect of your agency.
What they do is they end up being a jack-of-all-trades for this kind of 1-2 person marketing team and this is like 99.9% of the agencies. Such agencies can’t create economies of scale or charge premium pricing for their services.
So we only offered SEO and PPC for 6 years at a premium price because that was what we were good at. That increased our gross profit and we could hire good talent from that money and increase our capacity.
Jump to 5:11 in the video to hear more
How do you price your services?
Minimum plus spend on PPC and then fixed retainer on SEO. Our hourly rates are based on capacity which in turn is based on hours.
Jump to 7:50 in the video to hear more
How do you structure your services?
Content writing, in my opinion, is the world’s worst deliverable so I don’t deliver written content because it’s a loss leader. A good writer costs around $1000 apiece and few people are willing to pay that kind of money for it.
So what happens is your agency actually loses money writing content for people and then you start cutting corners to make up for the loss and then you lose relationships.
So we stopped creating content about two years ago and we doubled down on briefs and that’s what we focus on.
Jump to 10:02 in the video to hear more
How is your team structured internally?
We have consultants who consult, communicate, and do the work – we pay them a premium. Here nobody works on more than five accounts. I’ve only 57 accounts as an agency and 37 full-time employees.
Jump to 12:50 in the video to hear more
How often do you visit clients in person?
We don’t make it an option. I have all my account stars fly out to all their accounts six times a year.
I’m really close to my vision so like I know what I want to build and I just stick right to that. Because at the end of the day if you can charge someone 75 grand a month for SEO and deliver on it nobody can beat you and then you can have so much cash on hand to do acquisitions that you can win the top-line game.
Jump to 14:25 in the video to hear more
Do you offer SEO and SEM as separate services or blended?
You can’t force people to do both once you get to the midmarket enterprise.
So with small business what you find is you get a lot of people who do a lot of new services and then the larger you go with organizations and the bigger their in-house marketing teams are and the more talented they are as an organization they usually want that one individual thing.
And then you have to try to cross-sell as you earn trust and as you deliver. When the renewal comes up, you have to see if you can win it and sometimes you do sometimes you don’t.
But the reality is the more weeks charged over the years and the bigger we’ve tried to grow our retainers the less full service we’re doing.
I have a very blended approach. My philosophy to search is entirely different than anyone I know.
I believe in the concept of discoverability. It’s like SEO is about your brand, it’s not about your website.
So if you get really good at financial modeling and unhinge yourself from any of these ideas that you have to rank your website and start to say that you can rank your brand you start to get really really affected with capital allocation.
That’s because you can start to identify anything within a search engine as an opportunity and then you create essential rules of engagement based on who owns what types of opportunities and that allows you to make PPC SEO and SEO PPC.
And as you get that understanding and you start to say cool all I have to do is position your logo to be discovered when there’s purchase intent you can drive insane amounts of results in a short amount of time, especially in SAS.
So that’s kind of what our whole business model is and that’s why people hire us.
Jump to 15:25 in the video to hear more
Have you built proprietary tech in house?
We did build a couple of things. We built the Pulse. That’s the largest SAAS database for search marketing in the world.
I’ve got over 25,000 companies in there across 800 verticals. It’s fully enriched. I built my own kind of algorithm called a ‘Directive Score’.
It can tell you, like in the church donation software space who’s spending relatively because it’s all based on data from SpyFu, SEMrush, and Ahrefs data.
Who ranks for most viewers, who has the strongest authority and all these things come out to a blended score.
So you can actually look at what their total search marketing investment looks like and how that’s performing.
And then I built a tool behind the scenes that I didn’t launch. But it essentially can measure your discoverability.
It’s like a SERP tracker based on your brand. It can tell you how often your brand shows up for any keyword research. That tool is still in beta and it’s not client-facing but it kind of formulates our consulting practice.
Jump to 17:49 in the video to hear more
Walk me through your hiring + training process?
To onboard we built an institute to teach SEO or PPC the way we do it.
We have a culture that’s really autonomous and it’s fully remote. We have offices around the world that you can work from if you want but most people are like blended so it’ll be at the office a couple of days a week and then they are remote.
We give smart people enough time to actually be smart. Then we run everything on quarterly business reviews. We nurture a culture of delivering results and so you either fit our culture or you don’t.
We do a lot of assessments in the hiring process and then we do a lot of quantitative assessments, qualitative assessments.
Jump to 22:50 in the video to hear more
Has it been more difficult running your agency completely remote?
I call myself a matchmaker. We even let clients choose who their consultants are. We have frameworks like Engram analysis and Myers-Briggs. We have all their background, their clients, their industry experience, their portfolio and then we introduce 2 to 3 options and ask our clients who they want to work with.
Jump to 25:57 in the video to hear more