Scaling Up

00:00You're listening to the Growth Manifesto podcast, brought to you by Web Profits, where we share inspiring stories of real people who've succeeded in the marketing and business world. In this episode, we talk about how to scale a business. We cover everything from challenges with scaling, understanding when it's the right time to scale, and whether you can grow too fast. So let's get into it. Welcome to the Growth Manifesto podcast. You probably already heard that in the intro, but today we're going to try something different.

00:34So Tam, who's our head of growth, is going to interview me. So my name is Alex, co-founder and director of strategy and innovation at Web Profits. And we're going to talk about scaling. Yeah. Is that right, Tam? Yeah, it's something I really wanted to talk about with you because it's probably scale or scaling is probably the word you use the most after value and growth. So I thought you said let's come up with a topic that we're passionate about and nothing more than your third most used word and your vocabulary.

01:07They actually made a joke at the last conference saying that if I had had another child or something, a child's name would be value. I think that's how much I said it at the last conference. It was a very cool one. That was at the Christmas party actually. Oh, yeah. Yeah, the stand-up routine. But scaling. Scaling. Scaling. I think it's good to always start with a definition. So why don't we go with your definition? What does scaling mean to you? Scaling.

01:38I do use it quite a lot, actually. I would say that scaling is the ability to grow while sustaining profit and while sustaining the quality of your service or product, right? Right. It's a lot easier to scale software because the software is a software and you can sell an unlimited amount of that, right? And you don't need to hire people at the same speed as the sales happen.

02:08Okay. Yeah? It's harder to scale a service type of industry, right? Because to continually... Like what? Can you give me an example? Like ourselves. Okay, right. Yeah, so for example, like ourselves, So we're a consultancy. We deliver a certain service for companies. That service costs a certain amount of money. For us to scale, we need to hire people that are going to do the same quality

02:41and the same level of service and performance kind of as the smaller team. And so as you scale that up, scale, you need to maintain that. Maintain the quality. Maintain the quality and maintain the margins and maintain the clients, obviously. Yep. And maintain kind of the various parts that kind of are required to scale. I actually had a look online before and there's no real clear definition of scaling for business.

03:13Right. In fact, scaling itself means to remove scales from a fish. That was the first definition I found. But scaling for business, which was the next search term I found, was to expand the company profitably. Right. Yeah. I like to add kind of like an extra point on that is that there's an element of speed. Okay. So what, I guess, what are the different components of scaling a business? Like what do you need to scale? You talk about growth. Yep. And growth comes in many different forms and different ways.

03:44What are the different ways to scale businesses? What are the different things that you need to scale? Yeah, I think there's a difference between scaling a campaign and scaling a business. A marketing campaign. Yes, scaling a marketing campaign and scaling a business. You know, I think a lot of times when you talk about scaling in marketing or scaling, you're talking about scaling campaigns, you know? So are you able to find the campaign that can grow kind of at a level that outperforms

04:16everything else profitably? Right. Right. For a business, everything has to come together. It's the hardest thing. Okay. You've got the people, you've got the service or the product, you've got the cash flow, and you've got the business model. Yep. Those are the four parts I would say. Now, they all have to work together harmoniously or however or whatever is the word there to continue to maintain the same level of quality and the same profitability

04:46and the same kind of speed in terms of expansion as you grow. Okay. And that's hard. What specifically is the challenge with that? Because you can imagine, you know, businesses are always scaling. There's always kind of different challenges. You're going to have things happen at different speeds as well, I'd assume, right? You're not always going to be able to scale people as a thing. But in your experience, what have been the things that have challenged businesses the most when trying to scale? I think it's different for every business. I think every business is going to have their own different challenges.

05:17And I think it depends on what you're selling. Okay. I'll just use ourselves as the example because I'm so close to that. Probably the edge of the future to talk about, yeah. It's the easiest one and I know what I can and cannot say. Whereas I wouldn't want to talk about other specific examples or other specific companies, although I can talk about other examples of business models. Let's start with ourselves first. I think if you look at pretty much any agency, right? So every agency will start with a couple of, say, two to four people.

05:52Potentially a couple of co-founders and a couple of staff, right? That's how everyone starts, right? Normally, people who start an agency and succeed are pretty damn good at what they do. Sure. And so you can often find smaller agencies of two to five people that are pretty damn awesome because these are experts who thought, hey, look, I'm going to go out on my own and try this thing. Right. The challenge basically becomes, so as you become successful,

06:29so that if you are actually pretty good at this thing, yeah, and if you do perform well, you're going to get a lot more business than what you can support. Sure. So then you need to hire someone. And so you go out, you find this person, and then you need to train that person up. And so now you have extra capacity. but now you have cost because now that person, that will cost a certain amount every single month. So now you need sales to support that person

07:00and so then you go and you make some sales or whatever to the point where that specific agency can hire a salesperson. That salesperson then has a salary and they need to be fed as well and so they're going to make sales to the point that it hits capacity. right and then you then hire a person to help with that capacity but then there's now a couple of people now in the production side of things and so now the pressure to maintain a certain amount of sales is even higher so then you find like another salesperson and that's kind of

07:32the the um it's like a cycle isn't it the cycle right the cycle of scaling the cycle of growth right scaling versus scaling compared to growth scaling i think is more profitable than growth You can go for growth without being profitable, but I think scaling requires profit as a component of it personally. That's my opinion of it. Well, I guess if you've just got growth and it's not scaling,

08:03it's not profitable, eventually it's going to run out. You're just not going to be able to pay the bills. So scalability takes into account the fact that this is sustainable. It's about sustainable growth. Exactly. Exactly. And so part of the challenge around that agency that I just spoke about, the two-person company that wants to grow to 200 people, right? So as you expand, you hire the production person, then you hire the salesperson, and then there's another production and sales and production and sales and production and sales.

08:38And then there's accounting and HR and support and everything else around it. And that is extremely challenging from a cash flow perspective and from a business model perspective. The reason being is that basically as the company becomes larger, there's a much higher, there's a lot more pressure on sustaining clients. And so then there's a lot more pressure in actually holding on to clients

09:12and actually converting them. The quality of the service. The quality of the service and the longevity of the service and the stickiness of the service, right? Then you also need the people to do the work and you need the processes in place to support that. And then people aren't always going to stay with you. And so then you've got this, it's like you need to create a machine that can grow. Yeah. And that's the hardest part of scaling, right? And then there's going to be certain stages. stage one is between say zero to 10 people stage two is between say like 10 to 30 people stage

09:50three is between say 30 to 70 people and so on and so forth right the business model needs to change at certain steps in that cycle because the thing which you were doing at a couple of people in size is very different to 100 people in size okay if that makes sense so i mean i think it does but can you go into more detail? What needs to change and why? Why don't those things work anymore? Something that don't work anymore, it's now your cost base is so much higher. Right. Right? So the bigger the company in terms of staff,

10:21the bigger the office, the more kind of like laptops that have to be purchased, the more support around them, the cost of that business basically increases significantly. Yeah. Right? And so now all of a sudden you need to increase your prices. Yeah. You're not as lean. You're not as lean, but also you need to charge more money because of the increased size of your organization and just kind of the cost of basically, like the cost of the operation. Yeah?

10:54So then you have to have like a better service that costs more. But now you're in a competitive market where everybody's charging less because everyone else is probably smaller than you. Sure. So now all of a sudden, now you're changing kind of the offer, the price. but now also like you're changing the audience and who you're going after, right? Because now that you want the bigger companies that can afford to pay more, that's harder to attract and they want a company of a certain size because of the stability of that company, right? Because if you're a small agency,

11:27you're not very stable but if you have like 100 people, that's a lot more stable, right? But now you're competing against the bigger agencies, right? And so it's that continuous cycle of trying to reinvent the service and the product to be competitive, to retain clients that are prepared to pay you more. At the same time, you need to hire staff that can actually perform the service and you need to have that as a model that can continue to grow. Now what happens is that you grow

11:58kind of like Frankenstein in the beginning, right? Like you make some sales, you fix something and then you fix something else and you put something else on top of that. And then all of a sudden, there's this kind of like Frankenstein style structure in terms of the business. And so there'll come a point where that's going to limit your success, right? You can't get past that size of organization having that structure. And so now you need to change it completely. Would you say at that point it's inefficient? It's inefficient.

12:29Yeah, there is a lot of waste, right? But what you'll find is that the revenue is stuck at that point. You are attracting clients at the same speed as well as you're losing them. And that takes a lot of work. So now you have a retention problem. And the retention problem can't be solved in that structure. So now you have to restructure the organization. This is like a people business now, right? Sure. To restructure the organization.

13:01to be able to support that size efficiently. And to look at the processes and the way that everything's happening and kind of almost start again at that size. And that will happen again. And that will happen again and again. I think, you know, so we just did a pretty big restructure last October. That was our fourth huge restructure in the last 15 years or so, right? And everything changed. And it's like very difficult. And it took us about 12 months to plan it, to figure it all out, and then to execute on it.

13:38I would say maybe there was nine months of planning, and then we would execute and support all the execution. That will happen. That's what's so hard about scaling a people business. And that's why sometimes I get super jealous of business models. Because I've got some friends that have SaaS companies. And now these are successful SaaS companies. So they've gotten past that first part. And now they can just continue to make more sales without hiring more people. Yeah. Right?

14:08Like it's really, and so I get a lot of envy. But they've got their own challenges, right? It's a different, in the beginning, exactly. Yeah. Yeah, sorry. So I guess we're talking a lot about businesses in the relatively early stages, you know, first kind of 10 to 15 years. There are companies out there have been going a lot longer, a lot more established organizations. 100 years old or whatever, is scaling still a challenge for them? Or have they fully scaled and now they have completely different issues? Or should they be thinking about scaling in different ways or something else?

14:40Or what's your take on scaling for bigger organizations? Yeah, I think scaling for bigger organizations is a different challenge. I think for larger organizations, it's harder to incrementally scale, I think. I think what's important at that point is to find the areas where you can expand profitably, continually, right? Now, a lot of the times, it depends on the organization, of course, right?

15:14But you might acquire. So you're scaling up the revenue now and you're scaling up the profitability, right? And yes, you could do it organically with sales and people and all that type of stuff or you could just acquire, right? You might be looking at kind of the business units that are going to scale, right? So it might not be the whole organization that scales but there might be a couple of the business units and they're scaling. You'd probably be looking at campaigns specifically but I guess if you're like a larger organization,

15:46You're not going to be pumping out lots of different – I mean, you should, but you're probably not going to be doing that because of the size of the organization and kind of how that actually operates, right? But I would say that the companies – the larger companies that are going to be getting the best success are going to have kind of components inside of their organization, the business units that are scaling, that are trying to push the envelope. And have they got similar, do you see them having similar problems as a smaller business that's just starting out?

16:22No, I think the hardest place to scale up is the beginning, is the start. Okay. Because you don't have anything at that point. Right. Before I spoke about the fact that sometimes I have business model envy. I'll hear of a business and be like, that's so smart, man. And I wish that was kind of the company I had because this is so hard, right? But they're all hard. Are we talking about software? So we're not talking about those guys who are just like,

16:52you know, build a machine that continually makes money and you can go live on the beach and do nothing for whatever and just actually make money. That's software. That's also education. You know, that's like if, like, yeah. I'm talking about that too. Yeah. I think software or information products or education or courses or those kinds of things are super hard kind of in the first stage. It's the easiest thing to start, I think, is like a service of some sort

17:23because all you're trying to do is to sell your time. That's pretty easy to do if you're pretty good at what you do. It's an easy concept. If you're good at what, yeah. Pay me and I will do this for you. And there's already like a demand out there, right? Software products, oftentimes there's not. You need to create that demand. like to find the niche, to find the thing that people want and to find the price point and the pivot points and all these components of it to get to the point that it's starting to grow automatically.

17:54You know what I mean? And that's very difficult. That's why there's so many apps in the app store or so many software tools that just fail, you know? But if you can get past that point with software, then all of a sudden it becomes a very exciting space, right? So how do you know when you've got past that point? What's the point at which you think we have successfully scaled? You have successfully scaled for SaaS specifically or for services? I guess, yeah, maybe let's think about SaaS specifically,

18:27but even generally, at which point do you know? How do you know when you've successfully scaled and you go, okay, we've done it now? Scaled. Well, I think scaling is a process that doesn't stop, but like kind of having experienced it, like to say, all right, like I'm on the right path now. Okay. To know if you're on the right path is the revenue is growing and it's growing at a level that requires you

18:57to continue to invest in expansion. Yeah. Like you can't help, like you almost have to spend money to maintain the growth. Budget. Momentum. It's momentum, right? And the key to scaling is to spend it profitably, which is difficult. Yeah. Very, very difficult. If you spend it unprofitably, you're going to stop scaling in a minute. Go backwards. So, because it's kind of almost like a natural, kind of, it's like a natural balance.

19:29like if you're not making profit and you don't have heaps of funding behind you you're going to get to a point where you're not going to be able to pay all the bills yeah right so that's where the profitability component of it is right yep so let's talk about companies that have scaled well or I guess they're still scaling are there any businesses out there that you look and you go they've done an awesome job in scaling I'm not going to look at the SaaS companies because I mean any SaaS company that you've heard of has scaled sure by that point right okay right And there's a lot of conversations that we can have about that.

20:01What I would prefer to focus on is the people businesses, right? Because it's a lot less spoken about and it's a lot more challenging in many ways, right? I think, I mean, obviously, the ones that come to mind are the big consultancies. Okay, yeah. Yeah, like BC, Geely, Accenture, and Bain, consultancies like that, right? They've scaled. They started off in the 70s or the 60s or 70s, right?

20:32And over time, they just grew and they grew and they grew and they grew. And now they make billions of dollars a year, right? And they're people businesses. I'm sure they invest and they have all these other kind of business units that are kind of outside of the consulting arm, but they've scaled to a point. It's the same for advertising agencies, right? The big ones, yeah? But now the big ones, they just acquire everybody else now, right? And so if you have a look at all of, like they talk about the independent agencies

21:02and what's the other one? Like it's independent. The groups, I guess, yeah. And the groups. The four groups, they own pretty much every company out there, right? So to find an independent consultancy or to find an independent agency that's over a certain size is very difficult because at a certain size, they just get acquired because that's how this other company can scale. You know what I mean? And so they're the types of organizations I'm closest to, if that makes sense. I think another example is the franchise space.

21:34Like there's a way to scale. We've got a client that's been extremely successful in the franchising of their core service, right? And that's how they scaled, the people side of things. And they came to us pretty early on, right? Like I heard a story that the guy had to sell his car or something. Right, to pay for our marketing in that first year. Now he's got like 17 cars or something like that. So it's fine. And he's a philanthropist now. It's so good. So you've seen that journey progress.

22:06Maybe that's a perfect example, I guess, of sharing a different example of a company with the scaling issues they had early on compared to the scaling issues they have now. what have you seen of the differences I guess between them when he's selling his car just to pay for marketing and now what are the issues that they have with scaling? Is it a lot of the same ones? Is it completely different ones? What's interesting now is that he's gotten to a point where he doesn't want to sell any more franchises I think. That was the past conversation that we had if I have it correct. So he

22:37sold enough. What I think happens is that for him specifically is that in the beginning he wanted to sell franchises right and then that was a thing and then the marketing campaigns that support that and then that kind of creating the scaling process to sell to franchisees right that was the part but that's not how like it's done now right and like now he's giving back and you know he's having the focus is now kind of back on ensuring that each of the franchisees are

23:09successful in their own right. And so now he's going back in and making sure that there's success at the current size of the organization. It's difficult to scale a people business because there's so many parts that all have to work at the same time to be successful. And you may not be that big yet where you can afford to have a 10-person team that kind of all support that process, right?

23:40And so oftentimes it falls back onto the CEO or the CMO, the CEO, the CMO, the CMO or the founder, right? And they have to be the driver. But they only have so much time available, right? And so they will focus on the thing, which is the biggest problem at that time. And then once that's fixed, they go to that thing, right? But what you need is to focus on all of them at the same time. And that's what's challenging about it. so let me ask you this can you scale too quickly you can grow too quickly um but if you're scaling

24:11it means you're profitably expanding you're okay you're okay so i don't think you can scale too quickly um it's just really difficult to scale quickly what as a people business so what are some of the biggest challenges to scaling then a people business because like the thing is it's different between product completely different you think i think there's similarities but i think it's easier to increase sales for a company from 100 000 per month to 6 million a month in selling

24:43a product so you just sell a bunch more product but that's just there's delivery that's just sales that's not necessarily scaling a business that's just you can increase sales right talking about growth and growth and scalability right but so but as soon as you sell something you have to deliver If it's a service, if it's a people business, that's time. That's hours. So whereas if you have a product that costs $100 and you sell for $500 and you can sell 1,000 of those or 100,000 of those, you're sweet.

25:14If you have a good service where it's, I say, $5,000 a month or $10,000 a month, you're going to need someone who's pretty awesome to deliver that service. you can't just find a thousand of them like instantly and kind of up and actually hire them attract them train them kind of integrate them into your culture upskill them and so on and so forth and then ensure that there's processes so that it can sustain and retain the level of quality it's a challenge i think you touched on an interesting word there culture um i've i've

25:47been involved in a couple of business in the past where as the company's grown and and i'm there i'm sure there are thousands out there as the company's grown the people who were there in the early days say this is different now this place is different it used to be like this you know it's changed and they used to really like the environment and now they don't particularly like the environment or maybe it can go the other way yeah what specifically some of the the challenges involved with scaling while maintaining or improving the culture of the business without going too much down the culture path which i love i can talk about that as a whole

26:20separate episode right um but i think it's an important part of definitely business right because if you don't maintain the culture that attracted the people you brought in in the first place you're going to lose those good people and you're going to put off other people yeah so i think it's an important kind of part to yeah sure it's interesting i don't know where i heard it because it was a while ago now, but they said the people that help you get to your first, to 30 staff in size,

26:51they're not going to be the same people that help you get to a hundred people in size. And they're not going to be the same people that get you to 500 and to a thousand people in size, right? Cause it's a different type of person. So what happens is in the early stages, you have people that are more entrepreneurial, that are kind of, that are more, they'll get their hands kind of dirty everywhere, right? But they don't have the expertise of how do you work in a bigger organization with all of the, not the bureaucracy, but the parts, the politics, all the, like there's a thing about it, right? It's kind of how you operate, like in a thousand

27:26person organization, isn't how you operate in a five person organization, right? So the people are different. The culture is set at the very start. And the culture is set at the very start. And the culture is what people see. Yeah. And so whatever you've done in the beginning, that's essentially the culture, right? And so, you know, so we are now like 100 or so. And what I found over the past year or two, or what I have realized is that the culture is here,

27:56You know, we do have people that changed quite a lot now, right? Because of our size of organization and because of the type of business that we are. But the culture is still there, right? And the culture is what they see. The culture is what, I mean, how people talk, you know? And that kind of happened at the very start. Now, you need to maintain that and ensure that you're hiring people that can, I guess, embody that culture. And that's where you've got the control. but once they start the culture is already there kind of thing you know gotcha but there's a whole

28:31episode on that with melinda muth so check that out because she's a lot more experience in that than me it is a good uh yeah she's very she's some very interesting things in that podcast yeah um moving on then maybe to to to scaling within marketing specifically we talked about people a lot how is that different how is scaling within marketing or scaling marketing campaigns what I guess what are the different challenges there? Because I assume that wouldn't be a case of, you know, whether it's a SaaS business or any other kind of business.

29:02You'd assume each business has the same challenges with scaling marketing campaigns. Is that fair to say? I'd say so. I think there's a difference if you're trying to sell something online and not speak with anyone versus if there's, like, a salesperson involved in that kind of discussion. So if it's, like, a lead gen to, like, e-commerce or SaaS, right? e-commerce and SaaS, you can sell unlimited amounts. I mean, it's a bit different with e-commerce potentially because there could be a certain amount of stock. But assuming it's unlimited stock, right,

29:34which you can import from China through Alibaba. That's a big assumption. Because even if it is unlimited stock, actually getting it there. I mean, we're talking dropshipping. I'm looking at the dropshippers as the big example, right? Because their whole business model is scaling stuff that they don't own. Right? And so they import it through Alibaba. Actually, they just kind of, they send the orders straight overseas and kind of Alibaba will send it off for them, right? So their whole business model is scaling. That's it, right? That's because Alibaba has already scaled, so they can do that. That's right.

30:05They're scaling off the scale, back of a scaled business. They made so much money, it's out of control. But I think, you know, what's like assuming you've got the product and assuming that you've got the software right um you can just like like as soon as you find a campaign that is working you can just spend like an unlimited amount on that right um and assuming that kind of the servers are okay and

30:36they can handle the load and all that type of jazz i mean they have challenges as well right like in and in terms of say for example um the product sort of things at some point you're going to have to have like a warehouse and there's going to be other components and so they're still going to have to have their own challenges, right, in terms of that and ensuring that's profitable and ensuring that they don't kind of over-capitalise on stock that doesn't sell because then they have to kind of hold on to it and sell it to someone else or sell it potentially at a loss, right?

31:09We had the co-founder of Young Henry's on here a while ago, you remember Trent Allen, talking about the same problem they had there where they were making too much beer and then they couldn't sell it and then there's loads of demand and they don't have enough beer. They don't have beer. It was a very big problem. And so they had the same kind of challenge, right? But I'm assuming that they've gotten past that challenge, right? And now there's enough of the demand that they can – this is a big assumption, right? I think it gets to the point where you've basically scaled enough, right? So the economies of scale kicks in and it's okay and it's not sober. The economies of scale.

31:39There you go. That's the first time. It's all linked. It's all linked. but I guess if it's a service style business you're only going to scale the marketing campaigns to the point where you can handle the business then you might have to have a look at other kind of ideas around this maybe you can make a product or something that you could scale but it should be that's not what you're going to do you're going to get to the point in terms of the business cycle of a service based business where you either have enough business

32:11or you don't And it's a very fine line. The bigger you get, the harder it is potentially to get the volume of inquiries in to convert them at the speed that you're scaling. Does that make sense? It's almost like fine-tuning, isn't it? Because there are points in which you could generate too many leads. We've had this problem before. We generate too many leads, overwhelm a sales team, and then all of a sudden you're wasting money on your marketing.

32:43And all of a sudden then there's, you attract a few too many clients, for example. And then the delivery is not there. So it's like such a fine kind of a balancing act for a people business. It's still one as well for SaaS and for e-commerce in a different way, you know. But generally, like you hear the case studies and all that type of stuff of kind of e-commerce and SaaS that's gone from this to that. because you can just sell a thousand raises or a hundred thousand raises. I mean, SAS, you still need the demos and stuff

33:14a lot of the time, right? You still need somebody to take somebody through a demo and tell them why it's going. But yeah, okay. Yeah, of course you do. But that same person would sell it and it's done. And then the work is done by the software, right? Not the salesperson sells it and then there's a team of people that have to do that per month forever, which is the aim unless the client leaves. Gotcha, yeah. right and so um but scaling is where it's at like because scaling versus scaling compared to growth um is harder because of the profitability factor yeah so are you expanding profitably

33:50that's the big question are you growing profit so then let's go back to to marketing specifically yes uh maybe maybe we can't go back to marketing specifically maybe it's all too much too linked whether there's a marketing and the delivery i think it is because i think that's also part of it, right, is that to scale, you need a sales and marketing machine that you can pull the levers to increase the speed or to decrease the speed. Then you need to continually change and improve the marketing depending on the audiences that are being targeted, right? I mean, in terms of our

34:29own experience right we with how the internet works the majority of companies are going to be small because the majority of companies are small sure right so for us to attract the larger companies or the mid to large kind of of um the challenger brands right that have the budget that have kind of hit a point of scale and that are trying to scale past that point very difficult So now we have to change all our marketing. And so the thing that got us to where we are now,

35:00that's not going to get us to the next stage. So that applies to marketing, to the structure of your company, to the structure of your services. It's across everything, which is how come it's so hard? Right. So if it came to the scaling of campaigns or marketing campaigns specifically, what are the key elements that you need to take into account in order to scale a marketing campaign? Scaling a marketing campaign for leads or for sales, for e-commerce sales? Let's go with leads and then e-commerce sales.

35:31Okay, so challenges of scaling a campaign for leads. In fact, you know what, let's talk about just a marketing campaign regardless, but assume there are no restrictions on delivery. So whether that's, you know, you've got the capacity to deliver the service or you've got the stock in play or there's no free demos, whatever it may be. Assume a perfect world where you never have to worry about capacity Okay. What would be the challenges with scaling a marketing campaign? Challenges with scaling a marketing campaign, regardless of what it is that you're selling,

36:03is to identify the audience that is likely to convert, to put the right message in front of that audience, to send them to a page which will get them excited about it and then to have a very refined sales process that will get them to convert as high as possible. Assuming that they are of the quality required to make it profitable. And so they're spending enough that the ROI is there.

36:37And all those parts are really difficult in and of themselves. That whole step-by-step thing. Because you made it sound very easy. I know, I was about to say, like, that sentence sounds like it's like nothing. It's easy, just, you know, find the right audience, put the right message in front of them, build a brilliant web page, make sure they convert, make sure the process works, and that's it. And that's it, right? Scale, that's easy. Yeah, and you've got the factor in there that makes it difficult is people. The people that are going to spend the money. Sure. Right? There's always people, someone's got to buy. Yeah, unless, yeah. So, I hear you kind of, you know, we talked a lot when we did restructure our team,

37:11and identified the three core elements of our business being scaling Google Ads, scaling Facebook Ads, and ranking websites. And you always talk there about the difference between kind of running a good campaign and scaling good campaigns. And you say the team are particularly good at scaling rather than... So what does that difference look like? What is a good campaign versus a scalable or scaled campaign? Yeah, I think from a marketing perspective, scaling is the hardest thing to do. Because what scaling requires is that you have a level of expertise

37:44that you can take a campaign that's already working and profitable for a company and increase it by five times or by ten times. That's difficult. Just put more money in and more comes out. Yeah, I mean that's what people think. But there's – how do I explain this without a chart? But basically, there's like an upside down triangle. Yeah. So at the bottom of that, like- Adrian, can you get a chart over this later?

38:16If we can just, over the video, we could just put a chart up. There's an upside down triangle. At the bottom of the triangle are the hottest buyers. Yep. Right? Now, campaigns can work at that level pretty easily. Yeah. But as you try to scale a campaign, you need to widen the net of people who you're now talking to. Now, these people at the very bottom are extremely, they have a lot of desire to purchase at the very top that don't have any, right?

38:47But they could, right? And so your ability to change your marketing to be able to compel people who may not be looking right now but who could be interested to buy from you, that's hard. So part of scaling a marketing campaign is being able to adjust your strategy to be able to convert the widest part of the triangle profitably. Gotcha. I think it's a really good analogy, the widest part of the triangle, reaching up so high in the triangle.

39:18Yeah. It's so interesting because I was overseas in the US like on my first conference ever. This is about, I don't know now, maybe nine years ago. I went to the Conversion Excel Conference in Austin. And what I was- Part of the stories, yeah. They were all great stories. But what was interesting is that what was immediately apparent is all the billboards and all of the ads on TV were for online companies, were for software companies, right? And I was like, why are they doing that?

39:49And I had a look around and so on. And what I found was that they had exhausted everything online profitably. and so the only place they could then expand past that point is offline. So they go to billboards, to TV. Now the cost per customer is higher but it's still profitable. So they're not making as much profit per customer but they're growing profitably. They've exhausted online. They've scaled as much as they could possibly scale. They have all the impression share. Yeah, they're everywhere.

40:20That's what they've got. So now they have to continue to scale and so they go offline and they make less profit per customer potentially up front or depends on their business model, but they can grow their customer base profitably. And I was like, oh, wow, that's something different that we don't experience here in Australia. So what did that teach you, I guess? What did you take away from that? It taught me that that upside down triangle is bigger than what you think. You often think about it in terms of search campaigns, right? Like at the very top of the triangle

40:53are the words that someone like is searching for that are not the by words. Yeah. But that applies to pretty much everything. Yeah. When you're saying triangle, I'm hearing funnel now. Funnel, funnel. It's a funnel. It's a funnel. But if I say funnel, it doesn't, yeah. Yeah, I've said funnel a lot. I'm going to change the word. Instead of a sales funnel, it's a sales triangle. Just sounds childish. Yeah, I'm not going to use that, just to be clear. Trying to be funny, which I'll stop doing. Thanks. On behalf of everyone. Okay, so what would be your top tips then

41:26for scaling marketing campaigns? We've outlined how we do it. Regardless of e-commerce. Unlimited inventory. Unlimited inventory, unlimited people, whatever you want to do. Top tips for scaling marketing campaigns. What stage of the cycle is it? Like, is it like, because I think it's different in the beginning versus once you've hit a certain point. Well, let's go with both. What's the top tip from scaling at the beginning or a very early stage? And then once you're bigger, once you're more established,

41:58what's the top six there? Yeah, I wish you'd given me this to think about ahead of time. My top tip. Look, I think in the beginning of most campaigns, you're either going to start with Facebook or Google. Okay. Yeah. Why is that? Because that's where everyone is online, right? And that's where all of the scaling happens essentially, right? Like you don't scale on LinkedIn. I mean, you could theoretically, theoretically,

42:30I don't know hardly anybody that has. And if they have, they're a one person company that's done some stuff on LinkedIn or two people, but they're not 50 people. They get all their business because of LinkedIn, right? Not scaled, yeah? And if you disagree, challenge. Yeah, please. Just show us, yeah. But I think scaling requires ad spend, yeah? and ad spend is going to be on Facebook or Google to start with. And I say those two because they give you the most amount of levers to pull and if you're good, you know which ones to pull to be able to grow it, right?

43:03Plus, they have all of the people. Like everyone's on them. If you can start with search, start with search first because these are people that are actively looking to buy what you sell. So that's going to be the easiest place to start that process, right? You exhaust search and then you go into Facebook. If you can't target search effectively, then just go straight to Facebook. Just understand that you're trying to convince people to spend money with you and they're not interested yet, potentially. So your audience selection and your ability to experiment very quickly

43:35across audiences and make a really good funnel is going to be the key there. So search is way easier, but Facebook is where the volume is. If that makes sense? It does. That's for startup. So then let's talk a little bit down the track, a bit more established. You've seen some products. You've been doing Google Ads. You've been doing Facebook, and you feel like you've hit a wall. Yes. What's your tips for scaling beyond that wall? So for companies that have kind of hit a point in terms of their success and they can't scale past their current campaign performance,

44:08this is an interesting one because the advice is to really audit the campaigns. to identify what's actually performing for you, which is harder than it sounds, right? If you know the areas that are getting you the best business, right, specifically, you can now start to expand those areas a bit more. You can start to focus on specific audiences. You can start to become a lot more sophisticated but on specific audiences, yes?

44:41So whereas in the beginning, like you're looking for channels, I think stage two is you're focusing on audiences across all channels if that makes sense it does it does it actually makes me think of Koala quite a lot who we've talked about a lot in the past and in our marketing but they did that pretty well I think you know with the came up with the mattress sold that a lot yes a lot through Facebook we've talked about their famous Facebook ads yes and then I guess they've got to a point where they're like how are we going to continue to make money

45:12and now they're doing beds and they're doing so-fas. Lounges and everything else that kind of comes into it. I think that's probably a good example of what you're trying to do. Yeah, although they're probably targeting similar audiences. The same people. Yeah, yeah. So yeah, I think that's another good point is that, yeah, you can expand your product lines, but I'm assuming that the advice I'm giving is not changing their business model because, sure. I mean, you know, another tip of, say, for example, e-commerce, if you want to scale that easily, just go into another market. You know, like there's a way of doing it.

45:42It's got its challenges, but then you create the go-to market strategy for international expansion, right? And then you start with one country and then you go to second country and third and fourth and fifth and sixth, right? That's going to have its own challenges again. Nice. One word that gets brought up with scaling a lot, automation. Can you talk to me about the role automation plays in scaling campaigns? it's a really interesting one right because um we have a lot of not a lot we have some clients

46:16um and i also have some friends as well like in the same kind of um like in the same uh boat that try to do everything online they think the way i'm going to scale is to make an online process where where the person can just purchase everything online and they never have to speak to a salesperson? Yeah, sure. At the moment, the telemarketing, the team in the telemarketing center are pumping all the sales, but they want to scale specifically online. And so

46:50they're doing everything they can, even though it performs at 10% versus a person speaking to somebody on the phone, right? And so it's more important to focus on what's actually working profitably than trying to be more efficient, if that makes sense. Okay. Yeah? Yeah. So if you kind of have someone on the phone and you sell to them on the phone and that works profitably, yeah, sure, it's expensive, but you're still profitable and it performs

47:20significantly higher than online. If you tried to do everything online to kind of improve or to increase the efficiency and the profitability, you're not going to scale as fast. It just doesn't happen that way. It just doesn't, right? Like if you're like trying to sell a product to someone and you've got a core center, scale that core center, scale it up. It sucks. Sure. Like I'd rather, you know,

47:52to not have a hundred people to be in a core center. But if that's what works the most, don't try to find something else. Just be lucky that you found something that can scale and scale that. And if you can scale online, fantastic, but you'll never beat a company that is prepared to speak to someone on the phone because their conversion rate is gonna be so much higher and they can afford to spend more on advertising. So they'll just basically outrank you

48:23across all of the platforms and they'll get basically the lion's share of the impression share, if that makes sense. Does that make sense? It does. I don't think it answers the question. What's the question again then? The question was about the role of automation within scaling. But if you are an online business, and of course I don't know anything, you are an online business, whether that's Ecom or Legion or whatever else, how much should you be looking to automate? How does automation help? Yeah, I guess that's what I was trying to say,

48:55is that I... Because we automate a lot here. You automate a lot. I think you have marketing automation, you have email sequences, you have maybe some tools that can help you with some of the ad campaigns and stuff like that. You have some predictive scoring and you have things that can help to give you insight and then can kind of try to move people along.

49:26That's where it's good. It's where it's supporting the people in the process, right? Like the sales people, the customer support people. That's where it can help not to replace. If you're trying to replace people so that it's more efficient, your conversion rate is just going to drop significantly and then you're not going to be able to compete as much. So if you've got something which allows you to spend above your competition and still be profitable, you know, that's what's going to help you scale the fastest.

49:57Sometimes you need to pay more on costs to scale faster. And if you want to be more profitable, forget scaling because just it's going to be more difficult and there's not going to be that many channels that are going to be able to be profitable, if that makes sense. I think it does. You think it does. Did I answer the question that time? You did. I don't know. I go on tangents, man. I don't know. All right. I think I haven't heard the word scaling as much in my life as in the last 45 minutes or so. Yes. So I'm just going to ask you one more question.

50:29Yes. About scaling. Yes. Is there any additional kind of recommended reading you would suggest for anybody who's interested more about the challenges of scaling or how to scale or how to do these? The only book I know is called Scaling Up by Vern Harnish. It's a pretty good book. and he talks about the four areas of scaling. That's pretty good. Apart from that, I don't think there's too many books on scaling specifically. It was surprising. I was trying to come up with some good questions for this interview

51:02and didn't find as many as I thought I would. But there you go. Maybe it's an article you should write. Well, maybe you can transcribe this interview and then pass it to one of our team. Sounds like a good idea. Yeah. Perfect. All right. Well, I think that is everything I wanted to know about scaling. Great. Thanks so much for interviewing me, Tam. And all the listeners, thanks for listening for today. Thank you. Cheers. Bye. Bye.