Episode 14:MMO Mailbag 2: Establishing Prerequisites
In this second part of a 3 part mailbag episode, we talk about our prerequisites in working with somebody who we think we can get the best results for.
Summary
Nick and Kai walk through the specific criteria each has developed for client intake, from traffic minimums for A/B testing to asking about product margin before taking on e-commerce outreach clients. They cover rejection ratios in practice, what to offer people you turn away, and why being explicit about who you work with turns rejected prospects into referral sources.
Highlights
- Nick screens clients differently per service: Draft Revised requires minimum traffic and enough sales volume for A/B testing to be valid; Draft Coaching requires a minimum bank balance so the engagement isn’t being used to plug a short-term cash problem. No VC-funded companies qualify for any service.
- Nick frames his discovery process as finding the absence of no, not getting to yes. He’s checking for phantom stakeholders and potential deal-killers before agreeing to work with someone.
- Kai learned to ask about product margin after a recurring pattern with e-commerce clients: results were real, but clients on 10-20% margins selling $30 items couldn’t generate enough revenue per unit to break even on his monthly fee.
- Rejection ratios in practice: Kai turns away 3-4 prospects per acceptance; Nick turns away roughly 19-20. Nick also mentions Matt Englett at about 10:1.
- Persistent requests for short-term results can point to a real unmet need worth packaging as a productized service. Kai cites Kurt Elster’s Website Rescue, which applies 30-50 Shopify best practices in a single engagement, as a clean answer for clients who need something now but aren’t ready for a full retainer.
- When saying no, offer an alternative: a book, a teardown, or a referral to a better-fit consultant. Nick does this explicitly for ad agencies and VC-funded companies he can’t take on.
- Kai calls precise positioning a source of Rolodex moments: when rejected prospects know exactly who you work with, they can refer the right people directly.
Read the transcript
Another question that we had was: what are our prerequisites for working with somebody who you could get the best results for? And this, I think. connects to that idea of client intake and client qualification. I’m wondering for your business, what are the prerequisites you put in place for working with people?
Depends on the service, but the overall things are you have to have an interesting problem worth solving. You have to not take venture capital. You have to Usually be a business of a certain size. I tend to balk at giant corporations or like single-person startups. They tend to Run into a bunch of kind of logistic and just experiential problems with the engagement. But with Draft Revised, you have to have a minimum amount of traffic that you get. You have to get a minimum amount of sales for A-B testing to be worth it. With Draft Foundation, you have to have a very good strategic reason. For why you’re going to be reaching out. With draft coaching, you have to have a certain bank balance actually and a certain amount of cash on hand so that you’re not just trying to ping me for short-term revenue generation. And I’ve developed these criteria kind of bespoke to the service because I keep seeing people coming in and either the engagement goes poorly or I’m not able to generate enough value for them, or the negotiation process falls apart at some point, and it just doesn’t land for them. And so what ends up happening is I end up kind of Turning the screw on it, you know, like kind of ratcheting up the tension and making it a little bit more difficult and being upfront and making you really question whether or not it’s a good fit. And the reason I do that is I’m finding every reason possible to not work with you. I told somebody on a podcast recently that it’s not really I’m trying to get to yes, I’m trying to find the absence of no. I’m using a discovery process to figure out, okay, are there any like phantom stakeholders that might throw me off? Are there any significant issues that could potentially deep six this? We spent a lot of time talking about this and characterizing it as brown MMs on a previous episode. For me, I’ve developed things that work well for my business and my process. And I don’t think that I’m going to be While I don’t take venture capital funded businesses as clients, there’s nothing stopping you, dear listener, from doing that. There’s nothing stopping other people from developing criteria that I find to be revolting or whatever. It’s just not working for me in draft.
There was something you said there that I wanted to leapfrog off of you’re putting these prerequisites in place. You find the clients that you will work best with and you’ll be able to produce positive results for. Am I right in that?
Oh, yeah. Yeah. Yeah.
I I ran into something very similar when I had an e-commerce focus. I was doing a lot of outreach for e-commerce businesses and I neglected to ask a very important question, which is, what is your margin on the products we’re selling? And yeah, yeah. And for the listener who hasn’t caught on, the issue was I might be working with a client and we’re doing outreach campaigns. We’re getting placement on an outreach campaign for an e-commerce client. We’re basically getting reviews on blogs and building relationships and doing giveaways. And we might be selling more units. But if they only have a 20% margin on an item and they’re selling an item for $50, that means each time they make a sale, they’re going to make $10 profit, ignoring all other costs. And You’re going to have to sell a lot of units to break even on my monthly fee. And I realized that I kept ending up in the situation of working with on-the-surface great clients, but After a couple months, we were seeing results, but we weren’t seeing the financial ROI we were looking for. And the relationship ended. And I realized, oh, the clients who I’ve had this problem come up with Our clients who have good businesses and are good fits, but just are operating on a narrow margin. So we need to move such a huge volume. And my service isn’t designed to help you move a huge volume in the short term. It’s designed to help you grow your awareness in your market and move a larger volume over the long term. And so, just by asking that qualifying question as part of my client intake process, what’s your average margin on a unit sold in? What’s your average order value? I was able to start weeding out the clients who were in no way a good fit and just focus on the clients who are a good fit. I had a recent client come on board who has a 400% profit margin on each unit they sell. So if they sell it for $100, It cost them like 20 bucks or 25 bucks. So that is a wonderful position to be in. That means that if we sell one unit, it’s going to make us a lot of money. I’ve had conversations with prospects who say, Oh, our profit margin is, you know, 10 to 20 percent. And they’re selling something for $30. And I’m like, so wait, if we sell one of these widgets, you’re going to make three bucks. And they’re like, yeah. And I’m like, This isn’t going to work because we just aren’t going to be able to hit the volume necessary to break even. And in some cases, that’s been enough of a reason for them to say, oh, okay, like obviously this won’t work. And in other cases, they say, no, we see value in this beyond just a financial ROI. We see a branding reason for us to attack this problem with outreach. And we’ve decided to explore working together in those cases. But like you said, it’s searching for that absence of no, asking these questions to a prospect, figuring out if they are a good fit. lets you identify where objections might be and where problems might be and where benefits might be, you as a consultant might not even realize. Early on, I didn’t realize a client would be hiring me primarily for non-quantitative, more qualitative branding and public relations purposes. But more and more, that’s where my business has evolved to. And it was only through clients saying like, yeah, we realize like the ROI in the short term isn’t going to be high, but the qualitative ROI is going to be very high for us because we want to be perceived as a thought leader. That it let me position my marketing and position the problem I’m solving in that direction.
Yeah, absolutely. Absolutely. I think that That really helps address a lot of the things around trying to find the right clients. The ultimate goal here is find the right clients. And there are right clients and wrong clients. And everyone who comes in the door is not just the right client. You can’t be so desperate. You have to say no to a lot of people. How many people do you reject for everyone that you accept?
I probably reject three to four for every one I accept at this point.
Yeah. I mean, Matt, a person I spoke with recently, Matt Englett, he rejects about 10 for every one. My friend Kurt Elster, your friend Kurt Elster as well. He rejects, God, I can’t even imagine, a lot. A lot. I reject about 19, 20. I get a lot of noise. That’s the problem. So it’s have a criteria for acceptance. Be picky. Develop a business that allows you the luxury to be picky, and you will find considerably more success in that scenario.
There’s one point I want to leave Prague off of here that I think could be a valuable exercise for the listener. We touched on people who are looking for, specifically in your business. people who are looking for like a short-term win with A-B testing. We want the Make Money Machine to turn on and make us some money. Nick, can you turn the Make Money Machine on for us? I have that same thing happen both from the SEO side and the outreach side. People who are like, we want success today, we want solutions now. And I’m like, it’s going to take three to six months. We’re planting a garden. We’re not. running a sprint to mix metaphors terribly. But when clients persistently come to you looking for that short-term solution, that could be an effective sign that there’s a problem in your target market that people are willing to pay for, that there isn’t an effective solution out there for. And it might be you identify like a The 10 things that people are commonly doing wrong within your industry or within that target market, and put it together as like, hey, great, it’s not going to be a full service, but This takes care of like 70% of the issues we commonly run into. And I can’t put any guarantees behind it. But if you’re looking for something short-term, we could hit your website or hit your business with this and see what the improvements are. Kurt Elster does this wonderful, wonderfully with his product, the Website Rescue, where he goes into your Shopify store, he applies 30 to 50 better practices to it, tunes up things that he knows are always wrong, jacks up the font size. And people typically see a significant conversion rate increase from these best practices being applied. It’s a really standardized process. It’s going through the same steps for most stores, but it’s really valuable for the client who says I know my website can be performing better. I don’t have the time to invest in a full website redesign or A-B testing. What can we do today? And I have colleagues and friends who have gone in the direction of creating a book. So, somebody shows up and is like, I need answers today. You’re like, well, I’m booked solid for six months. Buy my book.
Yeah. Offer an alternative. When you say no. Direct them to a teardown. Direct them to your book. Direct them to a colleague. I mean, I do that sometimes where it’s like, oh, I’m an ad agency, or I’m a VC-funded company. It’s like, well, you know, you can buy my book, but like, You know, I’m pretty ride or die about not working with you in a consulting basis. So here is a consultant who would be a better fit for you. And That shows that you’re actually still interested in providing value to them. Why are you doing that? To build the relationship, right? There’s no harm in offering an alternative. Not only are you probably going to get good business, but they’re also going to remember you as somebody who is helpful. And they might be more liable to recommend you to somebody who is a good fit because you provided a clear and sensible criteria for what constitutes a good fit. Entirely.
I’m working on an article about this right now based off of a conversation we had in our mastermind, the triumvirate of positioning. and how the combination of target market and expensive problem and discipline leads to referrable moments, Rolodex moments. And so if you’re Confident enough in who you work well with to say, like, hey, I don’t work with venture capital funded companies. I work best with bootstrapped SaaS companies this size looking for this goal. Suddenly, people are going to be able to say, Oh, okay, I might not be a good fit, but I could think of three people who are good fits for you. And as soon as they say those magic words of, gosh, do you know anybody who does like A-B testing or does UX and UI? They’re going to say, Hey, I know the perfect guy. Let me refer you to him. He works entirely with people like you. And it’s those Rolodex moments which are so powerful. and get you prospects and clients who are eager to work with you because you’re already positioned as being the answer to the problem they’re experiencing.
Absolutely. Absolutely. And then profit. That’s it. You’re just going to waddle in a pile of money. That’s it.