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Transcript of Customers.ai Island Chatbot Chat: Bot Selling Services Q&A with Isaac Rudansky

Virginia Nussey: Hello everybody, and welcome to your Facebook Friday Chatbot Chat. I’m Virginia Nussey and this is a very special edition of Chatbot Chat. I’m joined by Isaac Rudansky, the founder of Adventure Media.

You will probably recognize his face as the instructor of the Customers.ai Chatbot Masterclass and generally, just smart guy when it comes to creating an agency, building bots, bot strategy and I’m really, really excited that you are our guest here today thank you, Isaac, for joining the program.

Isaac Rudansky: Thank you for having me. I really appreciate it, every event we’ve done together with you and Larry has been really fun, very insightful, great group of people and I just love to keep coming back as long as I get invited back and yeah, I’ll keep coming back so thank you.

Virginia Nussey: This topic, I set an invite to the group of, you know, what do you want to hear about in Chatbot Chat? Because we do this every week and I like trying to cover what people want to hear about as the community of Facebook Chatbot builders and there is just far and away, a ton of demand for understanding selling of bot services.

So there are a lot of people who are running their own agency, who are freelancers. So Isaac, do you know anything about selling bots?

Isaac Rudansky: I know a little bit about it. So my background is briefly is I run Adventure Media. We’re a digital agency based in New York. We’re a fully in-house team. And over the last year, year and a half we’ve been really getting involved with building bots for clients.

It falls right under the scope of what we’ve always been doing, which is digital paid advertising services. And while bot building is not specifically a paid domain, it’s highly relevant because one of the most effective ways of using bots is connecting a bot to a click to messenger Facebook Ad campaign, which as most people know tends to be cheaper.

The cost per acquisition tends to be cheaper than in other forms of Facebook Ads. And there are a number of reasons for that. One is it’s a newer ad format; two is unless you’re redirecting somebody out of Facebook, which you’re typically not, as long as you’re staying within messenger you’re really keeping people in the Facebook ecosystem and Facebook knows how to find value for every minute of time somebody’s on Facebook or on a Facebook product so they like that.

So the systems are probably awarding advertisers using that campaign type with lower than average rates, let’s say for a thousand impressions or a click or whatever it may be.

Yeah, so we sell bot building services to clients now and it’s been going very well and our clients love the bots, they love using Customers.ai, they love the…It’s just a new frontier, and that’s the bulk of the excitement.

So when you’re selling bots to clients, it’s really worth focusing on that, it’s like…And I do that in every pitch, it’s like, listen, this is new. Okay, all of a sudden that’s exciting. And that’s something which another way, it happens to work in headlines news is something popularized by David Ogilvy and Claude Hopkins and they did a lot of testing around this.

When you convey something that’s new or exciting, it could be a new product or a new way to use a product—and this is, by the way just regular advice for your own headlines—you really pique the attention of potential customers. So that’s the first thing; it’s new, it’s exciting.

Now, you talk about the opportunity where you have… what did Larry say last time? I don’t know, 10 million? 100 million business pages on Facebook got a 100 thousand Facebook Messenger bots in use and Facebook Messenger bots are being rapidly adopted but 1% or a fraction of one percent of businesses on Facebook are using actual Facebook bots and sophisticated bots. So it’s a huge opportunity.

And then you talk about the engagement rates from these bots, right? Like you send out an email campaign… I just did a webinar this morning where I should have been signing people up to the webinar through my Customers.ai Facebook bot but just because I didn’t have time this past week to set that up but I had like a 10% attendance rate which is totally normal for like an email based webinar funnel. Ten, fifteen, twenty percent is pretty good but most people who sign up for a webinar especially if it’s you know, a week in advance, they’re not showing up to the live webinar so like, ten to twenty percent attendance rates are pretty normal.

And that’s because email open rates and engagement rates are really low. And listen, marketers, kill everything, right. We take every good tool and we make it really, really, bad for most people because we profit, and we approach any good opportunity as an opportunity for growing our community.

Virginia Nussey: An opportunity?

Isaac Rudansky: As an opportunity, as we should. And that’s how…And that’s at the high level really how innovation is driven because email became a really bad tool for communication from a marketing perspective because everyone was doing it and there was so much spamming and part of that created a void for something new, and you have platforms like Facebook Messenger and other social media tools and other ways of marketing so like the fact that marketers good marketers will jump on something and squeeze every ounce of value out of it, is also outside of it you know, it creates a shelf life, you know, at least.

I’m not saying email is dead, it’s not dead but like how great of an opportunity of it maybe has a shelf life. But it’s also that same cycle of, you know, the food chain that just creates more and more opportunity for growth and innovation and creates more useful tools for marketers which is awesome.

But anyway, so like Facebook Messenger bots, you’ll get an eighty percent, ninety percent open rate engagement rate click-through rate, which is unreal and like you shouldn’t believe me unless you see that yourself and you should try that yourself because if somebody told that to me I wouldn’t believe it because like what, marketing platform could give you a ninety percent open rate and a seventy-five, eighty-five percent engagement rate like, no, it doesn’t exist so you have to go build a bot, follow this, follow the techniques read a bunch of Virginia’s posts and Larry’s posts on how to create effective bots and you’ll see for yourself that it’s unbelievably effective.

And that’s something you convey to your clients and it’s like you drum up all this excitement about it and then it’s like, “I’m so excited. Here’s my credit card, let’s build a bot.” You know, like that’s really how you sell these bots. You really take advantage of the fact that it’s new, you take advantage of that most marketers aren’t using it, it’s going to be a leg up on their competition.

If you could find three/four of your clients’ competitors that aren’t using bots and you could show them that, that’s huge, right? Because anything that you could show a client that they could do that could help crush the competition, it’s automatic excitement points. And you build up that excitement, you build up the newness of it, you build up the potential results, you show your clients…

Last time I gave a summit at the Customers.ai Virtual Summit, I walked everybody through how to build a spreadsheet that compares the potential results of a giveaway campaign with a Facebook bot verse a non-giveaway campaign and giveaways, contests, anything that’s like engaging like that—at least in my experience, I’m only talking from my experience—has been the most effective ways of building bots for our clients. And you could show clients a predictive outlook of like how much more effective these types of campaigns with messenger bots are going to be.

What I’m getting at is I haven’t really got into like the numbers yet of like, okay, what do you actually charge? How do you actually charge? Because that’s very secondary because if you set yourself up right, you could really charge whatever you want. And if you hit the setup right and the pitch right and like, “This is exciting, this is an opportunity. There’s all these…” You know, it’s so wide open, there’s so much that could happen here. If you get that point right, you could charge them six times what you’d be able to charge them if you didn’t get the pitch right. So then, in my opinion, it’s what’s more important.

Virginia Nussey: Sounds like the key to the pitch is having a lot of excitement, you know, knowing that you can bring a lot of value and be able to show that. There’s a question you know, I think something that comes up a lot is, do I have to…How do I demonstrate that value?

And I think that it kind of lends to finding a niche or niche for your services so that way that you can create a few demos or even like build out like a mock-up of a bot, so that you can show proof of concept, kind of like you said like, “Hey, your competitors aren’t doing this, look at how engaging this is and what, this could be yours,” which, this is all tying like kind of together but like if you have a niche then you can have that demo, then you can pitch that industry and get…Become an expert in it really kind of like show the value there.

Isaac Rudansky: Definitely. I’m a big fan of the niche approach to marketing your own agency as well as working on like specific demos for clients in a specific niche like you know, you don’t necessarily want to go to specialize, like I know some agencies will like to specialize in marketing for dentists. Well, okay, if that works for you, then great.

For us, like people ask me all the time like why don’t I do SEO, why don’t I do organic social, like these all fall under the online marketing umbrella. Well, it’s like first of all, we’re not a one-stop shop marketing company, we’re an advertising agency, so we do paid media online, that’s what we do. It’s what we like, it’s what we’re good in.

And a lot of clients have told us over the years that like they came to us, and part of our appeal to them was, that we were specifically, we specifically identified as a paid media agency and advertising agency, we weren’t a one-stop shop online marketing company. I mean they like that. People do tend to want to work with specialists, and I think that’s a pretty common universal thing.

So if you could specialize, even if you just specialized in bot building, I think that could be a very positive thing. We don’t do PPC, we don’t do influencer marketing, we are really good at building Facebook bots and we build the best bots, we make the best bot campaigns. That’s a good specialty, yeah, that’s definitely a good specialty.

Virginia Nussey: Thanks for that. I got a ton of questions from our community. I pulled them all together and they kind of fall into a few different categories like how do I find clients? So let me read, there’s also how do you pick services and what are some standard pricing and packages? Before I get ahead of myself. Okay, here is a question from Scott Davidson, “I’ve been attempting to target local restaurants because I think they could benefit from being proactive and having reactive bot support but no one seems to be biting, maybe, am I not selling…”

Isaac Rudansky: No pun intended.

Virginia Nussey: Actually, that’s pretty clever. “…Am I not selling the value enough or communicating correctly. They think that they’re just going to keep doing traditional marketing like advertising in the local newspaper, emailing but do you have any ideas on, you know, so it sounds like they’ve already got their industry in mind but they’re having trouble generating the excitement factor and maybe getting in front of the right person.”

Isaac Rudansky: Okay, so there are a couple of different things there on that element. There’s building the actual bot and how the bot functions and what it does and what it promises and all that. But then there’s also who you’re targeting, let’s say you’re running a Facebook Ads campaign, those are two totally separate categories.

But I never saw your bot and I can’t diagnose it, but I do feel that any decent restaurant worth its salt should be able to create a profitable Facebook Chatbot because I think it’s a perfect industry for bots. A lot of these restaurants are more sort of immured in their traditional marketing approaches to experiment within the first place.

But, here’s what I would do; obviously, if you’re building out a Facebook Messenger campaign you want to be targeting within a location of the restaurant that people are going to. Gender targeting works, age targeting works, so speak to the restaurant and find out like well who are your customers? And like they’ll be like men and women all ages. Well, no that’s okay that’s not the really the question. It’s like who makes up the majority of your most valuable customers, right.

You’re not looking for rules to which there are no exceptions, right. You’re looking for trends and you might end up paying more, you might end up nailing down your demographic, so it’ll be like, okay maybe you want to bid more from females between 24 and 40, that might be like a sweet spot customer for this restaurant or families or whatever it maybe, and you might see your cost per lead increase and that’s okay, right?

Because your ultimate goal is not to have the lowest possible cost per lead, that’s never a goal, that’s never anybody’s goal. Your ultimate goal is to generate the most amounts of dollars for the least amount of upfront advertising cost. And oftentimes, people are so hesitant to let a campaign run that has a higher CPL just in the basis of it having a higher CPL, even though they’re going to end up having a higher ROI.

So first thing is, don’t be afraid to narrow your Facebook targeting, potentially see an increase in cost per lead or cost per contact added to Customers.ai because there’s a very good chance that by doing so you’ll also increase your revenue, increase your conversion rate and ultimately increase your return on ad spend, which is the goal.

Now for the bot itself, a restaurant is a very good opportunity for a giveaway. I don’t want to go into too much detail because that will eat up the next 45 minutes but if you haven’t bought the Customers.ai’s virtual all-access pass, do so and Virginia could put a link because I don’t have a link to that, but you’ll be able to see in my last lecture I speak for a probably good 20-30 minutes on building out a sheet that you should present to your client that will predict—that incorporates the value of the giveaway.

So meaning you might go to the restaurant owner, your client, and he’ll be like, “No, I don’t give away free meals, like I cook these meals, I pay for my meals, this is my bread and butter, you know nothing, there’s no free lunches.” And then you’ll say, “Well, okay, slow down, you also work hard for your money and my job as your account manager is to maximize the distance your advertising dollars go and take a look at this template, this predictive outlook, the cost of a steak dinner for five—your cost, not the cost of customer, but your cost is $75 on average and we’re going to now earn exponentially more than that by offering that as a giveaway.

So if you do meet resistance, there is a very good approach to speaking to clients about that because I’ve also met resistance, emotional—not rational resistance, totally emotional resistance to a giveaway because like business owners don’t want to give away their things for free, they’d almost rather spend money than give away something for free, it’s just rational. Unless there are exceptions.

If you’re a luxury brand where giving away something for free could hurt your reputation, that’s a fair exception. But in most cases like, no, the restaurant’s not a luxury brand. So you offer something like once a week, a family of three is going to come and eat for free, right, anything they want on the menu. And it’s worthwhile to spend to invest a little bit more in the giveaway to offer a giveaway that’s very, very compelling.

Because you’re only giving away one a week, or if you do one a day, like it’s—the more, the better. The more valuable the give away is, the better, and use an analysis to actually predict whether or not the cost of what you’re giving away is going to be worth it and you could do that pretty easily.

And you also use the losers to— you market to the losers too. So, let’s say you you’re getting now a thousand new contacts a week into Customers.ai, you’re picking one winner a week.

You’ve got to milk both segments so the winner, you asked them to share on social media, put it on their Facebook, here’s a link that you go into to this restaurant and you won a free coupon, the whole family is going out for free, right? Fantastic. That’s going to bring in a lot of customers. And then you take all the losers who didn’t win the coupon and say, “Well, for all of you who were participating in our contest, here’s a 10% off coupon it’s valid for the next seven days on our entire menu.”

And now what you’ve done is you’ve generated more contacts. I always make this distinction with giveaway campaigns; you shouldn’t expect to see an increase in conversion rate, and that’s part of the pitch. There’s no reason to assume—I’m not saying it can’t happen, but there’s no outright reason to assume that a greater percentage of your contacts are going to convert and show up at the restaurant who came into your contact lists through a giveaway campaign but lost than any other campaign that generated a list of contacts on Customers.ai, right?

I don’t see any compelling reason to say one of those groups should have a higher conversion rate. But the main thing is you’re going to have a much lower cost per contact because if somebody’s scrolling through their Facebook feed, they see a generic ad for a restaurant in town and be, “Oh look, it’s a new restaurant and we have really good steak.”

Okay, it’s a great ad but it’s less compelling than if somebody scrolling through their Facebook feeds and see; once a week this restaurant, steakhouse or whatever it is in the neighborhood two miles you know, open late family-friendly, pet friendly is giving away a free coupon once a week for your entire, no restrictions, no blackout dates, anything on the menu, come to eat for free and all you have to do is click the link, respond to us in messenger and you’ll be entered automatically into the running. So that’s a lot more compelling.

So your click-through rate will be higher, your cost per contact will be lower. The people will be much more likely and motivated to actually engage with the bot. And you don’t need…And that’s another thing that people don’t always realize, by the way, if you don’t tell me to shut up, I’m just going to keep talking.

Virginia Nussey: Well, you know, it was very compelling to watch your presentation at the last summit about the contest and the power of the giveaway. There are some good questions actually that I had lined up here I wanted to ask about with a giveaway which relates to, does the giveaway offer, should it be, related to your business? Is it more powerful that way, or can it be you know, an iPad or whatever it is? Does that have any impact?

Isaac Rudansky: It’s a really good question and like my natural response is just to say of course it should be related to your business because that just seems like the logical gut reaction but I don’t necessarily know if that’s the case. I think you have to give people what they want. Hopefully, your products and services are what people want. But oftentimes, like your products and services are like very niche, and if you want to really just generate a high volume of engagement, you might have to offer something more universally appealing.

So for example, I’ve done a lot of giveaways with my own courses and content and I found that like if I offer like a free landing page review or you know, which is very relevant to my product or service it’s not as appealing as a $400 or $500 Amazon gift card right, because you’re just…Or an iPad which is not relevant to what I do at all.

Virginia Nussey: And also sometimes you don’t really have an offering to give away. Does that make sense?

Isaac Rudansky: Yeah, that’s true too.

Virginia Nussey: Like a realtor or something like that.

Isaac Rudansky: Exactly so like if you’re a realtor, or you’re a plumber, you’re trucking company, it’s not so simple to figure out a giveaway, I mean you could do like a coupon code, a discount code, but it’s not so straightforward to be doing a giveaway or something like that. Yeah so it’s not. But my point is that, even if it’s totally irrelevant, it’s still worth running these giveaways with something that has more of a universal appeal because the whole point of the giveaway is significantly decreasing your cost per contacts.

And the follow-up point is that once people have these contacts in Customers.ai, you could send out these chat blasts and you could send out drip campaigns for free on an ongoing basis like email marketing used to be. So like there really should be a focus when people are looking at Customers.ai and Chatbots at, what is my cost per contact in my niche, like per contact on my list, that’s a very important metric to focus on.

Virginia Nussey: When you started your agency, how did you get those first leads? How did you start the momentum going? Like what does it look like to get your boots on the ground and start pounding the pavement and start finding clients?

Isaac Rudansky: Okay, it’s a good question. I get this question a lot and it’s a question I typically…It’s hard to answer in like a simple way, but what I’ve found is that most people don’t like the way I answer this question because not really what people are looking to hear. I think people want to hear, well, like there must be something that you found that none of us know about that generates high-value clients to a marketing agency, and like what is that secret?

And I’m not saying that secret doesn’t exist because just to say something doesn’t exist, means that you have to have explored every inch of the universe and know with certainty it doesn’t exist, but all I could say is that I don’t know if it exists. I haven’t found it.

So when I started the company and like you know…I’m really thankful that now we’re able to work with very high-value clients, some of our clients include Forbes Magazine, AMC Television Network, the International Culinary Center you know, and a lot of other large clients that don’t have as much name recognition but when I first started the company my friend’s father was my first client.

We helped him with his Yelp listing. He was a dentist, and then my own father was our second client. It was like a pity client, he’s like help him with a LinkedIn page. I did anything for anybody that would offer to pay me anything, okay? That’s really the best, first advice. There’s nothing that’s beneath you. And it has to obviously has to be somewhat relevant to what I wanted to do. I want to be in digital advertising so, okay, LinkedIn, I helped with a LinkedIn page, I built you Squarespace websites, I’ve built Yelp pages, like really super simple, just starting out learning all this stuff. A

Not only was nothing beneath me but I didn’t manage those projects in any different way than I manage campaigns for clients who are spending six, seven figures on their ad campaigns through our agency today. My level of attention to the clients, how much I cared about my product being the best that I could possibly produce. The level of respect I had for my clients own money, like none of that has changed when I was working for really next to nothing probably what would have amounted to a 30th of the minimum wage in America per hour, if you looked at my hours and what I was charging for the early work.

So that was the first step right and it’s like a very, very difficult and unpleasant attitude to adopt like there’s nothing beneath you and there’s no amount of money that’s too little in the beginning, and that’s not easy, it’s not easy, it’s not easy to work under those conditions, it’s not pleasant at all: emotionally, psychologically, physically, it’s not pleasant but that’s how it was for me in the beginning.

And then I spent a lot of time copying what other people were doing well. And that’s something which is also maybe not so admirable to talk about or to admit but it’s what worked. I spent a lot of time researching other successful agencies how they presented their material, what content they use and I went about that with like a very healthy respect for their accomplishments and like admiring other people who have done this and have done it successfully.

I would try to copy pixel for pixel, a landing page, and I’m like, “Okay, I’m going to make mine look exactly like that and I want to learn about what they’re doing so I could make it better one day but I can’t figure out what was good and what I could improve on unless I copy it at least something or at least I do as something as similar as possible to somebody else.

So I spent a lot of time making my website and landing page and material and sales pitch basically copy…And I remember getting one email a long time ago from a company where I basically copy their exact same pricing page. This is when I was still alone myself. I had no employees, like no one working with me and I really copied their exact pricing packages, I used their names, I used the deliverables, it was really pathetic but I still think it’s a good idea but I don’t regret. It’s pathetic but I don’t regret it so like they emailed me they’re like, “What the hell are you doing? Like, that’s our page,” and I’m, “Okay, like sue me,” and so…

Virginia Nussey: Other people are saying that’s how it is listening, learning, trying, growing, copying.

Isaac Rudansky: And yeah, and then once I copied, I understood what was good and what was bad about what I was copying and I figured out how can I do this better? And then over time you do that, you do enough difficult work, unpleasant work, but you do it well.

I’m not patting myself on the back, I’m just saying how it is, like I’ve failed more times than I’ve succeeded over the last five years. But just like I’ve always had the attitude that I appreciate any client willing to give me any money for any amount of work.

I’m also very aggressive in my own growth and I hold my team to a very, very high level of accountability but I still have a very strong sense of appreciation for any client. You know like you don’t have to give me your business, you don’t have to give me your money, there’s other people that could do what I do just as well or better. And that sense of appreciation impacts many, many different areas of building a business and clients will come.

Virginia Nussey: Jeff Bezos calls it like staying in day one or day zero, right.

Isaac Rudansky: Yeah, so that I definitely there’s that concept, not to say my name and his name in the same sentence, that’s utterly absurd but…So there’s that which is a big part. And then creating content; that was the next piece. And this is something which is very important for your bots. It was that attitude, that hard work, there was one winter where I wasn’t getting any leads from my website I was spending money on my own ad campaigns on Google ads.

I signed a couple of small clients but I couldn’t afford the ads because it was very expensive. And as much as Google likes to say it’s like a level playing field, it’s not. We could talk about that on another time, but I printed out brochures, physical brochures that took me like a week to make.

It was like 30 pages long, about all the different things I could do, full-color, like it was expensive at the time. I didn’t have money to print out 700 brochures, spiral them, the works. And I walked around all these different little towns on Long Island. I just drove to Huntington, I drove to Cold Spring Harbor, and I just went door to door in freezing cold, I think it was snowing, handing out brochures.

And I think like one person called me back. It was not a good marketing but the thing is that it was just trying, it was like, it’s okay, I’ll walk around for four days door-to-door and see what happens and like that’s in any way.

Virginia Nussey: In the snow uphill, absolutely.

Isaac Rudansky: Yeah, and then there was the content. I don’t think cold calling or cold emailing is an effective way of generating clients. Again, I’m not saying it can’t be done and I’m not saying no one’s doing it successfully, it’s not something that I would recommend trying.

But creating content is going to be very important and it’s also going to be very, very hard. So all of our best clients, now a lot of them come through referrals and as you start getting a little bit of a good track record, you have a good handful of clients, you should be forthright in asking for a referral because you’ll never get a referral unless you ask.

That’s another I see like, “Oh you do good work,” you’ll call his friend but that’s not going to happen, no, they don’t…No one’s thinking about you, like but your clients who are paying you, A, they’re not thinking about you or your business, B, they’re not like incentivized to share your attention with another business. So you have to really be forthright with asking for a referral and potentially asking multiple times. So there’s that. So referrals will come but it’ll come eventually if you ask for them and you’re respectful but specific.

But also content, so like my courses, my webinars, blog posts, content works. So people will be exposed to your content, they’ll develop a sense that you know what you’re talking about, so you’ve got to specialize in a niche.

And this is advice that most people probably have heard already, but most people haven’t done it because it’s so unbelievably difficult to create good content and it takes long, it takes a long time. Creating content itself is difficult but you have to do it consistently with no results for a year. Who wants to do that?

And I mean I think if you look at WordStream and Customers.ai like you guys are very content heavy, the summits, the workshops, the Facebook group, the blogs like it really drives a huge amount of emotional validity when a customer calls you. Think about it like this, if you call a business say, “Hey, can I manage your Facebook Messenger marketing for you?” like goodbye.

Or you write a really good insightful post about five Facebook Messenger techniques with specific results with case studies with a financial analysis and some people see that, that will go so far for you in terms of getting people to think about who you are, who your company is, they’ll want to follow your posts, they’ll want to follow your information.

So again, I always talk about creating content but I always feel gets ignored but like most people don’t do it, which is by the way for the…Who’s ever listening to this, for the 2 or 3 percent of you that are going to do it, it’s a huge opportunity because if you know that most people are not going to create content.

The only competition you really up against is yourself is like it’s just overcoming your inability to put in that level of effort and consistent hard work but on the flip side the good part is most of your colleagues and most of the people that are going to be competing with you in your space are not going to really do it, so the world is open to you, it’s not a saturated market in my opinion and it can be done well.

So that’s how we got our first clients, and we’re still a young company and we’re not a big company and we still work very hard but the success will come, it just takes a lot of consistent unpleasant hard work.

Virginia Nussey: There you go. That’s the truth in the content it’s so hard to sometimes prioritize that when you have a number of other things facing you like should I try to send out this proposal or should I create a demo here? But if you can demonstrate what a successful outcome looks like based on anything that you’ve done in the past then that can speak very loudly and it could be a tool for everything going forward.

Isaac Rudansky: Yeah, for sure.

Virginia Nussey: Great advice. I’m going to read a couple of comments here. If you have a question, do leave a comment I can see them and we can chat about them with Isaac I see Isaac is the man just copy Amazon they already spent the money on R&D, and UI’s absolutely. Is giving away like free meals or something is that going to be attracting the people that just want something for nothing?

Isaac Rudansky: Is that a question in reference to the restaurant discussion?

Virginia Nussey: Right.

Isaac Rudansky: Well, I mean, I don’t think so. I don’t think you should be concerned about that. You’ll attract some people that want something for nothing but let me clue you in on something. Everybody wants something for nothing. Getting good deals has a universal appeal.

Yes, it’s true that on the flip side people also have a greater sense of satisfaction when you’ve earned or when you’ve earned something or when you’ve paid for something but at the same time you know, the human being could have contradictory psychological forces but we also love getting a deal. We love getting something for free.

Even more so we love getting something for free when we know that other people are paying for it, right? There’s nothing more exciting than that. So I mean, I don’t know, human nature is not always a beautiful thing. I think you’ll attract some people that want a free meal but great, so you’re going to give away a winner but people need to eat, people are still going out to eat, people are still going to restaurants so you generate all the people who didn’t get a free coupon and you give them a ten or fifteen percent off coupon if they come within three days or whatever it is.

So no, I don’t think you should be so overly concerned about the type of people you’re attracting. At the very least, test it and see what happens right? That’s the beautiful thing about digital marketing with messenger and bot building is you could test so many different things with relatively low risk and you’ll come out ahead. Not every test will be successful but a fail test is also successful, it’s also a successful thing, you learn something that didn’t work. And companies pay a lot of money to find out things that don’t work.

Virginia Nussey: “Preach,” comment from the audiences. “You mentioned that you stole the pricing page from somebody else right in your industry another agency at one point which is very great story. So what are some ways to price bot services.

And I know there are different kinds of—so maybe you know you’re running ads for somebody or if you’re creating like a Chatbot that will reside on a website to answer FAQs. So there are different kinds of services related to bots. I’m not even sure what avenue to take with this but what are some of the different models you think are viable pricing packaging?”

Isaac Rudansky: So this is a very loaded and complicated topic but let’s try to get into it a little bit and we’ll see where it goes. And this would be easier for me if I had slides just to keep my thoughts in order but I’ll do the best that I can.

There are a few different things you want to sort of figure out first when it comes to pricing. At the very high level is like do you want to have fixed pricing that you that let’s say you could post on your site or do you want to take down the pricing from your site and price out each job individually? Because how you approach that makes a big impact on sort of how this tree goes down and how it branches out into different models you could use.

I don’t know the right answer to that question because we started off, or like I don’t know if there’s clearly a better way one or the other. I could tell you that our agency currently does not have any pricing publish on our website for digital marketing services but in the beginning, we did. For the first two and a half years we were in business we had specific set pricing packages, and I do feel that having clear pricing was part of our appeal to smaller businesses.

We took it down because I did some testing and I realized that at the point where we were in our size and our growth that we were able to earn more revenue by pricing out jobs and like you know, sort of to conceptualize this, you have commoditized pricing. So when you have, let’s say Facebook bot building services, we’re going to be building two bots per month in this package with a maximum 50 different Q&A items with you know, four different sub segments of pages that you know, different pages a bot can go to.

And you can come up with some specific lists of deliverables in this package and then in this package. And there’s all these different psychology of pricing packages, right? You’ll have the decoy like one just a side note if you’re going to do the pre…Oh nice dog. Is that a cat or dog? That’s a cat. Looks like a dog.

Virginia Nussey: It’s a big cat.

Isaac Rudansky: Because it was that’s a little funky, the screen. What’s his or her name?

Virginia Nussey: That’s Harley.

Isaac Rudansky: Harley, cute. So you want to have a decoy, right, so you want to have, let’s say three packages. So you have the cheap package which no one wants the cheap package because no one wants to be the cheapest package. And then you have the middle package which has a lot of value.

So let’s say your cheap package starts at you know $199 a month and then your middle package is $599 a month and has all these deliverables, and your third package is like two grand a month. It’s way more expensive than the middle package but it has like one extra feature.

And like the idea of the decoys, like everyone looks at the one extra feature and they’re like, “Well, which sucker is paying two grand a month to get that one extra thing?” That makes the $500 deal look so much better, especially because remember like there’s that human nature that if you think that some other suckers were fleeced and bought the really expensive package with one extra feature, they’ll be like, wow, I’m getting a really good deal for this middle package. So like that’s just a basic concept in pricing tiers.

So you have your set packages, and we did that for a long time and then we took it off, and that sort of commoditized, meaning it’s like the same thing over and over again. And that will have an appeal to small businesses that are looking at it and be like, “Okay, like I know that I’m going to get honest pricing. I could hold them accountable for the deliverables.” But there’s a lot of downsides too.

The main downside is you can no longer really price the job which what I call is like a consultative approach to your services which is like, “Okay, how big of a company are you?” How excited are you about this? What type of communication you can expect from us? What’s the growth potential scalability potential? Because like if this is a big company that’s scaling will decrease our rates a little bit.

Do you as the provider, as the vendor really believe in this product or service in which case you’ll want to discount your base fee, and do some sort of bonus structure, which is like really by far the best way to go is bonus structures, with a with a slightly discounted base fee.

But anyway, so you have to sort of decide what you want to do first, like are you going to be you can take a consultative approach and price out each job or an each client separately? You could have a broad framework but there’s a lot of different permutations.

Or do you want to take a commoditize approach and list your prices and have pre-built pricing packages with pre-built deliverables which have its pros and cons? Okay, you figure that out. A couple of other things that we’ll talk about before going into like the different bonus models but you want to think about a setup fee.

A lot of people have asked me in the past like do you charge a setup fee? So we typically charge a setup fee. And I think your setup fee could be up to the cost of the first month’s management fee, let’s say. So if you’re charging a client 1,500 bucks a month, it’s reasonable to charge a client a $1500 setup fee which is a one-time fee for a month one.

But you have to really describe these two things, A, you have to make it clear to your client why you’re charging a setup fee and B, you have to actually do the additional work that you’re claiming is the reason why you’re charging the setup fee in the first place. That’s important.

So like we tell our clients, “Listen, onboarding a new client is a pretty intensive process. We’re doing a lot of competitive research which we’ll send you, like we’re going to show you like some very impressive spreadsheets on the competitive landscape of your industry. We’re going to be sitting around researching and thinking about different ideas for the structure of messenger bots or other campaigns.

We’re going to be learning about the advertising footprint of some of your competitors and how they’ve changed their ads over time. We need to just learn your industry. We need to put together some financial analysis like what is your profit margin on products? What products and services are you trying to sell? What’s the break-even cost for a lead or for a contract. Setting up the messenger bot systems and structures take time.” So like you know you could charge a setup fee, that’s what I’m saying.

Now if you sign a big deal, if you got a big client you might want to waive the set-up because if it’s a client that’s big for you, the client knows it, like the client knows they’re a big client for you and you also want to convey that for you this clients a big client and the goalposts will hopefully change over time, like as you grow and as your agency grows, what’s considered a big client will change and that’s fine.

But there’s just a thing, like clients tend to know where they stand as in terms of their value to your business, it just comes through in a matter whether or not it’s outright addressed, let’s say, so you might want to waive a setup fee.

Virginia Nussey: So just a couple quick questions from the audience when you charge a set up fee, do you charge the monthly first, fee for the first month also and I would think ye unless you decide you, you’re waiving the setup fee yeah.

Isaac Rudansky: Yes we charge the setup fee and the first month’s fee up front. It used to be almost all of our clients paid by credit card, which was great for us, even with the three percent fee and it’s great for the client to but now since we’re dealing with a lot of companies that are larger, they have invoicing departments, and they invoice them annually but either way we invoice upfront for the work.

So we invoice with a setup fee and the first month’s management fee up front. And then in month two, if there’s a bonus payment…If there’s a bonus payment from month one, we add that to the second month invoice and so on and so forth like that. So the setup fee is charged right away with the first month’s fee.

Now there are a couple of other things that sometimes clients will push back, and a lot of clients will be trying to negotiate a deal, they’ll be like, “Could you waive the setup fee?” But no, I can’t waive the setup fee but if you commit to three months, I could split the set up fee over the course of three months. If you commit to six months, we could wave the setup fee, something like that.

Now I know people are going to be asking about legal contracts and this and that, avoid all of that, for a couple of reasons. One, first of all, it takes too much time.

Second of all, if a client wants to stop paying, you’re not going to have too much recourse anyway as a freelancer digital marketer. Even if you do have recourse, it’s going to be more time and more money to try to extract money from the client.

Third, you don’t want your clients stuck contractually in a relationship that’s poisonous, that’s not working for them or for you because that’s poisonous relationship. No good will come from it. That’s three.

Four, 99% of clients anyway, if things are going well, they’re not leaving. We’ve had over 500 clients over the last five years and maybe three of them were doing really well and left because their whole plan from the get-go was to find an agency, get things going really well and then fire them.

And that’s my fifth point is agencies are not set up to lose money ever on a client right? So the only grounds there is to make a long term contract structure to your proposals. And I guess this is a different topic in pricing also, it’s like avoid long term contracts, it might sound cool or sound professional, clients don’t like it and they don’t make any sense.

Unless you’re one of the top four holding companies and maybe in those instances there really isn’t upfront investment on the agency side. And I tell this to my clients, I say like…And another…I told you there’s not to say on pricing. Clients love honesty and transparency, that’s A.

And B, clients want to know that you’re successful, clients want to know you’re making money. No client wants to work with somebody who’s not successful, like people have this notion that like, “Oh, I can’t ever convey to my clients that we’re profitable that I’m making money.” Like no, that’s not true; nothing can be further from the truth. Clients like to know that you’re successful, that you’re making money, that you’re doing well.

Clients don’t want to see you frivolously spending money left and right because they like, “Okay, well, I’m obviously paying you too much but they want to know that you’re successful.” So I tell clients that we don’t do month-to-month contracts because first we’re set up to earn profit from you on day one. If you fire us after month one we still made money like that’s how a typical digital advertising agency is structured.

We’re not investing upfront additional costs. We’ve had rare cases where a client like a large client asked us for certain things that we had to invest their own money. But in those cases, it was so clear that the relationship was going to be strong. But really, you tell your client like, listen, like we’re profitable every month so if you want to commit, give me like a verbal written commitment which not contractually bound to six months of service because you know that’s what it’s going to take to get these campaigns optimized, maybe we’ll waive the setup fee. If you want to commit to three months, we’ll spread it out.

And I’ve done that a handful of times and we’ve never had an issue with the client, you know, taking two months of work and two thirds of a set of fee and leaving, like that’that’s not how it’s going to go. But those are some instances where you could help the client defray the costs of an upfront setup fee over the course of a few months if you asked them for like a verbal or written commitment for three months.

Anyway, that’s how I do it. I don’t ever make a contract. I’ve never been sued and I’ve never sued. And yeah, getting litigious is not good for your business, it’s not good for you, it’s not good for your reputation, it’s just in most cases never going to work out well for you. So avoid trying to lock any kind of client into long-term contracts. But if you’re providing good work and your results are good and your services are professional and you’re work as a high-quality product, your clients are going to stay with you like you.Yeah, there are exceptions but by and large, your client’s are going to stay with you. So that’s a setup fee.

Virginia Nussey: So do you want to get into the bonus models because I’m sure that there are people who are on the edge of their seat excited to hear a little bit about, how to make that you know work for them.

Isaac Rudansky: Yeah, two more quick things before I get into the bonus models, and I promise I’ll make them quick because I have to go pretty soon also. One is a base fee. Because our industry sort of revolves around a percentage of ad spend or brackets and I’m going to touch upon both of those in a very brief minute. But people ask me about a base fee, and I think you should charge a base fee.

So here’s how I conceptualize it. If you’re a freelancer on your own and maybe you have some help or some contractors, I would say like look at the range of $699 a month as a base. So maybe you’re charging 10% of ad spend but if a client’s spending three grand a month, you’re not going to charge them $300, you’re going to make it very clear that our base fee is $699 to get involved with building bots for you, like that’s the minimum.

And you could tell your clients that if another freelancer gives you a cheaper quote you should be wary of how much personal time they’re actually able to put in for you on a monthly basis and getting paid so little. Something like that.

Now, if you’re a company looking to scale and do a lot of work with a lot of contractors and really primarily targeting small businesses then you could actually…It’s a little counterintuitive but I would even lower your potential base fee something to like $399 a month because as you scale and as have more clients and as more of your contractors or yourself could do more work, you’re able to spread that work out more and you’re able to earn the same amount of profit for less for a lower fee.

If you’re an agency that’s looking to scale, deal with higher value clients, not necessarily like a huge volume of clients, smaller volume of clients maybe you’re not taking every business opportunity that comes your way then look at a $1,600 to $2,000 a month minimum base fee. Okay, so those are base fees and you should have one because you’d want to be stuck getting paid $99 a month from a client, unless you’re just starting out and $90 a month.

Virginia Nussey: We take in everything, yeah.

Isaac Rudansky: Get as much work done as possible. Okay, so now you have your base fee so now you want to talk about the structure of your fees. So there are two basic ways you can structure your fees. You could do a fixed percentage of spend. Now if you’re building bots and you’re not running campaigns it’s separate then you need to charge based on a set of deliverables right.

So you could scale how much you charge based on how many bots you’re building, how advanced the bots are, but I would predict and I could be wrong about this but I would predict that most clients that you’re signing up for both services will probably be interested in running Facebook Messenger ad campaigns because that’s really one of the primary ways of getting a lot of contacts really quickly onto your lists.

So if you’re running Facebook Messenger ad campaigns that are clicked to messenger campaigns that are generating contacts in Customers.ai, then you could charge one of two ways. You could charge a fixed percentage of spend and you could start in that ten percent range as budget scales go down to nine, eight, seven, six, five, you know, we have clients that are spending well into the six figures, not on Facebook messenger bots yet where they started off you know, if you’re spending $200 to $300,000 a month, our fee will be 8% of spend: $300 to $500,000 a month your fee is 6% of spend and you go down.

You award the clients increase in spend with a decrease in fixed management fees so that’s what I call it graduated fixed management fee. But you could also just have a charge 7% of spend, 8% of spend, 10% of spend, I don’t think it’s normal to be charging more than 12 to 15% of spend excluding your base fee. Meaning if a client spending a thousand dollars you could tell them out front while we’re truthful it’s still going to charge you $700 a month right, which is 70% base fee. But like as budget typically scales like you know 12 to 15%, if it’s a very complex account is really the cap.

But anyway, I rarely charge a fixed percentage of spend for a couple reasons. One is if you’re charging a fixed percentage of spend, you as the agency do not know exactly what you’re going to be billing your client on a month-to-month basis because you’re waiting for the spend to come in. The client doesn’t know what they’re going to pay you, and neither of those things is desirable The client wants to know exactly what they’re going to pay you, you want to know exactly…

Virginia Nussey: Dependability.

Isaac Rudansky: Yeah, exactly. And like you just—you just want it out of, you want the management fees out of sight out of mind especially to your client as much as possible for you too but especially for your client. The other problem with doing it that way is that you can’t bill—or it’s harder to bill at the first of the month, it’s harder to bill before you do the work that way because you don’t know how much is going to be spent.

So what we do, and what we’ve been doing really since the beginning or close to since the beginning and clients really like this are brackets. So we do a fixed management fee within brackets so I’ll say something like, okay, up to $15,000 a month in spending your fee is $2500 dollars a month, $15 to $35,000 dollars a month, your fee is 3500 a month; 35 to 50, your fee is this a month.

So if you increase your spend a little bit, you’re not charging your client anymore, if you’re decreasing the spend a little bit the clients not paying you any less. And it works out very, very well for a few reasons. One, is if you’re doing a fixed percentage of spend system and you go to your client and say listen, like this campaign or this your marketing campaign getting list our contacts into Customers.ai is working really well I suggest we spend an extra $2000 next month doing it. So the client always has this defense mechanism that you’re trying to make more money off them.

And it’s unfortunate because usually you’re not that’s not the case like you actually want to help your clients business grow but like you can’t avoid that feeling of like are you trying to squeeze me for an extra 200 bucks a month now? So by having these fixed brackets will you have 5000 padding up 5000 padding down, that doesn’t really happen, it’s like yeah, I’m not going to make any more money off you, I just think it’s a good idea. And on the flip side, if the client comes to you and says you know what I want to pull $300 from the budget this month it doesn’t impact your fee either.

And of course, you could charge at the first of the month. So that’s a very, very—it’s a really good system. And what we do with brackets is if a client goes over the bracket one month, we don’t graduate them into the higher bracket it has to be significant, like we’re not going to penny pinch. So if they’re basically three, four months in a row or two, three months in a row, they’re spending two to three to five thousand dollars above their last bracket then we’ll say, okay, things are going great, we’re going to start charging you the next bracket, so the bracketed system is very good.

Okay, so now you’ve figured out, you’re not doing any long-term contracts, you figured out that you’re going to charge a base fee, you figured out you’re going to charge a setup fee, you decided whether you’re going to have comprised pricing or consultative pricing and you figured out whether or not you want to do some sort of fixed percentage of spend system or you want to do a bracketed system.

But now the best part about is you have to figure out how you’re going to get a bonus. And bonuses are the way to really make more money, provided that at least 50% of the time you could hit your bonuses. And you should design bonuses around that your ability to do.

So maybe if you’re just starting out, you’re just learning and you’re just getting your first two clients and it might overcomplicate things for the bonus but certainly once you have your feet on the ground a little bit, there’s no better way of scaling your agency revenue-wise because it doesn’t require one ounce of it that extra work you’re just coming up with a really smart way of making more money from your clients. So it’s the most effective way that I found to start scaling the revenue you’re earning, which is the reason why you’re in business.

So bonuses basically—conceptually, here’s what you’re telling your client with a bonus. It’s like listen, you’re hiring me to do certain things for you, to get certain results, right? You’re hiring me to either…And every client will hire you for different things so you’re either hiring me to decrease the CPA or to get a total, you know, increase your volume of leads, qualified leads, increase our sales, increase our return on ad spend. And by the way, clients could say they want all these things or a combination of these things, and it’s usually is a combination of some of these things.

Or we want to generate more contacts on our marketing lists for Facebook Messenger. So you’ll be like, okay, fantastic, we understand your goals so let’s just take one of these for example, say a client wants to generate more contacts on a Customers.ai list, not to exceed a certain cost per contact. Fine, that’s the goal.

So you tell your client, okay, your goal is to get, I don’t know, your goal is to get 10,000 new contacts a month and you’re willing to pay $10,000 for those contacts. Fine. So our management fee, you’re paying us a monthly management fee to basically get that those results. If we generate those results for you, you would feel happy that you hired us right? That’s the emotional idea here behind the pitch of the bonus.

Now, if we consistently underperform then, yeah, well, you reserve, you retain the right to fire us at any point but hopefully, we’re going to hit these results and hopefully, we’re going to do better. Now, typically, we’ll be charged you know, around 10% of spend as a management fee. And even in the bracketed system like we’ll usually charge between nine and thirteen percent of the median of the bracket. That’s usually how it falls out.

So you’ll say to your client, in order for us to earn your business over a month over month, like we’re going to aim to hit these goals, these 10,000 new contacts a month for $10,000, not to exceed $1 per contact or whatever it maybe, but we want to really align our goals to exceed those results. Like you’d be happy spending the 10 grand if it generated 10,000 contacts in Customers.ai but we’re a good agency we think we could do better and we want to sort of share in that success, and it’s within your best interest to have us want to share in the success because we’re the ones that are going to be behind generating that success.

So you tell your client, okay, we’re going to discount our base fee by 25% so instead of charging a 10% of spend or 10% of the median of the bracket, we’re going to now charge 7% or 6% or whatever it is and we’re going to put some skin in the game. We believe in your product, we believe in what you sell, we believe in our capabilities, and we’re willing to take a hit on the guaranteed fee in exchange for the opportunity to earn a performance-based bonus only if we exceed your goal, right?

So you tell your clients like and here’s one example of a bonus you say, “Okay, say we spend $10,000 and we generate 20,000 contacts, right, so we generated contacts at $0.50 a contact, we want to take a 20, 30, 40, 50% commission on the savings.” And what a savings mean? Savings is your own definition. We all agreed that a dollar per contact would be considered really successful.

So you spend 10 grand on getting, on 20,000 contacts, we’re going to earn a 50% commission and on top of our base fee, we’re going to get paid $5,000 because there was $10,000 in savings. And you have to be able to describe the stuff to your clients in English. You can’t just show them some formulas and expect them to be all excited.

So you tell your clients based on your own pre-stated results.You would have had been willing I guess to spend $20,000 to generate these 20,000 contacts because that would have been a dollar contact, instead we got the 20,000 contacts for $10,000 so we saved you essentially 10 grand, we’re going to earn a commission on that as a bonus 50% of that, $5000 bonus payment on top of that base fee.

So the bonus is a beautiful thing: one, it’s infinitely scalable because as long as results improve your bonus payment can increase. And we found that with some of our larger clients, the bonus payment has regularly exceeded our base fee. So, not only has it exceeded the entire base fee, it’s significantly more than what we had given up, because you want to sort of give a little bit of discount, give and take it makes the negotiation go a lot better.

And usually, clients love this if you could if you could decrease the risk for a client, if you could decrease a base fee and instead have a performance based bonus, there’s no client that I’ve ever spoken to that wasn’t like unbelievably excited to do this. It totally minimizes the risk. And then you’re showing the client that you believe in your own capabilities by saying that you plan on earning the money back through a bonus and you’re also showing the client that you believe in their products, that you believe that these products will actually sell and then you’re going to hit the results because it takes two to tango; you have to be good at your job but the client has to also have a good product that people want to buy.

So you’re really conveying a lot of belief, just a lot of belief, belief in yourself and belief in the client, which is very positive in the beginning of a relationship. And you’re really aligning your goals because oftentimes when you do this percentage of fee system what could happen is, is the agency could be penalized by good performance because as performance increases, as conversion rate increases, as CPA drops, the total amount that you could spend on a client’s campaign usually goes down to.

So all things being equal, if your conversion rate increases, your budget decreases, and if you’re only getting paid on budget then you’re going to be penalized as the agency by charging a lower monthly fee after you’ve increased performance for your client by, by increasing conversion rate, because your budget well again all things being equal your budget would go down a little bit.

Whereas you don’t want that and your client doesn’t want that. You should be incentivized even if budget goes down with a bonus system that if performance increases you’re going to earn in that bonus. And it’s very, very important to have the basic targets clear.

So in my example where we want $10,000, 10,000 contacts, that has to be clear, it has to be achievable. For myself, I don’t set achievable goals but for clients, you have to set achievable goals or attainable goals, that’s another just, you know, when you’re sending your own goals for your own life and your own business, don’t worry if they’re attainable or not, but when it comes to talking to clients, you have to be a little bit more realistic.

So the goals have to be achievable, attainable, and they have to make sense to the client and the client has to really feel that if I spend $10,000 and I got 10,000 contacts, that would be great, it would be profitable for us, which then makes it zero tension for them to give you a 50, 60 percent commission bonus on the savings because they themselves have determined and have stated that if you’re generating 10,000 contacts for $10,000 in spend, that’s a great use of our money, and whatever it takes to incentivize you to do better, we will share in those earnings.

So it sets you up very well to earn a very sizable commission on the savings. So there are a lot of ways you can do bonus. That was just a bonus based on cost per lead.