Ep 130: Why “Custom Work” Is Actually Killing Your Agency | with Stephen Cozzolongo of Digital Position

This is the Agency Uplift Podcast for agency owners who are done guessing their way through growth. Each episode focuses on the decisions that compound, from foundations and positioning, to delivery and leadership. With insights you can apply immediately. Let's get into it. Welcome to the show. I'm your host, Sean Lang. I've spent the last several years building and operating a digital agency that's grown past 75 people. That's definitely shaped about the things and the decisions that really start to matter when things get complex. Just a reminder, we've got a free community with times of helpful agency resources, templates, AI tools, frameworks, things that I created for myself when stuff was messy, things that will help you. Just go over to agencyuplift.co/group. Okay, so today I'm joined by, and Stephen, I'm so sorry I forgot to ask you how to pronounce your last name. Stephen, pronounce your last name for us, please. Cause a long go. Cause a long go. That's what I thought. But I also, I didn't want to butcher it. He's the partner in CMO of digital position. Digital position is a full stack performance marketing agency that exists to solve one core problem that they see in nearly every business that they work with. And I have a feeling that you're going to tell us what that one core problem is. So tell us about the agency, Steve. Yeah, yeah. So full stack performance marketing agency or growth agency. We were really rooted in paid and SEO, but as things evolved and as marketing has changed, we just knew that we had to get a bigger, more important seat at the table. And that is really speaking the language of business owners, decision makers, CFOs, and what they really care about. That's profitability, that's revenue, that's growth. So it's not just how a single channel is performing. But what we like to say is we unleash businesses ability to grow. And the biggest problem that you're just about to touch on is that we see a lot of businesses and even agencies suffering from what we'd like to call Phantom progress. And basically what Phantom progress means is that you're doing a lot of work, right? But is it the right work and is it actually helping the business grow? So a lot of people get very distracted. They're guessing you're on LinkedIn, you're on social media, you see tons of marketing gurus posts, some like BS, like fix or bandaid solution or whatever is hot at the moment. Like, hey, just check out this. Check out these AI agents on cloud. Just just hook up your Google ads and ask cloud to take care of your optimizer entire account. Cool. Yeah, you're done. You're totally done with marketing. Right. We just say that that's Phantom progress because you still are guessing you're doing a bunch of work, but your the wheels are like spinning. It's like a hamster wheel. You're spinning. You're wasting time. You're wasting energy or, you know, there's redundant tasks that you're doing. Right. And you just really don't know how to create a marketing system that is that's repeatable for your business. So what are the types of clients that you work with? So we mainly work with e-commerce businesses, but we are industry agnostic. The way that we look at e-commerce is a little bit different than most people, but we basically say that we can fit everybody into four different quadrants. And those quadrants are defined by skew count for the number of items that they're selling. So see their low or high. And then your your AOB or your ticket your average ticket price. And I see their lower high. So this basically saying, you know, how complex is the catalog that you're working with. And then what is the buyer journey? Right. So the if you have a low ticket item, you're probably a little bit more impulsive or you can, you know, your customer can be a little bit more impulsive on pulling the trigger and buying from you. Right. Think about something that's like five, 10, maybe $30. Right. You say, whatever. I could get that a try for 30 bucks versus something that's 500 bucks longer sales cycle. A lot different, you know, different touch points, different channels involved, different touch of content, that kind of stuff. But anyways, long story short, if we plug somebody into our four quadrants, we actually have, you know, the playbook for each one of these quadrants. Right. Because everybody I think is a little bit too broad and says, Hey, do you GC? Well, you GC in general probably applies to everybody, but how you go about generating you GC and how you go strategize around it is different based on which quadrant you're in. So in terms of the four quadrants, those are kind of like I'm picturing like those are like your four ICPs for the agency, more or less. Correct. Yeah. Yeah. How long did it take for the agency to sort of zero in on those four ICPs? Because I know that ICP and market in general is generally a very tricky thing for agencies to settle on. Definitely. Man, it probably took seven or eight years to hone in on those four different quadrants for the longest time. It's just like, Hey, we do e-commerce. Well, everybody does e-commerce or. Hey, we have this playbook. Well, you know, your playbook is the same as everybody else's. But in reality, when it comes down to the work that you're doing for these clients, it's like, well, it seems to be a little bit more custom for every client. Well, no, that's that's also not true. So you can bucket people into specific quadrants and even different industries into specific quadrants. And then the strategies that you would implement or even the timeline of strategies that you would implement or the channel mix or the budget allocation. That is going to change. And if you've worked with hundreds of customers over over the years, like we have, you start to see patterns. And that's that's what we figured out. Yeah, I mean, the pattern matching, I think is second and that's the most, I think that's that's the most important thing because that's how you scale your expertise and then scale the impact that you're able to give this clients. Can you just tell the other there's going to be a number of people in the audience who who still aren't convinced by the whole like, you know, niching down or picking an ICP out of fear and limiting beliefs, obviously, as we know, we've done it. But can you just maybe just tell them real quick what the what the benefit was and the changes that you saw at the agency when you actually had this clarity. Yeah, so before we have that clarity, everything seems like it's just this like complete custom job. And then you can tell yourself, you're going to tell yourself, well, we're different because we actually customize every single solution for every client. So we're providing a better solution. But in reality, you have these loose broken processes on your end because they're not complete enough. And yeah, there's so many ways to go down this question. Your output is not consistent enough if you have anything broken in your process, right. It's the same thing with AI, right. Everybody is like using AI, but they're probably using it wrong because you can type that same question in for a bunch of different people. Cool. Yeah, it spits it out really fast. But if you compare all the outputs, are they similar in a business needs to have a consistent output or else you will not be successful because you cannot promise something to a client and say that you're going to deliver something and it's just it's not predictable. It's not consistent. So you need to find some sort of pattern in some sort of way to hone in on like the specifics of a particular strategy, if that makes sense. That makes perfect sense. I'm really glad that you that I asked you that question because you answered it in a great way. All right, let's go back to the agency specifically. Now, I know you weren't there at the very inception of it, but you basically were number two and then started to build the agency as it was. So what made you want to to basically build an agency? Yeah, I think that was pretty interesting and I keep thinking back into like AI and stuff like that. But what was really interesting back in the day, especially in performance marking and digital marketing or paid marketing in particular, which that was like my forte back in like 2014 is. It was just very clear when somebody is just better analyzing data, they're better at Excel, they're better at using the tools that are available. They see things differently in terms of like how to find loopholes in the platforms win and how to make different moves, what kind of like levers you can push and pull and that kind of stuff. Like this is like all super important work back in the day, but this this is actually the stuff that gets replaced by machine learning algorithms and AI. And I felt like I was doing this for big fortune 500 companies or I was doing this for big fortune 500 companies. I was seeing a lot of great results both in my career getting promoted and obviously like getting raises and things like that and then overseeing bigger and bigger teams, you know, meeting actual like sea sweets of these large fortune 500 companies being the ones have to present to them and tell them what they they should be doing. And then I was like, well, I'm not really sure why I'm working for another agency and then doing everything that everything that I'm doing. And then not really getting compensated for that. And I just felt that there was that piece obviously. So everybody has like this motivation of obviously making more money and things like that. But the second piece was that I realized that like the team that I was leading and the organization organization that I was in it was just so big that you can't possibly have the best talent out there. It just like wasn't set up to have the best talent. And then I'll see you. saying, "Okay, well, this Fortune 500 client is paying literally millions of dollars in fees, but half the team just graduated from college." They're only getting really good at one single task that could literally just be one little thing within Meta, or one little thing within Google, not even in full platform. And I was like, "Well, what? There's a problem here. The companies that are paying the most for their marketing are getting the worst talent. It's just like not the talent that they should be. The value wasn't there, right? So when I met with my business partner, we both felt the same. I was coming from the agency world. He was coming from an in-house position, and he was always struggling with the agencies that he was working with. We're just like, "Let's just fix that. Let's go remote." We went remote back in 2016-2017 because our philosophy was, "I want somebody in the US who is just good at what they do and is super passionate, and I don't care where they live. I just want the best talent because they're going to do the best job. And then we together are going to get the best results for any client that we work with." That's awesome. Yeah. That's a great reason to start an agency. Let me see. We'll see the first two years. What were the first two years like when you guys said a fish you said like, "We are an agency. What came next?" Quick note. Agency uplift runs a free community for agency owners who want better systems and fewer headaches. Inside is a four plus hour foundational course, practical templates, private discussion, and podcast Q&A. You can find it at agencyuplift.co/group. See you there. If your idea of leverage is watching in-ate in-bros on YouTube while paying for 12 SaaS tools you'll set up later, this is for you. The agency leverage blueprint is a free five day email course for agency owners who collect software instead of results. No $400 dashboards. No Frankenstein automations. No productivity cosplay. Just five real mistakes that keep you trapped. Plus custom GPTs that actually remove you from client calls, sales calls, SOPs, automations, and your calendar. It's free because you're still the bottleneck and we're all tired of pretending you're not. Get access at agencyuplift.co/blueprint or click the link in the show notes. Seriously, pause this and go sign up. I'll wait. I've got all day. Man, okay, well, one that was a long time ago, but two, the first two years are full of tons of emotions. Figuring out how you're going to run the business and then maybe almost just as important is how you are going to play or work alongside your business partner or your team. Your relationship, my business partner and I, we always joke that it's like we were married because we spent more time together than we were spending with our wives and our family, but we had to. You're working from 7 a.m. or maybe even earlier. From the moment you wake up to, man, there are nights where we went to bed, like three or four in the morning trying to put together this proposal or something that, look, if we don't respond very quickly, if we don't do a kick-ass job, then why would they go with us? There's no other option. It's just really, really tough. You have to grind and you have to, we kind of joke about like you have to suffer a little bit. That's also the only way I think that you can kind of survive as an agency right in the beginning, but I will say that there's a lot of mistakes that we made in those first couple of years I wouldn't do again. I love asking about those because I think it's really, really helpful for us to learn from other mistakes that we can make our own mistakes. That's a big mistake that stands out as like in hindsight, that was really bad. I shouldn't have done that. One of the biggest mistakes I would say is not investing enough into your team and your systems that you are creating or the tools that you're using, all that kind of stuff, right? We're like, "Oh, we're good enough at Excel and everything like that." Let's just kind of create our own reporting system. Well, in the grand scheme of things, it's like, "Well, are you a reporting tool company? Why would you go and build your own reporting tool?" If somebody else is already living and breathing, reporting, let them do it, do that. Maybe it does cost you $1,000 a month back in the day that was a lot. But does that save you a thousand dollars in time where I should have actually been working on the business and doing some marketing and doing more lead gen and going out and talking to people, right? Yeah, there's probably a huge opportunity to cost there. Also in the same vein is not being afraid to hire somebody and maybe in the beginning, you're paying somebody more than you're paying yourself. That happened to us. But I would do that two times more than what we did, right? I think we were just so scared to run not in the red, but just run unprofitably for a couple of years, right? We're just like, "Well, let's bank this money and save it." Whatever. Why would you do that? Why would you have a bank account full of money when you're in the first few years of the company? That just makes no sense. We literally had $250,000 sitting in our bank account for a year or two because we're like, "Well, when we do grow, need to make sure that we have enough bankroll so that we can make payroll for people or whatever." It's like even thinking about that now, just freaking take that money out and invest it for yourself or make that money work for you somehow, whether it's in the business or for you personally. So just crazy how cautious we were. But being too cautious is going to hold you back. You see it everywhere though, with small businesses and clients that you work with right now, they're so cautious about reinvesting. They're probably like, "Well, I don't know why. I don't want to spend $10,000 a month on creative." Okay, man. Well, yeah. You're going to feel that later down the road when your creative goes stale and then you need something in a pinch and now you're 30 to 60 days behind. I'm kind of laughing to myself because that's so similar to our H2M when we started when it was just me and my partner. We didn't have any objective way to even track how we were doing financially. We just saw money comes in, pile money gets bigger. How much should we pay ourselves? I'll just keep paying ourselves this small amount because we don't know what's going to happen. I don't know if you're familiar with profit first, but I implemented the profit first system, which is just super simple, just buckets basically. Percentage of revenue. So if $100 comes in, well, $50 of that goes towards operating expenses. $20 of that goes to the owners. It's budgeting for dummies, but for a small business. We ran blindly for the first year and then I implemented profit first. I was like, "Wow. We have a lot of money and it's just the two of us and we're working our asses off." That was the catalyst for us to actually start hiring and actually start to have employees. We're sitting on money. We're not doing a very good job for the clients that we have because we're so busy. It's higher people. That was a huge light bulb moment for me and I think for a lot of agencies that are just sitting on piles of cash out of anxiety because they don't really know what they're doing. You actually, your goal isn't to hoard money. If you hoard money, you think that's how you get rich. No, it's not how you get rich at all. That's how you stay stressed and small. Speaking of first hires, what did the first hires look like for you guys? The first hires, at first, we were really thinking we were being a little bit too reactive. We're like, "Oh, well, what if we get somebody to help with our administrative tasks and maybe accounting and that kind of stuff?" It's pretty natural. It's still not a bad move, but in reality, that's just so easy. What you really need to do is take a lot of time and think about somebody that you would hire, that you would profit share with, that you would be willing to potentially give part of the company to. If I was ever to start another company, my first hire would get equity in the company, for sure. Or some sort of really lucrative profit model or profit share model. Because you just want those first hires to have skin in the game and you want them to feel rewarded for the value that they're going to bring. Those first hires are so important because that is the beginning of your culture. That is the beginning of you being a little bit less stressed. There's people on your team or anybody who's listening, who's listening, is like, "You can list out all your team members and then if you know that you have this new client and they're going to one team member or whatever, you have a certain feeling." You want to put that client on or you want to give that client to one of your team members where you're like, "Oh, I'm going to give it to them. It's going to be awesome." Whatever. I don't really have to worry too much. Everybody always has a short list of people there. They have bandwidth. I'm going to give it to them. I'm like, I'm gonna have to keep eyes on it, whatever. It's inevitable, like, it's leaving you. I don't think you can get away with that because there's always, you can always rank everybody from one to a hundred or whatever and there's always, there's somebody has to be on the bottom. But all I'm trying to say is that you need to get to that point where you can take a client, you can hand it over to somebody that you trust, you can go to sleep at night, you free up until bandwidth, you free up your own time within the company for execution or growth on the company. But that is so incredibly important. I would just not, I would just tell anybody, doesn't matter what type of business you are, don't try to hire somebody because they're cheap or something or you feel like you have like, leverage over that situation, right? Like, oh, they're young enough so I could just offer them a low, low, no salary or whatever. Like shoot for the moon, man. Like shoot for that person who used to work at Uber or something or who cares and like, give them what they want, give them, pay them handsomely, pay them more than what you'd pay yourself. And I think it's gonna, it'll pay off so much more. You cannot just like fake experience, you cannot fake like work after a court passion. Very true. All these a bunch of stuff in there that I want to comment on. First off, I was definitely the agency owner that was like, "Huh, if I hire this person, red at a school and they say that they're willing to work for $500 a month, that's a good deal, right?" No, it's gonna cost you way more than $500 per month with all the fires that you're cleaning up. So I was that guy and a lot of agency owners are definitely that guy. I love the idea of the first hire being that person that has skin in the game and that you give equity to. I love that. And then one caveat with that is that depending on your experience as a founder in business and working with other A players, you might not necessarily know what good enough looks like for that person to give them that level. I remember the first person that we gave equity to, it was a mistake. It was a mistake because we actually, we ourselves had not gotten to the level where we knew what we expected of others or what we needed to expect of others. So little caveat there, but I absolutely love that idea. One other comment there too, it is tough in the beginning to do that. I just think you should have the mindset of being willing to give equity or something to make it very sweet for that person that you hire. It doesn't mean that you have to do that every single time. I think that there should be some path to earning it. But the mindset should be, I want to find somebody that's so important and so impactful that I would be willing to go to war with them and that I would be willing to give them something. And if I'm making a million dollars and they should be making part of that or they should be making something that will make them feel like it was worth it because in those beginning, those first years, unless you're just like this crazy high performer and you can do everything and you are willing to put 60 to 80 to 100 hours a week in, which is pretty accurate, I would say, for like a beginner founder. - Oh yeah. - You need that person to be willing to do more than 40 hours a week. You need to trust them to be able to build out those processes that you weren't able to get to or handle a call when you have to go do something with your kid or something or who knows, whatever, right? Like when or somebody that, or like handle a relationship that you curated that you is super important to you. All right, so like all those things are the most important things to a business to survive in those young years. So you need to find somebody that could plug into that. And nobody wants to work for somebody, especially at this day and age, and just make somebody else rich. So like you have to make them feel like they're getting something out of it 100%. So were you able to find that first time? - Yeah, we were able to find some, I think there's a couple, so there's like three different people that we hired that was in like that type of role. One of them was tough because we did put them on like this profisher model, but it gave them so much insight to the company that then they kind of grew resentful a little bit. But almost every single hire that we've had has ended like amicably. So yeah, I think we tried too. I don't think we were as successful, but we didn't have that mindset that I'm talking about right now. I would just say like looking back, I think I would have spent a little bit more time and like shot for the moon in terms of like who we were going after and who we were talking to and found somebody that maybe even, I think also Ego has a big part of it too, is like find somebody who has equal or maybe even greater experience than you had. That just maybe they just don't wanna start like an agency or business, but they wanna be a part of it. All right, so I guess long story story show. The real answer is no, we didn't really find that person, but we tried eventually and it took a while for us to get there or to come to that realization of like, oh man, like these first hires are so important because you basically are taking on another partner by doing so, but really hard to view it that way. Totally, yeah, absolutely. I often find myself thinking and thinking about this and maybe I'll ask you like, imagine that your agency gets acquired and you're no longer in the business anymore and you're like, I don't feel like I'm done with the agency work yet. Like I still wanna do this. What would that second agency look like? What would you do? Knowing all of the things that you know now, this is kind of a reframe of the question of like, what would you tell yourself just starting out? But like, let's say that you're doing this part two, you know a lot now. You've learned a lot, you've got a lot of scars. There's a lot of things you would do differently and there's probably a shortcut to where you are now based on what you've learned. So what would you do? Yeah, I was catching up with an old friend of mine who ended up starting an agency and I think I like his model. I think it's really smart. What he does is he only works with a very small number of clients and then he has like a pretty lean team and I think that that's probably something that I would do 'cause I think as you scale an agency, one of the hardest things is that you really have to understand how to work with people, how to manage people. And that's a big chunk of your time. So I really think about it's more of like maybe the makeup of the agency that I would potentially change. I don't know, or just like having maybe clients that I am like insanely passionate about. But to have the leverage to be able to pick and choose is very difficult and almost nobody is gonna have the opportunity or most people probably won't. I don't know if that's like a fair statement or not, but it feels like almost nobody will have the opportunity to just literally say, I only want to work with five massive brands that I want to work with that I'm passionate about that are literally me, right? They are really into like fitness, the growth mindset in business. They do eight figures or more or whatever. It's pretty hard to get to that point. But I think that would be the most ideal situation. Hopefully that answers that question. No, no, I love it. Yeah, it's great. It's great. So how does digital position acquire new business? Yeah, so digital position, well, for the most part right now is, it's like everybody else is doing a damn good job and getting referrals and generating reviews that are meaningful and impactful, trying to network and different things like that. However, more recently, over the past six months, we've been trying these different things where we're just trying to add as much value as possible, as quickly as possible because it feels like that we're just in the sea of no name agencies that could just pop up anywhere, everywhere. People are pumping out content, people are pumping out ideas. Loyalty doesn't really exist. Or it's harder to come across, right? People are like, oh, well, agencies are commodity blah blah blah. But what we are trying to do right now to generate new businesses is just say, instead of just saying, hey, we'll do an audit, blah blah blah, free audit. No one cares, everyone can do that. Let me just do something for you for free. And on our end, we have to figure out something that is not going to break the bank, but be extremely impactful and can prove results within 30 days. And we also have to find like a problem that exists for either like a cohort of people or businesses, or maybe like a specific industry or something like that. And like right now, it's like a free AB testing. But we'll just like build a new page and then set up an AB test for somebody and hey, if we could beat your existing page, then the ball is in your court, but I think it might be worth a conversation if we just literally did that for you for free and made you more money. Maybe it's like potentially building out ads and creating something if we see that there's some sort of value that we can add there. Maybe we'll build out, rebuild your Google ads account or something like that because in reality, I guess you would know better, but the. Average CPA for an agency is got to be like $1,500 or something. I don't know. That's a tie. That's a tie answer. Sure. Yeah. I mean, I guess you could probably get it lower if you're if you're really good with that takes time. But I would just imagine that you would be willing to probably spend let's say a thousand dollars to acquire somebody through ads or through all these other channels. Well, would have I could just offer somebody, you know, something for free, give them $500 to $1,000 with their value instead of paying like Google or Meta or, you know, one of these platforms. No, totally. My final question and a fall up to this one is, who does sales at the agency? Do you guys have a sales team or is it like the the partners? Yeah. So we've tried we've hired three different sales people over the past four years. We've given them six months to year. It's tricky, right? It's tricky. I don't think you can find a sales person that works or plugs into an agency unless they have been in account lead or have like some sort of like extensive knowledge about like what we do. Maybe I'm naive. I don't know, but I think for like our offer for the type of business that we are because we are e-commerce, you know, growth agency, we are industry agnostic. Like you need to be able to think quickly on your feet and you need to have experience and pull from experience to then relate to that client on the spot. More so than just selling somebody like you, you need to consider a relationship with a new client as well actually as a relationship, right? Like that's somebody that you're going to be talking to a lot that you need to build a rapport. You should know what their favorite sports team is. Like you should know like all these different things. You should know like what's really bothering them. You know, right from the start, you can't just say, you know, here it's as simple as this. Here's a problem. Here's a solution. So yeah, it's been very difficult to find a sales person other than myself. The CEO or maybe a couple of people like some of the managers and the leaders on the team. But I would love to know if you've cracked that code. I mean, we can know. We could talk more about it some of the time and I can also refer you to one of the podcast episodes. But the podcast was a huge, it was a huge unlock for us as an agency. It builds rapport early. You get to learn all about, you know, how they're their their their their brand tics and they'll go through like props or experience because of the podcast episode you're giving them up a platform. And then afterwards you've already got that rapport and and you can basically just say like, you know, I kind of hear what you're going through and I mean, if you want to, you know, let me take a crack at you know, give me some insight or or let you know what I would do. I mean, I'd happy I'd be happy to do that for free. You want to book another call and then be like, yeah, sure. Why not? Great. Now you're now you're in discovery, right? And then anything can happen once you're in discovery. So true. It's definitely helpful. Definitely helpful. But that's again, that's when we were talking before before we said a recording like, that's that's the power of being able to like build relationships, right? And and building relationship one-on-one is definitely difficult difficult to scale. Once you have a system, which is why I do like sort of the podcast methodology is it's kind of it's it's a system of ties away at building relationship. It's not necessarily relationship at scale unless you start to like record an absolute massive amount of podcasts. But at the same time, it definitely offers a bit of an bit of an unlock. So yeah, that's what I do. Appreciate that. Cool. And well, we are at time. Thank you so much for coming on. This has been an awesome conversation. Where can people find out more about you and digital position? Yeah, you can come to our website digitalposition.com or check me out on LinkedIn. I try to post as regularly as I as I can, but Steve Kazalango on LinkedIn. Or you know, just reach out to me. Ask Kazalango at digitalposition.com. I don't know. Maybe you could put that in the in the captions or whenever. For sure. Yep. We'll do. Thanks, Ben. All right. Thank you. [Music]