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Why Clients Need To Earn 1000 X MLE

#
81
Chris Do
Published
May 5, 2018

Chris Do answers a Pro Member's question about how much a company needs to gross to afford your MLE.

Read Transcript
Chris, you mentioned that if a CEO is speaking to you, they probably cannot afford you. Yes, most likely. It's a great pass to my question. If you. It's a really short one. So OK, let me look at your question again. So are you wasting time with a client that can't. Well, count grows 1,000 times, my Emily. Ok? would you guys need to understand, is this OK if a company does a million of business, 10% of that usually is earmarked for marketing. Most businesses have forecasting, and they already know what they're going to spend for marketing next year. Now, marketing also includes their staff, the ad by boosting ads, paid media, the production cost, the creative costs and all these kinds of things, and it covers a campaign for the entire year. So you take that million, you chop down to 100 thousand, you chop that down to 1,000 little pieces. And before you know it, you're left with 1,000. So if your email is 10 thousand, you have to go backwards. And we already figured out the formula. If they can't afford or gross 1,000 times your MLI, they're not grossing that they cannot afford you. And we did the simple math. We talked to a company that did $60 million of business a year local business. They manufacture something. They're good company. They cannot afford us. When we put out price tag, they choked on it. So that's when I came back and was like, if they don't do more than $100 million, there's no way they can afford us. So we just reverse engineered it. Now you're going to be in this place, did me, where you're still trying to find your first client, so you're going to be a lot more flexible and it's not going to matter that much because you just need to get a win under your belt. You need to get some experience behind you and you do what you need to do. OK, pretty much. I'm asking if I'm banging my head against the wall because I think that right now I don't have. So I have zero clients. All the work I've done is a freebie job. So pretty much. I'm not sure. I'm perhaps it's a mindset thing, but I'm not sure I can go to decline that gross two million, for example. Well, I think that a local restaurant that grosses 500 thousand, which is still a quarter of my Emily times 1,000 might still be a good fit for me. OK, let me give you this short because we're running along on time here. The short of this, I talked to my financial advisor. He said, Chris, should I refer you to clients? I would love that, and he's like, well, how much should I tell him, so I gave him some guidelines on that. It goes, that's interesting. So you think they need to have 1,000 times your thing? And I said, yeah, I think so. It goes well, I don't want you to rule out certain kinds of companies. Some companies spend 50% of their gross revenue on marketing alone. Companies that are highly undifferentiated spend a ton of money on marketing. Credit card companies, soda companies. Water companies. They rely heavily on marketing to differentiate a lot of fashion brands do this as well. They buy a lot of ads, so that's all you have to do. So you can say like, you know, those prepaid phone cards. Absolute commodity, no differentiation. They're probably going to spend more on design and marketing. So if you're in a commodity space, those companies will spend more so your calculation can be a little bit lower, right? But let's forget about all these malls and the size of clients and how you feel about them. Just walk in the room. It's like, you know what? Whatever you ask them to do, you ask me to take out the trash is going to be 2000. If you want me to assign you an identity system, it's going to be $2000 because I can't do anything for less than this. I only have room in my client roster for 10 clients. I want to service them really well. OK, let's say you have 14 clients right now, and quite a few of them don't even meet your MLA. The tip that Blair gives is chop the ones at the bottom to make room for the ones on top of the ones you have already. So trim a few off the bottom. Take your lowest paying clients. Say goodbye to them. Send them to somebody else in the group who's just getting started. Send them to me if you have a couple of grand to do something, I'm sure he could do something and it'd be great. Make room for some people on the top and sell to those people. So you're going to go to this constant process of filtering out lower paying clients for higher paying clients as you level up. OK

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