Editor’s Note: This article was inspired by a handful of writer contributed articles built around a common theme: making digital marketing and process automation useful to a non-technical small business owner. We started with the article about building small business websites, where you could use some fairly basic web development skills to help local businesses. You can take it to the next level by working with outsourced experts to deliver your services, such as we did in the article about working with offshore experts to manage Facebook campaigns.
We touched on this same basic need from a marketing perspective in our articles about working as a freelance high ticket sales agent, helping small business owners up-sell prospects to higher value service packages. That same theme of translating the value of an offering, helping small business owners understand how to apply these tools and ideas in their business. Don’t want to talk to people? Rather do copy-writing? You can address the same needs by building up affiliate marketing campaigns and websites for high ticket affiliate marketing offers.
What if we put all of this together into a single business? We find clients, pitch and close the work, then contract with others to deliver the work? Welcome to the wonderful world of building a white label service business. Best of all – it is probably just like the day job that you just left – except you receive the full value of the business you sell and can decide how the work gets done. Sound interesting? Then read on….
What Does A White Label Reseller Business Look Like
The goal of this business concept is to put you in a position to sell a unique service offering without requiring you to invest in building out and managing a team of employees. For this example, we’re going to use the idea of starting a “done for you” publishing service aimed at helping busy professionals stay engaged with their clients. Imagine running a small accounting office: wouldn’t it be nice to update your blog every month with a fresh article and email it around to your customer list? Of course it would – it might even help you drum up some extra business.
Writing the article is an aggravating chore. You’re an accountant, not a writer and a blogger. It will probably take you all afternoon to develop an appropriate and interesting article. Even then, the article is going to look pretty rough. And who knows if it will even do anything? You don’t know anything about SEO. Or email copywriting. In fact, you may not even know how to post it on your WordPress blog. Starting to think you should just go play golf?
But wait! (triumphant hero music) For the low price of $500 per month, I can turn your blog into a solid contributor to your business success. I’ll spent an afternoon with you and your team to understand your business and set some goals. After that, the magic happens:
- We will lay out an annual calendar of content ideas by month
- We create and post two fresh blog articles each month
- Everything written by a SEO-trained professional
- Best of all, we collect $500 each month
Such value, eh? You get your afternoon back and several high quality client contacts per month to drive business. Best of all, this should grow your organic search engine rankings over the next year or so.
And with a 12 month contract, I just locked in $6,000 per year per client of revenue. With the potential to do some pretty serious upselling once I’m in the door – for weekly posts, longer posts, local listings, etc.
How We Get It Done
So now what? Do I spring into action, hiring a bunch of writers and junior talent? Rent an office space?
Meh. What do you think this is, MadMen? I’m not hiring anyone yet.
I’m going to call the reseller program at “The Hoth”, a large SEO agency in Tampa. I’m going to sign the client up for their blogger service, where I get two fresh 500 word articles each month written by a writer with experience in the industry. They find and pitch me on topics (per my guidance). Everything is well optimized for SEO. I’ll use the Blogger Pro offering, which will cost $160 per month for two 500 word posts. This gets me a writer with experience in the industry. They can post content directly to the client’s blog.
I can’t be totally hands off, of course. I’ll need to manage the agency, review anything that gets posted, make sure the credit card is charged, and update the client. Assume this is going to take 2 hours per month.
An honest accounting of our results should include the work I put into selling and setting up the account. The actual set up process itself takes about 4 hours.
My marketing strategy is pretty simple:
- Surf the web for businesses near me with a blog that has no recent posts
- Email and call the business owner to get an appointment
- I think I can get at least one appointment per two hours of prospecting
- The appointment will take two hours door-to-door
- I can close 20% of my face-to-face meetings
All of this math implies that closing and setting up a new account will take 24 hours of work (5 pitches, 2 hours to book the pitch, 2 hours to deliver the pitch, 4 hours to set up a new account). Combined with the two hours per month of client service, that means we’re going to spend 48 hours per account per year. Given we’re collecting $500 per month and paying $160 for the posts, this works out to $4080 for year 1, or the equivalent of $85 per hour. Should we retain the client, this jumps to $170 per hour in year two.
By the way, if you haven’t sold consulting services before, you should check out our free guide to finding consulting clients on LinkedIn. It would probably also be worth looking into setting up a professional website or blog for your service to provide some additional “legitimacy” in the eyes of the customer. It is well worth spending an afternoon or two polishing your LinkedIn profile, drafting some basic marketing materials, and putting together a basic website. Not only will this help you close more deals, it also helps you command higher rates as a professional service provider (rather than a quickly-thrown together startup).
Anyone getting excited? I know I am…
Phase II: How To Increase Your Profits
But wait – we haven’t gotten to the best part yet.
Any improvements or efficiencies go directly in my pocket. Anyone see opportunities? Because I do…
The $500 is a good “get in the door” price, but I’ve got an even better deal. Why post twice a month when you can post weekly? I’ll even bump one of those posts up to a 2000 word “super-post” on an important topic. This kicks my content cost per month up to $500 but I can easily charge $1000 for the better plan. It’s a pretty good deal: that’s almost four times the content for only double the price. Holy Cow!
I can probably flip at least half of my customers to the better plan. Incidently, with all that extra SEO optimized content we’re posting, there’s a good chance their organic traffic will grow dramatically. That should definitely help me keep more of the high paying customers around for Year 2 (no acquisition costs).
But wait – there’s more. With all that great content coming out with my upsell plan, I can sneak a little bit of filler into the mix. Once a month, I’m going to take one of the smaller articles and send it to a cheaper writing source (TextBroker) with less SEO polish. Maybe keep it focused on basic seasonal content. That will save me about $60 per month per client on the better plan.
Don’t tempt me too much, by the way. Once you control the specifications of the deliverables, you can easily improve the profitability of the overall offering. For example, what if we found a way to use content templates and writing formulas to use even cheaper writers to create our materials? Or used something like a quiz or widget to improve audience engagement with a piece of code that can be easily recycled across our different clients. We might be able to partially recycle common articles between clients by having a junior writer do a basic re-write rather than creating new materials from scratch. Anything you can do to use process, technology, product specifications, and policy to cut costs is a potential source of incremental profits and a competitive advantage in the marketplace.
Moving to marketing, half of my time is going into prospecting. I’ll hire a virtual assistant to handle searching for un-maintained blogs and doing outreach for me on my behalf. Even if they generate 1/2 the appointments per hour, I can pay them $15 – $20 instead of my time at $100+. I can probably also use a Facebook campaign to help generate additional leads while I sleep. The combination of these two ideas should dramatically reduce my average cost to acquire a new account and free up a bunch of time which I can use to close more new business.
At the same time, I’m not ready to hand off client service, closing deals, and quality assurance tasks. These are all pretty important to finding, winning, and keeping clients and would require a very senior person to replace me in that role. Hold off on outsourcing “client facing” or “key results” tasks until you’ve got a really good grasp of how the process should work and a plan to ensure things stay on track. When you do hire someone to manage these tasks, pay them very well – they are critical to your success.
Finally, you can make the decision to invest in adding more features and bonuses to your products. Wow, we make a lot more in the second year, don’t we? What if we added a couple of “Year 2 bonuses” into the plan so loyal customers got even more value? Stuff like free social media posting or a press release. I’d be happy to kick in another $1000 worth of services to secure a contract renewal at the upsell plan. I’ll easily make this money back between better retention and moving people to the upsell plan.
Did I mention that all of these benefits were going into my pockets?
Managing The Risks of A White Label Service Business
This is a business opportunity, not a job. There are some additional risks that you need to be ready to manage.
First, you’ll need to make sure that the service bundle you come up with is competitive in your target market. You can usually get a good read on this in your first couple hours of trying to sell the deal. If prospects don’t get excited, pause and ask a friend to listen to your pitch and give you some feedback. At that point, tweak the pitch or the offer and try again. The good news is you’re losing time instead of money, so you can probably do this for quite a while without going broke.
My next set of concerns would focus on managing the risks associated with your service delivery partner. With a larger organization such as The Hoth you’re probably in decent shape. But work on a plan to have backup vendors and copies of your client specifications and past drafts in the event a key vendor starts to have quality issues. If you’re dependent on independent freelancers (such as my cheap articles example), give yourself additional time.
Finally you need to make sure you’re getting paid and the client doesn’t bolt on you. I like the idea of getting a basic contract in place for the year and charging their credit card before you buy their content for that month.
White Label Services: Product Strategy & Competitive Positioning
You can easily apply this idea to a very wide range of services. While we use a bunch of digital marketing examples, there are plenty of other fields where this concept can work. All you need is a vendor who is willing to sell you their services on a white label basis and a good reason for customers to buy from you.
This business works best from an operational perspective when you can productize the service offering so you can sell the same set of basic packages almost every time. So this works for a well defined activity such as our blog posting service or setting up a paricular piece of technology. Be cautious about custom services or things that require lots of client interaction and signoff / revision cycles to get it right. That can quickly take your time investment from a couple of hours a month to much more.
Think very carefully about your value relative to other potential providers. What sets your version apart? For this to work, the service usually has to be common enough that you can easily hire someone to do it. So why should they work with you? Here are a couple of potential starting points:
- “Done for You” service – reduces the number of things client must manage
- Better knowledge of product; can “buy smart” and manage quality better
- Integrate multiple service providers into a single end-user solution
- Very Good at simplifying the user experience for non-technical buyers
See something that your main competitors aren’t doing? That’s a good place for a new agency to focus. Especially if it will increase your client’s revenue or save them money.