Justin McGill on Leaving Services Behind And Going All-In On Products

Justin McGill on Leaving Services Behind And Going All-In On Products

Background

Today, on Hubstaff’s Agency Advantage Podcast, I’m talking with Justin McGill of LeadFuze who shares why he left behind a $360,000 a year service business to go all-in on a product.

Justin launched his first agency back in 2008 and built it into a 7-figure agency. Along the way he had his first idea for a software product. Thinking it was his million-dollar idea, he poured 10 months and $60,000 in development to launch the product, but the launch fell flat.

For his second startup, he wanted to do things the right way, and that’s how LeadFuze came about. LeadFuze started as a productized service agency that eventually released software tools for users who wanted to take a do-it-yourself approach. Business was going great, but Justin knew he needed more focus, so when the service side was doing $30k a month, he decided to shut it down and go all-in on the software, even though that side was only making $6k a month.

Since then, Justin has had his share of ups and downs, but today the business is bigger than before and the growth doesn’t show any signs of slowing down.

In our interview, Justin shares why he decided to shut down the profitable service business, the difference between selling software and selling services, and how agency owners can make the transition into products.

If you’re drawn to the software business like so many agency owners but need help finding the balance between your clients and your new project, then this is the episode for you.

Grab the transcript of my interview with Justin.

Key Takeaways

The decision to shut down a $360k/yr service business

When Justin decided to go all in on the software side of the business, they were making $6,000 a month from software, while the service side was making $30,000. This wasn’t an easy decision to make, but from the very beginning Justin wanted to build a software company, not a productized service business. In Justin’s opinion, you can only productize a service so far. You end up needing to hire more and more people to keep up with demand, which means that even as you’re making more profits, you’re incurring more overhead costs.

More importantly, Justin just didn’t want to run a service business. After all, clients expect to always reach a higher level of growth. No matter how well you deliver, you’ve got to keep scrambling to reach that next milestone. Justin wanted out of the rat race, and he made that a goal from the beginnings of his company. As he built up a traditional service business, he used what he learned from his own practice to build software that he could eventually release as a product to other companies. He also used the profits from his service business as a down payment to hire contractors and other employees to create the software product.

As soon as the software side started pulling profits, Justin pulled the plug on the service side. He wanted to make sure the software side had everyone’s focus, so the company wouldn’t get bogged down in the details of managing two very different products.

Learning to sell software rather than services

For Justin, transitioning to selling software instead of service wasn’t a stretch because of two factors. First, he got a good process in place to onboard customers. Clients started with a free trial, of course, but before they downloaded the product, they would first speak either with Justin or an SDR to make sure Justin’s product would actually suit their needs, as well as help set customer expectations on how to use the software and what it was capable of. After that initial contact, Justin’s product specialist gives the client the demo and another pitch for the software, selling not just the product but the ideas behind it.

Justin’s second secret was his network. He participated in a sales group, which led him to meeting Damian Thompson. Damian was a sales coach who asked Justin to stress-test his coaching process. Justin was so impressed with Damian’s skills that he ended up asking Damian to come on board at LeadFuze. Now Damian gets customers onboard with the software.

Advice to agency owners looking to launch a product of their own

Justin’s advice for agency owners who want to launch a software product starts with taking a look at your own business. If you have sufficient resources, set some aside to hire a developer to work on your software idea. Even if you’re a smaller shop, you can take something out of your own profits to hire a part-time contractor to create something to start with. Once you’ve got a usable product, you can then take a cue from Justin and launch it, then use its own profits to help improve it.

This might sound intimidating, but Justin argues that marketers have an inborn advantage in business. They might not be able to build a product themselves, but from their own experiences and experiences with clients, they know where market needs are. Once they’re ready to launch, they know how to sell their product and become successful. It’s just taking what you already know as an agency owner and applying it to your own product instead of someone else’s.

Want to learn more?

The best place to contact Justin is through his website, LeadFuze.com. If listeners have questions, they can email Justin: [email protected]

Resources mentioned:

FounderCafe

Zero to Scale Podcast

The Sales Development Playbook by Trish Bertuzzi

Brian Casel on How to Profitably Launch a Product as an Agency

Thanks for listening!