345: Lighthouse Strategy, with Dennis Yu
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The Lighthouse Strategy is all about how companies can hone in on a particular niche that they aim to serve. Their niche could be anything ranging from restaurants to dentists to real estate agents.
Dennis Yu, CEO of Blitz Metrics, is our guest this week on the Conquer Local Podcast. One of the most requested topics for the podcast is how to acquire new leads. When it comes to lead generation, this is the strategy Dennis recommends to all agency owners, regardless if you’ve got an established business or are just starting on their own. It’s called The Lighthouse Strategy.
Who is Dennis Yu? Dennis is an internationally recognized lecturer in Facebook Marketing and has spoken in 17 countries, spanning 5 continents, including keynotes at L2E, PibCon, Conversion Conference, Gultaggen, and Marketo Summit. He has been featured in the Wall Street Journal, New York Times, LA Times, National Public Radio, TechCrunch, Fox News, CBS Evening News, and co-authored “Facebook Nation” – a textbook taught in over 700 colleges and universities. When he isn’t spreading his expansive breadth of knowledge, he can be found eating chicken wings, playing ultimate frisbee, and spinning wild metaphors with the enthusiasm of a thousand raging fires.
Join the conversation in the Conquer Local Community, and keep learning in the Conquer Local Academy.
George: It’s another edition of the Conquer Local Podcast, thanks for joining us. We’re bringing on one of our longtime guests and friends, Mr. Dennis Yu will be joining us in a few moments. Dennis has been pontificating recently about a lighthouse customer strategy. What is it? What is the lighthouse strategy? How do I execute the lighthouse strategy inside my organization? Why do I care? Why is it important? We’ll get into all of that and I’m sure Dennis will take us off on some tangents because he has some of the very best metaphors in the industry. The one and only Mr. Dennis Yu coming up next on the Conquer Local Podcast.
George: The man that needs no introduction to the Conquer Local Podcast listeners Mr. Dennis Yu joining us once again. Hello Dennis.
Dennis: Mr. George, How are you?
George: I’m doing really well. I was thinking back as to who I’ve done the most interviews with over the years, and it’s you, without a doubt, of all of our guests and it’s Mr. Dennis Yu. Even back in the radio days, I don’t think that I’ve done interviews with anyone more than I’ve done with you, so you know the drill. So we won’t even get into how we’re going to do this let’s just talk about lighthouse. And you know, the interesting thing about lighthouse, and I’d like you to explain it your strategy to our listeners, but I’ve been talking to people that have been attending the Conquer Local Academy and have been consuming some of the material that you’ve been producing, and all they’re all about the lighthouse strategy. So I’d love for you to dissect that for us today for our listeners here on the Conquer Local Podcast.
Dennis: So real brief the lighthouse, is the client that does the selling for you. And if you’re lazy like me, then you want them to do all the work so, when we got the Golden State Warriors, an NBA basketball team as a client, that gave us a bunch of other NBA, and professional sports teams as clients right because it draws others because it’s a demonstrated example, that’s taught publicly, executed step by step that other people can see, where you can repeat a process to achieve the same results. Right?
George: So, in other words, this is the testimonial that you need or it’s the case study that you need when someone wants to know if you know what you’re doing.
Dennis: But it’s more than just a testimonial ’cause do you really trust testimonials that you see?
George: No, not at all.
Dennis: Why not?
George: Because they could be made up.
Dennis: Now what happens if they are saying it. And it’s being promoted by… Let’s say we’re for example we’re doing something with driving leads with Facebook ads, and we have the COO of Facebook, talking about our case study on stage in front of thousands of people–
George: Now I believe it. I believe that.
George: I’m with you. I’m trying to get along.
Dennis: Even with deep faith,
George: So, what is the difference then of a lighthouse client, and the testimonial thing that we were just talking about where some people are skeptical of testimonials?
Dennis: Of course they are because most people’s testimonials are forced. It’s called a testimonial… By the way, never ever. When you go to someone’s website, or if it’s your website and you’re an agency, and it says testimonials, and you can see five or six of these things, you don’t really believe it because testimonials are the same as like hold my finger like I’m not gonna do that. Right? You know what you’re gonna get, right? This is an advertisement I’m gonna try to mislead you. No thank you. So what is it that makes lighthouse different? It’s believable. But believable for five or six different reasons. One is it’s in the voice of that actual person, or customer or client. And it’s not in a sales way it’s value-driven, it’s being taught step by step like a recipe like it’s one thing to show a picture of the food. It’s another thing to actually show the recipe and you cooking it step by step. It’s done with a high authority client, so a lighthouse is one who’s well known in the industry, so Dr. Glenn Vo is the best-known dentist, among other dentists for marketing. He has 24,000 other dentists that follow him. He’s a dentist too. But he carries a lot more authority. Who carries more authority on how to drive leads if you’re a dentist? Me or Dr. Glenn Vo?
George: Well, absolutely the dentist that’s doing it.
Dennis: Yeah. And the other dentists are gonna believe him and who the hell is Dennis Yu, right?
George: So what we’re talking about. I like to refer to this as the difference to user-generated content, the voice of the customer rather than propaganda. And I love the word propaganda ’cause we’re all thinking, if we get a view right in our head we’re like, the Toyota truck in that one ad didn’t really haul that boat out of the ocean. And there’s text on the TV ad going doesn’t necessarily haul a boat like this right but, so it’s the difference between advertising and propaganda. And real people that are using the solution and seeing success with it. And it’s not just one moment, right? It’s an ongoing strategy.
Dennis: So you see professional athletes, like LeBron James who’s a basketball player in a commercial for Kia because he won the Player of the Year. But do you think LeBron James actually drives a Kia? No, do you think he drives a Kia when he won Player of the Week? No, he drives an orange Lamborghini right, I’ve seen him going around town in San Francisco in his orange Lamborghini. He doesn’t drive a Kia. But in the commercial you see him in a Kia and you know it’s a commercial.
George: Maybe he bought Kias for friends or something, just as a gift.
Dennis: I’m sure he made enough money from those commercials and endorsements that he could have bought 50 of them, 100 of them easily.
Changing the Game: From a Horizontal to a Vertical Strategy
George: I think it’s a really good point that you’re bringing up Dennis and people who have been listening to this strategy you’ve been telling me, I didn’t really see it this way. Where I’ve missed the opportunity to take my four or five customers that are really living the dream following the path that I’ve been taking them along and using them to generate more customers that look like that.
Dennis: So, George, let me ask you, what is more effort or more difficult to do? Executing one dentist that you’ve done successfully 100 times, so that’s 100 projects a hundred clients. Or 10 random clients in 10 different industries?
George: You know, we all know the answer to that, and I love that you’re going down this path because this has been my whole argument around this idea of horizontal. Meaning, I’m gonna come up with one solution that works for everybody. And then it doesn’t work for anybody. The minute you try to find something for everyone, it’s not important to any one member of that cohort.
Dennis: So you mentioned that you like to go to a Greek restaurant in town for seafood right? They have this incredible seafood dish.
George: That’s actually true. But they also put Greek ribs on the lobster platter. So it’s two lobster tails and Greek ribs for two people for $89 and it’ll feed you for three meals. Unless you’re with Dennis Yu because then, you know you probably get one meal out of it ’cause I know how much you like seafood and Greek ribs.
Dennis: Well everyone who knows that I’m on a seafood diet, I see food and I eat it. When you go to this restaurant, you know what you want. There’s that one thing. And what happened was, you would think, like this is what most agency owners think. That if you order if you have more things on the menu, you’re gonna be able to drive more sales right? Because you can say yes to more things right? But what kind of restaurant is it that offers everything? What is that called?
George: Yeah, cafeteria. Like I think about when you get to the restaurant and it’s the 82-page menu, you’re like there’s no way they’re keeping fresh 82 pages of stuff. Like it’s just some of that stuff’s gonna be old or freezer burnt or that’s not done properly right? ‘Cause there’s no way the cook knows how to cook 82 pages of recipes, so I get your point it’s very well made, great analogy.
Dennis: So the lighthouse has two effects, and one of them is easily understandable, which is, you can attract more of the same thing. We all understand that right? The second piece which almost nobody realizes is ease of repeatability. And when you have clients that are paying you monthly, and you know the average churn in digital marketing is three to four months. That’s how long a client stays. If you can get that client to stay with you for a year or two years, now all of a sudden that client is worth four to 12 times more. Would you like to have a client that’s worth four to 12 times more? Because you can keep them? Because you can deliver something that’s called repeatable excellence? That’s what’s driven by one thing that you’re able to do over and over again. Not just because you’re known for that, but because you can execute it over and over and over again. And we see so many partners that don’t do that, because they’re so eager to say yes to everything, that they end up doing nothing. So that’s like a restaurant that has no menu. Can you imagine a restaurant that has no menu?
Dennis: What would happen? You walked in there and you sat down right, and I’m your waiter, and I say, “George, what do you wanna eat?”
George: “Can I see your menu?”
Dennis: “Oh no, we don’t have the menu. You just like tell me whatever you want I’ll try to make something up.”
George: “I’d like two lobster tails with all you can eat Greek ribs please.”
Dennis: “Great, I can do all of that. And no matter what you order it’s gonna be $9.99. So just go ahead and order whatever you like. ‘Cause it will custom order, make something for you.”
George: “Sounds too good to be true to me.”
George: You know, the point is very well made and I think that this is where a lot of people.
Selecting Your Customer: Three Ways to Hone in on Your Demographic
George: I’ve been talking a lot over the last year about selecting your customer. But selecting the customer that you know you can knock it out of the park with. Because it’s you know, to your point, you get distracted by all of these other people that you’re kind of making it work. Whereas you’ve got this one niche or these two niches that you’re really good at and if you just focused on that.
Dennis: So we talk about three areas or three ways that you can focus to be really good at that one thing and be also known to be really good at one thing. One is by vertical. So that’s chiropractors and real estate agents and Italian restaurants like whatever it is like you just serve dentists right, over and over again. And you’re known as the dentist guy. My buddy Wilton Hong has 175 funeral homes as clients. And he’s the number one guy in funeral homes. Who’s gonna challenge him? I mean that’s his thing right, funeral homes.
George: I heard it’s a dead industry.
Dennis: People are dying to get in there.
George: I’m sorry. It was low hanging fruit; I had to do it.
Dennis: These guys they drink like crazy. It is a morbid morgue kind of, the kinds of jokes they have is insane. But see he’s dominated that one and that’s by vertical. That’s one of three. Number two is by geography. If you have a really good network, then you can be the person in Los Angeles right, and everyone knows that you’re the person in Los Angeles, and anyone in Los Angeles, right you’re the one, or whatever city you’re in, and there’s something to be said about proximity. But you know when it’s harder to get together with people because of coronavirus or whatever then, you know, whatever but, which is based on location. And three is by specialty. So you’re the guy for SEO or building websites or Facebook ads or video editing or whatever, pop-ups, email marketing whatever your radio ads, right? You’re the guy for that. But the key is you gotta choose one of those three ways of specializing right? Because if you don’t, then who are you?
George: Right, identity crisis. And I’m reading into this that you feel that a lot of organizations, that sell digital solutions to their customers, have this built-in identity crisis as they run around and chase the dollars, and they’re and they’re not meaningful to any one vertical.
Dennis: Okay, yeah, I can do this I can do that. What about this? Oh, I can do that too. Now I don’t believe you. You’ve got to have a menu of a few things that are for a clear customer so that customer prospect, knows that they are right. People like to joke and say well it’s the Cheesecake Factory. Well, at least the Cheesecake Factory does have a menu. And they are able to execute those things in an okay way. Most partners we talked to don’t even have a menu. They just offer everything. And you see what happens there, that’s no differentiation, and then like you said no ability to execute that reliably ’cause you can’t keep 80 pages of things fresh in your fridge becomes a Gordon Ramsay which is called Kitchen Nightmare, have you ever seen his show?
George: I have. He yells more than I do.
Dennis: Yeah, he goes into there, he goes into the walk-in and it’s all moldy and there are bugs everywhere like that’s what most partners look like when you look in their back-end.
George: So when we talk about the lighthouse strategy, how big of a game-changer could this be, if an organization was to adopt it? Like what have you been seeing is you’ve watched people successfully take this strategy forward?
Dennis: My buddy, Dan Hamill was a struggling agency owner six months ago. And I’ll be kind by saying struggling agency owner because it was just, it was him freelancing. And he worked for his main… ‘Cause he was trained that he thought the benefit of digital marketing was it’s so big and social media and all these things right that’s what draws people in. And his job was working at a Sky Zone, which is a trampoline park. Have you seen these things? These bounce houses where you go in there and you can jump around it’s like a Chuck E Cheese but you know.
George: Who doesn’t like the bouncy castle at a birthday party?
Dennis: Yeah. So that’s the thing that he did and he was making 10 bucks an hour trying to do digital marketing on the side because everyone’s trying to start their thing up. And it just wasn’t working because friends would come saying, “Hey, I’ve got a business can you help me with this one?” and another person is a real estate agent and pretty soon you have four or five random clients and we call that a dog’s breakfast. And not any one thing and every one of these things is separate and custom and it’s not scalable, and they keep asking for exceptions because there are no boundaries. And it was just… So he was working at the Sky Zone making 10 bucks an hour, not able to grow his agency, a very common issue when people start their agency because they’re just willing to say yes to anything because after all, I just need to get a client right, I’ll do like whatever maybe if I get enough clients I’ll eventually you know, if I eat enough turds eventually I’ll have a steak, just doesn’t work like that. Right?
What Agency Owners Need to Keep Top of Mind for Success
George: There are so many nuggets from a Dennis Yu podcast episode that I could, I was hoping that we wouldn’t go to some of the things you talked about in the last episode but now I’ve got some brand new material so I love it. Let’s talk about, if you were sitting down with an agency owner, and you wanna say here are the three things that you need to do. what would those… And you only get three. What would the three things that every agency owner should do to be more successful?
Dennis: Number one is pick a lighthouse. And we can talk about the technique you do to figure out exactly what’s right because people have trouble doing that. Two is amplify that lighthouse. Meaning, you’re gonna document exactly how you’re doing, what you’re doing, of course using the Vendasta platform which is the whole point of repeatable excellence. And putting it out there so everyone in that lighthouse category can see it. Number three, you’re gonna hire staff. Or you’re going to have staff and software to then be able to execute against that. That way you have repeatable excellence and you have that money coming in every month.
George: I really am glad that you got to number three because it’s something that we’ve been talking about internally with a number of stakeholders over the last week or so. I, so we got an agency it’s a couple of people, they start up, they’re gonna be digital marketing experts right, they’re gonna embrace the dream and they’re gonna go to work. And then, they sell to four or five or six or 12 customers. And then, one of them has to start claiming Google My Business and responding to reviews and delivering on the brand promise, and guess what happens, the revenue growth stops. And, I’m glad that you identified that you’re gonna have to staff this thing at some point. If you are out bringing in the deals, you’re gonna have to have someone that keeps them and makes those customers successful. I believe it’s the thing that gets forgotten a lot of times when people are thinking about their strategy.
Dennis: So we go back to the restaurant analogy, and think of the waiter. The waiter is there trying to convince the customer that lobster ravioli is the best thing on the menu, right. And let’s say they’re good at it. Let’s say they’re even standing at the door saying “Come in, come in we have a great dinner special”, right, as people are walking by on the sidewalk to come in. But meanwhile, a bunch of customers have ordered because you’re so good at selling that you have to go back into the kitchen and you have to cook. And you have to make the lobster and you have to clean and cut potatoes and wash dishes and all that kind of stuff. But what happens when you’re in the kitchen doing all this and other customers are walking by? Or other customers are sitting down wondering, they’ve not come and taken my order yet. I’ve been sitting here for an hour or two or the lights are not even on. I know of a restaurant owner, I was in Las Vegas two months ago. And there’s this delicious looking Korean restaurant but, I was driving by it and the lights were out. I decided I’d go in anyway and there is the owner sitting in the dark, telling us he was trying to save money on electricity. Right, by turning his lights out. And then when we came in, he wanted to charge extra from the regular menu price for takeout, because he didn’t have enough customers. So we left. And that’s what happens with most agency owners. They don’t realize that in a restaurant, you need somebody, you know, the cooks in the kitchen, and then you as the relationship person are the waiter. He cooks and waiters. How many waiters do you know George that also tried to cook the food too and then rush back to refill your water and ask you how your food is and that can take orders?
George: It’s just not gonna work out, it’s not their skill set. So it’s taking them outside of what they’re comfortable doing and it’s leading to a bad customer experience. And you’re not gonna get a lighthouse customer if you do that, it’s just not gonna work.
Dennis: These guys or girls that [think] if they’re a digital marketing agency that they have to be able to cook the food too. Do you really expect the waiter to have to be able to cook your food?
George: I hope he doesn’t, or she doesn’t
Dennis: Then why do so many digital marketers wanna feel like they can cook the food too? Do they want to be Gordon Ramsay?
George: You know they, I believe they just don’t know any different and I’m glad that we’re talking about this because I believe that if we look at failures in marketing organizations that get started, it’s exactly this problem. We’ve had success in landing clients, but where we’re losing is we’re not able to keep those customers. And you know, God knows it’s cheaper to keep a customer happy than it is to acquire a new one. So you know it really goes hand in hand.
George: Dennis always intriguing and always thought-provoking when we have you on the podcast, you give us things to think about, you give us great nuggets. I’m still trying to figure out how turds turn turned into steak, but maybe I can Google that and figure that out somewhere down the road. Thanks for joining us once again, the guest that we have had the most times on the Conquer Local Podcast and it’s obvious why, Dennis Yu always brings the knowledge when he comes to the podcast, and thanks for joining us again.
Dennis: Thank you, Mr. George.
George: I don’t mind the restaurant analogy when it comes to putting together a proper recipe. And I think that that’s the important piece. Let’s think about recipes for a moment. Why do restaurants use recipes? Why do they measure every single component that goes into one of their dishes? Because they’re looking for a repeatable process. Once you get to that repeatable process, then you know that you can guarantee that it’s gonna be fantastic. You can put together a system where you know exactly what the cost structure is going to be because the same things are going into the recipe every time. And to his point, you can now come up with a lighthouse strategy, where you can attract more customers in that cohort that could use that recipe for success. Let’s think a little bit more about the lighthouse strategy. It’s about not being one thing for everyone, because that’s just not gonna work out. There is no one solution for every vertical. So coming up with something that works for dentists, and then going to find more dentists, or the analogy around the funeral home, with the bad joke in there, or the analogy around… And I’m going to use this analogy. I’ve got an agency friend that works with vet clinics. The reason being, vet clinics have their own language. Do you call the dog a patient? No, I don’t think they do. I actually don’t know what they call the dog. Whether it’s patient or customer whatever it might be, but this agency knows exactly how to speak to the vet clinic veterinarian on what’s important to that business. They know that you probably have to speak to the office manager. They know what product lines they deliver. And what they’re looking to market, so having that vertical approach is really important. And where did we come up with this horizontal approach? I have to point back to industries that were in the marketing space that dealt with everybody. Remember the Yellow Pages? And they would do a canvass? Salespeople come into town, knock on every door, go around and get them to get into that book which was so brilliant and vitally important at that time. If you did not have an ad in the Yellow Pages, back when that was an industry, you were pretty much in a lot of trouble because it was a year until the new book came out. But when we think about that, it was a vertical approach. They had different sections inside the book we’d go find auto dealers and pizzas and whatever else you were looking for. So that’s where that vertical approach came from. We wanna just go sell to everybody and we’ve got one solution and you decide the size of that solution. But when we move into digital marketing, where there are different approaches and there are different tactics and there are different strategies depending upon the vertical that you’re in. That horizontal approach is actually causing for bad behavior. And it really makes it hard to deliver 100% of the time or even 99% of the time for your customers. So thanks to Dennis Yu, for explaining this lighthouse strategy. I think there’s something in there for everyone that you can take out little components and use it for the success of your organization. Thanks for joining us on another edition of the Conquer Local Podcast, the best place to get a hold of us is on LinkedIn, on my profile George Leith, L-E-I-T-H, and we look forward to your feedback. I read every single message that comes in on LinkedIn. We reach out to get clarity, we love getting all of that feedback. So please reach out to us, and we look forward to hearing from you. And we look forward to you, hearing us next week. Right here on your favorite channel, wherever you find the Conquer Local Podcast. My name is George Leith. I’ll see you when I see you.