Scott Christiansen: Digital Marketing Tactics That Drive Real ROI

Craig Castelli (00:05):

Welcome to The Close M&A Podcast with Caber Hill Advisors. I’m your host, Craig Castelli, and today our guest is Scott Christiansen, founder and CEO of Root3 Marketing. Full disclosure, Caber Hill is a Root3 client and I’ll say a happy Root3 client. So Scott, let me just ask you this question right out of the gates. Is anybody doing marketing right?

Scott Christiansen (00:27):

Well, besides Caber Hill with their terrific marketing partner? Yeah, no, that’s a great question, Craig. Doing marketing right is hard because it’s always moving. It’s always moving. What works and what doesn’t work in this digital environment that we’re in today is always moving. Two years ago, I couldn’t get an executive to think about a LinkedIn strategy. Today we’re getting inbound calls saying I need a LinkedIn strategy, which is just amazing to me. Three years ago, email campaigns were huge and important. Today it’s part of the mix, but man, it’s impossible to get people to open an email. It’s a lot more LinkedIn InMail or digital ad campaigns. So the thing that works about marketing today is measuring everything every single month and seeing what’s working and what’s not, and adjusting because you’re going to have to.

Craig Castelli (01:35):

And even if I’m doing it right today, it might not be right in three months, is your point.

Scott Christiansen (01:39):

It almost definitely won’t if you keep doing it the exact same way and maybe not three months, but I think we are entering a world where that’s how fast it’s going to move.

Craig Castelli (01:50):

Sure. Let’s not even go down that AI rabbit hole on that topic because that’s just changing everything once again. But let me ask you something maybe a little more relevant to our audience here. So you’re hired oftentimes by private equity firms or their portfolio companies to work with companies post acquisition, and you have specific levers that you can almost always pull that unlocks a lot of value for new ownership. Are these things that the average small business owner can do on their own that would drive value for them before they sell instead of just handing all that value over to the PE investor once they bring you in?

Scott Christiansen (02:30):

I think there’s two things that I recommend everybody who runs a business be doing to unlock additional potential sales revenue that I do once they come to me that you can do before then and unlock a lot of value. Number one, sales channel. You work with a lot of physician businesses and so do I. Digital marketing works. Google, PPC, Meta, that’s where your audience is for just physician business specifically. This is where your audience hangs out and it’s cost effective. And you can measure the ROI. So we often do what we call a market opportunity assessment for digital marketing. Just did one this week for large metro area, about 1.5 million total addressable market.

Craig Castelli (03:35):

People population?

Scott Christiansen (03:39):

People within their demographic of what they’re going for. And these are all AI companies. Meta, Google is an AI company. You can run really good projections on it. So the projections that we’re running based on the keywords that we want to win are about a $1,500 monthly spend. Should drive 1800 clicks, 3% to 5% conversion rate. Let’s call that 80 patients. So give or take a few 80-ish patients for $1,500 a month.

Craig Castelli (04:11):

And what is the average patient spend in that setting?

Scott Christiansen (04:14):

Well, this is an orthopedic practice. So they’re going to come in for the initial consultation, let’s call that 120 bucks. They’re seeing a PA, they’re going to get x-rays, so let’s call that 300 bucks right there. Maybe they walk out with a brace, let’s call that. So conservatively $300 more likely $550. And that’s not even addressing the lifetime value of that patient.

Craig Castelli (04:41):

So your initial return revenue, we’re not talking profit here, but at least revenue, you’re turning a $1,500 spend into roughly $40,000.

Scott Christiansen (04:50):

Yeah.

Craig Castelli (04:53):

Math works.

Scott Christiansen (04:54):

And that’s just PPC. That’s not Meta and that’s just PPC with keywords. That’s not including. We’re also going to bid on your competitor’s names. We’re going to bid on the competitors’ doctors’ names. So the two cool things about that is, one is that it’s something a lot of your competitors, I’m shocked market by market that I go to, how little competition there is. I’m still just shocked by it. The ROI is measurable. We don’t even spend that $1500 right away. We start with a smaller budget and then we scale into what’s working in the end. Do we end up spending three grand, five grand because it’s working so well or do we keep it around that 1500? But the ROI tells us what to do. You don’t spend for things that aren’t driving huge value.

Craig Castelli (05:49):

Sure. That’s business school 101 right there,

Scott Christiansen (05:52):

I think. So I skipped school that day, but it does make sense. The other thing that I recommend people do is because so many of these organizations, when we start working with them, they literally don’t even have a client list in a digital form. They have it in their invoicing or so, but if you don’t go through the work of digitizing your pipeline, making it visible, there’s so many sales opportunities that you’re not unlocking. So for example, let’s say an organization, let’s call it a facilities management organization. So you’ve got five services, probably you are just acquired and now you have three more that you can offer based on the collective strength of that business that you’re in.

(06:45):

When we look at that client list of a thousand people time and time again, we see that the majority of that a thousand, 80% of them only use one service. So that upsell, cross-sell was never exercised. We call that the fastest sales channel. These are people who’ve already bought the service from you. You’re already integrated with them financially. You’ve gone through all of their vendor approval process. You have an existing relationships. You just have to call somebody who knows you and will answer the phone. All of those things can really, really step in and create immediate sales value.

Craig Castelli (07:19):

Yeah, I mean it’s interesting you bring up facility services in that context because we’ve seen some of the larger consolidators in that space are focused on adding ancillary services. I’d say most commonly in janitorial, you have some very large janitorial, rollups cleaning industrial settings, office buildings, schools, whatever, hospitals, whatever. The end market may be starting to look at what other services they can bring in because they have this 30-year relationship in the cleaning. They know that the same facility is buying HVAC. They’re probably buying security guards. They may be buying parking lot maintenance, whatever the other service may be. They would probably trust that same company to offer it. And funnily enough, we’ve had some clients who offer multiple services and the cross-selling is minimal. When they go to sell, they’re worth more just by virtue of offering multiple services with minimal cross-selling because the buyer’s going to come in and scale the cross-selling across a larger organization and recoup their value pretty quickly.

Scott Christiansen (08:24):

And the other value that we haven’t really talked about is the customer retention. If you’re the one who’s offering and trying to get them sticky in a couple different services—two to three services, your retention is going to be much higher than if you’re only offering the one and somebody else can come in and say much

Craig Castelli (08:42):

Greater switch on cost.

Scott Christiansen (08:44):

Yeah, so unlocking that and listen, I understand that investment in technology is one of the things that drives a need for investment. I’m not talking about a big, this isn’t a huge Salesforce strategy, an enterprise-wide Salesforce strategy. This is often the free version of HubSpot that you can go in or it’s 200 bucks a month for a specialized CRM in whatever industry you’re in to get your pipeline digital. There’s so much data that you’re going to find out once it’s digital. Oh, I didn’t realize that the sales cycle for this service line is three times shorter than the sales cycle for this service line. So even though it’s not, I don’t charge as much for the service line, I can sell three times more and I can get paid for it faster information like that, that can help you really focus your sales strategy, all of these things are going to drive so much value to your business pre-sale ideally instead of post-sale.

Craig Castelli (09:49):

Yeah, all I would say the entire time we’ve worked together, maybe even before we formally worked together, I’ve heard you talk about the mid funnel and working the mid funnel. Is that really what you’re referring to here is that middle of the sale funnel where there is a relationship, these are warmer opportunities. You have more knowledge and understanding of the client or customer. So the conversion logically should be greater, should be easier.

Scott Christiansen (10:19):

Well, I’m really proud of my drawing of the sales funnel, so thanks for bringing that up. As you mentioned, we have a top of funnel, then we have the middle of the funnel. That’s enormous. We want it to be as big as possible, meaning that we’ve educated as many people, potential buyers in the market as possible. But the other thing we do is once it gets down to close is we consider that the start of a new funnel, and then the funnel goes like this again, and that’s upsell cross-sell right there. You close them, but you close them one time. So if it’s a service and they use you once, are they going to use you again? We need to have a strategy for that. If it’s a service and you sell five services, well great. You close ’em on one. We’re just getting started. Let’s close ’em on 2, 3, 4, 5. So what’s the strategy for that? That’s where the sales funnel gets really exciting.

Craig Castelli (11:11):

Well, it seems like it works in just about any business. Your original example was on orthopedics, and that’s turning that initial consult and perhaps that brace into at some point a total knee replacement, which is the much bigger dollars for that practice. And the next knee works the same way that

Scott Christiansen (11:30):

And then the next knee and

Craig Castelli (11:31):

Then the next knee and then the hip. And we keep working here. Don’t get me started on my own future issues. I’m going to make an orthopedic surgeon a lot of money in the next 10 years, but I’m thinking about a managed IT business that starts out with a need to solve for cyber and help desk, and now they can start getting involved in deployment of AI agents and bigger projects that supplement the recurring revenue. So whether you’re, is it fair to say it doesn’t matter if you’re B2B or B2C or B2B to C, if we can say that this philosophy can be followed and applied just about any type of business.

Scott Christiansen (12:07):

Yeah absolutely. It’s like we said, who’s marketing well, who’s selling? Well, it’s the people who are looking at what’s working, have it in a way that they can measure the ROI for both. And they’re adjusting because think about most of our clients, whatever they were selling, and it was the most important thing. Pre COVID changed during COVID and then changed again, coming out of COVID, it changes and you just got to be adaptable to it.

Craig Castelli (12:41):

And Google does a pretty good job of telling you what to do. You don’t to, you

Scott Christiansen (12:45):

Can just run a report and it’s going to show you things that sound really scary. It’s going to say you have 500 broken back links, you’ve got these problems with your H1s and your H2s and all this stuff. Most of those things can be taken care of with a tool that you can put on that can fix 400 at the same time. It’s not all of it. I don’t want to oversimplify it, but most of the things, if you’re getting 40% out of a hundred on your Google Lightspeed test, it’s a matter of hours usually to clean it up. Not a huge web project that takes three months and 30 grand.

Craig Castelli (13:30):

Right? It’s lower cost. And it’s also an easy service to outsource because I can tell you I don’t understand it. I know these things because you have told me about it, and you have somebody on your team who deals with it for us, and it improves our Google ranking monumentally.

Scott Christiansen (13:48):

And it’s just what Google’s plan is to keep all search at Google, not just the first search, but the second search and the third search and the fourth search. And they’re being very clear about it, and they’re telling everybody exactly what they plan to do. So there’s an article out, even just this week, the websites are dead. Google’s going to keep everybody there. Google My Business profile is going to be your website, and if there’s a website, it’s just finally at the point of transaction and that’s it. I’m not there yet. But what I do believe is real that if you’re not keeping up with Google, which is 90% of search, and we know that no matter what business you’re in, somebody’s going to search before they buy. If you’re not keeping up with what Google is very clearly telling you to do, you’re not optimizing your Google My Business that you’ll be left behind.

Craig Castelli (14:49):

You may not be all the way there, but are you willing to put a stake in the ground that it’s not eventually going to be the future? I wouldn’t bet against Google in that regard. Hedge,

Scott Christiansen (15:02):

It’s going to be more than it is today. I don’t know that it’ll be as much as everybody says it’s going to be, but it’s going to be increasingly more and more. But again, they’re telling you what they’re doing. So if you just kind of can stay up with best practices, then you’re going to be at the game. What I tell people about AI, my mantra on it is because everybody’s and AI is a big part of what Google’s plan is, is spend less time thinking about the finish line and more time thinking about whether you’re at the starting line or not. If you’re not at starting line, why are you even worried about the finish line?

New Speaker (15:38):

Right?

Scott Christiansen (15:39):

Get in the race and then start worrying about the finish line.

Craig Castelli (15:43):

Yeah, I think that’s a fair statement. So going back to the initial questions on how you’re helping these businesses post acquisition, how you’re driving value, what I find interesting is the common association with a lot of these private equity investments is that their main tool for growth is making more acquisitions. And it is true that a lot of these are buy and build strategies, whether it’s the healthcare or the facility services or the managed IT or some of these other sectors. You will grow faster by making a series of acquisitions, but at the end of the day, the real value comes A, from integrating them, but B, from creating a business that can stand on its own two feet, creating a business that if it stopped making acquisitions would continue to grow faster than the market. It doesn’t have to be several times faster than the market, but it has to be a little bit faster than the market. And it is these cross-selling opportunities. It is these increase in customer acquisition, patient acquisition that’s really going to drive all that. There are some other factors, I don’t want to oversimplify it, but from a marketing selling, outwardly facing perspective, that’s what’s really driving things. What’s it going to take for the average business owner to appreciate this the way that your clients appreciate it and take action that ultimately is going to pay dividends to them in a short period of time?

Scott Christiansen (17:15):

Yeah, I mean, I think there’s just a lot of people who just still don’t believe it works for a long time. And you’ve heard the old marketing mantra that if you spend a dollar on marketing, 50% of it works, 50% of it doesn’t, but you just don’t know which half. If I hear that ever again, marketing has been entirely in a digital world, entirely digital for a decade. There’s nothing we can’t measure. There’s nothing we don’t measure. And sales is there now too. If you’re using a CRM, it’s just time to believe. And to kind of go back with what you were saying before, I like looking at it from another perspective too, because talking about pre-sale, but most of the organizations that are selling are going to have hopefully a second sale. And so how does some of these things help accelerate the growth of this organization that they’re joining, that getting your sales pipeline and customer list in a digital format? So when you do immediately on day one, you can integrate your data with the other four companies in that organization. And you can know, oh, two of these companies work with five of my clients already. One, you can avoid stepping on the toes or giving yourself a black eye with your clients, which is your biggest nightmare when you sell.

(18:51):

You don’t want to make your clients uncomfortable. You don’t want ’em to feel like you don’t know what you’re doing anymore. You can suppress those clients from other people talking to and so that you don’t have somebody within that organization now cold calling that client and saying, Hey, you should work with us. And I’m like, oh, we do.

Craig Castelli (19:11):

Stories. You hear all the time

Scott Christiansen (19:14):

Yeah.

Craig Castelli (19:14):

These types of mix up with me, and I’m on the receiving end all the time from cold calls from groups we’ve worked with, have worked with, have directly declined to work with.

Scott Christiansen (19:28):

It accelerates the integration of the businesses together and it drives value faster and it protects your client relationships, which is I know is important to every owner founder that ends up going through the process. Can we talk brand?

Craig Castelli (19:48):

We can talk brand.

Scott Christiansen (19:49):

Yeah.

Craig Castelli (19:50):

I was going to ask you about brand. If you bring brand up,

Scott Christiansen (19:55):

Brand is so funny. Both sides are terrified to talk about brand, the buyer and the seller, they’re just terrified to talk about it. It’s like such a,

Craig Castelli (20:06):

Because it’s personal. It’s so personal, whether it should be or not, it is, right? And so it becomes this delicate dance.

Scott Christiansen (20:15):

It is. So I have an exercise that I always recommend, and I don’t find it’s that personal. I just think everybody doesn’t know how to talk about it.

(20:29):

And they both assume the other side, the seller assumes that the private equity group wants to erase their entire brand history. And the private equity group assumes the seller’s going to be super emotional and wants to keep his brand, and it’s the biggest buyer brand to avoid while they’re having their conversation. But when I talk to people about it and I make the business case, they’re like, this is what we’re talking about is, and I do a simple exercise. I’m like, think about what you just bought into in five years. Where’s this company going to be? What services are you going to be providing? How many locations are you going to have? Where are those locations going to be? If everything goes well, what’s it going to look like? Now look at your brand and is your brand big enough for that? The answer’s always a hundred percent clear. Like, oh yeah, no, it’s not. Okay, now let’s move on. I really have never really found brand to be that part of an issue to talk about when we actually talk about it in a business case and we explain why we’re talking about it. So here’s a couple hints that your brand might not be big enough. Does it include your name, doesn’t include a specific location? Does it include a specific service? Does it include a specific industry?

Craig Castelli (21:54):

So if my company is Johnson’s Quad City Roofing

Scott Christiansen (21:58):

Saying

Craig Castelli (21:58):

That’s a little bit of a problem.

Scott Christiansen (22:00):

Well, having went to school in the Quad Cities, I would tell you that’s probably a very valuable URL that you should purchase. But yeah, Johnson Quad City Roofing is not going to scale past Quad Cities and Roofing.

Craig Castelli (22:14):

So I understand that. And if we take certain B2B businesses having a nonspecific brand name that is highly scalable, even if it dabbles into the service, if the rest is not name specific, geography specific, perfectly understandable, but I will challenge the notion a little bit on healthcare, and I’m curious your perspective on this. So we recently interviewed on this podcast a former client, Dr. Anthony Ponzio, who runs Ponzio Dental in Oak Park, Illinois Chicago suburb. His dad started the practice, he took it over, he then merged it into a larger group, which then subsequently merged into an even larger group than a fundamental part of a large private equity backed DSO. That DSO goes by the name of P1 Dental Partners. All of their practices maintain their original brand. So the patients that have been going to Ponzio, referring their friends to Ponzio, the other physicians in town that are referring to that practice, they all know the name, they don’t know the name Cornerstone, which was the original umbrella company. They don’t know the name P1. So what’s your thoughts on branding in a context like that as you’re scaling a business? Because a lot of these MSOs take that same approach with, they keep the original practice name the same.

Scott Christiansen (23:41):

Yeah, I should clarify. I don’t think that work that I’m talking about on brand matters for sale value, by the way, it just is what it is. I’m talking more as best practice for your, if you’re growing a business that you’re going to scale. But let’s take Ponzio, it’s a great business that’s grown really well and has value. The challenge with Ponzio as a brand for the buyer is when Ponzio leaves, can you still use Ponzio? Is Ponzio going to want that? So that’s the challenge for them. And then the other challenge that we run into sometimes, and I’m not going to say Ponzio here, I’m just going to use a blank doctor name, is if there’s a bad reputation from that blank doctor, then they have to immediately change the name of that practice. So again, it’s not really the owner founder’s problem in either of those instances and the owner, founder and grow great business, but it is something that we address on the backend.

Craig Castelli (24:50):

Yeah, I mean, I agree from the startup point, if you’re starting a business tomorrow, definitely take that, those branding queues. I think the way you approach brands from an M&A perspective is definitely different there. So how do you see, back to your initial point about two sides dancing around the discussion, what should the growing groups, instead of talking about a startup tomorrow and how they can approach branding, if I’m trying to grow, and let’s say I have a brand name that is somewhat agnostic to industry or geography or my own name, but I’m approaching acquisition targets that have their own unique names, that maybe they are personal to them, maybe they care about them rightly or wrongly believe that a disproportionate amount of value is attributed to the name. What are you telling the buyer in terms of how they should approach those discussions and how they should approach the larger branding play?

Scott Christiansen (25:53):

Okay, I want to answer that. I want to answer something else first around scaling your own brand name. People shouldn’t think that your company name is set in stone, whatever you started at 15, 20 years ago. So Johnson’s Quad City Roofing can very easily scale eventually, and it can start as Johnson Quad City Roofing, and then it could go to Johnson Facility Services. You kept the Johnson probably kept the colors, kept a lot of it, and you just update it. People need to refresh the brand frequently, and I don’t think they’d know that I’ve refreshed the Root3 brand five times in 10 years, never had to rebrand the website because of it. Never had to change any signage because of it, because it’s just refreshing it and updating it.

Craig Castelli (26:55):

Which means what? Exactly.

Scott Christiansen (26:57):

So what looked cool, watch an old TV show and look at the opening credits. You can tell exactly what era it was in by the fonts, by the graphics. People can tell that about your business too. If you haven’t touched your brand in years, people can tell. A lot of physician sites have the exact same logo from when they started. And so there’s a big difference between a rebrand and a refresh to go in and say, Hey, we’re going to update the fonts a little bit. We’re going to update the colors a little bit. Maybe this little swoop that you have in your PT or your orthopedic that everybody had in that snapshot of time, maybe it’s not that great anymore. I bet nobody misses it. So we just do things like that to update things. And that’s how you can also update the name like Johnson Quad City Roofing.

(27:53):

You can update it to Johnson blank if your plan is to scale. But wasn’t your question. Your question was do you, I always tell any organization that we’ve worked with for a long period of time, we’ve developed brand strategy for them that when they do the presentation to the organizations, they’re also talking about here’s what a brand evolution would look like. And in a brand strategy and any sort of roll up, there are certain triggers that mean you’re successful, you’re doing what you said you’re going to do and you’re successful. What is always going to happen is if you are successful, the main brand

(28:48):

Is going to get bigger than

(28:51):

The little brands that they bought.

(28:52):

When

(28:53):

It does get bigger, everybody’s going to want to have that brand name because that’s what the market knows. That’s going to help them sell more. So if we can show them what that brand evolution looks like and their brand doesn’t go away right away, but if we’re successful, everything that we’re all buying into together, this is what the brand’s job is at a certain point, and this is how we’re going to move from Johnson Quad City Roofing, a blank blank company. So you keep everything, but you start to bring ’em together to blank blank company, formerly Johnson Quad City Roofing to everybody just moving to a brand. We don’t always see people moving all the way there before they end up selling to a bigger private equity group. But they start to take those steps. And one of the reasons that they do that isn’t just for branding, but for efficiency, they want to have one email across all 600 employees.

(30:00):

They

(30:00):

Can’t do that unless there’s some co-branding involved. So things like that on efficiency. Think about marketing. If you want to do marketing, and I have to do marketing for, we work with a large MSO in the PT space with 250 clinics. We can’t market for 250 PT offices effectively cost effectively if we set up 250 Google accounts and 250 meta accounts and ran all of them separately, imagine that. So there are things that your brand has a bigger job to do at a certain point if you’re all going to be successful together.

Craig Castelli (30:45):

And the fear, I feel like is always we’re going to lose customers. The customers know our name and they’re not going to be able to find us or the customers like us because we’re the smaller local business. They don’t want us to be part of the big conglomerate. Actually, in fact, I had a conversation yesterday with a business owner, I won’t say what sector, but they sell B2B, they recently took on a private equity partner. They are not sure they’re announcing it to the market. And the CEO who had sold the company, stayed on to run it as CEO said, I run around saying, don’t do business with them. They’re PE backed. They’re going to screw it up. They’re not going to care about you. Now I’m PE backed. People are starting to find out, but I can’t advertise it. I got to figure out how I sell differently around that. There’s this notion that the bigger players don’t care about the local customer the same way that the founder did when they ran that local business. So dispel the myth that the brand change the name change actually can hurt business.

Scott Christiansen (31:56):

I mean, you could answer this one as well as me. I mean, when you take that investment or you join, your business just changed and you are going to alienate some of your customers, you’re probably going to go after a completely different customer than you did in the past. Maybe not on day one, but if it’s successful, if you’re doing what you’ve all bought into doing, you’re probably going to go up market to the next level of client, which is probably 20% of your current customer base. So I don’t know, maybe I’m being too honest. You are going to piss off some customers because your company’s going to change. You’re going to have less control.

Craig Castelli (32:45):

Yeah, I mean the reality is there’s like most things, I think there’s a right way or wrong way to do it. And if you do it the right way, you are honest with yourself, with your team that yes, we might lose a couple. Yes, not everybody is going to be happy about this change. Welcome to change management. That’s the case with any type of change you’re ever going to make. If there’s a bigger goal and everybody understands the bigger goal and you get there, it’s probably worth that small sacrifice along the way. If you don’t have the proper buy-in from the important people on the team, if you lose sight of who the actual customer is because you’re chasing some other goal along the way that frankly misses what created your business in the first place, then you’re probably going to suffer. And very large companies can operate locally with the right leadership and with the right vision and with the right goal that align everybody together.

Scott Christiansen (33:48):

You said it the most important thing, it’s be honest over communicate, over communicate, over, communicate to your team. Tell them what’s happening to your customers. Tell them what’s happening. That’s all you can do is you can communicate. Most customers are going to be happy for you. You’re taking a next step in your business. That number of clients that you’re probably immediately alienated, alienating the ones, it is going to be a small percentage, but it probably will happen.

Craig Castelli (34:29):

So Scott, I normally conclude this podcast by asking you for a piece of advice that our average listener hasn’t heard somewhere else. But I feel like you’ve doled out five or six pieces of advice that are unique and very valuable. So I’m going to let you off the hook on this question, but I’m going to make one request. How can people find you if they want to get in touch with you?

Scott Christiansen:

It’s Root3, not the road. ROOT number three, marketing.com. That’s where I live. I like to talk to anybody about marketing, business development strategies, whether you want to use this or not, just what I love to talk about.

Craig Castelli:

That’s great. Well, Scott Christiansen of Root3 Marketing. Thanks for joining us on The Close.