How Digital Agency Increased Profits by Doing Less – with Ralph Burns and Ryan Hodges of Tier 11 – E112

In this strategic conversation, Mandi interviews Ralph Burns and Ryan Hodges of Tier 11, a digital marketing agency managing over $105M in annual ad spend. They discuss their journey of transforming from a chaotic 70-person agency to a streamlined, more profitable operation with 40 team members.

Key Topics Discussed:

[00:00-03:45] Introduction

• Overview of Tier 11’s business model
• Introduction to Ralph Burns (CEO) and Ryan Hodges (COO)
• Discussion of their podcast “Perpetual Traffic” with 12M+ downloads

[03:46-09:30] Growth Stages & Breaking Points

• Every time you 2-3x your size, everything breaks
• First milestone: $100K/month revenue
• Second milestone: $300K/month revenue
• The importance of finding complementary talent

[09:31-15:45] Acquisition Strategy

• Using acquisitions to gain talent
• Converting contractors to full-time employees
• Building strategic partnerships within the industry
• Importance of relationships with competitors

[15:46-24:15] Operational Transformation

• Reducing headcount from 70 to 40 while maintaining output
• Implementing standardized systems and processes
• Focus on the 80% fundamentals of business operations
• Discussion of operational efficiency improvements

[24:16-32:30] Client-Centric Model

• Transition from accepting any client to selective partnerships
• Doubling revenue per customer
• Improving client retention dramatically
• Creating strategic partnerships for referrals

[32:31-39:45] Profitability & Team Optimization

• Increase in gross margins from 50-55% to 65%
• 15-20% productivity increase through aligned purpose
• Discussion of team motivation and culture
• Implementation of standardized processes

[39:46-44:15] Vision & Leadership

• Importance of clear vision communication
• How to handle team members who don’t align
• Creating a legendary brand in the agency space
• Building operational excellence

[44:16-50:02] Key Insights & Closing

• Finding complementary leadership
• The importance of saying no to wrong-fit revenue
• Focus on metrics that matter to clients
• Discussion of ideal client profile

Notable Achievements:

• Doubled revenue per customer
• Increased gross margins by ~10%
• Improved team productivity by 15-20%
• Successfully transitioned from 70 to 40 team members while increasing efficiency

Key Business Insights:

1. Focus on running the business properly (80%) versus just delivering services (20%)
2. Importance of clear vision and purpose alignment
3. Value of complementary leadership skills
4. Need for operational excellence and standardization

Actionable Takeaways:

1. Systematize vision communication
2. Focus on operational excellence
3. Create strategic partnerships
4. Implement proper management systems
5. Align team with company vision

Resources Mentioned:

• The “Hodge Wheel” – Vision, Journey, Culture, Results framework
• Rocket Fuel by Gino Wickman
• Client Experience Engine methodology

Perfect For: Agency owners generating $1M-$5M+ in revenue who want to transition from chaos to operational excellence while increasing profitability and reducing personal involvement.

Want to transform your agency from a resource-heavy operation to a streamlined, profitable machine? This episode provides the blueprint for making that transition while actually increasing client satisfaction and results.