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Growing an Ecommerce Agency with Ben Chafetz (Part 1 of 2)

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Ecommerce is a competitive landscape, and Ben Chafetz has found a way to build a thriving consulting firm focused on Magento development. He’ll share how he’s done it here.

Mentioned in this episode:

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Growing an Ecommerce Agency with Ben Chafetz (Part 1 of 2):

Full Transcript

Liston Witherill:
Welcome to Modern Sales, a podcast for entrepreneurs, business owners, and salespeople looking to have more and better conversations with your perfect clients. You’ll get a healthy scoop of psychology, behavioral economics, and sales studies to help you create win-win relationships. I’m your host Liston Witherill and I’m pleased to welcome you to Modern Sales.

Liston Witherill:
In today’s episode, I’m bringing you part one of my interview with Ben, who is the CEO of 121eCommerce. I’m going to get into his bio in just a quick second, but I did want to mention before I get into all of that, if you’re getting something out of this podcast, if you’re enjoying what you’re hearing, if it’s been useful and you know someone else who could also get something out of it, tell them, that’s all I ask. Just tell them.

Liston Witherill:
So as I said today I’m going to be interviewing Ben. He’s a CEO and driving force behind 121eCommerce. After growing an eCommerce business himself from $500,000 in yearly revenue all the way up to 80 million, that’s eight zero million, Ben founded 121eCommerce back in 2014. Just over three years of that, 121eCommerce has grown from a fledgling group of five people to a robust team of 34 members. Ben is responsible for everything that happens at 121eCommerce. Maybe not every single thing, but he’s the guy at the helm. And that includes from creating and driving the sales pipeline to setting goals and expectations to managing a delicate ecosystem of over 50 living beings. No, that’s not as staff, but it is his fish tank. Ben, welcome.

Ben Chafetz:
Hey, thank you so much.

Liston Witherill:
I don’t want to botch your last name. Would you say it for me and for our listeners?

Ben Chafetz:
Sure. It’s Chafetz. You can say Chafetz or Chafetz, either one works for me.

Liston Witherill:
So the American in me would have said Chafetz, so I’m glad you would have accepted it.

Ben Chafetz:
Yep, absolutely.

Liston Witherill:
Okay, cool. So Ben, I discovered you on LinkedIn and I did a little bit of digging on your business and was immediately fascinated by the fact that you do Magento development, but you’re very focused on eCommerce and that’s been the focus for the business from the start, I believe, is that right?

Ben Chafetz:
Yeah, correct. Yes.

Liston Witherill:
I know you had an eCommerce business for a little while yourself, and then you went into founding this agency. What kind of prompted that change for you?

Ben Chafetz:
I wasn’t the founder of that eCommerce company, I was hired in the early 2000s as the VP of marketing and eCommerce was in its infant stage. In fact, I think I started about a year before AdWords actually came out. So paid search was I think GoTo back then or Overture.

Liston Witherill:
Oh wow. So back in the stone age, in other words.

Ben Chafetz:
Yeah, it was a very different age. Half the systems out there were … 95% of the systems that people use today and the things that they take for granted weren’t even really defined. It was the stone age and also the wild, wild west both at the same time. Over the course of those 10 years that I worked for the eCommerce company, we grew and we grew not only in the processes that we built, in the marketing and the channels that we did, but the industry grew with us and it was always a very fun and exciting time. This kind of ties back into my Magento development, why we stuck with Magento, but back in 2004 we were originally on a eCommerce platform called LS Commerce, which was really the first open source eCommerce platform to come out.

Ben Chafetz:
It was a big deal because before that there was just maybe a couple of really crappy kind of carts that were out there. Then if you wanted to build a really nice site, you’d have to use ATG or WebSphere and you were looking at $1 million and most people couldn’t do that. LS Commerce really opened up the door. I had hired this company in LA called [inaudible 00:03:50] to build our site. It was a very small company, I think less than 10 people, and they moved the us to LS Commerce and then a couple of years later they said, “Hey,” and we’re still using [inaudible 00:04:01] they said, “Ben, we’re thinking about developing another better eCommerce system. We’re going to call it Magento.”

Ben Chafetz:
By then, [inaudible 00:04:07] had changed their name to Varien and then changed their name to Magento. I was very good friends with the founders of Magento. More than that, Magento really defined the eCommerce market tremendously. Today you have a slew of options from entry level to very robust platforms that offer a variety of features depending on industry and really there is just an extremely … Obviously, it’s a huge industry.

Ben Chafetz:
If anyone’s ever listening and they went to the IRCE show, which is Internet Retailer Conference and Exhibition, which for the last seven years I think has been in Chicago. If anyone went in 2009 and 2008, there were no other eCommerce platforms. There was no Shopify or [inaudible 00:04:48] Shop or … There was a Hybris and a Demandware, but there was nothing else. Now you go, you see eCommerce platforms everywhere and that’s the norm. But back then, Magento is it, Magento changed the … single handedly really changed that whole landscape by making an eCommerce system that was open source, accessible to everyone and very feature rich.

Liston Witherill:
So I’m curious about … I understand the history of Magento and I understand that there were less options back then. I am curious though, why didn’t you just create your own eCommerce company? Why go into services where you’re creating Magento sites for clients?

Ben Chafetz:
Great question. So I thought about selling a product because that’s really where my core experience is. I was a VP of marketing for acquisition and retention, I’m not a developer. But what I found was that after working with probably well over 200 vendors over 10 years, and not just development vendors, but SEO vendors, affiliate management vendors, different analytics vendors, reporting vendors, you name it, and we worked with a lot of different companies and having consulted with many colleagues who had hired development agencies and had those project stall out, I realized that there was a huge gap in the market for a development company that put communication and accountability first.

Ben Chafetz:
So I know that sounds like buzzwords, but really what would happen is that a company … sell widgets, wanted to build sellwidgets.com and then they would hire a development company. They’d sit down, they’d have this massive meeting and say, “Okay, we’re going to build your site.” They’d say, “Great.” Then three quarters of the way through the budget and probably a third of the way through the actual progress of the project, things would hit a [inaudible 00:06:29] because the client would say, “Okay, that looks great. Now how does it connect to this system?” “I don’t know. You never even said you wanted to connect to that system.” “What do you mean? Of course we want to connect to that system.” “Well, you never told us.” “How we were supposed to know to tell you?”

Ben Chafetz:
And one aspect was that a lot of times, especially in development, there was a myopic view for agencies when looking at another model. I think this really applies for anyone coming from a more technical background or more sales background. I call it the grocery clerk analogy. When you go to the grocery store and you go to the same grocery store and you always recognize that people bagging your food, right? You remember that’s Linda, that’s Nora, that’s John. And you see the little name tags, right? That’s because you see three or four of them, but they see a thousand people in a day and they don’t remember your name. And that’s not because they’re not polite or not nice people.

Ben Chafetz:
So when vendors, when they tend to deal with a company, tend to think of themselves as that … tend to think that what they’re doing for that company is the focal point and the epicenter of what that company’s focus is on. Right? But that’s not true. They’re hiring you because they’re a company that does something else and hire you. Having that awareness, really trying to understand what the business model is from the beginning, is a huge benefit and that’s what really attracted me to starting my own services based company. I enjoyed working with people. I enjoyed bringing a solution to a problem that was on a global scale and so that’s why I left, and not starting my own eCommerce company instead of moving to a services based company. Because I felt that that would provide me with more options and then also tied into what I really wanted as my longer term, my 10 plus year plan.

Liston Witherill:
Tell me about that.

Ben Chafetz:
The 10 plus year plan is really simple. As a services company, you can only scale so much, right?

Liston Witherill:
Sure.

Ben Chafetz:
If I have 20 clients and I have 50 developers working for me across those 20 clients or whatever it is and I’m doing four or $5 million a year in revenue, if I ever want to get to $100 million in revenue, you know how much you have to scale?

Liston Witherill:
Well, for most companies, 20 times.

Ben Chafetz:
Yeah, that’s a lot of people and it’s a lot of work and each person is beholden to, basically on a one to one ratio for each developer. It’s a big headache, you know? That’s why my eventual plan was to really build a couple of other business models that were focused on a product, like a platform, not necessarily Magento or an eCommerce platform, but have that and have a product that we could service. Meaning build one product that services thousands of customers and then I service the product, not the customers. The product will service the customers, we’re providing a general feature set, which is a SaaS based model.

Liston Witherill:
Is that something you’ve already done or you’re working on that?

Ben Chafetz:
We have started working on that. When I started with my partners, we had three ideas which still haven’t really been exploited to the extent that they can be exploited or no one’s really taken advantage of them in the market. But my feeling was that one of the biggest costs in any initiative is development. So if I had my own development team and I had a team that was experienced already in running a business with me, that enabled me to basically build my own incubation house. That was our seven plus 10 year goal, to build that infrastructure.

Liston Witherill:
I’m acquainted with a Sujan Patel. Do you know who that is?

Ben Chafetz:
No.

Liston Witherill:
He has a digital marketing agency and I’m guessing his plan was somewhat similar. He went out and started creating really simple versions of tools that were already proven to be popular. So for instance, like a calendar booking widget, he has one of those, he has a cold email scaling, cold outreach kind of platform. He just bought one that does email tracking and scheduling later and that kind of thing from your Gmail inbox. So he’s put together piecemeal, piece by piece, a suite of different things, different software tools that kind of undercut the competition in the market price wise, at least so far as I can tell and all kind of work together in this story of growth marketing/outbound sales. It felt like a little bit of a scratch my own itch kind of thing. But yeah, now I think he’s up to like, I don’t know, three, four, maybe five tools.

Ben Chafetz:
The scratch your own itch model is a great model and I think that there are several people already in the eCommerce world who have products there because they’ll scratch their own itch. I know that a gentleman, Chad Rubin at SkuVault owns, I think it’s vacuum.com and he was just frustrated with other order management systems and he built SkuVault. I think it’s a very similar story behind Brightpearl. I think one of the products that we have is … Well, actually all is scratch your own itch. I mean, how else do you innovate if you don’t have a need for it? You won’t understand that need. So I’d say all of our products have some definite basis in scratching our itches.

Liston Witherill:
All right, so that sounds like it’s an ongoing project. I am wondering, right now, what are you most excited about in 121eCommerce?

Ben Chafetz:
I guess what really excites me the most is that I have an amazing team from really top to bottom. I have a team, not just my partners, not just the people on an executive level, but even down to just the account managers. Everyone really, we focus on bringing people in who try to always innovate, do what they’re doing to do what they’re doing better. I’ll try to explain it a little bit better. I think it’s Proctor and Gamble that has a policy that if you are doing that same job in four years that you’re not really cut out for Proctor, for P&G. If after a couple of years you haven’t already trained in your replacement to move on, then you’re not cut out. So everyone here has a real desire to grow, professionally, personally, and we have a very open atmosphere in the office.

Ben Chafetz:
By that I mean that we’re quick to point to how we can do something better. We don’t look at that kind of feedback as criticism. Like, “Oh, I didn’t do it well enough.” Any time that we finish a project, we’re very quick to look at where we can focus. Key point is that two years ago, I used to get on the phone and part of my sales pitch, I don’t want to call it a pitch cause it’s not really my selling style. Part of what I tell clients is, “You may be able to find developers who are technically better than our developers or maybe more proficient, but at the end of the day, it’s communication, right? The communications count. We’re going to understand your business and we’re here when you need us and you’ll have that kind of level of communication.” I can’t say that anymore.

Ben Chafetz:
My CTO has brought the technical proficiency to a really high level where we’re using integrated testing and continuous deployment. We use functional testing throughout the whole thing and it’s all built into an automated sequence. I mean, he’s done an insane job of bringing our development to a really, really high level, right? My operations manager has built out reporting that like, the visibility that clients have and the controls that we have, we just operate more efficiently because it’s much easier for us to spot issues before they come up.

Ben Chafetz:
I was actually watching an interview a while ago from the founder of Classy Llama, who is a competitor of ours. He had brought up some interesting points about how they measure certain statistics of client happiness. So for example, on a regular basis they’ll speak to a client manager and a project manager and then the client and they’ll take different metrics and then they use those to forecast that. And they just figured this out like last year. We’ve been doing that for a couple of years. So we have a really smart team who brings these things into play. But it’s also hard finding people who fit that kind of model.

Liston Witherill:
Meaning clients?

Ben Chafetz:
No, no, no. Clients is not hard. Finding employees. Finding people to come into the company, the kind of person who wouldn’t fit in our company is the kind of person needs to be told exactly what to do, right? We have a couple of positions like that, but for the most part, if someone wants to come into a position, we have a standard, we have metrics, we have very clearly laid out goals for each person and there’s a very defined position. But if they want to bring innovation or if they feel that the system can be improved, by all means, we want to hear it.

Ben Chafetz:
If they’re rocking it there, we’ll let them move on to something else if they feel they can bring more value. I mean, we typically do fund and encourage people to do their own … Even developers, if they has something that they’re interested in. I mean, that’s obviously something that we took right out of [inaudible 00:14:28] Google, I know that they have that, but we have developers who’ve built extensions and then they’ve created other modifications internally to create better efficiencies for us internally.

Liston Witherill:
Now, I want to come back to that in a second, but I did want to hear your take on something you said a few minutes ago. You kind of said in an offhand comment that pitching isn’t your selling style. That’s in reference to, you’re talking to someone about helping them out with their Magento or their eCommerce store, and you said pitching isn’t your selling style. I was wondering what is?

Ben Chafetz:
Understanding. You’re not going to force someone to make an investment of 50, 70, 80, $150,000 in an eCommerce site by telling them how awesome your product is and how awesome you are. That’s not what drives them over. Anyone coming and putting that kind of money into a system has a problem that needs to be solved and there’s a pain point that they’re feeling that’s making them open to that. They may not even be able to understand that pain point, and there’s numerous conversations I’ve had with clients who’ve told me that they want a eCommerce system to do X and I’m like, “That’s not where your pain is. You need to focus first on this and then come back in seven, eight months once you do that, because that’s not your real pain. Getting an eCommerce system not going to solve that pain, you’ll still have that and then you’ll be mad at me that you still have that pain.”

Ben Chafetz:
That’s not really a great way to do business. The answer is is that we really try to understand our client’s business. We understand what is it that’s causing them to speak to us and then can we solve that problem? That’s part of our prequalification. We have a very clearly defined prequalification. Is this a client that we can deliver, that our skill sets allow us to deliver a win for them? Are we going to solve their problem? Second question is, is the client a jerk or is the client structure something that we can’t necessarily work within? That could be, for example, it depends on the size of the company and the infrastructure. But we’ve had … we call it battered agency syndrome, but we’ve had clients who come to us from other agencies who’ve just gone through horrible experiences and they’re shot, they’re …

Liston Witherill:
Jaded, let’s say?

Ben Chafetz:
Yeah. Not just jaded, though. It’s just the relationship starts off at a very unhealthy level because everything is always put into that perspective of everything is a flinch and you can’t operate on that kind of level. There’s always a distrust there. Well, some of them, and then, usually you tell clients like, “Yeah, listen, we’re not the first agency. Going to have to establish that. We’re happy to adjust our reporting, adjust the communication, adjust our explanations accordingly so we can build that to a level of comfort. We’re not asking for blind trust, but you’ve got to operate on the principle that you hired us because you trusted us at some level to fix a problem. You didn’t want to jump from the kettle into the fire.”

Liston Witherill:
Yeah. So I want to stop you there. I want to dig into how you overcome a client who’s been burned by an agency, but you still want to help them. So we’re going to stop here for now, Ben. We’ll get to the answer to that question in episode two. Yes, dear listener, I am making you wait, so be sure to hit that subscribe button and if you enjoyed this conversation, please tell someone else about it. Make sure you download part two of my conversation with Ben Chafetz for the answer to how he overcomes clients who’s been burned by an agency in the past. Also what he’s doing to fill his pipeline and some of his biggest challenges right now. See you then.

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