Fractional Futures

Scaling Customer Acquisition and Retention

• Paul Mills • Season 3 • Episode 4

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Fractional Futures is the essential podcast for CEOs, investors, and senior marketing executives looking to unlock the power of fractional marketing leadership.
 
Hosted by Paul Mills, Founder at VCMO, and with special guests, we'll share expert insights, provide actionable strategies and explore real-world success stories to help you leverage fractional marketing leadership for maximum impact.

In this episode

In this episode of Fractional Futures, Paul Mills and Rob Nicholls discuss the critical aspects of customer acquisition and retention. They explore the importance of crafting a compelling value proposition, optimizing customer acquisition channels, and enhancing retention strategies to drive long-term profitability. Rob shares insights on the role of CFOs in shaping marketing strategies and the significance of partnerships and brand advocacy in achieving business growth. The conversation emphasizes the need for businesses to invest in marketing and understand customer lifetime value to reduce churn and foster sustainable growth.

Special Guest

Rob Nicholls, Founder Rob Nicholls Consulting, CFO, Board Advisor and Angel Investor.

Key Takeaways

  • Crafting a compelling value proposition is essential for customer acquisition and retention.
  • Traction is the ultimate proof of product market fit and should be measured through metrics like customer acquisition rates.
  • Investing 10% of revenue in marketing is crucial for sustainable growth.
  • Strategic partnerships can significantly reduce customer acquisition costs and enhance brand visibility.
  • High retention rates are critical for long-term profitability and indicate strong product market fit.
  • Understanding client profitability is essential for making informed pricing decisions.
  • Customer feedback is vital for reducing churn and improving retention strategies.
  • Marketing leaders must collaborate with CFOs to align strategies for customer retention.
  • Brand advocacy can drive significant growth and enhance customer trust.
  • Businesses should regularly gather customer feedback to address pain points and improve service offerings.

Sound Bites

"Brand advocacy can drive significant growth."

"Retention is key to long-term profitability."

"Marketing leaders must collaborate with CFOs."

Contact VCMO

Thanks for listening & keep podcasting!

Fractional Marketing Leadership | Marketing Transformed.

Paul Mills (00:01.863)

Hello and welcome to another episode of Fractional Futures, where in this season we're exploring how fractional CMOs can help SMEs and portfolio companies accelerate growth and maximize enterprise value. In this episode, we're diving into a crucial aspect of scaling any type of business, and that's customer acquisition and retention. Now, acquiring customers is essential, but keeping them is what drives long-term profitability and sustainable growth.

 

So today we're going to be exploring how businesses can craft a compelling value proposition to stand out in the market, how they can optimize their acquisition channels for maximum ROI, and how to build retention strategies that increase lifetime value and reduce churn. Joining me today is Rob Nicholls, a strategic CFO, a non-executive director and board advisor with over 35 years of global finance experience.

 

Rob also specializes in profit maximization and value creation. Hi Rob, welcome to the show.

 

Rob Nicholls (01:04.628)

See you again, Paul.

 

Paul Mills (01:06.181)

What you've been up to since we recorded the last episode, you've been thrashing out on the golf courses.

 

Rob Nicholls (01:11.598)

The weather's been against me, Paul. The weather's been against me. In fact, it was yesterday as well. So hopefully later this week, but a bit of vacation, a bit of art, a bit of culture as well, which is good. And we're back to it now.

 

Paul Mills (01:23.279)

And it's getting lighter later now. So certainly fit an extra hole or two in the golf cup over the next few weeks.

 

Rob Nicholls (01:26.368)

yeah.

 

Rob Nicholls (01:30.126)

Tuesday afternoon and Friday afternoons will be well spent.

 

Paul Mills (01:35.035)

Fantastic. So Rob, let's dive into the first topic. I want to look at how to craft an effective value proposition. We both know if you as a business, if you can't clearly articulate why your business matters, you're going to struggle to acquire and retain customers. So I want to explore why defining a strong value proposition is essential and how

 

to prove traction can validate that you found the right product market fit. So Rob, with your CFO hat on from a financial standpoint, how do you assess whether a company's value proposition is effectively driving revenue and what role should finance play in shaping it?

 

Rob Nicholls (02:21.933)

I'm glad you wanted to talk about this because this is, I think, a critical area for businesses. It's not talked about nearly enough. I work with a of startups that have been awarded Innovate UK grants. Value proposition is one of the first things we start with. do training classes on this such that startups, early or not from free revenue startups, get a good handle on what their value proposition, who they're targeting,

 

what they're offering, what their product or service is, and what the deliverables are to the client. If I go and switch that thinking to the SMEs that I work with, the value proposition really oftentimes is not clear. It's not thought about. Oftentimes, there's a marketing person involved in the business or business development stroke marketing person, but they don't really get what the value proposition is. I think it's

 

critically important and there is a role to play for the CFO because again, in a lot of startups and lot of SMEs, less than 50 people, you'll have a senior finance executive. You probably should have a fairly senior marketing executive and there is a role to play here because finance are driven by numbers. So whether it's revenue, profitability, margin, pricing, whatever it is.

 

There is input that is going to be given by the CEO and the CFO to marketing to focus on what is the value proposition that's going to drive the metrics that are important to the business. Generally, that's going to be revenue-oriented, margin-oriented pricing and profitability. Those sort of variables and then the output from that is the value that we're creating with the business. I don't think it's talked about nearly enough.

 

I don't think it's really understood by an awful lot of CEOs. It's interesting. On the social media channels now, a lot of people are talking about, on your headline, you need to be very clear about what your value proposition as a business leader is to your client. It's the same thing. It's understanding what the output is, what you're creating for your clients, and it's the same way with the value proposition in the business.

 

Rob Nicholls (04:45.569)

crystal clear on it, and it may evolve and pivot over time as you get traction in the marketplace and you establish product market fit, but it's not nearly well understood. I think it comes back to the marketing leader or whoever is running that part of the business to be clear on it and to make sure everyone in the organization, including finance,

 

is clear on it and it's clearly not it's something we've moved away from to an extent I think.

 

Paul Mills (05:18.503)

I think you're absolutely right. you know, certainly some of the investors I speak to that they expect a documented value proposition that outlines the unique benefits. And when we talk about benefits, we're not talking about product features or service features, we're talking about functional value that someone receives from a product or service. But it's not just about the functional value. Also, Rob, it's about the emotional value. And I think particularly in B2B services marketing,

 

If you're a decision maker in a company, you've got to find an outsource partner to do something. There's a commercial risk that you face because you've got to make a decision on a partner and you're going to be worried about are they the right organization to provide the service or the products? Is it going to be the right quality? Is it going to be on time? Is there any other risk attached for that?

 

Now as that decision maker, if you get that decision wrong, there's some professional advancement jeopardy that might come your way. It might impact your career. And so part of that value proposition also needs to look at who is the buyer, who is the decision maker, what problems have they got, and how is your product service going to solve those? the value proposition isn't just about

 

differentiation. Yes, it is about that to some degree. But it's also about clarity, it's about relevance. And it's also about proof of demand. And I think certainly, from my perspective, from a marketing leadership role, the CMO's role, or the marketing director's role, they've got to prove to the CFO or the investor that,

 

The value proposition is driving traction. think traction is the ultimate validation that a business has found its product market fit. So metrics like customer acquisition rates, repeat purchases, referral growth, that's what's gonna prove to someone like you, a CFO or an investor that yeah, there is resonance there. The value proposition does resonate with the market.

 

Rob Nicholls (07:22.509)

And that is really, really important to an investor. And it's important to an investor. It's very important to the CFO. And the key word here is traction. And traction generally is going to be clients on a wait list, perhaps when they're free revenue, clients who are onboarded, maybe on a freemium version of a product. But it's equally, it's validation through traction and revenue generation. And if you can see that revenue generation, you know, I...

 

I talk a lot about other businesses, and I was looking at one business in the U.S. last night. They had 70 % increase in revenue quarter over quarter. That's phenomenal, and that's a business that's a multi-billion dollar business. That's the sort of revenue traction you need to be seeing because, if that is the case, that's validation that the value proposition is clearly aligned with what customers want. I think that's really, really critical.

 

well enough understood or valued in the UK as it should be. I often compare and contrast the UK against the US. The value proposition is something that's very clearly defined in the US. It's a point that investors focus in on really, really quickly. Even if it's pre-revenue, are they crystal clear on who they're serving, what they're offering, what the output is?

 

To your earlier point about differentiation, I'm not so worried about differentiation. There can be four providers in a marketplace providing very, very, very similar products or services. One or two of those is going to get validation through rapid growth, rapid traction in the marketplace, even if they're offering the same product. There are thousands of people on the social media.

 

offering the same product, some of them are just doing it way, way better, communicating what they're doing for clients better, and they're getting traction, and therefore then they're getting revenue as well.

 

Paul Mills (09:27.867)

Yeah, I totally agree with that. I think it's A couple of my clients, they've really struggled with the value proposition. They've been doing what they've been doing for years and years and years, and people kind of know what category they're in.

 

But there's other competitors doing a better job. so doing a workshop with the leadership team saying, let's talk about value. People do struggle with what value is. They automatically think of features and it's really like, where do you add value to your clients or your customers? You're going to help them execute something better. You're going to help them save time. You're going to help them do something cheaper or faster or better. It's that kind of value is what we want to talk about, not.

 

Rob Nicholls (09:53.133)

Ciao.

 

Paul Mills (10:10.895)

People don't buy a car because it's got four wheels and a gear stick. They buy a car because they want to get from A to B. And I think a lot of business leaders need to differently, use a different mindset about the value that they actually offer, not the things they do.

 

Rob Nicholls (10:28.469)

It really isn't rocket science, at the end of the day? And I'm surprised in this day and age that businesses still struggle with orienting marketing actions, communications around the product benefits, the service benefits, and it's really all about outcomes. It's what can your product or service do for me to improve my business, to make it work better, faster, for me to increase sales, revenue, profitability? That's what it's about. It's about how...

 

problems, not features and benefits. It's a little surprising that in this day and age, we're having to so much re-educate, but re-familiarize business about some fairly basic concepts that we've moved away from. To a large extent, is marketing's role, is to educate the organization about what is important in the marketplace, not just where's the market going, what the customers want today,

 

but what customers want tomorrow in terms of their outputs? What are they willing to pay? What pricing are they willing to pay? I think we've lost an awful lot of that as well. And I think one of the reasons is the agency model in the UK is I think it's a flawed model. I think it's a flawed model that's moved us away from some of these basic tenants, whether it be research, whether it be partnerships, whether it be pricing, whether it be just the value proposition.

 

we've moved significantly away and probably need to re-familiarize ourselves with some of the core beliefs and tenets of Mark.

 

Paul Mills (12:04.679)

Yeah, no, totally echo all of that. I'd like to, I guess, move on. I guess slightly following on from that, I want to look at optimizing customer acquisition channels. I think there's one thing having product market fit and having a you know, a well-defined value proposition. I think one of the other things we need to do is really optimize the channels that we're acquiring customers from. you know,

 

Rob, customer acquisition is essential for growth. But it needs to be efficient, it needs to be scalable, and it has to be aligned with some form of ROI goal. So what I want to do now, Rob, is break down how to maximize performance across paid, organic, and partnership channels without wasting budget on low-impact tactics. So Rob, from your standpoint, when you evaluate marketing spend,

 

How do you determine the optimal balance between short-term customer acquisition costs and long-term profitability? And what metrics do you prioritize?

 

Rob Nicholls (13:06.893)

So this is an area that I find fascinating, to be honest, that no business gets right. I'm a big believer in if you've got a million dollars worth of sales, you should be spending 10 % of that revenue number on investment in brand, marketing, tactical, or strategic activities. And if you're not spending 10%, you're under-investing, and therefore, over time, the growth in revenue is just going to tail off.

 

and you're going to wither and die if you do. I'm a big believer in, you've got to generate revenue. You've got have a line that says marketing PR, promotion, communication, whatever that is, that is a decent line. I see a lot of businesses that invest nowhere near enough money. They're turning over two, three, five million pounds a year, but they're spending a couple of thousand pounds a year on marketing.

 

outside of perhaps one person just doing some BD or some sales or some marketing activity. But I think the easiest way for a lot of businesses and the lowest cost way, and I'm a big believer, is strategic alliances and partnerships. I think it's something that's not nearly enough in the UK. Again, it's very, very widely utilized in the US. I don't understand really why we don't do it more here. I think perhaps

 

Trust is part of it. People don't know a lot of other people outside of their specific industry or their business. If they got out there more often, I put in place a couple of years ago, a partnership with one of my clients with an insurer and basically enabled that insurer to sell product on the back of my client's product. But if my client's product was sold into the channel, the buyer would

 

would receive a 10 % to 15 % reduction in their insurance premium. So was a clear win-win. And we posted revenue, probably 20 % just on that strategic alliance. There was no investment. There was no investment by the insurer in my client. was no... It was just reciprocal. It was a win-win. And I don't think we do that nearly enough. It's relatively low cost. Yes, there's some engagement has to be had. We don't do it nearly enough.

 

Rob Nicholls (15:31.346)

I think businesses should be doing a great deal more of that. They should have three to four partnerships in different channels for different clients. The client I was working with was specifically in one industry. was actually agriculture. They just focused on that one industry. You could parlay three or four good relationships in that industry. Then on top of that, they built organic—

 

spending, they did some SEO, they did blogs, they did some social media, and they didn't have a marketing person in place. We just did it, the CEO, myself, and an outsourced freelance copywriter. So there's an awful lot you can do. But I come back to the previous premise is that you need to be investing. And we haven't really talked about brand yet. A brand, you can have a brand that a million pound turnover a year, as you plan a billion pound turnover business.

 

I really don't think SMEs in the UK think enough about the brand in the marketplace. They may do a rebranding and change the name. They may change the font or the coloring on their wording. That's really not branding. That's just imagery in my world, if you will. I talked to a recruiter a couple of weeks ago, and she's doing a rebranding right now. Effectively, it's really just changing the name of the company.

 

Well, know, asked, have you gone to an outsourced agency, a strategic marketing firm, if you will? You said, oh, no, we've done it ourselves. So, well, that's not really investment in your brand. It would have been smart to outsource it, get a kick-ass marketing person in there to develop the whole remit of strategic deliverables, understanding their value proposition, who the customer is, where the market is.

 

what the marketplace thinks of your brand at the moment. People seem very reluctant to invest in that currently, and I think that's something that I, as a CFO, strongly support because I know six months down the line, we're probably going to have an inflection point in terms of revenue generation or client numbers or onboarding or an improvement in retention or an improvement in client conversion.

 

Rob Nicholls (17:56.062)

not nearly enough investment in that today.

 

Paul Mills (17:59.751)

I'm really glad you mentioned that 10 % number. it's, I know that there's a lot of marketers that often have a bit of headbutting with the CFO to ask for more money. Certainly in my background, my career, I've spent a lot of time in professional services and there's a lot of organizations I've been in where the actual total marketing spend is about less than 1 % of total revenue. And

 

I always say, and there's lots of written academic words out there around this 10 % rule of thumb, if you're not allocating. no, no, it is a general rule of thumb. Yeah, it's a general rule of thumb. And I think as a business, and if there's any business leaders listening or watching this episode, if you're not allocating 10 % of revenue, you're not ambitious enough in your growth journey.

 

Rob Nicholls (18:35.373)

I just came up with that myself. Maybe that's where I got it from. Maybe that's where I got it from.

 

Paul Mills (18:54.035)

full stop, I think that's fair to say. And if you've not got that level of revenue to invest, you're doing something wrong. You're probably wasting effort, you're wasting resources in other parts of the business. Maybe you're too inefficient in some aspects of what you're doing. So I'm really glad to hear that from a CFO, that 10 % number. And I'd also like to pick up on the point you made Rob about partnerships. And I totally concur with you. And I think even more so in

 

B2B organizations. think partnerships and alliances, they really do allow you to tap into existing audiences and distribution networks. And it really can reduce your customer acquisition costs. And I think that is such an important thing there. And I've been in an organization where actually the majority of business, new business, came from distribution channels that were set up. And they're easy to set up. It's go networking.

 

have some friendly conversations with like-minded organizations that share similar target audiences, that share similar values, that have a similar outlook on product, service, quality, customer experience, all that kind of good stuff. And I think that mutually beneficial ecosystems are really where you're going to find a lot of long-term growth.

 

Rob Nicholls (20:13.741)

I mean, There's a clear correlation or maybe it's causation. For a number of years, I ran the Middle East and Africa for a technology firm. And we went in, we had 69 countries, but we had about 25, 28 distributors across that whole region. I went in and over the period of two years, we basically tripled the number of points of presence with dealers and distributors in countries that we worked in.

 

We took revenue from, I think it was about 25 million to when I left three, four years later, about 120. We had a 4x increase in revenue from probably less than threefold increase in points of presence in the distribution channel. There's definitely correlation. You get the number of partnerships in place. You get people on the ground working for your business.

 

whether it's regionally for instance in the UK or whether it's nationally and geographically across a region, there's a strong correlation. And you've got to have points of presence, you've got to have distribution. And one of the best ways to do that quickly is partnerships and strategic alliances.

 

Paul Mills (21:28.231)

Absolutely. I think there's another channel that gets a lot of noise in the business landscape and that's social media, and particularly in organizations, LinkedIn, TikTok, you often hear a business leader, a CEO, sometimes a CFO say, right, we need to be doing more on social media. And quite often that's a result of we're not doing anything on social media at the moment, or we don't have enough employee advocacy to use it in the right way. And I think certainly my experience, a lot of companies,

 

will try to blame social media for not delivering revenue growth. And I think a lot of companies that think that way, they're not using social media in the right way. Just doing a post here and a post there at random times of the day is not really going to cut the mustard. I think if you can leverage social media in the right way to build relationships, foster brand advocacy, and amplify customer success stories, that's when you're going to start winning. And I think if you can

 

turn your employees into advocates to extend that reach, you're going to increase trust, you're going to boost awareness, you're going to enhance your credibility. And I think certainly, you know, so many companies use social media in the wrong way. It can be a brilliant tool when used effectively. But Rob, you know, I know you're very prominent on LinkedIn, you've got a huge following, you know, you're everywhere. How are you using social

 

media as a CFO to really build I guess your profile and also what you do.

 

Rob Nicholls (23:02.805)

Two things. Social media is low cost, but it's by creation of brand recognition. I use it an awful lot. I'm probably the most visible CFO in the country right now because it does generate inbound inquiries. It's relatively low cost, but it's branding equally. You're absolutely right about creating brand ambassadors for a firm. There some great examples. I use US examples a lot because I spent a lot of time there.

 

And one of the best ones I found is Chipotle Mexican Grill. Basically, every one of their associates are brand advocates. And I just don't understand why UK-based companies don't do that. There should be an incentive, almost a competitive desire within members of organizations to create a brand, to create recognition. celebrating going to a conference, that sort of thing is of no value to me, but celebrating

 

the success of clients, engagement, wins. There's so much you can do. I post, for example, every day, and I think there's a growing recognition that CEOs clearly need to be brand advocates, but equally any member of any organization could be a brand advocate and could create a following of tens of thousands of people. It definitely has an impact on the generation of

 

inbound inquiries. It's a gift that just keeps on giving. Again, I struggle why people don't use it more because it is low cost and it's easily available. To your earlier point, it's about relationships. If you don't have those relationships, whether it's strategic partnerships, contacts in other industries,

 

contacts in other companies where collaborations are possible. If you're not building relationships, your business just won't grow. But the more relationships you have, the more inbound inquiries you'll get and the more your business will grow. Quite often times now, I'll have two to three inquiries a day that I'll spend the rest of the week trying to set up. And it's all through engagement and it's all through conversations and it's all through building relationships.

 

Rob Nicholls (25:27.981)

And that's what business is. It's about relationships where you can help me and I can help your business. And the sooner and the quicker you get on board with that. it's again, it's relatively low cost. I don't need to invest 10 % of my revenue to generate those inquiries. It's relatively low cost. And, you know, we should all be doing a lot more. I try my best Paul. I try my best.

 

Paul Mills (25:51.431)

Well, you did a very good job. I don't know any CFOs that are as high profile as you on LinkedIn. So you keep up the great work. You're certainly a role model. I certainly use your profile as kind of a benchmark really for other clients that I work with to say, here is a CFO using LinkedIn in the right way. This is the impacts they're making on their personal brands, but also their expertise as a thought leader in everything you do.

 

Rob Nicholls (26:15.725)

It's funny, I know an agency business owner that uses my profile in his training classes and I was like, well, how did that happen? And one of the, someone who attended their training class messaged me and said, this guy's using your profile in his training class. I'm thinking, that's weird.

 

Paul Mills (26:38.331)

There, there, that's good. Keep it up, work. Robin, I'm just conscious of time. I would like to divert the conversation to how you can drive retention to build long-term value. And we both know that retention is the key to profitability, especially from an investor's perspective, where they want to shift their focus from rapid growth to sustainable value creation.

 

I'd like to explore why high retention rates are critical and why marketing leaders need to have this very focused on their mind and how to measure customer lifetime value and what marketing can do to reduce churn. I know that would be music to your ears, reducing churn. So Rob.

 

From your standpoint, how do you evaluate the financial impact of customer retention initiatives that may come from marketing? And what advice do you have for CMOs that are looking to secure investment /marketing budget for retention-focused marketing activities?

 

Rob Nicholls (27:45.024)

A couple of elements here. I worked with a client a couple of years ago that had, that was growing very rapidly. It was an early stage. They were running for series A. They were turning over about 30 % of their clients were moving on within 12 months. So it's just a rapidly evolving situation. You've got to bring a significant number of inbound doing queries and qualify them, convert them to replace the clients you're losing.

 

That's not a winning strategy. So one of the first things we had to do in the space of about six months is to drive retention rates from under 50 % to sort of north of 60, 70%. And I look at, again, a lot of businesses in the US, and a lot of those businesses create value through retention. So they aim to retain 95 % of their business on an ongoing...

 

know, yearly basis. This is the basis of a lot of companies, whether they're healthcare providers or insurance companies. They expect 90, 95 % of their customers to be retained and retained at a higher pricing. So, you your insurance premium will go up every year. Your healthcare premium will go up every year. And lo and behold, the value that's created in those businesses increases every year. So, it's absolutely critical.

 

that you look at retention rates. And again, if you've got 50 % retention rates, 60 % retention rates clients, that's not a winning strategy. again, getting your retention rate up to 80%, 85 to 90 % is absolutely critical because again, you know that you're retaining clients because they're getting a good service, they're valuing the outcome and they're willing to pay.

 

Oftentimes, a lot of businesses are reluctant to pass on pricing or to take pricing. In this environment, I'm a huge advocate and I promote this frequently, is you need to be taking pricing here in the UK on your services. You need to be putting through two or three pricing increases per year, certainly every 15 to 18 months. Again, it's something that is

 

Rob Nicholls (30:06.341)

much better understood in the US. For example, Chipotle, an example I gave earlier, they put in, I think, four or five price increases last year and really didn't lose any clients. One of the mantras I talk to my clients about is, quite often, if you're taking pricing and you're trying to drive up retention rates, you will lose some clients along the way. But the likelihood is those clients you may lose along the way are high-maintenance clients, clients that are

 

perhaps lower pricing, likely lower margin. And this goes to ensuring that you understand the margin or the profitability of every client or every product you've got in your portfolio. Most businesses do not have a clue as to their profitability per client or per product. It's just not something they do. I work with a surveying client and they have no, they've got four divisions. And really it's only in the last

 

six months, we've got to handle on the profitability of each one of those businesses. We know that one business is not profitable. Two businesses are barely breaking even though one business of the four is basically carrying the whole organization. It's basically because their retention rates are very high. They're on framework agreements and they basically get a job every three to six months and they have very profitable jobs.

 

But you have to understand pricing and your margin and profitability by client and understand what retention rates you need. And maybe it'll be you only need 70 to 80 % retention rates if you can take pricing frequently. In the example, two or three times a year, most businesses can't do that, but you should be taking pricing at least once a year on a regular basis.

 

low single digits, communicating that with your client, that will hopefully look to expand margins over time and create value over time. And long as you're not bleeding clients and you're working hard to retain clients, whether that's through, you know, looking at the life, I'd rather have a client that is on board for six years than a client that I can, you know, work with for six months at a high retainer.

 

Rob Nicholls (32:30.399)

I want that six year time, most definitely. I'm not interested in working with someone for six years. I want to work with them for four, five, six years. That's where they'll get the value out of me and equally I will get the lifetime value out of them. And you have to think long-term here.

 

Paul Mills (32:50.439)

Yeah, right. think Earlier in this episode, we spoke about, you know, one of the rules of thumbs are you invest 10 % of revenue on marketing. I think the other rule of thumb is that acquiring a new customer costs between five and seven times more

 

than retaining an existing one. I think if you're looking at your marketing, your BD activities, really focus on those customer acquisition costs and think about what you can do more to retain your existing customers. And I think if you can retain your customers,

 

That demonstrates that you've got strong value proposition probably because they don't want to switch to someone else. They're probably pretty satisfied with what they're receiving. Yes, you can probably do better. Customers are pretty fickle. They always want more. But as long as you build more into your product innovation or service innovation strategy, can provide that. And I think you're right. Having customers over a longer term, that gives you your predictable revenue streams. You can plan over a longer term.

 

look at your profitability and invest. And I think certainly the investors that I speak to, certainly regard high retention as a sign of strong product market fit and operational efficiency as well.

 

Rob Nicholls (34:08.519)

You're right. Investors are very focused in on growth. New clients coming on board, they want to see a waitlist for pre-revenue. They want to see an increasing number of client engagements. They're very focused on growth. Equally, on the backend, they're very focused on how long are you holding onto that customer? Is it a year and then the client's gone and then you've got to find another client? Or are those clients staying with you and are they sticky?

 

in that they are not going to walk away from you and look for a lower cost alternative, are they sticky in that you can apply and take some pricing on that as well? To be honest, think there's a shift that's happened from the rope at all costs to, how sticky is the client? How much pricing can we take? What margin expansion and what profitability can we generate over a longer period of time now? I think, you know, go back three to five years,

 

and was about growth. last two years or so, it's really about retaining clients, expanding margins, expanding profitability, and holding onto your clients longer, such that you're driving up retention rates. And investors are very much focused on that now. Yes, growth, but also retention.

 

Paul Mills (35:29.339)

Yeah, and I think that's where marketing leaders need to ensure that the CFO is a strong ally in working together and saying, how can we make sure we can reduce our churn rate of our customer base? And I think retention, it doesn't happen by accident. It requires

 

ongoing communication with your customers. It requires personalized experiences. It requires proactive problem solving as well. If you can kind of think ahead for your customers, what problems might they have later on in the future and what products or services can we offer that might mitigate that? Again, you're just going to keep them for much longer. I think there's also businesses have to regularly gather that customer feedback. What are we doing well?

 

What are those churn indicators? How can we address pain points better before the customer leads to a cancellation or switch to a competitor? I think it's really important. And I think that's really where marketers need to kind of step up, particularly with working with the CFO, is to make sure they've got those kinds of activities on their marketing strategy rather than tactical, short-term tactical activities just to satisfy, I don't know, the CEO's ego on getting a piece of PR out there.

 

Rob Nicholls (36:44.991)

And I think again, that client listening is something that is often forgotten. To be honest, mean, the professional services world, they do it really quite well. And they'll go out and talk to clients and understand what they're thinking, where they think things are going. Again, it's investment. It's investment in the brand. A client listening program does not cost a lot of money. You do it once or twice a year kind of thing, and that's fine. It's relatively seamless, if you will. And again,

 

more businesses outside the professional services world should invest in it because it is relatively low cost and it will drive retention rates. It will drive an improvement in retention rates. absolutely right.

 

Paul Mills (37:26.074)

And that's

 

probably a good point to close the show. I think there's a profound statement there, Rob. So thank you. if you've been listening or watching this episode, I hope you found value from our discussion. In the next episode, Rob joins me again, and we're going to be discussing how to leverage data to make informed marketing decisions. So stay tuned for that one. So Rob, just like to say thank you again for giving up your time today and sharing your perspectives. I really enjoyed the show, and I look forward to the next episode.

 

Rob Nicholls (37:56.429)

Nice to see you again, Paul. Cheers.

 

Paul Mills (38:00.455)

Right, I'm just going press this.

 

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Paul Mills

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Rob Nicholls

Guest