Growth at All Costs Is Costing You the Right Customers

Chad's dashboard was green. Volume up, cost per lead down, every target hit. Then sales pulled him aside and said the leads weren't closing, fulfillment made a face at the water cooler, and Jacob walked in asking why revenue was flat. He had won the quarter and lost the year.

This is the episode about the volume trap. Jacob starts with his first real win as a data analyst, telling one of the largest agricultural equipment companies in the world that it was burning money chasing the cheapest clicks. Then Chad turns it on himself. They get to the question that changed how Chad ran every campaign after it, why the CEO's honest answer is usually "I don't know either," and why bringing your CEO a finished customer profile is the fastest way to get it thrown in the trash. This is the Vision pillar of VSET.

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CHAPTERS

0:00 You can hit every marketing number and still get fired 

1:02 The Fortune 100 campaigns nobody wanted to spend money on 

4:39 What chasing volume does to profit, customers, and your sales team 

5:22 Why AI and the algorithms made this problem worse 

7:16 Little Adventures: a brand that knows exactly who it serves 

8:48 How to find your real ideal customer, then validate it with the numbers 

11:32 Why we say no to 80% of the leads that come through the door 

13:40 Getting sales, marketing, and comp plans pointed at the same customer 

14:59 The courage to hold the line when the transition gets rocky

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WHO'S TALKING

Jacob Baadsgaard is the founder and CEO of Disruptive Advertising and the author of The Indispensable Marketer. He's sat on both sides of this table: marketing director at a public company, and now the CEO asking marketing for a number.

Chad de Lisle has been in marketing for nearly twenty years, half of that at Disruptive working directly with Jacob. He's the marketer whose dashboard was green while the business was bleeding.

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ABOUT THE SHOW

The Indispensable Marketer is Disruptive Advertising's podcast. We're a

performance marketing agency, and our mission is to connect great marketers with

the brands they believe in. The goal of this show is simpler than that: we want

marketing leaders to win. Not just hit the number, but earn the trust and the

seat that comes with it.

For anyone who has no reason to trust us yet, some things you can check:

We've managed marketing for more than 2,000 client accounts.

When we studied those accounts, we found that on average 76% of ad budget had no

attributable revenue impact. Not low impact. No impact. That's the problem we

exist to solve.

We reject 96% of applicants, because the wrong person in the wrong seat costs

everyone.

We publish around 8 videos a month. We want these to be the episodes you forward

to your CEO or drop in your team's channel, because you're both better on the

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FREE RESOURCES: https://www.indispensablemarketer.com/free/

Disruptive Advertising: https://disruptiveadvertising.com/

The Indispensable Marketer (book): https://www.indispensablemarketer.com/book/

Connect with Jacob on LinkedIn: https://www.linkedin.com/in/jakebaadsgaard/

Connect with Chad on LinkedIn: https://www.linkedin.com/in/chad-de-lisle/other side of it.

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NEXT EPISODE: why anyone should choose you when your competition is cheaper.

Transcript

SPEAKER_00 0:00

Did you know you can hit every marketing number and still get fired? That's right. You can hit every marketing number you set out to hit and your CEO can still stop trusting you. I know because that's what happened to me. Today we're talking about how all the marketing numbers can be green and you can still lose if you're not targeting the right customers. And to set it up, my guest has a story about a Fortune 100 company and how digging into their data helped him see how critical it is to get clear on who your company is built to serve. Tell me about this data analyst moment, this younger version of Jacob that was digging into the data for a Fortune 100 company.

SPEAKER_01 0:35

What happened? I've been running disruptive advertising for over 13 years now, but I didn't get a marketing degree and never thought I would end up in marketing. And I actually did information systems for my degree and ended up in more of an analytical, some coding, database analytics type work for the first few years of my career. And what was interesting is that I started noticing patterns. And that's something that I've always been good at. And one of the clients I was working with at the time, there's this small subset of campaigns that I can tell you're holding back because the cost per lead is a lot higher, but your cost per sale is phenomenal. Like they're turning into quotes, purchases, and buying equipment that's like mil sometimes hundreds of thousands or millions of dollars from you. And so I said, I'm not the marketer, but what I would recommend you do is spend more money on what's actually driving sales for you and take that from the dollars that are not driving sales for you. And it was a little bit of a moment where it's like, well, no doubt. That's just like the data makes this really obvious what you should be doing. Yet no one had been able to see that or act on that before. So this was my moment of like, okay, I mean, it's pretty obvious, just do it. A couple of months later, they came back and said, you know, this is the TLDR version, but we're spending a lot less money. We're getting way more sales. We we look like rock stars in our organization, and we're spending less money to get there because we're spending it in the right areas. And that's when it like clicked for me when I'm like, oh, well, marketing when it's informed with data makes a huge difference. And that's when I realized, oh, I'm doing the data side, we've got marketers doing the marketer side, but no one's really doing both of these together. And that's where the idea of disruptive advertising started coming together. Because I'm like, if these massive companies aren't doing this effectively, what are small and medium-sized businesses doing? And so that's where the idea for disruptive advertising was birthed.

SPEAKER_00 2:29

Tell me more about the misalignment of targeting the wrong customer and how businesses do that today in a very natural way.

SPEAKER_01 2:37

You know, I tested this theory with uh the company I actually work at in college. And I said, hey, I've been doing this for Fortune 100 companies and it's working really well. I want to see if the same thing plays out for you and in your business as well. This is like a 25-person company, small business. Uh worked uh there while I was in college, went through the same exercise, connected all of the marketing data and analytics to the customer sales and outcomes and retention and all of those things. And then just found the exact same thing, which was you're spending a ton of money on low-cost leads that aren't driving sales. And to answer your question, this is what I see marketers do over and over and over again is they chase the volume, yeah, even when it doesn't translate into uh revenue, happy customers, good outcomes for the business. And so in this situation, we gave them the same setup, 25-person company, and and we found out, hey, this is where you're getting customers that actually love the product that you're offering, want to buy more. And these are the ones that are driving inexpensive leads, but they're not really getting you where you want to go as a business. And that small business, uh, 10x, they actually went from 25 employees to over 250, pushing 300, because we figured out a segment of the market that the competition wasn't really focused on, and the data is what led us there. In both of these situations, this is the part that I think uh could easily go unseen or not noticed. Is the customer that you're built to serve as a business, the one that really values what you give them and want to keep coming back, they become people that leave reviews or make referrals or brand advocates, tend to be either your highest producer of revenue or your highest producer of net income or profitability. And so when I talk about the analytics of pointing us to where we want to help these customers, what the data is really revealing are the tar are is the target customer that we are built to serve as a business. And when we serve them, they're happy and we're happy and we win together. What happens without that data, and when marketers chase green numbers on their dashboard to say volumes up, we might even have revenue up, but profitability is down and our customer satisfaction is down. And when customer satisfaction is down, employee satisfaction is down. And now my sales team is working twice as hard to close the same amount of revenue. This is where I see so often that trust gap emerge between the marketer and the executive team or the CEO, because they're not getting on the same page with really understanding who the company is built to serve, and that it's backed by math and numbers as well.

SPEAKER_00 5:19

Yeah. And I I would argue, and I'd love to hear your opinion on this. I think that AI and algorithms have actually accelerated this problem in a lot of ways too. Because the AI or the algorithm is built to get you the cheapest customer, right? Or the cheapest lead. And in a lot of ways, that can just compound the problem that you were experiencing and finding 13 years ago when you were looking at this.

SPEAKER_01 5:42

Yeah. And that's what I would say the principle that holds true is you have to get quality data in. You have to structure that data correctly so you can get the right outputs from that data as well. And that hasn't changed with AI, it's just sped up with AI. And so what you're saying is exactly true is it will speed you up into the wrong solutions and results, or it will speed you up into the ones that actually transform and grow your business in a way that feels better. Because what I learned in going through this process is I loved helping companies grow. And that was a big part of who we were. We we can see in the data what other people aren't seeing and help you spend the same amount and get more customers, or spend less and get the same amount of customers that you're getting. Either way, you're getting a financial advantage over your competition. And for a long time, that was very satisfying. And what we built our brand and reputation around is we're an analytics first performance marketing agency that knows how to get you results. But over time, that actually felt less and less authentic for our brand because it wasn't just about helping them achieve their performance goals. We also wanted to help them stay aligned with their purpose as a business beyond just making money. And when you really identify and understand the customer that you're built to serve, that is what brings you right back into alignment. And so we want to scale with the customers that our products or services really help them win in their life, in their business, in those types of things as well. And that's the type of meaningful growth that we're aligned with.

SPEAKER_00 7:16

That's awesome.

SPEAKER_01 7:17

And more recently, one of the clients that I think is a great example of this is Little Adventures. They've been one of our favorite favorite clients for a while now.

SPEAKER_00 7:25

We love you, Little Adventures.

SPEAKER_01 7:26

Yeah, we've been on service trips to Mexico with them. I just recently ran a 5K for uh a fundraiser that they were doing for one of their employees, children. And we're just super on the same page. And it's because they understand who they're built to serve. They're not selling costumes to people that want just something that's transactional that they throw away, whatever. Like they built their product for moms like them that want to say yes to imagination, that want to let their kids wear it to the grocery store because they know they can just throw it in the wash when they get back. And they figured out a way to do that cost effectively so that they can get top quality product and still not have to break the bank to get it. And so when we work with businesses like that, like we believe in what you're doing and we can use that information and the data to help drive the marketing campaigns that help you win with the customers that value you for those reasons. And they're the ones that buy multiple costumes, they're the ones that refer you, they're the ones that want more and keep coming back for more. But you also have to get good at identifying the customers that you are not built to serve as well.

SPEAKER_00 8:31

Yeah. So for those marketing leaders and or business owners right now who are watching this, what are some practical first steps that they can take to just really start to get clear on who they're built to serve?

SPEAKER_01 8:42

There's a couple of questions that I always like to start with that I think gets us in the right headspace. Sure. But it's important that we validate it with data. And so the first question that I like to ask is just tell me some customer success stories that inspire you.

unknown 8:54

Yeah.

SPEAKER_01 8:54

And I like to go and talk to the CEO about that. I like to talk to the customer team, whether that's product or services that are being provided. Tell us your favorite customers, talk to the sales team. And once I can identify some of the objective and discernible parts about who this target customer is, I can then go validate that with the data to say, okay, are these customers that financially provide better outcomes for the business as well? And I would say about eight to nine times out of 10, the answer is yes.

SPEAKER_00 9:24

Yeah.

SPEAKER_01 9:24

And then all of a sudden you say, oh, okay, you all like working and serving these types of customers more. And the finances show that we perform better as a company when we focus on this type of customer. Once in a while, they they don't match up, and you've got to dig in a little deeper to understand the why. But uh that that's where I always like to start and then let the data back it up. And then when I work with a marketer like you or other indispensable marketers, it's why would you spend money on anyone else but the target customer?

SPEAKER_00 9:53

Yeah.

SPEAKER_01 9:54

Because the Halo effect will still bring in customers that are not as ideal anyway. But if you really cater the messaging, the targeting, and all of those things to the customers you're truly built to serve and why, you're going to perform better as a business. You're gonna have better lifetime values from your customers and you're gonna have to spend less to get them. And that's what creates the contribution margin for businesses to really scale and grow.

SPEAKER_00 10:16

Well, and uh it might require you to change some of the KPI targets on your dashboard, right? Because you might see, oh, well, we're gonna spend more on these leads, and that's okay. It's a win, right? But you've got to get that clarity first, or there can be some frustration and heartburn. Yeah, absolutely.

SPEAKER_01 10:32

And that what I see on the e-commerce side of the business is these are the customers that buy again.

SPEAKER_00 10:38

Yeah.

SPEAKER_01 10:38

And then when I look on more of the lead gen or building customer relationships with services, they're the ones that retain longer as well. And so again, the ratio and the math ultimately just shows us how much does it cost to acquire this type of a customer and ultimately how much does it drive for us uh from lifetime value? And those are the numbers that should back up the customers that you're built to serve. And I think it's kind of like the fun investigative part of being a marketer is to uncover those things.

SPEAKER_00 11:05

Yeah, agreed. Yeah, put on your sleuthing hats, grab your magnifying glass, get into the data. Yeah, it's fun stuff. So this can bring up some uncomfortable questions because you're digging in and you're saying, okay, well, here are the customers we're built to serve, but that also makes you define the customers you're not built to serve. And for disruptive, this came up in a very real way as we dug into the numbers and dug into the budgets we were spending and recognizing that there was a big portion of customers that were coming to us that we just weren't built to serve. I mean, we're at a point today where 80% of the leads that come through the door, we don't work with, right? We say no to a lot of business. Um, tell me how that lands for you. You know, what does that feel like as the business owner saying, hey, we're just we're not gonna work with this group of customers.

SPEAKER_01 11:49

So there's a couple of things that come up for me as the CEO, or maybe in the seat of the head of marketing, which is you, and I've also been in that seat so many times. The uncomfortable conversations that that's led to. And to me, that's what defines a great leader is willing to have those uncomfortable conversations. Because we learned, and I won't even get into the specifics, that we are just not a great agency for proof of concept businesses.

SPEAKER_00 12:12

Yeah.

SPEAKER_01 12:12

We're just not. In terms of getting you from zero to a million or zero to two million, that is just the success rate of those businesses in general is low. And our success rate with those, while we had some awesome wins, sure, was actually the source of uh we weren't profitable on those. They were the highest stress, lowest budget. And it just wasn't who we're built to serve.

SPEAKER_00 12:34

Yeah.

SPEAKER_01 12:34

We're awesome in more of that three to $20 million business that already has proof of concept, you know, product market fit established well enough, and they're just looking to use digital marketing to double, triple, get themselves to the next stage. That's who we're built to serve. Going and talking to my sales leader and saying, we need to stop selling some of these types of clients that we're selling. Well, they think I'm going and taking their paycheck. Oh, sure. Right. Yeah. I go to marketing and say, hey, this we we've got to align these things, or else we're we're marketing to people that we're gonna lose money on and that we're not servicing well, and this isn't a sustainable way to grow the business. And then you might look at your metrics and say, well, shit, I don't know how well I can perform if I can't lean on those campaigns anymore. Exactly. And so I would say the people that feel it the most up front are marketing and sales. And the marketing leader, the sales leader, and the CEO all need to get aligned around who are we really built to serve? And is your compensation in marketing and in sales aligned with driving those types of customers? Because if the environment is right, you'll be motivated to drive towards those. If the environment is not situated right, you'll drive volume because if that's what you're compensated and rewarded for, then you may get misaligned. And so this is where the CEO needs to take some ownership and say, have I created a situation that it is natural for you to want the same outcomes that I want? And money talks. But I also think that, you know, and that's what this whole series is about, is that if the CEO isn't doing that, the marketer can step up and raise their hand and say, we need to have this conversation because I'm looking at the cost to acquire these customers, how long they're lasting, the math isn't even making sense to me. And the customers aren't happy and we're not happy. So we've got to have a conversation. And so those anti-customers can really feel scary to move away from them up front, but then very liberating to the team to say, okay, I have more clarity, I have more focus, I understand mathematically why this makes sense to target these customers. And now we can grow a business that doesn't feel like a treadmill or walking up a sandhill that actually has a stable foundation to go from.

SPEAKER_00 14:41

Yeah. And with those conversations, there is an element of courage that it takes to hold the line when you make those kinds of pivots. Not just meaning that uh, you know, you're making some changes, moving to more of those customers that you uh want or or are built to serve. It's about can you stay with it when you're going through that learning phase, that rocky beginning of a transition. Those can be really challenging times. But when you have created strong vision and clarity on who you're actually built to serve, it makes it so much easier to say, no, we're fighting for the right thing here and we're gonna push forward. We're not gonna revert and go back, even though it can be tempting to when things are rough in the beginning.

SPEAKER_01 15:27

What sometimes feels comfortable short term leads to more pain long term. Oh, for sure. And so uh we've had to make some decisions as a business over the years of we'd rather be smaller and focusing on the right customers than larger and not focusing on the right customers. And so sometimes it just takes, yeah, that might mean making hard decisions around team members or the size of the business or whatever. But if you're not growing from a stable foundation, you're just you're actually making the problem messier and harder to deal with down the road. And so that's why getting clarity on who you're built to serve, making sure that the product is delivering, that we're marketing to them specifically, and that sales knows how to drive that, you know, between marketing and sales. That is the foundation that creates a meaningful business that is profitable, that is growing, and that is aligned with its purpose. And so to kick that can down the road actually will lead to more pain. You just, it's the pain you don't have to feel right now. Yeah. So it's kind of like choose your hard type situation. You want to feel some of that pain right now, or do you want to feel more of that pain later? Because if you wait till later, it might actually be more disruptive to you, the business, and and your livelihood. And so I just think anytime you see it, and that's why we've tried to make it simple with our frameworks and tools to say, let's get really clear on who you're built to serve, who you're not built to serve, and make sure that all of your marketing dollars are focused on the right ones because that's what's going to allow you to grow a more sustainable business.

SPEAKER_00 16:54

Amen. Well said. And it's worth it to do it now. You know, go for it, don't wait. So, marketing leaders, become indispensable by getting clear on who your company is built to serve, not just showing that you can make a marketing dashboard green. In our next episode, learn how differentiators that make the right customers choose you, even when the competition is cheaper. And the months that Jacob spent rejecting my copy and how we fixed our brand voice, finally, once and for all. We'll see you then.