Your marketing agency reports an 847% return.
The dashboard is full of green arrows. Clicks are up. Impressions are growing. Attributed revenue looks strong.
But your bank account tells a different story: 0.6 to 1.
How can a campaign look that successful while the business behind it is losing money?
That contradiction sits at the center of Episode 15 of From Burnout to Bought Out. Jon and Ryan explain why many marketing reports look impressive without answering the question that matters most to an owner:
Did this marketing produce profitable growth?
The problem is not always that the agency’s numbers are false. The problem is that the numbers may measure advertising performance without measuring the economics of your business.
The Difference Between a Good Report and a Good Result
Most agencies can tell you how much you spent, how many people clicked, how many leads came in, and how much revenue a platform attributed to a campaign.
Those numbers can help diagnose marketing activity. They cannot, by themselves, tell you whether the business made money.
An owner does not pay payroll, rent, vendors, and taxes with impressions. Revenue does not automatically become profit. A lead does not automatically become a paying customer. Even a strong return on ad spend can disappear after you account for the cost of fulfilling the work and the full cost of acquiring the customer.
That is why the episode draws an important line between ROAS and ROI.
ROAS asks:
How much attributed revenue did the ads generate compared with the advertising spend?
ROI asks:
After accounting for the relevant costs, how much value did the business actually gain?
ROAS can be useful, but it is not the same as business profitability. If your agency stops at attributed revenue, you are only seeing part of the picture.
Why Revenue-Based Reporting Can Hide a Margin Problem
Imagine that your agency reports a strong return because its dashboard compares ad spend with top-line revenue. That calculation may ignore:
- The agency retainer
- Creative and production costs
- Sales payroll and commissions
- Discounts, refunds, or no-shows
- The labor and materials required to deliver the service
- Software and other campaign-related expenses
- The time it takes to collect the cash
Once those costs enter the calculation, the result can change dramatically.
This is the margin conversation many agencies never have with their clients. They know the media spend. They know the campaign. They may even know the attributed revenue. But they often do not know how much of each sale remains after the business fulfills its promise to the customer.
Without that information, the agency cannot confidently tell you whether it is creating profitable growth.
Why Your Agency May Not Be Measuring What Matters
The title of Episode 15 is intentionally direct: Your Marketing Agency Has No Idea What You Make—and They Don’t Care.
That does not mean every agency is dishonest or indifferent. It means the typical agency relationship is structured around a different set of incentives.
Agencies are usually hired to manage campaigns, produce leads, increase traffic, or improve platform performance. Their retainers are often based on an ongoing scope of work or a percentage of advertising spend. They are not usually trained, equipped, or paid to manage your profit and loss statement.
As a result, the agency may optimize the metrics inside its lane:
- Impressions
- Click-through rates
- Cost per click
- Leads
- Cost per lead
- Attributed revenue
- Return on ad spend
Meanwhile, you are responsible for the metrics that determine whether the company survives:
- Gross margin
- Contribution margin
- Customer acquisition cost
- Cash flow
- Payback period
- Profit per customer
Both sets of metrics can matter. The mistake is assuming that strong marketing metrics automatically create strong business results.
The 30-Location Clinic Reality Check
Jon and Ryan share an example involving a clinic business with 30 locations.
Its marketing reports showed an estimated return of roughly eight to ten times the spend. On paper, that looked like a highly successful program.
But once the business evaluated the results using margin instead of revenue, the return moved much closer to two to one.
That is not a small reporting difference. It changes how an owner should evaluate the agency, allocate the budget, and decide which channels deserve more investment.
The solution was not simply to spend more or demand more leads. The business corrected its marketing mix and began judging performance through the economics that mattered.
Six months later, the marketing spend remained flat while profit per new patient doubled.
That is the result owners should want: not a prettier dashboard, but more profit from the resources the company is already using.
Track Customer Acquisition Cost by Channel
One blended customer acquisition number can hide both excellent and wasteful marketing.
If referrals, paid search, social advertising, partnerships, and organic content are all grouped together, you cannot see which channels are producing valuable customers and which ones are consuming budget without creating enough margin.
Customer acquisition cost should be tracked by channel:
Customer Acquisition Cost = Total Channel Cost ÷ New Customers Acquired
The “total channel cost” should include more than media spend whenever those additional costs are necessary to run the channel. The goal is to understand what you truly invest to gain a customer—not just what the advertising platform charged your card.
Then connect acquisition cost with:
- Revenue per new customer
- Gross or contribution margin per customer
- Conversion rate
- Repeat purchases or retention
- Time required to recover the acquisition cost
- Profit per new customer
This channel-level view gives you something a platform dashboard cannot: a practical basis for deciding where the next marketing dollar should go.
Five Questions to Ask Your Marketing Agency
Before you fire your agency or approve another month of the same reporting—put your questions in writing.
Use these five questions to pressure-test whether the agency’s results connect to your business:
1. What is our customer acquisition cost for each channel?
Do not settle for a blended average if separate channel data is available. You need to know what it costs to acquire a customer through paid search, paid social, organic content, referrals, partnerships, and every other meaningful source.
2. How much gross profit does each new customer create?
Revenue is only the starting point. Ask what remains after the direct cost of delivering the product or service.
3. Does the reported return include the full cost of marketing?
Clarify whether the calculation includes only ad spend or also accounts for the agency fee, creative costs, software, sales support, and other necessary expenses.
4. Which channels produce the best margin and cash payback?
The channel with the most leads is not automatically the best channel. Look for the source that brings in customers economically and returns cash to the business at a sustainable pace.
5. What will we change based on these numbers?
Reporting should lead to a decision. Ask what the agency recommends increasing, reducing, testing, or stopping—and why.
Clear answers do not guarantee perfect performance. They do show whether your agency understands the difference between campaign activity and business outcomes.
A New Agency Will Not Fix a Broken Measurement System
If your agency cannot answer those questions, that is a warning sign. But replacing the agency may not solve the underlying problem.
If the next agency receives the same vague goals, uses the same incomplete data, and reports the same vanity metrics, you will recreate the same frustration with a different logo on the presentation.
Before changing partners, make sure your company can clearly define:
- What a profitable customer is worth
- What you can afford to spend to acquire one
- Which margin should guide marketing decisions
- How quickly the business needs to recover its acquisition cost
- Who owns the connection between marketing, sales, finance, and operations
The agency should be accountable for its work. The owner and leadership team must also give it a financially meaningful definition of success.
What a Real CMO Does Differently
A capable chief marketing officer does more than manage campaigns.
The CMO connects the marketing plan to the company’s economics. They work across finance, sales, and operations to understand which customers the business wants, what those customers are worth, and how much the company can responsibly spend to acquire them.
That person should help the business:
- Set targets based on margin, not revenue alone
- Compare acquisition costs across channels
- Challenge reports that celebrate activity without profit
- Reallocate spend when the economics change
- Give agencies the financial context required to make better decisions
Without that ownership, agencies often operate inside separate platforms while the owner tries to piece together the complete financial story.
Stop Asking Whether the Ads “Worked”
“Did the ads work?” is too broad to produce a useful answer.
Ask instead:
- What did we spend in total?
- How many new customers did we acquire?
- What did it cost to acquire them by channel?
- How much margin did those customers create?
- How quickly did the cash return?
- What should we do differently next?
Those questions move the conversation away from activity and toward decisions.
Your agency may know how to generate clicks, leads, and attributed revenue. It will not automatically know whether those results create a healthier company. That requires a shared scorecard built around the economics of your business.
An 847% return does not matter if your bank account says 0.6 to 1.
The goal is not marketing that looks successful.
The goal is marketing that makes the business more profitable, more scalable, and less dependent on the owner guessing where the money went.
Watch Episode 15 of From Burnout to Bought Out
In Episode 15, Jon and Ryan explain how strong-looking agency reports can hide lost profit, why ROAS is not ROI, and what owners should measure before approving another month of marketing spend.
Listen here: https://tinyurl.com/FBO2BO
Watch on YouTube: https://tinyurl.com/FBO2BOYouTube
For more practical strategies to build a profitable, scalable business, visit the Synergy Solutions blog.
JON:
Your marketing agency has no idea what you make. Not the impressions, not the clicks—the dollar, the margin dollar. They don’t know it because they don’t calculate it, because no one ever asked.
And here’s the harder truth. If we’re being honest, they don’t really care, because their contract doesn’t tie their fee to your P&L; it ties their fee to the retainer. This is Marketing 101 from the guy inside the industry.
Welcome to From Burnout to Bought Out, the podcast for business owners who are tired of being the hardest-working, lowest-paid employee in their own company. I’m Jon, joined as always by Ryan, and together we’ve spent years inside owner-led businesses, helping founders go from running on fumes to running a business that actually runs without them.
Every episode, we break down the real problems nobody talks about—the burnout, the bottlenecks, the blind spots—and show you what it looks like to build a business that’s profitable, sellable, and doesn’t need you in the building every day to survive.
Whether you’re grinding through a plateau, thinking about an exit, or just trying to take a vacation without your phone blowing up, you’re in the right place. Let’s get into it.
Okay, Ryan. Hey.
RYAN:
Hey, Jon. We’re back. Episode 15.
JON:
We are indeed, but this one’s a little different, eh?
RYAN:
It is. You know why it’s different, Jon?
JON:
I do know why it’s different, unless you have a different reason than me.
RYAN:
Oh, well, you put me through 14 episodes of hell, you son of a bitch, and this is payback.
JON:
Yep, I’m in the hot seat.
RYAN:
That’s it, folks. Yep, and I’m in the seat. We’ve literally changed seats, folks, and I’m in a seat that smells like Bengay and regret.
JON:
Well, that’s what I use to stay limbered during every episode. I gotta stretch it out.
RYAN:
Why is it wet?
JON:
Oh, God.
RYAN:
Oh, geez. This is uncomfortable as it is. Anyway, Jon, we’re going to be talking about marketing today.
JON:
We are indeed. You get to see how easy my job is. You get to be funny, and I get to be smart for once.
RYAN:
Well, we can try. Yeah, so we’re talking about marketing—the enigma, you know, where the money gets spent and there’s no accountability. And, Jon, you’re going to take us right through it—how it goes.
So let’s get into it, Jon. Give me the thesis, and if you can, one minute or less.
JON:
I can never do anything under a minute.
RYAN:
That’s for darn sure. You know that. Well, that’s not what Andy says.
JON:
Oh, yeah. I’m no good in the kitchen, clearly.
In a nutshell, your agency has no idea what your margin is. They’re lucky if they know what your revenue is.
Of course, your agency knows your budget, but they can’t tell you what it generates. There’s a huge difference. All marketing engagements are written around your spend, not its outcome.
And that’s for a couple of different reasons. One, it’s really hard to calculate. And two, it requires higher levels of accountability.
So when I said earlier in our open that they don’t really care, it’s not personal. It’s really structural, and it’s to their advantage because they optimize what they get graded on. That’s generally things like cost per lead, clicks, impressions, ROAS sometimes—but never margin, not long-term customer value, not cash.
So, examples—as always, composite story, names anonymized. Jennifer runs a professional services company, for example. The agency reports 847% ROAS. Her bank account says 0.6 to 1, so she’s losing money on the marketing spend.
And this gap is the episode, which really you need to figure out before you sign your agency agreement.
RYAN:
So, Jon, “they really don’t care” is a really strong claim. Are you saying that—I mean, are there any good agencies out there?
JON:
The agencies are good. They don’t care, not because they’re horrible people, just because it’s so difficult to report on.
And if they can’t report on it and it’s not part of the contract, then really it’s something that they can get away with ignoring. Of course, they want you to be successful, and every agency has that intention. But it’s much easier to look into the platform and report on clicks and impressions because they’ve got direct control of that.
They don’t have direct control of whether what they send you turns into actual business.
RYAN:
All right, folks. You and I are in the front-row seats of getting some education here in Marketing 101.
So, Jon, why does an agency avoid the margin conversation? My suspicion is they’re trying to hide something. Are they?
JON:
They’re not really trying to hide something. Again, they’re just going over what they can control because they’ve got line of sight to it, and it’s easy to turn dials and turn up the things that they’re giving you the reporting on.
It’s really tough to actually follow what they give you all the way through to leads becoming customers, customers then generating revenue, and revenue turning into margin. So it’s a real challenge.
There’s a number of things here. One, they rarely ever have this revenue data, and they almost always don’t have your margin data because you generally haven’t had a conversation with them. They didn’t ask for it.
They don’t really want to, because as soon as they start committing to revenue and margin, it’s out of their control, and you can call them out for their program. So it’s better for them to build an ambiguous program. They can claim success over metrics that really kind of don’t matter.
I mean, why do you care how many impressions you got this week? Impressions don’t go into your bank account. Cash goes into your bank account. So that’s the first thing.
Two, the tools don’t measure margin, right? It’s really difficult, and you have to build something custom most of the time. Google, Meta—all these ad platforms—they measure clicks. They don’t measure cash.
Google might give you a cash number if you’re an e-commerce business and you tie in all the pixels, yada, yada, yada—everything that your agency talks about—and they’ll give you a ROAS number: return on ad spend.
You need to be really careful with ROAS because it’s not return on investment, which takes full accountability of costs, including the agency costs. ROAS is an easy number to throw out there and say, “Okay, we spent $1. We got five back,” based off just platform measurement, and it doesn’t take anything else into account.
So it’s easier to share impressions and build programs around impressions rather than whether somebody actually became a customer. That’s the second thing.
Third, retainers generally are not set up on outcome. Their incentive is to keep you subscribed, and this, unfortunately, is the case.
When you’re in internal agency meetings, it’s the number of clients. It’s the amount of dollars that you’re bringing in. It’s how many clients each team member is managing. That’s what their leadership is talking about.
They’re not talking about how much revenue you’re generating for clients. There are program structures based around performance-based fees, but almost no agency will commit to them.
There are programs that you can try and structure based around growth of the business, but again, an agency will shy away because they need those dollars to run their agency. They have salaries to pay. So it’s the hard retainer income that they report on.
The fourth thing: they’re not really trained on it. I didn’t know what a P&L was. Well, I guess I’d run a couple of businesses before we got involved, Ryan, but the level of knowledge I’ve got based around P&L cash management now, based around how we do things at Synergy—you’ve taught me how to read it properly.
You made sure I became Profit First certified and made sure I was able to allocate dollars. It changed everything.
Agencies don’t go through any of that. They’re taught to read clicks, read impressions, and have a really good conversation that confuses people about what tactics are out there.
None of this is personal. It’s just structural. It’s just how the agency world works, but this structure costs you six figures a year.
RYAN:
Wow. So really, it’s not malicious. It’s about how it’s structurally built.
JON:
That’s correct. Yeah. That’s what agencies can do based on the tools available and, generally, a formulaic way to communicate with your client and try to relay positive news.
And I’ll say one more thing: it’s really easy to share positive news. We have so much data at our fingertips.
We can go into Google Analytics. We can go into the ad platforms. We can pull anything.
They’ve got so many metrics in there that we can find something positive in some date range somewhere along the line, right? You can jump on a call and say, “Oh, well, two weeks ago last Thursday, you got X number of leads, and we think it generated this ROAS.”
But they might just be changing the conversation from what’s going on right now to something that happened two weeks ago, right? It’s really easy to find numbers, so you’ve got to get consistent reporting with it as well.
RYAN:
Oh, well, that’s good to know. So, hey, little Timmy, your poop smells all flowery.
JON:
Well, it did before it came out.
RYAN:
That’s right.
JON:
We’ll find some good news in there.
RYAN:
All right. All righty. I think we’re taking a quick break, right?
[SPONSOR BREAK]
JON:
Brought to you by Twins Plumbing and Heating out of Manchester, New Hampshire.
RYAN:
New Hampshire it is. And this one ties in nicely with what you just said. A hidden leak is a marketing agency you’re not measuring.
JON:
That is exactly the metaphor. You don’t see the leak on the meter until the bill arrives, and by then it’s cost you real money for months.
RYAN:
Same energy as Jennifer’s 847% ROAS. Everything looked fine right up until you checked the bank account.
JON:
That is right.
RYAN:
Twins has been at this for almost two decades. Family-run, residential, commercial, 24/7 emergency service. Water heaters, boilers, drain cleaning, pipe cleaning, pumps, sump pumps, installation and repair—all of it, the whole shebang.
JON:
We’re doing great with this one. Sorry, Dana.
RYAN:
We’re so sorry. Manchester, New Hampshire, 603-450-8946, twinsph.com. Find the leak before the ceiling gives out. That’s the whole show.
All right, Jon. We’re getting back into it.
JON:
Wait, wait. Before we—Dana, you’ve got to track how many leads you get from this podcast. So if you’re calling Twins Plumbing and Heating, use FROMBURNOUTTOBOUGHTOUT as your code word and you get 30 cents off.
RYAN:
Hey, you got the name of the podcast right this time.
JON:
Yeah, I did. It’s the first time in a while.
RYAN:
But you screwed up Dana’s ad, so.
JON:
Yeah, well, sorry, Dana. Where are we going?
RYAN:
See, the hot seat’s not so bad, right? So, Jon, I’ve taken a second opinion on the smell of your chair, and it kind of smells like the waiting room of a funeral parlor.
JON:
Oh, geez.
RYAN:
Yeah, that’s, that’s, that’s, that’s Canadian.
JON:
Well, it’s probably Canadian.
RYAN:
Yeah, it’s smoky as well.
JON:
It’s probably smoky as well.
RYAN:
It’s a Canadian chair.
JON:
Yeah, everybody run up and buy Canadian furniture.
RYAN:
It should smell like a parlor.
JON:
Yeah, that’s exactly right. And then you can get a tariff on it as well.
RYAN:
As it comes across the border. Love it.
All right, Jon. Let’s get back into it. Tell me a story—a Canadian version, if you can—the one that reframes the whole conversation.
JON:
Excellent. So, Canadian version. We were eating poutine, right? It was great.
Physical therapy clinic, 30 locations. Marketing agency reporting $110 cost per acquired customer. That’s a darn good number.
ROAS was at 8 to 10x—another darn good number—reported everywhere. The owner said it out loud every quarterly meeting, every review. The owner and clinic director were thrilled.
The marketing agency was thrilled. Facebook was thrilled as they dumped more dollars into it. And then we ran the math that nobody asked for.
We sat down and worked out the average customer lifetime value, and that is $800 to $1,200 per customer. Sounds great—8 to 10x return.
Except that’s revenue lifetime value, not the margin. When you start to factor in things like therapist salary, room utilization, insurance, billing, overhead, and the no-shows that were factored into those cost-per-acquisition numbers, really the margin turned out to be around $200 to $400, not $800 to $1,200.
So when you’re reporting back to that return-on-ad-spend number—when you’re reporting return on ad spend of 8 to 10x—you think it’s amazing.
But when it turns into 2 to 1, that’s still pretty decent, but it’s not eight times. So when you’re pouring dollars into an eight-times program and it’s really closer to 2 to 1, then you’ve got to think about it a little bit.
Still profitable, but way less profitable than everybody thought it was. And they were just pushing the marketing every quarter.
The agency wasn’t necessarily lying, and everybody felt good about it. Those were the numbers they were paid to report on. But nobody in the room ever sat down and worked it out. And it wasn’t complicated. It was one more calculation just to take it a little bit deeper.
The resulting conversation was also easy with the agency. You say, “Okay, well, let’s cut the two lead sources that are running above that level, feed the two below it, add some retention-focused campaigns for existing patients, bump up the number of repeat visits and referrals, et cetera, et cetera.”
And then you get an entirely different number, which is much healthier and much more profitable.
So, same business, 30 locations, different intelligence. Six months later, the marketing spend was flat, but the profit per new patient had doubled. So we’re between $400 and $800 in the actual margin, right?
That’s the full approach in one story. Agencies are generally reporting on it the wrong way. Everybody’s kind of happy about it, but you’ve got to dig deeper.
RYAN:
All right, Jon. I like the math. That was fantastic. How do you calculate customer acquisition cost, or CAC, which I remember as a cat coughing up a hairball?
JON:
Yeah, that’s what it feels like when you’re doing it sometimes. I’m going to give you the honest truth: it’s really challenging.
We do it enough times, and in all of our programs we’ve got to get to a CAC. We know that. It’s really difficult to calculate a CAC per channel, right?
What I mean by that is you can be running Google Ads, and you’ll be running two or three different types of campaigns in Google Ads. You can be running some Facebook ads and some Instagram ads as well.
Each of those things will give you a certain number of clicks that come in. They will give you a certain number of leads that are generated by those individual campaigns. And that’s about the limit of what an agency can report unless they go across the other side of the threshold and track what goes on when a lead comes in.
You’ve got to record phone numbers. You’ve got to record email addresses so that when they come into the actual environment that the lead comes into, you can track them through and see whether they become a customer. But you’ve got to keep them all separate.
Back to those channels again. I think I mentioned five different ones there. Those are just the easy ones off the top of my head, right?
All of those phone numbers and email addresses have to go in. They have to be tagged. Generally, they can go into a spreadsheet, your job-costing software, or your CRM system, and you can tag it by source.
But you’ve got to get those five independent sources—not just Google or Facebook—because that’s not enough detail, right? You need to know within each campaign which one is working and which one is not.
Then you have to track all the conversations all the way through to closing the customer and then track it through to the revenue that’s coming in from whatever service you’re running.
It’s really about consistently building that tracking path to understand where people came from, whether it results in them becoming a customer, and then whether they actually generate revenue from it.
Then you look per channel and go, “Okay, on Instagram, how much revenue did we make?” I bet you it’s not a ton, depending on the business that you’re involved with. And how much did we spend?
That’s where you can sit down and say, “Okay, well, there’s a return number there.” You then have to factor in the cost for the program and your actual margin numbers to look at what you’re truly generating as a return from those individual programs.
So it’s complex. It’s not easy, especially when you get other forms of advertising running over the top of it, or when you’ve got phone calls coming in that aren’t necessarily tracked and your team actually has to ask, “Hey, how did you hear about us?”
They might have hit two or three of those individual channels, but they only remember one of them, so your attribution gets kind of messed up. It’s about having a structured approach to tracking.
If you aren’t talking about tracking at that level of detail with your agency, they aren’t doing it. There’s just no way to tell whether it’s being effective for you or not.
Sorry to go down a wormhole there. I know—a little bit of detail—but that’s how it works.
RYAN:
Sorry, not sorry that I asked. Well, why don’t we take another break?
JON:
Sounds good.
RYAN:
Quick break, Jon. You’re doing great in the driver’s seat.
JON:
Thank you. I must say, it’s weird up here.
[SPONSOR BREAK]
RYAN:
Brought to you by Twins Plumbing and Heating, Manchester, New Hampshire.
JON:
Hey, the H wasn’t silenced this time.
RYAN:
Tie for this one. You take it.
JON:
Okay. When your kitchen sink backs up, an amateur snakes the drain and calls it done. A pro follows the line back and finds the actual clog three feet down, which is exactly what a CFO does with an agency’s ROAS number.
RYAN:
Wow, I’m impressed. That was actually a good analogy.
JON:
Thank you very much. As a Canadian, I take drainage very seriously. Our national pastime is basically staring at snowmelt in April and asking whether it’s going to end up in the basement.
RYAN:
That’s your one.
JON:
That is my one, and it’s real. It is in our basement every year.
RYAN:
Twins does drain cleaning, but they also do the boring stuff that prevents the emergency call: boiler service, water-heater installation, whole-home water filtration.
JON:
Preventive—which we say in every episode—it always applies.
RYAN:
Sure does. Twins Plumbing and Heating, Manchester, New Hampshire, 603-450-8946, twinsph.com. Family-run, almost two decades. They will tell you if the problem is the drain or the whole line.
All right, Jon. So owners pay an agency $12,000 a month right now. How do they grade them, but without firing them on Monday?
JON:
Yeah, that’s a good question, because there are levels of success. You really don’t want to fire anyone right off the bat.
You want to issue a report card, and you want to get them to up their game. The squeaky wheel gets the oil. I’ll repeat that: the squeaky wheel gets the oil.
If you’re asking the questions, if you’re making noises like you’re a slightly dissatisfied customer, they don’t want to lose your revenue. They’ll want to fix it.
So, five questions I’m going to give you. Send them by email. Ask for written answers so you can come back and digest them.
Question one: What is our gross margin per new customer?
I would be very surprised if anybody answers right off the bat, especially if they haven’t had these conversations with you. They’re going to say, “What? I’ve no idea. You need to tell us more.”
If they do know a number and it’s wrong, then that’s even more challenging, right? It’s a bigger red flag because they’re making stuff up, and that then creates a lack of trust. So that’s a really hard first question.
Question two—what I was just discussing earlier and described how we have to fix: What is our CAC by channel, month by month, ideally over the last six months?
We need trends on these things because they’re doing things all the time and pulling levers. They pull a lever one month and it changes things, and you need to be able to see the trend.
That should be in one clean table. If they need a couple of weeks to build it, they haven’t been running it. They don’t know. At least if they’re going to build it for you, that’s awesome. They’re showing the effort is there.
Third question: What is our lifetime-value-to-CAC ratio, and what’s been trending?
“Trending” is the key word there, because if they’re not measuring it over time, they haven’t been tracking it. If you’re not tracking that over time, it’s a real challenge for them to tell what they did that’s more successful versus what is causing issues. Again, that’s a really tough question.
Question four: Which channels would you starve today if forced to?
That kind of hints that you’re going to reduce your budget, so an agency should be able to find a solid answer to this. If they have an answer and it comes right away, that’s great.
If they don’t have an answer and they take time, then obviously they’re trying to work it out. If they say, “Oh, they all work together. We need SEO, and we need paid media, and we need social media,” that is a BS answer. I would cut two of those programs right off the bat.
So, yeah, judge based on how they respond. And again, this is a challenging one.
Question five: What business objective does each campaign map to?
If they know your business and they’ve created campaigns to achieve those aims, then they really should be able to say, “Okay, well, if you’re trying to increase your customer retention, we’re running some email and some custom matchback campaigns based on your existing audience, and those are the campaigns that ladder up to that.”
They really should be able to map what they’re doing to your business objectives. If they haven’t had those conversations with you, then, I mean, that’s the first conversation any agency should have with you.
It shouldn’t be, “What are your pain points?” It should be, “What are you trying to do with your business? Where are you taking your business?” So, yeah, that’s question five.
Score them. If they get all five answers and they’re all great, then give them a five for each of the questions. If they’re poor on each, give three to four, zero to two, et cetera, et cetera.
Total it all up and average it, and see what you get out of five. If you’re below a three, I’d say you really should start setting up more consistent reviews with them.
Give them a bit of a push—not necessarily notice, but give them a heads-up: “Hey, look, I’m not sure this is working for me. I need you guys to work harder and set up structures and campaigns that give me the reporting that I need.”
If they’re at zero or one, start thinking about replacements right away. Don’t fire them. Just start talking to other agencies.
But give them the heads-up when you start these new conversations that these are the things that are most important to you, all based around these five questions.
RYAN:
So if the agency entirely fails that report card and gets defensive, it’s really telling you everything you need to know. You’re telling me that when somebody fails that report card, run—don’t walk—and start interviewing other agencies.
JON:
I would have those conversations. It really depends on their response, because you know what? It takes a while for an agency to get up to speed and start generating benefit.
If they respond, “Hey, we’re going to work harder. We’re going to bring some more people on here. We’re going to sit down and work through your objectives, and we’re going to work this out,” that’s actually a relationship worth putting more time, effort, and energy into.
The last thing you want to do is spend four months onboarding a new agency and really get to the same place. So the answer isn’t always to fire the agency.
You have conversations somewhere else. If they can’t answer anything and aren’t willing to respond—if they’re down at zero to one—then I think it’s worth having conversations right away. You can’t afford to keep throwing dollars at this campaign.
It is “run,” but do it intelligently. Have the right conversations with other types of agencies so that you can transition smoothly.
You don’t want to fire your agency and then have nowhere to generate additional revenue and growth from.
RYAN:
All right. Good stuff, Jon. Okay, so let’s talk about if an agency failed the report card.
JON:
Yeah.
RYAN:
Right. So now what?
JON:
Okay. I think I just covered a little bit of those steps based on how they answered the previous question, but the actual solution—it’s not always a better agency.
In those cases where they’re just blowing smoke and mirrors, can’t answer any of those questions, don’t care, and don’t bring additional help or thinking to it, then you’ve got to move agencies.
RYAN:
Yes.
JON:
But that’s not the total solution. It’s about having somebody with a vested interest in the organization who also has knowledge of the business side of marketing as well. So it’s really a job.
The incentive for them needs to be what happens in your P&L, not whether the retainer gets paid at the end of the month.
That role generally has a name. It’s a senior marketer, chief marketing officer, fractional CMO, or director of marketing, et cetera, et cetera. Different levels, the same seat, different costs.
But it’s really about having the level of thinking that we’re talking about at the table, because you can’t just have your ownership team and your leadership team say, “We want to grow by 20%,” and then hand it to people who have no vested interest in watching that growth happen.
RYAN:
You’ve got it. There’s a gap there.
JON:
Right. You need to fill that gap with skills and experience. And a fractional CMO has real value when it’s set up that way—set up for success that way.
They should be immediately talking about CAC, margin, and business growth. They should be pulling the cover off as well, saying whether your goals are realistic or not.
If you’re wanting to grow 40% to 50% in a year, and you’re upping your marketing budget by 10%, and you don’t have an idea of CAC, and your leads are 10 to 20 coming in a month, there’s no way that you can jump up to 40% growth when you don’t have the numbers nailed down and you have such little controllable impact on your marketing.
So they should be thinking and talking at that level.
RYAN:
Last break. Twins Plumbing and Heating.
[SPONSOR BREAK]
RYAN:
And this one is for the commercial listener because, on the commercial side, plumbing and heating are diligence items. Explain.
JON:
Well, when somebody buying a business walks a commercial business during diligence, they walk the mechanical room. Bad boiler, sketchy water heater, non-code plumbing—those are all line-item discounts at the closing table.
RYAN:
And sometimes low six-figure discounts as well.
JON:
Yes. Yes, all of those.
RYAN:
Twins does full commercial plumbing and heating, boiler installation, water-heater installation, drain cleaning, whole-building water filtration, and almost two decades doing it.
Same principle as this whole episode: fix it before the pro shows up to inspect it. A tune-up is cheaper than the discount at the table.
JON:
That is right.
RYAN:
Manchester, New Hampshire. 100 Zachary Road, Unit 4. 603-450-8946. twinsph.com. 24/7 emergency.
If you didn’t fix it before the pro showed up—
JON:
Do the work before the invoice. Do the marketing work before the LOI.
RYAN:
Same principle, different peace of mind.
All right, Jon. So, awesome stuff. You’ve teed up the CMO as the solution in some way, shape, or form, but let’s sharpen this up. What does a real CMO do differently day to day than, say, an agency?
JON:
Okay, so the CMO’s job really is translation in both directions—both business to execution and execution back to business—every single week.
