Host – Grace Jennings-Edquist: [00:00:05] Are you tracking the right metrics? And do you know how to use communication to drive cultural change in your team? In this week’s episode, digital marketing expert Jason Le explains why many businesses rely on vanity metrics those that look impressive but don’t reflect real performance. Jason also explains which metrics truly reflect growth, and he shares how big a business should actually be before it needs a marketing agency. Then leadership consultant Sue Barrett explores how meaningful conversations can transform workplace culture. She outlines how leaders hoping to change the culture in their teams can shift from top down broadcasting to genuine listening, collaboration and ongoing dialogue. From SoundCartel, I’m Grace Jennings-Edquist, and this is Business Essentials.
Are you tracking the wrong marketing metrics?
Our first guest is Jason Le, founder and director at digital marketing agency Journey Digital, which is spelled JRNY. Jason says that when it comes to digital marketing, many business owners waste time studying the wrong metrics. He also has a few straightforward tips on how to refine your marketing strategy, and he shares the one critical metric most businesses aren’t tracking, but should be. He says business leaders need to be looking at their LTV to CAC ratio. And yes, he’ll explain what that means in a moment. To kick off our interview, I asked Jason, what’s the most dangerous marketing metric business owners tend to rely on today?
Jason Le: [00:01:33] I think the most dangerous marketing metric business owners rely on is cost per lead. Because cost per lead doesn’t actually tell the entire story of what actually turns into a customer. I think cost per lead only showcases or tells you how much you’re actually spending to then get someone on the phone or actually speak to. But with a lot of businesses, especially small businesses, there’s multiple steps after the fact to then close into a deal. There’s obviously the booking, the actual conversation the proposal sent, and then the deal closed. So when businesses rely on getting the cheapest cost per leads, what ends up happening is they’re optimizing to get really bad quality leads. Like, you know, $1 leads that don’t even turn into any customers. So you get then situations where businesses are generating thousands of leads and only one of them turns into a customer. And I think because of that, if you’re relying on cost per lead alone, it’s a really dangerous game, especially in your marketing.
Host – Grace Jennings-Edquist: [00:02:30] I think I’ve heard this referred to before as vanity metrics, kind of marketing metrics that look impressive, but often tell business owners not that much about whether their marketing is actually working. Are there any other examples of those kind of metrics that might look great on paper, but aren’t actually saying much about how great the digital marketing is?
Jason Le: [00:02:48] Yeah, I mean, a lot of vanity metrics that people, especially like marketers in this age they love talking about is like click through rates or like cost per clicks and things like that. I think at the end of the day, I’m all about following the money. And at the end of the day, if it’s not making you more money back, then it probably isn’t working. So vanity metrics on the platforms that might show that your ads are doing well, or your marketing, it doesn’t really mean much unless you’re actually making a return back. So cost per click, click through rates, uh, the metrics on platform that showcase like the ad is performing well on like an engagement level. These things I don’t think matter as much because at the end of the day, if you’re a small business and you’re trying to make money from your marketing, the only thing that makes sense is whether your marketing is actually converted into sales.
Host – Grace Jennings-Edquist: [00:03:37] So what is one critical metric that some businesses aren’t tracking but should be in your view?
Jason Le: [00:03:43] Yeah. The most critical metric that not many people track is probably LTV to CAC ratio. So it’s lifetime value to customer acquisition cost. And it’s actually two parts to the equation. But if you measure that, you’ll be able to determine whether your marketing is working or not. So the first one is lifetime value, which is how much one customer makes you over the course of a year or their lifetime. So a customer, although they might buy from you and it’s only like $100 over a year, they might actually spend $1,200 or something. So that’s lifetime value. And then customer acquisition cost is how much it actually costs you to acquire the customer. The relationship between the two is if it only costs you like, let’s say $50 to acquire the customer, but you actually make $1,200 in the entire year. Your ratio is actually much higher, which means that you can spend so much more to acquire more customers and be profitable by that year. So not many business owners look at that ratio, and they might think that their marketing isn’t working, or they don’t even know what the lifetime value is per customer. And I think if you know that metric, you can do a lot of great things. You can forecast out, you can set budgets, you can actually reverse engineer growth such that, you know, if. You know how much one customer’s going to generate you over the course of a year and you want to grow half $1 million or $1 million in turnover that next financial year, you can literally reverse engineer a marketing budget to how many customers you need to acquire, to what your LTV to cash is. And then you can set a budget that you can then spend for that year.
Host – Grace Jennings-Edquist: [00:05:19] I’m wondering, do the right marketing metrics to track change depending at all on the size or maybe the maturity of a business and like, if so, what should a startup track versus a more established company?
Jason Le: [00:05:31] I probably have a differing opinion. I don’t think the metrics should change depending on the size of your business, and I think it should actually be the same. So, you know, LTV to CAC ratios, LTV in general, all of these metrics are extremely important, whether you’re a startup or an enterprise business or you’re a public company. The only difference is that bigger companies can play with bigger budgets so they can spend whatever they want and not worry about the finer details. Versus small business owners, especially the ones that don’t have a lot of capital and they need to be profitable on first purchase or just make their marketing work. You need to know how much money you’re putting in and how much money you’re making out. So regardless, if you stick to the basics, you should focus on the same metrics regardless of how big your company is. It’s just in my view. My controversial opinion is really big. Companies get lazy in their marketing so they don’t have to worry about, you know, whether this specific marketing activity made them more money or not. So you’ll get people doing billboards and random radio ads and things like that, but there is already some sort of like customer acquisition cost associated to every single marketing activity. So long story short, I don’t think marketing metrics should change. Regardless of the size of your business. You’ve got to stick to the fundamentals.
Host – Grace Jennings-Edquist: [00:06:50] So if a business owner listening today wanted to reset their marketing dashboard this quarter or this year. What are the top, say, 2 or 3 metrics they should prioritize and why?
Jason Le: [00:07:01] Yeah. If somebody wanted to reset their whole marketing funnel, the main thing you should look at is definitely cost per acquisition, lifetime value, and then lifetime value. Those metrics I talked about before, because a lot of times when business owners have like an entire marketing funnel, it gets very blurry in terms of what marketing activities worked. But once you work it back to actually closed deals or like revenue that’s generated from your marketing and break it down per month, you actually know what marketing activities have contributed to revenue. From there, you would know like to the tee what marketing activities generate a higher value customer, what marketing activities generate a more efficient customer? So like, you know, you spend less to then acquire a new customer. All these metrics will actually like come out when you analyze revenue closed to their marketing activity on this spend level. Once you figure out your lifetime value, your customer acquisition cost, you can pretty much do whatever you want. You can spend more, you can spend less, but at least you will know whether your marketing is working or not.
Host – Grace Jennings-Edquist: [00:08:04] What size of business benefits from getting a digital marketing agency on board? Like, you know, do startups go to digital marketing agencies and be like, what do I do? Or is it really once you kind of are hiring ten people and you’re kind of scaling a little bit?
Jason Le: [00:08:16] That’s a really great question. And this is going to sound kind of funny as a marketing agency owner. I actually think that the early stage businesses where you haven’t generated, let’s just say a baseline of like 20 K per month, like a validated revenue model, you really shouldn’t be spending that much money on like an agency. If anything, the value would probably be more so in like consultative advice or something along the lines of puts you in the right direction. Because at a small scale, when you’re, let’s just say, doing less than 200 K in annual recurring revenue, most of your budget should be going towards Amplification or content or validating a message. And it doesn’t matter whether there’s an expert doing your whole marketing like an agency or yourself. Most of the resource should be on marketing in and of itself, not the service fee. And I think at a lower scale, these startups, if you’ve, let’s just say argumentatively, you’ve only got like $2,000 a month, you should be spending like 2000 of that on advertising yourself, not necessarily getting someone in at $1,500 a month as an agency or something, and then only spending $500 on ads, because that $500 is only going to take you so far.
Jason Le: [00:09:29] So to answer your question, I think really early stage businesses actually don’t benefit that much from an agency purely because not because the advice is bad or there’s bad agencies, but mainly because at a really low level, you actually are hamstrung by the amount of budget you have, and you need to put as much money into data gathering and actually promoting your business. And then from the data. You can then do whatever you want. With that, you can get learnings. You can understand the different metrics, the metrics. I spoke about LTV, the kak kak ratios, you know, all these things. You don’t know these metrics unless you actually do the marketing in the first place. So I think do that first. Just spend money on your own marketing, have a crack at it, get the data. And then once you’ve scaled to a point where there’s product market fit, you’ve got a consistent revenue base. You can then get an agency to really scale and amplify your brand.
Host – Grace Jennings-Edquist: [00:10:21] That was Jason Lee, founder and director at Journey Digital in Brisbane.
How to have conversations that change culture
Now we turn to workplace culture and the role communication plays in shaping it. Many leaders rely on top down announcements to drive change at work, but real cultural shifts often happen in everyday conversations. Sue Barrett is founder and CEO of Barrett Consulting Group and the Selling Better Movement. She joins us to explain how genuine listening and collaboration can transform how teams work together. To begin with, I asked you to explain where most leaders go wrong when trying to use communication to shift company culture.
Sue Barrett: [00:11:04] Okay, well, this is a trap that we constantly see. And look, we’ve all made mistakes ourselves, including myself, but the single biggest error that I see is that leaders treat communication like broadcasting instead of actually a co-creation exercise. So they think that if I craft a perfect email or give the right speech, people will just fall into line. But culture isn’t actually built on annual town halls. It’s really built in, you know, thousands of micro interactions that actually happen every single day. So from what I’ve seen, when we, you know, are rolling out change programs, you know, when we’re helping people engage, communicate, and sell better, I’ve learned that the leadership group and we always tell the leadership group, what they have to do is have a communications plan. And this communications plan is going to be invitational. It’s going to invite people in. It’s going to ask them to be able to, you know, join in and provide feedback. So it’s a two way street. So I think what’s really important is in terms of communication, before anyone starts trying to fix anything and start telling people about stuff, you should actually ask questions and invite people in to the journey. So that’s where I’m sort of looking at these sorts of things over the many years I’ve been doing this.
Host – Grace Jennings-Edquist: [00:12:21] I’m wondering, how can leaders move from reactive to proactive communication when shaping culture?
Sue Barrett: [00:12:26] Okay, so let’s think about human relationships. Let’s think about when we react to something, oftentimes what happens is, you know, someone comes at you with an issue or they, they make a statement or they’re angry or upset. Most people react and then try to defend themselves. And it kind of makes sense in some way. But actually that’s not helping anyone, including yourself and the person that’s having an issue. So when we take this up to leadership level, oftentimes you see reactive communication. It’s firefighting. So you’re constantly putting out rumors or addressing morale dips or, you know, these things have already spread and it’s exhausting and it’s ineffective. So what we want to do is look at proactive communication. And that is actually planting seeds before any sort of storms or challenges hit. And it requires discipline. So like I mentioned just before, what we’ve seen work really well and why we encourage this is a cadence of communication that’s non-negotiable. And so you want to have regular comms that’s going out. If you’ve got a change initiative or you’re leading something, keep people informed regularly. One of our clients, rural bank, when we started rolling out a program with them, I said, look, create a little internal brand and have a comms plan.
Sue Barrett: [00:13:42] And so they called it Rural Muster. It’s how they sell in service around there. And so every week there would be a weekly email out to the entire business about what the business was focusing on, including Rural Muster. And then there would be regular comms with the sales team. And then there would, of course, be the one on one and team coaching and communication, all of that’s layered and levelled. And then people know it’s not just some sort of whim. This is actually something that’s serious and it’s not going away. And then people have space to be able to step in, ask questions, participate in the co-creation of this change. So that’s what really works best, which is why I remind leaders all the time, you cannot communicate enough, but what you have to do is communicate at different layers and different levels that allow people to feel part of it and actually can contribute to things in a really constructive way.
Host – Grace Jennings-Edquist: [00:14:36] So how does a leader measure when communication is actually working? Like, how do they know when their team actually gets it versus kind of just pretending to get it?
Sue Barrett: [00:14:45] Okay. We’ve all seen the nodding plague. You know, when people nod at you going, yeah, yeah, yeah. And inside they’re probably going, no, no, no. Okay. So we see this everywhere because people just kind of go, are they serious? Do they really mean this? I’ll just look polite. People don’t want to upset people. They also don’t put themselves out on a limb usually. So everyone just smiles in the meeting, but nothing changes on the ground. Right? That’s really problematic. And so you can’t actually measure cultural uptake with how many email open rates or survey scores alone. You actually have to look for behavioral evidence. Okay, so you’ve got to get on the ground and with people. So my litmus test for this is are people using the language of the new culture in their own conversations, unprompted? You know, are they making decisions aligned with the values that we’ve set and the standards that we want to meet outside of the room where we actually presented it? So when you’re looking at this, I just came off a call this morning with a new program we’ve just launched, and we’ve had the leadership team there, and we were checking last week because we launched it in face to face. You know, training. And there’s a lot of positive signs there. But the real test is are we going to see this in the real world, in the workplace? So what I love to see is when people start using the language and the skills and the tools, and you actually are just sitting back and watching and they’ve taken it up and they’ve transformed and transitioned into this space. So we don’t want the pretender to get a crowd. We don’t want people who are silent and compliant. What we want are people who are truly engaged and feel safe to have a go, and even make a few stumbles and mistakes, but that having a go and trying it, even if it’s not perfect, is in fact very positive signs that we should be looking for. So yeah, no nodding heads, real action and language in the real world.
Host – Grace Jennings-Edquist: [00:16:41] My next question is a little bit of a double barreled one. So do excuse me, but I wanted to ask what role does listening play in cultural transformation. And how can leaders become better listeners without slowing things down?
Sue Barrett: [00:16:52] Oh, okay. This is fascinating topic because when someone’s listening and creating this space for people to be seen, heard, and understood, it doesn’t look like you’re doing much, does it? I mean, it’s just sort of this space, but can I tell people this is the most wonderful experience you can create for people because listening is actually the engine of cultural change. Basically, if you’re not listening, you’re flying blind. So no matter how articulate you are, if you’re not actually creating space for your people to be heard and understood, then nothing will change. And here’s an interesting stat. I thought, you know, the listeners might find useful. 90% of people think they’re actually good listeners, but only 17% agree that others are okay. So let that just land, right? So everyone thinks, oh, I’m really good at listening, but there’s different levels of listening. Most people are just waiting for their turn to speak. They’re not actually listening to context. They’re not listening to what’s not being said. They’re not listening to meaning. And that actually is a really important skill we need to develop. So when we actually look at, you know, if we go into some cultures that might be a bit toxic. The common thread that comes through is the same that the leaders are brilliant talkers, but terrible listeners. And, you know, they thought they were moving fast. They thought they were actually getting things happening, but what they were doing is actually slowing down progress. It’s sort of a bit counterintuitive, isn’t it? So many leaders actually do fear listening. They fear listening because they might get feedback that might not be pleasant.
Sue Barrett: [00:18:25] And so they think, oh, I don’t want to deal with that. But they also think it’s going to slow them down. So I’m arguing, as you can see the opposite. Not listening is what creates bottlenecks. So when people don’t feel heard, they disengage. Information gets hoarded. You lose access to the collective intelligence of your team. And we also know that when clients and stakeholders are actually heard and understood. When we teach people how to actually do this work with really effective questions and fantastic listening, that those stakeholders and clients are 74% more likely to buy into what’s on offer. So last year, for example, I worked with 70 IT people and there were six teams in that group of 70, and they’re very good at what they do, but they had trouble communicating what they do effectively with the other stakeholders in the business, and everyone just didn’t understand what they did. So we worked very closely with helping them to develop these communication skills, these emotional intelligence skills, these ability to ask good questions and listen and then find space and then translate their technical speak into language that the rest of us could understand. And it’s made a huge difference to their stakeholder engagement and getting projects done. Because here’s the thing, most people think they’re really good at communication until they realize it’s not working, and most people are just talking at each other. They’re not actually working with each other and genuinely listening and trying to find common ground to build consensus. So my work is not done. I spend most of my life helping people do this stuff well.
Host – Grace Jennings-Edquist: [00:20:03] And look, those stats are really compelling. It makes really clear how important this stuff is. Look, my last question is, um, something that I think is quite widely relevant. You hear a lot about kind of toxics or disengaged cultures. If a leader inherits a toxic or disengaged culture, where do you think they should begin with communication to start turning things around?
Sue Barrett: [00:20:23] Okay. Well, it kind of comes back off the last question, which is listening. So let’s frame this with a lovely old German saying. You sweep the staircase from the top. Alright, so any organization, any culture begins with the intent and an approach and behaviors and values and attitudes of leadership because they affect and infect culture. So when we’ve had situations where we’ve gone into businesses and worked with leaders who’ve inherited a toxic culture, dysfunctional culture, what you can’t do is talk your way out of that situation. Okay. What you have to do is because if the previous leadership have created this toxicity, but if you come in just to broadcast, oh, we’re going to change everything, people will just sit back and they’ll go into that nodding thing again, and they’ll just give you the sort of roll their eyes and go, here we go again. So it comes back to listening, but also acknowledging what’s happened. So I would recommend day one. What you basically need to do is say to the people, look, I’ve heard there’s been pain here. I can see the exhaustion in the room. I’m not here to lecture you. I’m here to actually listen. What’s one thing that’s working that we should protect? What’s one thing that needs to change? Just starting there to acknowledge and act with humility, and also signal that it’s a safe environment for people to speak up now. Some will just, you know, launch forward and tell you others will be going, I don’t trust you yet. I don’t think, you know, I’m not going to share until you actually model this because the other ones, you know, they said stuff and then they did something else or whatever. So it’s really important that you can get some early wins, but you can’t do it without people.
Sue Barrett: [00:22:11] And it also explains to people that you are serious about creating this change. And, you know, we deal with this all the time with the work that we do with clients, because some of them get very KPI kind of results focused and they think, oh, we want to see results. You go, well, they’re just a history lesson. What you need to do is work with people with their feelings and behaviors and actions, and also be a great role model for what is a safe, productive, healthy environment. So I just think that, you know, in the kind of community work that I do, you know, around representative democracy and stuff like that, the same principles apply. And there’s a wonderful thing we can deploy in business from this work. And it’s a concept called kitchen table conversations. And a kitchen table, if you can imagine a kitchen table where people get around it and you have the opportunity to talk about stuff that’s on your mind, things that are worrying you. Obviously, it’s not just a free for all, any topic. It would be focused around specific topics. But when you give people the chance to be heard and understood and you create that space, not only are you getting valuable insights as to what to work on, but you’re also helping these people also create space for others to be heard and understood. So you can get diversity of thought without it being a a fight. So you create these things. So if people want to help people with challenging situations, teams that aren’t working well together, run kitchen table conversations with them, facilitate that, create a safe space and keep doing it and keep gathering it and keep it around the key things that you want to focus on and then put it into action.
Host – Grace Jennings-Edquist: [00:23:54] That is terrific. I just want to ask one follow up about this idea of kitchen table conversations, because this is fascinating. So are you saying this would be like a small group of employees within the business, maybe workshopping one particular idea? So it’s very different to a town hall where you’ve got everyone there.
Sue Barrett: [00:24:07] Yeah. Well, in town halls again, you’ve got volume and stuff. So what you need to do if you’re doing a town hall, is to create avenues for people to then go and have these more intimate discussions around key subjects or whatever it is you want to focus on. But you can ask like that in a town hall. You could ask simply, like I said before, you know everyone in the chat box. You know, if you’re doing it remote, tell me, what’s one thing we should protect? Okay. And there’s one thing we should work on. Like you could ask that at a town hall and people could, you know, if they feel like it, you know, write something in there that would be very interesting. And then act on it. But when it gets down to sort of having people re-engage with each other and connect, these kitchen table conversations are really, really helpful because they’re more intimate, they’re working on things. You can then have perhaps insight, like with these IT people I mentioned, we can have them inside teams, we can work on stuff, you know, why aren’t they getting what we do? You know, why don’t they understand what we do? And you know, once we work that out, it was because you’re talking tech and they don’t understand tech. So how do we translate your tech talk into outcomes driven stakeholder language where they all go, ah, I get that, you know, that kind of thing. So that’s an example obviously, but it’s really making sure that people are included and part of the change journey. And so being invitational, creating safe space and just being genuinely true and delivering on your commitments because they’ll test you. It won’t happen overnight because particularly if they’ve come from a very bad environment, they’ll just be constantly going, yeah, when are you going to bite me in the neck? Or when are you going to do this? You just have to hold your line and make them realize that actually, I come in peace. I’m here to serve you, and I’m here to help us move forward together. And then bloody demonstrate that.
Host – Grace Jennings-Edquist: [00:25:56] That was Sue Barrett, founder and CEO of Barrett Consulting Group and the Selling Better Movement. Thanks for joining us for this week’s episode. Follow Business Essentials Podcast across social media and head to www.BusinessEssentialsPodcast.au for more. Business Essentials is a SoundCartel podcast. Producers are Nick Schildberger, Nicole Goodman and myself. Technical production is by Pete Letts. I’m Grace Jennings-Edquist thanks for listening. We’ll bring you more business essentials next week.
