A common misconception among B2B agency owners

Some agency owners I speak with object to focusing on one vertical because of customer conflict.

Some customers don't want you working with their competitors. 

I get it. There's only a limited number of businesses in a vertical. And this conflict artificially lowers your agency's revenue potential.

While this can happen, excellent customer retention is an important byproduct of focusing your agency on a vertical.

Having great customer retention reduces the need to close every customer in your target market. You can have 3-5% of the businesses in a vertical market and run a profitable company filled with happy customers.

For example, when I was the CMO at Scorpion, our customer retention was 93%. Our competitor's customer retention was 50%. 

This meant they had to replace 50% of their business every year just to maintain flat revenue.

This churn put massive pressure on them to say "yes" to poor-fit customers (perpetuating the cycle).

Question to ponder:

👉 Does customer churn put pressure on us to say yes to poor-fit customers?

Frequently Asked Questions

Why do some agency owners object to focusing on one vertical?

Because of customer conflict, some clients don't want their agency also working with direct competitors, which feels like it artificially limits how many businesses within a vertical can realistically be served.

How does excellent customer retention address this customer conflict concern?

Because it reduces the need to close every possible business in the target vertical. Strong retention means an agency can build a profitable business with just 3-5% of a vertical's total businesses, without needing to serve everyone.

What was the retention gap between Scorpion and its competitors, according to this example?

Scorpion had 93% customer retention as CMO, compared to a competitor's 50%. That gap meant the competitor had to replace half its business every single year just to maintain flat revenue.

How does poor retention create pressure to accept poor-fit customers?

Because replacing a large percentage of lost business every year forces a company to say yes more often just to fill the gap, a cycle that perpetuates itself as more poor-fit clients churn out again the following year.

What's the actual lesson connecting retention to the customer conflict objection?

That strong retention, a natural byproduct of vertical focus, reduces the real-world impact of customer conflict, since a smaller share of a well-served vertical can still support a healthy, profitable business.