Q4 Shareholder Town Hall

CTC is on pace for 100% top-line revenue growth,

300% profit growth,

BUT, will only represent 55% of our profit target.

CTC Has a Growth Map

The map is reconciled every month in the sandbox meeting. We do this for each of our service offerings, applying the same cohort modeling principles that we use with clients. These include retention, average monthly contract value, and how many new clients we anticipate from marketing and sales metrics.

The vast majority of our revenue comes through growth team clients. It just so happens that’s also the area where we’ve had the largest miss. Growth teams are about 2m behind pace.

Where Are we Wrong?

Forecasting is not about being right, but about understanding where we are importantly wrong.

For new customers, we’re at 95% of target 53/56. Our MQLs have grown consistently except for one dip in the middle of Q2. We’re confident in our ability to meet new customer expectations.

The average contract value is at 110% of target.

This leaves one existing portion of the business for the shortfall. Through the end of Q2 we were at 51% retention when the plan had us at 88%.

Our original forecast had us at 83 clients on 15 teams. What we actually have is 57 clients on 11 teams. We don’t have the capacity to make up the profit goal for this year.

This environment is not really a surprise, check out the messaging we were sending to clients about headwinds: https://commonthreadco.com/blogs/coachs-corner/ecommerce-after-covid

In this environment, clients pulled back spend in response to iOS 14 underreporting. This put downward pressure on CTC’s variable contracts. At the time, no one was sure if pullback as the right move or not, and we lived through this unanticipated moment.

We Lost Touch with Clients

In the midst of our own growth, moving remote, DEI commitments, marketing presentations, everything else we were doing publicly, we got detached from the people we were intended to be leading.

At the beginning of Q3 only 6 out of 50 clients were filling out the Pulse, the average score was <1, most customers hadn’t responded in months.

Coming into Q3 we changed our focus to 3 important goals:

• 75% client retention
• 4.0 on Client Pulse
• 4.2 on Employee Satisfaction

Arshi’s new role was set up to build relationships with our clients.

We moved to share content starting with employees, then clients, then ADmission, then the public in that order.

the result was that at the end of Q3 we hit 77.2% retention in Q3, or 103% of target.

We got to a 4.3 in service, 3.7 in copy and creative, and 3.5 in account performance. We didn’t reach the overall 4.0 goal yet, but this was a major improvment.

We did all this while maintaining our 4.2 on employee satisfaction. In fact, we achieved our highest quarterly scores of the year.

Employee Retention

We all feel the dramatic impact when someone leaves the organization. CTC has grown 64.2% year-to-date, this is consistent with our rate of growth since CTC was founded. We kept our 1: 1 or 1 IDEA hiring commitment in Q3.

The industry standard for turnover is ~30%. CTC’s target. is 25%. Our YTD rate is 27.9%. Turnover costs us time, role expertise, and productivity. The total estimated organization cost at the end of Q3 was around $490,000 this year.

The great resignation has impacted the entire US workforce. In July alone, 4 million people quit their jobs, CTC is not immune to that.

Data indicates that early tenured employees and BIPOC employees have the highest turnover. We will work to tackle these problems by:

• Enhancing departmental awareness
• Improving hiring and department-specific onboarding
• Working to build a more inclusive environment

Orchid Bertelsen

We’re thrilled to announce that Orchid will be CTC’s new COO. Go learn more and connect with her 🙂 https://www.linkedin.com/in/orchidbertelsen/

Iain’s Update

After. a year of great gain, loss, change, and grace, Iain is taking the opportunity to end his 20-year career in client service. The quality and character of the people he’s worked with here has been life-changing.

Orchid. and Iain are doing the same thing, choosing values first, aligning what they’re doing with their values.

Q4 Company Goal

75/25/1.75

75 | >75% Client Retention

25 | <25% Employee Turnover

1.75 | >$1.75M EBITDA

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