Growing a business organization may be easy for most business owners. Retaining that growth and turning the business into a profitable unit is another ball game altogether. Agencies specialize in the profitability of any business organization that seeks their services. An increase in digital service demand has given rise to new service offerings and challenges in client attraction. Agencies find the market extremely competitive, requiring accountability for every dollar and hour spent.
Agencies exist for their creativity in enhancing business processes, to solve operational inefficiencies, and to streamline marketing services. A marketing agency must be imaginative and create award-winning initiatives for its clients.
Increasing any agency’s profitability is a top priority. Some strategies define the increase and sustainability of any advertising agency’s profitability. These policies are blueprints to getting to the profitability zone, increasing the profits, and remaining there sustainably.
Track Your Time: The Entire Time
Time is a vital aspect of profitability to any marketing agency. To increase profits, agencies need to keep track of their time of events and activities. When you fail to pay attention to non-billable hours, they will eventually eat into your profit margin. Literal careful time tracking helps in handling billable hours against the non-billable hours. There is a need to sustain time tracking for a while to ensure everyone is on board the system. An agency can state the impact of billable and non-billable time tracking on its profitability through proper hours accountability.
It is from this tracking that a manager will notice gaps where time wastage takes place. Recommendations are then advanced for the realignment of the routines to eliminate the existing inefficiencies. Billable and non-billable hours tracking can help marketing agencies to reset their productivity and make each member of the team stay on their assigned tasks. The bottom line of time tracking for an agency is to avoid making drastic changes to its systems and business processes when, ideally, it is time management that is necessary.
Comprehend the Costs of Service Delivery
New businesses should avoid blindly rolling out service delivery before dipping their feet into the market to test its depth cost-wise. Service production and eventual successful delivery to the market hinges on various costs. Any agency need to determine the cost of producing a service per hour and per person to know what to spend and the expected realizable profit from the expenditure. The costs help in determining task assignment. For instance, a talented low-level employee will deliver a task at a lower value. The same task handled by a senior officer will be expensive due to the high salary.
Service delivery cost knowledge is handy in work delegation to realize possible maximum agency profitability.
Lots of information must be available to estimate service costs accurately. A new business should refer to past projects to determine the cost of current service delivery to increase profits. References will help discover the possible project’s length and value to avoid eating into the agency’s profit margin.
An agency should consider budgeting for all the activities involved in producing and delivering its services to clients. A financial officer or account manager should have the final cost of the service at the back of their mind while budgeting. Proper budgeting guides the careful and creative improvement of service pricing.
Tracking resources is key to correctly budgeting. An agency can determine its variable costs per project, revenue per employee, and variable revenue per project. Furthermore, establishing billable and non-billable hours is easy, and this translates to profit per client determination.
Besides, controlling pricing and demanding higher rates impact measurable client bottom line directly.
Streamline Workflows Using Templates
Most of the agencies may have some tasks that keep recurring. Such duties require simplification for faster execution. Agencies should avoid spending too much time doing one assignment over time. The creation of a template is necessary to allow the copying and pasting of these tasks. Creating templates for workflow enhancement takes less time. The rest of the time goes towards tackling more profitable strategic work.
The created templates come in handy in getting the team in the groove and helping new employees to settle in faster.
The workflows become seamless, smoother, and faster due to adequate training time using the templates. The trained marketers get to expand the team’s capabilities. Templates reduce the time spent doing repetitive tasks that would turn costly to the business and eat into its profit margin.
Stop meetings and manage updates from a PM software
Meetings are time-consuming and limiting, especially when the due project gets pressed for time. To make the project stay on track, avoid weekly frequent meeting updates that consume the agency’s profitability. The adoption of alternative meeting methods is necessary, like manage all the communication through Project Management Software. The digital marketing team can install conferencing services to enable remote meetings. Some of the communication can get to the intended audience through email correspondences and chat programs.
At times, meetings become monotonous and unproductive. They turn to fertile grounds for company expenditure. The unavoidable meetings should clearly define its goal and plan. Well-defined meetings are goal-focused and customer-driven to help generate revenue for the agency to hit profitability.
Strive to Retain Talent: Your Greatest Asset
A human brain is a powerful tool and resource to organizations. Agencies need to invest significantly in recruiting and developing talented individuals to deliver their new services. The onboarding process should pay close attention to the value of work targeted by the hiring and not compensation. Likewise, a concerted effort is needed to retain talented personnel onboard.
An agency can become indispensable in the market by having exceptional talent.
The marketing services delivered by these talents are tremendous before clients, especially when they have no knowledge and resources to furnish those services. Service pricing doesn’t matter to clients who offer to pay more when the retained talents are adept in delivery and offer scarce outstanding capabilities that are high on demand.
Identify services that are making you lose money
Some avoidable agency activities consume their resources without generating any income in return. It is ideal to note the money-consuming activities and curtail any expenditure supporting their existence to save the business on inflated costs. At times conversations with clients turn hypothetical and go on for hours without any indication of converting to income. Some clients ask for favors that are not part of the running projects meaning project readjustment and increased cost. Billing for such business favors, at times, fail to cover the hours spent and may not account for the committed research and resources.
It is immensely challenging to stick to the initial project without a few adjustments. The considered customizations should be within the initial budget if possible. Should extra costs need factoring in, then a different billing should cover the additional costs entirely. An agency stands to profit more from avoiding an unidentified service. To outsource service delivery also leads to extra expenditure that eats into the agency resources limiting profitability in the long run. An agency should have a good project and resource management tool to keep track of its services to avoid unnecessary services that lose the company money.
Bring Down your Business Development Time
At times business owners take a lot of time planning the sale process. The spent time may fail to give positive returns due to misplaced priorities. There is a need to initiate processes that identify the practicability of pursuing a potential client to fruition. Too much time spent pursuing a possible unfruitful new client may turn costly to the business eating into its profit margin. To increase profits, client vetting and assessment are necessary through CRM software. This software helps business owners to streamline quoting, pricing, presentation, upselling, and sales closing activities.
The amount of time consumed by business development is costly to the business. The costs reduce the agency’s profitability in the long run due to the drive geared towards recouping initial business development investment. The bottom line is that a significant reduction of business development time saves the agency money. The time becomes useful in delivering value and results to potential clients rather than courting them.
Keep Your Clients Happy and Satisfied
Client retention is vital for an agency to save on its costs, seeking new customers to increase sales and revenue streams. Any business should focus on keeping and growing its existing clients. The result is the reduction of business development time, enhanced efficiency, and improved cash flow.
Client retention generates new customers through referrals from satisfied existing loyal clients.
Agencies can use metrics such as churn rates, customer lifetime value, and client happiness indexes to track their Client Retention. These metrics help with maintaining clients and with avoiding finding new customers.
Open communication, transparency, and customer rewarding should be the norm. These activities lead to the creation of customer lifetime value. The assured cash flow from the retained happy clients works wonders in the agency’s profitability realization as most of them are more concerned with service value than pricing.
Use the Right Management Software
Managing agencies to profit zones requires the correct set of management software. The benchmarks should focus on the software performing tasks such as workflow management, scheduling, and real-time task tracking.
The proper management system helps in scaling processes and services by making teams efficient.
The software should allow to:
1. Automate the time tracking of your team
2. Estimates the hours spent on each type of deliverable.
3. Assertively predicts the time each project will take
4. Have Real-time visibility of availability per team and per member
5. Estimate how much talent is needed to accomplish your next projects
6. Have visibility of the status of each project
7. Automates task creation through project templates
8. Identify customers and projects that contribute or detract from your profitability
9. Understand which services bring profitability to your business
10. Avoid bidding for services that can generate losses
COR is an excellent example of management software that combines project management, resource management, time tracking, and business intelligence features in a single online platform.
COR’s main focus is to enable professional services firms to create awareness about their profitability and boost the understanding of their profit margins per project and client, in order to improve budgeting, renegotiate fees and avoid bidding for services that can generate losses.