Managing an agency can feel chaotic. But tracking these key agency metrics will help you see the forest for the trees - and make the right business decisions.
Between monitoring your client communications, project pipeline, and internal affairs, agency leaders have got their work cut out for them. It can take a full 8-hour day (and the rest) just to fight fires and make sure everything's flowing smoothly.
And despite putting in a mammoth amount of work and care into running your agency, it can be hard to shed those nagging doubts, wondering if you're making optimal decisions for the future of your business.
Are things really are moving in the right direction, or are they just getting by?
Needless to say, it's unwise to rely on gut-feelings for situations like this. Taking a good look at your agency's KPIs - key performance indicators - is a much smarter way to answer your questions.
However, there are hundred of metrics out there that you could be measuring, each with a more complicated equation than the last. They can help you take a look at the insides of your business from every angle - but you may find that some metrics are more helpful than others.
So, on a day-to-day basis, how do you decide which metrics get your time and attention? Well, we've got you covered. In this article, we'll delve into the seven key metrics all agency leaders should track, and how to make metric monitoring an easy task.
Tracking business metrics can help you get an objective view of your agency's operations, get to the heart of how your business is performing, and - crucially - identify the areas that need improving.
There's a popular saying that "You can't manage what you don't measure", and this is just as true in the agency world as it is in any other sector.
Without tracking metrics, it's very difficult to set goals for change or improvement. How can you address weak profit margins from projects or cut back on operational costs if you don't understand where the issues are, or what the consequence of changing X or Y factor would look like? You're stuck taking a stab in the dark.
In comparison, taking metrics seriously can help you:
Your net profit is used to measure your real profit after all outgoing cash flow, and the profit margin supports this data. If you are experiencing low profit margins, consider looking at the operational challenges in running your business.
Changing or upgrading your automated systems, improved resource planning, and implementing standardized best practices across the organization can help you optimize your net profit.
Aside from the total revenue that involves all business operations, getting a handle on MRR can help keep cash flow healthy. MRR comes from sources of income for your business that repeats monthly - like subscriptions, monthly contracts, and retainers.
Tracking MRR can also help you identify trends in customer acquisition and retention, which can help feed into informed decisions about your pricing model, service packages, and marketing strategies.
Resource optimization helps maximize your utilization rate and protects you from unnecessary operational expenses year after year.
For starters, you can look at the total billable hours of individual employees and the agency overall. Does the billable time match their corresponding role? Are there duplicate functions, or do you need additional talent to delegate an employee's workload? Does your staff have more non-billable hours logged than billable ones?
By looking at your people, one of your most important resources, you can avoid burnout and stress while maximizing their output at work.
Client or customer acquisition cost (CAC) represents the cost and resources you spend to gain a single customer. As an agency leader, this metric can identify if you're spending too much on something that generates only a small percentage of your income.
Comparing your CAC with the amount that customer would spend with you overall, (called customer lifetime value or CLV) helps you objectively assess your marketing campaigns. From there, you can make changes to minimize your acquisition costs.
When you improve your organization's sales strategies, including lead generation, tapping the new markets, and enhancing your presence in your audience's preferred channels, you are already one step ahead to acquiring new clients.
A customer's profitability is the money they bring in based on a specific period. This contrasts with the CLV, which is based on the entire sales relationship. Client profitability gives you insight into how well your products and services are fulfilling your client's demand.
To get the most out of this metric, don't wait for annual data to learn your areas for improvement. Monitoring your turnover, productivity, resource expenditure, and efficiency weekly and monthly can spare you from overall loss of both budget and patrons.
The vital part of customer satisfaction is to ensure you customize each buyer's sales journey as their own. A personalized approach makes consumers feel you are not just an agency founder, but someone who really takes time to take care of all their customers.
Client satisfaction is one of the key KPIs related to retaining clients, and it can also serve to expand your customer base through word-of-mouth marketing. Given that 92% of people trust recommendations over other forms of advertising, this metric is an important one to focus on for future growth.
Not every metric is about your client. You also need to take care of your employee net promoter score (eNPS). This is used to measure employee satisfaction - which can be vital when you want to identify what your team members really want.
eNPS is measured through a survey, and the feedback results can be a good way to build a stronger relationship and higher employee engagement in your company.
Key metrics can be tricky to collect, measure, and monitor, so as founders and leaders, you strive to look for ways that make tracking agency metrics a lot less complicated.
A comprehensive resource management tool like Runn helps you track your business's financial and human resource metrics with just a few clicks. It allows you to identify your overall capacity and utilization rates, your team's individual availability, and even forecast your finances for future project pipelines.
By controlling your resources, you can also check and strategize your team's productivity, workload, and costs while having enough time to take care of your customers.
Agency leaders can measure their organization's profitability and efficiency by tracking these seven key metrics. To gain the greatest understanding of your business's ability for growth and sustainability, monitoring these metrics on a monthly or even weekly basis is critical.
With Runn, you get an overview of your entire business as well as the granular details, so you can confidently handle your financial and human metrics with ease.
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