By Dennis Kayser, CEO and co-founder, Forecast
The business landscape has changed radically in the last two years. Hybrid working is now a staple model, employees are spending more time at home – and much of our daily work life and interaction is conducted digitally. But what appeared initially as a challenge has become an opportunity.
Project-based businesses have always been committed to maximising profits – whilst minimising employee burnout. But giving your people enough attention is difficult when inundated with client work – and your people are no longer necessarily in the same room.
Agencies have many strengths. Their agility, flexibility and ability to scale resources up as-and-when needed ensures they can deliver on tight deadlines with ease. This flexibility, however, can come at the cost of efficiency – which can hurt profitability.
Inefficient – and non-existent – processes are the greatest agency killer. The same can be said for poor communication, operational execution and morale.
Forecast’s latest whitepaper – ‘How to Build a High Margin Agency’ – surveyed 163 agency leaders on what they thought were decisive factors in maximising profitability. We explore how the ‘just about surviving’ agencies can transition into high-margin organisations.
The Future Is Here
Finances are understandably a hot topic of conversation in agency board meetings.
Yet only 9% of agencies we spoke to believed they were maximising profitability. Inefficient delivery processes (39%) and excessive time spent on project admin (31%) were cited as the main barriers preventing greater profitability.
Delivering premium client experiences is the overarching objective for all agencies – and this requires seamless project management. Timesheeting, update meetings and reporting are all crucial tasks that must be completed. But these are all time-consuming jobs that take employees away from their primary roles.
Increased automation is the solution. AI and machine learning can augment – rather than replace – your human staff. Leaders that invest in technology, process historic data and build project plans at speed won’t just reduce wasted time. They will drastically reduce the overall margin for error.
Implementing technology into your processes ensures the right people are assigned the right task – at the right time. This also helps to maintain clearly mapped-out timelines. Slow, repetitive tasks are a burden for agency and client alike. Automating these work-intensive processes and eliminating unnecessary data entry will quickly streamline operations.
The Power Of People
High-margin agencies are built on a foundation of hard work, shrewd hiring – and happy workforces.
Employee experience’s (EX) value can’t be underestimated. Overworking employees won’t lead to greater productivity or better overall service – it will simply crush morale and harm loyalty. Yet only 7% of agency leaders believed burnout contributed to employee turnover.
Integrating wellbeing into agencies’ overarching business objectives can help address this lack of understanding. The employees that feel valued are the ones that will consistently perform well – which is the gateway to improved efficiency. Investing in robust frameworks that measure staff happiness at all levels is paramount.
Retaining existing employees is important – but so too is client retention. 47% of the agencies we surveyed acknowledged that less than 25% of revenue came from existing clients. Winning new business shouldn’t be prioritised ahead of preserving long-standing relationships.
Leaders can only predict growth when they have a keen understanding of client happiness – and only 40% of agencies recognised that a lack of visibility prevented accurate forecasting. Agencies should be tracking satisfaction across all touchpoints. This will keep the finger on the pulse for who matters most – such as stakeholders.
Greater communication is vital. Agencies regularly overestimate staff and client satisfaction levels. Operational efficiency is a vague concept – until it is translated into numbers. Data, tools and processes need to be centralised. Leaning on these – as well as qualitative insights from catch-ups and conversations – will soon pay dividends.
Get With The Programme
Agencies take pride in the innovative, creative services they provide clients – and adopting the same mindset in-house is also recommended. Investing in new tools is key to improving outdated practices that are unfit for purpose. Maximising profitability requires agencies to optimise their project management processes.
Technology shouldn’t be embraced, not feared. Automation can reduce employees’ workload and increase their impact. Agencies’ flexibility remains one of their strongest traits. But a lack of efficiency will always be the deciding factor in which agencies are ‘just about surviving’ – and which are thriving.