I could be wrong, but I’m betting you didn’t get in the agency business because you love metrics. Am I right?
Taking a look at your business by the numbers may not get your blood pumping, but it is essential for the health of the agency.
At a minimum, you should track two areas in your business: New Business Strategy and Client Profitability & Project Profitability.
New Business Strategy
This area includes tracking new business, the number of prospects/leads, and tracking how much new business is earned from existing clients. Account teams should cultivate their relationships with existing clients and discuss their needs and upcoming projects. Never wait for the client to call you. Remaining top of mind is the key to recurring business.
Client Profitability & Project Profitability
While measuring revenue is great, it’s very important to measure Client Profitability & Project Profitability. If your revenue numbers are through the roof, but if that money is not being stewarded well, or there is frequent scope creep without consequence, you will lose money.
If you already have a good history of tracking those two segments of business, consider up leveling your game by measuring these metrics recommended by Rhys Furner, Head of Partnerships and Business Development (APAC) at Shopify.
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- Sales conversion rate
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- Average sales value and average client value
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- Average time to convert
The sales conversion rate represents your success rate of converting leads to paying clients and is calculated as follows:
Sales conversion rate = (number of successfully won projects / number of proposals submitted) x 100
The sweet spot for the sales conversion rate hovers right around 50 percent.
The average sales value is calculated by dividing the total sales value by the total number of sales and multiplying that figure by 100.
The average client value is calculated by dividing the yearly revenue by the total number of invoiced clients and multiplying that number by 100.
This should enable you to identify your most valuable clients. Spend the majority of your relationship building client retention efforts on these clients.
The average time to convert is how long it takes a lead to move through each stage of your sales process, which can help you identify areas where your processes need improvement.
Average time to convert = sum of all conversion time periods/total number of conversions
Whether you choose to track just a couple of metrics or put a system of in-depth tracking in place, committing to evaluating your business using concrete metrics is critical to the growth of your business.
For personalized, expert advice, don’t hesitate to get in touch with us. You can schedule a complimentary 45-minute discovery call by contacting us here.
