What are the most important KPIs to monitor to keep the agency profitable?

Managing an agency means wearing several hats. Whether it’s preparing a presentation, sending suggestions, communicating with customers, reporting to management, or just keeping employees happy – all of these activities are what are visible from the outside.

When managing all of the above, constant attention must be paid to maintaining your agency black. Because workflows can vary, but in the end, the most important thing is the steady increase in profitability.

How do you do that? In short, you need to keep a close eye on the metrics that keep your agency profitable. But knowing whether your agency is profitable or not is not something you don’t know. Profitability is based on actual figures and these figures are influenced by many different factors.

Below we have selected and discussed seven key performance indicators that you can monitor productively. We believe that these KPIs are essential to maintaining the profitability of your agency.

KPI # 1: The number of pre-qualified leads in your sales funnel

We are confident that you have a system in place to attract new leads and turn them into customers. But here’s the question: how do you measure the number of your pre-qualified leads? Knowing this number will give you a starting point to predict where your sales will take place in the next quarter. The key here is to focus on qualified leads.

KPI # 2: The number of suggestions sent

Now that sales leads are on sale, you want to close them as soon as possible. The next step in your sales process is to submit suggestions. Many agencies face the challenge of having their proposals in their funnel for more than a month, sometimes even a few – without getting any closer to the deal. This is something you need to focus on and delve into. Maybe your sales funnel leads aren’t qualified as a new business? Maybe your sales team needs a different approach to tracking them? Regardless of the method, you should look at the number of your pre-qualified leads and suggestions sent together.

KPI # 3: The value of your sales funnel

The value of your funnel will help you predict the near future planning, use, revenue, and profits for your agency. However, none of these predictions matter if you do not close these deals. Ideally, you need both a high closure rate and a high funnel value. However, the higher of the two is the higher the closure rate.

Keeping all your sales metrics under one roof will help you visualize your sales pipeline and make more informed decisions. It is important to have a comprehensive agency management tool that covers all of the above.

KPI # 4: The cost of acquiring a customer

Your customer acquisition cost (CAC), which is basically defined as the cost you have to pay to acquire a new customer, is an agency metric that affects your profits at the end of the day. Your CAC answers how much money you need to spend as a company to gain new customers and can be an indicator of how much you’ll need to pay for certain types of projects or services in the future.

KPI # 5: Lifetime value to customers

Another important KPI for agencies is LAC. Your LAC is the total revenue from your customers, calculated as the average of all your customers as long as they are your customers.

By knowing both your average customer acquisition cost and the value of your customers’ lifetime, you can know exactly how much you spend on customer acquisition, how much you earn from the average customer, and how long it takes to achieve profitability on a customer-by-customer basis.

KPI # 6: Agency utilization rate

Usage is the KPI that most agencies view on a daily basis. Depending on who and to what extent this KPI is monitored, each agency owner, project, account, or operations manager must ask himself or herself how effectively his or her staff is working. The Agency’s performance indicators answer this question.

Your agency utilization rate is the percentage of time your teammate spends on billable or unaccountable work. In terms of usage, your teammates spend time on either internal projects or project clients. Some teammates, such as those working in office management or marketing, aren’t used to working with clients at all, simply because they don’t offer jobs directly to your clients. That’s why it’s important to look at billable usage, because “billable” teammates cover salaries, overheads, or other unaccountable personnel or expenses.

You can track your usage with agency management tools with just a few clicks, and get a complete view of your metrics.

Source: app.productive.io

KPI # 7: The agency’s profit margin

Basically, your gross profit margin (GPM) is the total cost of your sales minus your total revenue. The healthier this indicator is, the more likely your agency is to earn a good net income. To understand what profit margins you should strive for, you must first monitor all of your agency’s costs: people’s costs, overheads, and any additional costs you incur.

Source: app.productive.io

Use one tool to track KPIs and increase agency profitability

Tracking agency KPIs can help you grow your business. A single point of trust for the agency will help you increase your profit margins.

With an agency management tool that helps you manage project delivery from start to finish, you can track all of your KPIs and streamline your agency processes.

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