It’s the first week of January and hopefully you’ve already spent a good amount of time setting your goals for 2016. Make sure those goals are specific, measurable, attainable, realistic and time-based. These SMART goals are the basis by which you’ll make decisions during the year, but more importantly how you’ll know if you're on track during the year.
Talking about goal setting and actually establishing a set of goals and KPIs (key performance indicators) is easier said than done. In this article, I’ll share with you some of the quantitative goals top tier inbound marketing agencies are deploying in 2016.
Net Profit
If you don’t make any money, you won’t be in business long. Traditional agencies typically deliver around 20% net profit, but honestly our experience with inbound agencies shows a more realistic number of 10% net profit. Some of this is going to depend on how aggressively you want to grow your agency.
Agencies who are aggressively hiring and investing back in their companies typically set a lower net profit goal. Agencies that are in “lifestyle” mode could set a higher net profit goal. Regardless of your situation, setting and tracking your net profit number monthly is mandatory.
Revenue Growth
Definitely, the easiest goal to set. Almost everyone knows what they did last year in revenue and what they’d like to do this year. The biggest challenge for inbound agency owners is setting attainable and realistic revenue goals.
For example, if you did $1 million in revenue in 2015 it might be unreasonable to think you’re going to do $4 million in 2016 but it might be reasonable to do $2 million. Now if you’re planning on tripling your marketing budget, hiring three sales people and spending all your time doing speaking events—then perhaps the $4 million number is reasonable.
So set a realistic revenue growth number for 2016 and then break that big number down into 12 smaller numbers, one for each month. Keep seasonality in mind. Typically, it’s slower in the summer and at the end of the year. You could even take this revenue number and back into it with even more granularity like number of clients, number of leads, and website traffic.
Revenue Per Team Member
Growing an inbound marketing agency means hiring people but you need to keep an eye on hiring vs. revenue and a great way to do that is the revenue per team member number. Again, traditional agencies who purchase media and have other non-inbound services could be around $200,000 annual revenue per team member.
But inbound agencies are labor intensive so this number is typically between $100,000 and $150,000 annual revenue per team member. If you’re in growth mode, the number might be lower and if you’re in coast mode it might be higher.
Average Monthly Reoccurring Revenue Per Client
The more money people pay you per month the more money your agency is going to make. If you’re new to inbound marketing you’re going to quickly learn that the work required to get clients leads is almost identical regardless of what the client is paying you.
Meaning your $5,000 a month client is probably going to take you the same amount of time and energy as the client paying you $10,000 a month. In fact, your smaller client might actually take more time because they are less experienced, more budget conscious and expecting more dramatic results. So actually working to drive up this number directly impacts your net profit number.
Renewal Rate
If you’re clients don’t renew then your churn is going to make growth almost impossible. So you need to know your renewal rate and you need to track it monthly. How you track that is up to you. For example, we don’t consider clients who move their program in-house as a negative impact on our renewal rate. But regardless of how you want to track your renewal rate—track it, report on it and incent your team on it.
Picking these numbers for your agency might not be your issue, but the process of getting buy-in from your team might be challenging for your agency. Here are some of the best practices for including your team and rolling these out across your agency.
Include The Team In The Goal Setting Process
You’re going to have a better chance of hitting your goals in 2016 if you involve your team in the goal setting process. To make this process easier to manage, go into this meeting with a set of potential goals that work for you and let your team pick the ones to focus on. This allows you to guide them through a selection process that probably means you’ll get the goals you want and they’ll feel like part of the process.
Now that you picked the goals next you want to set the numbers. Again, my suggestion is that you walk your team through this process, helping them understand the idea of reasonable, attainable and time-based. In this case, your team might want lower goal numbers than you’d like—after all, they want to attain them easily. You might have to challenge or push them a bit to get goals that are stretch but still attainable.
Communicate The Goals Weekly
Now that you have your goals, you have to keep your team connected to your goals. This doesn’t mean creating a poster and putting it up around your office. It means talking about your goals every single day. It means providing visibility and transparency around those goals so everyone knows exactly where you are in relation to your goals and they all know what they can individually do to get the company to their goals.
It's an ongoing effort that requires a variety of media including email communication, regular weekly team meetings, technology like Gecko Boards and intranets. The more you talk about your goals the better chance you have of hitting your goals.
Provide Incentives For Goal Attainment
It would be futile to talk about goals without talking about incenting your team to hit the goals. I’m not just talking about compensation either. We ran a company-wide goal attainment effort in November that resulted in the entire team getting the time between Christmas and New Year’s off. We also use Square 2 Marketing SWAG as an incentive too. So think about a combination of incentives that include product, time off and cash to get your team all focused on driving to your goals.
Start Today Tip – If you don’t have goals and the kinds of goals we’re discussing here, stop everything, close the door and get these set up. If you want to involve your team, schedule the meeting and get these down on paper. Make sure you have the tracking mechanisms down and the communication plan in place. Now you’re in a much better position to make 2016 your best year ever.
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