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The Top 5 KPIs Every Inbound Marketing Agency Owner Needs To Know Cold

Posted by Mike Lieberman on Aug 4, 2015 7:00:00 AM

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Inbound_Marketing_Agency_NumbersIt’s very difficult managing any business if you don’t know your numbers. Now take an inbound marketing agency where you’re involved in complex and highly creative projects day in and day out. In this case it’s even more important.

The best way to remedy this situation is to start with a handful of KPIs, get extremely comfortable with those numbers and then expand your tracking efforts over time. This gives you the opportunity to start slow and get good at making adjustments that drive your numbers up and to the right.

In no particular order, here are the top five inbound marketing agency numbers.

1. Client Capacity

If you’re managing your agency properly, they you’re trying to balance hiring and capacity with the inflow of new clients. You don’t want to be overstaffed as this drags on cash flow. You don’t want to be understaffed as this stresses the team and impacts client service.

Instead you need to be sure you can effectively service the projected new clients coming into the firm. This gets even more complicated when you factor in clients who are renewing for another ongoing engagement. To keep an eye on this create a system that shows you exactly how many new clients your team can handle at any given time. When that gets down to one or two, you should be comfortable hiring to increase the capacity and if you do this well, you can add new people in a “just in time” fashion.

2. Average Monthly Reoccurring Revenue Per Client

This might be one of the most important numbers on your dashboard. This number impacts profitability as you’ll see in just a minute. More importantly, this should be a number that you’re actively working to drive up month over month. In fact, I’m going to recommend you set a goal and work hard to hit that goal.

Late last year, at Square 2 Marketing, we were at $8,500 in MRR and set a goal to move that to $10,000 a month. Today we’re at $12,300 and we keep track of this number weekly. When you consider this number and the increase’s impact on your business you see that any improvements directly fall to the bottom line. After all, you’re not increasing your costs or the expenses associated with the engagement. So pushing this up by charging more directly impacts company profits in a very direct and positive way.

3. Client Profitability

Speaking of profitability, you need to keep track of profitability on a client by client basis. You’re going to have clients who approve things quickly, don’t change their mind and follow your advice. These are going to be highly profitable, assuming you charged them properly. You’re also going to have clients who go back and forth with approvals, who constantly change their mind and who argue with you on every tactic. These clients are probably going to be less profitable or even unprofitable.

You need to know which clients are making you money and which ones are not. You need to track this and monitor this weekly. You need to be discussing client profitability with your team and you need to make sure the team is actively managing the  more challenging and less profitable clients. Knowing these numbers makes this effort much easier.

4. Client Program Performance

We covered a couple of operational numbers but your success comes down to one thing—are you getting results for your clients? Clients with a performing program are usually profitable because they trust you and they’re highly likely to renew. Clients with an underperforming program are probably questioning what you do and having to approve everything you do.

Track client program performance on a monthly basis and make sure that as many client engagements as possible are showing nice improvements in website visitors and leads. These are the two high level measurements that usually lead to highly profitable client engagements.

5. Net Promoter Score

Results are important but the stories your clients tell other people are actually more important. By implementing a regular Net Promoter Score survey or phone call lets you know firsthand how many people are telling great stories, neutral stories or negative stories about your inbound agency. You need to know what clients are saying and this give you the chance to put a number to it.

We track this monthly and I make these calls personally every couple of weeks. I select a handful of clients who are exiting key phases in the engagement and ask our contacts to rate us on the NPS scale. This number doesn’t change very dramatically but it does give us a good handle on how we’re doing with our clients.

These five numbers only represent a handful of the numbers you might want to use to manage your business. Some of the others are company gross profit, project profitability, net profit margin, companywide billable rate, or actual realized rate. All of these are great numbers to keep an eye on too. It’s not really about what you’re tracking but that you’re tracking something.

It’s also important that you act on the information your seeing in these numbers. So if your numbers are not looking good, or not trending up, then make changes to what you’re doing and watch your numbers to see if your changes are positively impacting the business.

Start Today Tip – Got numbers? Great! But if you don’t, you need to get going immediately. Start with these five or pick five different numbers based on your experience. Regardless of your numbers, schedule time weekly, probably an hour, to go over your numbers. Review them and then respond with an action plan to make the necessary adjustments. You’ll find that this rhythm gives you the ability to dramatically impact your business in a very short time frame.

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Topics: inbound marketing agency numbers, managing your inbound agency, inbound agency kpi

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