The 3 Pillars Of Running
A Successful Marketing Agency: Pillar 3
I have a friend that used to run a white-label web design agency.
He had two clients that were frustrating to work with.
I’ll tell you their stories one at a time.
Client A (shockingly, this was not the real name of the client’s agency) was frustrating because they had a daily all-hands meeting in which they all got on a call to share what they had done, what they were planning to do, whether they needed help, etc.
This was a 30-minute meeting that occurred every day.
The frustrating thing was that the white-label retainer was for 5 hours per week.
So my friend, not wanting to scam their client, but also not wanting to dedicate 2.5 hours of time for free, spoke to their client about the situation.
The result? The client was happy to pay for 2.5 hours of meetings every week to feel like my friend was part of the team.
My friend proceeded to leave them as quickly as possible because 2.5 hours a week was not enough to make progress on their web development work.
My friend had standards and he didn’t want tension to develop when projects fell behind because he was not able to devote the necessary time to them.
So what about Client B (also a ficticious name)?
Client B was very clear in their contract about what was and was not billable work.
It made a lot of sense, and my friend agreed to the terms and got to work with the client.
They fed him a few hours of work here and there and he tracked his billable time. He was consitently billing for about 3-5 hours per week. Nothing crazy.
However, he was getting a bit frustrated as each project required a lot of back-and-forth.
Information was not forthcoming and he had to ask a lot of questions to clarify different points of the assigned work.
It became frustrating enough that he began tracking his non-billable work for the client as well.
What he found was that, for every 3-5 hours of billable work he put in…
There were 12 HOURS OF NON-BILLABLE WORK!
The absurdity of this situation led to a quick parting of ways.
My friend has other stories about an agency for which he would line up web development leads who were ready to sign at $5k with a 3-month timeline or $10k with a 6-month timeline and the agency would then somehow cut the deal down to $500 with a 3-week timeline or $2k with a 4-week timeline.
I don’t even know how an agency could undervalue themselves so much as to undersell and overpromise to this degree.
Thankfully, my friend is in a different line of work now (he owns a B2C SaaS company) and he’s crushing it (though still undercharging).
The lessons we can learn from his suffering, though, are worth their weight in gold.
Agency life is pure insanity.
We have to work with lots of different kinds of clients and it often takes us a while to stabilize our pricing and average scope of work.
Doing so, however, is one of the first milestones to running a real agency.
Hiring a team is another key milestone, but one that immediately complicates everything.
The complexity of serving several clients is pretty high. The complexity of running a team of people who are responsible for all of those moving parts and who don’t communicate or work the way you do?
That’s next-level complex.
So one of the ways to bring order to this chaos is to build processes for your team to follow and one process will affect your success as an agency more than most others.
(Ironically, when writing this, a member of my community reached out for help with exact process. It’s a sign.)
This is the process of calculating and allocating working hours to each client.
This process goes hand-in-hand with a good onboarding process that sets clear boundaries and when additional billing occurs.
This process (when paired with time tracking) allows us, as agency owners, to measure team bandwidth and agency profitability.
How do we know we’re successful as an agency? It boils down to how much profit we’re generating and how consistently we can generate profitable growth.
So if you have a team that is tracking their time and they’re all spending reasonably close to the allotted time per client…
You know how much more time they can spend before reaching 75-80% bandwidth (a reasonable cap).
If you know how much more time they can spend, and you know how much time clients of varying size should be allotted…
You know how much revenue your agency can take on before you need to hire more team members.
Which can help you use your pipeline to stay ahead of your talent acquisition needs.
This process can also help you determine when certain clients are demanding too much time, or when certain employees are not focusing well.
It can help you spot inefficiencies in your processes, identify when you’re not charging enough, monitor the relationship between time spent and client success, and determine when clients are under or over-served.
Agency performance is not directly tied to their ability to get results for their clients, although that affects it…
Agency performance is about being in control.
Do you know when you’re profitable?
Do you know when you have capacity for new clients?
Do you know when to increase your rates?
Do you know when to hire new employees?
Do you know which prospects will make the best clients?
Do you know which employees will thrive in their roles?
Do you have the ability to bring on new clients at will?
Do you have the ability to hire new employees when needed?
Do you have the ability to replicate a consitently positive experience for both clients and employees?
Your performance as an agency is measured by your ability to grow profitably and run your agency at each new level of growth.
KPIs are:
MoM revenue growth
YoY revenue growth
Avg profit margin
Client retention rate
Employee retention rate
How is your agency’s performance?
To truly grow a successful and stable agency, you’ll need all 3 pillars.
People, Processes, and Performance.
Next week we’ll get into some practical ways to build and stabilize these pillars, starting with a tricky one for all agencies: Process Adoption.
If you know of someone who may benefit from this newsletter, please don’t hesitate to send them to https://kinglyconsulting.com/newsletter so they can start receiving them.
All the best,
-Ryan Baker
Founder, Kingly Consulting