Forget silver bullets; build your agency profits by following these 11 golden rules
How can you increase your department's, or your agency's, profitability is a question that all agency owners battle with on a daily basis? Are there ways that money can easily be wasted, for example, by pitching too often? Are all retainers even worth it? Are you paying too much for your office? Do you even need such a large office space?
There is no one silver bullet for building agency profits
In my experience of agency management and leadership there is certainly no one silver bullet for improving agency profitability. Instead, I’ve always found that focusing on a number of the operational activities, usually the basics, will often have a positive impact on your margins.
Here are some of my thoughts that, if applied consistently and rigorously, will improve your profit margins without you, your managers or your staff having to make drastic, painful change.
Strong account leadership
Ensure that your leaders are commercially focused and understand how they can play their part in protecting your agency’s margins. Your senior leadership should implicitly understand how to protect this at every touch point, whether that’s an effective negotiation, involving the right expert at the right time, and just ensuring less people attend a meeting.
Negotiation skills
Invest and continue to evolve the negotiation skills that exist in your business. Positive negotiation with clients and suppliers is your greatest weapon for margin improvement.
The brief
Never underestimate the power of a great brief. The time spent defining a brief upfront will deliver untold efficiencies further down the line.
Play to strengths
Ensure that you have the right people working on the client challenge and take the time to brief them in properly. This way you stand a great chance of getting the solution right first time.
Scope creep
Always ensure timely budget updates are communicated to the client when the assignment strays from the plan. Scope creep is a profit killer that affects far too many agencies, but it can be managed and often eradicated by improved communication.
Meeting etiquette
Projects are often more complex these days and naturally involve more experts, which leads to long meetings and often with too many attendees. Have a clear agenda, involve only the key people, keep meetings short and agree clear actions at the end of every meeting.
Minimise the admin
Focus efforts on the client, not on how you organise and manage yourselves. Keep process and procedure to an absolute minimum and focus instead on delivering the absolute essentials required to create great work.
Relevant inductions
Ensure new employees know the standards right from the very start of their employment with your agency. Getting the basics right from the very start often ensures the big ticket items look after themselves further down the line.
Pitches
Never be tempted to go for new business pitches when the odds are clearly stacked against you being the winner. Have a simple pitch criteria and stick to it rigidly, no matter how tempted you are to throw your hat in the ring (because it would be a good name to get on the client list.)
Hot desk policies
After your people office space is often your second highest overhead. Cut your space in half, invest in a proper hot desk solution with flexible working procedures and necessary kit to make it happen effectively and efficiently.
Talk more
If you have got good open and honest lines of communication within your agency then your people can be fluid and efficient in finding solutions to every client challenge.
Finding margin improvements in your agency shouldn’t impact the quality of service that you offer clients, in fact it should deliver the very opposite. With greater focus and efficient procedures in place your services and margin should quickly improve.
James Parsons is chief executive officer at MSL Group, the strategic communications and engagement arm of Publicis Groupe.
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