I’ll be blunt, maybe even too blunt, but we need to face the problem before we start solving it!
Many agencies don’t set enough KPIs or track enough metrics. Though it may not be the case, it often feels like agencies only care about delivering fast results to keep a certain client, and they don’t “waste” their time setting the metrics properly.
I’m sure our readers are not among those agencies or even if you are, it’s just because you’re new to this and confused about what to track or how to organize everything.
Let me ease your concerns. Today we’re going to discuss everything in detail, and after you read this article, you’ll be able to decide what agency metrics to track and what not to, and what you need to pay the utmost attention to.
Since this is my first article in our blog, let me introduce myself 🙂
I’m Araks, the marketing director of 10Web.
Before 10Web, I’ve spent a huge chunk of my career working in different agencies with clients all around the world, doing everything from SMM and SEO to the implementation of full digital marketing strategies and the management of the digital marketing team.
So when I tell you that I know how time-consuming and complicated it can be to manage all your clients and deliver everything on time, believe me. I understand.
But also believe me when I tell you, the moment I learned what and how to track, my life and the life of the agencies I worked at changed forever.
Now it’s time for me to share everything I’ve learnt with you to make your life easier and help you grow your agency.
Ok, enough blabbing, let’s get down to business.
First of all, let’s separate the agency metrics by categories (I’ve chosen the most important ones):
- Client metrics
- Employee metrics
- Profit Metrics
- Agency brand reputation metrics
Let’s start with the most important category, the core of every agency, the breadmaker 😀 :
Let’s start with:
1. Number of clients acquired in a month
Maybe you’re just starting your agency or maybe you already have more clients than your team can cover. No matter, you always need to work on getting new clients! Remember, you can always hire more employees and there can never be too many customers.
Each agency might have different funnels for acquiring new clients, so first of all you need to understand what that funnel looks like for you.
Let’s take a look at a very simple example of the client acquisition process:
Social media ads -> Sales Landing Page -> Lead acquired -> Negotiation -> Lead closed (win/lost)
So in this simple funnel, the number of acquired clients will be the number of the “Lead closed(win).”
To understand what works and what doesn’t, and how you can increase the number of acquired clients per month, you need to be tracking each step in the funnel.
To create funnel reporting, you can put all the info into Google’s data studio, see every single weak point in the funnel, and start working on it ASAP.
You will spend some time setting it all up at first, but you won’t regret it. Ultimately, it’s one of the most important things for your agency’s growth.
I found this video that can be quite helpful for creating funnel reports.
Take a look and also comment below if you’re using data studio for your tracking.
Now let’s talk straight! We can get a gazillion clients per month but if it costs us 100x gazillion dollars to close them, it doesn’t make any sense and won’t bring you much success. So, the next important agency metric to track is the client CPA (cost per acquisition).
2. Client acquisition cost
Remember the funnel we just mentioned? To understand the cost of each client, you need to understand how much money you spend on each step of the funnel and assess if it’s worth it.
CAC is calculated by dividing everything spent on acquiring more customers (advertising, brand awareness campaigns, sales, and more) by the number of customers acquired for a certain period.
When trying to improve CAC, make sure to answer these questions when analyzing these numbers:
- What’s the average cost of client acquisition in my market?
- Can I reduce the price of each separate step?
- Is my strategy of client acquisition the right one?
When answering the questions above, don’t just focus on the end result. Approach each step of the funnel individually and develop optimization strategies for each separately as well as combined. Only then can you be sure you will reach your desired CAC.
Also when calculating your ideal CAC consider the profitability of each customer. Depending on the customer group, your perfect customer acquisition cost can drastically vary. For example, if one client pays you $50K per year, you can probably afford to spend around $200 on acquisition, but if a client only has a 1-month project with a budget of $3K, it would be too much.
Now let’s be honest. Will you be able to build a sales funnel and reach your ideal CAC without your team? Most probably not!
When building a successful agency, or any company for that matter, employees are your biggest asset. Take a look at the most successful companies like Netflix, Google, and others. They all are famous for their high employee satisfaction rates. There is even a book about the company culture of Netflix, and you’ll have a very hard time finding a dissatisfied Netflix employee.
If these huge companies understand the value and importance of great employee culture overall and each employee in particular, you, as a growing agency, should make your employees your number 1 priority as well.
But how can you improve something without having data?
And what are the employee-related agency metrics you should be tracking?
Employee net promoter score! It’s the easiest and one of the best ways to understand how happy your employees are, what makes them happy and what doesn’t.
So, how is eNPS calculated?
eNPS= No. of Promoters – No. of Detractors/Total No. of Respondents x 100
Now let’s see how we find our Promoters & Detractors and also learn who the passives are and what to do with them.
It all starts with a simple question.
Once a month you send out a short anonymous one-question survey to your employees, asking:
“On a scale from 0-10, how likely are you to recommend our organization to your family or friends?”
I also highly recommend leaving a space for comments to be able to get a better understanding of what’s working and what’s not.
After you have all the results, it’s time to analyze the answers by dividing them into 3 categories:
- 0-6: Detractors, employees who are highly dissatisfied with the organization and spread negative word of mouth.
- 7-8: Passives, employees who are neither emotionally invested nor disengaged.
- 9-10: Promoters, employees extremely loyal to the organization, who spread positive word of mouth.
Let’s analyze the categories separately to understand what you need to do for each of them:
These employees are your key to success! This is exactly why, even though they are currently very happy with your company, you should not relax and do your best to keep their loyalty. Focus on their comments! What makes them happy? Keep doing that and also see how you can improve further.
These employees can cross over to Promoters or Detractors anytime now, and it all depends on you. Ask them what they would improve. What’s the one thing that holds them back from referring friends to your company? Work on that!
These are the people that are extremely dissatisfied with your company. If there are many of them, maybe your company culture needs to be changed ASAP?
Take a look at what they’re not pleased with, what makes them unhappy, and start working on those aspects immediately.
Again, I can’t stress the importance of employee culture enough!
4.Employee churn rate
Now when you know how to calculate and analyze your eNPS, it’s time to understand why you need to track the employee churn rate.
First of all, let’s define employee churn.
Employee churn is the overall turnover in an organization’s staff as existing employees leave and new ones are hired. The churn rate is usually calculated as the percentage of employees leaving the company over some specified time period.
Now it’s important to keep in mind that a high employee churn rate/turnover will not only ruin your company culture but also end up costing too much!
Believe me, building a great company culture is way more affordable than consistently spending tons of money on new hirings.
Of course, if you’re hiring because you’re expanding and need more employees, that’s great, but if the reason is that you fire a lot or people leave your company often, that’s almost disastrous.
So as I mentioned above, there can be 2 reasons of high employee turnover:
- You have to fire a lot of people
- People leave your company very often
First one is a red flag that warns you that you need to revise your hiring process. It clearly indicates that your current hiring process does not allow you to identify the ideal candidates for your company. The solutions here are:
- Studying best hiring practices and implementing the one more suitable for your business. Have you tried a one-day hiring technique? Worked wonders for our company.
- Organizing interviewing trainings for hiring managers.
- Developing a clear understanding of your ideal candidate for a certain position.
- Clearly communicating your expectations to the candidates.
The second point is more related to company culture and we’ve talked about it enough in the section above. If you skipped or just skimmed it, my piece of friendly advice is to scroll back up, read again, and take notes. It’s just too important.
Agency Brand Reputation
If you want to go far and not be “just another agency,” you must put a lot of effort into your brand awareness.
We could talk about building an agency reputation and creating a brand no one will forget, but let’s leave this for another day. Today we are going to discuss the main agency metrics you should track to monitor your brand awareness.
I’ve separated them into 3 main categories:
- 1.Brand mentions
- 2.Brand SERP
- 3.SM engagement rate
To find out who talks about you and what they think of your company, you must track all the brand mentions. It can give you a clear understanding of what others think about you and how “popular” are you amongst journalists/experts that write articles about your field.
Tracking brand mentions is super easy. You can use tools as simple as Google Alerts or go for more professional tools dedicated to that function.
We recently started using Just Reach Out for our PR activities, including tracking brand mentions and let me tell you, it works like a charm.
It’s super user-friendly, cuts the time you spend on your PR affairs by half. Also, you can clearly see that the founders are real pros of their job and very dedicated to helping you out.
Most of you SEO people – I’ve been one as well – pay too much attention to targeted keywords. It’s a good thing, don’t get me wrong, but sometimes it comes at the expense of ignoring branded keywords, which is a big no-no nowadays.
More and more SEO gurus are talking about SEO and PR becoming closely related. So making your brand name “famous” should be your priority!
Start tracking brand-related keywords and it will help you understand many things, including:
- What words/adjectives people use with your brand name. It will help you understand how your target audience feels about your company. Also, it will give you a fresh perspective on new keywords you should target.
- How your branded searches change based on different campaigns. And I mean DIFFERENT! Social media campaigns, events, advertising, and so on. This will be a great indicator of which one brought you more brand awareness overall.
See that crazy spike on September 30th? It’s the day we launched our Website builder with AI assistance! And it affected not just “10Web AI builder” keyword SERPs but + 10Web keywords overall.
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7.Social Media Engagement Rate
Social Media is the best place to show off your skills and grow a tribe. Forget about page likes/followers. It’s not the stone age. Your engagement should be the main metric you track!
It shows you how targeted your audience really is, how good your content is.
It will also help you find the best performing posts based on likes, comments, and shares. You can alter your social media strategy based on that data.
Keep in mind that different social media platforms have different engagement rate formulas and different top criteria.
For example, on Facebook you can track your engagement rate based on the formula below:
There are also many tools that analyze your social media platforms and give you the engagement rate. One of my favorites for Instagram is Tank.
Now let’s get to the main agency metric you should track! Which obviously you already know, but let’s just go through it once again.
Everything we discussed above brings us to the one main end goal: Profit!
These metrics will help you understand if the pricing model you’re using is the right one for your agency.
You need to understand all your costs, from employee salaries, rent, and client acquisition cost to costs of different tools you use.
Here you need to build the whole company funnel to understand how you are spending your money on and try to increase your profit margin.
Agency Analytics has a fantastic, super detailed guide on how to calculate your agency margins.
Don’t forget to let me know in the comments which agency metrics you’re tracking for your agency now, and which ones you’ll start tracking after reading this article.
And as for now, arrivederci! See you soon!