The new year has officially arrived, and if you’re like some agency leaders, you’re wondering how you can improve control and increase agency margins in an industry that’s constantly changing. Instead of just adding it to your “wish list,” why not make it happen?
With client needs becoming increasingly complex and budgets spread thin, the push for measurable metrics that prove your firm’s work is producing leads and sales has never been as essential as it is today. On the other hand, while you want to generate results, if you’re consistently over-servicing clients or incorrectly pricing projects, you’ll go out of business.
Luckily, there’s a technology out there that’s delivering a solution for many agencies: professional services automation (PSA) platforms. Here are three ways this single tool can get your company on track and profitable for the year ahead.
1. Understand and manage revenue strategy
Your revenue strategy (quote-to-cash model) doesn’t have to be difficult. Just think of it as a blueprint, one that starts with your client’s intention to use your service and ends with cash in the company’s bank account. Along the way, it should touch every department, channel and client in your agency, adding control and driving innovation across your organization.
In an agency, your employees are your asset and time is the product. This is true whether you charge clients a fixed cost per project or employ value-based billing (such as the percentage of sales you generate for clients). At the end of the day, you’re really trading hours for dollars.
When using a PSA with real-time insights into your company, you can manage revenue strategy to quickly adopt new business models, predict outcomes and meet complex customer demands. You can easily determine if costs and sales rates are accurate with cash flow.
In fact, companies using a PSA platform typically report an 8.4 percent improvement in projects completed on budget.
2. Become more transparent
Karl Sakas, global agency consultant and president of Sakas and Company, revealed in his latest agency trends report, “Designing the Marketing Agency of the Future,” that savvy CMOs need revenue attribution to help them with business pressure from their CEO and CFO. According to IDG Connect, 70 percent of marketers struggle with cost justification.
Needless to say, it’s a lot easier for CMOs to get approval for marketing and sales initiatives if they can demonstrate need and success. So, it’s important to ensure your agency is giving clients the attribution they want and need.
The right PSA increases transactional transparency so you can provide clients the information they require based on real data. Not only does this increase your value, it provides business insight that enables you to help them identify new opportunities. This transactional data is the key to generating new business and increasing agency profitability for your team.
3. Remove silos between team members
As a leader, no doubt you’ve heard some peers remark the agency model is “broken.” It’s not – it’s just changed. The digital age has introduced new technologies, marketing channels have both disappeared and sprung up, globalization is on the rise and competition is at an all-time high.
To be competitive, agencies must adapt their offerings, and even consider different business models.
PSA platforms provide the flexible, powerful platform agencies can build on. For instance, with project management becoming more agile, teams must constantly collaborate and draw upon each other. PSA tools give agency leaders and employees the ability to ensure work is done as efficiently and profitably as possible.
That’s why services organizations are used to quickly seeing a 9 percent increase in projects delivered on time and on budget with a PSA platform.
Make no mistake, running an agency in today’s business climate is challenging. More importantly, keep in mind the path to increasing agency profitability is different for every business. Still, running an agency is a matter of adapting to the work at hand. With a PSA platform providing greater operational insight, efficiency and financial control, you’ll have a greater ability to change, compete and conquer in the year ahead.