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Agency Efficiency: 9 Tips for Tangible Results

minute read
Updated on:
February 27, 2024
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Agency efficiency, or the lack thereof, has a huge impact on business success. It determines if your team and clients are happy and whether you’re putting your resources to good use. Moreover, it influences your ability to stay at the top in a highly competitive agency sector.

Be that as it may, agencies, unlike typical organizations, require sweat, blood, and tears to keep them running efficiently. Read on to learn why agency efficiency matters and discover nine tips you can use to improve it in your business.

What exactly is agency efficiency?

Agency efficiency is all about using finances, labor, and other resources to produce quality results without wastage. For marketing agencies that primarily focus on selling time, efficiency involves having the right processes in place to balance productivity, quality, and profitability.

Achieving this means working side by side with your team, hands-on project management, and the use of technology to streamline workflow. Furthermore, it requires a thorough understanding of the client’s marketing needs, industry best practices, and current market trends. This way, you’ll eliminate any chances of overspending, overworking, or overutilizing resources.

Typically, agency efficiency can be measured by:

  • Clients praising your smooth and well-structured onboarding process
  • Your team delivering work beyond expectations
  • Being able to produce consistent results across all projects

Who should be in charge of agency efficiency?

Generally, everyone’s input is equally vital and valuable in ensuring an agency is operating efficiently. Be that as it may, the management team usually has the largest burden to pass on effective practices down the leadership hierarchy. The main reason being, they make major decisions and are responsible for optimizing workflows and allocating resources.

How does agency efficiency benefit your business?

Now that you know what agency efficiency is, let’s explore why you should prioritize improving it in your business.

Getting rid of unnecessary costs in your management processes

Whether directly or indirectly, agency efficiency seeks to minimize wastage through workflow optimization. As such, you can achieve more with fewer resources, ultimately saving on operating overhead costs related to labor, materials, utilities, and administrative tasks.

Moreover, efficiency eliminates errors in the workflow. As a result, you’re less prone to doing reworks that would demand more resources.

Ensuring your customers are happy

Efficient agencies exceed client expectations. When clients are satisfied, they’re more likely to remain loyal to your agency and its services. In addition, they’re less likely to switch to competitors, leading to long-term customer relationships.

From another angle, client satisfaction can drive business growth. It’s likely to attract repeat customers, referrals, and positive reviews, which attract new leads and conversions. In fact, a survey shows that 72%of clients have a probability of sharing their positive experiences with at least six people.

Boosting your team’s attitude and morale

When tasks are well-organized and deadlines manageable, team members feel less overwhelmed. This way, they’re more likely to achieve their goals and complete their jobs successfully. Accomplishing objectives gives team members a sense of pride and fulfillment, thereby boosting morale and motivation.

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Metrics that determine if your agency is efficient

Metrics for agency efficiency, also known as activity ratios, measure the success of business objectives against the resources used. These metrics vary across agencies due to different goals and the specific nature of the agency. However, several metrics are common to every agency.

Team utilization and capacity

Optimizing team utilization is key to the efficiency of your agency and the capacity of your team. This means effectively managing billable and unbillable hours, so you can maximize productivity and profitability.

Billable vs. Unbillable Hours

It’s important to understand the differences between billable hours and actual hours. Billable hours are the hours your team spends working directly on client projects. These are the hours you can invoice clients for, making them essential for revenue generation. On the other hand, unbillable hours include time spent on administrative tasks, meetings, training, and other non-client-related activities.

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  • Time tracking makes it easy to see where time is spent - on billable work or not.
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  • Regular progress reviews identify patterns and streamline those unbillable hours.
  • Balance workloads so nobody gets burned out.

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Agency gross income (AGI)

All agencies carry out different operations to serve their clients. However, as much as these operations bear fruit in the form of revenue, they also have costs. The agency gross income (AGI) measures the total income an agency rakes in from its activities minus the direct cost of serving clients.

Delivery margin

The delivery margin is the profit margin of your agency. You calculate it by deducting expenses, such as rent, taxes, and overhead costs, from the agency’s gross income to give the profit percentage. If the delivery margin results in 50% and above, it indicates that the agency is doing well.

Client retention rate

An agency earns more revenue when it retains more clients. The client retention metric measures the level of satisfaction among customers. A higher rate is an indication that the agency is providing real value to clients. It also means that you use your resources efficiently.

Accurate report analysis: Task estimates vs. actuals

Effective project management relies on accurate time estimation. Getting the estimated time and actual time wrong can result in budget overruns and missed deadlines.

Why Accurate Estimates Matter

Accurate task estimates help in planning your resource allocation. This sets realistic expectations with your clients to make sure projects stay on track. Improving your task estimation process leads to accurate project plans and better resource management.

Generating and Analyzing Reports:

  1. Historical Data: Use historical data from past projects to inform your estimates. Analyze what tasks took longer than expected and why. This helps in creating more realistic estimates for future projects.
  2. Regular Monitoring: Continuously monitor the progress of current tasks. Compare the estimated time against the actual time spent and adjust your project plans accordingly.
  3. Detailed Reporting: Generate detailed reports that break down time spent on each task. 
  4. Client Communication: Keep clients informed about progress and any deviations from the original estimates. 
  5. Post-Project Analysis: Conduct a post-project review to analyze the differences between estimates and actuals.

Profitability of a project

The project profitability metric measures the amount of income that a project realizes. It helps to calculate the profit by deducting the project costs, which include staff remuneration, materials, and outsourced labor, from the total project revenue.

Utilization rate

The utilization rate metric helps agencies avoid non-essential operational costs. It calculates the percentage of total billable hours that employees spend on client work. The rate informs the agency whether employees use up most of their time on income-generating client work or not.

This metric also indicates whether there are employees with similar functions, heavy workloads, or if the work relates to their roles.

Cost of onboarding clients

Wooing potential customers doesn’t come for free. The client onboarding cost or client acquisition cost is a representation of the amount of resources an agency uses to bring in one client. For efficiency purposes, the cost of recruiting a client should be lower than the amount they spend with the agency.

What matters: Financial or non-financial metrics

Both financial and non-financial metrics are key in optimizing agency efficiency. Financial metrics help you get precise information on your agency’s cash flow, including how you handle income and expenditure.

But these metrics can also be a bit complex, causing delays and inefficiencies. On the other hand, non-financial metrics provide insights into areas such as employee hourly yields and client satisfaction.

Therefore, it’s important to evaluate both metric categories in order to uncover issues early, identify opportunities for change, and also make decisions. Combined, these help to improve your agency’s operational efficiency.

Boosting agency efficiency: 9 tips to know

Agency efficiency doesn’t come easy. It requires deliberate efforts geared toward all processes in the organization. Here are some tips agencies can use to boost efficiency.

1. Reviewing resources planning processes

Resource management is paramount for an agency that has a growth mindset. It enables you to balance high-quality services and profitability. In most, if not all, agencies, the resources that you largely manage are your employees. If you underutilize your staff, then you’ll miss out on revenue. On the other hand, overloading your employees can cause burnout and a high turnover rate.

Here are a few tips to help you plan and utilize your resources optimally:

  • Always have a scope of work for each project. With the end goal in mind, you can map out resources to start and finish the project without waste.
  • Align your deliverables with a budget and a schedule. This way, you’ll know what you need and when.
  • Maintain a clear visibility of resource allocation. You’ll be able to free them up for new projects or reallocate them to meet more urgent deadlines.
  • Have your resource pool in a central place so that you know who is available and suitable for each project.
  • Hold a wash-up meeting after every project to know your strong areas and those that could benefit from improvement.

2. Automating key operational processes

Most agency processes are repetitive and monotonous. Not to mention, they’re more likely to result in errors when done manually. All these aspects derail efficiency.

One way of overcoming this obstacle is using technology to automate repetitive tasks, such as reporting and analytics, data entry, and content scheduling. According to a survey conducted by WorkMarket, 42% of businesses agree that automating key processes speeds up the completion of repetitive tasks. Another survey by Nucleus Research concludes that marketing tools boost productivity by 20%.

Some of the key areas where automation can bring a significant difference and productivity include:

  • Project management: An automation tool can offload you and your team’s admin tasks, such as monitoring deadlines, managing budgets, and keeping track of deadlines.
  • Reporting: Reporting is an ongoing process for any business that wants to keep track of its performance, yet manually compiling reports is no easy feat. An automated tool summarizes data in a few minutes to give real-time reports about social media, websites, and ad campaign performance.
  • Time tracking: Keeping track of time is necessary in assessing your agency’s efficiency. When automated, it saves employees the hassle of having to record their time manually. Compiling timesheets and billing clients becomes easier and fast without delays caused by errors.

3. Keeping everyone accountable

Every agency has a diverse workforce with people who work differently. While encouraging everyone to bring their unique talents to the table, you’ll only maintain high standards if there’s accountability. Accountability means that everyone is responsible for their actions, decisions, and performance.

It helps in increasing people’s commitment to their tasks, thereby contributing to the operational efficiency of the agency. Nonetheless, it’s important to embrace the fact that accountability is more evident when you encourage employees with a positive approach rather than a negative one. This way, team members will be more receptive and take ownership of their work.

Some of the key practices that promote accountability for agency efficiency include:

  • Setting and distributing goals and objectives across the agency
  • Establishing clearly defined expectations of employees
  • Availing updates on any progress from projects, surveys, or meetings
  • Leading by example

4. Laying a good foundation for onboarding clients

Some clients can be difficult. But in most cases, the onboarding process didn't lay a good foundation for your client-agency relationship. For instance, if you fail to articulate expectations clearly, clients might feel entitled to push work boundaries beyond what is acceptable for your agency. This, in turn, might strain your relationship with clients. To back this up, a study shows that a complicated onboarding process is likely to push 74% of potential clients away. For the onboarding process to be smooth for clients, break it down into steps. Doing so will help your team give clients a lasting impression. It’ll also ensure you’re on the right page with the client in terms of expectations and deliverables.

An ideal onboarding process should include the following activities:

  • Sending a cordial welcome message
  • Getting to know the client’s business through a phone call, email, or intake form
  • Assigning the client a point of contact for easier communication
  • Introducing your client to the entire team
  • Planning for an onboarding meeting
  • Setting expectations of timelines and project requirements
  • Defining the channel of communication
  • Agreeing on the method of reporting
  • Following up on client

5. Managing your workflow from a central place

Growing agencies have an ever-increasing need to find more efficient tools to manage the workflow. As much as these tools are useful, they also come at a cost. First, your data may not be strictly ordered, so it might take time to find information when needed.

Second, managing multiple tools requires additional time and more labor, training team members, and ensuring compatibility between different systems. The result is increased operating expenses and inefficiencies.

Adopting a tool that manages everything from a central place can overcome this challenge. You can manage your clients, projects, finances, and communication without jumping from one place to the other. Most importantly, your team members will have an easy time working together even if they’re working from home.

Though there are many automation tools in the market, Hello Bonsai is the best. It’s all-in-one agency software that allows you to do all your agency management work from one place.

6. Promoting a culture of working together

Teamwork among employees doesn’t automatically come with a collaboration tool that connects them. This is because teamwork is an agency culture that needs to be acquired and cultivated. If it’s not well-established in your daily activities, even with the right tools, your team will fall short.

Being intentional in creating a safe environment where everyone’s opinion is valued is among the best ways to cultivate collaboration between team members. Doing so inspires employees to share their knowledge and skills, which can lead to innovative solutions and more efficient workflows.

Furthermore, team members also feel accountable to both their supervisors and each other. This gives them a sense of ownership and responsibility for the agency's tasks and projects, leading to higher productivity and better quality of work.

Also, with cooperation, teams can quickly and efficiently brainstorm solutions whenever challenges arise. This allows them to solve problems in a timely manner before they escalate into larger issues. Better still, it creates a conducive work environment that contributes to employee retention.

7. Upgrading project management processes

There’s no clear approach to handling a project, especially in an agency. It can cost an arm and a leg to plan and streamline workflows, employees, and clients. As such, objectives can fail to be met, resulting in wastage of resources.

However, you agency owners can get around this by improving the current or establishing new project management procedures. By having the correct processes in place, you can rid the team members of distractions, ensure they stick to the budget, meet deadlines, and increase collaboration.

Even so, there are many ways you can enhance the project management practices at your agency:

  • Prepare objectives and goals for each project early on.
  • Hold meetings to align all stakeholders from the start and assign clear tasks to team members.
  • Select the right software by defining your requirements, such as file sharing, time tracking, and project scheduling.
  • Establish a project plan and give regular progress updates.
  • Set quality standards and assessments to reduce errors.

8. Preventing time theft

A lot of agencies rake up high operational costs because of time theft. Typically, it happens when employees get paid for hours they’ve not worked for. Sadly, most business owners don’t recognize time stealing since it can take on many forms. Some of the more common occurrences include::

  • Employees arriving to work late
  • Having social conversations for an extended period during working hours
  • Prolonged breaks
  • Clocking in and out for one another
  • Inflating working hours

In any organization, time theft can have overreaching effects, such as reduced productivity, project completion delays, missed deadlines, and decreased output. Worse still, it causes financial losses and poor utilization of resources. It’s no surprise researchers estimate that 30% of businesses, both large and small, fail because of stolen time.

To prevent such occurrences in your business, you can come up with strategies to eliminate any time theft loopholes:

  • Building employee morale to keep them motivated
  • Setting clear guidelines about timekeeping
  • Integrating a time card tool that’s hard to manipulate (for example, one that scans the eyes)
  • Having regular check-ins to see how employees are working

9. Evaluating your agency technology

Auditing your agency’s software platforms is a great way of boosting efficiency. Technology provides great value when it works how you want it to. Otherwise, having too many programs that don’t align with your business objectives can prove to be a waste of resources.

As such, tech audits are necessary because, other than helping to increase productivity, they also allow you to examine the return on investment of your software. When evaluating your agency tech stack, it’s important to do the following:

  • Layout the technological needs of the agency to help in selecting the best tools.
  • Make a list of the tech tools that you use to support your agency operations, both software and hardware.
  • Assess the productivity of each tech tool against the set goals and eliminate the least effective.
  • Single out technology tools that need improvement based on your tech audit. It can be replacing or upgrading outdated ones or investing in new tools.
  • Calculate the total cost of buying the tech tools and maintaining them.

Periodically auditing your agency’s tech stack helps to optimize its performance and suitability to your business objectives, as well as improving the efficiency of operations.

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Benefits of Bonsai’s All-in-One Tool

  1. Centralized Information: Consolidate all client, project, and financial data in one place. This reduces the time spent switching between different tools and ensures that everyone has access to the same information.
  2. Automated Processes: Automate repetitive tasks such as invoicing, time tracking, and reporting. This not only saves time but also reduces the risk of errors.
  3. Improved Collaboration: Facilitate communication and collaboration among team members. 
  4. Cost Savings: Reduce the cost associated with subscribing to multiple tools. 
  5. Enhanced Reporting: Generate reports that provide insights into all aspects of your business. 

Don’t think it’s too late to work on agency efficiency

The thought of having a stress-free client-agency relationship, a team that’s not burned out, and projects completed to satisfaction can sound far-fetched. However, it’s possible if you weed out all operational inefficiencies. With patience, the right people in place, and tools like Hello Bonsai’s agency software, you’ll notice a change sooner than you think.

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