When you run a marketing agency, it takes a careful balance of revenue streams to earn and maintain a healthy profit. Invest too much in one, and you’ll have to scramble if you lose it. Spread your resources too thin, and you won’t get true value out of your revenue streams.
So, how can you dedicate the right amount of resources to your clients, operations and marketing channels?
We asked 26 agency professionals how to maximize profits, and we’ll share their advice today. Plus, we’ll share a few tips we gathered through our research and experience.
Here are all eight of them for you to jump to:
- Vet Your Prospects Carefully
- Improve Your Lead Conversion Rate
- Create More Efficient Business Processes
- Simplify the Onboarding Process
- Measure Your Success and Share It With Your Clients
- Focus on Client Retention
- Avoid Over-Servicing
- Prioritize Your Most Profitable Services
Let’s get going.
1. Vet Your Prospects Carefully
Ever invest a lot of time and money into snagging a client, only to find out they weren’t a good fit for your agency? Or, maybe you lose a sale after dedicating your efforts to a certain lead. There go those resources — plus your team’s morale.
The trick to avoiding this situation is to evaluate your prospects in advance. We recommend these two strategies for focusing on high-quality leads:
- Perform thorough lead scoring: If you don’t already use lead scoring to target your most qualified leads, try dedicating some time to it. Lead scoring involves giving each lead a score based on the activities they perform that show interest. After scoring your leads, you’ll know which ones will have a higher chance of becoming dedicated clients.
- Create a client prospect questionnaire: Some unqualifying factors, like a lack of goal alignment or misunderstanding of your services, don’t come up during the sales phase. Client prospect questionnaires let agencies figure out if they can serve a potential client’s needs — and vice versa. Always remember that you should evaluate a client as much as they evaluate you during prospecting and onboarding.
It’s also worth pointing out that you don’t have to take on a large number of clients to find success — instead, make sure you have quality clients. The majority of the agency professionals we surveyed work with 11 to 25 clients. Less than 10% of them have more than 100.
So, if you think a client won’t mesh with your agency, don’t be afraid to refer them somewhere else.
2. Improve Your Lead Conversion Rate
Once you have high-quality leads from your lead scoring, your job isn’t done — you still have to try to convert them into customers. Even if they have a higher chance of becoming a client, you still have to give them that final push.
At Workzone, Kirstin Miller considers improving your lead conversion rate a top strategy for boosting agency profits. According to Miller, you don’t have to set drastic goals to raise that number. Increase your conversion goals little by little, and adjust your strategy as you go.
When we asked business experts about their methods for improving lead conversion rate, some of the tips they shared included:
- Minimizing your funnel by reducing the steps needed between introduction to your brand and a request for a quote
- Carefully nurture your highest-quality leads with targeted copy and content
- Find a follow-up process that keeps you at the top of your leads’ minds while feeling natural
3. Create More Efficient Business Processes
The most popular answer respondents gave to us when asked how to maximize agency profits was to streamline business operations. This makes sense, considering that 37.50% of them consider a lack of internal organization and planning the top obstacle to agency profitability.
“To maximize profitability, it’s important to have systems in place to minimize the time spent on administrative tasks like running reports and filling out timesheets,” advises Brandon Schroth of Nomad SEO. “These should either be automated or given to a specific team member who will be responsible for these tasks. This will free up you and your team members to focus on delivering great work that drives revenue.”
Schroth shares a statistic to put this advice into perspective: “ For example, across small and medium-sized businesses, an average of 120 working days are spent on administrative tasks each year. Clearly, reducing employee administrative tasks will immediately improve your company’s productivity.”
If you use Databox in your business operations, keep in mind that we have more than 250 third-party integrations for easier automation. Our integrations work through Zapier and Integromat.
“To boost revenue streams, we can’t overlook automation. With that said, in my experience to manage revenue streams it is advised to try and cut or minimize OPEX costs where possible,” Spitfire Inbound’s Boitumelo Jwere adds. “For example, it could be reducing outsourced services and looking at an opportunity to upskill the team internally to carry out the tasks that are usually outsourced. This will open an opportunity for growth both within the business and also as an individual’s career development.”
VisualFizz’s Dan Salganik points out how the human element of agency work impacts business processes. “Since the industry is so reliant on human time and experience, we have to build processes to maximize efficiency, quality, and timeliness. Unlike a software or product, you have to rely on the human element. Beyond that, most clients and projects are quite different from one another,” Salganik begins.
“So, by creating better business processes, you save excess time on things like over-communication, deliverables that can be streamlined, and quality control time,” Salganik concludes.
4. Simplify the Onboarding Process
Once you have a prospect who’s ready to convert to a client, you can leave a lasting impression with your onboarding process. Digital Agency Network recommends making your onboarding process easy to improve your chance of keeping your clients on longer.
You can remove friction from your client’s onboarding experience with an established system. One of the easiest ways to establish this system is to create a template or checklist to follow.
Here’s a sample onboarding checklist we created based on our survey research:
- Request client information
- Prepare and send the contract
- Send a welcome email
- Schedule your kick-off call
- Provide onboarding questionnaires
- Obtain branding details
- Research campaign ideas
- Create a plan of action
- Get feedback on your plan
- Assign client work to team members
- Follow up regularly
A clearly defined onboarding process like this one will help you improve client retention, increasing your ongoing profits.
5. Measure Your Success and Share It With Your Clients
You ideally track each client account’s key performance indicators (KPIs) to understand your progress with their campaigns. Those numbers can also help you build trust with your clients by showing them how you’re impacting their marketing.
At Coalition Technologies, Jordan Brannon and colleagues focus on clear communication and reporting to improve their profitability. “As a digital marketing agency, we increase profitability by focusing on maximizing returns and demonstrating the value of our services to clients,” Brannon explains
Brannon continues, “Moreover, we make sure that our reporting team highlights the returns realized from our efforts. Ultimately, revenue for clients is revenue for us. We also believe in the importance of building strong client relationships by pairing highly satisfactory delivery of services with regular and timely communication.”
You might already share reports with your clients based on data gotten from a revenue dashboard, but you can boost their profit potential by turning them into an opportunity to connect with your customers.
When we asked agency professionals about their reporting methods, they had plenty of strategies to share for taking your reports to the next level. Many of them were related to reducing friction for your client. So, consider adding visuals, explanations, and next-step plans that put your reports into context so your clients understand the value you provide.
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6. Focus on Client Retention
Many of the tips you’ll read today tie back to one principle: client retention. By building a base of loyal customers, you’ll spend less time chasing leads and boost your ongoing profits.
“The best way to maximize revenue streams is to focus on client retention,” says Frank Olivo of Sagapixel. “New client acquisition is far more expensive than client retention, yet sales-led marketing agencies focus more on driving new leads than delivering value to the clients they already have. We do not employ any salespeople at Sagapixel, and while this certainly has cost us a few deals, it has freed up funds to better compensate the people doing the actual work, which in turn maximizes retention.”
This advice doesn’t mean you have to ditch your sales team if you have one. But, it does highlight the importance of investing in your current accounts versus focusing mainly on sales. Don’t neglect the clients you already have in the name of increasing your client numbers.
What can you do to encourage your current clients to stick around? One method is to keep an eye on customer retention metrics like:
- Customer lifetime value: The estimated revenue your customer will give you throughout their time as a client
- Customer churn rate: How many customers stop using your services after a campaign
- Monthly recurring revenue (MRR) churn: The number of clients who don’t provide revenue in a new period
7. Avoid Over-Servicing
You want to make your best impression on prospects. But, you can go overboard if your customer acquisition costs grow out of scope.
“Managing revenue streams requires you to take multiple factors into account. One of the best ways of doing it is to avoid over-servicing. Many people call it the cost of doing business unless they realize how much they are over-servicing,” explains Brice Gump of Major Impact Media.
What’s over-servicing? “Over-servicing refers to overdoing of things like marketing, posting, engaging, etc. Once you calculate your customer acquisition cost, you realize that your efforts may not be worth it,” Gump says.
“Therefore, avoiding over-servicing can be very important when you have to manage different revenue streams. Over-servicing makes employee efforts disproportionate and negatively affects their productivity,” Gump concludes.
For reference, customer acquisition cost refers to your cost of marketing and sales divided by the number of customers acquired. You should compare it to your customer lifetime value with the CAC ratio — the total value a customer provides throughout their relationship with you divided by customer acquisition cost. That number should stay under 1 — otherwise, you’re spending more on marketing than you’re earning from clients.
8. Prioritize Your Most Profitable Services
What marketing practices should your agency focus on? If you consider your business a multi-channel agency, it’s important to understand which services bring you the most money.
When we consulted agency experts, more than a quarter reported that SEO is the most profitable channel for them to invest in. The next three top revenue streams were content marketing, social media, and website development.
Meanwhile, marketing experts across the internet have even more profitable service revenue streams to recommend. The Blueprint also suggests community building, advertising, and partnership marketing. Hubspot highlights the current popularity of podcast marketing and influencer marketing. Both bring up word-of-mouth marketing.
Related: SEO vs. PPC: Which Channel Generates More Sales?
So, which one will deliver the most value to your clients — and therefore, your agency? There isn’t a single answer for every business. Use these recommendations as a base, and pay close attention to the channels that draw in clients and keep them coming back with the help of these profit and loss dashboard examples.