Profit margins can be tight in creative agencies, especially with as competitive as the market currently is. However, there are still ways you can increase your agency’s profitability. Before rainy days come, this is the time to double down on success; you should constantly have an eye on your finances and analyze where you can do better. Here are some of the steps needed to leverage your agency’s profits.
Improve lead attraction: It’s simple logic—the more leads you can attract and convert, the more money you stand to make, which in turn can create better profits. Developing a strong pipeline of prospective clients that you can automate and easily adjust is a great investment in your business that can pay big dividends in terms of profit margin boosting.
Adjust your pricing: It can be worth taking a good look at what you’re charging for your services, especially if you haven’t adjusted your prices in quite some time. You shouldn’t base your prices solely on how much it costs you to complete the service. Consider, for example, the following: What type of value can you put on the work you give to your clients? Do you have a track record of high-quality services, or do you have particular recognition in your field? What analytics can you use to show how your firm creates value for its clients?
Cut down on over-servicing: You should, as much as possible, try only to perform tasks that are within the scope of your operations. The more work you’re doing outside of your scope, the more your eating away at your profit margins. Just as importantly, it could result in you stressing out and overworking your employees, which significantly inhibits efficiency and productivity. No when to say “no” to certain types of jobs and tasks, and set clear limitations for yourself and your company regarding scope of work.
Improve how you’re using your people: Your employees are the most important assets you have in your company. You should do everything you can to improve your utilization rate, which is the amount of time these employees are spending on billable work. The more productive and efficient you can get your employees, the better your profits will be. You might consider using time tracking tools, which can help you get a better sense of the profitability of certain types of projects and how efficient individual team members are.
Focus on growing existing accounts: While you should always have some focus in bringing in new clients, it’s also beneficial to upsell existing clients. These clients already know the benefits of the services you provide and have established a certain level of trust with you. While you shouldn’t try to sell them anything they don’t need, you should seek opportunities to increase the work you’re doing for them in a way that is helpful to them.
For more information about how you can increase profit margins at your creative agency, contact us at Patin and Associates.