Why Your Agency Needs KPIs (And the Three Ways Of Implementing Them Into Your Business)
How well do you understand the metrics that influence your agency’s success? Without KPIs, you can’t know if you’re working at maximum efficiency.
Our client came to us with several problems.
Dealing with an enormous amount of administrative work, the owner felt overwhelmed. They knew the team shared that feeling and it was starting to show in the results produced.
Sales goals kept getting missed and the agency regularly delivered projects late. In fact, the average delivery for projects stood at four days past the due date!
We identified a lack of accountability as a key issue. The team wasn’t united behind a clear vision and plan, which meant that it often lacked focus. It wasn’t that the team wasn’t working. It was that it was often working in the wrong areas.
Part of the solution to this challenge involved creating Key Performance Indicators (KPIs) for the team. These KPIs gave the team a heightened sense of direction and held people accountable for their work.
On-time delivery of 100% of the agency’s projects.
Perhaps you’re seeing similar issues in your own agency. With KPIs, you can unify your team and help them to understand how to work together. That’s more important now than ever, with many agencies pivoting to working remotely in recent months.
In this article, we explain why you need KPIs and offer three tips to help you implement them.
Why Does Every Agency Need KPIs?
Allow us to answer that question with one of our own:
Do you know and track the key metrics that influence your agency’s success?
Many businesses struggle to understand exactly what those metrics are. On top of this, they worry about the cost of implementing a system for tracking KPIs. Ultimately, they choose not to do it.
And that’s how agencies end up in situations like our client’s.
You need KPIs because you need to create accountability within your team. You need to understand what you’re all working towards and have clearly defined targets. Without having them to hand, you have to spend more time trying to figure out what’s going on in the agency. And as the saying goes:
“A bad businessperson spends time to save money, a great businessperson spends money to save time.”
In an ideal world, you should have a dashboard that gives you an at-a-glance view of the key metrics in your business. For example, you could track the number of sales calls, your budget, and how many proposals you’ve sent in a given time period. You can also monitor your margins, accounts receivable, and accounts payables with its related KPIs.
The point is that KPIs give you a clear understanding of what’s happening in your business. And ultimately, they can point you in the direction of issues that need your focus.
You just need to implement them correctly. With these three tips, your agency will adapt to your new KPIs much faster.
Don’t Rely on Past Results to Inform the Future
You shouldn’t only look to your past profit and loss statements to determine what you want to achieve in the future. This is particularly true for creative agencies as they often have sales cycles of between 6 and 18 months.
Looking at your last profit and loss statement does not give you up-to-date information because of a lag in change. And many of the leads you’re generating right now won’t result in clear revenue for up to 18 months.
The key here is to set KPIs around your current sales activity. You need to know how many leads you’re generating and how well your sales team moves those leads through your funnel. That’s what will give you the best indication of what you should aim for in the coming months.
Consider the Cultural Challenge Before Implementing
We worked with another client that used KPIs to improve on the fact that they only delivered 80% of projects on time.
The key issue they faced came in how implementing KPIs affected the agency’s culture. With new targets to meet, many of the agency’s people became nervous. Individuals would often head to other people’s desks to discuss a project. And in doing so, they disrupted the workflow and created inefficiencies.
The solution in this case was to alter the culture to prevent interrupting interactions in the agency. All meetings had to get scheduled in advance to prevent this inefficiency.
The solution for your agency may differ.
But the key point here is that implementing KPIs may require you to alter your agency’s culture.
Be Transparent in Your Reporting
As mentioned, introducing KPIs is a great way to develop accountability within your team. But part of that involves you showing that your people can trust you. Every KPI you create has a goal behind it.
You’ve got to offer transparency in your reporting to demonstrate this.
Now, this doesn’t mean you need to show your people every bit of financial information that your agency has. However, you can show them high-level reporting that highlights the agency’s goals and how their individual KPIs help the company meet its goals. Your people need to know your financial standing, what your goals are, and why you’ve set those goals. They also need to see the objectives you’ve created for them.
This transparency helps your employees to see why you’re implementing these KPIs. And because they no longer feel like they’re in the dark, they engage more readily with the targets you set. You have created a team, driving your agency to its goals.
KPIs Can Create Change in Your Business
For change to happen, you need to move away from the practices that hold your agency back. A lack of reporting leads to inefficiencies and an inability to track the progress of work. It can also create a culture where accountability gets placed on the back-burner.
KPIs allow you to stay on top of the metrics that influence your business.
They also allow you to create accountability and help your team to focus on the key tasks they must complete.
We specialize in helping agencies develop and implement KPIs. We also offer a dashboard system that you can use within your agency. To find out more, check out our webinar about reporting called from Surviving to Thriving.