If you were profitable last year, congratulations! It's a good reason to celebrate and offer your employees some profit-sharing bonuses. However, past profitability doesn’t guarantee your future bottom line will always be as exciting.
Business owners know they can never stop growing, improving, and reaching beyond their comfort zones. Profit margins can shrink, client relationships can sour, the cost of goods can skyrocket, and a hundred other things can wreak havoc on your agency’s cash flow.
Proactively taking steps to maintain a successful agency is the best way to protect it. Let’s discuss eight of the best ways to increase your agency’s profitability, from adding new services to tightening up your business processes.
1) Create and offer a new service add-on that adds value for your clients
Have you ever had to shop at three or four places to get everything you need? Annoying, isn’t it? Companies feel the same way! Maintain your agency’s profitability by adding new services to your mix. A “one-stop shop” increases your value to your clients — plus, it opens up their budget to spend more with you. CallRail and Kickstand's study reports that 86% of marketing agencies added at least one new service in 2021.
Ensure the service offering is complementary and closely related to your current suite of solutions.
If your agency focuses on SEO, add a link-building service.
Agencies that build websites could also build social media pages.
Are you already offering social media marketing? Consider adding content writing to your list of services.
2) Scale current services that are performing well
The old saying, “if it ain’t broke, don’t fix it” is apt for this point. Look at the services your existing clients find the most helpful and the services that bring in the highest profit margin. Figure out ways to scale those products to gain additional penetration with current customers and help sales lead with those services when pursuing new business.
If your marketing agency does well with your content marketing services, hire additional freelancers and market this service to more of your customers.
If social media advertising is one of your profitable products, initiate an inbound marketing strategy to ensure your current clients know you offer it and demonstrate the value it could bring them.
3) Minimize scope creep across your projects and tasks
It seems innocent enough, but scope creep can suck the life out of a project’s profitability. If team members spend less time servicing clients’ additional requests, they can focus their efforts on other, more productive tasks.
This doesn’t mean your agency shouldn’t offer attentive service. It means that you should minimize constant questions, handling issues the customer could prevent, and working on extra projects that don’t pay well.
You’re building a website for a client. They begin sending you rewrites their contract doesn't cover. Instead of just doing it, have a conversation with the client and ask if they want to expand their contract to include those additional requests.
The pay-per-click (PPC) campaign you’re running for a new client pulls great metrics. However, they keep wanting to change the wording multiple times, often at the last minute. It’s time for the account manager to give them a gentle reminder of the deadlines instead of letting the team do double and triple work that's not billable.
4) Fine-tune all your internal processes for a seamless workflow
Successful project management is key to keeping your agency profitable, especially in the age of WFH. Everyone, from the agency owner to the most junior team member, should always look for ways to streamline processes that reduce completion time.
Using project management software is a good way to keep a handle on your team’s active projects, including priorities and status updates. See how Teamwork’s creative project management software helps creative teams plan, track, and deliver projects in one place.
The marketing strategist always sends her work to her manager to proofread. The manager marks it up and sends it back for edits. The strategist decided to try an app that lets both parties work from the same document. It saved them both time, and upon their recommendation, the app was adopted across every other department.
Your content writers are overwhelmed. After all, a 2022 report finds that content marketers spend 33 hours a week on content creation. By making productivity apps available, your agency could save them several hours a week.
5) Understand how to address client feedback & concerns
New customers are great, but current clients are usually an agency's bread and butter. Give them multiple ways to find answers to their problems and share honest feedback.
A loyal client was having an issue with placing an order, but an instructional video on your website solved his problem in almost real time. The customer is satisfied, which will retain him and may even net some referrals.
A customer completed a feedback form via email, expressing her disappointing conversation with a customer service team member. This information lets the manager know they need to offer coaching to empower their support team to handle clients more helpfully.
6) Build an effective pipeline of leads
Every company has churn. Using your agency’s branding and your social media channels, you can share a steady stream of content that helps set you apart as an industry leader. Building these relationships by establishing trust makes it easier to convert them into leads, then into clients.
A digital agency puts time into creating its blog and sharing it on social media. They built up a highly engaged following. The agency saw a high conversion rate when they offered a helpful ebook and gained several high-quality leads.
An agency decided to offer monthly webinars about digital marketing topics. They built a long list of leads in their pipeline they could then nurture with content.
7) Diversify your revenue streams
It’s less risky if you diversify your revenue streams. Only offering a few products can leave your agency vulnerable to competition and market fluctuations.
A marketing agency developed an internal program to help them track customer churn. They realized their clients could use it, too. They developed and sold it as a SAAS add-on to their other services.
A digital-only marketing agency decided they were missing out on sales. They added traditional marketing services like email marketing to their mix for a wider, more profitable appeal.
8) Adjust and improve your pricing regularly
It’s essential to find ways to make more profit on the services you provide. You can do this by raising your prices or by changing your pricing structure. It’s a fine line between increasing prices enough for profitability, but not so much as to damage customer retention.
A small marketing agency underbids a handful of projects to get in the door with a new client. Over time, they decide to increase their prices. Armed with key performance indicator (KPI) reports, they prove their value to the client and are able to increase their prices to a more profitable level.
Be a more profitable agency — keep your projects & processes organized with Teamwork
The takeaway is that digital marketing agencies must watch their bottom line, their processes, and the profitability of every service they offer. Never getting comfortable, always looking for better ways to handle service invoicing, and providing top-notch customer support are essential to staying profitable.
Do you need an easier way to manage your agency client projects? Teamwork is the flexible, customizable solution to improve your processes and save time. Find out more about how marketing agencies use Teamwork to increase their profitability.