How to make your client relationships more profitable

Posted by Paula Da Silva on September 27, 2017

client relationships more profitable

A recent survey from Kingston Smith, ClickZ and SoDA has revealed that advertising and digital agencies are often failing to meet target net margins per client. This has a hard-to-swallow impact of your agency putting in the hard yards, without getting the return you deserve.


 

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Inconvenient Demands, Ineffective Processes And Inaccurate Estimates


Speak with any agency and they will have a story about an over-demanding client. In fact, according to ClickZ, 75 percent of agencies have clients that routinely change the scope during a project, and a report from The Agency Works, states that two thirds of agencies regularly over-service their clients. This can have a long-term impact on the agency and ultimately is not sustainable for long term profit growth.

It can’t all be blamed on clients though because more than 25 percent agencies surveyed don’t have a way to track and manage performance. Being able to manage KPIs and look introspectively at agency performance is essential because it helps identify the most profitable services, work out the right clients, and monitor costs and margins.


Greater understanding leads to better choices


profitable-agencies

The key areas an agency should focus on is the accuracy of project scoping and budgets, delivery capabilities and project management performance.

Below are some key points to address when looking to better understand your operations, clients and projects:

  • Establish the greatest potential for profitability by looking at how you target new clients and understand their sectors.
  • Set targets and project parameters by reviewing your historical project data
  • Look at your resource planning systems and project management processes. They should allow you to set KPIs that will help to increase your clients’ accountability. You should also set up procedures for monitoring and reporting on these KPIs to help manage client expectations, prevent scope-creep and improve the profitability of the relationship for both parties.

It is also important to look at client engagement and consider how extended service contracts and different pricing models can help gain greater predictability, increase the value you deliver and help measure the value of your output.

For more information on how you can optimise your costs, maximise your profitability and build longer-lasting relationships, download our e-guide: Knowing What’s Good For Your Agency

 

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