As accountants specialising in creative businesses, we’ve worked with hundreds of agencies over the years, from start-ups to £5m turnover. Here’s a few insights into what the most profitable ones do differently to the rest.
We know that winning new business is exciting – there is nothing quite like that feeling of winning a pitch and starting work with a shiny new client. However, most agencies spend a disproportionate amount of time & energy on new business generation when compared to generating revenues from their existing clients. The most profitable agencies redress this balance and unlock the hidden profits within their existing clients. Here’s how:
Last month, we spoke about setting targets to assess your agency’s performance. Taking this a stage further, it’s a good idea to calculate how to make the most of what you’re already doing. For example, do you know what your most profitable offering is? Are you able to work out if there are any services you offer that don’t actually make you any money? You might have an inkling, but do you have the numbers to back it up?
As well as knowing about your most profitable products or services, it’s a good idea to sit down and calculate who your most profitable clients are. You’ll already know your top 3 clients by billing, but do you know how much each of them contributes to the bottom line? Can you produce a league table of clients by profitability? The results might surprise you.
It’s easy to get so focused on picking up new clients that you can sometimes neglect your existing clients…cherish them. In the same way that you’ll have someone in charge of new business, it’s equally important that you have someone in charge of your existing clients. As your agency grows you’ll most likely be able to offer new things, so make sure you’re constantly making your clients aware of all the ways you could potentially be helping them out – it’s one of the easiest ways to make more profit.
Spend time with your team coming up with creative ways that you can help your clients. Don’t be afraid to pitch them new ideas to help them grow, in the same way you’d share ideas with a new client. Take your top clients out for lunch, make them feel special and find out what they’re up to, what their plans are and how you can help them achieve their objectives. You’ll be amazed by what happens when you do this regularly.
As well as cherishing your existing clients, it is also a great idea to create a profile of those clients you love working with – what do they have in common? When classifying them, have a think about where your top clients came from. How could you find more of them?
Also, don’t be afraid to treat clients differently. Not all clients are the same, so it’s important that you spend time with those that you enjoy working with, that tell their friends about you, provide you with a steady stream of work, and ultimately help you make more profit. Grading your clients might seem a bit regimented, but it will help you to prioritise how you spend your time. And, in a service business, how you spend your time ultimately determines how much profit you make.
If you’ve cherished your clients, they’ll be more than happy to tell other people about you. Here’s how you can connect with your clients and their contacts to increase your profits:
1. Organise an event where you get clients to bring a ‘plus one’. This event could be a formal presentation or an informal drinks or dinner. You can even be specific about who you’d like the plus one to be, e.g. a marketing manager from a company with more than 100 staff. Make sure you are also introducing your clients to anyone of potential interest. It’s a two-way relationship – the more you give, the more you’ll get back.
2. Use LinkedIn to find contacts of clients that you might want to chat to and ask for introductions. The key here is to have a reason for them to refer you, e.g. some experience of working with a client in the same industry. LinkedIn is also a great way to explore your larger clients – who else could you get introduced to in other areas of the business?
Top tip for more profit: Produce a summary of the new things you’ve done recently to send to your existing clients to let them know what else you could be doing for them.
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