Successful Agencies Weigh In: What Drives Agency Profitability? [report]

With over 20 years experience in the business of project management and productivity, I’ve had the chance to speak to a lot of management teams and their creatives about what drives profitability and success for agencies. From the first market research when we initially conceived Function Point to the many inspirational conversations I’ve shared with successful agency leaders, I’ve been lucky to have agencies pull back the curtain for me and my team, to let us go behind the scenes and see how agency software can help improve productivity and profitability.

But one thing I’ve never done is sat down to compile a formal report of my findings. The data, advice and learnings I’ve collected over the years have gone into making Function Point the best that it can be, but we’ve never released these insights to the public to help other agencies compare, learn and grow. In 2017, we vowed to change that and began conducting our first ever productivity survey of our customers and other creative agencies, internal marketing teams and professional service firms.

In collaboration with the Agency Management Institute (AMI), the 2018 Agency Productivity Report is based on over 400 responses to our online North American survey that targeted creative agencies and internal marketing teams. Designed to uncover the main barriers to effective project management, productivity and profitability, we broke down stages of the creative process to understand where problems arise. As a result, we now have a far better understanding of how poor project planning can result in strained client communication, differing expectations, and the over-servicing of clients.

Respondents indicated that they were over-servicing more than half of their clients, and only 65% of respondents stated that the majority of their projects were profitable. In spite of these statistics, only 49% of respondents had repercussions in place to combat over-servicing. Without a solid plan in place to budget for and reduce the over-servicing of clients, agencies will struggle to grow.

Our partner Drew McLellan, CEO of AMI points out, “It’s important that new client relationships and new projects are set up for success, right from the beginning. It’s not always possible to think of every question when being briefed on a project, but account leads shouldn’t be afraid to follow up later with more questions to ensure they truly understand client expectations and can budget accordingly.”

For project managers, project planning and budgeting can sometimes feel like walking backward in the dark. While creatives work on projects in a chronological fashion, project managers are responsible for designing the project process from end to start to ensure success. It’s a difficult job that will always be prone to human error, indecision and miscommunication, but designing processes that ensure profitability can serve to reduce these headaches along the way.  

“Clearly documenting the scope of work, timelines, and potential costs of delays or changes, will help ensure agencies and clients are on the same page about the value of work performed and minimize over-servicing,” says Drew.

Download the full report via the form below. Use it as a benchmark to gauge where your agency is at in comparison to others, and learn where you have opportunities to grow and strengthen your services. We’d love to hear your thoughts and insights.

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Chris Wilson

Founder & CEO

Chris started Function Point over 20 years ago in his basement as a way to help professional service agencies run their businesses more efficiently. Since then he’s grown FP into an international success, working with over 600 agencies from around the world and continues to run the company from the head office in Vancouver, Canada.

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