Business Intelligence Reporting: A Complete Guide
Agency managementAgency reportingBusiness intelligenceFinancial Tools
Read time: 6 minutes
Business Intelligence is still somewhat unexplored territory for many creative agencies. If you’re an agency owner used to cookie-cutter reports to make business decisions, now might be a good time to take the next step; understand the positive impact that business intelligence reporting or BI reporting can have on your agency.
When it comes to running a creative agency, one size does not fit all. Your agency has a unique offering and an equally distinct way of operating. BI reporting can help catch trends in your agency’s operations to inform your next business decision, big or small.
If you’re just getting started with BI reporting, you need to know the basics.
In this blog, we’ll discuss:
– What business intelligence reporting really is
– Our recommendations on basic BI reports that every marketing agency should use, and
– What advanced BI reporting can look like for creatives
Psst…to see how you can create and customize business intelligence reports in the Function Point system, check out this guided customer tutorial.
Before we jump in, let’s start by understanding what business intelligence is and how it differs from standard reporting.
Business Intelligence vs Standard Reporting
Every agency uses reporting tools- these may be manual or automated, and every agency has some standard metrics that they track on a weekly/monthly/quarterly/annual basis. These standard reports usually give agency owners and management a high-level view of their business by looking at levers such as revenue, profit, cost, new business, and so on.
Do these metrics give you a snapshot of agency performance in real-time? Absolutely.
Are these sufficient to forecast performance and make relevant future business decisions? Probably not.
This is where business intelligence reporting gives agency owners the added edge. To preempt the success of your business you need to see more than just profit. You need to assess profitability. And to do that you need a report that answers questions like, “how profitable is client X?”, “how much whitespace do I have in my design department?”, “are my project managers over-burdened with tasks?”.
Unfortunately, a standard business overview report won’t answer these questions.
Business Intelligence reporting enables decision-makers to see large amounts of data in an easy-to-digest manner so you can decide the next steps on how you want to run the show!
Below is an example of a real-time burn rate & profitability by client report. Reports such as this one, allow you to identify trends over time rather than catch noteworthy but isolated instances.
BI Reporting Must-Haves for Marketing Agencies
Now that you understand the power of Business Intelligence, you might ask, ‘but where do I start?’. Below are our top recommendations on reports every agency owner should understand. Access to just these 2 reports will give you a huge step-up.
Report #1: Real-time job burn-rate and profitability
‘What was the discrepancy in the budget that was estimated and the amount that was invoiced?’
‘Is this job still on track with our initial estimates?’
‘How profitable is this client project?’
If your usual answer to the above questions is ‘I’m not sure’, you absolutely need this report. Take a look at the screenshot below. This is the ‘job burn-rate and profitability’ report generated in the Function Point agency management system. In a report like this one, by seeing the budget burn rate in real-time, you will be able to tell if a job is going off the rails before it actually does. If your actuals suggest that you’re eating through your budget quicker than anticipated, it gives you an opportunity to adjust your estimates the next time around.
Report #2: Real-time staff efficiency
Having a pulse on your team’s efficiency can be one of the hardest things to track as a business owner. A holistic, real-time report can greatly help relieve this pain point.
For instance, the report below summarizes how a team spends its time- how many hours are dedicated to billable tasks vs. non-billable or administrative ones. But the real treat lies in a report that can help you as an agency owner assess if your team is meeting its billable target.
Advanced BI Reports for Marketing Agencies
Once you’ve familiarized yourselves with the basics, there are a few ways you can advance the way you extract business intelligence data from the reports we looked at previously.
1. Real-time job burn-rate and profitability- by job, client, AE
In addition to looking at jobs to assess a project’s budget burn rate, you can also try looking at the burn rate by client, type of work, or even the Account Executive assigned to the project. It’s not uncommon for PMs and AE’s to oversell services in order to please clients, which can ultimately lead to over-servicing and cost agencies crucial billable hours.
It is also not uncommon for specialized agencies to promise services that are beyond their area of expertise. If not managed well, these additional services can quickly turn into serious profitability-chokers. To find out if this might be happening at your agency, you want to look at your project burn rate by type of work or service.
2. Real-time staff efficiency and resource management
We previously looked at the importance of knowing how your team spends its time on billable vs. non-billable hours. To take this a step further, look at how many of the billable hours were actually invoiced. This is an important metric towards calculating a project’s true profitability. This is a good rule-of-thumb to follow is: of all the time a team member logs in their timesheets, 75% of it should be spent on doing things that can be billed to the client, whereas 60% of the time logged is billed to the client.
Staff efficiency is closely associated with staff burnout. To avoid burnout and ensure productivity, you want to identify whitespace and reallocate tasks between team members. A report like the one below (Real-time Available vs Allocated Work Hours) is good to achieve this. It gives you a birds-eye view of your team’s capacity so you can quickly shift priorities. This type of report should ideally be broken down by both team and individual staff members.
3. Effective Billing Rate
This metric might seem like overkill, but Effective Bill Rate is a valuable profitability metric- it lets you know if, at the end of a job, you were able to get the desired per hour rate on the billable hours that your team actually worked on.
This is calculated by simply dividing the actual hours spent on the job by the invoiced labor amount. The image below gives you an idea of what this looks like on a report.
It is possible that as an agency owner you may not be aware of all the important aspects of reporting and business intelligence and this may be keeping your agency from operating optimally. By investing in the right business intelligence reporting system, you can get a step closer to understanding the multiple ways in which your agency can be more efficient, more effective, and ultimately, more profitable.