AGENCIES ARE FAILING TO MAXIMISE PROFITABILITY, RESEARCH FINDS
Data from AI-native project and resource management company, Forecast, reveals that only 9% of all agencies feel they are confidently achieving project profitability targets, falling to just 5% for those with less than 50 employees. Inefficient delivery processes and poor time management were identified as the main contributing factors driving inaccurate forecasting.
Forecast surveyed 163 agency leaders between May and June 2021 in partnership with agency growth consultancy, Cactus Agency Growth Consulting. The research looked at the barriers facing agencies when looking to maximise profitability and operations efficiency.
Disorganised delivery processes were found to be the biggest challenge for 39% of agencies, followed by too much time spent on project admin for 31%. Reporting and managing how employee time is being utilised was identified as a significant challenge for agencies. It found that 67% of agencies with between 100-199 employees cited meeting updates, resource management and timesheets as the biggest time consumer in client management. This figure dropped to 50% for those agencies with less than 100 employees.
Forecasting was also identified as a concern, with only 40% stating they are accurately forecasting the revenue of client and project work. The two factors preventing accurate forecasting were visibility and lack of time for 40%, and inaccurate or disparate data for 18%.
Rob Massa, chief revenue officer at Forecast says, “We speak to a lot of agencies on a day to day basis and the challenge of accurately forecasting revenue and project profitability is always number one. What it comes down to is a lack of visibility. If agencies don’t have sight of how much time their people are spending on tasks and track historic metrics, how can they possibly forecast future projects?”
Forecast’s research suggests that agency staff feel client processes are too time consuming and are directly reducing productivity. This in turn, impacts the agency’s ability to accurately forecast future revenue.
“Most agencies cannot find the right talent right now and this is only going to become harder, so they are going to have to work at retaining talent and doing more with fewer people - which doesn't mean overloading staff but making sure they are more efficient in how they use their time,” adds Spencer Gallagher, co-founder and CEO of Cactus.