By Kate Vincent 
Agencies are teeming with information. Timesheets, budgets, salaries, costs, profits… and that’s no bad thing. But the real trick is to have the right information in the right place. And to know how to use it. Data without context is really just a lot of meaningless numbers. Intelligent information that’s analysed and addressed is what will really take your agency forward.
So what information do you need? Without doubt, the key commodity in an agency is time. And you need to understand exactly how this time is being used and charged.
The more hours you sell, the more revenue you make. But growth is about more than revenue. You need to look to your profits. And this means making sure your teams are all utilised to best effect and you’re recovering their costs. Obvious maybe. But a surprising number of agencies measure their success based around employee numbers without drilling down to their agency’s recoverability rates — how many hours were spent on a job versus the number of hours actually billed.
It’s also important to remember that an account director will have a lower utilisation (or chargeable hours) target than a designer or other creative. They naturally spend more of their day working on pitches or speaking to clients. But all too often I hear agencies say they don’t account for client pitching and management time.
This simply masks the overall recoverability of a project. You may think you’re profitable if you estimated 50 design hours and it took 50 design hours. But if you haven’t accounted for the 30 hours an Account Director spent travelling across the country to pitch and land the account, and the 200 phone calls to discuss amends then you’re not seeing the true profitability of that project or client. This isn’t about looking like you’re profitable. It’s about drilling down into the granular detail of each job to get the real figures, whether they’re pretty or not.
Remember too, a person’s recoverability is made up of a few different calculations:
- What does it cost to employee the person ‑— not just in terms of their salary, but an overall percentage value of their employment costs?
- How much of their day can be spent on chargeable work (utilisation rate)?
Only by understanding the true cost of an employee can you understand the true profit of a job, client or service.
Lots of systems can track time spent against estimates. But again, it’s not just about knowing this figure. It’s about using it as business intelligence, so your agency leaders can make the right decisions about services, clients and resources to boost your profitability.
Tracking capacity
Now you need to turn your attention to capacity and tracking time. Understanding how much time is estimated and booked (on chargeable and non-chargeable work) versus what’s available by person, team, and service gives you better visibility on where your team are full utilised and where there are delivery gaps. It also helps you determine if your team need freelance support or would benefit from additional resource.
Essentially, capacity means the number of hours each person in each team has available to work. Not just how many hours they spend in the building. The best way to gauge this is to speak to each team member to get a good idea of what they do. It’s rarely as simple as looking at their utilisation rate times the number of hours they work. You need to consider internal projects, new business, pitches. Calculating their availability for chargeable work can help with your planning. You know how many hours you have to sell and for which team. There’s no point selling 50 design hours if you only have artworkers available. Capacity tracking and planning can keep everything streamlined and on track.
See Understanding your agency’s profit levers: utilisation rates – The Agency Works
So tracking data is important. But the real value is turning this data into intelligent information. Data that doesn’t just sit on a page but that speaks to you, that informs you, that directs you. Understanding how the jigsaw pieces of time, utilisation, recovery and capacity all fit together mean you can take on the right jobs for the right people at the right time. That’s not just data. It’s data that delivers profits.
