Sometimes the odds of forecasting accurately is about as successful as flipping a coin. Aside from forecasting what your agency will generate in new business for the year, you also need to properly forecast what resources are required to support that growth.
While those resources might be slightly different from one agency to the next, it never hurts to follow or get started with a formula. To help, our team recently built an Agency Growth Calculator to help our clients get a more accurate view of how they can obtain success in the year ahead.
The calculator was built with four primary parts of the new business funnel in mind:
Understand Your Growth Requirements
Here’s where it all starts! Every KPI your agency should be monitoring throughout the year starts with your overall growth requirements.
While I dare to say this should be a no brainer, some agencies do get caught up in the hustle and find themselves struggling to clearly identify what numbers they need to hit in the year ahead of them. Here are some essential questions that you should ask yourself before moving onto any
- What’s your overall revenue goal?
While there are many approaches for setting your revenue goal for the year, make sure it’s nailed down and clearly communicated prior to the new year so all parties can set operational KPIs off of that plan.
- How much have you historically grown organically?
This will give you a good idea of the outbound effort you will need after organic growth.
- What is your typical churn rate (loss of clients)?
You can only put so much on top of the funnel if you’re losing it all at the bottom. It’s important to clearly understand how much revenue is falling out each month.
- How big is this goal in comparison to new business amounts you’ve produced in years past?
Knowing how much you’re planning to grow new business Y/Y is important, particularly so you can understand the resources required to achieve that growth.
- What’s your overall pitch win percentage and what’s the win percentage when they are inbound warm leads vs. cold opportunities you have generated?
Be honest when answering this question; the higher pitch win percentage you have, the less outbound effort will be required. Keep in mind that warm opportunities close at a higher rate than cold opportunities.
- Have you ever generated a cold pitch opportunity before?
Many agencies rely on referrals for 100% of their pitch opportunities and while those are warm and close at a higher rate, they are not reliable or sustainable. Evaluating this can give you a better understanding for how long it can take to produce cold opportunities in the future.
Warm New Business Opportunities
Next, it’s important to understand the amount of warm new business opportunities your agency brings in.
Warm new business opportunities typically come in the form of referrals, networking, and word of mouth. And let’s be honest, who doesn’t absolutely love these types of leads? These are seen by most agency principals as the most attractive type of lead as it’s free business that came directly to you.
To help generate more of these we recommend activating your core 100 network. We define this as the core network of decision-makers with budget or marketing decision power that you have a 1st-degree relationship with. By connecting with this group at least once per month, whether a simple hello or providing them with relevant thought leadership, the likelihood of getting more referral leads increases significantly.
Lastly, while warm opportunities are nice it’s important to not solely rely on them, and here’s why:
- They are unpredictable and you never know when your next project will be coming in
- You have no control of how your portfolio expands
- Losing one major client could drastically hurt your agency’s revenue
The next section will discuss how to couple with cold prospecting for ultimate success!
Cold Prospecting For New Opportunities
Since you can’t solely rely on warm opportunities, you must find a way to incorporate cold prospecting into your mix. Often new business directors will wonder how much outreach is enough? How many phone calls and emails will result in a qualified meeting?
We recommend tracking your success rate at each touchpoint. This will allow you to know if you are consistently reaching out to enough prospects in your outreach cadence.
Proper measurements typically include:
- How many people typically reply to a cold email or call?
- Of those replies, how many of them turn into a meeting?
- How many people move from the first meeting to a pitch opportunity?
- How many cold pitches your agency typically wins (win percentage)?
If you’ve never kept track of these numbers before, don’t worry! Just understand that for someone starting out, these numbers are typically a bit lower and grow with time.
Keep in mind that many agencies underestimate how many prospects they actually need in their pool and keeping that pipeline full is a full-time job in itself. Make sure you have the resources and bandwidth necessary to fuel the fire.
Estimating Your Costs: Time and Money
If you’re an agency CEO who is responsible for driving new business in addition to running the entire agency, be aware of what that double duty is costing you.
If you’re juggling too many tasks it’s likely that things are getting completed, but most of it is probably not being done exceptionally well. As an agency head, your time is best served strategically looking at ways to grow the overall business, not just through the lens of new business. If you’re worried about the time and investment it would take to hire someone in-house, there are alternatives like Catapult who can manage this function for you. There is huge potential in having someone solely focused on bringing in both cold and warm opportunities for your agency.
Now that you have a better understanding of what goes into forecasting your new business goals, and the resources required to hit them…check out our Agency Growth Calculator to see how the numbers line up for your business!