2020 has taught us many things, but one of the biggest learnings has been around most of our agencies’ need to better understand and predict where their future new business will come from. Last March, just about all of us received phone calls from our clients cutting our budgets in half or changing our scope of works (for the worse). This meant a renewed interest in our new business efforts and trying desperately to fill a funnel with clients that could make up those gaps created by reduced scopes.
Understand Your Baseline Metrics
The trouble for many agencies is they never established any sort of baseline understanding of their new business process. Without a baseline understanding of the metrics that get you from a cold call to a signed service agreement, how do you know which levers to pull to make new business happen?
Many agencies I review find themselves looking and evaluating new business through Lag Measures. Lag measures indicate the current or past state of the business. These are measures like revenue, net profit, or annual contract value. The problem with looking at these numbers to predict future success is that they are all in the rearview mirror of your new business journey and don’t really predict what is going to happen next. It’s important to know these values to evaluate where you’ve been, but predicting where you’re going is our aim here. I think we can all agree that our April 2019 revenue numbers didn’t exactly properly predict our April 2020 revenue numbers. For most, your ACV reduced in 2020 vs previous years, so how do we estimate how many new clients we should or will be winning?
When creating a repeatable new business process, we need to be focusing on Lead measures. Lead measures are those that predict future results. In terms of new business development, this means looking at actions and events that most agencies aren’t typically used to tracking. Marketing Qualified Leads, Needs Analysis Calls, Number of Pitches are just a few lead measures that can better predict exactly what may be coming in the future months.
Below is an example of a potential sales funnel. If you understand the metrics and percentage chances to move from one level of the funnel to the next, then you can better predict and (importantly) ramp up your new business efforts when you hit the hard times or the times of needed new revenue growth.
If you don’t have a baseline already of the numbers above to move from level to level in your funnel, take a small sample of the last three months and begin to track this every month moving forward. Even an imperfect funnel will give you a better idea and the ability to more accurately predict exactly what is coming down the line in the future.
Better Predictions Means Faster Growth
Better predictions of your new business mean you are able to grow faster, more profitably, and provide an overall better service by being staffed properly at all times for your new clients.
If you need help figuring out your funnel and which metrics you should be tracking in your lead stages, give us a call. At Catapult, we use these every day to ensure we are growing our own and our agencies’ new business efforts in the most efficient way possible.