Agency Operations 101: Achieve Operational Excellence

As the market is getting busier and more competitive, the focus is no longer simply on agency operations – but rather on operational excellence.

Under agency operations, we understand the totality of a company’s day-to-day management processes. Agency operations managers will usually take on the brunt of this multi-faceted and challenging duty, supported by operations management software that can provide streamlined resource management, including financial, human, and project management. This is challenging enough, but with the ever-changing landscape of today’s business industry, making sure your agency is ahead of the race can feel impossible.

The key to operational excellence is, first and foremost, ensuring that the foundations of your business are stable enough to weather whatever change is coming its way. This is why we’ll be targeting these very basics of agency operations management in our guide today.

The fundamental components of operations are projects, clients, and resources. We can also include workstreams, as workstreams in project management include the basic activities that comprise larger business initiatives — for example, specific tasks within a milestone, or multiple milestones within larger project phases.

The path to success is ensuring that these four components are working seamlessly together.

Let’s go into more detail for each of these essential agency processes, with data and examples of good practices that can streamline managing each of them separately and in conjunction with others.

The end-to-end project phases usually include: project initiation, project planning, project execution, and project sign-off. During project initiation and planning, the main thing to keep an eye out for is establishing reasonable client expectations and setting achievable goals. For this to work, it’s important that the project manager has an accurate overview of the agency’s capabilities, not only for the individual project but also with regard to overall business processes.

Here, historical data from previous project management processes can help, as well as keeping a detailed schedule of your resource availability.

Some amount of scope creep might occur regardless, as data from a PMI report shows that 34% of projects globally experienced scope creep in 2021. However, you might be able to mitigate the worst effects by keeping a close grasp on the status of your agency resources.

Other than scope creep, some other frequently identified reasons for project failure are poor alignment between project stakeholders, inadequate planning, lack of resources, and unclear client expectations (PMI).

For all of the mentioned, project management software for agencies can prove invaluable. In fact, data shows that 77% of companies with high-performing projects use project management software (PwC). During project execution, such tools can help make data-driven decisions efficiently, and also help clients stay in the loop by sharing project reports or progress updates directly from the platform.

Finally, during project sign-off, gathering essential insights and conducting a retrospective review is much easier with a tool that already gathers all your data into a single source. This goes back to project initiation and planning for the future, creating an ecosystem for the best project management for agencies.

When it comes to client relationship management, the two main points of discussion are client acquisition and client retention. Although there is no retention without acquisition, studies point to retention as being the more essential of the two – depending on your industry, acquiring a new customer can cost five to seven times more than retaining an old one (Forbes).

However, retention is a fickle thing. Data from the XM Institute shows that on average, more than 40% of clients cut their spending after having a bad experience with a company. How can you make sure that you’re meeting client expectations and providing them with quality experience along the way?

Here’s a great example of failed customer satisfaction due to a lack of proactivity from the SaaS industry:

Resource management, also known as resource planning, is the process of identifying, allocating, and managing agency resources, usually undertaken by a resource manager or a more generalized project manager. In the agency sphere, the most important resources that a resource manager handles are human resources, or your project teams and their hours. Most managers will need to manage multiple projects at once, so resource management is frequently a delicate balancing act: Ensuring that all projects have the right balance of resources to stay on budget and schedule while being aligned with other projects, overarching agency goals, and client needs.

Resource managers report the following frequent issues of resource management: poor capacity planning, inadequate assessment of risks, lack of skilled resources, unoptimized and inconsistent resource allocation, unrealistic deadlines and schedules, and poorly documented resource utilization (Chimera Technologies).

All of these can be easily addressed by the right resource management software, such as Productive. It can provide you with a streamlined and reactive overview of all of your company resources. If any changes occur, whether mandated by internal or client requests, your scheduling will immediately be updated with the impact of the new resource allocation on your budgeting and schedules.

Unsure which team member has the most work on their hands? You no longer have to eyeball your estimates. With an agency project management tool, you’ll know exactly what each employee is doing and for how long, so you’ll be able to balance your resources quickly. An example of an important metric that you could be tracking with an agency management software is Forecast Production Capacity, which shows the scheduled and availability ratio in future months:

By investing in a robust agency project management tool, you can seamlessly link your business processes and get a clear overview of the larger agency picture.

Research by Wasp Barcode has found that 55 percent of small businesses don’t track their assets at all, or use a manual process. Although the latter part of that metric might not seem as bad as the former, multiple resources show that manual data tracking just doesn’t cut it. A famous example of a manual process gone wrong is the so-called London Whale debacle from 2012, wherein JP Morgan Chase & Co lost over $6 billion in trading loss partially due to Excel errors (Business Insider).

This is why resource management software that can provide budgeting and financial management insights is essential to keeping a clean bill of financial health. The top business budgeting software solutions for agency operations professionals can analyze large amounts of complex data and deliver them in real time, supporting successful project outcomes.

Here are the key agency insights that agency leaders will need to keep an eye on in order to improve cost efficiency and make informed business decisions: agency operating cash flow, agency burn rate, and agency gross profit margin.

Check out our article on the five most critical project metrics to learn more.

Another important factor to consider is your revenue operations management. For example, how much of your revenue is taken up by a single client? A general rule of thumb is that if a single client accounts for 10% or more of your revenue, or your largest five for 25% or more of your revenue, you have a high client concentration (Stats for Startups).

Although it has its benefits, high client concentration is extremely risky due to its potential to harm your business, so it’s important to seek out opportunities to diversify your client base.

When it comes to acquisition and retention, the past years have been tumultuous, to say the least. Although there are signs of the trend of the Great Resignation or the Great Attrition nearing its end, this doesn’t exactly signal that all of the trouble is over. For one, although employee turnover might be slowing down, recent research by Gallup shows that nearly six in ten workers are disengaged from their work and that employee stress is at a record high.

Furthermore, according to a study by Korn Ferry, by 2030 there will be a global human talent shortage of more than 85 million people.

In light of these findings, what can you do to ensure that you’re retaining talent and that employees are engaged enough in order to contribute to your agency?

The first step is making sure that you’re attracting the right profile of employees. These are your traditional value propositions: the job titles, compensation, and work-related benefits you’re offering. Here, the most important thing is to ensure that you’re staying ahead of the competitors and being transparent during the entire process. Additionally, you can build up non-traditional value propositions, which include flexibility and mental health benefits, such as hybrid work, flexible working hours, pet-friendly office space, childcare assistance, etc. Another important thing is outreach: get your agency out there, either through social media promotion or in-person opportunities such as job fairs or various other networking events.

Afterward, it’s a matter of retention. Data shows that the cost of replacing an employee can range from one-half to two times the employee’s annual salary (Forbes) – this is why it’s essential that you’re providing your employees with the kind of environment they need in order to stay engaged. An exhaustive report by the Work Institute from 2020 underlined some of the most frequent factors for voluntary turnover: lack of opportunities for growth and development, poor work-life balance (schedule inflexibility and commuting), poor communication and leadership from managers, limited training and resources to complete tasks, bad working environment and relationship with coworkers.

Focus on the aforementioned by providing enough opportunities to your employees and by nurturing a positive environment from the top to the bottom of the chain.

Now that we’ve covered the basics of agency operations, let’s move into how software can help you optimize your processes. In the Global Agency Landscape 2022 SoDa report, participants assessed their operational strengths and resilience. Certain categories showed a lack of confidence, with 31% of agencies reporting that they feel their financial visibility is “shaky”, and over 35% reporting the same for their processes and workflows. Finally, the worst results were observed in knowledge management and sales and marketing categories, with over 50% reported “shaky” or “weak” strength and resilience.

As we’ve established, managing your financials and agency workflow manually just doesn’t cut it anymore. In order to process large amounts of data and maintain a competitive edge in the ever-changing industry of service providers, you’ll need to refine your processes as much as possible to achieve operational efficiency. There are many software options out there, from professional services ERP systems to capacity planning software. No matter the type, consider the benefits of choosing a comprehensive solution that can combine features that your entire agency can use: sales teams, creative teams, and your management teams.

A good example of an all-in-one solution is Productive, a management software tailored to agencies of all shapes and sizes. Productive can cover all your day-to-day business operations and help you make accurate, data-driven decisions with the following features: task management and project progress visualization, employee workload management, budgeting and billing, financial management, sales pipeline, and collaborative documentation.

See how a digital agency streamlined operations and real-time business intelligence with Productive.

In the following section, we’ll go through five examples of operational challenges that might occur during the process of project management.

We’ll give you some best practices for streamlining the process of operations strategy by utilizing the right software for management teams. Throughout each challenge, we’ll be including testimonials from various agency operations professionals, so you can benefit from their experience and utilize it to make the right choices for your business.

Stop me if you’ve heard this one before: You’re working in creative project management, and a task is lagging behind schedule because a developer was waiting on a design that was finalized a while ago. Now you need to invest additional time to ensure that overall project deadlines are not affected. Any type of process that hinges heavily upon manual work is sensitive to forgetfulness – this is why the best solution to this is to automate repetitive tasks with creative agency project management software.

Productive’s Project Management feature lets you build your project boards and create an open space for employee collaboration. Instead of counting on employees to ping each other for every task update, implement a simpler process with task updates that send notifications to their platform and email. An additional perk of these types of software solutions is the comment space on tasks, which you can use to create a record of all information regarding a particular task – decisions, who worked on which dependencies, time frames, etc.

And if you need to put down a lot of information, Productive offers Docs, a space for collaborative documentation that is seamlessly integrated with the rest of the platform. Convert parts of your text into tasks automatically and tag employees in relevant passages. This consolidated approach will help you keep your data tidy, and minimize the amount of time spent searching for relevant info across multiple tools.

This issue can and often does extend to client communications. If you don’t have your internal affairs in order, it goes to follow that this lack of organization will spread outwards.

Meeting client expectations is simpler with project management tools: To keep your clients in sync, simply invite them into your project with full or limited access rights. Productive also offers 50+ agency-focused project reports, which consolidate all of your project activities. You can create dashboards with specific reports and share them with project stakeholders, export them and forward them, or subscribe to them and get them automatically in your inbox.

Now, let’s picture this situation. A client is looking to expand a project feature, and after taking a look at their resources, the PM agrees. Then suddenly, disaster strikes. Because the team’s vacation times are stored in an Excel sheet that’s somewhere between 20 other bookmarks on their browser, the PM has forgotten that a team member crucial to finalizing the task is going on a 2-week-long vacation. Or maybe the situation is less dramatic. Maybe the PM just miscalculated the amount of time needed to execute a task. Luckily, there’s a solution for both examples, and it’s found in Productive.

The first step you need to take to optimize your resource management is to invest in a tool that comes with integrated time tracking – many tools will offer some sort of solution, whether through integrations or time sheets, but look for a way to make this process pleasant for employees (check out some Time Doctor alternative options to learn more).

Productive provides different ways for creating time entries, whether you want to track directly from tasks, or create entries with time ranges or overall hours spent after the fact.

Additionally, Productive includes leave management for sick or vacation days, so you can always get a clear picture of whether an employee is available to work or not. Create accurate resource plans and get key insights into your resources between departments and project teams, including current or forecast utilization across different metrics. With heatmaps, you can avoid situations where one employee has too much to do, while another is being underutilized. You can even account for future staff with placeholder entries.

In a 2020 report by Wellingtone, only 43% of participating agencies reported finishing their projects “mostly” or “always” on budget. Budgeting and financial management never get easier – while smaller agencies and startups might grapple with their inexperience, larger companies have more complexities to account for. As they say, a man is only as good as his tools.

No matter how expert your financial teams are in balancing agency budgets, they won’t be able to do it as well or as efficiently without the right project budget management tools to support their business processes.

Productive provides you with the flexibility you need to build budgets according to your price model: fixed-price, hourly, or mixed, with support for retainers and complex projects.

With Productive, your budgeting and finances will be the focal point of your business, with automated warnings for budget overruns, and robust financial forecasting that ensures you’re always working with accurate data. Another key agency insight that Productive can provide is agency profit margins. By entering relevant data into the platform, including project budget, overhead costs, and non-billable employee time, Productive will automatically calculate your project profitability, as well as overhead per working hour and project. It’s that easy.

Productive also supports streamlined billing. You can pull all relevant information from your budget and time tracking data, then automatically generate branded invoices and send them from your work email, directly from Productive.

Using multiple tools to do something just one software can accomplish is simply inefficient. There’s the amount of time wasted in switching back and forth from one platform to another, the difficulty in onboarding each new team member to a variety of solutions, the financial drain, and the lack of standardization and data centralization that can cause operations to become chaotic and mistake-prone.

Tools like Productive that can unite your workflows and become the single source of truth for your business operations are invaluable for multiple reasons. First, there is the time and money-saving factor of not having to pay subscriptions or onboard your team to multiple software.

But more than that, by developing one standardized way of working on a project, teams will be able to work more efficiently and consistently, with less of a chance for things going unexpectedly awry.

By connecting your data across all your projects, you’ll also be able to get deeper insights into your processes. This will in turn result in improved decision-making, which will drive growth and profit.

It can also help you hold a more transparent project evaluation — with full visibility into project progress, you’ll be able to identify the root cause of mistakes and bottlenecks for improved future projects.

Connected to the topic of dispersed workflows is the strategic alignment of your agency teams. If all your various departments are working on separate tools, a gap will appear between their processes that can impede improvement and collaboration. Sure, there are various ways to keep everyone in sync, but holding endless meetings is spending time you could invest in working on high-level concerns.

Thankfully, Productive has a solution to that as well. With the integrated Sales Pipeline, you can track your leads from the start to the end of the funnel and seamlessly convert won leads into projects. Forecast potential sales revenue and track communication with prospects on one platform, keeping the process transparent and efficient.

Additionally, with Productive, you can set up workflows for all of your project teams in one place. Productive is tailored to agencies of all shapes, whether advertising agencies, creative agencies, software development agencies, or consulting agencies. Simply create boards within your projects that you can easily switch between. Both your managers and team members will get the benefit of having the full project picture at their fingertips. Combine this with the ease of getting project data in real-time and you have a recipe for success.

As we can clearly see, the topic of agency operations is a complex one. It’s difficult to present straightforward solutions, as the process might vary from industry to industry, agency to agency, and even team to team. However, we hope that the strategies and testimonials presented in this guide will help you rethink and recontextualize your day-to-day business operations.

One golden standard that might be applied to all businesses is simply this: syngergize your workflows. No matter which agency professional was speaking, the concept of connecting all areas of work was repeated throughout. Centralized and standardized operations can bring numerous benefits to your business, from saving time and money, streamlining onboarding, and improving employee efficiency, to producing in-depth agency insights. After you’ve managed that, everything else is just the cherry on top.

Take the first step towards operational excellence by booking a demo with Productive, the all-in-one agency management software.

Agency operations encompass the entirety of the processes necessary to run an agency on a day-to-day basis. Depending on the industry and nature of the agency, these processes might vary, but some general examples are: coordinating and managing resources on projects, handling talent acquisition and retention, building and maintaining client relationships, handling project and agency financials, and working on the larger agency strategy by consolidating all separate activities into one. Achieving operational efficiency is key to delivering quality services and meeting overarching agency goals.

Although the categorization of agencies can vary, we can identify the following five main types depending on the services they provide, the types of projects they deliver, and the talent they hire:

The agency operations manager, sometimes also called a chief operating officer, will be in charge of ensuring that all agency processes are functioning smoothly and in alignment with agency strategy and goals. This is achieved by overseeing resource management and high-level project progress, collaborating with financial departments and management, keeping track of human resource management within the agency, and oftentimes communicating with clients. In short, the agency operations manager is a key position for the overall success and growth of an agency.

Though operations management is a complex process, the main roles can be separated into three interconnected categories: