Agency Operations 101: Achieve Operational Excellence

Lucija Bakić

September 6, 2023

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 in our guide today.

Key Components of Effective Agency Operations

The fundamental components of agency management are projects, clients, and resources. The path to success is ensuring that these three components are working seamlessly together, like cogs in the great wheel that is your agency business. Let’s go into more detail for each of these essential processes, with data and examples of good practices that can streamline managing each component separately and in conjunction with others.

Project Management

The process of project management can be segmented into four main phases: 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.

See also: End-to-End Project Management: A Beginner’s Guide

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, a good project management tool 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 healthy project management.

Typically, I’d get asked by one of our clients: What percent are we finished with this project? Or from Management: What is the end margin going to be? I could never get those answers before. We had spreadsheets, we had a system that didn’t really work, we had people incorrectly logging their time, in the wrong places. Now, I’m confident when anyone asks me a question regarding the profitability of a particular project. With Productive, I can easily share forecasting and scheduling, knowing: This project’s going to end in March, we’ll have a 30% margin.


Client Relationship Management

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?

  • Ensure a good client-agency fit

    Going back to the acquisition step, it might seem that having more clients is always a net positive, but a poor fit can do your business more harm than good. Ultimately, you will be spending more resources to try and stretch your services or products to accommodate their needs, and it’ll most likely end up with client dissatisfaction anyway. Some might even leave bad reviews or spread negative word of mouth because of the experience. As research shows that 91% of sales are influenced by word of mouth in B2B (Demandbase), this is an outcome you should avoid at all costs. Therefore, understanding your potential clients, their industry, and their specific needs, is one of the key steps to a profitable relationship for both sides in the long term.
  • Clear lines of communication

    A healthy back-and-forth process is essential to successful project outcomes. Make sure to set expectations with the client right at the outset – be transparent about your pricing and about the abilities of your agency. You don’t want to oversell, and then underdeliver. Then, once you’ve established a relationship with your client, make sure that communication is efficient by setting up feedback processes and conducting your business openly. Project management software with time tracking features, such as the all-in-one agency management software Productive, are a good way of automating your processes while also streamlining collaboration – for example, while billing your client, you can simply export your time sheets from the platform and attach it to the invoice.
  • Be proactive, not reactive

    Finally, cultivate your client relationships by anticipating their needs and being proactive in your communication. Don’t wait for the client to request data or progress updates – anticipate their demands by sending them project reports and summarizing your task progress in a timely manner. After you’ve completed the project, hold a debrief and get feedback with a formal customer satisfaction survey. These small steps will go a long way toward making your client feel valued and heard. But don’t forget that a relationship goes both ways – always be cordial and professional, but set appropriate boundaries if clients are asking for the impossible.

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

source: LINKEDIN

Resource Capacity Management

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 handle 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.

See also: How to Manage Multiple Projects: 8 Essential Steps

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:

One simple example would be: We have team X, whose Scheduled/Available ratio is 110% when looking into the upcoming quarter. This means that we’ll need an extra 10% of our current capacity to be able to do the work we have scheduled. Then we translate those percentages into the numbers of full time employees we actually need and signal this to HR so that they can start with the hiring process.

Luka Marić,
Head of Operations at Infinum

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.

Financial Management

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. Software solutions for agency operations professionals can analyze large amounts of complex data and deliver them in real time, supporting successful project outcomes.

See also: Top 5 Business Budgeting Software Solutions for Agencies

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

  • Agency operating cash flow shows the amount of money a company generates and spends from its day-to-day operations within a period of time. This metric determines whether you should invest more capital or reduce expenses for the time being.
  • Agency burn rate shows patterns of spending on a weekly, monthly, quarterly, or annual basis – as 38% of startups fail because of lack of cash (CBinsights), this is a particularly important metric for smaller to mid-sized businesses that want to keep a hand on the pulse of their financials at all times, without the need for a more detailed financial analysis.
  • Agency gross profit margin is your actual revenue left over after deducting the costs of sold products and services. This metric informs agency owners on whether they should expand business, continue operations as is regular, or scale them down.

Another important factor to consider for your financial management is client concentration – how much percent 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.

Related: Revenue Operations Guide: Implementing RevOps in Your Agency

Talent Acquisition and Retention

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.

See also: Streamlining Recruitment: How Your Agency Can Attract the Best Applicants

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.

The Role of Technology in Modern Agency Operations

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.

SOURCE: The Global Agency Landscape 2022 — SoDA Report

As we’ve established, managing your financials and workflows 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 enterprise resource planning tools 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: DotControl Digital Agency Increased Their Forecasted Utilization With Productive

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Overcoming 5 Common Operational Challenges with Operations Software

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 our tips and tricks on how you can avoid them 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.

Challenge #1: Communication Breakdown

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.

See also: 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.

Productive allows me to just very easily check in on a project, without completely detracting my attention from what I’m working on. Allowing me to stay in a good groove and keep my focus where it’s meant to be. I can very easily leave a comment for my producer or videographers on the same project. It’s just a really simple way of keeping conversations organized by project.

Marshall Littlefield,
Visual Editor at Tandem X Visuals

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.

Challenge #2: Resource Mismanagement

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. 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.

We go through our team and see our workload for the next week or even for the next month, or for the next three months, and then we can schedule our people accordingly. Before we had a lot of Excel sheets, or people were doing this in PowerPoint or Word. They were not in one place and data wasn’t extractable from one place.

Stephan O.,
Manager at BICG

Challenge #3: Inadequate Financial Planning

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 tool to support their business processes.

Budget management possibilities were rather limited with our old tool, but Productive is very budget-oriented. It made us more aware of overall productivity and project health. This ties in well with the invoicing process. We used to work mainly with Excel for creating invoices and then we had to send them separately to our accountants. Now the direct connection between Exact and Productive, and the available invoice template make this process much more automatic and less error-prone.

Karla Vincheva,
Head of Production at Build in Amsterdam

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 mail, directly from Productive.

See also: Top 7 Project Budget Management Tools: Optimize Your Project Budgeting

Challenge #4: Dispersed Workflows

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.

As you know, time tracking and billing are disconnected from your work. So, being able to go down to a micro-level and do an estimate vs. an actual, we can say: “OK, well, I told you this thing was going to take me 100 hours, but it took me 200 hours. Let’s see where we went wrong.” We never had that data because our management systems were disconnected. That was probably the biggest added value of switching to Productive: connecting billing and project management.


Challenge #5: Lack of Team Alignment

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.

With Productive we’re able to look a lot further ahead now. That changes the game quite a bit. Now our sales reps take that into account when talking to a client. Instead of promising we can start anytime, they can actually influence the efficient allocation of the entire team. That helps a lot.


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.

Takeaway: Achieving Operational Effectiveness

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.


What is an agency operation?

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.

What are the 5 types of agencies?

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:

  • Consulting agencies: Consulting agencies offer professional advice, guidance, and solutions to businesses that can be part of a variety of industries, including finance, engineering, architecture, healthcare, advertising, etc. Consulting agencies usually specialize in one industry or subset of an industry and provide experts in the field who can understand and solve the specific needs of their clients.
  • Design agencies: Design agencies provide a range of creative solutions, including branding and identity design, graphic design, or website and app design. They might specialize in one niche, or provide a full suite of solutions. Design agencies usually hire a diverse range of creative professionals, such as graphic designers, UI/UX designers, illustrators, photographers, copywriters, etc.
  • Marketing agencies: Marketing agencies focus on helping clients attract and retain customers through traditional or digital media. Marketing agencies can provide a wide array of services, such as social media management, SEO strategies, email campaigns, advertising campaigns, marketing automation, and content creation. A subtype of marketing agencies are digital marketing agencies, which focus on web-based services.
  • Public relations agencies: Public relations agencies help the client shape public perception of their companies. PR agencies employ various tactics in order to enhance public awareness or improve perception, including reputation management, damage mitigation, promotional activities, engagement with the community or other corporations, and much more.
  • Software development agencies: Software development agencies design and develop software solutions for clients in a variety of industries, including finance, healthcare, e-commerce, and more. Some examples of projects a software development agency might be delivering are website or mobile app development, QA testing, software maintenance and support, and technology expertise and consulting.

What is the role of an agency operations manager?

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.

What are the 3 roles of operations management?

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

  • Operational improvement: An operations manager has an overview of all of the processes taking place within the agency. Therefore, one of their main roles is to improve efficiency and productivity by optimizing resource utilization, streamlining workflows, and improving overall performance. They are usually supported in this by software that helps oversee the project management process and wider agency operations.
  • Production planning and control: Operations management is responsible for ensuring the quality of products and services. This means that a manager has an overview of all activities related to the production and delivery of services, including mainly its scheduling, budgeting, and execution. The main concern of the manager for this role is ensuring customer satisfaction and building a positive reputation.
  • Financial management: Finally, an operations manager will work together with an agency’s finance department in order to manage financial resources through budgeting, forecasting, and accounting. The main focus in financial management is ensuring financial stability, as well as optimizing resources to support the agency in achieving its objective and ensuring opportunities for good investment.

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Lucija Bakić

Content Specialist

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