#008
"Aim for The Holy Grail: 100000 per head revenue"
What this week's contributors think of this aphorism?
Darren Low
Founder @ Low&Behold
"It is one of the agency myths or bullshits, because it ignores all the other dynamics in your agency"
Chantell Glenville
Chief Operating Officer @ Strategiq
"I think it’s useful to have quick and easy benchmarks to refer to"
David Wood (AKA "Woody")
Chairman @ BBL/P
"Why focus on one metric when there are lots to think about. A doctor doesn’t stop at blood pressure"
Jason Neale
Founder @ The Agency Works
"I think it’s a good measure to aim for; but can also create negativity in an agency"
Jinny Mitchell-Kent
COO @ Great State
"I wouldn't exclude it from recommendations but it would be part of a wider set of things to consider."
By Daniel de la Cruz
Chief Learner @ Polymensa
My reflections on "aim for The Holy Grail: 100000 per head revenue"
The headline that springs to mind when I hear this aphorism is: “Benchmarking with caution!”
I get asked by agencies all the time about the perfect formula that will help you scale. It doesn’t exist! But there are metrics that are useful, if they are relevant to how your business is structured. So my first tip would always be, only benchmark against other agencies with caution and full context. Just because one agency is doing £100,000 / head in revenue, doesn’t mean they are “performing well” in other areas of the business.
Also if we want to be literal about it, then why benchmark against other agencies when the per head revenue figures in other sectors look like this: If it’s in the UK, apparently in 2018 the upper end of FTSE companies was £4,669,039 (3i) and the low end was £40K (Compass Group) and the mean was £613k.
The oldest reference I could find where this number was mentioned was in this report.
That was back in 1990! Things have changed a lot since then. It also includes media spend, which wouldn’t be relevant to a design and build agency, or a video production agency.
My recommendation would be to look at who your sweet spot client is. Then spend some time with them, asking them “what do they need from you as an agency?” (you could use Lego Serious Play as a fun ideation session for this) Then work backwards from there. It will give you an idea of how much you need to charge and how much resource you require to fulfil their needs, while still making enough profit to grow your business (if that is the goal). Then ask yourself what do you want out of the business? What is the kind of working culture you aspire to have? Then you can start adding layers of people operation related metrics over that.
At Polymensa we did do a KPIs research piece, because we wanted to find out for ourself whether there is a magic formula - and there isn’t obviously and each agency is so different.
Feel free to download the report here (it also includes operational tools agencies use).
Appreciate you taking the time today to read our Polynut newsletter. Any comments, ideas or questions - feel free to reach out to me [email protected]
And a HUGE THANK YOU to our contributors for giving up their time to share their knowledge with us and providing multiple perspectives! 🙏
Cheers ✌️
Daniel
The Rabbit Hole: The Moth
I think one of the main reasons we humans have survived as a species for so long is our ability to tell stories. This site has some of the most incredible stories I’ve heard, told by 'ordinary' human beings...
Peak down the rabbit hole
Blindspot: Capa e Betina
Since my move to Portugal, I’ve naturally come across cultural novelties all the time. One night I was walking down the narrow and dimly lit roads of Peniche. I could only hear my footsteps and the occasional screech of a seagull, when suddenly a whole crowd of people draped in long black capes cut me off at the next crossing. I honestly thought I was walking through a Harry Potter film set.
The capes are called “Capa e Betina” and are the traditional school uniform in Portugal. But what I didn’t know is that JK Rowling used to live in Porto and allegedly was inspired by these particular uniforms. Now if you’re a hard core Harry Potter fan, I am sure you already knew this.