Aim for the Holy Grail: 100,000 per head revenue
“Your agency may be structured differently and so this calculation may not be correct for you”
Chantell Glenville | Chief Operating Officer | Strategiq
Questions:
> How would you explain what “aim for the Holy Grail: 100,000 per head revenue” means?
> What do you think about this ‘advice’?
> Would you give this advice to other people?
> If not, what alternative advice would you give to agency leaders?
> In Chantell Glenville's opinion these are the most important performance metrics at an agency
How would you explain what “aim for the Holy Grail: 100,000 per head revenue” means?
Wait, am I the only one who’s been working to £120,000 per head?
Given the typical industry margins and structures of agencies, if you're making significantly less than £100,000 per head in revenue you’re unlikely to be that profitable.
Obviously in an agency not all of those ‘heads’ will be revenue driving, or even billable. But it does not mean that each person has to be driving that much revenue themselves; it simply provides a quick and easy sense check of: Is there enough revenue to support the total number of heads, even in non-billable functions, across the business.
What do you think about this ‘advice’?
I think it’s useful to have quick and easy benchmarks to refer to in terms of financial health, especially if you haven’t run an agency before. That said your agency may be structured differently and so this calculation may not be correct for you. If your agency runs best with 9 x Account Executives and 1 x Account Director but most would run best with 1 x Accounts Executive, 2 x Account Managers and 2 x Account Directors doing that work your headcount to revenue just isn’t going to adhere to this metric.
Would you give this advice to other people?
I would make them aware of it, in the same way I would other industry benchmarks like typical profit margins, % of billable to non-billable staff etc. but I wouldn’t give it as advice to have to adhere to as such.
If not, what alternative advice would you give to agency leaders?
What’s your Gross Profit? You see it time and time again, agencies getting excited by signing off deals that are large in terms of revenue but what actually matters is what amount of that total that’s your fees. What do you get to keep vs/ what’s just coming into the agency and flying back out the door again.
In Chantell Glenville's opinion these are the most important performance metrics at an agency
The most important metric for any business to survive is cash.
Even a business that looks like it’s doing well in vanity metrics like revenue could go under if they don’t have enough cash. After that what I really care about is gross profit and expenses. The output I’m looking at from that which really matters is the net profit of course but I specify the two of them just because either one could go off course. Checking in on both is important.
Chantell Glenville's bio
Chantell Glenville is the Chief Operating Officer of StrategiQ. She worked at some of the UKs top creative communications agencies such as AMV BBDO, VCCP, Billion Dollar Boy and Dare as well as client-side at Vodafone. Over the years Chantell has worked across media for a broad range of clients; from international blue chips such as Johnson & Johnson, PepsiCo, Barclaycard, Molson Coors, and Henkel through to high profile UK and pan-European accounts.
Humble promo of Chantell Glenville
Chantell is a great human being. She's always up for helping fellow business leaders and her advice is always spot on. Perhaps something you don't know about Chantell is that she's also an accomplished author and has written one of the best books that every person who works in a client facing role should read: What Clients Really Want, And The Shit That Drives Them Crazy. The book is a showcase of the knowledge and experience Chantell has about managing client expectations, being commercially savvy and ultimately delivering great work for our clients. But beyond that Chantell is also really clued up in regards to the operations of an agency and a top class managing director. If one day she's looking for a new opportunity, the company that will swoop her up will be extremely lucky!
Cheeeeerrrrsss!
Daniel (Polymensa founder)
Explore other perspectives
Darren Low
Founder @ Low&Behold
"It is one of the agency myths or bullshits, because it ignores all the other dynamics in your agency"
David Wood (AKA "Woody")
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"Why focus on one metric when there are lots to think about. A doctor doesn’t stop at blood pressure"
Jason Neale
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"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."
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