The Agency Profit Podcast
The Problem With Benchmarking and What to Do Instead
Jan 1, 2025
The discussion highlights the pitfalls of benchmarking in agency performance, revealing how reliance on external metrics can mislead. Marcel emphasizes the inadequacies of comparing rates, particularly with the shift towards value-based pricing. He introduces the average billable rate as a more insightful metric, advocating for a deep understanding of one’s own agency model. The need for agencies to focus on internal metrics rather than external validation is stressed, establishing a path toward enhanced profitability and operational efficiency.
32:04
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Quick takeaways
- Focusing on an agency's internal performance metrics is essential, as relying on external benchmarks can lead to misleading conclusions about profitability.
- Understanding team contributions and operational models allows agencies to optimize efficiency and accurately assess financial health and growth potential.
Deep dives
The Importance of Understanding Your Agency's Model
Understanding an agency's operational model is crucial for assessing its performance and setting achievable targets. It involves comprehensively analyzing the roles and contributions of each team member, including their salaries, hours worked, and the distribution of their time across tasks like client delivery and administration. This analysis helps determine the agency’s capacity and utilization rates, which are essential for gauging efficiency. By clearly defining these elements, agency owners can establish whether their structure supports desired profitability and growth.
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