As a digital marketing reseller in Australia that has worked with thousands of agencies, we have seen what the most important indicators of growth are. Key Performance Indicators (KPIs) can be tracked over time to help your agency foresee challenges, make decisions, and stay competitive.
Keep your finger on the pulse of your digital marketing agency’s growth by recording and analysing these 5 metrics:
1. MRR
Your monthly recurring revenue can be calculated by multiplying the cost of services by the number of customers you are providing the service to. MRR is a powerful indicator of cash flow health and even of your agency’s profitability in general. Make it a priority to sign larger clients who are in need of more or higher quality services to improve this figure in the long run.
2. Customer Retention Rate
To understand if your team is keeping clients happy, calculate your customer retention rate by calculating the difference between the customers you have this month and the customers you onboarded this month before dividing this figure by the number of customers you have this month and multiplying that by 100. A low rate indicates that clients are leaving your agency rapidly.
3. Churn Rate
Your agency’s churn rate will demonstrate how many customers you are losing. Calculate your churn rate by subtracting the number of customers you have at the end of this month from the number of customers you had at the start of the month, then dividing it by the number of customers you had at the start of the month and multiplying the answer by 100.
Do You Need Support Right Now?
Book a call with one of our world-class experts and walk away with $1000 worth of absolutely free services. Outsource your agency’s services to our pro teams ASAP.
4. DSO
Your Daily Sales Outstanding will help you understand how long it takes the typical client to settle your invoice. A high figure indicates that it takes many days for clients to pay up, and a low figure indicates that clients settle their invoices fairly quickly. Calculate this figure by dividing your accounts receivable by your net credit sales, and then multiply this figure by the number of days the payment has been outstanding.
5. CAC
Your agency’s Customer Acquisition Cost tells you how much it costs your team to sign one new client. You need to aim to make a return on investment in this case. Calculate this figure by adding the total sales expense and the total marketing expense spent on new customers, and then divide this by the number of new customers you have onboarded.
Tracking and understanding these figures will help you manage a healthier agency. We know that looking after your digital agency ‒ including managing your KPIs ‒ is a full-time job. Instead of adding even more to your plate as you try to oversee and deliver on your client’s needs too, outsource your services to our digital marketing reseller team in Australia.
