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Profit & Growth Tips for Digital Agencies

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How to Identify Your Agency’s Best Customers

Posted by Laura Hernalsteen on Mar 29, 2016

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Good customer relationships are vital for the health of your agency: recurring retainer work is the best way to stabilise your agency workload and lay a solid foundation from which to grow.

Therefore, it’s important you know what your best customers look like, so you can focus your resources on attracting similar customers and moving away from poor-fit customers that drain your agency resources.

What Do Your Best Customers Look Like?

Don’t fall into the trap of thinking your best customer is the one who pays you the most money each month. You may find that your biggest client monopolises your team’s time and effort, while smaller clients bring in more revenue with less resource required.

Profitability is an important indicator of your best and worst customers, but you should also consider whether the customer is a good fit for you to work with in terms of your team’s specialisms and your company values.

One good indicator here is to ask yourself: do I enjoy working with this client? If your customer is a poor fit, it’s likely that they will require a lot of extra work – long phone calls to accompany an email (“They never read my emails!”), countless revisions because they changed their requirements without telling you, feeling like the customer doesn’t value the work you’re doing… In short, they can be hard work – but not in a good, rewarding way.

Conversely, if they’re a good fit, they ‘get’ what you’re doing, appreciate the value, and communication is open and ongoing.

So how do you work out who are your agency’s best customers?

1) Implement a Qualification Process

Before you start working with a customer, it’s important that you qualify them as a good fit for working with you. You want to get a clear understanding of the scope of their project, so you can identify whether it’s a good fit for your agency team’s skills. This initial qualification process is a good way to get a feel for the customer’s values and way of working, too, so you can start to evaluate whether they are compatible with your agency.

2) Measure the health of your agency/customer relationship

There are metrics to quantitatively and qualitatively measure the health of your agency’s relationship with your customer. For example:

  • Customer Profitability – this allows you to gauge the real value of each customer and identify your most profitable types of work. This is a key measurement of whether your customer is a good fit for you, or if they’re draining your time and resources.
  • Accounts Receivable Aging – this shows how long it takes for clients to pay you, from when the invoice was sent, to when payment is received. If a customer consistently takes a long time to pay you, they’re impacting your cashflow and may be preventing you from making necessary investments in technology, training or personnel.
  • Customer Satisfaction – your relationship with customers and employees has a huge impact on your agency. Tools like the Net Promoter Score (NPS) or Customer Satisfaction Score (CSAT) will help you gauge the happiness of your customers so you can understand what is going well, and what can be improved on.

 how to make your digital agency profitable

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