Margin Killers To Watch Out For While Running A Small Digital Agency

A business’s net profit margin is one of the most important profitability metrics you should track when running a Small Digital Agency. This metric is useful when answering questions like whether your company is making money or whether you are pricing your products correctly.

Generally, the higher your net profit, the better your business is doing. If your profit margin is higher than the industry average, your Agency has a competitive advantage. In other words, your Agency is doing well compared to others running similar operations to yours.

With that knowledge, it’s clear why business owners need to create a plan to increase their Small Digital Agency net profit margin.
Here are three tips to improve your Agency’s profit margin:

1. Market to your Existing Customers: Did you know that marketing to your existing customers costs much less when attracting new customers? It is because existing customers are already converted, making it easier to upsell and cross-sell them. Maintaining their positive experience and effectively targeting their needs is essential to keep them returning and recommending your brand to others. They are creating an effective loyalty program for your existing customers to encourage them to return or spread the word about your Agency to their circles. Loyalty programs can come from cashback, discounts, or exclusive sales. Offering this to existing customers will increase their chances of converting them into your brand evangelists.

2. Remove Unprofitable Products from The Shelves: Review the performance of your products and determine which ones are generating less profit. It is only possible to continue to produce a particular product if it sells well in the first place. As much as possible, ensure all your products contribute to your profits. Doing so will help you eliminate some costs and improve profitability.

3. Streamline to Reduce Overhead Costs: Streamlining operations is one of Small Digital Agency’s most significant drivers of profitability. Review your agency operations and identify areas where you can cut costs.

You can also streamline your digital agency operations by automating tasks. For instance, using a CRM solution to automate sales processes could save your staff time and avoid human errors. Automating aspects of your customer service process can also speed up issue resolution and reveal patterns that inform better services going forward. Marketing teams can use automation to time promotions based on customer engagement, targeting customers more likely to purchase based on their recent actions.

In Summary, having a solid profit margin is a pre-requisite: Whether your goal is to sell your Agency for the maximum amount possible – or to build a business that can provide long-term cash flow and sustainable employment for your team. It’s important to remember that measuring performance is a process – not an event. We encourage you to establish a cadence by which you measure these essential agency metrics, thus ensuring that the business is moving in the right direction.


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