If you have access to reporting, you’ve no doubt wondered at one point or another, what you should be paying attention to. It seems like there is data for everything these days, and its growth is on an exponential curve with no signs of letting up any time soon.
In my view, the biggest rule is simplification. The information you are having your team monitor needs to be easy to discern and actionable. In addition to that, it needs to be something that is critical to your business and performance. In the end, our minds are only able to keep so many things in proper focus. Make sure the information you are passing along to your team is the right material to be focused on.
Here are four areas I would recommend you keep an active eye on if you are not already:
Most agencies keep pretty good tabs on their total dollar placements, but there is obviously a lot more to it than that. You should have a comfortable gauge of where your paper is coming from, who is providing it to you, and how it is evolving over time. You might be surprised at how much this can change over a small window of time and how large an impact these changes can have on your overall performance and business. If I ever see an agency’s performance drop off, the first thing I look at is their incoming paper.
I’m convinced that agencies consistently waste more money through their letters processes than anything else. I suppose it is the allure of having money come in through the mail or by an inbound call that makes it so attractive. It’s almost like its free money because nobody had to make a phone call and, pending your letters process, maybe you didn’t have to waste hardly any of your staff’s time. The unfortunate reality, however, is that sending out letters does cost money and most letter campaigns cost more than they bring in. With reporting, you should keep a tab on how many letters are being sent out, the types of letters that are being sent, who they are being sent to, and what level of return they typically provide to you. One of the quickest ways to help an agency that is looking to become more profitable is through analysis of their current letter campaigns and processes.
There are a lot of different methodologies out there on how to do this, but in the end, you’re just trying to maximize your opportunities to collect the accounts that represent the highest return to you. In the spirit of simplicity, this means you want to focus on your newest business with the highest scores. As your accounts age and become less valuable, the level of effort you are expending should also taper off. A good rule of thumb is to apply a one-to-one ratio between the effort you are expending and the dollars you are collecting in return. This will help you to make sure you are tapering off your effort effectively as a particular batch of placements ages. Misallocated effort can represent a very large expense to you. Eliminating it on accounts that will not pay anything saves you money immediately, and its reallocation could result in overall lift if your high value accounts are currently being neglected.
Plan for the future. Some of the clients you sign on are going to be goldmines for you and merit extra attention and resources. Others may only wind up costing you more money than you bring in. Pay attention to the average amount of revenue you bring in per account and how that compares to your agency’s cost structure. It’s pretty easy to ignore a smaller client and embrace a larger client, but if that larger client is only bringing in negative margins, it might make sense to renegotiate or just to get out completely. In either case, make sure you keep an active eye on the performance of the paper you are collecting on and making adjustments where appropriate. Doing so will help to keep your agency sharp and ensure that the business you are working is on your terms.
In the end, just remember to keep it simple. To state the obvious but often neglected truth: you need to maximize revenue and minimize cost. Getting your staff focused on these four areas will go a long way in helping you to get there.