The Chaos Conundrum

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Volatility is a constant

There is a major confluence of events happening right now in the world of agency business development and agency revenue and profitability growth. Those things are:

1. Societal weirdness: DJT, Charlie Kirk, Israel, Palestine - everything is whacked out.

2. Economic weirdness: Stocks are hitting record highs, job growth has cratered, & the economy is really strong or falling apart. Who the f knows?

3. Time of year: It's biz dev season! Q4 is right around the corner, and nobody wants to be caught without a good solid plan.

4. AI is all up in our business: The hype machine is strong, but the reality is muddy. No joke, AI is adding volatility to our lives.

You take those four ingredients - add in the everyday, typical weirdness that happens in the world of agencies and clients - and you come up with an abomination of a concoction that could be explosive in either good or bad terms.

So, what do you think about when there is so much change? Where is your focal point? Let's dig in.

What to keep your eyes on

Okay, this is going to sound boring as fuck, but you need to keep your eyes on the basics.

You might ask, "Hey Tim, what are the basics?" Well, they are very simply:

1. Sales metrics

2. Revenue growth

3. Revenue quality

4. Profit

5. Capacity

6. Vibes

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You're right, Tim. Those are boring AF

I thought you were going to give us some sort of amazing, insightful, newfangled, AI-powered super metric that was like the Rosetta Stone for business performance.

Sorry to disappoint.

When there's change in volatility of foot, it is so easy to get distracted by the noise. The noisier it is, the more you have to focus on the basics. There are two schools of thought when things are volatile, and I subscribe to both of them:

1. Volatility means opportunity

2. Volatility means watch out

Volatility does mean opportunity because when things are chaotic, your market is looking for guidance and stability. If you can provide that, you have an extraordinary ability to win market share. Volatility also means people make rash decisions and they change their mind a lot because they don't know which signals matter.

So here's why those 7 signals matter to you:

1. Sales Metrics: These matter because they are the leading indicators of your revenue. How many leads do you have? How many calls do you book? How many calls turn into offers? How many offers turn into sales? Those are your essential sales metrics that you need to be on top of.

   You're not looking for big changes one way or the other. What you are looking for are subtle changes in the trend. For instance, if you have been generating 12 sales calls every month, and all of a sudden that drops to 8…well that is a signal that you need to investigate your messaging out in the market.

2. Revenue Growth: Revenue growth is a crucial metric because Revenue is a lagging indicator of everything that you have done. However, you want to focus on revenue growth because if it is slowing or it turns negative, that means you've got an upstream disconnect. Revenue growth itself is meaningless; it is however the most accurate reflection of the effectiveness of your business development and retention activities.

3. Revenue Quality: Most agencies I work with don't have a definition of revenue quality, so let me give you one. Quality revenue is revenue that comes from a client or prospect who matches your ICP really well. They are seeing benefit from your services and they are able to appreciate the soft values that your business brings to them through your work (like target market refinements, customer data, upsell data, and all sorts of stuff…) Un-quality revenue is revenue that's coming from a super-duper promo or a non-scalable offer or from clients that are not core to your ICP. That's revenue that is going to disappear. At some point you cannot build on it, so we want to focus on quality revenue which is the kind of revenue that allows your agency to get better. Often during volatile times, the amount of quality revenue you have drops because things are uncertain. People are making rash decisions. I want you to be thinking about your revenue quality so that you can be aware if you happen to be loading up on the cotton candy equivalent of revenue. It might taste good but it's going to rot your teeth.

4. Profit: Profit is also a lagging indicator. It is a fixed metric that comes from the congruence of all the stuff that you've done before you calculate your profit. In and of itself, it is meaningless. There is no such thing as good profit or bad profit. There's just profit. I want you to be looking at your profit specifically so that you can monitor changes. So if your profit is going up or if it's going down, that is a signal that you need to look for changes upstream. You've got to figure out what is either driving or dragging down your profit. It's not to make sure that you have 18% profit or 23% profit or 50% profit. It is to look at the change in profit percentage over time because that alerts you to changes that are upstream that you may not be aware of. It is a fail-safe check.

5. Capacity: Capacity is the hobgoblin of every agency owner. No employees like to track their time usage, so capacity is always a drag to collect. Agency founders don't like to think about capacity because it either tells them that they cannot do the things that they want to do or sell the kinds of opportunities that they want to, or it tells them that they're wasting money by having people in the payroll who are not doing enough work. Everything about capacity is friction, but you need to be tracking capacity closely because during volatile times we often add in extra things into our offers because we want to make a sale. Capacity tends to be volatile during volatile times. You want to be targeting between 75% and 85% capacity.

   • If you have less capacity (meaning you're above 85% capacity), you are truncating your ability to add future business.

   • If you are less than 75% capacity, that means that you have staff that is not being effectively used.

   Measure this carefully and as often as you possibly can.

6. Vibes: Vibes is a totally made-up metric. There is no way to measure it, but you feel it every day. Vibes are:

   • What's happening with your clients?

   • What's happening with your prospects?

   • What's happening with your team?

   • What's happening with you?

   All of those qualitative assessments of team is really excited on point. Customers are moving slow. Prospects are putting off meetings. I am stressed out. All of those things are indicating vibes heading in one way or the other. The more negative vibes there are, the more it's discordant music that needs to get in tune.

Marketing ideas for marketers who hate boring

The best marketing ideas come from marketers who live it. That’s what The Marketing Millennials delivers: real insights, fresh takes, and no fluff. Written by Daniel Murray, a marketer who knows what works, this newsletter cuts through the noise so you can stop guessing and start winning. Subscribe and level up your marketing game.

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Let's make this easy

Instead of worrying about calculating things down to 8 decimal points and worrying if that 1% differential in a metric is meaningful or not, on a weekly basis and at the worst, every other week, all I want you to do is take a quick look at the data and mark it red, yellow or green.

• Red means there is a problem

• Yellow means I need to think about it and investigate

• Green means it's A-OK

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