Think of all the metrics you track and monitor for each SEO client you manage. It’s essential that you do this in order to deliver a successful search marketing campaign, but even more importantly, keep that client on your books.
A lot of SEO agencies are great at tracking metrics for their clients, but fail miserably when it comes time to tracking metrics that relate to their own operation. There are several things your SEO agency should be tracking that will help you run a successful (and profitable) business.
Let’s dive into the agency data you should be paying close attention to.
Staff (Office & Remote) Productivity
Running a successful SEO agency requires a team that works together like a well-oiled machine. There are so many moving parts, from new client onboarding and strategy development, to outreach and pitching. SEO has evolved over the past few years to become a very multi-channel service.
All of the tasks required to manage a solid SEO campaign require a complete team, which may or may not be in the same location as your business. With all of the technology available today, many SEO agencies are opting to hire remote workers, creating a team located throughout the world. There is nothing wrong with this, if you can properly manage them and maintain a high level of productivity.
I would highly suggest that you get set up with Slack to get everyone on your team on the same page. It’s a great communication tool and it allows you to create a virtual office, where everyone can easily access and communicate with your entire organization.
As far as managing client projects, my agency uses Service Provider Pro, which so far has been great for keeping all of our team and client communication in one place. Basecamp and Project Bubble are also good options. Find one that meets your needs and use the data to determine whether or not your team is being productive. Everything is time stamped, so you should be able to determine whether or not specific tasks are taking too long to complete. Use this data to hold your team accountable. (Note: I am not affiliated with any of these services and I pay for the software we use. These are just options that I trust, and not a sponsored plug.)
Have you ever fired an SEO client? I have, on multiple occasions, and I can tell you that it can be the best thing for your business sometimes.
You need to look far beyond just the monthly dollar retainer amount that is attached to each client. Just because a client is paying your agency $3,000 per month for SEO doesn’t mean that they are profitable and worth keeping on the books.
Here’s an example of a client that my agency recently fired:
They operated a very large e-commerce website with thousands of products. The website was a complete mess and their on-site SEO was virtually nonexistent. We explained that it was going to be a long term project and they shouldn’t expect results overnight. We are always very transparent and never say what the client wants to hear just to get the sale. They understood and appreciated our honesty, so we moved forward.
The client started to call daily and send multiple emails daily wanting status updates. It got to the point where they were becoming such a nuisance that they were interrupting our work flow and day to day operations, not to mention taking away phone and email support which could have been better utilized servicing other clients and onboarding new ones.
After evaluating the situation, we determined that they were not worth keeping, so we fired them. Truthfully, in my early days I only looked at their monthly retainer value. I wish I started digging deeper to determine true profitability like this much earlier. It would have helped my agency grow substantially faster if I took this approach from the start.
Agency Cash Flow
This is something that can really come back to bite you if you don’t stay on top of it. Having a lot of clients signed up on a monthly SEO retainer isn’t going to automatically translate to a positive cash flow situation. If your cash flow is struggling, it could mean that you have an invoice problem.
If you notice that a lot of your clients are paying late, it’s only going to hurt your business. If this is the case, you might want to consider introducing a set-up fee or requiring a 3-month prepay to get started. This extra “upfront” cash can help you stay above water in the event that some clients are slow to pay.
You have to anticipate for it, because there are bound to be issues at some point. A lot of businesses are relying on their own accounts receivables and customers to be able to pay their SEO bill. Things happen, and not all slow pays are done intentionally. Search engine optimization and organic traffic is a huge segment of most businesses, so the last thing they want to do is piss off their SEO provider.
I would also suggest that you establish a late payment fee of a set dollar amount plus a percentage of the monthly bill that grows as time passes. This alone will help cut back on late payments and greatly improve your cash flow.
Cost of Goods Sold
There are very few SEO agencies that do 100% of the work in-house. Many will outsource content creation, infographic design, link building, guest blogging outreach, etc. I know first hand, as my agency does work for some of the largest SEO agencies.
With so many different components of a monthly SEO campaign, each costing different amounts and each potentially being invoiced from a different source, it’s important to track the full cost of everything you are packaging together for each client.
SEO has definitely moved away from pre-set packages to a more custom approach, so what it costs you to run one campaign is going to differ from what it costs you to manage the campaign for another client.
There are a lot of expense tracking programs and apps but they are very feature-rich and a bit too much for what my agency needs personally, so we use an Excel spreadsheet that features all of the possible expense options and each client has a page.
Not only does this allow us to see profit margins in real time, but it also allows us to compare expenses and profitability over time. If I can give you one tip it would be to track everything down to the penny. Even if you end up doing a last minute guest post for the client and the content was only $50, you need to add that. Becoming disciplined and aware of where every dime is going will only strengthen your agency’s foundation.
Company Burn Rate
This is related to agency cash flow as explained above, as struggling cash flow can really impact your burn rate. Your burn rate is how fast you blow through your cash due to your hard monthly expenses, such as software subscriptions, employees, office and operational expenses.
Sometimes you can look at your expenses and identify cash-sucks that you can either downgrade or eliminate altogether to free up cash. I noticed that we were subscribed to so many SEO tools and software that we weren’t actually using, which added up to thousands of dollars every single month. They were all on recurring subscriptions and just came out of our account every month. It wasn’t until I really started to look at our burn rate that I discovered just how much we were wasting month after month.
If you are close to running out of money every month, it’s important that you find ways to eliminate hard costs. If you are renting a large fancy office is it really necessary? Can you downsize your office and transition some of your team to remote locations? Can you eliminate your hardwired PBX phone system and switch over to a cloud based VOIP system?
Sales Revenue (Recurring & New Client)
The money you bring in every month is what keeps your agency above water. I suggest separating it into two categories. Recurring revenue, which is from your customers that are already on board and locked into a contract or agreement. That is revenue that you anticipate month after month, provided you deliver the service the client is expecting.
Then, you have new client revenue, which is for the new clients you onboard each month. I never thought too much about the difference between the two, but they are very different and when you focus on increasing your new client revenue each month it’s going to automatically translate into higher recurring revenue each month as well.
Ignoring your new client revenue is going to keep your monthly revenue the same month after month and it might even dip if a client terminates their agreement with you.
SerpLogic is a fairly new SEO agency, as I sold some of the other services I was behind in order to put all of my energy into its growth, but our monthly revenue is strong because I focused on new client revenue. This doesn’t mean that you should ever neglect your current clients, because if you do, your recurring revenue will sink.
I would suggest that you set realistic and achievable goals in terms of new clients per month. Even just one new client a month is going to transform into a higher recurring and overall revenue each month. Slow and steady growth is great for long term success. There are plenty of SEO agencies (I use that term sarcastically) that take on everyone they can and provide a low quality service, which causes clients to leave. They are constantly scrambling to bring on new clients (suckers) because they can’t count on recurring revenue.
Client Retention Rate
The recurring revenue I just spoke about needs to be protected, and keeping your clients satisfied will help ensure you maintain a very high retention rate. If you are upfront and honest with your clients before you take them on they should understand that SEO is a long term play and results aren’t going to magically appear overnight.
Even though you tell them this and they say they understand, you still need to keep the lines of communication open. I highly suggest that in addition to bi-weekly or monthly reports you also schedule 15 minute phone calls. Reports are nice because they give the client something to physically look at or print out and hold in their hand, but there is nothing like a personal call to really keep the client satisfied.
This also gives them an opportunity to ask questions if they have any. If you don’t give them that opportunity, they might get discouraged and just cancel the service rather than pick up the phone.
If you are handling a large number of clients, assign a dedicated customer service rep to schedule calls. If you can keep the same day/time for each client, it will help to keep everything on track. For example, if you tell a client that their call is on the first Tuesday of each month at 2pm, they are likely to always keep the appointment and be prepared with questions. This communication will keep your retention rate high. If it is low, figure out why. There is always going to be a root of the problem, and you will need to uncover it ASAP.
Client Acquisition Cost
Do you know how much money it costs you to sign a new SEO client? If not, you are making a huge mistake. You need to know where your clients are coming from and how much money you are spending to acquire each one.
If your acquisition costs are very high, you might need to increase your prices to give yourself a little more cushion. I like to analyze acquisition costs for each marketing channel we use, like PPC and email marketing, but then I also like to look at a blended average acquisition cost.
Keeping this metric under control will help you maintain your desired profit margin and also identify the best sources for attracting clients. If you notice one area is increasing in cost but you are signing new clients at an affordable level using a different traffic source, then cut back on the high cost option and put more of your marketing dollars into the channel that’s delivering clients at a lower cost.
Numbers never lie, so the more metrics you can track, the stronger your agency will become, internally. It isn’t just about delivering great service. That’s mandatory, but so is having your own affairs in order.
These are all metrics that will make or break your agency. While focusing on the success of your clients is a must, you can’t ignore your own metrics. These are the things that my agency tracks on a regular basis to evaluate our progress, set new goals, and reach new heights.
Note: The opinions expressed in this article are the views of the author, and not necessarily the views of Caphyon, its staff, or its partners.