Kevin Trokey is founding partner and coach at St. Louis-based Q4intelligence.
I was recently asked, "What are the three most dangerous trends that could affect independent agencies in 2023 and beyond?" My responses were:
1. Agencies not knowing the numbers that tell their story. 2. Agencies struggling to create an accountability culture. 3. Agencies that lack discipline in operational execution.
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I chose these responses because of the increasingly dangerous exposure they create in difficult economic times.
Future-proof your agency by steering it away from these bad habits.
Don't know their numbers
Our industry's financial reward for mediocrity has been so high that most agencies pay little to no attention to the KPIs that tell their story.
During an economic downturn, the margin of error can erode alarmingly fast. Financial rewards have allowed you to survive despite not knowing your numbers, but this has resulted in many agencies becoming weak and undisciplined.
Pre-recession advice–Take 15 minutes to sit down and calculate your KPIs.
Undisciplined in execution
If you don't have clearly defined, documented, and consistently executed processes in key areas, you have unnecessary inefficiencies in your operations.
Pre-recession advice–The next time someone on your team performs a key activity, have them write down the step-by-step actions they take. You will have a documented process that becomes more efficient as you refine it over time.
Fear of accountability
There must be clear expectations and accountability. As the "financial tide" goes out, there won't be room for marginal team members.
One exposure during a recession will be with the sales team. The revenue they bring in is your greatest insulation from a recession. But producers are usually the least accountable team members in an agency.
Pre-recession advice–Have producers create the accountability necessary to ensure you hit your revenue goals.
+ Here's the REAL danger
A Harvard Business Review study of the three previous global recessions found that companies that became post-recession winners balanced cutting the right costs while making the right investments. They gave themselves the greatest chance, 37%, to create separation from their competition. This may seem like daunting odds, but it's a big improvement over those who focus only on slashing expenses.
Irrational responses
Exposures often lead business owners to cut the wrong expenses and avoid the right investment. Many agencies start by slashing their marketing and training budget. But disciplined competitors know enhanced marketing presence and training creates more separation between them and their competition by the day.
Nobody wants a recession. But there is no greater opportunity to separate yourself from the rest of the pack.
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