At a time when every business decision has taken on increased weight and significance, the data we use to inform those decisions is more crucial than ever.
At IMPACT’s Digital Sales & Marketing Day in April, Mavenlink's VP of Advisory Services Brent Trimble delivered an address titled “Key Metrics to Drive Agency Success — Leading With Certainty in Dynamic Times.”
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Brent is a member of the advisory services team at Mavenlink, a small team of service professional leaders from a variety of backgrounds that helps firms that are looking to improve their organizational design and workflow.
Here, Brent offers additional insights to help agencies prepare for post-COVID growth.
What Mavenlink offers
John: Mavenlink is a SaaS company. Can you talk about the platform that you offer?
Brent: We are a SaaS company. We were formed in 2008 to fill a need that our founders saw: A professional services company of any kind — whether it's an ad agency or a big consulting firm — is ultimately in the talent business.
And regardless of size, nearly every service company struggles with the same questions: What kind of talent do we have? How are our people allocated? Can we deploy them at the point of attack on a client solution to deliver value?
Our founders saw a need, founded Mavenlink, and we've grown and matured since.
We have crystallized around this notion of being “an operational system of record for services companies.”
What that means is that we can be the hub that ties all operations together: Everything from giving leaders visibility into their sales pipeline to the management of a project or an engagement to monitoring the health of that engagement, then, finally, to revenue recognition and invoicing.
Mavenlink can do many of those parts in and of itself — or integrate with other platforms that an agency or a services company might have.
For instance, Salesforce as a CRM, Mavenlink as a hub, NetSuite or some other financial ledger on the back end. Mavenlink sits in the center.
That's essentially what we do.
John: How many clients does Mavenlink serve?
Brent: There are a couple of ways to answer that. Customer-wise, more than 2,500. From small shops, 50 to 100 people, all the way through some global consulting BPO firms where we have up to 10,000 users or more.
John: Where's your headquarters?
Brent: The headquarters is in Irvine, California.
We have critical mass there that's grown to a couple hundred people. The rest of our team of more than 400 is spread across our seven global offices, or working remotely.
We have a development office in San Francisco and product design and management based in Salt Lake City.
We also have growing, thriving offices in Boston, London, Melbourne, and Cebu.
How service companies use data — and how they could use it better
John: In general, do you think service companies use data well to make their decisions, or are they looking at the wrong information?
Brent: There's a massive move to use data and use it well.
You look at a company like Amazon. They're built on data. Many folks would contend that Facebook and Google are really data companies before anything else.
Services companies do a remarkable job of deploying data, discerning data, managing data, and interpreting data for clients. Some do use data well, but when I look at the array of services companies that we work with, I believe most could do a better job to harness their own data.
Many of them, particularly in this climate, are primarily looking at three metrics:
Top line revenue — How much revenue do we have coming in?
Utilization — How much are our people working right now?
Gross margin — Are we making any money?
These are really important metrics, but I think some useful metrics and insight could be gained by treating an individual project or a client engagement like its own P&L.
For a growing firm, it’s essential to track this way and important to remember that not all revenue is good revenue.
You can't make everything up in volume, so it’s important to look at margin not only at the company level, but at the individual engagement level. That's a key suite of metrics that companies could spend more time utilizing to drive decisions.
There’s also opportunity for data that's around talent: skills, geography, availability.
For example, what kinds of skills are currently in high demand? What's the market telling us will be in demand? The demand skill matrix is an important metric that should be prioritized.
I talked at the Digital Sales & Marketing Day conference about satisfaction of clients in a couple of dimensions, that's a really key data point that I think a lot of services companies miss. Can you fill in gaps of observation with some qualitative data?
Then, ultimately, services companies need data around their client’s business. How is the data in their client segment doing? What is it showing? This means following everything from the macro market trends, the stock indices and industry trends all the way to, for instance, the data that a client shares in their earning statements.
How is that going to fluctuate in the future and, ultimately, in recovery?
Those are some pieces of data I think that services companies could utilize more to their advantage.
Not all revenue is good revenue
John: Can you go a little farther into that statement, “Not all revenue is good revenue?”
Brent: The mistake many firms make is they're not able to really think further down the line in terms of top line revenue to what does this work mean to the business in the long run?
What's the opportunity cost in other areas of the business if I'm going to have to cannibalize some key talent to work on this?
Is this piece of business really good for us in the long term?
It’s easy to just get blinded by the short term revenue. It’s easy to be distracted by the size of the opportunity, the size of the logo.
Profit, of course, is a key metric. You have to be able to look at the outset of an engagement and say, "Is this really going to make money for us?"
Many services firms right now have to make some tough decisions around people, trajectory, delaying expenses and more. But as the recovery emerges (and beyond), firms have to look at all the trailing data points, the cause and effect that could come from taking on a bad engagement.
Brent: I think this is where software companies have done a better job over the years than services companies.
We automatically assume if we're in the services business, because we're always interacting with clients, that we have a good sense of their satisfaction.
In many cases we do and our observations are the leading indicators: What am I seeing? What is my client telling me? Am I deepening that relationship? Do they feel like they have an open forum to voice concerns? Am I really creating value for them?
The next layer is gathering some qualitative data from our practitioners in the field.
Our project managers, our scrum masters, our engagement managers, program managers, account teams and more. What are they observing? Do we have a mechanism to capture data and view it as it bubbles up?
I'd say most services companies do a pretty good job of A, an okay job of B, but as far as making CSAT a part of culture in a real business practice, very few have an automated mechanism for doing that.
In practice, that would look like having a survey methodology where you’re asking the right types of questions to all of your client base at key intervals. Maybe it's once at the beginning of the year, maybe it's once in Q3, maybe it's once a year.
This allows you to develop a baseline and see how the firm grows or evolves in its clients’ eyes year over year.
Then, you can look at making CSAT an important part of how performance is rewarded in the company and make it part of driving value for clients.
As an example, we do have a couple of integrations with our platform with some leading automated survey-type companies where we've seen some nascent introductions of survey automation as part of an overall dataset.
I think we'll see more firms start to do this well. It really helps pivot culture, and certainly helps flag bad surprises — I mean, who wants to be surprised by bad news halfway through the year of a major client, when you could have had a signal for that sooner?
Preparing for post-COVID-19 success
John: In addition to watching metrics, what other things can agencies do for success in the post-COVID-19 era?
Brent: I think what agencies can do, provided that they've been able to double down and preserve the business that they've got, is take the opportunity to treat this period as a pit stop of sorts. The way a Formula One or a NASCAR crew team would use it — very strategically. Get the car into the pit, gas it up, change wheels.
This is a time you can really double down on things that need improvement in the business, primarily around areas like operations. Maybe a new business practice, maybe there's some opportunity to migrate some talent, retrain, or even or bring in some new talent.
I mean, think about it. This has been a talent-driven market for the past seven to ten years. Now there's this pool of really outstanding talent available. Of course I'm not advocating leaders go in and switch people out in a wholesale fashion. But if there's an opportunity to improve in a couple of key areas, the world's your oyster right now.
Really take time to look at the enterprise: what can we do to improve operations that we always wanted to do, if we had the time to do it?
Don’t lean on top performers
John: In trying times, businesses tend to lean more heavily on top performers. Talk about how this can be avoided and why it is so important to do so.
Brent: For folks who have been in the agency world for a long time, this has always been a long-hour business, with a really tough work-life balance — particularly if you're in a high octane hub like New York, London, or San Francisco.
Then, you're compounded by the fact that everybody's now working remotely and the days bleed into nights.
I think agencies and service companies really need to consciously focus on ensuring that their top performers do not suffer from burnout. The top performers are the folks who are going to drive them, ultimately, out of the recovery and springboard the business.
But top performers need self-policing sometimes, like thoroughbreds. They have a tendency to run themselves out, so if there is a data mechanism where you can view folks’ utilization, that should certainly be top of mind.
If you're the head of a 50-person business, you're going to have personal relationships with your top performers. Reach out and counsel them, help introduce things that allow them to find balance.
For instance, at Mavenlink, our leadership invested heavily in its people. It's always had an extremely strong culture and has really enhanced that with things like health, wellness, mindfulness during COVID-19, and paying for a slew of health and wellness programs like online fitness and reimbursing gym equipment that really helps to ensure that folks don't take this time to burn out like a meteor.
You don't want to run at a 100-meter pace, it’s not sustainable. You’ve got to think about it as running an 800-meter pace: fast, earnest, but for the longer haul.
Should you cut marketing in a downturn?
John: During economic downturns, a knee-jerk reaction among many businesses is to cut marketing budgets. Why is that a bad idea?
Brent: I think if you look at some broad-based, more cerebral studies of market downturns, you’ll see CPG companies such as The Colgate-Palmolives of the world, the Johnson and Johnsons of the world, they are doing pretty well in this market.
Now, many of them have products that are very much in demand, but their brands didn't gain that recognition, supply chain, shelf space, desire, and product design overnight.
They've invested in their brands for many years, and if you look at fluctuations and overlay their ad spends, you don't see huge swings. It's very modulated and very deliberate. They might cut and shave back 10% here and there, but they're not cutting 50, 60, 70%.
They understand that brand equity is a way to reduce business risk coming out of a recovery.
So my counsel would be this: don't cut marketing or advertising disproportionately because, even if a consumer changes their spending or shopping habits, this is a way to stockpile brand currency.
Whether it's something as simple as pixeling a customer for a few months down the road to gain some data about them — these little bits of interaction they have with you now can really pay off a quarter or two or three down the road.
It's tough not to make that knee-jerk reaction when the economic data is so dire, but history can be a guide and show how building currency with the consumer now will help lead you out of the recovery.
Advice for the post-COVID recovery
John: You spoke at our event in April about your belief in economic recovery being likely later this year. With that in mind, what is your advice to companies of all kinds out there right now?
Brent: I have lived and managed through a couple of downturns, including the economic crisis in 2008. But there's really nothing like this.
The economic shut off was a planned event, in contrast to the economic crisis, which was very unplanned. In this situation, there's at least been some coordination. Central banks were very fast to flood the system with liquidity and now folks are just kind of waiting.
The "V" recovery could be very narrow and very sharp, or it could be wide and stocky.
I think the consensus, still, is that there is going to be a speedy recovery. The recovery has already begun. If you're looking at companies that have offices in Asia, those folks are going back to work and resuming business. So the recovery has begun, and that recovery will make its way west.
The advice I'd have is this: observe patterns in consumer behavior as it intersects with the clients that you're servicing. Continue to model and build scenarios. Plan for a short-, medium-, and long-term recovery. Keep checking your models.
If you've got a worst-case scenario that your business absolutely falls off a cliff, take that model, double it, and look at ways that you would sustain business through a really, really prolonged downturn — and then just keep refreshing that model.
But what we are seeing is that the recovery is happening. It's just going to hit different sectors sooner than others. It's not going to be an even buttering of the bread, but it is happening.
The future of work
John: Lastly, during this period of upheaval, there's been quite a bit of discussion around the future of work. As an operational software company, what data are you seeing from current clients, and how do you interpret this for the future?
Brent:Digital transformation as a term has been overused so much almost to the point of being meaningless, but I think it's germane here because there’s this notion of companies that weren’t doing business digitally are suddenly being forced to transform. We're just seeing unbelievable adaptation and adoption.
A practical example is this: you have a restaurant supply company out of Manhattan that has made its business over the years supplying food to restaurants. And they’ve suddenly spun up an e-commerce website. It’s not the slickest, this wasn't an Amazon-level experience, but being able to pivot their business that quickly is unbelievable.
Probably 95% of their revenue comes to a screeching halt. And then, within days or weeks, they pivot to a direct-to-consumer model and are able to survive.
Services companies that are working remotely are seeing that they can trust people if their culture is sound. If they've built a culture of accountability and executional excellence, they can trust that work gets done. Technology is simply a conduit for that, and it has hastened what I believe has been a growing expectation of workers to have some flexibility to either work from home, or work in the office.
Now, I don't think it has to be binary. I think there are instances where in-office collaboration has to be there and works really well, so we'll see a mix of that.
At Mavenlink, we're fortunate. Our software and our platform is really meant to facilitate collaborative work. We're not Zoom, but we're in that sort of vein.
For our current clients, they're leaning more into the platform. They're turning on functionality that they planned to turn on later this year or early next year. They're doing more integration, more customization, they're buying more capacity and usage.
We're seeing deals come through our pipeline with people that are considering the product saying, "How quickly can you integrate this? We need this right now. We can't manage our business with manual processes and spreadsheets anymore. We need visibility because we can't keep up with the pace and the tempo of a remote workforce doing all this manually."
I think we're naturally relational creatures. People like to be together. I think there'll just be a really good, happy medium in the future where folks have built-in flexibility in most employer-employee relationships.
In the services industry, we know that work happens around the clock in a global economy, so most people have some version of flexibility anyway, and that's just going to continue.
We’re seeing businesses that for years stiff-armed this notion of remote work because of data concerns. And now we're seeing bond traders with multi-screen setups at home and they’re getting along fine.
There is perhaps some good that'll come out of the COVID-19 pandemic. I think that in the future, there's just going to be a nice blending of in-person collaboration with lots of remote work.