Running a successful agency isn’t just about delivering great work—it’s about knowing how to measure your success. Agency key performance indicators (KPIs) are the handpicked metrics that facilitate that. They give you the insight you need to understand how your agency is performing, and where you can improve.
But with so many data points to track, it’s easy to feel overwhelmed. That’s why we’re breaking down the basics, and will outline six simple steps for understanding agency KPIs and leveraging them to unlock growth.
Ready to take your agency successes to the next level? Let’s dive in.
In this article 📖
The difference between metrics and KPIs
Distinguishing between metrics and KPIs is a must when planning (or adjusting) your agency growth strategies.
What is a metric?
A metric represents anything you can measure and provides general data about performance.
What is a KPI?
A KPI (Key Performance Indicator) is a targeted measure that’s directly tied to your goals and is unique to your growth strategy.
Examples of agency metrics vs. agency KPIs
Let’s demonstrate the difference between the two, using examples.
- Example goal: Increase monthly revenue
- Example metric: Number of client proposals sent
- This metric shows how much energy the agency is putting into getting new business through the door
- It gives quantifiable information about how they’re trying to make more money, but it doesn’t directly tell us the impact on their goal to increase monthly revenue
- Example KPI: New client acquisition rate
- On the flip side, a specific, targeted measure directly tied to the goal (a.k.a. A KPI) could be new client acquisition rate
- If 20% is deemed healthy for the agency, they could use “Reach 20% MoM client acquisition” as their KPI
- Example KPI formula:
- New client acquisition rate (%) = (Number of new clients acquired in a given period/Total number of leads in the same period) x 100
- Example KPI calculation:
- New client acquisition rate (%) = (10/50) x 100 = 20%
Further reading: Dive into our agency metrics article to get your head around core concepts and use cases for each. It can also help you decide which metrics make the most sense to choose as your agency KPIs.
Why KPIs are important
They align daily operations with strategic goals
KPIs are critical for aligning day-to-day agency operations with long-term strategic goals. They translate broad goals into actionable measures that track progress and success.
They provide focus
KPIs provide focus, create accountability, and boost motivation to achieve specific outcomes.
They drive performance
KPIs help in driving performance by setting clear targets and benchmarks. Good KPIs (more on this below) ensure that everyone in the agency understands what’s important and how their performance impacts the overall success.
They enable informed decision-making
KPIs offer actionable insights that guide decision-making. By regularly monitoring KPIs, agencies can identify trends, measure effectiveness, and make data-driven decisions to increase profitability.
They foster transparency and alignment
KPIs improve transparency within the agency by providing clear, quantifiable targets and results. They facilitate better communication between teams and management, ensuring that everyone is on the same page regarding performance expectations and outcomes.
What makes a good KPI vs. a bad KPI?
All KPIs aren’t created equal. So how do you distinguish a bad KPI from a good one?
Good KPIs:
✅ are directly tied to strategic objectives or specific goals
✅ are easy to track and analyze
✅ provide insights and drive meaningful actions
✅ enable better (and faster) decision-making
Bad KPIs:
❌ are unclear, or poorly defined
❌ create confusion
❌ provide little insight into performance or progress
❌ do not lead to actionable insights or decisions
❌ don’t help you achieve a wider goal
Let’s demonstrate this further with another example below.
Agency KPIs example
Example goal: Maintain steady revenue levels.
A good KPI is aligned with the agency’s strategic goals.
Example of a good KPI: “Client retention rate” measures the percentage of clients who continue working with your agency over a given period.
It’s a KPI that reflects how many clients you’re maintaining a positive relationship with and, subsequently, how much revenue you’re consistently generating by working with them.
With all that in mind, your specific KPI could be “Maintain a 90% annual client retention rate.”
Example of a bad KPI: “Number of leads” is a tempting KPI to use here.
More leads means steady revenue, right? Not necessarily. Calculating how many leads you have can tell you something about your potential revenue, but nothing specific or intrinsically connected.
The number of leads may make an impact on revenue levels, but you don’t know how likely those leads are to sign up as clients. You also don’t know how much each lead is worth, meaning it’s not measurable against revenue.
Therefore, it’s too disconnected from the goal of maintaining steady revenue, and a bad KPI.
6 steps to identify and maintain effective agency KPIs
1. Align with your goals:
Start by defining what you want to achieve overall for your agency or team, and how KPIs can align with this. Ensure that each KPI has a clear connection to these strategic goals.
2. Set realistic targets:
Establish realistic (and attainable) targets for each KPI. Remember, setting overly ambitious KPIs can lead to frustration and demotivation, while targets that are too easy might not drive performance.
3. Use the right tools:
Leverage relevant agency tools and software to collect, analyze, and visualize KPI data. Start with the reporting features in your resource management and project management tools.
4. Review and adjust:
KPIs aren’t a “set it and forget it” type of thing. Regularly review KPI performance and make adjustments as needed. Frequent evaluations help in identifying trends, addressing issues, and refining strategies to stay on track and drive agency growth.
5. Communicate progress:
Ensure that progress is communicated clearly (and on a regular basis) to relevant teams and stakeholders. This type of transparency promotes alignment and accountability across your agency.
6. Integrate with performance management:
Bring your KPIs into performance management processes, including performance reviews and goal-setting discussions. This ensures that KPIs drive both individual and team performance.
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Agency KPIs (examples per agency type)
One big factor to consider when choosing your KPIs is the type of services your agency offers. After all, every agency is unique, and therefore needs unique KPIs.
To examine agency KPIs through the lens of these different agency types, we spoke with Rob Sayles, agency veteran and seasoned consultant.
In our agency metrics piece, Rob has shared some revenue related metrics you could choose for your KPIs. But, to get more specific, he has also shared some example KPIs tailored to the unique characteristics of creative, marketing, digital and PR agencies. You’ll find them below.
These will help you get a better understanding of agency KPIs—both when it comes to your businesses’ success, and that of your clients. After all, happy clients lead to stronger agency performance.
Creative agency KPIs
As we’ve said, good KPIs are measurable and tied to a specific goal. Creative agencies’ goals are often aligned with a need to come up with innovative ideas and execute original campaigns. But, at the end of the day, healthy revenue levels is what enables them to keep creating.
With that in mind, here are some revenue-driving KPIs creative agencies should consider:
1. Project delivery time variance
How fast is your project process, from initial onboarding right through to final delivery? Tracking this duration as a KPI helps creative agencies stay accountable, and see if they need to speed up when it comes to getting deliverables over the line.
You can break this down further by comparing your forecasted delivery time with your actual delivery time. By comparing these two durations, you can gauge if you’re meeting your targets and if you need to re-evaluate and refine your project processes if you’re not.
Formulas:
Example calculation:
Project delivery time variance = (20 working days – 18 working days) / 18 working days) x 100
Project delivery time variance = [0.111] x 100 = 11%
Example KPI:
Maintain a <0%* project delivery time variance
*Note: The numbers in each of our examples may vary from what’s reasonable for your agency. Make sure to tailor the math to match your reality!
2. Billable utilization rate
Resource utilization measures how effectively you’re using all your available resources. These include time, budget, and tools, but the term usually includes staff too—even though we know people are far more valuable than “resource” implies.
One KPI that can give a better understanding of resource utilization is billable utilization. Creative agencies can use something like this to assess that:
Formula:
Example calculation:
Organizational billable utilization rate (%) = (700/800) x 100
Organizational billable utilization rate = 0.875 x 100 = 87.5%
Example KPI:
Hit an organizational billable utilization rate of 85%.
This KPI helps you understand if you’re assigning your team to the most valuable tasks, and if you can improve your billable totals, and revenue, as a result.
Need a hand figuring out your billable totals? This free billable hours calculator can help with that.
Marketing agency KPIs
At last count, there are 33,000+ agencies offering digital marketing services in the US. That’s stiff competition. As such, most marketing agencies have goals around client satisfaction.
By delivering work that’s outstanding by client standards, not only can these agencies retain their existing clients, but they can fend off their competitors who may want to poach their business—and their revenue.
Marketing agencies are fortunate when it comes to KPIs as they are usually concerned with data-driven outcomes. If you’re looking for the most important KPIs to track based on the above goals, these are the standouts:
1. Campaign ROI
This one is maybe obvious when thinking about how to prove your worth to your clients, but being able to show how much money your marketing agency is making for them is truly essential.
That, as well as how specific, measurable, and aligned with the goals we’ve outlined above it is, makes it a great KPI. Here’s how to assess it:
Formula:
Example calculation:
Revenue from campaign = $55,000
Campaign cost = $25,000
$55,000 – $25,000 = $30,000
$30,000/$25,000 = 1.2
1.2 x 100 = 120% campaign ROI
Example KPI:
Achieve marketing campaign ROI of 100%+ for each client.
2. Lead conversion rate
Feeding into campaign ROI above, you should also keep an eye on the number of leads you generate for clients, and the percentage that convert.
The type of conversions that are most relevant are between you and your client to decide. But, they could be anything from subscribers to customers to folks who commit any other significant action. Here’s how to figure out that KPI:
Formula:
Example calculation:
Lead conversion rate = (670/1000) x 100 = 67%
Example KPI:
Achieve a lead conversion rate of 50%+ for [client].
3. Cost of customer acquisition
Whether you bring in one customer or 1,000,000 for your client, how much you spent on securing each is a vital KPI based on our established goals.
This is a great way to justify your spend to clients. It’s a clear indicator that you’re doing your job well, spelled out in numbers, tied to the goals we talked about earlier. That all makes it the definition of a good KPI.
To calculate it—per project, channel, or per campaign—use this process:
Formula:
Example calculation:
Average CAC = $4,000/50 = $80
Example KPI:
Achieve an average CAC of <$100.
Digital agency KPIs
Like marketing agencies, digital agencies who deliver services like web design and ecommerce management are often deep in the data. As such, crunching KPIs may feel more natural than at other types of agencies.
Just like marketing agencies, they also face a lot of competition when it comes to securing client contracts and the revenue that goes with them. So, objectively proving how their services benefit their clients is often a core goal.
Somewhat uniquely though, digital agencies often work on a project basis, rather than a retainer basis. This can make cash flow less predictable than at other kinds of agencies. Addressing that difficulty is a common goal at digital agencies as a result.
With those goals in mind, here are some KPIs you may consider if you’re working in digital:
1. User engagement rate
When clients ask for an ecommerce store or a website build, one of the most important indicators of success for them is how users interact with it.
User engagement rate takes two metrics into account—total engaged users and total users. Because it directly relates to the goals we’ve identified above, and it’s highly measurable and specific, it’s a great KPI to start with at a digital agency.
Here’s how to figure it out:
Formula:
Example calculation*:
Total users = 10,000
Engaged users = 2,500
Engagement rate = (2,500/10,000) x 100 = 25%
*Note: Before calculating this formula, you’ll need to agree on the definition of “engaged” with your client. For example, you might agree that someone is engaged if they visit three or more website pages, or if they spend two or more minutes on the site. Regardless, once you have that definition, you can find the value you need to plug into this calculation.
Example KPI:
Secure an average engagement rate of 25%+ in the first six months of the site being live.
2. Client retention rate
While this is applicable to all the agency types we mention in this article, client retention rate is a particularly important KPI for digital agencies, as we’ve said.
Given the traditional “one-and-done” nature of website builds, client retention isn’t always high at these types of agencies. As such, to get a sense of the health of the agency, this rate should be monitored closely using a method like this:
Formula:
Example calculation:
Client retention rate = (1,500 – 550) / 1,500 x 100 = 63%
Example KPI:
Achieve a client retention rate of at least 60% MoM.
KPIs for PR agencies
PR’s traditionally seen as notoriously hard to measure in terms of success. However, there are steps you can use to create numerical KPIs for your PR agency.
For this agency type, we’ll also be speaking to KPIs that reflect the agency’s effectiveness when it comes to creating impactful work for their clients, justifying what the average client spends on their services.
The typical PR agency goals these address include increasing client profiles, and maintaining or elevating client reputation.
These are some of the best KPIs to track with those goals in mind:
1. Media mentions
This is a great example of a strong PR agency KPI, and there are plenty of media mention monitors on the market to help track the data you’ll need to compile that KPI.
In order to report on the significance of media mentions in a compelling way for clients, it’s important to not only state how many mentions your PR agency secures, but also the quality.
Like an example in our digital agency KPIs section, this is a compound KPI that takes multiple metrics into account. Here’s how you can report on it:
Formula:
Example calculation:
For each of the four metrics used to calculate this KPI for PR agencies, you’ll need to assign a weight.
Volume score is the count of total mentions during the evaluation period.
In terms of weight, assign 1 point per mention.
Reach score is the total audience size exposed to the mentions (e.g., readership, viewership, social media followers, etc.) To give it a weight, calculate 1 point for every 10,000 users reached.
Sentiment score categorizes mentions as positive, neutral, or negative and assigns points. For a positive mention, add 2 points. For a neutral one, 0 points. For a negative one, -1 point.
Engagement score measures how much interaction mentions generate (e.g., shares, likes, comments). Assign 1 point per 100 engagements.
Suppose an agency tracks media mentions for a campaign over a month and collects the following data:
Volume: 30 mentions
Reach: 200,000 total audience
Sentiment: 20 positive mentions, 8 neutral, 2 negative
Engagement: 5,000 total interactions across platforms
First, calculate the scores:
Volume Score: 30 × 1 = 30
Reach Score: 200,000/10,000 × 1 = 20
Sentiment Score: (20 × 2) + (8 × 0) + (2 × -1) = 40 − 2 = 38
Engagement Score: 5,000/100 x 1 = 50
Then, add the scores together:
Media mentions quality = 30 + 20 + 38 + 50 = 138
Example KPI:
Achieve a media mentions quality of 140 or above.
2. Crisis response time
No matter how busy your agency gets, there’s a “crisis” and then there’s a “crisis”—a media crisis. Think negative press on a client, social media backlash, or a product or service outage. One KPI for PR agencies is their crisis response time, i.e. how quickly they can react to issues like that.
While you can’t always be the first to know when a crisis arises, you can be prompt in reacting, and accountable for the same. To calculate crisis response time based on the factors you can control, simply use this formula:
Formula:
Example calculation:
Crisis response time = 3:15PM – 2PM = 1 hour 15 minutes
Example KPI:
Achieve a response crisis response time of 2 hours or less.
The bottom line on KPIs
You can’t know you’re making an impact without knowing what success looks like. KPIs are a valuable tool for providing insight into both your agency’s internal performance, and your external performance for clients.
By focusing on KPIs like resource utilization, client satisfaction, project delivery time, and client retention rate, agencies can figure out what they’re doing well, and what they could be doing better.
That said, effectively tracking and optimizing these KPIs requires the right tools—especially when it comes to managing team availability and project timelines.
This is where Resource Guru comes in. With features designed to streamline resource scheduling, optimize workloads, and improve project efficiency, Resource Guru can help you stay on top of related KPIs with ease.
Resource Guru empowers agencies to allocate resources intelligently, deliver projects on time, all while preventing team burnout.
Get a free trial of Resource Guru today to see how it can support your agency in hitting your KPIs and setting the foundation for long-term success:
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