Digital Marketing Profitability: Unlocking Success with Marcel Petitpas
Marcel Petitpas, CEO and Co-Founder of Parakeeto, is an expert in helping digital marketing and creative agencies measure and optimize their profitability. With proper data collection and analysis, businesses can make better decisions, increase profitability, and focus on the work they love. In this blog post, we will explore the keys to measuring profitability and how Marcel Petitpas’ services can help businesses triple their profits and provide their employees with more flexibility and bonuses.
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The Keys to Measuring Profitability
Clarity on timeline estimates, understanding financial accrual, and gaining a clear view of how all pieces fit together is key to measuring profitability. According to Marcel Petitpas, many agency owners are measuring a lot of things without understanding why. He argues that the most important metric is delivery margin: the portion of revenue left after spending payroll and other costs to finish a deliverable. It should be above 50%. The second most important number is overhead, which should be under 30% of gross income.
The Four Numbers That Influence Delivery Margin
Marcel Petitpas discussed four numbers that influence delivery margin: delivery costs, AGI, average billable rate, and utilization. Decreasing delivery costs can be accomplished by reducing the cost per hour of staff, maturing products and services, and using automation to reduce judgment needed for deliverables. The average billable rate is determined by dividing AGI by hours spent on a project; increasing it can be done by charging more or getting work done faster.
Utilization measures how much of bulk-bought time is used for client projects; increasing it means a team can do more with the same amount of time until another person is hired. Focusing on these four numbers helps unlock visibility into profitability with 20% of the work.
Understanding Costs and Selecting Profitable Clients
Marcel Petitpas discussed the importance of understanding what costs are involved in the production and selecting profitable clients that are also enjoyable. Revenue replacement is a concept used to grow a business by replacing lower-performing clients with new, more profitable ones.
Marcel proposed running an average billable rate report to see which services yield the highest profit margin. Profit margins should be above 50% delivery and 30% overhead for an agency to be considered reasonably healthy.
Investing in Growth Opportunities
With strong delivery margins, businesses have the option to choose how profitable they want to be while still investing in growth opportunities. Marcel Petitpas explains that all service-based businesses have the same business model, with consistent ratios between overhead and labor costs.
A key principle in marketing is to identify which metrics need improvement to reach profit potential. Marcel offers a 3-step process of an audit, measure, and report to help agencies reach their goals.
The Agency Profitability Toolkit
The Agency Profitability Toolkit provides training videos, templates, spreadsheets, cheat sheets, and more tools to help businesses understand the process. Connect with Perche on social media platforms or the Agency Profit Podcast for more resources and speaking opportunities.
Marcel Petitpas’ services are invaluable for businesses looking to increase their profitability and provide their employees with more flexibility and bonuses. Proper data collection and analysis, understanding delivery margin and overhead, and focusing on the four numbers that influence delivery margin are key to unlocking profitability.
By understanding costs, selecting profitable clients, and investing in growth opportunities, businesses can reach their profit potential and achieve long-term success.
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