Thinking

Knowing what your investment’s worth

In my experience if your investment in developing new business isn’t delivering a return of at least six times in 12 months there’s something amiss.  Curiously, though, not many agencies set definite outcomes to measure their return on investment in attracting and delivering new business.

When planning for the new financial year, leadership teams will often see a clear gross profit gap that needs to be filled through both existing and new clients.  In order to address this they invest in new personnel, marketing and research, and pitching; however, at the end of the year few can accurately say what the net return on this investment has in fact been.

Why is this important?  If you measure it, you can manage it.  You can ask and answer questions about performance and improve.  How effective is the new business attraction and conversion?  Did the pitch cost justify the gross profit won?  When should we decline to pitch?  How well is a new business director performing?

We measure the productivity of our agency people, why shouldn’t we measure the real cost of new business in the same way?