Agencies have traditionally made money by billing time. Although that is beginning to change as more smaller agencies abandon time tracking in favor of accurate project estimating, most agencies still bill using hourly rates. For those agencies, establishing how billable an account executive is should be as simple as pulling a report from the agency management system each month.
Or is it really that easy? The number of hours someone bills is just one measure of productivity. While important as a way to identify additional opportunities to bill, it should never be the only productivity metric.
It’s About Time… And How You Use It
Fully billable employees (usually the creative and production staff in your agency) should be able to bill around 1,925 hours per year, minus vacations, holidays, and sick days (that’s 37 hours out of every 40-hour workweek). Some people may be able to bill more time, some less. We usually suggest that AEs try to bill between 75 and 80 percent of their 1,925 hours, or around 28 to 32 hours a week.
These are general goals, not “must meet” numbers; how attainable they are in your agency will depend on the kinds of accounts your AEs service (mostly media, heavy on collateral projects, or a mix), as well as what duties they perform other than strict “service.” For instance, if they spend lots of time calling on clients and relaying information and input back to the agency, that’s a service account. If they also do account planning, research and strategy (as they should in a modern agency), their productivity may increase simply because they can bill such functions at a higher hourly rate than that applied to basic service. (Account for these variations when you figure out blended rates for your larger accounts.)
Understanding how employees spend their time can help the agency’s estimators tighten up their project estimates. When you have a good sense of how much service goes into a typical project, you can establish baselines for future estimates of similar projects.
For service accounts, you may need to assess how much time AEs actually spend traveling back and forth between agency and client offices. If your account execs spend most of their time on the road, rather than actually speaking with clients or back at the agency, look for ways to help AEs “meet” with clients using technology. You shouldn’t completely eliminate in-person meetings, but try to cut down a reasonable percentage of travel hours. Also, look at whether some AEs are carrying too many long-distance accounts; shuffle some to other AEs so no single AE carries a heavy travel burden.
Look at the kinds of accounts each AE handles. Some accounts are heavy on print collateral; others are dense with media planning; still others demand research time or a higher degree of strategic planning. Every account is different. Look at how many of each account type your AEs handle, and consider shifting some accounts between AEs to give every AE a better chance to bill more hours.
Keeping tabs on AE time may highlight client accounts that simply aren’t profitable. Reassess whether you want to keep those accounts.
Also, the total billable hours available to AEs—or any of your staff—may also be affected by the agency duties they perform, i.e., not client hours. We’re thinking of pro bono work, attending civic/business functions on behalf of the agency, assisting with recruiting, or helping pursue new business (although new business hours can typically be recovered if you win the account). Throw in time to contribute content to the agency’s self-promotion efforts, and maybe general admin duties, and you may be looking at available billable hours closer to 50-60 percent. If that is the case at your agency, you may want to spread some of those agency duties and non-billable assignments to other agency personnel, or assign them on a rotating schedule.
Look at Where Each AE is Spending—Or Bleeding—Time
Pull a report for each account executive to check where their time is being spent, and how much of that is actually billable. Then meet with each AE individually to identify areas where time is not being used efficiently, or where billable hours might be increased. Help AEs set goals and start working toward improving billable hours and overall productivity. Check back monthly to get a brief update on their progress toward goals.
Ultimately, you must still pull monthly reports to see how much time AEs bill… and, just as important, remember to share that report with your account executives.
- Share a copy of the monthly report, then discuss what you see and how the AE feels about those observations.
- Ask AEs to keep a log of how they spend each day over a two-week period.
- Meet again to discuss how time is being spent, and where efficiencies might lie.
- Explore ways to increase billings by simply identifying areas where they should be billing, but aren’t.
- Suggest which time-churning duties might be better delegated to the account coordinator.
- Recommend that AEs structure their workdays, so they spend a certain number of hours on each function or responsibility daily.
- Ask AEs to allot one day or a half day each week for in-house duties, admin, etc.
- If necessary, consider shifting one or more accounts to other AEs to achieve a better balance of billable hours per AE.
- Share a copy of the monthly report with comments, kudos and encouragement; add suggestions whenever possible.
Ask AEs for input and feedback on the process. As they learn to assess how they spend their time, they may have ideas for improving efficiencies, or even changing processes and practices to help boost billing.
When AEs become more billable, you can concentrate more time on winning profitable new business.
Make it clear that you don’t want AEs to start boosting billing by fabricating hours they aren’t actually spending. That approach can lead to big trouble if clients ever decide to audit your billing against their accounts. Another difficulty you may encounter is having AEs so focused on managing their productivity that they start to drop the ball on actually servicing clients. Again, a structured day or week can help rein in OCD impulses to get lost in process.
Capturing more billable hours through smarter account management is another strategy for improving agency profitability. If you aren’t already reviewing employee reports for ways to boost billable time, get started now. And, agency principals, don’t forget to pull your own monthly report! You can probably bill more time, too.