The Ford Mustang is arguably the most iconic American sports car of the past 50 years. Some of its popularity is based on how the car looks, but for many people, the Mustang is a must-have because of the engine, the core part of the vehicle that isn’t seen but makes the vehicle go from 0 to 60 in 4.3 seconds.
Why do we bring this up? Because in many ways, digital studios are just like the Mustang. It is easy to have a flashy website and say you are an expert at the latest design trend, but in order to become a sustainable power in the ever-changing digital space, you need to have a powerful engine that drives the performance of your business.
And just like a car, when it comes to optimizing your business’ performance, it’s critical to frequently look at the heart of your company and examine your core principles and practices.
So, let’s take a peek “under the hood” of your digital studio.
When you step back and examine the core of your business — which you should do frequently, at least quarterly – there are three areas you should focus on:
- Your people proposition
- Your value proposition
- Your profit proposition
In order to grow your business, you need to have clarity around these propositions including how they are aligned. By constantly evaluating each, you can make the necessary adjustments to ensure the business is producing its desired results.
Let’s examine each proposition:
Your people proposition
Your people proposition consists of the positive motivations and incentives you put in place for your employees as they support and implement your overall strategy. Beyond that, this proposition includes how you hire and onboard employees, how you establish job descriptions, what types of employee development you offer, and how you evaluate and reward your employees.
In order for your employees to offer the support you need, it is essential for you to first clarify, communicate and operationalize the following:
- Mission statement: You need to provide clarity around a compelling purpose statement that states why the agency exists
- Vision: You must define and communicate where the agency is going
- Core Values: It is imperative you share the irrefutable behavioral foundations required of your team
Your value proposition
Your value proposition simply means the benefit your clients receive from purchasing your product/service, minus what they pay for it. Therefore, to increase the value of your offerings, you can either increase the benefits your clients receive, lower your costs or a combination of the two. Value is also relative to what your competitors offer.
The following exercises will help your agency determine how to increase the value of your product/service:
- Strategy canvas: Identify the differentiating factors between you and your competitors, including how customers make their buying decision. From there, you can determine whether to change any factors to help you further stand out in the marketplace.
- Sales Positioning: When you are pitching a client, you need to understand not only what a client ‘wants,’ such as a new website or app, but you need to go deeper to understand and quantify what your client ‘needs.’ By knowing that, you can better demonstrate how your services could increase your client’s business outcomes in a quantifiable way.
- Pricing Model: Furthermore we encourage agencies to think beyond hourly or fixed pricing and instead determine the value you bring to your client on a given project and then price according to that value. Having a deep understanding of the value you bring to a client is essential in growing your fee structure.
A solid strategy canvas, a well thought-out sales position, and a strategic pricing model will enable you to put together a compelling value proposition that demonstrates to prospective clients the powerful return on investment that comes with hiring your agency.
Your profit proposition
Determining your profit is simply calculating the revenues generated by your agency minus the cost of production and delivery.
Frequently calculate and monitor analytics around cash, utilization, capacity to contract, and profitability. Properly calculating these analytics is essential – if you need assistance doing so we recommend reaching out to Summit CPA. Monitoring these key performance indicators allows you to get real time information on how the agency is performing and identify what to adjust in the ‘people’ and ‘value’ propositions, to achieve your agency’s profit goals.
If you aren’t meeting your profit goals, then you need to step back and revisit the components of your value proposition.
Agency’s that achieve repeated success in the marketplace are crystal clear when it comes to who their ideal client is. The agency builds its value proposition around that ideal client. It hires, develops and rewards people who serve that ideal client. This clear distinction leads to greater profit levels.
Do you know who your ideal client is? What do they want? What are their values? What do they need from you?
Take out a piece of paper and draw your performance engine. Separate out your people, value and profit propositions into three circles, and in between the three, place your ideal client.
Within each section, rate the current performance of each component of your agency.
- Green = great as is
- Yellow = OK, but needs some improvement
- Red = In trouble and needs fixing
A sample performance engine drawing is below.
Now take a look at your picture. What do you need to do to make each component better? How can you better align the components in a more integrated way to improve the performance of your agency?
As you consider the answers to these questions, remember the Mustang. Ford is not shy about the car’s iconic status. Front and center on the Mustang website is this phrase: #1 SPORTS CAR FOR OVER 45 YEARS
Embrace who you are and what differentiates you. By doing that, you too can strengthen your digital agency’s performance engine.
About The Author
Tom Barrett is a sought after strategic planning facilitator and coach to companies, teams and leaders. He is also the Co-Founder of Navigate The Journey, LLC a strategic planning and leadership development company that specializes in focusing and growing digital studios, consultancies, and agencies.