This is November’s monthly Progress Report for ATTN Agency and we’re growing fast. We need to hire our first employee to assist in growth and dialing that was a major theme of this month.
Employee pay structure is very important to us. We need to properly incentivize with commission or bonuses and fair salary, but also make money.
Decision making continues on ownership of accounts. Specifically how the client manager and media buyers will work together on the accounts. I look at other industries to find out what we might adopt for our agency.
One of my partners and I discuss the idea of employees working from home. We discuss how that might work. It might be a realistic solution for having less office space, keeping people happier or making clients perform better.
The job listing is finalized, pushed live, and applications are starting to come in. We worked very hard on every detail that went into it and I discuss it more below.
Employee Pay Structure Ideas
Billing model for Hires: One of the things that we need to be careful and conscious of when we are growing is ownership of the accounts and responsibility pinning.
If everyone is responsible, no one is responsible. We need a specific person to be in charge of specific duties. In commercial sales insurance companies, it could be an account manager, or a lead manager. The manager gets paid commissions on that account for the lifetime of the account. He gets about 30% commission the first year and then 20% every year after. They are highly incentivized to keep clients happy and ensure client satisfaction.
This would mean a lower salary for these people, so they are highly incentivized. A vast majority of their income comes from their clients and making sure their clients are happy. In this billing model, they would also be incentivized to sign new clients.
The other model is Wells Fargo merchant processing. They give a heavy commission the first year you sign an account. After the first year, you do not get any commission. All future account operations and maintenance fall to Wells Fargo.
We need to think if we want to have account managers with a vested interest in the accounts. We can have levels of media buyers. Someone new and raw can start as a low-level buyer and once he proves himself capable of handling ad spend, he moves to the second tier, the third tier and then to the fourth tier, to bigger and better accounts.
We can rotate buyers in and out for an account, but the relationship remains consistent with one account manager, one point of contact. Clients will not get disturbed when a change in the buyer is made because that is not their main point of contact anyway.
This comes back to the communication issue of buyers spending too much time just communicating with clients. If we could have an account manager heading the buyers, and being updated on everything going on within the accounts, they can communicate with the clients and keep them happy. It would be good to incentivize somebody to take ownership of the account and remain as a fixture in the clients relationship with the company.
This will free up buyers from communicating with clients, except in case of the big accounts. This model is more directed towards our immediate growth. There is a concern that more of the Wells Fargo style of only first year commission payouts would be a better way to bring in more business. When the number of accounts increases, we can hire more account managers, with the newer managers managing the smaller accounts.
The senior managers can continue prospecting for new clients, pass it on to the new managers, and get a one time commission on it. This way we are putting ourselves in a position to have longevity with accounts and have the company grow successfully because people feel like they can make a career and a life at our company. This is similar to commercial insurance, where agents build a big book and then they stay with the company for a long time because they can see themselves making a lot of money and retiring one day.
This was basically the range of discussions and debates that we had in our team meeting in relation to the growth of our ad agency.
Ownership of the accounts (if everyone is responsible, no one is responsible)
The one point which puzzles every growing business owner is pay structure for employees. We decided to bounce some hypothetical numbers, to get the discussion rolling.
If we hire somebody and pay him $150,000 a year on target earnings, that would be $12,500 a month. Let us say they are managing Google spend at $50,000 a month and the fee is 8%, that would be $4,000. If that person was managing eight Google accounts at the same rate and fee, that would be $32,000 gross for the company every month.
If we take $32,000, the gross fee minus the fee to the employee, salary plus commissions, the gross profit is $19,500 at a 60% margin, which is exactly where we need to be. We cannot expect to pay 20% while retaining 80% margin, as people will leave if they are shortchanged. We need to avoid having that happen to us as we grow.
Our main strategy for getting and retaining ideal employees is good pay and not overworking employees. A person managing eight accounts, getting a minimum $1,000 an account as salary, gets $8,000. That leaves a difference of $4,500 per month he could potentially make to meet his on target earnings. Our CPA has told us that bonus is the best way to pay out commissions to avoid any kind of problems and arguments with employees about what they should be getting paid.
The number one problem with companies is partner arguments, the second problem is commission arguments. As our CPA said, bonus is the best, because you either get the bonus or not. A potential bonus of $4,500 per month would get people to $12,500 per month. On quarterly payment, it is a $562 bonus per account, totalling $13,500, which would put them at their $150,000 income range.
With a bonus structure, targets could be set for every quarter, improvements like growing the account spend could be made to keep accounts happy.
Another thing we could do is pay arrears of six months. So you get paid for the quarter that you keep the client, after the next quarter. If you lose the account in the next quarter, you would not get paid the commission on that quarter, but it will run in arrears. This will help our cashflow too.
All media buyers and account managers we hire must take ownership of the account and be invested in the performance of the account. Without ownership on the account and real commitment, things will not succeed. If the bonus is tied to the client satisfaction and consistent performance, things are bound to go the right way.
We value our clients and keeping them happy and loyal to our agency should be our sole focus. To sum up, pay well, do not overwork people, be happy with a 60% margin to pay for your expenses, partner salaries, et al.
Employee Work from home
Jeff Bezos says that the number one work benefit for employees is not to set weekly hours and give them the options to work wherever they want. Do not have a minimum number of work hours and they can work anywhere they want. They could work from home, but I prefer to have them in the office for at least two days a week when we review what has been done and then plan the future course of action.
Buyers are different because they just do ads. As long as they get the ads up and running successfully, that is what matters.
Most ad agencies have time cards, where the employees log what they do every day, to keep track of things they are doing within working hours. Record their screen and then spot check it to make sure that they are working. If they are working efficiently, they could probably handle more work and get paid more money for it.
All this may possibly work well, but what is going to keep people around longer is feeling like they are a part of something that is growing. Work satisfaction, great work atmosphere, achieving their goals and their long term vision for themselves, is what will work best.
Employee Job Listing Is Live
Our first listing for a job application for a Facebook ads manager is live and we have some applications for the job. We are waiting to keep the momentum going on the ads first before we pump it after a few more applications to generate more interest and clicks.
We took a long time drafting this job listing, looking for exactly how we wanted to come across. It is straight, to the point and direct. However, it says everything we want it to.
The book Who: The A method for Hiring by Geoff Smart and Randy Street, was our guide and we drafted the ad as per all tips mentioned therein. We went back and forth about all the different words that we chose and why we chose them. We were very specific about the different things that we needed people to know or not know. We refined and defined it with multiple edits before it went online.
It is time for us to start expanding our numbers. We are getting some great opportunities for some big clients and accounts. The company is growing fast. To meet our goals, we need more people and we are hoping to scale our numbers and quality. We are trying to be better, even though being different is better than being better.
Anybody who is innovative, committed, confident, collaborative, passionate, and resonating with our core values, is the type of person that we are looking for. All fingers and toes crossed for this one!!!