In this episode, hosts Peter Kang and Sei-Wook Kim cut through the noise of data overload to share the essential metrics every agency should track. Moving beyond fancy dashboards, they break down the handful of key performance indicators (KPIs) that truly drive informed decision-making at their portfolio agencies under Barrel Holdings.

Peter and Sei-Wook explain the critical difference between lag measures (reporting on the past) and lead measures (predicting the future), providing a clear framework for both. They dive deep into core financial metrics like revenue mix, gross margin, and EBITDA, and operational essentials like utilization and pipeline health. They also share practical advice on avoiding common pitfalls, like making hasty decisions based on unverified forecast data or tracking too many meaningless numbers.

Whether you're drowning in spreadsheets or flying blind, this episode offers a pragmatic, battle-tested approach to measuring what matters, so you can focus on growing a healthier, more profitable agency.

Key Moments

1. Why less is more: The danger of tracking everything and the power of a simplified dashboard.

2. Lag vs. Lead: Understanding the difference between historical reports and future forecasts.

3. Revenue 101: Why breaking down revenue into recurring vs. project and new vs. existing clients is crucial.

4. Gross Margin as a health check: What it says about your pricing and operational efficiency.

5. The story behind EBITDA: How to interpret SG&A costs and strategic investments.

6. Utilization deep dive: Why targets vary by role and how to forecast future capacity.

7. The art of the pipeline: Tracking leads, proposals, win rates, and converting it into a weighted revenue forecast.

8. Secondary metrics worth a glance: Accounts receivable aging, client concentration, and net revenue retention.

9. The human side: Why employee satisfaction and retention are leading indicators of business health.

10. The litmus test: How to know if a metric is worth tracking or just becoming "wallpaper."

Real Talk Takeaways

1. Data is a signal, not gospel. Never make a major decision based on a number without understanding the story behind it.

2. A signed contract doesn't equal instant revenue. A weighted pipeline that maps revenue to future months is essential for cash flow planning.

3. Utilization targets are not one-size-fits-all. They depend on role, seniority, and your agency's billing rates.

4. Profitability is a multi-layered game. You need to understand it at the project, client, and overall agency level.

5. The most important metric is the one you act on. If you're not having conversations or making decisions based on a KPI, stop tracking it.

6. Don't let perfect data paralyze you. A directional understanding of your forecast is better than no forecast at all.

7. Metrics should inform judgment, not replace it. Leadership is about interpreting the data and making the call.

Timestamps

00:00 – Intro: Cutting through the noise of agency metrics

00:15 – The "less is more" philosophy for agency dashboards

01:05 – Lag vs. Lead Measures: Defining historical and predictive metrics

01:20 – Lag Measure #1: Revenue (Recurring vs. Project, New vs. Existing)

02:07 – Why the recurring revenue mix is a key stability indicator

02:20 – Lag Measure #2: Gross Margin (Pricing & Operational Efficiency)

03:24 – Lag Measure #3: EBITDA (Understanding SG&A and strategic investments)

04:17 – Lag Measure #4: Utilization (Targets by role and discipline)

05:24 – What is a "good" utilization rate? (Spoiler: It depends)

05:40 – Shifting to Lead Measures: Forecasting the future

05:48 – Lead Measure #1: Forecasted Utilization (Avoiding capacity cliffs)

06:48 – The critical step: Verifying forecast data with your team before acting

07:23 – Why you must look beyond the next two weeks in your forecast

08:27 – Lead Measure #2: Pipeline (Leads, proposals, win rates, and value)

09:33 – The importance of tracking new work from existing clients

10:12 – How to build a "Weighted Pipeline" to forecast committed revenue

11:33 – The critical difference between bookings and recognized revenue

12:46 – How a signed mega-deal can still leave you in a cash flow drought

13:00 – How pipeline forecasts impact hiring decisions and gross margins

13:47 – Secondary Metrics: The supporting cast of data

14:04 – Accounts Receivable Aging: The cash flow reality check

14:28 – Client Concentration: Measuring your biggest risk

14:50 – Net Revenue Retention: The ultimate test of client growth

15:56 – Why employee satisfaction and retention are business health metrics

17:12 – Project & Client Profitability: Learning from past engagements

18:13 – The final word: If you don't act on it, don't track it

18:39 – The "wallpaper" test for metrics

19:33 – Finding the right cadence for each metric (weekly, monthly, quarterly)

19:52 – Wrap-up: Metrics inform judgment, they don't replace it

Notable Quotes

"It's very easy to go overboard, just start tracking everything you can... there's actually benefit to having less." – Peter Kang on simplifying your dashboard.

"Metrics can be lag measures... reporting on what happened in the past versus lead measures, which you're trying to project the future." – Sei Wook Kim on the two types of data.

"Gross margin... reflects how profitable are the projects that we're running. It speaks to operational efficiency." – Peter Kang on the story behind the number.

"Any of these things... it's making sure the data is correct before making any decisions on it." – Sei Wook Kim on the danger of unverified forecasts.

"A signed contract for a $500k project sounds great, but if it doesn't start for months, you still might be in a drought and be in trouble." – Peter Kang on the difference between bookings and cash flow.

"Metrics are... it shouldn't replace judgment. You have to look at this and decide is it telling you the right thing." – Sei Wook Kim on the role of leadership in interpreting data.

Links & Resources

Peter Kang on LinkedIn: https://www.linkedin.com/in/peterkang34/

Sei-Wook on LinkedIn: https://www.linkedin.com/in/seiwookkim/

AgencyHabits Website: https://www.agencyhabits.com/

AgencyHabits on LinkedIn: https://www.linkedin.com/company/agencyhabits/

Barrel Holdings Website: https://www.barrel-holdings.com/

Barrel Holdings LinkedIn: https://www.linkedin.com/company/barrel-holdings/