revenue

How your recruitment agency can predict dips in revenue before they happen

Sarah Linney
28 Sep
Reading time: 3 minutes
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One of the biggest benefits of tracking your recruitment agency’s business development is predicting dips in revenue before they happen.

A strong business development pipeline ensures new clients and jobs each month for your recruitment agency, but if you’re not prioritising and tracking your business development efforts then this pipeline can easily run out. 

To ensure your business development pipeline is flowing smoothly, recruitment agency leaders need to track how business development leads are progressing, accurately predict when dips in revenue might occur and boost their business development efforts to avoid these dips. 

To understand how one New Zealand-based firm is effectively tackling this challenge, we recently chatted to Iain MacGibbon, Managing Director of Farrow Jamieson, about how they predict dips in revenue and the big benefits it brought to their agency. 

What mistakes do you see recruitment agencies make when it comes to ensuring consistent and sustainable revenue?

The number one mistake is NOT working on jobs that will bring a return. Focus on retained work, exclusive work or (worst case) contingent work in an area where consultants have expertise or a reputation and candidates.

I personally dislike preferred supplier agreements (PSAs) as 80% of the time they are driven by procurement as a way to drive down costs, irrespective of the market and the difficulty of finding candidates, however, the other 20% of PSAs are a gift because they are based on a partnership that brings a stream of work.

You need to understand the numbers. What do you have to bill and what is your average fee that will help you hit that number?

Stop digging. If a client or a market area is not working; fire the client or get out of that market. Conditions change, markets change, even clients change.

Focus on 90-day cycles. Too many recruiters are working day to day without planning. When you get to Christmas and a slow down, that sort of thinking will kill you.

How has Farrow Jamieson set up processes to ensure you can predict dips in revenue?

Recruitment is a simple business. Find people that clients will interview and hire. The simplest number to watch is how many candidates are getting interviewed by clients. If that dips, you have a problem coming up.

Watch out for the biggest biller this quarter. If they have been so busy delivering this quarter you can probably guarantee that they will dip next quarter because they forgot to do the basics like keeping in touch with clients and following up on placements.

What short- and long-term ripple effects has this approach had on Farrow Jamieson?

In the short term; confronting a big biller who isn’t doing the basics is “interesting”. You know they will have a dip but in the midst of a “purple patch” of billing they can’t see it. Sometimes being old has its uses as we really have seen it all before.

The biggest decision we ever made as a business was to “fire” a client that was responsible for 40% of our revenue. 

However, they were killing us with the way the in-house talent team were treating  assignments and us. 

While it seemed massive at the time, it was the best decision we have ever made as a business. And the hole in revenue filled quickly with clients who gave us more work because we had more time to service them properly.

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