Running a marketing agency without solid data is like navigating without a map. You might get somewhere, but you’ll waste a lot of time, money, and energy along the way. At Kontra, we’ve built a culture around measuring what matters — not vanity numbers, but the metrics that actually tell us how healthy the business is, where we’re growing, and where we need to improve.
To be fair, we didn’t start measuring many of these business metrics when we started the agency 14+ years ago – those were introduced much later. When you just begin, you probably measure just revenue and costs, which is more than enough to start. We added more metrics as we learned more about this business and began measuring more data.
We calculate and measure all these metrics in 3 tools:
- our internal master Excel sheet
- Productive
- Pipedrive
Here’s a breakdown of (almost) every business metric we track, what it means, and why it matters to us.
Revenue per Division
We operate across 3 divisions (Communications & Creative, Growth & Performance, and Web Design & Development) — each focused on a different area of marketing services. Tracking revenue per division shows exactly how much each team contributes to the company’s top line.
This business metric helps us understand which services are in demand, which departments are scaling, and where we may need to invest more resources or rethink our offer. It’s not about ranking departments against each other — it’s about having a clear picture of where our income is actually coming from. Without this visibility, it’s easy to overinvest in areas that aren’t pulling their commercial weight.
Salary Costs per Division
Revenue only tells half the story. We also track the total salary cost for each department, which gives us a direct view of how much we’re spending on people in each area of the business.
When paired with revenue per department, this business metric becomes a powerful lens for evaluating whether our team structure makes sense. A department generating strong revenue while keeping salary costs proportionate is healthy. One where salary costs outpace revenue signals that something needs to change — whether that’s pricing, team size, or how work is scoped.
Company Overhead
Overhead refers to all the fixed costs that keep the business running but aren’t directly tied to producing client work — things like office rent, software subscriptions, accounting, legal fees, utilities, and similar expenses.
Understanding our overhead gives us a realistic view of what the business needs to generate just to keep the lights on before any profit is made. It also informs decisions about growth: expanding the team or opening a new office will increase overhead, and we need to know whether we can sustain that.
Overhead as a Share of Total Costs
Knowing the overhead number is useful. Knowing what percentage of total costs overhead represents is even more useful.
This ratio tells us how lean or heavy our cost structure is. Agencies with high overhead ratios are more exposed during slow periods, because a large chunk of their costs is fixed and doesn’t shrink when revenues do. We aim to keep this number at a level that gives us flexibility — low enough that we’re not locked into costs we can’t control, but structured enough to support a quality working environment and the right tools.
Profitability per Division
This is one of the most important business metrics we track. Division-level profitability is calculated by subtracting a division’s direct costs (primarily salaries and other costs attributable to that division) from its revenue.
It answers the fundamental question: Is this division actually making money for the business? A division can look busy, produce good work, and still be unprofitable if it’s not priced correctly, projects are poorly scoped, or the team is too large relative to the revenue it generates. Profitability per division keeps us honest and helps us make better decisions about pricing, hiring, and service development.
Average Salary
We track the average salary across the company to check the trends over the years.
This business metric is useful in several ways. It helps us benchmark against industry standards, plan for salary growth over time, and understand how changes in team composition affect our cost base. Hiring more senior people increases average salary, which is fine, as long as it’s reflected in higher revenue and better profitability. Tracking average salary also feeds into other business metrics, such as effective hourly rate and gross margin per client.
Marketing and Sales Costs
Growing an agency requires investment to attract and win new clients. We track all costs associated with marketing and sales — using Productive to inform us of the costs for the marketing and sales activities.
Having a clear number here helps us understand what we’re investing in growth, and holds those investments accountable to results.
Marketing and Sales Costs as a Percentage of Revenue
Expressing our marketing and sales costs as a percentage of total revenue gives us a sense of how efficiently we’re growing.
A high ratio might indicate we’re spending heavily to acquire clients relative to what we’re bringing in, which could be fine in a growth phase but unsustainable in the long term. A low ratio suggests our acquisition engine is efficient, or possibly that we’re under-investing in growth. Tracking this over time helps us understand whether our business development efforts are becoming more or less efficient as the company scales.
For example, in the period 2023-2025, our marketing and sales costs were basically the same, but because of the revenue growth, this percentage is lower. That’s why we decided to invest more this year to grow our revenue even further.
Number of Won Deals per Year
Every year, we track how many deals we successfully close. This is one of the most direct indicators of our sales performance and market demand for our services.
Looking at this number year over year tells us whether our pipeline is growing, whether our sales process is improving, and whether market conditions are working in our favor. It’s also a useful reference point when combined with other business metrics — for example, revenue per won deal indicates whether we’re closing larger or smaller contracts over time, and conversion rate indicates how efficiently we’re moving prospects through the funnel.
CAC — Customer Acquisition Cost
Customer Acquisition Cost is the total amount we spend on marketing and sales, divided by the number of new clients we acquire in a given period.
It tells us how expensive it is to bring one new client through the door. A high CAC isn’t necessarily a problem — if those clients are worth a lot over time, the investment can be justified. But if CAC is climbing while the value of new clients stays flat, we need to improve our acquisition efficiency.
LTV — Client Lifetime Value
Lifetime Value is an estimate of the total revenue a client will generate for Kontra over the entire duration of their relationship with us.
LTV is calculated by looking at average client revenue, how long clients typically stay with us, and how often they expand their scope of work. A high LTV means clients are staying longer and spending more — which is the ideal outcome. LTV is one of the most powerful business metrics for a service business because it shifts focus from short-term sales wins to long-term client relationships. Retaining a great client is almost always more valuable and less expensive than acquiring a new one.
LTV/CAC Ratio
The LTV/CAC ratio puts lifetime value and acquisition cost side by side to answer the most important question in business: are we making more from our clients than we spend to acquire them, and by how much?
A 3:1 ratio is commonly used as a healthy benchmark in service businesses — meaning that for every unit of currency spent on acquiring a client, we generate three units of lifetime value. A ratio below 1 means we’re losing money on client acquisition. A very high ratio might indicate we’re under-investing in growth. The LTV/CAC ratio is one of the clearest indicators of the long-term health and sustainability of our business model.
Total Hours Worked Annually
We track the total number of hours worked across the entire company each year. This gives us a top-level view of our capacity and output.
Total hours worked is an important baseline because everything else we measure about time — utilization, effective hourly rate, client hours — flows from it. It also helps us understand team capacity over time: are we working more hours because we’ve grown the team, or because people are stretched?
Client Hours
Of all the hours worked in a year, client hours represent the portion spent on billable, client-facing work — the time that directly generates revenue for the agency.
Not all hours can or should be client-facing. Time is spent on internal meetings, business development, training, administration, and agency-building work. But the split between client hours and total hours is a key indicator of how productively the team’s time is being used. We track client hours in Productive, our agency management tool, which gives us an accurate, granular view of where time is actually going.
Utilization Rate
Utilization rate is the percentage of total hours worked that were spent on client work. It’s calculated simply as (client hours ÷ total hours) × 100.
Utilization is one of the core operational metrics for any agency. A higher utilization rate generally means more of our team’s time is generating revenue. But there’s an important nuance: 100% utilization is neither realistic nor desirable. People need time for internal work, learning, and strategic thinking. We aim for a utilization range that keeps the business healthy without burning the team out. Monitoring this metric over time helps us identify when teams are under-resourced, overstaffed, or when workloads are unevenly distributed.
Effective Hourly Rate
The **effective hourly rate** is calculated by dividing total revenue by the number of client hours worked in a year.
This is one of the most revealing business metrics in our stack. It answers the question: on average, how much revenue does every hour of client work generate? A highly effective hourly rate means we’re pricing well, scoping projects efficiently, and delivering value that the market is willing to pay for. A low one signals that we may be underpricing our services, taking on work that doesn’t match our value, or allowing scope to expand without adjusting fees. Tracking this metric over time shows whether we’re becoming a more valuable business — or running faster just to stand still.
Gross Profit per Client and Gross Margin
Gross profit per client is calculated by subtracting the direct cost of the work delivered to them from the client’s revenue — specifically, the portion of salary costs attributable to the hours worked on their projects, as tracked in Productive.
Gross margin expresses profit as a percentage of revenue: (gross profit ÷ revenue) × 100.
This is our most granular profitability metric, and it’s one of the most actionable. It tells us whether each individual client relationship is financially worthwhile. Some clients generate high revenue but require so many hours that the margin is thin. Others are smaller in absolute terms but highly profitable because the work is well-scoped and efficiently delivered. Gross margin per client informs our pricing strategy, helps us identify relationships worth investing in, and flags accounts that may need to be repriced or — in some cases — exited.
Why We Track All of This
Every business metric on this list connects to the others. Revenue per department feeds into profitability. Utilization and effective hourly rate explain why some months are more profitable than others. CAC and LTV tell us whether our growth is sustainable. Gross margin per client tells us whether the work we’re doing is actually building a healthy business.
At Kontra, we don’t track business metrics just to have dashboards. We track them because running a serious agency requires serious data — and because the decisions that shape our team, our clients, and our future deserve to be made with clear eyes.
If you’re running an agency and want to start somewhere, start with the utilization rate and gross margin per client. Those two numbers will tell you more about the health of your business than almost anything else.
