• One key metric raised was your income to staff costs ratio – how much of your fee income is consumed by permanent and freelance staff costs. A good benchmark for this is 60%, any more than this will start to quickly eat into your profitability (70% and over spells trouble – get to the bottom of things and get advice).
• Keep at least 2 months worth of expenses in the bank (people and overheads). In these more challenging times, when clients may be pausing projects or taking longer to pay, up to 4 months would be prudent, with an additional 6 months in working capital. If cash reserves are less than this you risk making short-term decisions.
• If you spot red flags in your finances, beginning to just break-even or make a loss, make quick decisions. If you need to cut headcount, do it hard and do it once. Dragging decisions out risks destabilising the business and team even further. Don’t stick your head in the sand.
• Keeping a tight rein on what you should be aiming for by looking at the number of staff you have and your average charge out rates. Back of the envelope is fine as a check, but have the detail available so you can investigate the root cause of any issues. 
• Limit dependency on a single client to no more than 20% of fee income to manage risk. 
• If you are having to make cuts, take the opportunity to re-focus and bring in new skills. If new business is your issue, you’ll need to carefully review your value proposition. 
• Sometimes winning a new client needs an injection of cash to support the growth. There are growth capital options you can explore, or look into local grants – one member flagged these as a key to their recent growth in both skills and sustainability. Have proactive conversations before the need is too great for you to look less attractive to an investor.
• Consider the timings of major investments and expenses for tax reliefs. Ideally you want to be near the end of your tax year. If you’re not and timing is critical, consider moving your year end – Moore Kingston Smith can help with impartial advice. 
• Having an external non-executive director can help to remove the emotion from difficult decisions, someone who is just looking at the business and can take an objective view. 
• One member raised a challenge in getting invoices paid. Some suggestions to overcome this were to bill a small amount e.g. 25% on sign up, then regular staged billing, pausing halfway to get payments in and not leaving a big chunk to when the project has been delivered as that can leave you in a difficult situation. Your terms may be 30 days, but factor in 60 and 90 day payments in your planning.
• Another member recommended an invoice discounting service whereby 80% of an invoice is paid upfront – it’s an option that could be worth investigating to help to manage cashflow. The main high street banks all provide this service, do shop around.  
• In managing over-servicing, another behaviour that impacts profitability, education is key. Explain the context of why you’re charging what you are and what expectations are for that delivery. Set targets on utilisation and efficiency so everyone is on the same page. 

There was much, much more covered in the hour – I hope you find these notes helpful. Join our next meeting on Tuesday 6 August, 4-5pm BST, look out for an email with the details in a few weeks.

We’ve captured the conversation highlights from the all the Members’ Forums which have taken place and they can all be found here.

We’re delighted to welcome three new directors to the DBA board, as voted for by members at our Annual General Meeting:

Louise French – Studio Operations Director, forpeople

Andrew Lindsay – Global Head of Enterprise Design, Kraft Heinz

Matt Round – Chief Creative Officer, tangerine

We also extend our huge thanks to Francesca Bayliss, Head of Commercial and HR at Bulletproof, who steps down from the board after 3 years.

The directors of the DBA are a mix of association members and other design industry experts with extensive experience of integrating design into business strategy at executive level. They collaborate closely with the DBA’s management team to elevate the role of design in business and government and build confidence in design investment.

Find out more about the DBA board

• With average recovery rates across the DBA membership at 80%, here’s a useful document to help identify why you might be under recovering your time. 
• Fundamental to this metric is that the work is either taking too long, or it was underpriced – and this is irrespective of business size. It’s simple to monitor the amount of time you’ve scoped to spend and track the amount of time you’re taking in reality – whether you’re a team of 2 or 200. It’s important to look at this as an average across the business, rather than on an individual basis.
• One member shared how they actively check on recovery rates throughout the project by setting key milestones. This enables them to either have conversations with clients about additional costs, manage expectations, or shift the way the team is working to make sure recovery rates don’t slip further. 
• Building the inevitable scope creep into your proposals can help to keep recovery rates high. Charging for more rounds of amends over and above what was agreed, giving a price for how much additional work will cost if it happens. If it’s in your agreement, then your client can’t be surprised. 
• Having access to good data was raised by a few members on the call – including the importance of sharing data with the whole team so that everyone can understand the reasons behind why you’re asking them to track their time carefully. Timesheets are not about checking up on individuals – they are about managing profitability. One member saw a marked improvement in recovery rates when they started sharing financial data with the client servicing team. 
• Another member raised how their bonus structure is based on profitability, so that helps to get everyone engaged and keep a careful eye on the figures. 
• When it comes to new clients, it can be tempting to over-deliver on what was promised to get the repeat business, but that has a big impact on recovery rates and sets a dangerous precedent. While you might have different pricing levels for different clients, its important to keep a tight grip on what you’re charging and the work you’re doing to boost profitability. 
• It’s also important to look back retrospectively and see where there might be room for improvement either in costing out the work or in the project management.
• DBA Expert Julian Davies shared this great deck on maximising profitability – a 10% increase in income can have a 66.6% increase on profitability – even at 1%, it’s worth starting with your prices, and the DBA Annual Survey can help with this.

There was much, much more covered in the hour – I hope you find these notes helpful. Join our next meeting on Monday 1 July, 4-5pm BST, look out for an email with the details in a few weeks.

We’ve captured the conversation highlights from the all the Members’ Forums which have taken place and they can all be found here.

Key metrics highlighted were:

• Staff costs to fee income ratio at no higher than 60-65% (with approx. 20% on overheads, leaving you with 20% profit) This has fluctuated over the years, with hybrid working potentially lowering overheads to 15%, meaning you can spend up to 65% on staff and still make a decent profit, but like most ratios work out the best balance for your business.
• Break-even point – how much income do you need to cover your overheads – plus your target – then you can see clearly what you need to convert from the pipeline.
• Utilisation rates – how much time is spent on billable work by each person in the business? 
• Recovery rates – how much of actual billable time is billed to a client. This is a real warning flag metric – the canary down the coalmine. Not billing enough here will drag profits down throughout the business. Do you know what this looks like in your business? There are many reasons for low recovery rates. Improving them adds directly to your bottom line. More guidance here.
• What do the next 90-days look like? Booked revenue needs to be accrued over the time you’re going to complete the work. Looking at the next 90-days will mean you can plan to have the resources to cover the confirmed work, or make appropriate decisions if you don’t have the work in.
• Working out your liquidity ratio – having around 3-4 months of committed overheads in the bank is a good place to be.

 New business and your pipeline

• We know from the Annual Survey Report that clients are taking longer to commit to projects – this in turn has led to businesses needing more potential in their pipeline to convert to the number of live projects needed.
• One expert uses a strength test of confirmed work plus prospects being around 10 x monthly costs – this shows a business is working reasonably hard to win the next project.
• Setting new business targets should be done on an individual business basis to encompass the nuances around repeat clients.
• One member shared that they’ve tracked the various conversion stages throughout the pipeline and that’s helped them to see where they need to focus on. 

Benchmarking against other design businesses

• Benchmarking staff salaries, hourly rates, utilisation and recovery rates were all highlighted by members as key aspects of the DBA Annual Survey they use often in their businesses.
• It can feel isolating running a design business, the data in the report helps you to feel like you are not operating in isolation – to be able to benchmark against the industry is invaluable to running the business.
• The DBA Annual Survey is open now for you to add your data – don’t miss this chance to contribute. The more members that take part, the more representative the survey is. And the only way to get hold of the exclusive online comparison website is by taking part. If you need more information or are struggling to access the survey please contact Christina Warren for your unique survey link.

There was much, much more covered in the hour – I hope you find these notes helpful. Join our next meeting on Monday 3 June, 4-5pm BST, look out for an email with the details in a few weeks.

We’ve captured the conversation highlights from the all the Members’ Forums which have taken place and they can all be found here.

As the world around us continues to change at breakneck speed, one thing remains constant; the ability of design to create solutions and reinterpret the challenges into new ways of thinking and shaping the way forward.

The DBA Design Effectiveness Awards are the most rigorous standard for measuring the effectiveness of design, rewarding entries that have demonstrated the value of investing in design to drive business and societal success.

It’s the difference design makes.

Over the coming years, we’ll see the power that design has to help navigate the biggest shifts our society faces – how businesses can remain relevant and competitive as major changes take place to how business itself is done, how societies can manage and thrive in the environmental and technological shifts we stand on the edge of.

Throughout this, the DBA will continue to champion and promote, celebrate and reward the achievements of our industry; an industry which continues to punch above its weight.

Right now, we invite you to celebrate client and agency partnerships that have been shortlisted for this year’s DBA Design Effectiveness Awards. The case studies behind these titles listed below contain a wealth of creative expertise and savvy business insight which have propelled their work from simply delivering on brief, to magnifying what was possible, often from humble beginnings.

It has never been more important for all those that work in design to understand the role they play in shaping a future that matters for us all. This autumn we will be celebrating the winners and revealing who has won Bronze, Silver or Gold, at a live event packed with talks, debates, films and dinner discussions. We want you all to join us; a meeting of the creative and business minds that make our industry shine.

Whether you have won this year, in previous years, or are yet to articulate and prove the measured effectiveness of your work, this event will be for every design team that knows they can make a difference.

Join us at The Design Effect on 8 October 2024 at The British Museum, London for an inspiring day of talks, debates, case studies and dinner discussions – including the 2024 Design Effectiveness Awards – curated to illuminate the ways effective design can shape business, society and the world. Find out more and book now. 

The DBA Design Effectiveness Awards will open for entries in February 2025 with a deadline in July 2025. Join us on 8 October for insight and inspiration, and transform how you talk about the value of design.

DBA Design Effectiveness Awards 2024: Winners shortlist

Founded in 1989, the DBA Design Effectiveness Awards recognise impactful, wide-ranging examples of design that have had a tangible and measurable impact upon business and societal success. Judged by a broad range of business leaders and entered jointly by client and designer, the Awards draw focus onto the role design plays in enhancing people’s lives and delivering competitive advantage for business. Congratulations to the winning agency and client partnerships and thank you to our fantastic judges who brought their insight and experience to rigorously judge the 2024 entries. Find out more information about the DBA Design Effectiveness Awards and view the 2024 judging panel.

“The DBA Design Effectiveness Awards provide clear evidence of how design drives better business results, and how it has the ability to improve lives and shape a better world.

This year’s entries demonstrated solutions to a truly diverse set of challenges and once again the distinguished groups of judges had to work hard to pick the winners. The judging panels consisted of an incredible cross section of Business, Marketing and Design leadership, ensuring that we had a diverse set of perspectives when evaluating the entries. As Chair of these judging panels, it was truly an honour to witness the quality and depth of the discussions triggered by each entry.

The shortlisted winners provide clear and compelling evidence that design can and does deliver value, improving business results, positively impacting society and improving lives. They can be extremely proud of the recognition they have received.”

Sean Carney, Chair of the DBA Design Effectiveness Awards Judging Panel 

Firstly, we need to consider the context. 86% of clients consider themselves to be working in a more pressurised environment than five years ago.

This often means tighter budgets, smaller client teams, a more ruthless focus on return on investment and the feeling of having to do more with less. Consequently, clients are generally looking for greater levels of proactivity and added value from their agencies. They rely on agencies more and more to be their eyes and ears, monitoring competitors and trends.

36% of clients would like their agency to ‘push boundaries’ more in terms of creativity that differentiates and disrupts. This is an environment where clients are bound to be more demanding of their agencies. Is it any wonder, then, that fewer clients are giving an unqualified ‘Yes’ to the value for money question? However, before we all begin to relax about the issue and simply blame the wider context, there are some specific factors that we should take seriously.

There are a range of issues, regularly raised by clients in our interviews, that negatively impact upon their perceptions of value for money. These fall into three areas. Firstly, those related directly to costs.

Some clients accept that front-end conceptual work is charged at a premium but question why other types of work, more implementation in character, appear to be charged at a similar rate. Other clients complain of a lack of transparency around how long some tasks really take and who is working on them. Clients also comment that the gold standard approach isn’t always necessary. Some tasks are in the ‘just get it done’ category and don’t need a juggernaut process. They talk about the need for greater pragmatism and a demonstration that the agency is ‘on our side.’

Another bugbear is misalignment on the scope of work and disagreement about what is covered in the cost and what isn’t. This often comes down to a lack of adequate up-front discussions and forward planning. Another concern is that the agency’s day-to-day client contacts may feel that their agency represents good value for money, but senior management disagree. There is a failure to show senior management the value of creativity and the return on investment it can bring.

The second area that affects value for money is the quality of client service. No matter how good the end result, if the process of getting there was painful, then perceptions of value for money will suffer. Clients often mention the difference between simply managing a project versus really driving it. ‘Driving it’ means taking ownership, being totally on top of every aspect, excelling at communications and being forceful with the client when necessary. Failing to drive projects in this way results in more client input being needed. Client time is now at a premium, so anything that impinges on that is a negative in clients’ eyes.

Clients are particularly sensitive to any indication that their business is perhaps not quite as valued as it used to be. Clients often mention any sort of drop in responsiveness or proactivity levels. Another indication is when agency leaders are no longer checking in as much with clients and that feeling of strategic oversight has lapsed. Also, if the agency is obviously doing well and winning new clients, but client service is seen to suffer in any way, then clients can be quick to believe that the agency’s attention and effort is going into new clients at the expense of existing ones.

The third area affecting perceptions of value for money concerns final delivery. The most serious client criticisms are around the promise of the original concept not being fully realised. In other words, it all seemed great in the studio but was it really workable? There is a consequent feeling that the agency either weren’t honest enough in their explanation of the original concept or weren’t realistic enough about its practical application. Unforeseen production issues and problems with third parties are all capable of causing strained agency/client relationships and the accusation that the agency is ‘hiding problems’.

Value for money, therefore, is a complex area and in effect, clients are judging the fully rounded client/agency relationship, not just the work and its cost.

Based on 675 in-depth client interviews, the report offers insight into client expectations and concerns, their relationships with agencies, views on agency new business activity, pitches, websites, marketing content and more. 
 
During the meeting, three key themes of the report were explored in more detail:

• A decrease, over the past 10 years, in client’s perception of agency value for money.
• An increase in in-housing design capabilities.
• The distinction between managing projects and driving projects, with clients wanting to see more driving.

Perceptions of value for money
In 2014, 66% of clients considered their agency to be good value for money. In 2024 that has fallen to 45%. The important context behind that change is the more financially and time pressurised environment that clients now consider themselves to be working in.
 
There are three areas that regularly affect these perceptions:

• Costs – clients understand that conceptual, strategic ‘front end’ work comes at a premium (and this is often where clients perceive the value to be), but feel that often implementation work is charged at a similar rate, without transparency about how long tasks take and who’s working on them. Planning well to avoid misalignment of scope and what has been agreed upon in costs is important. Additionally, there is a feeling that the gold standard, full process approach isn’t necessary every time – agencies may feel that this point is debatable – but being a bit more pragmatic and realising where some projects require just ‘good enough’ is a factor for clients. 
• Quality of client service – when clients are more time pressured than ever before, having to spend lots of time managing things impacts perceptions of value. More on that below.
• Final delivery – problems can arise when what was delivered isn’t quite what was promised in the original concept and the agency hasn’t been honest or realistic enough about its practical application. Additionally, sometimes unseen ‘third party’ problems can create strain, and agencies can be seen to be hiding problems.

In-housing
46% of clients have access to some sort of in-house creative resource, and 22% of those who didn’t stated that their company was considering it. This is often motivated by wanting to save costs, and perceived comfort factors such as it being easier to deal with problems internally if work goes wrong, or a brief is disputed. In-house teams also understand the organisation, its culture and politics and how it operates, and potentially the brand and the market a bit better than an agency can.
 
However, the picture here isn’t one of agency vs in-house; 80% of clients would like to see better collaboration and 95% of clients with in-house capabilities still see the value in using agencies for particular challenges.
 
Clients often would like an agency’s fresh perspective and wider reference points, when working on bigger, more strategic projects. Agencies should focus on explaining where their value lies and building experience of dovetailing effectively with in-house teams.
 
Driving rather than managing
The biggest differentiator between agencies in terms of the experience of working with them is the quality of client servicing. No matter how good the end result is, if the process of getting there was too painful, it’s not considered worth it.
 
48% of clients believe that their agency’s client management is too transactional. Design agency account management can lack assertiveness. Clients would like agencies to be bolder – to drive the project, own it, be on top of it, push the client, tell them when they get things wrong and continue to offer opinions and thoughts and be keen to impress. Agencies are thought of as the experts, and clients want them to be! It’s not about being aggressive, it’s about being organised and having a defined approach to client servicing and client development.
 
62% of clients can recall periods where the agency is obviously over-stretched and under-resourced, and these cracks show. This can show up as a drop in responsiveness, a lack of proactivity, or a lack of checking in from senior agency people. Active engagement is vital for both successful project delivery, and for consideration for future, bigger projects.
 
It is worth having a defined approach to client service, based in understanding the client’s journey with you and the interaction points between you, as well as internal guiding principles of how you communicate, what you do, what you don’t do, etc. This can be really helpful in pitches too, as you can present your approach and reassure clients at that stage that you have thought through both their experience with you, and how you take ownership of projects.
 

There was much, much more covered in the hour – you really had to be there. Do make sure you join us in our next DBA Members’ Forum on Tuesday 7 May at 4pm BST, look out for an email from me in a few weeks with more details. If you would like to attend, get in touch here. 

We’ve captured the conversation highlights from the all the Members’ Forums which have taken place and they can all be found here.

“Produced by Up to the Light, in association with the DBA, the ‘What Clients Think’ report is an indispensable tool for anyone who delivers or commissions design. If you’re agency-side, it will arm you with inside knowledge of what your clients want from you this year. While for those client-side, it’s a unique opportunity to see how your concerns and priorities compare to your peers.

To mark its tenth incarnation, this year’s report also provides a look back across the last decade, covering a time before Covid and even the EU Referendum. Think how much our businesses have been through and changed since then. What trends have unfolded and what can we learn from them to strengthen our client/agency relationships now and in the future?”

Access the report

Watch a recording of the report launch

Watch a snippet from the launch

Further resources for DBA members

The Report’s author Jonathan Kirk also joined us for our April Members’ Forum to discuss how agency/client relationships are evolving, delving further into the report’s findings. You can read a summary of the conversation here. 

 

Get in touch – if you are a DBA member who would like to talk through issues you are facing, or if you are interested in becoming a member to attend monthly Members’ Forum such as this, you can schedule time in the DBA Membership Director’s Adam Fennelow’s diary.