You Don't Have a Lead Problem. You Have an Account-Development Problem.

By Craig S. Cody, CPA, Certified Tax Coach.

Here's the answer up front. The cheapest growth most marketing and PR agencies will find this year isn't a new logo. It's one more service sold to a client who already pays you, already trusts the team, and already has money set aside they haven't mentioned. Drew McLellan at the Agency Management Institute puts a number on it: 60 to 70% of an agency's net new income should come from existing clients. Most agencies aren't close, and the reason isn't effort. It's that nobody in the building is accountable for it.

I've seen it in my own firm. When Drew walked me through AMI's client research on my old podcast, the finding that clients have unspent budget and want more ideas from their agency, I brought it straight back to my team. An accounting firm has the exact same blind spot: there are services our clients could use and get real value from, and the humans already paying us only hear about them if we bring them up. It works the same way in every service business.

So this is a short piece on where growth actually comes from, what Drew asks of account executives, and the five numbers I'd want on an agency growth dashboard.

Why Is an Expansion Worth More Than a New Logo?

PRovoke Media reported that Havas PLAY expanded its existing relationship with MOCCONA, the JDE Australia coffee brand, into social strategy, influencer campaigns and always-on community management. It read like an account-management story. It's an agency economics story.

Winning a brand-new client costs sales time, proposal work, senior involvement, onboarding, and the risk that the first project never turns into recurring revenue. Drew told me about an agency that won a roughly $500,000 RFP in the first quarter of 2023, staffed up for it, and by year end had seen less than $100,000 of the work come through because the client kept pushing start dates. A yes isn't money in the bank.

Expanding the right existing client has different economics. The relationship exists. The team already understands the business. The client already knows how you work. The agencies Drew saw post growth and profit in a brutal year were the ones that got granular about the clients they already had, instead of, in his words, chasing the pretty girl they didn't know yet.

What Does Drew McLellan's 10% Rule Actually Say?

Drew has said this for years, in AMI's AE boot camps and every time it comes up: an account executive's job is to grow their book of business by 10% a year.

His example is an AE managing three accounts worth $500,000 of AGI. That AE should be held accountable for ending the year at $550,000 of AGI from those same clients. Not every client has to grow, but the whole book does. And when AMI tells AEs this, Drew says they're stunned. They thought the job was keeping clients happy. The job is helping clients accomplish what they're trying to accomplish, and the book grows as a byproduct.

Three details in his version matter more than the headline number.

• It's measured in AGI, not billings. AGI here means agency gross income: what's left after pass-through costs like media and outside production, not the adjusted gross income on your 1040. If you don't already run the agency on that number, start with the 55/25/20 benchmark.
• The salary pays for the 10%. Growing the book is the job, and the paycheck is the reward for doing the job. Anything above 10% gets a flat, one-time cash bonus: one amount for 11 to 15%, a bigger one for 15 to 20%. Never a percentage, never ongoing. Drew has seen an agency pay 20% of gross as commission, which meant everything that person sold was delivered at a loss.
• Nobody hits it without a system. Every AE should know what their book is on January 1, what it's expected to be on December 31, and where they stand at each quarterly review. Then put the AEs in a room together so they can steal each other's ideas.

What Do Clients Say They Actually Want?

More ideas, and more of your time. AMI's 2023 Agency Edge research asked clients where and when they'd give their current agency more money. Roughly 70% said they had money in other pots, other departments, other line items, even after the annual budget was set. The catch: the agency has to ask, and the agency has to bring the idea.

That lines up with an older AMI study on why clients fire agencies. The number one reason was that the agency stopped bringing new ideas. Drew told me about a client who put a 10-year relationship out to RFP, loved the incumbent's response, and then asked the question every agency owner should tape to the wall: why did it take an RFP to get you to bring us that level of idea again?

This isn't a pitch problem. It's a cadence problem. The agencies that grow existing clients bring ideas on a schedule, some of which won't even earn the agency a dollar, because that's what proves you're thinking about the client's business.

From a CPA's Perspective, Which Five Numbers Belong on the Growth Dashboard?

If new business is the only thing your leadership meeting measures, new business is the only thing that will happen. Here are the five I'd want in front of me every month.

1. Net revenue retention. Did existing clients spend more or less with us this year than last, in AGI? Above 100% means your roster grew on its own.
2. Cross-sell rate. How many clients buy more than one meaningful service from us?
3. Service-line penetration. Which capabilities we're good at aren't being used by good existing clients? This is the list Havas PLAY worked.
4. Expansion gross margin. Is the additional work actually profitable, or did we discount because the relationship felt safe? Growth in the book and margin on the book are two different numbers, and an AE can hit the first while losing the second.
5. Growth source. What share of this year's growth came from existing clients versus new logos? Drew's target is 60 to 70%. Most agencies have never calculated it.

New business still matters. But if you have strong clients who trust the team and buy one slice of what you do, the constraint isn't leads.

Who This Is For, and Who It Isn't

This is for the marketing, advertising or PR agency with a stable roster, a team clients like, and a service list longer than what most of those clients buy. That gap is your cheapest growth.

It's not for the agency where one client is already 40% or more of AGI. Selling that client a fourth service deepens a concentration problem a buyer or a bad quarter will punish. Fix the mix first. It's also not a reason to expand a client you're already losing money on. Run the four-point self-audit before you decide which relationships deserve more of your team.

What Can You Do Monday Morning?

Build one grid. Down the side, every client with their trailing-twelve-month AGI. Across the top, every service you sell. Mark what each client buys. The empty cells in the rows of your best clients are the list.

Then take Drew's rule literally. Give every AE their book number and their year-end number. Put the book-of-business review in the quarterly meeting where it can't be skipped. And walk into your next leadership meeting with one question: which five current clients have the strongest business case to buy one more service from us, and why haven't we had that conversation yet?

Frequently Asked Questions

What percentage of agency growth should come from existing clients?

Drew McLellan and the Agency Management Institute teach that 60 to 70% of an agency's net new income in a given year should come from existing clients. Most agencies run well below that because nobody is assigned to grow the current roster, so the number is worth calculating even if you've never tracked it.

How much should an account executive grow their book of business each year?

AMI's standard is 10% a year, measured in agency gross income across the AE's whole book rather than client by client. An AE managing $500,000 of AGI should end the year at $550,000 from those same clients. The salary pays for that 10%; growth above it earns a flat one-time bonus.

What is net revenue retention for an agency?

Net revenue retention is this year's AGI from the clients you had last year, divided by last year's AGI from those same clients. Above 100% means your existing roster grew even before counting new logos. Below 100% means new business is filling a hole rather than adding growth.

Should agencies pay account managers commission on upsells?

Not as a percentage of revenue, and never as an ongoing stream. Drew McLellan's advice is a flat cash bonus for growth above the 10% target, with tiers, because percentage commissions have a way of outrunning the margin. He describes an agency paying 20% of gross that delivered every sale at a loss.

Let's Talk

The grid above takes an afternoon and shows you where your cheapest growth is hiding. The dashboard tells you whether it's showing up. Neither one tells you how much of it you'll keep, and in 23 years of reading agency books, that's the number most owners have never had anyone look at with them.

If you'd like a second set of eyes on what your agency is really keeping, and a plan for keeping more of it, Book a Free Tax Analysis. Otherwise, run the grid, ask the question, and let's talk.

Craig S. Cody is a CPA, Certified Tax Coach, and retired NYPD Lieutenant. His firm works with more than 70 marketing and advertising agency owners every month, helping them keep more of what they make through proactive tax planning.

This article is general education, not advice for your specific situation. Confirm your own facts with your advisor before acting.