Seven Figure Agency · Know Your Numbers01
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The Rules and the System
Nine rules that make every number comparable, and the two levels every member moves through.
One rule above all
Calculate it this way or it cannot be benchmarked.
Every definition assumes a digital marketing agency on recurring retainers. Every number excludes client ad spend that passes through the agency. Same definitions at every level of 7FA, so your numbers mean the same thing as every other member's.
- 01Churn first, retention second. Churn % = clients lost in the month / clients at the start of the month. Retention % = 1 minus churn. Retention never has its own formula.
- 02Pooled windows, not averaged percentages. Add first, then divide. Every rate is sums over sums across a 3-month and a 12-month window: total churned / total starting clients. A big month counts more than a small one. Never average twelve monthly percentages.
- 03The headline is the 3-month trend. The baseline is the 12-month figure. One bad month does not repaint a number red; one good month does not let you off the hook.
- 04Closed months only. The current month is month-to-date and never enters a trend window.
- 05MRR is the base you expect to collect. Collected Revenue is what arrived. Recurring numbers run on MRR. Margins run on Collected Revenue.
- 06The $500 maintenance floor. A client paying less than $500 a month in recurring fees is not counted as a client. Dropping below it is churn.
- 07Pass-through ad spend is never revenue. Client media budgets that flow through the agency stay out of MRR, Collected Revenue, every expense line and Cash in Bank.
- 08Owner pay sits below the line. Owner salaries, executive benefits and one-time items live in Executive Expenses, under Operating Profit. Owner comp never enters CAC.
- 09Raw inputs only. You never type a metric. A number is either right or visibly blank, never confidently wrong.
Two levels, one language
Level 1: Sales & Retention
Accelerate, on the way to seven figures
Tool: Sales & Retention Tracker
MRR, clients added, clients lost, MRR lost, churn, retention, net new, MRR growth
Know the goal, land the clients, keep them
Level 2: Agency Economics
Elite and Titans, at seven figures and up
Tool: Agency Executive Scoreboard
Level 1 plus client value, LTV, CAC, payback, gross margin, operating profit, net profit, runway, valuation, the funnel
Know what a client costs, what one is worth, what the business keeps, what it is worth
Diagnostics
Coaches, and any member whose number is off
Tool: Calculated when needed
Show Rate, Qualified Close Rate, Team Cost %, Net Revenue Retention, Revenue per Employee
Find out why a number is off
02
LEVEL 1
Sales and Retention
The numbers every member tracks from day one, against a goal. Churn is the number you calculate; retention is what is left.
8 metricsMRR: Monthly Recurring RevenueThe sum of every active client's monthly fee at month end, at the rate they are contracted to pay. The base you expect to collect next month, and the number every recurring metric is measured against.
MRR = Sum of active clients' monthly recurring fees at month end
- Include
- Monthly retainers and management fees at the contracted rate; recurring add-ons billed monthly (hosting, call tracking, reporting, resold software); every client at or above the $500 floor.
- Exclude
- Setup fees; one-time projects; pass-through ad spend; overdue balances; clients paused longer than 30 days; maintenance clients below $500.
- Watch for
- Reporting collected revenue as MRR. A strong setup-fee month or three failed cards makes the two diverge, and MRR is the one that tells you what the business is worth. A $5,000/month client on a 12-month agreement is $5,000 of MRR, not $60,000 / 12.
MRR Growth %How fast the recurring base is growing, month over month.
MRR Growth % = (This month's MRR minus last month's MRR) / Last month's MRR, averaged across the window
- Watch for
- Celebrating growth while churn climbs. Growth is new clients plus expansion minus losses; check the losses on their own.
New Clients Per MonthHow many clients started paying this month. The sales number.
Avg New Clients / mo = Sum of New Clients / months in window
- Include
- Clients who started paying $500 or more per month; a former client returning above the floor.
- Exclude
- Signed but not yet paid; one-time project clients; upgrades of existing clients.
- Watch for
- Counting a signature as a client. A client exists when the first payment clears.
Churned Clients Per MonthHow many clients you lost this month. Counted on the day they cancel, pause beyond 30 days, or drop below the $500 floor.
Avg Churned / mo = Sum of Churned Clients / months in window
- Include
- Cancellations; pauses over 30 days; downgrades below $500 per month.
- Exclude
- Clients who downgraded but stayed at or above $500; one-time project clients.
- Watch for
- Treating a drop to maintenance as retention. A $1,500 client who falls to $250 is a lost client with a small maintenance fee, not a retained one.
Net New Clients Per MonthNew clients minus churned clients. Whether the client base is actually growing.
Avg Net New / mo = Avg New Clients minus Avg Churned Clients
- Watch for
- Watching only this number. Four in and three out is the same net as one in and zero out, and a very different business.
Logo Churn %The share of your clients you lost this month. Logo means client count; this is the primary retention number at 7FA.
Logo Churn % = Churned Clients / Clients at start of month, then pooled: total churned / total starting clients across the window
- Include
- Every active client at the start of the period; cancellations, pauses over 30 days and downgrades below $500 as losses.
- Exclude
- New clients signed during the month (they are not in the starting count); clients who downgraded but stayed above $500.
- Watch for
- Netting new clients against lost clients and calling it churn. Growth hides churn. Count losses on their own. And never average twelve monthly percentages; pool the totals.
Retention %The share of your clients who stayed. One minus churn, nothing more.
Retention % = 1 minus Logo Churn %
- Watch for
- Giving retention its own formula. If two members calculate churn the same way and retention differently, the benchmark is broken.
Revenue Churn %The share of your recurring revenue you lost this month. The second view of retention, in dollars.
Revenue Churn % = MRR Lost / MRR at start of month, then pooled across the window
- Include
- The full prior monthly fee of every churned client, including those who dropped to maintenance.
- Exclude
- Downgrades that stayed above $500; failed payments that were later collected.
- Watch for
- Revenue churn running well above logo churn. That means you are losing your biggest clients, and logo retention will not show it.
03
LEVEL 2
Client Economics
What one client pays, how long they stay, and what the relationship is worth over its life. Revenue-based on purpose.
3 metricsAverage Client ValueWhat the average client pays you each month in recurring fees.
Average Client Value = MRR / Clients at End of Month
- Watch for
- Mixing in setup fees or projects. This is recurring only, so it moves when your pricing moves, not when your project calendar does.
Average Client TenureHow many months the average client stays. Derived from churn, not from a list of clients.
Average Client Tenure (months) = 1 / monthly Logo Churn % (pooled 12-month)
- Watch for
- Assuming forever tenure when churn is low but the data is thin. One month of zero churn is not infinite tenure; that is why tenure runs on the 12-month window.
Lifetime Client Value (LTV)What a client relationship is worth in revenue over its life.
LTV = Average Client Value x Average Client Tenure
- Watch for
- Comparing LTV to a CAC that only counts ad spend. Both sides of the ratio have to be fully loaded or the ratio is fiction.
04
LEVEL 2
Acquisition and the Funnel
What a client costs to land, how fast they pay it back, and the funnel that feeds them. Only Close Rate carries a benchmark; the top of the funnel is your own trend.
10 metricsCAC: Cost To Acquire A ClientWhat it actually costs to land one new client, fully loaded: media plus every person and tool that runs growth.
CAC = (Ad Spend + Sales & Marketing Cost) / New Clients, sums over sums
- Include
- Ad Spend in full; sales and marketing salaries, commissions, staff-like contractors; third-party providers (an ads agency, a social consultant, a videographer); lead-gen vendors, referral and affiliate fees; marketing software.
- Exclude
- Owner comp, even when the owner sells; client ad spend; fulfillment costs; general admin; the cost of serving existing clients.
- Watch for
- Counting only ad spend. Most agencies report a CAC that is a fraction of the real number. Owner comp stays out so members can be compared; if you are the closer, know that your CAC is understated by your time.
CAC Payback PeriodHow many months of a new client's fees it takes to earn back what they cost to acquire.
CAC Payback (months) = CAC / Average Client Value
- Watch for
- Using a setup fee to claim instant payback. Payback is measured on recurring fees; note setup fees separately.
LTV : CACWhat a client is worth over their life against what they cost to acquire. The single best read on whether the acquisition engine works.
LTV : CAC = LTV / CAC
- Watch for
- A great ratio with a tiny client count. LTV:CAC tells you the engine works; it does not tell you it is running hard enough.
Sales & Marketing % Of RevenueHow much of every collected dollar goes back into growth. This is a floor, not a ceiling.
Sales & Marketing % = (Ad Spend + Sales & Marketing Cost) / Collected Revenue
- Watch for
- Under-investing here and calling it discipline. It is the most common pattern in a flat agency's P&L.
Leads Per MonthEveryone who opted in this month, under one definition you never change.
Avg Leads / mo = Sum of Leads / tracked months
- Include
- Form fills, lead-magnet downloads, book requests or booked calls, whichever definition you chose.
- Exclude
- Anything outside your one definition; months you did not track.
- Watch for
- Changing the definition. Switch from form fills to booked calls and every trend on the sheet breaks. A lead-magnet funnel and a call-booking ad are different machines, so there is no community benchmark here.
Cost Per LeadWhat each lead cost in media. A pure media-efficiency number.
Cost per Lead = Ad Spend / Leads, tracked months only
- Watch for
- Loading people costs into it. Cost per Lead is media only so it moves with your ads, not your payroll.
Appointments Held Per MonthSales conversations that actually happened. Not booked: a no-show is not held.
Avg Appointments Held / mo = Sum of Appointments Held / tracked months
- Watch for
- Counting bookings. If half your calendar no-shows, that is a real problem, and it belongs in Show Rate, not here.
Lead-To-Appointment %How many of your leads turn into a conversation.
Lead-to-Appointment % = Appointments Held / Leads, months where both are tracked
- Watch for
- Judging a 3% rate as bad. For a lead-magnet funnel it is normal, and the fix for a slow calendar is volume or a different funnel, not the ratio.
Cost Per AppointmentWhat each held conversation cost in media.
Cost per Appointment = Ad Spend / Appointments Held, tracked months only
- Watch for
- Comparing it across members with different funnels. Compare it to your own last quarter.
Close Rate %How many held conversations became paying clients. The one funnel number that means the same thing at every agency.
Close Rate % = New Clients / Appointments Held, tracked months only
- Include
- Every appointment held, qualified or not; every close where the agreement is signed and the first payment received, even if it lands in a later month.
- Exclude
- No-shows; appointments booked but not held.
- Watch for
- Using leads as the denominator. That blends marketing and sales and hides which one is broken. Reporting Qualified Close Rate as Close Rate: the scoreboard number is all appointments held, so a closer who disqualifies half the room still owns those appointments.
05
LEVEL 2
The P&L Ladder
Four lines, read top to bottom, exactly as the 7FA ideal financial structure lays out your chart of accounts: what delivery costs, what running the business costs, what the business produces, what the owner keeps. All four run on Collected Revenue.
4 metricsGross Margin %What is left after delivering the work, to pay for everything else.
Gross Margin % = (Collected Revenue minus Fulfillment Cost) / Collected Revenue
- Include
- In Fulfillment Cost: service team payroll (account managers, SEO, PPC, content, design, dev); outsourced providers and white label; delivery tools (call tracking, reporting, hosting, per-client software); client setup costs.
- Exclude
- Client ad spend (out of both revenue and cost); sales and marketing; admin, office and leadership; the owner's pay in any form.
- Watch for
- An owner doing a full-time fulfillment job for free. If you are the account manager, Gross Margin is overstated by your salary; add it back mentally before comparing to the room.
Overhead %What it costs to run the business, apart from delivering the work.
Overhead % = Overhead / Collected Revenue
- Include
- Admin staff payroll, rent, office, software, insurance, professional fees, merchant fees, training, and every marketing and sales cost including Ad Spend, Sales & Marketing Cost, commissions and referral revenue shares.
- Exclude
- Fulfillment Cost; Executive Expenses.
- Watch for
- Starving marketing to hit the 30%. Sales & Marketing % has a floor of 10% for a reason; cut admin before you cut growth.
Operating Profit %What the business produces before the owner takes anything out. The benchmark number and the valuation number.
Operating Profit % = (Collected Revenue minus Fulfillment Cost minus Overhead) / Collected Revenue
- Watch for
- Putting every salary in fulfillment or none of them. Split each person by role. And if you do a full-time job in the business, Operating Profit is overstated by that salary; the valuation card subtracts it for you.
Net Profit %What is left after the owner is paid and every executive expense is covered. What you actually keep.
Net Profit % = (Collected Revenue minus Fulfillment Cost minus Overhead minus Executive Expenses) / Collected Revenue
- Include
- In Executive Expenses: owner and shareholder salaries, executive benefits, life and health insurance for owners, vehicles, executive travel, meals and entertainment, one-time items.
- Exclude
- Income tax.
- Watch for
- A 30% operating profit with a 2% net profit is an owner taking 28% of revenue out of the business. Fine as a choice, a problem as a surprise.
06
LEVEL 2
Cash and Valuation
How long the agency can run if new revenue stopped, and what a buyer would indicatively pay after replacing you.
3 metricsCash In BankWhat the business holds at month end, net of what it owes on cards.
Cash in Bank = Operating and savings balances minus credit card balances due
- Include
- Business operating and savings accounts.
- Exclude
- Client ad funds held on their behalf; sales tax and payroll tax money set aside; lines of credit (available credit is not cash); personal accounts.
- Watch for
- Counting client ad funds sitting in the account as our cash. It is the most common way agencies overstate runway.
RunwayHow many months the agency could keep operating at today's spend if new revenue stopped.
Runway (months) = Cash in Bank / average monthly Total Expenses (3-month)
- Watch for
- Confusing runway with profit. A profitable agency with 45-day payment terms and a big payroll can still run out of cash.
Indicative Agency ValuationWhat the business is indicatively worth: annualized operating profit, less the cost of replacing you, times a multiple you earn.
Valuation = (Annualized Operating Profit minus Replacement Salary) x earned multiple. Multiple = 3.5x floor plus 0.625x per driver met, 6.0x maximum
- Include
- Replacement Salary: the annual cost of hiring someone to do what you do today. Set once in Config.
- Exclude
- Owner add-backs are already excluded by definition, because Operating Profit is before Executive Expenses.
- Watch for
- Quoting it to a buyer. It is a direction tracker, not an appraisal. Setting Replacement Salary to zero shows what the business is worth with you chained to it; every $100K of owner dependence takes $350K to $600K off the number.
07
DEFINED, NOT TRACKED
Diagnostics
Five numbers every coach can define and calculate, none of which is on the scoreboard. Each answers why when a Level 1 or Level 2 number is off.
5 metricsShow RateHow many booked appointments actually happened.
Show Rate = Appointments Held / Appointments Booked
- Watch for
- Blaming the closer for a calendar problem. A 50% show rate halves your appointments before anyone sells.
Qualified Close RateHow many qualified conversations became clients.
Qualified Close Rate = New Clients / qualified appointments held (right industry, budget, decision maker on the call)
- Watch for
- A low qualified close rate is a sales problem. A big gap between Close Rate and Qualified Close Rate is a lead-quality problem. Never report this one as your Close Rate.
Team Cost % Of RevenueEverything you pay people, across every function, as a share of revenue.
Team Cost % = All people cost (fulfillment, sales, marketing, admin, plus a market-rate salary for each working owner) / Collected Revenue
- Watch for
- Paying yourself $0 and calling team cost healthy. Add a market-rate salary for every working owner before you read this number.
Net Revenue Retention %Whether your existing client base grows on its own, after losses and upgrades.
Net Revenue Retention % = (Start MRR minus MRR Lost plus net expansion from existing clients) / Start MRR
- Watch for
- Under 100% with good logo retention means the book is shrinking through downgrades above the $500 floor.
Revenue Per EmployeeHow much revenue each full-time person produces. Productivity, pricing and leverage in one number.
Revenue per Employee = Trailing 12-month Collected Revenue / full-time equivalents
- Include
- Every FTE including working owners; part-time staff and regular contractors at their FTE fraction (20 hours a week = 0.5).
- Exclude
- One-off freelancers; vendors and white-label partners (they are fulfillment cost, not headcount).
- Watch for
- Counting heads instead of FTEs, or leaving out the contractors who do most of the delivery. Both flatter the number.
08
YOUR TOOLS
The Tracker, the Scoreboard and the Monthly Ritual
Fourteen numbers a month, entered once, calculated everywhere. Your Sales & Retention Tracker already produces the first five.
Level 1Sales & Retention Tracker
Goal vs actual every month: MRR, clients added and lost, MRR added and lost, churn, retention, net growth.
Open the tracker Level 2Agency Executive ScoreboardOne Google Sheet. Fourteen inputs a month. Twenty cards that tell you whether the business is healthy in under a minute.
Make your copy Automate itAI PromptsBackfill twelve months, run your monthly close, and get a diagnosis of what to fix. Works with Viktor or any AI that can reach your books and CRM.
Get the promptsThe fourteen inputs
Twelve required, two optional, on the first Monday of the month for the month that just closed. You never type a metric.
| # | Input | Level | Locked definition | Source |
|---|---|---|---|---|
| 1 | MRR | L1 | Sum of every active client's monthly recurring fee on the last day of the month, at the contracted rate. Excludes setup fees, one-time projects and pass-through ad spend. | Client list / billing |
| 2 | New Clients | L1 | Clients who started paying $500 or more per month this month. | Client list |
| 3 | Churned Clients | L1 | Clients who stopped paying, paused beyond 30 days, or dropped below $500 per month. Counted on the day they cancel or downgrade. | Client list |
| 4 | Clients at End of Month | L1 | Active clients paying $500 or more per month on the last day of the month. | Client list |
| 5 | MRR Lost | L1 | Monthly recurring value of the churned clients, at the rate they were paying before they left or downgraded. | Client list / billing |
| 6 | Collected Revenue | L2 | Total revenue that hit the bank in the month: recurring fees collected, setup fees, project work. Excludes pass-through ad spend. | P&L |
| 7 | Ad Spend | L2 | Money paid to media platforms: Meta, Google, LSA, paid placements and sponsorships. Nothing else. | Ad accounts |
| 8 | Sales & Marketing Cost | L2 | Everything other than media paid to people and tools to run growth: sales and marketing salaries, commissions, staff-like contractors, third-party providers, lead-gen vendors, referral fees, marketing software. Never owner comp. | P&L / payroll |
| 9 | Fulfillment Cost (COGS) | L2 | Direct cost of delivering client work: service team payroll, outsourced providers and white label, delivery tools. | P&L |
| 10 | Overhead | L2 | Every other cost of running the business: admin payroll, rent, software, insurance, professional fees, and all marketing and sales costs. Excludes Executive Expenses. | P&L |
| 11 | Executive Expenses | L2 | Owner and shareholder salaries, executive benefits, vehicles, executive travel, meals, and one-time items. Excludes income tax. | P&L |
| 12 | Cash in Bank | L2 | Business operating and savings balances at month end, less credit card balances due. Excludes client ad funds, tax money set aside, lines of credit, personal accounts. | Bank |
| 13 | Leads (optional) | L2 | Everyone who opted in this month under one definition you never change. Blank for months not tracked. | CRM |
| 14 | Appointments Held (optional) | L2 | Sales appointments that actually took place this month. A no-show is not held. Blank for months not tracked. | CRM / calendar |
The monthly ritual
First Monday. One row. Ten minutes.
Pull the fourteen numbers from your client list, your P&L, your bank and (if you track them) your CRM. Enter the month that just closed. Read the Dashboard. Fix the one card that costs you the most if you ignore it.