As a staffing agency, the product you’re selling to clients is the quality of your talent. The more successful your contractors, the more likely you are to retain existing clients and earn new ones. But you can’t continue to make sales and ignore the health of your contractors. Your relationship with your clients can only grow if your contractors are solidly embedded in your agency.
There’s no question—taking care of your contractors is good for business.
The way in which contractors impact an agency’s bottom line is the topic of several current studies, the results of which will be announced in 2018. There are three main hypotheses being investigated:
- We live in a gig economy
- Contractor success plays a critical role in agency success
- Contractor success has quantifiable benefits
Let’s see how they relate to agencies and their contractors.
1. We live in a gig economy
In 1989, freelancers made up 6% of the workforce. A recent study by LinkedIn and Intuit anticipates that by 2020, freelancers, entrepreneurs, contractors and others who work for themselves will make up 43% of the workforce. Why has it risen so quickly? The two biggest factors, according to the study, are:
- More money. According to the LinkedIn study, 57% said they entered the gig economy to earn more money. As companies continue to pare down their workforces to do more with fewer employees, the number of opportunities for advancement has dwindled. Contracting, especially, allows professionals to earn more per hour than they would make continuing to be part of the corporate workforce. Those contractors most often work through staffing agencies, although quite a few find themselves contracting with the company they just left.
- More flexibility. Contracting allows for the best of both worlds—more flexibility, with some of the stability of a corporate job. It allows for travel between contracts. It allows for leaving if the engagement is different than expected. It allows for more personal discretion in the type of work done.
As more are seeking better work-life balance and more control over all aspects of their lives, those seeking contracting positions will grow.
2. Contractor success is critical to agency success
With more and more workers entering into contracting arrangements through staffing agencies, the success or failure of those contractors is critical to agency success. According to our research, less than half of all contractors stay on with an agency through multiple engagements. Pair that number with the estimated $10,000 to $20,000 it costs an agency to replace a contractor and the problem becomes obvious. The only way to effectively grow your agency and its client base is to lean heavily into making each contractor a success within your agency.
3. Contractor success has quantifiable benefits
As noted above, the cost to replace one contractor who leaves your agency is between $10,000 and $20,000, but that figure is just the tip of the iceberg. When a contractor leaves, especially if it is before the end of an engagement, they take with them client goodwill, the risk of poor reviews, and a decrease in the number of potential referrals.
There are three areas which, over the last few years, have shown increases in revenue when applied to contractor success:
- Preserving revenue. Simply put, managing contractor churn keeps preserves your agency’s revenue. Agencies have reduced contractor churn by addressing issues as they happen, through establishing comprehensive contractor success plans. Strong contractor success plans ensure contractors are onboarded, trained and followed throughout their life with the agency. According to our own research, 45% of contractors who leave at the end of an engagement will not reapply, and 22% will not refer.
- Expanding revenue. If contractors feel well taken care of, they have confidence in ownership and management, and feel they are offered satisfying work. They are more likely to talk to their existing client about adding more work to the current contract or adding time to the end of an engagement. The amount of revenue available from existing relationships expands the longer a contractor stays with the agency.
- New revenue. As noted above, contractors are more likely to refer others to an agency if they feel they are being heard and are being set up for success.
Want to learn more about contractor care? Sense will be hosting a live webinar on February 22 titled, “The ROI of Contractor Experience.” Learn more and register HERE.
Sense can help you take advantage of the success of each contractor. How? Make an appointment now to talk with one of our representatives.