For us in an agile studio, points are as concrete a unit of measurement as inches, minutes, or dollars — but for those new to Agile or agency billing, points can rightly feel like a lot of handwavy hot air. Using points and agile in a growth marketing agency is one of our core theses as a firm, so I’m here to once and for all demystify this mighty means of measurement.
Story points are an alternative to tracking billable hours for planning and measuring work. They have many advantages for project management and service businesses and their clients. Among these benefits include administrative time saved in time-tracking, faster, more robust estimates, and allow for work estimates to be associated with value instead of billing for the “work about work” that can fill our days.
Points and Agile
If you’re unfamiliar with Agile project management, pause for a moment to watch last week’s episode to get caught up. We write extensively about Agile here, so check out this intro we wrote on the subject or an explanation of how we arrived at this business model in the first place. HBR also has an excellent primer on Agile.
A fundamental principle of Agile (and startup marketing) is that at any given time there are nearly infinite initiatives you could undertake or product features you could build, but that time and resources are certainly limited. How do you prioritize and project manage?
In Agile, project owners architect sprint intervals to prioritize building the highest value features in a product or complete the highest value growth initiatives. A common way for ranking this backlog of campaigns or strategies is often referred to as ICE — Impact, Confidence, and Effort. In other words, we as a team should spend our time on projects that we are most confident will have the highest impact for the lowest effort.
So today, we ask, how do you measure effort? Or better yet, how do you predict effort so you can prioritize the fastest wins before undertaking a project? This process in Agile is called Estimation, as in estimating how much effort this task will take.
What is a story point (and what it isn’t)
There are several common ways to estimate tasks to determine how to organize a sprint interval of work. Some include hours, T-shirt sizes (small task, medium task, large, XL, etc.), and story points (or just “points” for short).
Where does the “story” come from? In product engineering, product managers will write user stories to design solutions to. For example, imagine I am a business user who wants to use the product to do X or Y. How many points will it take for us to build that feature?
No matter what unit you use to measure effort, it’s critical to managing the project to understand your team’s capacity in that unit and then plan effectively. Whether story points, hours, or T-shirt sizes, Agile project managers consider the total number of units their team can work in a sprint as their velocity. For example, I can do 40 hours each week (or maybe five large T-shirts). Knowing the effort of what needs to be done and the capacity for that effort, I can manage the team most effectively to have the highest impact on the organization.
Counter to the example of 40 hours a week above; points are designed to be a more accurate measure since the capacity of points available is set by trial and error. Consider bathroom breaks, phone calls, etc., that affect that 40 hours’ capacity. In this way, points abstract away from all that to capture effort, complexity, uncertainty, and value to the client or organization. A point isn’t an hour or a proxy for hours. Points capture the value of multiple people working on a project.
How can this be? Instead of relating to time, points relate to the value of a story. For example, sending a newsletter may be a value of four story points. Something roughly twice the value of that newsletter is rated eight points, whether or not we had our fastest or slowest designer make it. It all boils down to a combination of how much of our resources will go into making it and how much value the deliverable will bring the client.
Creating Unique Value for Agencies, Clients, and Growth Marketing
If product Agile is about shipping the most valuable increments of software as quickly as possible, growth marketing Agile is about moving the highest value metrics as quickly as possible. That was our revelation; that all this agile discipline could be applied to help our clients win. There are numerous advantages to running project management on points.
For a marketing agency like us, points also provide a convenient way to bill our clients. They are consistent across accounts, and our clients buy retainers of points that account executives help them deploy at the highest value to their organization in ways that let us move the metrics that matter.
Points are also guaranteed! Once we estimate a project, we deliver it for that point value. That’s predictable for both the client and the service provider.
Points come in doubling increments to make estimation fast and agreeable. If we had to decide between four and five points for every task (or hours!), work would move quite slow. But instead, we only have to agree if it’s closer to four or eight points. Check out Mountain Goat on estimate ranges.
Lastly, tracking time sucks. It’s our goal to be a growth engine for our clients, to be embedded in their teams. And in my experience, that doesn’t work if every time they talk to one of us for an hour we send them a bill for $150. Maybe that’s why HubSpot research shows it’s a growing way that marketing agencies are billing clients.
A value-first billing system
In the end, points keep us focused on value. They are a language for billing clients for that value instead of tracking the minutes of communication that got there. And building your organization in a language where everyone across roles and disciplines can communicate about value is a powerful thing.