Situation
In a rapidly changing economic climate, a mid-sized digital marketing agency faced a familiar but urgent challenge: reduce operational costs while preserving quality, culture, and client outcomes. After a period of high growth and hiring, the company needed to rebalance its cost structure and increase efficiency without triggering a decline in morale or performance. While standard cost-cutting tactics like headcount reductions, across-the-board budget freezes, or service scope reductions were considered, leadership opted for a more surgical, strategic approach. The goal was clear: protect what made the company great, while tightening the belt with precision so that the company could extend its burn rate and be better insulated against economic downturn.
Solution
Guided by Proxxy, the agency adopted a Lean mindset (not as a one-off initiative, but as an operating principle). Rather than launching a program, Proxxy worked behind the scenes to embed Lean thinking into every corner of the business. This meant re-evaluating the cost of client acquisition, asking how much friction was too much to win new business. It also meant confronting the hidden costs of client retention, challenging whether the firm was overextending itself to keep difficult clients happy. As well as auditing how work was getting done and cutting out waste. Every team was encouraged to look at their work through a cost-value lens, and changes were made not to reduce capability, but to realign effort with return.
We started with a department-by-department audit of tech stacks, reviewing usage, cost, value, and license allocations. Redundant tools were eliminated, and user access was trimmed to reflect real needs. Vendor contracts were reviewed and renegotiated, focusing on high-ROI relationships and phasing out underperforming or unnecessary spend. Each department also restructured its development budget, opting for group subscriptions, cross-department learning, and shared training opportunities to maintain growth while spending smarter.
The agency implemented a standardized process for evaluating job requisitions. Entry-level roles were routinely assessed for offshore suitability, with SOPs guiding how and when to backfill based on skill, cost, and client impact. This mix-labor model allowed the firm to expand capacity and coverage without bloating overhead
One key breakthrough came from redefining how non-billable client work was handled. Admin overflow, ad hoc requests, and excessive communications were tracked against a defined internal margin. Teams were challenged to stay within the allocation buffer, allowing room to be generous without becoming inefficient. This created a sense of ownership and accountability across departments.
The agency also leaned into performance transparency. Assignments, utilization, and account-level margin data were shared more openly with teams. KPIs were clearly tied to bonus outcomes, giving staff a line of sight into how their decisions impacted both clients and the business. Additionally, leadership retired an outdated biannual raise policy and introduced a new compensation approach that emphasized performance-based, year-end raises. This shift allowed the company to reward true impact, without prematurely locking in costs before company-wide financial performance had stabilized. It reinforced the message that when it comes to long-term impact, smart work, not just hard work, is what moves the needle.
Proxxy also made sure this shift wasn’t perceived as just another cost-cutting mandate. Employees were brought into the process with transparency and trust. Bimonthly All Hands meetings and weekly team meetings were turned into open forums for spotting inefficiencies, sharing solutions, and taking ownership of improvements. Staff saw how their work connected to financial performance, and leadership made a point to celebrate smart, strategic thinking at every level, including in the company #wins Slack channel as well as in the more formal internal communications. The tone from the top was clear: cutting costs didn’t mean cutting corners. It meant choosing to do what matters, and letting go of what doesn’t.
Outcome
Within six months, the agency had trimmed more than 8% in operating expenses and improved project margins over 10%, while simultaneously improving employee satisfaction. These gains didn’t come from squeezing teams, because that seldom works. They came from removing friction, closing gaps, and freeing up time to focus on high-value work. Utilization improved, but without pushing people to the brink. In fact, team morale grew by 47 points, thanks to the focus on transparency, inclusion, and realistic expectations.
Specific to savings, one subscription change reduced the annual fee from $20k to under $3k. Another example, outsourced support contract renegotiations saved the company $110k in spending for the year. And, the company development budget was reduced from $30k to $12k with better programming and higher engagement. The mixed labor model has saved the company about $185k/year in salary savings so far.
The changes also led to better outcomes for clients. Smoother handoffs, clearer briefs, and more efficient tools meant projects moved faster and with fewer revisions. Client escalations dropped, and internal confidence grew.
Most importantly, the company embraced a new way of thinking. Lean wasn’t a one-off project; it became a lens through which every part of the business was evaluated. Spending became more intentional. Processes were regularly questioned and refined. Teams had the freedom to suggest new ways of working. Operational discipline wasn’t just accepted, it was celebrated.
The business didn’t just get leaner, it got sharper and wiser.
