New Business Hawk

New Business & Client Service: Keys to Successful Negotiation

Every person in advertising, like every fisherman, has a story about “the one that got away,” the perfect client that was a great fit, or the one that was “this close.”

Many times, great clients are lost due to blunders in negotiating. But there are negotiating tools and techniques that can help you land prize clients. Or keep key clients longer.

Although negotiation is a natural part of human interaction, it also makes many people uncomfortable. Lots of us, for example, are conflict averse: When it comes to “fight or flight,” we’d rather fly every time. Others see negotiation as an exercise in deception and manipulation, in which we hide our true intent, try to intimidate or outwit our “opponent,” or try to “wait them out” by sitting silently as they present options.

Many books and articles on the subject present negotiation as a set of “tips and tricks” designed to make the other person squirm. Negotiation, like office politics, is an unavoidable part of business life that’s gotten a bad rap because of the way it’s practiced by some agencies and consultants.

One of the first steps in successful negotiations is assessing your client’s style or profile accurately, and responding to their negotiating style in the way best suited to them. There are four client profiles, based on how they work and respond, whether they are more task oriented or people oriented, and whether they are high or low assertive. For instance, someone considered a “Headline", high assertive and low response, is focused on “now” and “results”, and wants “options” presented so that they are in control of the decisions. Others, like “Body Copy", are more interested in “how” and “process” and respond better to fully-presented information as they check off all the pieces they want to consider. Other profiles include the "Logo" and the "Illustration"

Client relationships tend to evolve, initially being based more on learning about each other, then on tasks and getting the work done after trust has been established. However, tension from something gone wrong can swing that relationship upside down, and until the relationship is healed, work essentially needs to, or will, come to a stop.

Negotiations are not always about the money, but can include a number of other items, such as turnaround speed, payment terms, licensing agreements, or limits to the approval process.

The negotiation triangle is a balance between finding out what the client wants and make them feel heard, with knowing exactly what your agency wants, and then suggesting action in such a way the client can accept, always looking for a win/win resolution.

Common errors in negotiation include misunderstanding what the negotiations are actually concerned with (someone’s job may literally be on the line, so budget is not as key as a client feeling confident that an agency can successfully solve the client’s business challenge). Or the agency team may not have clear goals going into negotiations, or not have a clear understanding of the roles and responsibilities for the negotiating team members.

There are eight phases of negotiation we teach in our High Gear program for Account Service:

1. Preparing: Collecting information about the client, their profile, background, and more.
2. Setting Objectives: Making sure all your objectives are on the agenda, how to counter other issues that might be raised.
3. Identifying Positions: Setting your “ideal”, “realistic” and “fallback” positions, or even your BATNA – “Best Alternative to a Negotiated Agreement.”
4. Opening: Open well away from where you want to settle, never accept an opening offer, and never negotiate with yourself, making concessions to the other party before you meet because “I know they wouldn’t accept that.”
5. Checking and Testing: Know the power of silence, and don’t accept “no” at face value, try rephrasing, look for non-verbal signs.
6. Getting Movement: “If you... then we” style of introducing some early concessions.
7. Giving Concessions: Consider when to give, how much, and what are you getting in return.
8. Finalizing and Agreeing: Recognize when you are at the agreeing stage. Look for signals such as repeated “no’s”, concessions getting smaller or resistant body language.

It’s important to remember that getting an agreement is the easy part. Keeping the agreement is often the hard part.

One key point - negotiations on client-agency relationships should be kept separate from those who will actually be working on the business, due to the potential for some bad feelings, no matter how good the intentions or how well negotiations proceed. It is critical that CEO’s in particular not lead negotiations as they are the ones who may, at some point, find it necessary to step in to resolve potential issues.

Agency Growth the Old Fashion Way: Buy It!

Want to grow fast? Do a cross-town merger. This way you add important services you don’t have or bulk up fast and perhaps more inexpensively than you thought. And with a cross-town merger you can bring in experienced personnel to add to your management team. That’s all possible if you grow by acquiring.

Why Cross-town Merger vs. Out-of-town Acquisition? Cross-town mergers are often quicker, easier and more profitable immediately. Back office, administrative, production and more can be streamlined with little problem. This simplifies management issues and produces fewer hassles. In addition, a cross-town merger is usually less expensive and is a good place to start. Few executives know the full extent of the many attractive opportunities within their own city.

So how does one go about a cross-town merger?

First you have to decide to seek a merger partner. It's important not to tell any outsiders about your decision. The search needs to be done in isolation. Second, do a strategy session to look at all the options. What type of firm should we be looking for? Any specialties we are missing? Or what market do you want to get into? Third, organize a proper search to see where the best fit is. Keep your name out of the initial conversation with any prospects. And lastly, use an experienced, outside point of view that will keep the process on track.

Typical Cross-Town Merger Situations We Find:

A. The Cherry A perfect fit where everything goes right from the beginning and continues on through the deal. If everyone is reasonable, Cherry deals can be found and made. Cross-town mergers make these even sweeter.

B. The Slot This is another perfect fit where you can slot the acquired operation into your firm without missing a beat. It’s usually in a service area where you have little experience but solid potential. The acquired firm gains from your resources, your new business opportunities, and the organic business you can place from your existing accounts.

C. The Escape The search phase has located a firm in trouble and the owners want to crash the company, not pay the creditors and move themselves and several key accounts to your operation. You buy nothing. You take on some staff. You pay for what sticks.

D. The Exit The search phase has located an owner who wants out, will stay for a year or two to work the accounts and help maintain AGI. But the owner is phasing out but willing to stay around to help the transition. And is willing to work hard to make the deal happen.

E. The Key Guy One firm is not very good at new business, for example. The other firm is bad at operations but great at growth. The buying firm brings the other firm on board mainly to get the key person and the expertise to help them grow. The other guy wants to sell because he or she is having troubling managing the business already on hand and can’t wait to dump the operational side of things so he or she can go chase new business.

How To Get Started: Not sure a cross-town merger is right for you? We suggest a “Power Hour.” This is a one-hour, no-cost discussion by phone on the best way forward. It’s a chance to check chemistry, analyze costs and investments needed, and discuss possible options and strategies for moving ahead. Give us a call at 800/899.1538 for more information on how to get started and how to set up a Power Hour on mergers and acquisitions.

New Business: Five Warning Signs of a Nightmare Prospect

New business sometimes lands you in strange places. This has never been truer than in challenging time like these. Winning is everyone’s objective, but every agency has a nightmare client that was once a promising prospect.

Our clients often ask if there is a way to assess in advance what prospects and accounts will drain profits and drive you to madness once they become clients. SCG advocates the use of an active outreach program for screening prospects. You need a clear understanding of the prospects personality, history, objectives, budget, and expectations for all prospects in your database.

Agencies don’t take on these clients willingly. Dysfunctional, destructive or disorganized prospects slip through the cracks all the time pulling you into lose-lose relationships that drain patience, time, resources and profits. The time to confirm and clarify a prospects “nightmare potential” is during the first visit. Doing so can keep you from investing time and energy into loser accounts.

Here are the five warning signs of a nightmare prospect:

1. You are their first agency. This is a red flag. Take a pass and allow another agency the frustration of training them.
2. The prospect is not clear about what he or she wants, but somehow expects your agency to produce it without detailed input.
3. The prospect reports having had a lot of problems with their previous agencies. A pattern of “problem” agencies could be a sign of a problem client.
4. The prospect is ignorant about marketing, advertising, or the creative process and has no competent staff. This prospect often expects you to wave a magic wand, with little understanding of the complexity or expense of developing and producing effective work.
5. The prospect makes it clear that they are looking for a bargain and focuses entirely on cost.

If you have found one or more of these signs, proceed with caution, if at all.

If you decide to attempt to turn this prospect into a client, here are some steps that you can take to minimize the risk.

1. Document major concerns in writing in a conference report following the first visit. In your reports make sure to outline the framework for a successful relationship.
2. Maintain constant communication becoming their best friend and confidant.We recommend you create a binder and number every conference report, and be over organized!
3. Don’t let problems fester. They are much easier to solve when they are small problems. Keep the focus on relationships not issues.
4. Educate them. Explain the impact of their behavior on schedules, budgets and deliverables.

Search consultants and Cattle Call RFP’s have made it more difficult to identify a nightmare prospect. Many agencies see only the revenue opportunity and overlook or ignore the signs.

To keep a prospect from becoming a nightmare client, you must be extremely clear on what you need from the prospect at each step. You must communicate as often and as tactfully as possible. Communicate these success factors up front is most effective.

It’s important to have a detailed contract covering issues that might lead to problems and exactly how payment will be handled if things do not work out.

By building a graceful exit into the process, you can protect your most important client - you.

Probably going on in a client’s office near you…

I just read an interesting article on how local businesses in a small resort town are asking the city for better reporting, more accountability and standardized metrics. 

Shrinking revenues are demanding that the town become far more fiscally accountable so that funding is directed at the most productive activities.

Some of those who are attempting to analyze the productivity reports that are submitted claim the lack of financial or demographic data standards makes it impossible to fairly evaluate the productivity from either an economic or community-relations perspective.

Now change the players.

The city is the marketing manager, brand manager, or director of advertising at any one of your clients. The business leaders are acting as the C-suite. CFO, CEO, CMO, etc. In these tough times every action, every marketing plan, every cost will be studied. Analized. Picked clean.

What are the goals? How will we measure success? What is the ROI?

This is something business consultants in the world understand, and something they build into their proposals each and every time. Call it a cost/benefit analysis, matrix reporting, measurable deliverables, but they speak the language of the C-suite.

How is it impacting your business and what are you doing to deal with the changes?

Expecting things to remain the same is not an option!

Fishing in Troubled Waters - New Business in Tough Times

A recent B-to-B Magazine headline shouted, “Desperate ad agencies scramble for business.” There is no disputing that the current climate is the most challenging our industry has experienced in memory.

The traditional advertising agency model is under attack from all sides. From the strategic side agencies are being pushed out with the increasing impact of consultants; search, procurement, brand, marketing, and of course, the big fish, management consultants. On the tactical side agencies have to compete with all types; design, internet, database management, media buying, promotion, direct, special events, sports marketing firms, corporate identity houses, two guys and a Mac, and more. This is troubled water.

A recent poll among advertisers indicates the current tenure for a marketing manager is only 9-18 months. These new Marcom Managers are younger, have less experience in advertising, are more focused on tactical issues, and recognize that they are only there for the short term. At the same time they have a wider span of control over marketing and budgets, and they want their own suppliers – people who think and look like them. Not surprisingly they don’t take advice very well from traditional agency staff that often comes across as patronizing. More troubled water.

Client turnover is among the more serious challenges within our industry. Some recent studies show that for smaller accounts the churn, or client turnover, can be as fast as every two years, while larger accounts have gone from seven years to three. Clients, these new Marcom Managers, are growing more and more impatient and are quick to question the effectiveness of their current agency. The growing percentage of project-based work has made it easier to change – click to what’s next. Yet more troubled water.

Design studios and other low-cost providers have seen revenues increase as their agency brethren have suffered. These creative firms are organized and operate tactically. They are taking business away from traditional agencies on account of price, speed and timely delivery. Many other specialty shops who often work faster, are more focused on results, and offer tangible benefits to clients are also seeing an upswing in new business. Clients are questioning the value of all the layers at the agency; account service, traffic, and all the administration. Further troubled water.

There is a renewed focus on new business, but most agencies have no system for sustained business development and few staff skilled in new business.  What was done 3 years ago no longer works. The troubled water is changing everything. You have probably been frustrated by first-hand experience with all of these changes; but opportunities for new business are abundant for advertising agencies that are prepared.

We believe there is no better time to do new business than times like these; when clients are changing how they spend, when your competition is worrying about staying in business, when companies are changing agencies at an unprecedented rate, and when prospects want to make decisions that enable them to solve immediate challenges. Doing new business now is like fishing in troubled water. Most people don’t even go out – but that’s also when the pros know fishing is best. While others stay home, the smart ones go fishing.

What steps should you take in times like these? Here are six strategies we recommend.

First, make sure your firm is properly branded. Check to see if you are caught up in alphabet soup with a brand that doesn’t say anything. Clients who are looking for a new agency don’t want a “we-are-whatever-you-need” advertising firm. In fact, that turns them off and harms trust. At a recent new business conference hosted by the AAAA, every client and search consultant said “stand for something.” You have to know who you are and why you should be considered. Otherwise, you risk fading into the fog of marketing services lingo. It is better to stand for something and not be considered for one account then to stand for nothing and not be considered for any accounts.

Second, focus on generating leads. That means increasing the number of opportunities to go visit good prospects. Too many agencies only focus on winning pitches, not working to get into more pitches. Beware of the “we’ll win the next pitch” red herring. This is where an agency is busy pitching but not focused on creating awareness and relationships. Unless you are a recognized agency brand (and there are only about 10 in the US), counting on referrals and word of mouth is not a new business program. Many agencies have attempted to flip a new business switch – “we need some new business NOW! Let’s form a committee!” Few are finding success.

Third, sell smarter. Focus on the overt benefits you offer. Make it clear what you do why and how it gets results. Successful agencies do this face-to-face, not by clicking PowerPoint slides at a prospect with lots of case histories and marketing babble. Stop doing capability presentations! Instead show them how you work, specifically with their brand, and how you will impact their business. This means that you have to work hard and listen to understand their problem. This sounds simple, yet it is one of the most common problems in all client/agency relationships.

Fourth, be easy to do business with. Don’t try to sell what clients don’t want to buy. Give your opinion, offer suggestions, but be sure to give them what they are asking for. If they want the logo larger, make it larger and move on. Forget about account planning and stop trying to get clients to pay for it. If you are in a tactical position, play the tactical game better and build trust. Only then can you move up the marketing ladder and start recommending more strategic advice.

Fifth, think about growing the old fashioned way – buy growth. A cross-town merger with another firm in your market can create a wealth of opportunities. There are some good opportunities in every market. You can gain efficiencies and add new services and resources, and create more awareness for your brand.

Finally, go after the consultants and the strategic high ground by offering consulting services of your own. This requires a separate brand that is not linked to advertising or marketing. Too many agencies forget that if you’re an agency, and try to add consulting to your brand, you are still only an advertising agency –Where are my ads! However, if you are a consulting firm, then you can work at the strategic “C” level, and open up a sizable new revenue stream. This provides more opportunities for the agency side to follow once the consulting assignment is completed.

Search consultants are saying new business is slow. They’re wrong. Their business is slow. New business is heating up. The competitive landscape for agencies has been forever changed. As the economy recovers and picks up speed, you will need to adapt to win today and change to succeed in the future.

As you evaluate opportunities and challenges at your agency, never hesitate to give us a call - 800.899.1538

Image Credit: http://www.1st-art-gallery.com/Andreas-Achenbach/A-Fishing-Boat-Caught-In-A-Squall-Off-A-Jetty.html 

The Agency Offsite as Engine for Innovation

Most agencies annually convene a leadership meeting, strategic planning retreat, or brainstorming session dedicated to crafting an innovative course of business strategy. Rarely do these meetings deliver results.

Instead, they produce a pattern of incremental progress. And this does not translate into competitive advantage. Other factors affecting these meetings include planning, organization and leadership. Because responsibility for this meeting most often falls on the agency leader, the outcome is predictable.

The reasons for this are simple. Leaders "know" they know more than their team, so they develop a plan and agenda that determines the outcome - and everyone's frustration. Experience shows most meetings of this type fall into one of two patterns. At the "Rubber Stamp Offsite," the team nods along as their leader uses his agenda to present his assessment of the agency "As Is." He then dictates the action plan and assigns responsibilities. This approach is easily identified by the neatly organized three-ring binder entitled, "Agency Strategic Planning 20XX." Note - look for an accumulation of dust.

The other meeting type, the "March of the Hopeful, Guilty and Ambivalent," is the product of an insightful leader who - tired of the "Rubber Stamp Offsite" - assigns every member of the team roles and responsibilities. The outcome - well - you have been at these meetings, there is no outcome, just a reporting of the past year, justification of the results and explanation of the incremental changes that will be implemented to fix what's broken. Frustrated, the agency President usually sits down following this session; drafts an action plan and dictates responsibilities - see the results of the "Rubber Stamp Offsite."

If you want to break this cycle to create opportunities for innovation at your agency, then change your approach.

Don't go off the deep end and schedule team building exercises through Outward Bound, or book a provoking motivational speaker. These activities make great copy - but rarely, if ever deliver business-changing insights. A growing number of successful organizations are utilizing professional facilitators to assist in the planning and management of these important meetings.

By assigning responsibility for the business of the meeting to an experienced outside party, the group is better able to focus on the business of the business. The role of the facilitator is part emcee, part mediator, and part referee. But more than that, this person frames the discussion, manages interaction and creates opportunities for discovery.

Because innovation is not achieved in-the-box, an agency is better served living the process, not running the process. And agency leaders must understand that insight is achieved through their support, not as a result of their management. Utilizing a resource experienced in facilitation and knowledgeable in the industry changes the meeting dynamics. The agency, as a whole, becomes the focus, not the innumerable piece and parts.

If your agency's strategic planning process is not creating measurable results in growth, quality, productivity, or profitability year-over-year, then you might be a perfect candidate for this approach.

Photo Credit: thedailylondonphoto

Operations: 7 Ways To Improve Your Finances

Often when speaking with agency leaders they bemoan the state of their finances. Projections are looking better, but they're still not great. Marketing firms aren't setting any records for growth. Client marketing schedules are still being pushed back. What can an agency leader do?

1. Productivity improvement. This was once described as "pushing the staff to work harder." Most agencies are at the limit now when it comes to how hard your staff is working. It's more effective to strip non-value-added work out of the process. Streamline the workflow, implement new tools to enhance communication, remove old forms and steps that were implemented in another age.

2. Compensation and contract terms improvement from clients. This is a great option if only you can figure out a way to make your clients pay you more. Revisit your contracts, utilize benchmarking results, establish performance goals and understand how to negotiate.

3. Organic growth. This is the British term for getting more work from existing clients. It can be difficult if all you do is try to sell more of your existing services. It is far more effective to find ways to sell Business Building Ideas and Value-Added Services.

4. Merge or acquire. An effective way to reduce overhead or add services you are now buying from someone else. Look around your market for a good opportunity for a cross-town merger. If done properly, this can transform an agency.

5. Realign your brand. Focus your efforts on one category and become an expert. By adapting a more consultative approach for your existing and new accounts you can increase revenue to the bottom-line

6. Cut salaries and staff. This is a meat axe approach and is usually the last resort before the door closes. If not handled correctly, the end result is often good people leave and bad ones stay. There are some effective ways to better align staff with your overall agency goals. If this is done correctly, it can reenergize staff by removing deadwood.

7. Grow. Win more new business. One of the things Sanders Consulting Group is best known for is our new business prowess. Over the years we have taught more marketing communication people around the world more about generating new business than anyone else. If your firm needs more new business, give us a call.

By following these tips you can increase your bottom line, even during the recession. And, if you need help - don't be afraid to ask the experts!