Posted by stuart sanders on Tue, Jul 27, 2010 @ 12:06 PM
To avoid discounting your work, we believe agencies should discuss money whenever a new job or project is brought up, right when the assignment is first mentioned by the client. It’s a way to open up negotiations over both job specs and job budget.
Our approach is to start by asking, “In round numbers how much are you planning on spending to get this done?” Now wait until the client responds. The client has two options.
Option #1 is to ask you back how much it will cost, and the agency person needs to move towards suggesting a budget range by discussion first the job specs and then by picking a high number to test the waters. If the client responds, “That sounds about right,” then you know you have guessed too low.
Option #2A. If the client faints or grabs for his or her heart, then you have guessed too high, and you need to move down in a series of bracket jumps. It’s fun to do. The key point is to remember that you are not estimating the job at this stage, you are just trying to understand the importance of the job.
Option #2B. If the client gives you a number, your account staff should be trained to immediately say, “And as much as….?” You are assuming the client has given you the bottom number from a budget range, a normal assumption. And now you are asking how high to probe for the upper range. If you get a new number at this middle stage, immediately ask, “And up too?” Here you are assuming there is a very top number in the range, and you need to know what it is.
This is simple negotiation in a process we call the Budget Game. And your agency staff needs to be trained on how to play it well. It takes less than a day to learn and it will make your firm a lot of money over the years.
Running back to a client with a production estimate when you don’t have any idea what the client expects to pay, as so many agencies do, is very very foolish. It’s not a smart way to do business because you lock yourself into your own expectations about how important the project is to the client. And you lock your agency into living off production budgets.
Case Histories
Our files are filled with actual stories of how well this simple negotiation technique from the Budget Game has worked for agencies around the world.
Here are some favorites. A mid-sized agency asked their client, a medium-sized manufacturer in Ohio, a client for ten years, in round numbers how much money were they thinking of spending to launch a new home improvement kitchen product? The client responded, “Up to $6 million.”
The account handler was so shocked at the size of the budget that he forgot to ask the follow-on question of “And up to?” as he had been trained to do. That afternoon the agency president told me by phone, “Guys, do you know what we would be doing this afternoon if we had not asked that simple question? We would be working on a campaign launch of about $450,000. That’s the usual budget range we suggest when work with them. We have had the account for years, and we never knew they could pull the trigger on that big of a new product launch. Thank you so much for showing us the way.”
Another $300,000 Found
The president of a direct mail company called to report his junior account executive had just returned from a client office so excited that the Budget Game had worked for her the very first time she had tried it. She had asked a client the “round numbers” question and the client had said $200,000. She moved the client up to $300,000 for the next number and been told that the client couldn’t go over $600,000 on the project. The junior account executive was excited that the Budget Game had worked so well her the very first time.
The agency president wasn’t excited at that. He was excited at the new monies that would have been left on the table without his most junior AE asking a simple question, “In round numbers”, and then knowing what to do with the answers.
Big Black Eye
Before I knew about the Budget Game I got a big black eye on a large regional brokerage company. I had been part of the team that had won the account and now I had been assigned to work on the client. I was new to the agency, a junior AE. The ad manager asked for a media recommendation on using the Wall Street Journal to launch their new brand look we had recommended. I was young and so charged up.
I bounded back with a media budget recommendation that was six times larger than anything the ad manager wanted to see. And he ripped me up and down and almost fired us. We had flashed to him that we really didn’t know his business. We kept the account for years, but after that I never again went back to a client with any recommendation without knowing what the client expected to pay first. It was a life-lesson that I never forget. And the best place to find that number is to ask for it when the client first mentions the job. Your staff might need to learn all that now.
Posted by Robert Sanders on Mon, Jul 12, 2010 @ 12:22 PM
Recently I was working with a great agency, around 15 people and some outstanding work. They were well known in their market, but had been defined within that market as a certain type of marketing firm. While there were many pitch opportunities in the area it seemed they were almost never called.
Why?
Over the past few years by not defining their brand they had allowed the market to brand them. And as their capabilities had grown and improved, they failed to communicate that with prospects.
Even worst, the market perception for the firm was out-of-date and just plain wrong.
So here are 4 easy steps to help your brand stand out in the market.
Agency Focus – In this cluttered market place only an expert has any chance of standing out. Business leaders don’t have time to educate someone on their unique situation. An expert understands their product, their service, and knows how it can benefit customers. OR an expert knows their customer better then anyone. OR an expert has a unique view of the marketing landscape. Find something to be your area of expertise. Just being a “full service highly creative marketing firm that offers outstanding service” isn’t enough any more!
Make New Friends - We all now that people do business with people whom they like and trust. Choose to make a new friend over just creating a new business transaction. This will pay off in the long run.
Effectively Communicate - Establish yourself with your target market by creating a dialog on things that you have in common. You must be able to establish a relationship. With lots of people. This generates understanding and builds business over time.
Find Opportunities To Speak – Become a speaker to your target market, and educate people on both the changes hitting their market as well as the challenges they face. Provide Solutions.
There you go… 4 easy-to-forget strategies that can help you establish your brand in the mind of your ideal prospect. And just then, once they’ve heard of you, perhaps know you, and think you have some solutions then they will call you.
Posted by Robert Sanders on Fri, Jul 09, 2010 @ 01:28 PM
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
Posted by Robert Sanders on Thu, Jun 17, 2010 @ 01:56 PM
1. Challenge: You're the Best Kept Secret. No one knows you're around. You can do the work but you rarely get a chance to prove it. You answer the RFPs but nothing happens. You have revamped the agency and improved the talent, but no one calls. You worry your agency has a brand problem.
2. Challenge: Too Many Farmers. Not Enough Hunters. You're great at keeping accounts (farming) but you don't win any new business (hunting). Your agency senior staff won't make any new business calls. No one takes responsibility for new business. Little or no agency outreach is going on. You're surrounded by prospects, but how do you turn them into new business leads?
3. Challenge: Can't Get Invited to the Dance. There's a big review going on that would be perfect for you, but you're not invited in. A search consultant is running the review and you don't know how to get in. Can you really crash a review and still win? Are leads you see in the press really worth chasing?
4. Challenge: You Get the Cold Shoulder. There's an account you want, but they ignore you. How to make the first contact on a good prospect? How to build awareness that you're interested in their account? How to make cold calling pay off. How to start building relationships with great prospects.
5. Challenge: How to learn from Top New Business Pros. How do other agency leaders go after new business? What are your top competitors are doing that's different How do other firms build awareness and create relationships. What do the best search consultants say is the best way to reach out.
6. Challenge: It's Howdy Doody Time on First Visits. You make lots of calls (Howdy, I'm here) but you don't know Doody about how to close them. You never get any call backs after a good first visit. Prospects say they like your capabilities, but then they go quiet. What question should you always ask a good prospect? How to stop your good prospects from drifting into a formal review or hiring someone else?
7. Challenge: Always a Bridesmaid. Never a Bride in Pitching. Your agency is always presenting but never winning. You come in second on your pitches. The prospect always thanks you for the effort, but someone wins. Making presentations tears the agency apart. Isn't there a better way? How do you win major pitches? What's the secret?
8. Challenge: Dealing with Purchasing. What to do when Purchasing runs the review? What to change now that you have to go through Purchasing on all your work. Purchasing wants to bid everything out. Purchasing passes all your great suggestions out for everyone else to bid on. Your key contact is under pressure to use Purchasing. What do you say?
9. Challenge: Dead Man Walking. You're the Incumbent. You're the incumbent and now your client has initiated an agency review. You're invited to pitch to retain the business, do you? How want to keep the account but the formal review is starting because "it's company policy." You're doing great work for a client and now a new marketing director has been hired. Your client tells you the agency review is nothing to worry about but you do. Should you be?
10. Challenge: Understand The Art of Negotiating. What should be in every client contract? How to set yourself up to get more compensation for your firm. How to get paid for getting up to speed on a new account. What to do when a prospect won't sign a contract. What legal rights should you never give away.
Posted by Robert Sanders on Fri, Jun 11, 2010 @ 11:06 AM
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!