New Business Hawk

Ad Agency Growth: Training vs. Consulting

Our most valuable assets walk out the door at five o’clock

American corporations dole out an estimated 15 billion dollars per year on training and consulting for up-and-coming mangers and leaders. Sadly, most marketing firms spend very little on developing their staff. It’s the one thing most leaders tell me is on their yearly goals, and yet somehow it always fades by the wayside.

However, a few highly successful firms target high performers and potential leaders within their organization and work with them to develop their skills. These are the firms that make up most of our clients.

We have been arguing and writing about the science and practice of new business since the early 1980’s all in an effort to demystify this critical element of agency operations.

Our experience as managers, leaders, and consultants, both nationally and internationally, have helped us to understand the nature of that work, and the science behind it. Over the past several years we’ve seen the growth of many new business consultants. However we do see a unique difference between most of them and Sanders Consulting: few if any offer detailed training programs.

In this latest economic downturn marketing firms are asking their leaders to take new business seriously – a critical success factor to organizational growth. Learning leads to more effective action and, therefore, improved performance – and is no longer an option. More and more of the firms we interact with are recognizing that the roles of new business and agency leadership are different, and the skills required to be a great agency leader do not necessarily transition into the world of new business.

What To Do?

Invest in your staff. Your leaders. Yourself. Your agency.

Photo By woodleywonderworks

Are Ad Agencies Too Expensive?

Many advertising agencies are starting to hear more and more that they are too expensive. Having worked with many of them we know their rates are reasonable.

The question is how can our industry overcome this objection and convert more into wins? The economic downturn has pressured clients to trim expenses and assess the value-added contribution of their agencies. Most agencies have had their fees questioned and many have experienced the discomfort of fee/rate audits. Often agencies are responding with examples of results achieved and service quality, and question the appropriateness of this examination.

But this view overlooks the client perspective. While the marketplace has become more tactically driven and project-based, many traditional agencies have not adapted their organizations and services to match the needs of the client.

To be effective and profitable your agency needs to present itself in a manner acceptable and appropriate for the circumstances.

Agencies in this situation must understand that they are in three separate businesses that are often non-complimentary – Strategic & Execution Management & Production. Many traditional agencies have acknowledged this and have launched separately branded consultancies (strategic) and design studios (tactical). This approach enables a tactical response to an agencies organization and fee structure.

Just one more thought on this ongoing dilemma.

How can a small agency compete in new business?

Many smaller firms we’ve worked with over the past few years have won going up against some of the giants in our industry, and even more now consider themselves to be in competition with larger agencies. And sometimes the giants like JWT, Y&R, or just the large regional down the street feel the need to reach down and pick up a smaller account forcing you to compete with them.

So how do you compete against a larger agency? Do you pack your bags and go home, lie about your actual size, or disparage the behemoth?

Fortunately, there are more positive alternatives. You just need to explain why smaller is better. What follows are some points/arguments you can make to convince a prospect not only that size doesn’t matter when it comes to capability, but that large size can actually be a disadvantage in meeting his or her needs.

• The client is always dealing with the principal when he or she is dealing with your firm. You are the relationship manager. There is no junior partner to whom responsibility will be transferred. There is no decreased accountability, no “handoff” to a less-informed colleague. If the prospect’s interests are at stake continually, shouldn’t the client reasonably expect the principal’s continual involvement?
• You provide resources on a “just-in-time” basis. That is, your agency does not have to cover excessive overhead, such as multiple offices, large administrative backup, recruiting, partner perks, and so on. You are organized to efficiently provide everything the prospect needs but nothing more than that.
• There is greater likelihood of observing privacy and confidentiality with fewer people working on the project. In addition, the fewer people working on an account, the fewer “filters” there are to go through. Larger agencies sometimes have a problem dealing with a number of revolving staff’s differing perceptions or interpretations of information, and this can stall results. You (and the few people you might also involve) are constant, removing the need to sift through dozens of differing perceptions.
• You’re faster. You can respond to requests quickly and return all calls within two hours. (If you can’t, then you’re not taking advantage of your smaller size.) Your client needn’t worry about a bureaucracy, delays, and unfamiliar people answering their calls.
• Since you handle fewer concurrent projects than larger agencies, your attention is relatively undiverted. The client doesn’t have to “compete” with another dozen or so of your clients, some of which may be larger or more time-demanding. You structure your work so that every client receives maximum attention.
• Inevitably, you are less expensive. (Note that this is way down here in the list, because you shouldn’t be that much less expensive!). There are economies to using someone who can base their fees on each situation and not on a predetermined rate or their need for reaching a holding company goal.

Add your own reasons to these, and have them handy anytime you know that a prospect is considering other, larger agencies. Don’t be rocked back on your heels, defensively trying to explain why you can do the same things with fewer resources. Defense might win football games, but it doesn’t accomplish a thing in the new business process. Take the offensive, and explain why smaller is better for this client’s particular needs. Don’t disparage the competition; simply point out your superiority.

Don, over at Marketing Thought Leader has added more good ideas with his post Going Head-to-Head With the Big Guys. A good read and I highly suggest you head over all read his take.

Chemistry Wins New Business

Chemistry is that funny stuff in the space between people.

It’s not about you or me but what’s between us. That space is called Chemistry and it’s a driving force in new business. Chemistry is rarely talked about. Firms don’t like to say “we just didn’t like you” when explaining to an agency why they weren’t hired. Strategic direction, better fit, outstanding idea are all better reasons to go with another firm. Perhaps it would help if we called it “Likeability” as in “I like one firm more than another.” But Chemistry is more than that. Good Chemistry has more to do with meeting expectations, as in “I think we could work with these people best.”

Losing the Chemistry Battle

Here’s why it’s so important: We tend to like people better who best meet our expectations. Who seem like us. We understand them easier. We don’t get surprised. In short, we want to work with them. Hence we hire them.

In many searches, the search consultants or the key client-side decisions makers will realize that “any of these agencies can do the job.” The search process then becomes about which one firm do “we want to work with.” That’s Chemistry.

Must be Leap Year: Demise of the Ad Industry Being Reported

The advertising industry finds itself – yet again – at a crossroads, a confluence, a decision-point, a junction.  Attention is needed.  Assessment is necessary and action is required. After all, it’s been nearly 10 years since the industry was last stumbling headlong toward extinction.

Are there many reasons for concern? – Yes.  Are there always reasons for concern? – Yes! It's most interesting how the “expert class” repeatedly presumes cataclysm at the first sign of economic Darwinism.  Chicken Little would be proud.

Remember, not that many years ago, the Internet spelled doom for the industry.  Still around – amazing. Before that, TV. Radio...

Assuming clients will continue to sell products and services, there is a reason to believe that agencies will survive this most recent report of their demise.

Agencies HAVE Changed

That said, there are indications that change is needed to stem the tide of marginalization. Agencies have expanded, purchased, and partnered their way into every market, category and discipline.  They have leveraged advancements in technology to become as connected globally as their predecessors were in one office tower only a decade earlier.  And have scoured the market for the best and brightest to set to work advancing their client’s brands and products.

Evidently, not everyone has been impressed by the results of this effort.

The end of advertising as we know it

Traditional advertising players – broadcasters, distributors and advertising agencies – will need innovative new approaches to respond to major industry shifts underway.

What is most intriguing about this point-of-view is that it assumes the clients will sit and wait on the ad agency and their partners to innovate our way into the future.

There is no question that the future of advertising will look radically different from its past. The push for control of attention, creativity, measurements and inventory will reshape the advertising value chain and shift the balance of power. For both incumbent and new players, it is imperative to plan for multiple consumer futures, craft agile strategies and build new capabilities before advertising as we know it disappears.

Shocking! I know! The industry will have to “craft agile strategies!” in light of this “shifting balance of power.” This is amazing to hear in 2010.  Particularly from IBM who is serviced by the industries most influential agencies. After all, didn’t the industry spend the past few decades consolidating to deliver on the opportunity of integrated services, or was it convergent communication, or media-neutral communication, or whatever other iteration of the same to better measure and influence consumers. If agencies were delivering on their service promise, then churn would not be at unprecedented levels and clients would not be seeking the same service object as a decade earlier – FROM YET ANOTHER AD AGENCY.

So, where’s the rub?  Change is coming. And some agencies won’t make the change… See Cliff Freeman’s recent closing as Exhibit A.

Fingers of fault can be pointed in every direction, but what can an agency do to deliver on the promise of change and better consumer insight?

Options For Change

One choice might be to do – nothing.  As one CEO of a prominent agency network advised, “it’s not going to happen in my lifetime, so I’m better off spending my time on matters where I can have an impact.”

This pessimistic view might work for him and his pre-packaged retirement, but, as an industry, ignoring the issues is not a viable option.

If you are confident that agencies are on the case and see these views as a “Chicken Little” prophecy, consider one advertiser’s recent action. They terminated their agency relationships claiming the agency model to be irreparably broken. Then proceeded to underwrite the organization of its new agency – only to see that model stumble and fall. And now have folded the whole mess into yet another ad agency.

This is an extreme but not an isolated example of how client dissatisfaction has embodied itself in unprecedented levels of client churn.

Some would argue that client’s share much of the blame in these dysfunctional relationships.  But these same clients –criticized by agencies – have increased the role and expenditures for their management consultants year-over-year. Perhaps as an industry we need to consider why?

Anyone can satisfy and make money off of the handful of great clients. A great agency effectively services and profits from all of their client relationships.

Perhaps A New Role is Needed

Before dismissing the end of advertising as we know it, the example of another industry’s response to similar service pressures may be worth considering. The role of the general contractor in construction resembles the traditional advertising agencies role as general contractors of business communication.

The construction industry responded to client demand for improved quality, professionalism, integrated and unbiased service management by creating an entirely new industry services category – Construction Management.

After a decade of unfulfilled promises of better creative, more integration, social media and consumer insight and tracking, clients are showing signs of an aggressive search for “Communication Managers.”

Construction management firms are staffed by experienced and credentialed industry professionals who deliver unbiased results to the client. General contractors were not and did not.  Those who did not adapt have been marginalized. Agencies that continue to attempt to deliver services as general contractors have had their fate cast. Responding will require you to revisit your brand, organizational model, processes, fee structure and staffing protocols.

Time is of the essence; a recent study reported that those in the “advertising” profession rank just ahead of Used Car Salespeople in esteem. But neither that nor the changing consumer will end advertising as we know it.

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.

A New Business Fable

Once upon a time, there was a nice advertising agency in an important city far, far away. The agency had four key partners named Everybody, Somebody, Anybody, and Nobody. The agency’s creative work was outstanding but the agency wasn’t growing.

It seemed when it came to new business, Everybody was sure Somebody was looking after it. Anybody could have done it easily but Nobody touched it.

Somebody got angry about the lack of new business growth because he thought Everybody was in charge of it. Everybody thought Anybody was looking after it. And Nobody did nothing.

The situation lasted for several years and the agency stopped growing. Some key people left for better opportunities at agencies that were growing rapidly. Then the agency’s best accounts left because of company buyouts and changes in client management.

The agency spiraled downward because there were no new clients to replace the ones who left. In desperation, the partners sold their firm to a large agency holding company who had to rebuild the entire operation. The partners’ buyout turned to peanuts.

To this day, Everybody blamed Somebody for the lack of new business success when Nobody did what Anybody could easily have done. And that was to fix new business forever.

Overselling Is a Fatal New Business Disease

Stuart Sanders Chairman

I was so proud of myself. I had been following up on a good prospect, a large regional hospital in a small city near the agency where I worked. The Director of Communications agreed to see me because of our agency’s hospital expertise.

The Importance of Personality Profiling

Over the phone I did my usual personality profiling to understand her profile so I could establish good chemistry quickly. She sounded warm, friendly and definitely people oriented. She was low-assertive, meaning she was not pushy, very agreeable, and let me lead our phone calls. Those observations quickly established her as a Logo™ personality. I therefore cooled my sales jets, took a low-aggressive approach and worked over several weeks to warm her up. It’s all out of our Chemistry Wins New Business training manual.

I asked for permission to see her when it felt right. Besides, I explained, “I was passing close by,” so she agreed to see me. As I stood in front of her office located in the bowels of the hospital, I mentally checked over the Do’s and Don’ts for Logos™. I remembered don’t push. Don’t oversell. Do build chemistry by treating her first as a friend. Do establish common ground. That approach means I don’t take in a presentation or even samples because that’s too “salesy” for most Logos™.

The Importance of a Solid First-Visit Strategy

The first visit went like clockwork. It’s a tried and try approach built around Agency Baseball and something that I practiced at the agency, working to get my words down, remembering to talk it over easy, and not pushing. Now in her office it all came together as I spent 20-minutes discussing personal issues with her, including family, friends, industry contacts we both knew, college backgrounds and all type of stuff that drive Headlines™, those hard-charging profiles, crazy. It wasn’t difficult to hit common ground because her office was loaded with discussion tips in typical Logo™ fashion. And the approach works because Logos™ want to establish a personal relationship first before moving into work.

About the time I was going to bring up business, she suggested it. I moved quickly to outline our capabilities using word pictures. It was our hospital competency story, and it takes about three-minutes and includes the five things we do well, all stuff we teach in our Spark Training. It’s light and easy.

The Importance of Discovery

Then I asked moved to Discovery, a process where the agency asks questions, and acts like a medical doctor with good bed-side manners, meaning concerned, probing, checking off needs and looking for symptoms or pain where we can be of help. But not selling, just questioning like good docs do.

She opened up and laid out her marketing problems and opportunities in a very professional and orderly fashioned. I asked the Process questions and found out she was moving to fire her current agency, a shop that was having well-known leadership issues. My heart took a jump but I didn’t try the old “hire us” trial offer. I remembered my bed-side manner and her Logo™ profile.

The Right Way to Exit

The meeting ended abruptly, and too early for me, with a call from her boss that she had to take, but I stood and said my good-byes, told her I would follow up, and departed. I understood that I had accomplished just about all I could on a first visit with a Logo™ profile. Trying to close the account at that time would not have worked. And I knew rushing to ask for the order as so many “experts” suggest would have lost all I had gained.

Winning With a Conference Report

I followed up with a detailed conference report based on what she told me. And true to the process we teach in Torch Training, I stuck to the facts with no selling. And I sent it to her by overnight delivery as we suggest, never on email. She called back very impressed at how well I had listened, and said she didn’t want to go through an agency review and would like to shift her account to us. I asked her how she wanted to proceed, staying in her profile, and she suggested I send up our agency contract so her in-house attorneys could review it. Never had I won a piece of business any easier.

The Agency New Business Meeting

That Tuesday, when we had the agency new business committee meeting, which is usually the most hated meeting in the agency and a big waste of time because the account staff goes around the table and tells lies about stuff that should have been done and calls they should have made, but didn’t. All well and good until my turn, and I opened my mouth and bragged about my new “win.”

The agency president and chief creative officer, Headline™ to the core, demanded to know what this Director of Communications felt about our hospital creative work. I explained that she had not really seen it because I had not taken the agency hospital presentation to her because, in my opinion, it wasn’t needed. He was incensed and announced to everyone that he would go pick up the contract with me, but only after he marched my “new account” through our creative work. He would make very sure she knew what type of agency she was hiring.

DOA

You know the rest. We never got the account. The follow-up meeting began with our contract from her attorneys sitting there on her desk, breathing “pick me up.” Our president rushed to deliver his heavy-selling “we do it our way” creative review despite my suggestions on how to do it that I had given to him before we left the agency. His pushy overselling killed the win.

The sad thing is he felt he did a good job. I didn’t have the strength on the ride back to the agency, while listening to him tell me how well we had done, to speak the truth. We had just lost the easiest account we had ever won.

Five Important Take-Aways

1. Personality profiling really improves your batting averages.
2. Having a solid first visit approach always works.
3. A conference report follow-up is often your best closing device because among other things it proves you listened to the prospect.
4. Over-selling hurts your chances despite all the “ask for the order” junk floating around.
5. Never brag at agency new business meetings.

Free Offer

If your agency wants to learn more details on some of these techniques discussed here, call Sanders Consulting Group (800/899-1538) for a free, no-obligation discussion on new business, tips on your process, and perhaps some advice.

I'll Win That New Business Pitch! Missing the Forest

We’ve found that most presidents of firms in the marketing communications industry don’t really understand new business. And they don’t like it. They solve this problem by spending their time working in the firm as some type of technical expert. And they delegate the new business function to others who may not understand it either.

For the most part, all marketing firms love the chase, the thrill of being in the hunt, late nights and cold pizza, and then having the opportunity to stand up in front of a prospect and deliver the winning pitch. If I had a nickel for every agency president who told me “just get me in front of em, I’ll do the rest.”

But that’s missing the forest for all the trees. The key to getting “in front of em” and winning is building a relationship with them. Long term nurturing of prospects is NOT something most agency leaders think about. As a result most agencies end up pitching to prospects that are already deep into the review, with little time to build a relationship, much less better understand all the nuances of the brand. And they are now involved in a heavily contested review where up to 20 other marketing firms are all scrambling to make the cut.

What most agency presidents fail to understand is that prospects end up holding reviews because nobody was in there early in the process showing the prospect another way. By the time the prospect is ready to buy, there is no relationship-based agency friend from which he would like to buy.

I mean lets face it; the formal review process needs to change. If more marketing firms took the lead in developing their relationship building skills we would not be subjected to the pain and suffering of giving away ideas for free. All on the whim of a prospect you may have a 1 in 20 chance of winning. In addition, formal reviews can be too expensive for clients. It takes time, management commitment, and in the US, heavy fees for search consultants.

While one of the goals of relationship building is to improve your chances of winning formal reviews, there are additional benefits to nurturing prospects you are interesting in working with. The longer you work to build a relationship, the greater chance you have of closing the business with a fast close. You just need the skills and training needed to recognize where the prospects are in the review, and an understanding of how to move quickly and aggressively to preempt the process. Use that insight you’ve gained from understanding the prospect and building the relationship over time to win quickly, saving the prospect from the long drawn out formal review process.

Agencies are full of winners. The type bred for the hunt, the closers, the hawks. But who on your staff holds the responsibility for being the relationship builder? Who has training on how to cultivate and build relationships with a large number of prospects over time? The farmer of leads? This sacred role is the secret to many new business wins over time. Some of the largest account swings in history have been the result of an agency well versed in relationship building and understanding how to close. 

Most agencies ignore prospects that are not ready to buy now. Those that don’t ignore relationship building as a critical element of new business have to attempt to swoop in and  convince the prospect on the beauty of their idea, the desire they have to work with their brand, how much they looove them! This is a losing proposition if some other agency has put the time and effort into relationship building.