By Category: New Business During a Recession
Laurie Coots on growing your agency
by Todd Knutson | published on May 18, 2010
Laurie Coots is the global CMO for TBWA/Chiat Day. She's one of the smartest ad agency new business execs you'll ever meet. When she speaks, people listen. Laurie shared her thoughts on how to grow your agency at this year's New Business Conference.
I took away four simple and compelling points:
- Pick up a crumb and run with it. Pursue clients you want to work with. Incubate the small projects, as well as any other small clients you attract. Do great work. Great work will lead to more work. Crumbs Laurie pursued and grew last year created $11M in new revenue for TBWA.
- "Productize". Take what you're doing and put a price on it. Avoid charging by the hour. Consulting firm McKinsey and Co. does it this way; why not your agency?
- Learn to Sell. Quantify the opportunity. Get the decision makers in the room. [I'd add: ask smart questions, listen carefully, propose a solution, ask for the business.]
- Reinvent your behavior. Decide how you want to be, not how you think you should be.
Nurturing your crumbs is a perfect strategy to generate consistent revenue growth. In good economic times and in bad, focusing on smaller projects with growth potential gets you in the door early.
One of the great differentiators between agencies and their new business leaders is their ability to sell. If you really learn to sell, you'll stand out from the thousands that don't do it well.
I learned the power of "productizing" as a teenager. I had an odd-jobs business with two employees. When I charged by the hour, I knew how much money I'd make. However, once I created a product, I was able to charge my customers a flat fee and make much more. The technological capabilities of many agencies position them perfectly to charge a flat rate for certain services, and generate significant profits.
My last post about Alex Bogusky echoes Laurie's call for reinvention. Alex referred to it as "breaking the rules". However you choose to think about it, clients are looking for agencies that stand for something. You have the ability to choose who you want to be.
Case Study: Cinquino & Co.
by Todd Knutson | published on May 05, 2010
Was your agency able to win new business from 71% of your first meetings in 2008? How about 60% in 2009? That's what one small agency in New Jersey accomplished after being on the brink of closing its doors in 2007.
Crisis often creates opportunity, which is what happened for John Cinquino. His agency won zero accounts after 34 first meetings in 2006-07. As he and his team faced the possibility of losing their agency, they decided to things differently.
They made a pact to put the quality of first meetings before quantity. And they vowed to learn how to win.
Here's what they learned:
- Start with a hard target list that's focused on specific categories.
- Develop key case studies for each category.
- Hire a strong new business hunter.
- Your new business hunter is responsible to prospect and set up first meetings.
- Your new business hunter also preps the prospect for a "10-minute qualification call"with one of the ad agency's principals, who will be the only person at the first meeting.
- The agency principal uses the qualification call to identify the prospect's pain points and needs. When it goes well, this call may last 20-30 minutes (and the prospect will NOT be looking to get off the phone).This call:
- Establishes rapport between principal and prospect.
- Helps the principal understand, "What hurts?"
- Provides specific areas for the agency to research to prep for the first meeting.
John's recommended questions to ask the prospect:
- What did you do in the last year that didn't work?
- What issues are you having with your competition?
- What issues are you having with your brand?
The key is that you identify their pain points quickly, and then move on to the next question. You want to get just enough information to be able to connect the dots. This will enable you to do your research on the prospect's competitors, distributors, and the brand itself prior to the first meeting.
- Conduct meaningful research based on what the agency principal learned on the qualification call. Keep top-of-mind that every prospect wants to know more about:
- Their customers
- Their competitors
- The agency principal goes to the meeting prepared to take charge. Share your research and talk about the prospect's business. Try not to let them ask about you; when they do, answer briefly and then move on to something else you learned, or ask them another question.
- The agency principal leaves the meeting with very clear next steps. By now you should have a very good idea what the prospect needs. Before you leave the meeting, agree on a date for you to return to present a proposal to solve one or more of their issues three (3) weeks later.
With this approach, Cinquino & Co. closed 71% of their first meetings in 2008 and 60% in 2009. They now have three new business hunters instead of just one...out of a total staff of eighteen people.
John has proven that these nine steps work and is now in rapid-growth mode - and did so right through the recession.
Change can be just another thing that you do
by Todd Knutson | published on January 29, 2010
In our company, we constantly push ourselves to figure out how to change and improve in order to grow. Part of the pushing comes from an external source (the executive coach I mention in a recent post), but increasingly it's our own recognition that if we're going to achieve the goals we set for ourselves, it's up to us to figure out how to do it.
Setting goals is fun. Achieving them is where the proverbial rubber hits the road. The hard part of it is that it's...hard.
Hitting your goals, assuming they're challenging ones, requires that you do things differently. And, as we all know, changing even the smallest habits can be really hard. In business, changing habits means changing how we work - our processes.
Changing processes is quite challenging, particularly if the process involves multiple people and responsibilities. Each person who's involved has to change what they do and how they do it, which is where you're likely to run into difficulties.
This brings us to "Today's Word", to borrow Stephen Colbert's phrase:
mis-o-ne-ism [mis-oh-nee-iz-uhm]: Hatred or dislike of what is new or represents change
We all know that most people dislike change, and some truly hate it - and will do everything in their power to keep the status quo (just look at your typical bureaucrat for evidence of that). In our company, over the years, we've done many things to avoid change. Let me know if any of these sound familiar:
- Form a committee to investigate a particular subject; the committee report ends up on a bookshelf.
- Report on progress for a period of time, and then gradually stop doing so.
- Run into roadblocks that appear to be insurmountable, and then give up.
- See initial benefit and results from the energy of one "true believer", but then their enthusiasm is gradually worn down by the misoneists.
I'm sure you've never seen anything like this in your company!
To be successful in new business, we have to change and adapt. This means that as new business leaders, we have to be comfortable with change and need to make those upon whom we rely to get things done similarly comfortable with change. That's hard.
Here are a few of the things that we've learned about change, which may be of use to you if you're going to be a change agent in your agency:
- Set goals with the key people who will help you be successful.
- Break each goal down into all the steps that you can think of. For example, we recently had a brainstorming session to identify information we needed to know and have at our fingertips in order to create a series of projects that would, together, allow us to achieve one part of one goal.
- Set milestones for each of the steps along the way to achieving each goal.
- Assign responsibilities to each step or process or project.
- Assign due dates for each.
- Set a series of weekly meetings, when each team member is responsible to give a status report to the group. Meet immediately afterwards to resolve or bring resources to bear on significant issues.
By embracing this type of process, which breaks change down into small pieces and makes it a normal part of every day, change is becoming just another thing that we do.
Hopefully you'll find this to be a useful technique to use with your new business team.
How Justin is turning around an almost-lost client
by Todd Knutson | published on October 08, 2009
Customer retention, let alone organic growth, usually comes down to people delivering on promises. Missed deadlines, less than acceptable quality, and poor communication all naturally lead to lost accounts.
So it was invigorating to hear how Justin, a high-potential junior account manager I meet with a few times a year, yesterday described how he's being called upon to revive an account on the verge of being lost.
Over coffee, I first asked Justin what he discovered upon receiving his new assignment last spring. He described:
- Missed deadlines. Initial deliverables that were days late. They weren't weeks late, but it was a bad precedent.
- Poor communication. The higher ups at both agency and client had no idea what was going on in the trenches.
But, as he started digging into the depths of the relationship, he found that the situation was much worse that it appeared:
- Deadlines meant nothing. Future deliverables would be weeks late and there was no sense of urgency to meet promised delivery dates.
- Communication was broken. It had completely broken down between client and agency and within the agency itself.
- Personality mismatches. Certain members of the agency's team were oil and water with their client counterparts.
As it was now October, I asked what progress he'd made in the last six months. He said that he was not yet out of the woods, but had made significant progress by focusing on four things:
- Management involvement. He made sure that a key manager was present from both sides at key meetings.
- Communicating reality. He made sure everyone knew the problems, and more importantly what was being done to address them. He did not put the problems on the key managers' shoulders; he let them how they were being handled and if he needed help overcoming an obstacle he asked for specific help.
- A new team. He removed two toxic members of his team and replaced them with people who better meshed with the client.
- Hitting deadlines. The new team was setting realistic deadlines and had hit all milestones since July.
I'd like to focus for a moment on one of the things that Justin did that is really important when communicating with your boss. It's best summarized by two words: No Surprises.
Particularly when things aren't going well, it's critically important that you don't surprise your boss with bad news. As you learn things or have a "gut feeling" that things are changing for the worse, tell your boss. You don't want to make the problem theirs, so go to their office prepared with an action plan to correct the problem.
Never let your boss discover the problem by asking you questions. If you do, he or she will likely conclude that either:
- You aren't on top of what's going on; or,
- You're trying to keep bad news from them; or,
- You're trying to fix the problem so they never know there was one.
Once your boss does find out what's going on, which they will, they'll be surprised. Surprises are almost never good. (Even good news, if it's kept hidden for very long.)
The best news that came out of my meeting with Justin was hearing him say that his client had started talking about future projects. Six months ago it was how his firm was likely to be replaced; now he has a chance to create organic growth and earn a bonus.
That's the mark of a good account manager. And as we all know, account managers like him are an essential ingredient for organic new business growth.
Signs of a turnaround
by Todd Knutson | published on October 01, 2009
Dave Currie, President of Catapult New Business sits in a fairly unique seat. Catapult gets meetings with corporate marketers for its agency clients. While Dave speaks with dozens of agencies a week, his new business team talks with hundreds of corporate marketers. He quickly feels changes in the new business climate, so its in that capacity that I asked him to give us an update on the recession.
So what are you seeing out there in terms of a recovery, asked an eager new business director at a Chicago-based agency earlier this morning? Are some categories showing more promise than others?
These questions have become the norm in recent months while talking with a wide variety of business development people across the country.
I'm happy to report that, yes, we're seeing significant signs of an initial recovery in all our key indicators. There are also several categories that are showing more promise than others.
Three Quantitative and Qualitative Key Indicators We're Watching
1. Internal New Business Metrics
- In the past 12 weeks Catapult has noted a 20+% increase in conversion ratios within our clients' new business funnels.
- In the last 6 months, initial interactions with prospective clients, quality conversations, and qualified meetings have all steadily increased.
2. Reported New Business Wins
Quantitatively reviewing our clients results as well as information provided by MediaPost's "Accounts on the Move" (subscribe here), reveals that in the last three months there's been a 12% lift in awarded new business.
From a qualitative perspective, on each call and email exchange I have with agencies, I ask how they're doing. Increasingly, the response is positive. This morning, for example, I received an email from a large, full-service agency in New England whose principal said, "We're seeing things pick up a bit, let's hope the trend continues!"
We also speak with hundreds of corporate marketers each day. From these conversations we've identified that marketers are:
- Increasing their spend over the same period in 2008.
- Looking to invest their remaining 2009 budget so they don't lose it in 2010.
- Open to conversations around proven results and ROI.
- Seeking better value through alternative compensation models.
- Open to innovation.
3. Traditional Market Analysis
Here are three indicators, among others, that continue to provide good insights into market (and mood) shifts:
- Wall Street Journal's daily economic data
- The U.S. Leading Indicator at Econtrends
- The S&P 500 snapshot at CNN
The general consensus seems to be that, although a broad-based recovery may be 12 months ahead, it looks like we have a relatively stable foundation for growth.
On the new business front, some markets are showing signs of recovery faster than others. If you can take advantage of opportunities earlier than your competitors you may be able to capitalize on a changing market.
Some of the positive changes that we're seeing now and expect to continue into 2010 include:
- Big-box retailers. The upcoming holiday season / seasonal influence is helping.
- Regional finance and banking. This sector is experiencing positive changes, though some banks are still in trouble.
- Consumer OTC and health care. Seasonality is impacting the sector (cough / cold / flu and consistent spending through the downturn).
- Consumer package goods. In particular, the healthy snacks category.
- Quick-serve restaurants and casual dining. We've seen a 45% increase in opportunities in the last six weeks.
What can you do to take advantage of this opportunity?
Agencies that have undertaken the following are seeing improved new business results:
- Having a clear, unified vision and brand.
- Differentiating themselves in a saturated market.
- Positioning themselves as experts to their prospects.
- Investing in self-marketing.
- Communicating with prospects throughout the economic downturn.
- Addressing a known or assumed business challenge.
- Carefully targeting the right prospects.
- Sending specific messages to specific job titles.
- Utilizing a mixed-media approach in their outreach, including social media, and employing multiple prospect touch-points (up to 15 in many cases).
It's a bit like cutting off your nose to spite your face
by Todd Knutson | published on September 30, 2009
It's my birthday (it's not divisible by five, just another on the short march towards the big five-oh), and I've given myself permission to rant after hearing this comment one too many times from an agency principal,
We've decided to eliminate our new business department.
Did you hear the news? HP has laid off it's entire sales force! Home Depot is letting all its store associates go! Starbucks is going self-serve (sorry no more humor from behind the counter as they make your favorite concoction).
In a recession - or anytime for that matter - why would you cut the people responsible for generating your agency's future revenue?
Now, I know there can be legitimate reasons. For example:
- Poor performance. Provide training; do role practice. If that doesn't work, replace them.
- Not a good fit. Quickly hire someone who is.
- Ethical issues. Replace them immediately.
But, "budget" should never be one. A good new business person should only be let go when the agency is closing its doors. Period.
If you see this happening in your agency, jump up and down and raise an enormous fuss. New business is an investment in your agency's future.
If you disagree, recognize your risk: cut your new business staff and your demise may be as close by as the unexpected loss of a client.
End of rant.
Study reveals execs prefer face-to-face
by Todd Knutson | published on September 23, 2009
According to a recent Forbes Insights study, business executives prefer face-to-face meetings and conferences over virtual meetings, and overwhelmingly agree that they're necessary to build deeper, more profitable bonds with business partners. While web-, video- and teleconferencing have their role, it takes human interaction to accomplish certain business objectives.
Some new business people will readily accept a conference call in lieu of an in-person meeting. This survey of 760 business executives may give you added incentive to secure that in-person meeting whenever possible.
59% of executives say they will use virtual meetings (teleconferences, video or web conferences), and stated that their use has increased in the recession due to their lower cost and reliability.
However, 84% of executives said they prefer face-to-face over virtual meetings.
Those that prefer face-to-face meetings believe they facilitate:
- Building stronger, more meaningful relationships (85%),
- The ability to “read”another person (77%), and
- Greater social interaction (75%).
Those who favored virtual meetings took a bottom-line approach, saying they:
- Saved them time (92%),
- Saved them money (88%), or
- Offered greater location flexibility (76%).
Executives prefer face-to-face meetings when give-and-take is required. They prefer virtual meetings when disseminating data, or when time is a concern. Notice that the former is perfect for the agency-hiring process, but the latter is certainly not.
Many executives expressed concern that attendees did not give their full attention to virtual meetings.
- 58% admitted that they “frequently” surf the web, check their email, read unrelated materials and do other work during virtual meetings.
- 64% of those who prefer virtual meetings like them because they allow them to multitask (i.e. they're not paying attention to you).
87% agree that there are tangible business benefits to in-person, face-to-face meetings that outweigh the cost savings of alternative, technology-based meetings.
Executives also believe that face-to-face communication:
- Is necessary for effective teamwork (80%),
- Builds stronger bonds (81%).
It may be "old school" to prefer face-to-face meetings, but as this study indicates, they're important and effective, so keep them coming!
If you'd like to request a copy of the study, click here. Forbes Insights is the custom research arm of Forbes Media, publisher of Forbes magazine and Forbes.com.
The lifeblood of most agencies
by Todd Knutson | published on September 21, 2009
When you analyze the cost of acquiring a new client, generating new business from referrals is usually the least expensive. Realizing this, the natural question to ask is, "How do I get more?"
I've been thinking about this and did some research to help me put together a fairly simple referral-building plan. Here are some ideas that I hope will be useful for you. If you have additional ones to add, I'd love to hear your suggestions.
Define Your Referral Network
- Identify and categorize your prospective referrers: these should include past and present clients and co-workers, partners, affiliates, friends and family, vendors, etc. You might list them in column one of a spreadsheet.
- In column two, indicate how fresh they are. You might use a letter or number system: for example, an A could be very fresh and a D 'haven't talked to them in five years'. The resulting groupings will help you focus on nurturing the freshest ones and reacquainting yourself with the stale ones.
- In column three, segment them by industry, region of the country, or target companies. How you do this is best determined by how you plan to prospect.
- In column four, prioritize who you want to approach when, and then assign responsibility to specific people, with due dates and milestones.
Determine What's In It for Them
Get your new business team together and create a value proposition that's interesting and meaningful for each person you plan to approach. It needs to be clear what's in it for them. (Once you figure out what's valuable for them, the quality of your referrals should improve dramatically.) Answering these questions should help you define your message or offer:
- Why should they want to help you?
- What will they get out of it?
- How will doing so help their company or them individually?
- How will you help them in return?
Invest Time To Get a Personal Introduction
The most common referral is getting permission to use someone's name to open the door. While we'll all take this type of referral, the real "golden key" is a personal introduction. How do you do this? Your best chance is to help them first so that they'll be much more willing to help you in return. As you do this you want to:
- Get to know them really well, and they you.
- Truly understand their needs so you can refine your "what's in it for them" (when the time comes).
The only way to get a personal introduction is for your prospective referrer to really know you, and even better for them to know you and your firm. This process requires patience, so be careful not to put your hand out too early! You have to earn the right to ask for a referral.
Stay in Touch
The game isn't over when you get a referral. Those who open a door for you want to know the result of their introduction, so follow up and tell them what happened. Don't ask for more help, but recognize that once they know you'll do well by those they introduce you to, they'll be likely to help you again.
Make sure your referral network knows how much you appreciate their effort on your behalf. Thank them in a meaningful way. For example,
- Write a hand-written thank you note.
- Take them to dinner, a ball game, to play golf - make it something they like to do.
- Include them in the celebration after winning an account.
- Introduce them to someone you know that they'd like to meet.
- Offer them help or free service on an important project they're responsible for.
If multiple people in your agency each have and carefully nurture a well-thought out, small referral group, it should help you create a long-term new business pipeline.
Resist pressure to reduce your fees
by Todd Knutson | published on August 24, 2009
A recession is a scary time for the person trying to maintain the financial health of the agency.
I got into a conversation with a fellow CEO the other day about the pressure agencies are under to cut prices to win new business. We shared notes on what we're seeing when it comes to price negotiation. The top three things we identified:
- Senior executives dropping their prices, fees or hourly rates upon request.
- New business people offering free work or other freebies at the first meeting.
- Quickly matching competitors fees as soon as a prospect mentions that they're speaking with them.
Pressure on price creates a dilemma for an agency
- If you cut your fees, you create a precedent for the future - you're willing to work for (much?) less than stated rates.
- If you don't cut your fees, you may feel you won't have the revenue you need to avoid layoffs, or worse.
I know from experience that there's serious pressure to lower prices in a recession. Sometimes it feels like the easiest way out is to succumb to the price-reduction pressure with a rationalizing comment like, "It's what we have to do to survive".
But I disagree. You can win and not cut your rates, or perhaps only drop them 1-2% . It comes down to your negotiating skill. There's so much written on how to negotiate - just do a quick search and you'll find reams of information.
So, I'll just offer four suggestions - things that I've found to be successful in good times and bad. Hopefully they'll work for you, too:
- When asked for a better rate, think before you speak. For example, what value-add can you offer that doesn't cost you much, instead of reducing your rate?
- Don't believe everything you hear. Particularly in larger client companies, those charged with negotiating are very skilled and are able to tell a compelling tale of woe. Recognize that it may not all be true! Consider the negotiation a dance: you have something they want and they have something you want. Be prepared to tell your own stories and stand firm on your quality and value.
- Just say no, and then be quiet. Say "no" and then present a logical, persuasive argument why you won't reduce your fees, and then stop talking. Be comfortable with the resulting silence. Oftentimes, agency principals are uncomfortable with the silence and consequently offer up a discount, thinking they'll lose the business if they don't. Instead, you may find that your prospect thinks it over and accepts your argument.
- Be prepared to walk. Know what you want and how far you're willing to go on price - beforehand. This knowledge gives you a negotiating advantage; don't be afraid to use it. Your commitment will show - to your opposite number and to your team.
The fun part of negotiating is that, done well, you'll be able to share a laugh afterwards, each side recognizing the other's skills. Caving on price is not the way to earn respect. So, stand firm, proud of your people, your culture, your service and the value you provide your clients.
The skills of your hunters and farmers are critcial to landing and retaining clients
by Todd Knutson | published on August 14, 2009
Tight client budgets, hungry competitors, and aggressive new business hunters make for a tricky new business environment. That's what we're all experiencing now, and probably will for some time - despite news that the recession is over.
The challenge for agency CEOs and new business teams is that any mistake is magnified in importance. Your prospects are talking to your competition, investigating alternatives. Mistakes that may seem insignificant to you could be the last straw for them. For example:
- Not following up as you promised in a voicemail message
- Having a promised participant not join a conference call
- Rescheduling a meeting at their office (or even worse, doing so for the second time)
- Talking only about your agency and not asking your prospect relevant questions
- Not focusing on what they need, but instead proposing "nice to have" solutions
The same applies to your account service team: they are your key to organic growth and must be constantly aware that competitors are knocking on your clients' doors every day. Their attention to customer service and focus on the client's business is critically important.
To remain sharp and compete at your optimum level focus on your new business and account service fundamentals:
- Ask smart questions. Start with comfortable, general questions and as you develop rapport ask more in-depth questions that will reveal business opportunities.
- Listen, listen, listen. Even if you think you know how they're going to answer the question you've asked, listen very carefully. What's their inflection? When do they hesitate or pause before answering? Do they "mumble an aside"? Do they sound like they've making something sound better than it really is?
- Ask "why" and "tell me more about that" questions to follow up on areas revealed in #2.
- Be sure you're talking to the decision makers! Decisions are now being made higher in organizations, so the people who used to make decisions may not have that authority today. Be sure to ask, "who else will be making the decision to hire an agency with you?" It's almost never one person.
- Role practice. Practice on yourselves, not on your clients. Practice asking questions, listening, and asking follow up questions. This skill alone will separate you from your competition and distinguish your agency in the eyes of your prospects.
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