By Category: New Business for CEOs

» First Meeting Self Destruction: Happening Today

How one agency is turning an opportunity to win into a likely loss
by Todd Knutson  |   published on November 02, 2009

drop the ballAgencies will do almost anything to get a first meeting with an ideal new business prospect. But once the meeting is secured, optimism often turns to disappointment, and too often it's because the agency drops the ball.

Here's an example that's in play today. A good agency located in the Southwest had a meeting with one of its high-value prospects. The meeting went well and the agency left with the promise to submit a proposal for an initial research project. It was a foot in the door, for a small project estimated at $50,000.

Once back at the agency, the usual client issues surfaced, and delays ensued. The discussion also turned to the small size of the initial project, and internally (without conversation with the prospect), the project scope started to expand.

Three and a half weeks later (!), which was last Friday, the agency sent the proposal to the client, with a price tag of $191,000.

The result: sticker shock (to say the least).

I can't predict what will happen next, but odds are the project - any project - is in jeopardy.

Let's summarize what went wrong:

  • Not meeting expectations: When you promise to submit a proposal, doing so more than a week later for a small project says only bad things about your agency. For example, if it takes you three+ weeks to create a proposal, later on will you be able to deliver work on time?
  • No sense of urgency: Are you hungry for new business? Do you really want to work with this client? Are you thinking about them, or about yourself? Are you willing to go the extra mile for your clients?
  • Greed: As you know, value is in the eye of the client. Projects have three potential prices: what it costs to produce; what it's worth; and, what a client will pay. I'm not sure what $191K represents, but there's no doubt it's not what the client expected to pay.

Client relationships are built on trust. Establishing your credibility from day one - doing what you say you're going to do - is paramount. While this story may seem extreme, it's actually a common refrain.

So why not change your new business process to one based on meeting expectations with a sense of urgency, and win more new business?


» We Cut Our New Business Team [to increase revenue?]

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.

cut off your nose

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.

» 5 Reasons New Business Change is Hard, And How to Avoid The Common Traps

Real change requires real effort
by Todd Knutson  |   published on September 16, 2009


A recent Harvard Business School article addressed why it's so hard to change, which is a good follow up to my last post on the need for constant change and improvement in ad agency new business.

The authors of the article, Marshall Goldsmith and Dr. Kelly Goldsmith, outline five reasons why change is difficult. What follows is their research in their words, to a great extent, though I've reduced the amount of copy and made a number of edits.

1. Ownership. For your effort to change to have a chance of success, you have to take personal ownership and have the internal belief that "This will work if, and only if, I make it work. I am going to make this work."

2. Time.  Most of us set goals and then underestimate the time needed to attain them. We have to learn to be realistic about the time we need to change habits. Those that have taken years to develop won't go away in a week. Set time expectations that are 50% to 100% longer than you think you'll need to see results — then add a little more.

3. Difficulty. Not only does it take longer to achieve our goals than we think it will, but it also requires more hard work than we anticipate. It's important to accept the fact that real change requires real work. Plan for change to be more difficult than you think it should to help prevent the disappointment that can occur when challenges arise later.

4. Distractions. We have a tendency to underestimate the distractions and competing goals that will invariably appear. Plan for distractions in advance. Assume that crazy is the new normal. You'll probably be close to the reality that awaits.

5. Maintenance. Once you've put in the effort needed to achieve a goal, it can be tough to face the reality of what's needed to maintain the new status quo. If you don't, however, all your effort will be in vain.

Real change requires real effort. The "quick fix" is seldom a meaningful one. Distractions and things that compete for your attention are going to crop up — frequently.


» Perfection in Ad Agency New Business Is…Change

A call to action
by Todd Knutson  |   published on September 14, 2009

You've probably heard the expression, "Change or Die". Winston Churchill had another take on it that, to me, is even more powerful:

To improve is to change; to be perfect is to change often.


A speaker I heard last week talked about this quote in the context of leadership. In particular, that change is critical to organizational growth and development.

Many ad agencies and marketing firms are quite good at innovation when it comes to marketing - most likely because it's a requirement for client retention. It therefore makes sense that they're comfortable with this type of change.

However, as the speaker continued it occurred to me that you really don't see that much experimentation and change in new business. And, even when you do, what appears to be a new idea is often just one that's been recycled or re-purposed from what worked 10, 20 or even 30 years ago.

And this thought raised two questions:

  1. What does new business improvement look like?
  2. What change is necessary?

The low-hanging fruit of new business change and improvement for most advertising agencies includes:

  • Developing a one-page new business plan with both proactive outreach and reactive marketing objectives and tactics.
  • Working the proactive outreach plan every week.
  • Implementing planned marketing tactics every week.
  • Measuring activities weekly and summarizing results weekly, monthly, and quarterly.
  • Making changes as soon as results don't meet plan, and then measuring the impact of the change(s).

If your agency implements these five steps, your new business process will show significant change and improvement. However, rather than striving for perfection, first aim for continuous improvement that is both manageable and measurable.

» To Defend or Not To Defend - It’s a New Business Decision

And it needs to be a sound business decision
by Todd Knutson  |   published on September 10, 2009

sword defense

A few years ago I was faced with a decision about whether or not to file a lawsuit. As I considered my options, an old friend related to me what his even wiser lawyer once counseled him about lawsuits:

You have to decide if this is about business or about pride. Because if it's about business, the cost outweighs your potential return. But, if it's about pride, then I'll happily take the case and you'll help put another one of my kids through college.

I thought about this advice after reading a recent article in Ad Age, which reported that only 5-10% of incumbents successfully defend an agency review. And yet, as Judy Neer of Pile and Company estimates, incumbents are asked to participate in nearly 50% of their reviews, and most of the time they do. (Which means that those agencies are losing a lot of money.)

Let's turn that statistic around:  Your agency has a 95% chance of losing a review.

Before making a decision about whether or not to participate in a review, I encourage you to do two things:

  1. Determine the following numbers: your average cost per per pitch? Your win rate? Your cost per win? You need to know these numbers so that you can make a smart business decision about what you'll likely spend defending the business - before you're faced with the emotion that comes with actually losing a client.
  2. Decide as an agency: do you want to set a firm policy about whether you will or won't defend? The Ad Age article cites examples of how agencies like Crispin (won't defend) and the Richard's Group (usually won't defend) handle it.

When to participate?

  • Mandated reviews (e.g. government contracts; rules set by procurement or purchasing departments).
  • Roster reviews.
  • Agency consolidation reviews.
  • When you have very strong, deep relationships and the results to back them up (and there's been no change in management).

When not to participate?

  • When there are serious concerns (from either side) about the agency relationship or business performance.
  • Management changes, particularly when you know that the incoming leadership has successfully worked with other agencies.
  • Announcement of an unscheduled review.
  • Announcement of a non-roster review.

Like the emotion of wanting to get even, defend yourself, or inflict equivalent harm that you might feel when thinking about sueing someone, it's easy to get caught up in the emotion of wanting to fight and "spend whatever it takes" to keep your hard-won or long-tenured client. However, the smart new business decision may well be to spend the money winning a new piece of business.

» $40,000 Off Our Fees. Your Next New Business Pitch?

($ Canadian, that is.)
by Todd Knutson  |   published on September 09, 2009

$40,000 off coupon

How many of us are willing to offer $40,000 off agency fees to bring in a client? Well that's what The BrainStorm Group did at the end of May. And it worked.

Ron Telpner, chairman and CEO of the independent Toronto-based agency, was asked by a reporter from Canada's National Post newspaper (read interview here), "Have you won any clients?" and he responded,

Yes, and we exceeded the other, equally important objectives we established for this campaign -- increasing the number of RFP invitations, dramatically increasing visits to our new website, and generating increased exposure and awareness through media coverage, which we saw in Canada, the U.S. and even in Japan.

They also did what he calls Walking The Talk:  they advertised.

Telpner refers to the "inherent hypocrisy of an agency that would recommend advertising to its clients as a strategy while not having enough belief in the power of advertising to use it for themselves." So, they ran their $40,000 off coupon in newspapers and online, and it worked exactly as intended.

At first I thought this was just a terrific promotion, and then I thought about it from an ROI standpoint. Consider this (and mentally add to the list or feel free to comment, below):

  • How many RFPs do you respond to each year?
  • How many pitches do you participate in?
  • How many of them do you win?
  • How much do you spend on submitting RFPs? On pitching?
  • What's your average cost per RFP submission? Per pitch? Per win?

If you do the analysis, my guess is that a $40,000 off offer isn't as expensive or outrageous as it first might seem.

While it has now been done, what other innovative ways might you generate new business leads, publicity, and buzz - that really aren't that expensive?

» Do Retainer or Project Clients Build an Agency’s New Business Pipeline?

What's the right mix?
by Todd Knutson  |   published on August 31, 2009

layered drinkAd agency clients regularly ask us this question, "What's the best mix of retainer vs. project work?" I think the answer can determine how successful you are at creating a sustainable new business culture and a healthy revenue pipeline.

Retainer-driven agencies

Most agencies strive to land retainer clients for many good reasons, not the least of which is that they represent a predictable revenue stream. A sufficient retainer helps to cover overhead, allows you to hire good people, plan for the future, and hopefully do good work. Having a handful of retainer clients normally equals profitability. However, it may help you be lazy about new business, and it can be risky.

Case study: a family friend was, until recently, the chief creative officer at a 40-person, well-regarded regional agency. They'd had one big retainer client for 10+ years and felt very confident about keeping them. This client represented 70% of their agency's revenue. About 18 months ago I started pushing him to get his team to start prospecting for new business, but they never did. Of course, we can all guess what happened next: CMO turnover, new agency hired. His former agency is now a small fraction of its former size, my friend is out of a job, his family had to move in with his in-laws, and they and their many former coworkers are struggling.

The sad part is, while the client loss may have been unpreventable, an active new business program could have kept the team intact and avoided the massive upheaval that impacted dozens of lives.

Project-driven agencies

Most agency principals I know who run project-driven shops are always trying to land retainer-based clients. They dislike not being able to predict revenue more than a few months out. They also dislike the constant hunt for new clients, and the never-ending need for talented account managers to grow existing clients. That said, they're often very good at new business. They're good networkers, aren't afraid to pick up the phone, and understand that there aren't any "silver bullets" or quick fixes. As one such principal said the day before yesterday,

New business is a numbers game, and it takes time.

The ideal mix

From a strictly new business perspective, I think the ideal client mix is something like this:

  • 50% retainer-based clients, with no more than 20% of your revenue from any one client.
  • 50% project-based clients, representing as many clients as you can handle above your minimum project size.

My rationale is this: having 50% of your revenue coming from project work requires that you're constantly prospecting for new business. If you are, some percentage of your projects clients are likely turn into retainer clients, which will allow your agency to grow. When this happens, however, resist the urge to alter the 50/50 balance, as that will reduce your "hunter mentality", which is the lifeblood of your agency.

I'd love to hear if this balance makes sense to you.



» Agency CEOs: Your Actions Drive New Business Revenue Growth

Growth is within your control
by Todd Knutson  |   published on August 17, 2009

Support sales

CEO beliefs and behaviors either contribute to revenue growth or work against it. The questions is, are you helping or hindering your agency generate new business?

Here's an article by Michael Braun of Pivotal Advisors, a national sales improvement firm, which I've adapted for agency CEOs.

Ineffective sales growth strategies
When CEOs say they need to increase revenue, the first question to ask is: “What are you doing to drive new business now?” Responses range from interesting to shocking. Here are some typical comments:

  • “We’re going to just ride it out. When the economy comes back we’ll get our share.”
  • “I’m not happy about it, but it’s up to our VP of new business. If he doesn’t get it going soon I’ll have to replace him.”
  • “We’re trimming our new business team. If we can’t win enough at least we’ll spend less and weed out low performers.”
  • “We brought everyone in for a three-day training workshop to improve their skills.”
  • “We invested in a CRM system so we can see what they are working on and get more accurate forecasts.”
  •  “I’m personally getting a lot more involved in pitches to make sure we win.”

These responses usually foretell that the strategy employed is not working well. If you’ve been using one of these strategies to little effect, you might consider becoming more personally involved in your agency's new business effort.

New business involvement quiz
To gauge your current level of involvement, try answering these 9 questions. Answer each with a YES, SOMEWHAT or NO.

1. Do you foster a culture (policies, recognition, stories) that enables the entire agency to support the new business team?
2. Have you invested enough in your new business team to give them a competitive advantage?
3. Have you worked with your new business team to understand the critical steps your prospects take in evaluating your services? Have you documented the best approaches for all to use?
4. Have you determined your most probable customer or growth segment and communicated it to the entire organization?
5. Have you encouraged your new business leader to understand what behaviors and activities lead to wins and then supported the development the team needs?
6. Do you continually invest in your new business leader to be sure he or she has the best education, tools, and practices to drive continual improvement?
7. Do you routinely make new business accomplishments visible to the entire organization, recognizing those who win and those who support the effort?
8. Do you believe that new business is a process that can be taught versus a skill that’s inherent in certain people?
9. Do you look at new business as an investment in the business verses a cost to be managed?

If the majority of your answers were YES, you're most likely helping your team succeed.

If the majority of your answers were SOMEWHAT, you're doing some things right, but you need to take a closer look at ways you can improve.

If the majority of your answers were NO, here’s an opportunity to make changes that can make a big impact toward improving your new business results.

CEO actions that lead to results
To drive revenue growth and become more involved in helping your new business team succeed, try taking these actions:

  • Publish a growth strategy. Explain to everyone what type of client you want to work with, and then show them how to get those leads to the new business team. Follow-up with routine communication that shows how their efforts are generating new revenue. You’d be surprised how many employees are connected to people who could become clients.
  • Invest in your new business leader. Sales is a discipline like any other function in the organization, and it’s driven by the boss. Salespeople do best with a clear set of expectations regarding what they’re supposed to do, how they should behave, how frequently and what results they should be getting. Most managers learned their job from their former manager who never learned to do it well. Be clear their job is not to sell, but rather develop a team of people that can sell your services. Then, provide them the education and support they need to do it well.
  • Create a step-by-step method for engaging your prospects. Create a methodology that clearly outlines what activities help your prospects make effective decisions. Document which steps, tools, and resources advance the sale, and reinforce them over time. If you want the new approach to stick, think of it as the beginning of several months of teaching or re-teaching skills to resistant adults. It takes time and it’s up to the manager to teach and coach until a new habit is formed.
  • Stop making your manager the score keeper. Managers often spend 50 percent of their time forecasting, sitting in meetings to communicate the latest projection, working with the CRM team on the latest upgrade, or helping marketing. Studies show that when managers spend time coaching their team, revenue goes up significantly. Reduce administrative time wherever you can and help your new business leader focus where they’re needed most, teaching their team to be better.
  • Take pride in your new business team. The best hunters want to work for agencies that believe in, invest in, and continually develop their new business skills. If you’re not doing this, they know it and it shows up when they talk to your prospects. You can show your pride by offering learning events for the new business team and sending announcements to the entire company recognizing key new business wins.

The exciting part is that this is all within your control and it works. And, it works in every economy. Your prospects and clients are always looking for the best value. New business teams that help their prospects make good business decisions by understanding their needs, concerns, and risks, will always have a competitive advantage.

» Ad Agency New Business Mistakes are Magnified in a Challenging Economy

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:

  1. Ask smart questions. Start with comfortable, general questions and as you develop rapport ask more in-depth questions that will reveal business opportunities.
  2. 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?
  3. Ask "why" and "tell me more about that" questions to follow up on areas revealed in #2.
  4. 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.
  5. 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.


» Hire Your Ad Agency’s Next New Business Person Without Meeting Them

Best predictor of job performance is a work sample
by Todd Knutson  |   published on August 05, 2009


Dan Heath and Chip Heath, authors of "Made to Stick" wrote a provocative article in the June issue of Fast Company. It challenges our basic premise about how to hire successful employees.They argue that the reality is that

Interviews are less predictive of job performance than work samples, job-knowledge tests, and peer ratings of past job performance.

As primary evidence, they report on an unplanned, fascinating experiment that started in 1979 at the University of Texas Medical School. The school interviewed the top 800 candidates, scoring each on a seven-point scale. They admitted the top 350. Then, unexpectedly, the Texas legislature required that they admit 50 more students. It was so late in the process that only the candidates with the lowest scores were available, and they were admitted with everyone else.

The expectation: those with the worst scores would end up at the bottom of the class.

The reality: There was absolutely no performance difference.

And then the graduates went on to their residencies, where their inferior capabilities in actual work in actual hospitals would be clear. Right? "Nope, didn't happen. Both groups performed equally well in the first year of residency." The entrance interviews "correlated with nothing other than the ability to interview."

So, you need to figure out whether or not your candidates can do the job - without interviewing them.

If you're hiring a proactive ad agency new business person, whose job it is to sell, then ask them to sell you something. Here's how you do it:

  • Set up a telephone interview.
  • Create two role practice scenarios (for more details on how to do role practice, read this post).
  • You'll be the marketer and your candidate will represent your agency.
  • Run through each scenario once, listening for the questions they ask you, their ability to engage you, their comfort level when you attempt to shut them down, etc.
  • Observe how well they understand your agency: are they a quick study, did they prepare well or wing it?

I've found this to be the easiest way to weed out new business candidates who claim skills that exceed their capabilities. And this is something you definitely want to know before you hire that smooth-talking interviewer.

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