By Category: New Business Metrics & Management

» Is Procurement the Ad Agency New Business Enemy?

Interview with Mattel's ex-procurement chief
by Todd Knutson  |   published on March 23, 2010

procurementWhen you mention to a new business person that "procurement" is getting involved, the typical reaction is dread. You've built rapport with your prospect, established their need, demonstrated how your agency can meet it, and now someone who doesn't know you is is going to weigh in, with their ability to say, "no", hanging over your head. Your fear is that all procurement people care about is getting the lowest price, so the months you've spent getting where you are today may have been a total waste.

Dave Wilson, Ex-Procurement chief at Mattel begs to differ:

The biggest myth is that procurement people are the devil incarnate; most of us are decent, honorable people!

Brent Hodgins of Mirren interviewed Dave last month. Here are some highlights:

On lowest cost vs. quality:

  • Cost is certainly one factor, but, for agency services, it should be less important.
  • A good procurement process should weight quality and service above cost.
  • Lack of top-line revenue growth during the recession put an emphasis on reducing cost; revenue growth should reduce that emphasis.

On the biggest mistakes that agencies make when dealing with procurement:

  • Viewing them as "the enemy".
  • Not building relationships with individuals in the procurement department.
  • Not recognizing that procurement's job is to protect the client's interests.

On who should negotiate with procurement, and what they should be prepared for:

  • Have people separate from account service do the negotiating.
  • Be prepared.
  • Be objective.
  • Procurement may try to intimidate: you can't fall into the trap and become emotional.
  • Having a lawyer present to deal with contract language may be helpful.

David will be providing many more insights at the Mirren New Business Conference 2010. I've attended the conference since its inception and recommend it. If you plan to go and haven't registered yet, you'll receive a discount if you use this code: LIST2010. [Neither I nor The List have any financial interest in the conference.]

» The Failsafe New Business Committee

7 ways to make your committee more effective
by Todd Knutson  |   published on February 09, 2010

FailsafeMany smart ad agency Presidents create new business committees with the best of intentions: bring together the best and brightest in the agency who touch new business, give them a mission and deadlines, and then watch them work together as a unified team and land new accounts.

Too often, the committee never realizes its potential.

Jason Zweig of The Wall Street Journal recently wrote a column titled, "How Group Decisions End Up Wrong-Footed". Extrapolating from his article, which addresses how committees lost billions of dollars during the recent financial crisis, we can learn a lot about how to make our new business committees work more effectively. Here are his suggestions:

  1. A committee must be made up of people with different perspectives.
  2. Each member must be unafraid to speak their mind.
  3. Each member must be able to select and process information effectively.
  4. Each member must demonstrate their ability to learn from their mistakes.
  5. At the outset, the agency President must objectively determine and specify what success looks like for the committee. Each success factor must be measurable.
  6. As the committee considers various options, they should split themselves into two groups: the "pro" group and the "con" group. Each side should generate the best arguments they can for each position, being sure to consider what success and failure looks like for each.
  7. As recommendations are being considered, the committee needs to ask "the five whys". For example, why is one idea superior to another? Why does the proposer of that idea know that their proposal is right? (For a new business example of this, see this post.) Zweig argues that,
If you ask five such "why" questions in a row, you are likely to expose any weak points in the advice.

While I have a bias against new business committees, as I look back on my experience on various committees I can see how implementing Zweig's recommendations would have improved the membership, and more importantly, the healthy functioning of each group. I'll be curious to hear how these ideas work for you.

» For CEOs: O.K.R.s for Better Management of Agency New Business

Objectives and Key Results
by Todd Knutson  |   published on February 02, 2010

John DoerrTwo days ago I was introduced to a management technique that's widely used at Intel and Google, about which I was previously unaware. The idea is to get everyone in the company focused on the three most important priorities that matter most, and no more.

Managers who use this technique call it O.K.Rs, which is short for Objectives and Key Results. An interview in Sunday's New York Times with Mark Pincus, CEO of Zynga, a provider of online social games, describes it this way:

...the idea is that the whole company and every group has one objective and three measurable key's a simple principle that keeps everyone focused....

Pincus credits John Doerr, the well-known venture capitalist, with the idea; he's pictured above.

Here's how Pincus puts it into action:

  1. On Sunday night or Monday morning, everyone writes down their three (3) priorities for the week.
  2. On Friday, we see how they did against them.

He's found that:

...this is the only way people can stay focused and not burn out.

This simple management technique should be very effective for any ad agency that has had to cut staff due to the recession. While a smaller group may not get as much done as a larger group, the key question to ask yourself is, "Are we getting the right things done right now?" This approach will keep everyone focused on the getting the most important things done - this week.

It should be especially effective for new business people. For example, staying focused on nurturing a long-term prospect, completing the RFP that's due on Thursday, or making twenty calls every day this week.

It's easy to get caught up in all the little things that need to be done, putting aside for a while the big things that matter most. The little things do need to get done; however, it's getting the big things done that has the most impact on individual performance, and the agency as a whole.

» Misoneism and Ad Agency New Business

Change can be just another thing that you do
by Todd Knutson  |   published on January 29, 2010

fear of change

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.

» Top 10 Posts of 2009

Everyone likes the best of...
by Todd Knutson  |   published on January 08, 2010

top 10

As a way to kick off the New Year, here are the ten most-read posts from 2009. Enjoy!

  1. 7 Voicemail Messages for Successful Ad Agency New Business Development.
  2. The Other Reason Why Your Clients Buy Marketing Services
  3. Build Ad Agency New Business with a New Business Funnel
  4. 10 Steps to a New Business Plan
  5. Ad Agency New Business Update: Cold Calling Isn't Dead
  6. Skillful Listening Critical to Ad Agency New Business
  7. Sad But True: How One Ad Agency Completely Blew Their New Business Credentials Presentation
  8. The Agency New Business "Busy Paradox"
  9. The At Least 80% Formula for Ad Agencies to Win More New Business
  10. New Business Skill Development: Convert More Meetings to Revenue


» For New Small Agency CEOs: First Time Managing New Business

The good news is that everything is measurable
by Todd Knutson  |   published on December 15, 2009

A reader recently wrote me, saying that he's a new ad agency CEO, but has never managed a new business department. What objectives should I set, he asked? What should I measure? As many agency principals are thinking about next year, now's a good time to make plans for a successful new business process.

In our reader's small agency, the biz dev department consists of one full-time person, which is pretty common. Let's look at the numbers he'll need to build a new business funnel:

  1. How many clients do you want or need to win in the next 24 months?
  2. What percent of your initial client meetings result in a win?
  3. What percent of prospects you target do you meet with?

Let’s assume that your numbers are the following:

  • 2 new clients needed.
  • 10% of initial meetings result in a win.
  • 10% of the prospects we target meet with us.

You can create a sales funnel to illustrate what you need to do:

  • 2 new clients / 10% win rate = 20 initial meetings needed
  • 20 initial meetings / 10% of targets = 200 prospects needed


Your next step is to identify the resource you'll use to identify your potential prospects. Rather than repeat a prior post that addresses this, click here to read more. The one thing I'll emphasize, though, is to be sure you pick a resource that will allow you to make calls without having to do further research, not one that requires you to wait while they try to find what you're looking for.

At the same time that you're selecting your business development database resource, determine the activities that your new business person needs to do in order to secure 20 meetings. Using a CRM system, I recommend that you track all the outbound activities between your new business person and potential clients, which are typically the following:

  • Emails Sent
  • Emails Received
  • Quick Chat (example, "I'm sorry I've caught you at a bad time, I'll call you tomorrow.")
  • Good Conversations (this is a substantive conversation that moves the prospect down the sales funnel)
  • VM (left voicemail message)
  • DNLVM (did not leave voicemail)
  • Received VM (received a voicemail from a prospect)
  • Meeting Set (set up a meeting with a potential prospect)
  • Meeting Held (meeting was held with a potential prospect)
  • Business Won

With these activity measurements, you can create metrics that will allow you to determine what's working and what's not. Here are those I find to be the most valuable:

  • Total outbound activities = emails sent + quick chat + conversations + VM + DNLVM. You should use this daily, weekly, monthly, etc. to measure and ensure that activity is taking place.
  • Activities per day = total outbound activities for the month / # work days in the month (or week, quarter, etc.). How much is enough? Someone in new business who's charged with outbound prospecting to a significant number of potential clients should make at least 30 outbound calls per day.
  • Calls : Conversations = total activities / total conversations. This is a measure of how many total activities it takes to have a good conversation with a prospect. These days, having one substantive conversation out of every five or six calls is good. 
  • Meetings per Conversation: Total meetings set / total conversations. This tells you how many conversations it takes to secure an initial meeting. The lower the number the better your new business person is able to establish rapport, ask relevant questions, and establish a reason to meet. I think you should aim for a 1:2 ratio, or one meeting from every two good conversations. If you find that the ratio is higher, I recommend doing role practice to improve your new business person's skills.
  • Meetings Held % = meetings held / meetings set. This is a measure of the quality of the meetings that are set. Over time, you should aim for nearly 100%, as this will mean that your new business person is doing an excellent job of identifying a need and establishing your agency's relevance to satisfy it. If meetings regularly don't take place, then they weren't quality meetings in the first place.
  • Business Won% from meetings held = business won / meetings held. This will tell you how well you convert initial meetings generated from proactive outreach. Recall that in the above funnel, we used 10%. You should be able to do better. However, a note of caution: I can't tell you how many agency CEOs have told me over the years, "Put me in front of a prospect and I'll close the business." The exact same number have been terrible at moving an initial meeting along the process to actually winning. The objective of a first meeting is...a second meeting. Don't try to win on the first meeting. For more on this, read here.

These steps should help you measure and manage your business development process. Please let me know if you have questions or comments.

» How Not To Be The Talk Of The Prospect’s Office

"Jarring" is not the reaction you want
by Todd Knutson  |   published on December 11, 2009

talk of the townA few weeks ago I wrote about how not to self-destruct during your first meeting. Unfortunately, in this true story the agency became the talk of the prospect's office. Here's the back-story.

Recall that this was a "good agency located in the Southwest" that was asked to submit a proposal for an initial research project estimated at $50,000. They took three and a half weeks to respond and then submitted a proposal with a price tag of $191,000.

At the time I wrote, "odds are, the project - any project - is in jeopardy". And that's what happened, though the prospect's "No Thank You" response was polite:

We were looking for something more in the moment that could present us with company growth.

Understandably, as the prospect explained on the phone, the agency became "the talk of the office for a day" when it became known that their proposal was three times the budget - a budget that was communicated during the initial meeting. She said that the word to describe her reaction to the proposal was "jarring".

After a conversation with the prospect, we can summarize exactly what went wrong.

The agency:

  • Didn't listen: They failed to listen to what was said, as well as what was implied.
  • Didn't view the prospect's business situation: They failed to look at the prospect's competitive situation, their culture, as well as the type of project appropriate for a company their size.
  • Had no sense of urgency: They took 3.5 weeks to submit the proposal, which said a lot of negative things about them.
  • Failed to meet the prospect's expectations: Proposing an initial project that will cost three times the budget is a bad idea, plus its scope was far beyond what was needed or desired. 

It's one thing to lose a project after a hard-fought, competitive dual. It's another to beat yourself.

The silver lining of this story, however, is that all this is fixable. You just need to focus on your sales fundamentals:

  1. Ask questions.
  2. Listen carefully to what's said and not said.
  3. Summarize what you've heard.
  4. Agree on next steps, including scope and due dates.
  5. Deliver as promised and expected.

This agency likely fell down on #2, #3, #4, and #5. Let's all learn from their mistakes.



» A Hint of New Business Team Conflict = No Win

Good chemistry means learning how to have difficult conversations to maintain harmony
by Todd Knutson  |   published on November 04, 2009

chemistryYou've seen it happen: two members of your team aren't getting along. You've tried to repair the damage, but everyone knows it's there. While everyone tries to cover it up in the pitch, it still shows. You don't win (instead, you come in "second"). The VP Marketing cites "chemistry" as what made them choose your competitor.

Hopefully, you hear "chemistry" as the reason why you lost.

Discord in a marketing services company is felt by everyone around those who are out of sorts. It's therefore critical that we all know how to skillfully and effectively diffuse and repair relationships.

As I was faced with one of these situations recently, I gravitated to a Harvard Business Publishing article by Peter Bregman called "The Martial Art of Difficult Conversations". Peter emphasizes the importance of really listening to those who are upset until you completely understand the issue.

He suggests Three Things to Do to Communicate Listening:

  1. Ask questions. Ask open ended, exploratory questions, such as who, what, when, where, how, why, etc. These will clarify what the other person is saying and feeling. Stay away from leading questions and statements that pretended to be questions but won't fool anyone, like "You don't actually believe that, do you?"
  2. Actually listen. Shut up and hear what the other person has to say. Avoid thinking about anything except what the other person is saying. Try to hear what they're NOT saying, but are implying: the desires, fears, and assumptions behind what they're saying.
  3. Repeat and summarize. Recap what you heard, trying to use the same words they did, and check to be sure you understood them correctly. If you didn't get it, ask the other person to repeat what they said so you hear the whole thing again. What you really want to know is what you got wrong. Ask what you missed. Once they've told you, repeat that part again and ask them if you got it right this time.

This sounds easy, and like most things it's harder to do than it is to write or say. But it works, so it's worth the effort. If you try this approach, I think you'll find that you develop the habit of asking questions instead of jumping in and suggesting what should be done to fix the problem.

We all want to be heard. Once we know that we've been heard and understood, we're generally much more willing to compromise and find a solution that works for everyone involved.

For new business teams, getting back to a stable state of affairs is critical, since chemistry is a critical ingredient to winning new accounts.


» 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?


» Knowing What You’re Worth: Part of Your New Business Allure

The issue is timeless
by Todd Knutson  |   published on October 30, 2009

SteinmetzKnowing what your services are worth and being able to articulate and sell the value to a prospect is a critical new business skill.

I was recently emailed the following story, which was delivered in a 1999 commencement address by Charles M. Vest, President of M.I.T.. I almost deleted it before realizing the power of the "value message" that it describes so poignantly and relevantly for all marketing services companies.

In the early years of this [the 20th] century, Charles Proteus Steinmetz was brought to General Electric's facilities in Schenectady, New York. GE had encountered a performance problem with one of their huge electrical generators and had been absolutely unable to correct it. Steinmetz, a genius in his understanding of electromagnetic phenomena, was brought in as a consultant -- not a very common occurrence in those days, as it would be now.

Steinmetz also found the problem difficult to diagnose, but for some days he closeted himself with the generator, its engineering drawings, paper and pencil. At the end of this period, he emerged, confident that he knew how to correct the problem.

After he departed, GE's engineers found a large "X" marked with chalk on the side of the generator casing. There also was a note instructing them to cut the casing open at that location and remove so many turns of wire from the stator. The generator would then function properly.

And indeed it did.

Steinmetz was asked what his fee would be. Having no idea in the world what was appropriate, he replied with the absolutely unheard of answer that his fee was $1,000 [about $200,000+ in today's dollars].

Stunned, the GE bureaucracy then required him to submit a formally itemized invoice. They soon received it. It included two items:

  1. Marking chalk "X" on side of generator: $1.00
  2. Knowing where to mark chalk "X": $999.00

Many clients think of value as #1 - how much time does it take to perform a task?

The challenge is being able to communicate #2. What I love about his approach is that it's hard to argue with: He had the knowledge and they didn't. End of discussion.

How might you communicate the value of a big idea in such a simple, hard-to-argue-with way?


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