New Business Intel

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

Objectives and Key Results

Two 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 results...it'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

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...

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

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

A 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

You'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

Agencies 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

Knowing 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?

» Delivering on Expectations, Communication Create Organic New Business Growth

How Justin is turning around an almost-lost client

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:

1. Management involvement. He made sure that a key manager was present from both sides at key meetings.
2. 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.
3. A new team. He removed two toxic members of his team and replaced them with people who better meshed with the client.
4. 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.

» Data Accuracy Essential for Proactive New Business

Just because you have a database doesn't mean it's accurate

Most agencies have a new business database. Twelve years ago, while working at another company, I would've agreed with the majority of agency principals who believe that their database resembles a Chippendale chair more than it does a head of lettuce.

That belief changed dramatically when I saw with my own eyes that elements of more than 30% of our prospects' contact information changed every 3-4 months. All of a sudden, that repository of information that I thought was a valuable business asset became a liability. How was I going to keep it current?

This was in the days before information was available online, so we rented lists and spent significant dollars doing so. However, the alternative was hiring a couple of full-time people to do nothing but update our database, which was a more expensive option.

Today, the situation for agencies is similar, but many still ignore the reality of inaccurate data. This is not a situation unique to our industry: every company that sells anything has to deal with it. Many have realized that the cost of not keeping an internal database up-to-date is the opportunity cost of a lost sale. In other words, the cost of inaccuracy is:

• The time it takes to constantly look for accurate information. Measure this as the person's equivalent fully-loaded hourly cost (i.e. including benefits and company-paid taxes) times the number of hours they spend digging for information every day. Then, turn this into an annual cost.
• Calculate the number of leads they could have generated had they not needed to research. From that, calculate the number of prospect meetings they could have set up, and the value of the resulting business that could have been won over the course of a year.

It doesn't take long to do some rough calculations - you'll have it in less than 5 minutes. I also encourage you to figure out how much it would cost to hire someone to keep your internal database accurate.

The good news is that there are a variety of information providers who supply varying degrees of accurate and relevant prospecting databases for agencies and marketing services companies, at a reasonable price. (The price will appear to be a steal once you have the numbers mentioned above.)

The best news of all is that you don't have to give up on your internal database. If you want, you can use any of these resources as your updating resource - let them hire the people to do the research on your prospect companies, so you don't have do.

Here are some other posts that may be of interest if you want to learn how to choose a new business database, whether to rent or license a list, or whether to buy or build your new business database.