New Business Intel

» Negotiate to Win New Business For Your Agency, Without Giving Away Your Profit

Resist pressure to reduce your fees

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:

1. Senior executives dropping their prices, fees or hourly rates upon request.
2. New business people offering free work or other freebies at the first meeting.
3. 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.

» Skillful Listening Critical to Ad Agency New Business

Listening = Winning

We've all heard the expression, "People love to hear themselves talk." When it comes to new business, your success is often determined by how well you get your prospects to do the talking.

I've asked some great new business hunters what they think about that and the common answer has been, "When I'm on my game, I'm asking questions and listening really carefully to both what's being said, and what's not."

I've also asked sales coaches to recommend a target percentage for the amount of time a prospect should talk. They've said,

You should be listening at least 60% of the time.

As that's more than half the time the question is, how do you improve your listening skills? Here are the steps that I recommend:

Eliminate Distractions

1. Turn off your cell phone.
2. If you'll be talking on the phone, turn off your computer monitor - unless you need it for your presentation, in which case close your email.
3. Turn away from your desk or clear away anything that might take your mind off your current conversation.

Focus

1. Put yourself in a "student mentality". You want to be curious and open to new ideas. Remember, this is all about what you can learn from the person you're talking to.
2. Think only about your prospect: Give them 100% of your attention.

How to encourage your prospect to keep talking

• Use short, positive prompts. For example, "umm-hmmm", "Oh?", "I understand", "Then...?", "And...?"
• Use open-ended questions. Questions that start with What, Who, Which, or How can expand the conversation.
• Use close-ended questions. Questions that start with Would, Did, Do, Can, Is, Would, or Are can be used to prompt for specifics.
• Restate. Every so often repeat what you think your prospect said. Paraphrase in your own words. For example, "Let's see if I clearly understand..."
• Offer modest feedback. Share short insights and experiences, and then listen carefully to confirm.
• Probe. Ask questions to draw your prospect out and get deeper information. For example, you might ask, "What do you think would happen if you...?"
• Permit silence. Let comfortable pauses and periods of silence slow down the conversation. Give your prospect time to both think and talk.
• Summarize. Interpret what you heard and check for understanding. For example,"So it sounds to me as if...."

What not to do - things that may shut your prospect down

• Interrupt. This is the fastest way to have a short conversation.
• Dig for too much information. Use your intution before asking a probing or potentially too-personal question. Timing is everything. Ask the question too early and you've lost your prospect.
• Advise. Similarly, you are in no position to recommend a course of action until you've earned your prospect's respect.
• Patronize. Eliminate any phrases like, "I know just how you feel" from your vocabulary.
• Give unwelcome reassurance. For example, the common phrase "Don't worry about that" can be taken to mean the opposite, so don't use it. 

Last night, I came across a quote in the book "Same Kind of Different As Me" that's a perfect summary of our listening challenges, and also food for thought:

Those who should listen cannot get beyond the sound of their own voices.

Here's the corollary for new business: "The person talking is the person buying". Your key to success may be as simple as asking qood questions and then letting your prospect talk.

» Prospecting Tip: Use Your Cell Phone for Ad Agency New Business

One of the old rules may need to be rewritten

It wasn't long ago that calling a marketer on their cell phone was considered "too personal".

However, as cell phones are becoming mobile computers, and the lines between work-time and personal-time are blurring, doing so is becoming less verboten.

Just the other day I heard from a new business person who said that after being transferred to her prospect's voicemail, he offered his cell phone number "in case of emergency". Figuring it was worth a try, she called and he answered, and they had a great conversation. He was driving, didn't have any interruptions, and was able to fully engage with her.

The other advantage of this technique: No caller ID.

So, if you're not already doing so, it may be time to incorporate your cell phone into your trio of outreach tools:

• Office phone
• Email
• Cell phone

One other suggestion: Forward your office phone to your cell phone.

You may have had a marketer leave you a voicemail on your office phone in the evening or over the weekend, assuming that you wouldn't be there to answer. If you do forward your phone, though, just be ready to have a surprised marketer on the other end. Be prepared to ask questions and try to engage them, even though it may be Sunday afternoon!

» How to Reach the Marketer Who’s Screening Your New Business Calls

Caller ID doesn't have to be your enemy

How often do your prospects answer the phone?

New business people say that if feels like their calls are being screened. I agree. If your prospects don't recognize your number, they're unlikely to answer.

Here's a method to overcome this issue that I heard about today.

The LM, CB, CB Method. LM mean 'left message' and CB means 'called back'. Here's how it works:

For marketers who have requested information about your ad agency:

• Leave the marketer a message saying that you're calling to follow up on their inquiry.
• Call back a minute later. In the event they've screened your call, you'll go directly to their voicemail and they're now listening to your message, so don't leave another one - just hang up.
• Wait 5 minutes and call back. At this point, they've heard your message and are much more likely to take your call.
• Note: during the 5 minutes after your second call, stay off your phone: this is when they're most likely to return your call.

For marketers you're cold calling:

• Leave the marketer a message saying why you're calling - make it incredibly relevant to them (i.e. not at all about you).
• Call back a minute later. In the event they've screened your call, they're likely to be listening to your message and you'll go directly to their voicemail. Don't leave another message.
• Call back 3 minutes later. At this point, if you left a compelling message and they're at their desk, they're much more likely to take your call. If they don't answer, don't leave another message.

As you can see, the key to success for either approach is the quality of your initial voicemail and your persistent follow up. Naturally, your prospects are likely to be away from their phones a certain percentage of the time. But when they're there and in "phone-screening mode", this approach increases the chance that you'll get through.

I'd love to hear how it works for you.

» Premature Presentation: The Ad Agency New Business Affliction

You may have it if your new business revenue is falling short of expectations

I was doing some role practice recently and observed the following: the new business person asked a few good questions and then, thinking he'd identified the need he could satisfy, switched into presentation mode. The problem was, while he had one need, it was a soft need - not one that was going to win him any business.

Think of asking questions and identifying needs as building a stool: you need at least three legs to make it stable; four will make it rock solid.

If you ask too few questions and go into presentation mode without 3 needs in hand, you'll suffer from Premature Presentation - and will be unlikely to win the business.

When you ask a question, you need to be prepared to ask at least three follow up questions, drilling down each time to identify the ultimate need or issue.

By way of an example, I'll explain what was going on in my role practice. I was playing an agency principal and the new business person was trying to sell me a subscription to The List. I explained that we (as the agency) would never invest in a resource like that, hoping to quickly get him off the phone. He asked why that was the case and I explained that we generate business from referrals and that I didn't have time to make outbound calls or do any marketing. He jumped on that and presented why using The List would save lots of time. While that was very compelling, it wasn't enough.

Here's what he should have asked:

1. Given what's going on with the recession, tell me about the referrals you've generated this year? To that I might have responded that they were down from normal years, but still coming in.
2. How many have you had so far this year? That would force me to come up with a more truthful answer, so let's say the answer is three.
3. How many wins do you need every six months to keep up with clients you lose? Hmmm. I might say, at least two.
4. And can you generate two pieces of business from every three referrals? Nope. If we can close 40% we're doing well.

The sales person now has one need: generate more referrals. But, that's only one leg of the stool!  He now needs to start a new series of questions, perhaps coming back to my available time and unwillingness to do any marketing, in order to figure out what other needs are out there.

As you can see, the idea is to identify a series of needs that you can discuss in order to show how your agency can satisfy them. If you have three, even if one gets knocked out during the the process, you'll have two others to offer solutions for, and the odds you'll win will measurably increase.

Just be sure not to jump to presentation mode too early....

» The At Least 80% Formula for Ad Agencies to Win More New Business

There are two things every client wants. K.I.S.

We all know that when you Keep It Simple (K.I.S.) - I'll assume no readers are stupid - business success comes easier.

I've been thinking about agency-client surveys. Each tells us what clients want. Yet, the results show that a majority of agencies still don't give clients what they want.

So, I've decided to keep it simple.

I'll put money on the fact that at least 80% of clients want two things (and I'm willing to make the bet that 100% would take either one of these):

1. To attract more customers.
2. To retain more customers.

What can be simpler? It's what everyone in business wants. So, why not give it to them?

Here's my thesis:

• If on every new business call...
• If in every first meeting with a prospect...
• If in every pitch...
• If after every win, in every client meeting...

You ask questions to find out how you can help your prospect/client attract and retain more customers, you'll:

1. Discover what they need.
2. Create opportunities to solve their problems.
3. Win more new business for your agency.
4. Retain more clients for your agency.

This is my recipe for success in business. Who's willing to keep it this simple?

» New Business Strategy: Commercializing Your Own Products

Why shouldn't ad agencies or design firms launch their own brands?

In a recent post I mention the opportunity to partner with upstart technology companies as a new business play. This month's Fast Company article titled "Selling Soap. Literally" shows how some innovative agencies and design firms are creating their own products to generate growth and, as a healthy by-product, increase business acumen.

You may be familiar with what Anomaly is doing, but how about Trumpet, Zag or Fuseproject?

Fusebox has created Y Water, a low-sugar beverage for kids, as well as the Jawbone wireless headset - both in partnership with startups. Trumpet was similarly involved with Naked Pizza. BBH Labs launched Zag, which has created Mrs-O.org and lla, while Anomaly has five projects in the process, including Avec Eric and eos.

Here are some take-aways from the article:

Ben Malbon, BBH Labs:

• "By creating our own brands, we wanted to make ourselves recession-proof."
• "Because it's your own money on the table. When it's literally off the bottom line, the best idea must win. You have to be open to people being more expert than you."
• "You get exposure to the full gory detail of how clients make and lose money."
• [employees] "will be able to have a much smarter conversation with a client's marketing director, or CFO."

Carl Johnson, Anomaly:

• "If there is a client, they are in charge..."
• "You have to embrace collaboration."
• "You're much more commercially aware."
• "You can do so much if you know what you're doing with product placement, sponsorship, digital PR. It's that whole "I haven't got any money, so I'll have to think." It makes you much better at grinding out media without paying."

Robbie Vitrano, Trumpet:

• "It's exciting to figure out how to commercialize something that has real substance."

Bart Haney, Fuseproject:

• "Either our ideas will make it or they won't. If a partner starts a business with the idea, we stay on as the creative segment of it. If it gets sold off or licensed, then we take our share."
• "Clients start seeking us out because they absolutely know we understand the path to market and all of their challenges."

If these comments get your entrepreneurial juices flowing, go for it! Why not launch your own brand, either on your own or with a partner?

» Changing Role of Ad Agency New Business Rainmakers?

Adweek doesn't suggest an answer; Here's one.

Large, well-known agencies are getting frustrated at the length of time it's taking to fill open CMO positions and with the lack of available talent, according to a July 13 article in Adweek.

I wonder if they're looking for the right person.

Here are some of the main points in the article:

• There aren't many people who know how to do the job well now - the job is more complex
• Client reviews are more complicated
• The involvement of search consultants requires a skill unto itself
• Holding company-led contents are a whole new animal
• Procurement execs are changing the dynamic

Let's consider some of the things agencies expect this one person to do:

• Market the agency
• Nurture relationships with consultants
• Complete RFPs
• Play well in the sandbox with sister agencies in holding company pitches
• Develop relationships with procurement execs
• Prospect with client CMOs and hold meaningful conversations with them
• Organize pitches 
• Manage a new business team
• Be strategic and contribute at the highest levels of the agency
• Be current with social media, and every other channel that's out there (traditional, new, emerging)
• Understand and be conversant about every agency capability and client, including relevant metrics
• Similarly understand their closest competitors

Oh, and do this in an environment where the new business role is often undervalued, usually seen as an expense - not an investment in future growth and sustained revenue, and is susceptible to down-sizing when times are good.

Volunteers, anyone? No? Okay, let's put a junior person in the role and see how they do.

Pardon my sarcasm, but this happens every day and only perpetuates the problem. Face it: new business development requires sales and marketing talent, which is rarely found in one person. Most importantly, the actual job of generating new revenue is determined by sales skill. Sales is a learned skill that takes time to develop.

I've learned a few things about sales and marketing people over the last twenty-five years. From my experience...

1. Sales people are not paper-pushers. Good sales people are hunters, relationship-builders. Give a good sales person a RFP and while they may get it done, eventually, it's not the highest and best use of their time.
2. Sales people are generally not good managers. Let them sell, without having to manage anyone but themselves.
3. Marketing is not sales. If you want a CMO, hire a marketing person. And if they do well marketing your agency, don't ask them to sell - it's a completely different skill set.

Recommendations:

1. Invest in the sales and marketing of your agency.
2. Hire a marketer to do your marketing.
3. Hire a sales person, or two or more, to sell. Have them build relationships with consultants, procurement, prospects, but do nothing else.
4. Assign the completion of RFPs to someone who does this well, and fast.
5. Assign pitch preparation to your best manager - the person who can really organize people and gets tasks done well and on time.
6. Educate your sales and marketing team about social media - marketing needs to own it, and sales needs to use it to drive sales.

As you can see, new business is not a one-person job. If you structure your agency as your clients do - with a sales and marketing team - you will build your talent base and be able to promote from within. This will eliminate the need to conduct long and fruitless searches for that one person who is rarely found.

» Ad Agency Guide To Breaking In To New Categories

Every ad agency wants to break into a new category. How do you do so when you don't have the experience? How do you avoid spending a great deal of money on a pitch that you have no chance of winning? Clive Maclean provides some answers to these questions. He has started and grown very successful agencies in both his native South Africa as well as the U.S. (You can find his blog here.)

Guest post by Clive Maclean:

Breaking into new categories can be a difficult and expensive task for many agencies. The current economic environment has made it even more difficult, as marketers look for partners who already have deep experience in their specific category. They do not have the time, money, or risk tolerance to take on a new agency lacking category experience, and show them the ropes. So how in the world do you get in and get new category experience if your agency cannot get a foot in the door in the first place?

Well, it’s not easy, however, here are a few tips that might help improve your chances:

• Purchase an existing agency: The easiest way to break in to a category is to purchase an existing agency with both the experience and the clients to match. This gives you immediate credibility and critical mass.
• Partner agency with category experience: While not ideal in the long term, if you need the capability immediately in order to address a current opportunity, then partnership may solve the problem.
• Hire a team/individual with experience & relationships: Another approach is to identify and hire either a team or individual with both category experience AND a solid personal client relationship. (Category experience of one or two people is not sufficient on its own).  There must be a strong relationship that should at least give you a foot in the door, and some initial project opportunities.
• Avoid attempting entry in a pitch environment: While nothing is impossible, my experience has taught me that formal shoot outs in a pitch environment is not a successful way to break in. Yes, on occasion a great idea or concept can pull you through, but know that the odds are ranked heavily against you.
• Forget the category leader: The chances of ConAgra awarding you their flagship Healthy Choice brand, or BMW awarding you their account without any category experience is slim to none. Target smaller brands that are hungry to gain market share, more nimble and less risk averse. Another good idea is to target a smaller sub brand within a group of brands, and cut your teeth on it before moving up the ladder.
• Consider analogous category experience: Take a look at the skill sets and techniques utilized by your agency on current client accounts. What other categories may require a similar skill set? Consider how to package your experience up in a way that will appeal to the new category prospect.
• Proprietary tools, software, and widgets etc: If you have a truly proprietary tool or application that would add value to the new category prospect, you will probably have a good chance of getting them interested. Make sure you package the product up suitably to appeal to the new audience.
• Research and homework: This approach requires you to invest a significant amount of your talent, time, and money doing your homework on the category. What you are hoping is that you are able to find actionable insights (not information) that the client may not currently be aware of.  Using these insights as the reason to secure a meeting, you then have the opportunity to demonstrate your value proposition and “Wow” them with your innovative ideas/solutions.

I hope you find these helpful…. So, the next time your creative director rushes up to you and says “We need to go after the personal watercraft category because I have deep experience and a great reel from my past agency!” take the time to consider the idea before reacting.

» Sad But True: How One Ad Agency Completely Blew Their New Business Credentials Presentation

Making brownies while presenting your credentials doesn't mix

One day during the week of June 15th, 2009 a multicultural ad agency that can't be named had a conference call with a very large, well-known telecommunications company. They completely blew it.

Here's what they knew going into the call, which was set up a week earlier:

• The brief: present ideas on how to further segment the African American, Asian, and Hispanic markets.
• Expected content: a credentials presentation that addresses the agency's experience, shows case studies, and answers the brief.
• Participants: senior marketer, agency president, new business director.

During the week before the scheduled call, the new business director tried to engage her president to help prepare a deck. But she was unsuccessful, despite the fact that this was a big opportunity for them, they needed a new business win, and they had the background necessary to do so. The president felt they knew the material and should just have a conversation with the marketer.

At the appointed time, the new business director initiated the call. The marketer was in his office, and the president was on a speaker phone in the agency's kitchen. As the call got started, the president began to make brownies. Seriously.

Needless to say, the call went downhill from there. It was difficult to hear due to the racket in the kitchen, nothing was prepared in advance as requested, and the president was paying half-attention while reading the cookbook and mixing ingredients in the background.

Is it any wonder that the call went nowhere?

Lessons learned - if you're the new business director in an agency like this:

1. Prepare on your  own in advance
2. Keep your president off the call, off a speaker phone, and out of the kitchen
3. Or, alternatively, find a new job

If you're an agency president who acts like this: either stay completely out of the new business process, or hire someone to take your job (perhaps make yourself the honorary chairperson).

Quirky may be funny once a client gets to know you, but few senior marketers are going to find it amusing on the first call.