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:
- How many clients do you want or need to win in the next 24 months?
- What percent of your initial client meetings result in a win?
- 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.