Refine Your New Client’s Conflicts Clause to Really Win New Business
Knowledge is strength
You've just received word that you've won the pitch. The new client you've been nurturing for years is nearly yours. And then you receive their contract, which includes a strict conflicts clause. Now what?
When you need a real estate lawyer, do you choose from the best divorce lawyers? If your CPG client wants a management consultant, would you recommend that they choose one who only works with non-profit organizations? Would you rather hire an accountant who handles ad agency clients, or one who knows nothing about the business? Naturally, the answer to these questions is "of course not".
So, why do ad agencies accept conflicts clauses that restrict them from working with clients in the same industry - clients that will help build their expertise and make them more knowledgeable marketing partners?
Think about it: what are a few of the benefits of deep industry knowledge? Certainly, a faster ramp up time because you know the:
- Industry vernacular
- Key players, influencers
- Regulatory environment
- Revenue models
- Suppliers, vendors
- Successful marketing strategies
Keep adding to the list!
So, why do clients even include a conflicts clause? What are they afraid of? How do you find out? The key - and this is a common theme in ad agency new business - is to ask good questions. You need to uncover what's at the root of their fears.
Two likely possibilities...
- Fear that proprietary information will be passed to their competition
- Fear that you'll use successful marketing strategies that they've paid you for to help their competition
The only way to find out is to probe - question them to gain the insights you need to structure an agreement. Once you've uncovered their pain points, you should be able to come up with creative ways to work with them. For example, you might significantly refine the conflicts clause by agreeing to:
- Narrow it to a small geographic territory
- Focus it on a single agency office (assuming you have multiple offices)
- Make it specific to a couple of named competitors
- Create "Chinese walls" in your agency to protect their proprietary information
With this information in hand, don't miss the opportunity to have a professional discussion around the significant benefits they will receive from working with a marketing partner with deep industry experience - just as they do with their other consultants, lawyers, accountants, IT professionals, etc. This is a conversation that should help your agency, help agencies that follow you, and help the industry - as those you educate move to other companies and spread the word.
Lastly, keep in mind The Power of "No". If their conflicts clause is too onerous, you may need to walk away from the relationship.
Does this help? Is it practical?