Blog Posts

What’s Wrong with Billing by the Hour?

Written by ChuckMeyst2015 on . Posted in Blog Posts, Marketing Partenerships

Guest Post By 

If you’re like most agencies, you are still primarily using the billable hour payment. This model relegates you to a manual laborer rather than a solution-driven partner. It also puts you and your clients at odds, rather than forging a better alliance. The good news is there’s another way.

Why do agencies use the billable hour?

The main reason agencies still rely on the billable hour model is because this is how it has always been done. Change rarely comes naturally, whether we’re talking about individuals or large corporations. People find it easier to keep doing things the same way instead of learning a new system. And truth be told, billing by the hour is definitely an easier process because most agencies are set up to track employees’ time.

But this method no longer works. It’s outdated. Back in the days of heavy media buying, when the lion’s share of billing was based on commissions, this method was great. But today’s market is drastically different, and it has different needs.

What’s wrong with billing by the hour?

This model is to the disadvantage of both the agency and the client for a number of reasons:

  • It puts you at odds with your clients. They want to spend less, and you want to earn more. You don’t get the opportunity to work together to discuss the value of your work, so one or both parties are usually dissatisfied with the payment.
  • Similarly, it creates risk for clients since they don’t know how many hours of work you will need to do to complete the job. They’re forced to accept whatever bill you give them, which can make them suspicious and wary of you.
  • It implies that agencies make “stuff,” rather than create ideas or business solutions.
  • It penalizes agencies for technology and other advances that make agencies more efficient.
  • It prevents you from setting the price in advance, which keeps everyone in the dark until the final bill arrives.
  • Finally, and perhaps most importantly, it makes you like every other agency in town. If you update to a better model, it communicates that you are pushing ahead of the competition and are not trapped in old methods. This kind of change can make you a leader in your field.

Solution: The value-pricing model

In the value-pricing model, the client and the agency discuss the business outcomes that will be delivered as a result of the work. They set measurable, smart goals and determine the value of achieving those outcomes.

Here’s an example: Let’s say a client in the banking industry would like to get 200 new checking accounts from advertising efforts. The bank’s marketing manager determines that the lifetime value of a checking account customer is $500, so achieving the goal is worth $100,000 in new revenue. She also determines that the bank has a 50 percent close rate on selling a new checking account. So the campaign needs to drive 400 prospects into the bank in order to open 200 new accounts.

The agency can’t be held responsible for the actual sales because there are too many variables outside of its control. But it can present a program that will drive 400 prospects through the door. The agency can now present different options for driving inquiries about checking accounts. The agency knows that the proposals need to be priced in a way that creates a profit for the client. It’s then the agency’s job to deliver the specifics of the proposal within budget.

The client couldn’t care less how many hours the job takes. What the client cares about is results. As long as the agency creates more value than the price it charges, everyone wins.

This process is a much more balanced way to charge the client and to compensate the agency. The client pays for value, not stuff, and the agency is paid based on the success of its efforts, not how much time it took to accomplish the goal.

Value pricing makes it easier for your agency to build strong relationships with your clients because you’re both pulling for the same outcome. In this new model, the clients are in control of the price-to-value ratio, and they are happy that you are making a profit because they are paying for results. You can argue over hours billed, but it’s hard to argue with results.

If you’re still using the billable hour, it’s time to revamp your pricing model. You can stand out in the crowd, create agency-client relationships built on trust and common goals, and benefit from high efficiency. I don’t know of a single agency that doesn’t want those improvements.

AgencyFinder suggests – you won’t be the first, but how about it?

 

To Increase Agency-Client Trust, Align the Incentives

Written by ChuckMeyst2015 on . Posted in Blog Posts, Marketing Consultancy

Contributed today by Tim Williams of Ignition Consulting Group

The level of mutual trust between agencies and their clients is at an all-time low. There are many culprits, some historical and perennial, some temporary and episodic. The current debate over media “transparency” is a manifestation of the erosion of trust in agency-client relationships. But it is also symptomatic of the underlying cause of this mistrust.

Clients surmise that agencies are making money on media transactions that are not being fully disclosed. In many regions of the world, agencies earn not only a commission from the media, but also an AVB (agency volume bonus) — effectively a rebate from media properties based on total spend. In areas like Latin America, this is completely understood by clients and fully disclosed by the agencies. In fact, many agencies in these regions are heavily dependent on these volume rebates to make their numbers.

Black boxes

In the realm of digital media, the digital media distribution chain extracts up to 60% of every media dollar spent. Clients are understandably concerned that less than half of their digital media budget actually results in consumer exposure (and even then, just a few seconds’ view of a banner ad often qualifies as “exposure”). The digital media chain can indeed seem bloated and wasteful, and large marketers like P&G and Unilever have called for greater efficiencies and fewer handoffs in this chain.

An important part of this string is the audience data owned by third-party aggregators, the media themselves, or even agencies. Many of the large agency networks are able to add considerable value in the digital buying process by applying algorithms, appending data, and employing machine learning to enhance the effectiveness of audience targeting and delivery. In some cases, these technologies are viewed as “black boxes” by clients, and some marketers are concerned they don’t have full visibility into the process and costs involved.

The wrong end of the telescope

Underlying all of these issues is what I believe is the real problem: agencies have taught their clients they can have a full, complete, detailed view into every aspect of the agency’s business, right down to salaries, overhead costs, and margin. This, in effect, puts the client in charge of the agency’s finances. Procurement professionals now dictate which agency individuals are assigned to which projects and how many hours they can spend. They impose “industry benchmarks” on virtually all aspects of agency overhead costs, right down to rent and health insurance. In some cases, they decide the individual year-end bonuses of agency team members. That, by any reasonable standard, is insane.

Since when is it the buyer’s job to manage the margins of the seller? Why should it be the prerogative of a client buyer to dictate to a professional service firm how much profit they’re allowed to make? More to the point, how did this happen? It happened when agencies made the misguided decision to adopt a pricing methodology that dates from the industrial age: cost plus. The cost plus approach spawned a series of unintended but nonetheless pernicious consequences, ultimately producing today’s undesirable state of affairs.

Ceding responsibility

By definition, the cost plus method requires that all seller costs be disclosed, and buyers therefore feel they must be vigilant in tracking and verifying these costs. What if the agency is submitting inaccurate timesheets? What if they’re charging for time that was never spent? What if they’re overstaffing the business? What if they’re earning money in ways we can’t see?

In the world of multinational agencies, what should be purely internal agency management decisions are now monitored and governed by client buyers. Hence mandated audits of agency time and materials. Hence third-party cost consultants. Hence lack of agency-client trust.

To illustrate the futility of buying buckets of time, my friend Bruno Gralpois of Agency Mania Solutions provides the analogy of enjoying a fine meal at a restaurant.  As you take your place at the table, instead of ordering items from a menu with published prices, you instead ask the restaurant how many cooks will be needed, how much each of them will be paid, and how many hours it will take them to prepare your meal. Ridiculous? Yes. And it’s also a ridiculous way to buy professional services.

A simple remedy

The prevailing cost plus approach appears to be a circular conundrum, but the remedy is actually simple: agencies must stop selling their costs.

Imagine the immediate change it would make in agency-client relationships if clients bought effectiveness instead of efficiency. Marketers would cease to care how many people are assigned to their business if the agency compensation was based on the quality of the outputs instead of the quantity of the inputs. In this scenario, both parties would care about the same thing: deliverables and results, not time and materials.

In retrospect, the original commission system was far superior to cost plus. The only way for agencies to earn more money was to create effective work and make effective media placements, because that’s what spurred increases in client spending. Success breeds success. Clients in the days of Mad Men could have cared less how many people were in a meeting, because they knew the agency had the right incentive to include only the people who were essential to producing effective work and growing the brand.

If there’s one overarching principle of economics, it’s that incentives matter. As economist Stephen Landsburg observes, “Most of economics can be summarized in four words: ‘People respond to incentives.’ The rest is commentary.”

I Don’t Do Business Development …

Written by ChuckMeyst2015 on . Posted in Blog Posts, Business Development

Proudly contributed by John Heenan | agency growth consultant

Last week I talked to a young, aggressive agency owner who wanted to grow fast and thought the best way was to create a conceptual campaign to take around to marketers in hopes of selling it to someone. The owner didn’t want to spend time away from current clients to work on cultivating new relationships and new business. She believed that a hired gun could go selling for her. The owner was only interested in clients who could sign in 30 – 90 days and did not want to bother with long-term relationship building. Who wouldn’t?

In the same week, I spoke with a seasoned agency owner with years of experience working at and owning agencies. He talked about how bad things had gotten for his agency with no pipeline, no leads, and more clients fading away. He devised a ready-made offering to generate sales in the shortest amount of time guaranteed. He was looking for someone who could hit the road and sell his package to brands desperate to end the year with a bump. Who wouldn’t want that? NoThanks

Both of these examples have the same thing in common. Neither wants to do business development, the hard work necessary to compete and win and grow and stay in the ad business. Each believes they can do something different, create something out of thin air, come up with an idea no one else has had before that will be appealing and successful for everyone. And, their idea is so good it only needs a salesperson to take it to hungry marketers. The young owner felt she could sign 3 – 4 new clients per month while the experienced owner would be happy to find just one. I politely declined both.

It’s not that I don’t like helping agencies be successful. There is no greater feeling than to win new business and new clients for agency owners. Regardless of one’s level of enthusiasm or commitment, there are some fundamental truths to selling any product, service, or relationship, and their ideas were not. It’s not that I don’t believe in innovation. Innovation is the lifeblood of every industry. These weren’t innovative ideas but rather as old as snake oil. While there may be marketers who still fall for it, not me.

These two examples are not unique by any means. They are emblematic of an all too common dilemma among agencies. It’s the ‘I don’t need to do business development’ syndrome. Whether they think their work will bring new clients, or their notoriety will keep the phone ringing, or their network will keep them busy, when the leads dry up, and clients go elsewhere, the reality comes and panic sets in. It may be one or many years before the crisis, but every business that doesn’t have sales and marketing as an integral part of their operation is doomed to failure. The puzzling thing is why so many agencies think they are different.

There are a few agencies who have had pretty good runs without any formal business development. A very few. Unfortunately, other agencies see that as proof for them. They have no idea what the underlying factors are for the success, or they believe they also embody those same factors. Whatever the case, the chances of succeeding are almost zero whereas the possibility for success through business development is, on average 25%. While it is true that the cost and time necessary for a healthy new business effort is much more than doing nothing, doing nothing will eventually result in nothing.

Neither of these two examples had any business development efforts ongoing. The former had leveraged industry relationships to grow her new agency, and those had all dried up. The later had stopped all business development when the agency got overwhelmed with low paying client needs. Both had come to the desperate reality that they had to do something, or they couldn’t make payroll, couldn’t pay rent, and wouldn’t dip into savings anymore.

These are cautionary tales for every agency. Don’t neglect your business development responsibilities. Doing so is no different than ignoring your best client. Initially you can avoid any repercussion, but eventually, that client will go elsewhere, probably to an agency that has a business development program running. Also, then there is the absolute heartbreaker when a recently discovered prospect replies if only they knew about you six months ago when they picked a new agency.

The only solution is to have a business development program – that is well-defined, integrated into the operations of the agency, is regularly monitored, delegated across functions, and reviewed every six months. Keep in mind that the waves in the marketplace will buffet your efforts both positively and negatively. Don’t expect consistent results. Be patient. As long as you have a steady drumbeat of common-sense tactics and an ever-refreshed prospect list, you will have both short and long-term opportunities to keep your agency growing. It won’t happen overnight, but it will happen over time so get started now.

I want to help you get your business development program started or restarted. Click on Schedule a Call and let’s talk about what has been working well and what has not and how to fix it. If you like this post, click the thumbs up, so I’ll know and then sign up for my new business newsletter. Follow me on Twitter and LinkedIn for daily tips, tricks, and insights. #LetsGrow!

Media Agency Pitch Process Lacks Clarity On Client Goals, Report Says

Written by ChuckMeyst2015 on . Posted in Agency Search Tips, Blog Posts

by   Courtesy MediaPost Agency Daily

Media and marketing consultant ID Comms  and the 4As released a study today based on a survey of media agency executives that highlights perceived flaws in the agency pitch process.

It provides suggestions for improving the process — which, the organizations reason, will also improve agency-client relationships.

The study contains both qualitative and quantitative components and quotes a number of media agency CEOs including Wavemaker’s Amanda Richman and Steve Williams of Essence. Respondents represent agencies with combined media billings of more than $55 billion.

A key flaw, the research found, is that clients are often unclear about what the are looking for from their media agency. And they tend to remain vague throughout the pitch process, even when pressed for details.

The study quotes Richman, commenting on the RFI stage of pitches: “Let’s just be more transparent with each other on what the challenges are and what is motivating the pitch so we can put our resources towards the best solution.”

The RFI stage, the study concludes, is an earlier “filtering stage” where clients often require expensive video presentations or details on master service agreements that are better left for a later stage in the process.

Pricing exercises are often perceived as overly complicated and counterproductive. Williams is quoted in the study as saying: “There is a particular lack of consistency, and clarity, around pricing exercises and templates, and how agencies are expected to complete them — so an industry standard would be a constructive move.”

And requests for proposals are often lengthy but full of questions that don’t provide agencies the best opportunity to highlight capabilities and expertise. “Advertisers should focus on the key questions that relate to their particular business challenges,” at the RFP stage, the report advises. “Fewer but more important questions would stop this stage from feeling generic and untailored to the advertiser’s needs.”

Chemistry sessions also frequently suffer from a lack of clarity, per the report. Clients should make a concerted effort at this stage “to ensure that agencies know exactly what is expected of them and be mindful of the resource required where they go beyond the basic ‘meet-and-greet’ session.”

Final presentations are a critical and high-stress part of the pitch process with the highest level of agency resource investment and senior management engagement, per the study. And respondents noted that clients often impose unreasonably tight deadlines at this point in the process. “In general, the one thing that would help make pitches better is more time to do good work,” Williams responded in the qualitative portion of the study.

“Pitches are a big drain on the resources of a media agency, which is often managing multiple reviews simultaneously,” said Tom Denford, North American CEO, ID Comms. “While agencies have gotten better in recent years at prioritizing the pitches they compete for and being more focused with their resources, more discipline on the advertiser side would enable agencies to be more strategic and do better work. A clearer pitch process enables all participating agencies to present their best talent, resources and ideas to the advertiser. This in turn creates more business value for the advertiser.”

Matt Kasindorf, senior vice president management services, 4A’s, added: “Advertisers need to think deeply about how they run their pitches as they look to get the very best out of the agency community…agencies need clarity on the advertiser’s goals and objectives if they are to identify the more appropriate solutions.”

Note: Another well-done article on the same topic at Campaign by Oliver McAteer

Meet My Friend Mr. Bill Crandall

Written by ChuckMeyst2015 on . Posted in Blog Posts, Business Development

Bill Crandall, Founding Partner & Chief Marketing Officer, Steadman Crandall Business Development LLC

With over 35 years of brand marketing, agency, and new business development experience, Bill founded SCBD in 2014 as a new alternative resource for relatively smaller agencies and companies looking to grow and level the playing field against their larger, better financed competitors.

One thing, among many, that separates SCBD and Bill from most of other new business development consulting competitors is a rare combination of both client and agency experience.

In the course of Bill’s highly diversified marketing and agency account management career, he has worked for agencies such as Ted Bates Worldwide, IPG’s SSC&B:Lintas and Campbell-Ewald Worldwide, Scali McCabe Sloves, Earle Palmer Brown, and Della Femina.  Client brands have included Bubblicious and Trident gums, Bayer Aspirin, Friskies and Purina pet foods, Mennen personal care, Nabisco, Perdue Farms, Castrol motor oil, JVC consumer electronics, Sheraton and Marriott hotels, Jordache and Bill Blass fashion, apparel & accessories, U.S. Navy Recruiting, and the New York Metropolitan Transportation Authority (MTA), et al.

Since moving 100% into the new business development space about 15 years ago, Bill has brought his agency employers and new business consulting clients into some very big client rooms:  MasterCard, Estee Lauder, AOL, Time-Warner, SONY Music, BMG Entertainment, Procter & Gamble, Kraft Foods, Dole Foods, Kellogg, General Mills, Colgate-Palmolive, Pillsbury, Sara Lee, ConAgra, Clorox, Frito-Lay, Heinz, Quaker Oats, Café Metro and Fresh&Co fast-casual restaurants, and most recently, Steve Madden footwear & accessories.  The list goes on.

Bill received his BBA in Marketing, on academic scholarship and with honors, from Hofstra University and completed his MBA degree program at Hofstra’s Zarb School of Business.  Post-graduate Executive Program studies in global branding and finance were completed at the University of North Carolina’s Kenan-Flagler Business School.  Bill was elected to the Hofstra University Zarb School of Business Advisory Board, Marketing & International Business, in 2014.

Inquire and contact at: www.steadmancrandallnyc.com

All You Want for Christmas, Hanukkah or Posadas Navidenas is a New Marketing Agency

Written by ChuckMeyst2015 on . Posted in Agency Search Tips, Blog Posts

That’s not an unreasonable request, is it? Many company execs get the itch in early fall and then hustle to take action before Thanksgiving. The stars tend to align, vacations are history, kids are back in school and even for those not in retail, the frenzy is catching.

Many small-to-medium companies discover their incumbent is overtaxed, with too much to do. The chink in their armor becomes apparent, so that’s another good reason to look for a new marketing partner. That alone doesn’t warrant a change, but if that and other misgivings add up, then you have permission to proceed.

But move with dispatch! Have a plan and work the plan. Engage a free service like ours to quickly and precisely identify qualified candidates for inclusion and invitation. Don’t try doing it all yourself. You’ll be working around various holiday distractions, so be both patient and understanding. Golden Rule at this time – Do Not ask, expect or assign anything that would require work that could deprive agency personnel of their individual holiday vacations.

And if all else fails, move presentations, final decisions and celebration into January 2019.  #agencyfinder #marketing

 

 

Responding to Requests for Proposals – Heavy-Duty Advice

Written by ChuckMeyst2015 on . Posted in Blog Posts, Business Development

Building an agency one request for proposal (RFP) at a time is a painful and potentially humiliating way to grow a business. And while winning without pitching means not playing the RFP game, there’s more subtlety to the approach than simply saying no and feeling good about yourself all the way to bankruptcy. In this long-overdue issue of the Win Without Pitching Newsletter I address the specific steps to take in dealing with requests for proposals.

The Four Priorities of Securing New Business

Before I address the specifics of RFP responses, let’s recap the four priorities of how you want to go about getting new business.

1. Win Without Pitching

Through a proactive selling strategy, you ultimately strive to secure new engagements before they get to competitive situations, before you are asked to part with your thinking without appropriate compensation.

2. Derail the Pitch

When you cannot win without pitching and the prospect lets you know that he is talking to other firms and has a defined selection process in place, your objective is to derail the pitch: to get the prospect to put aside his process and take a series of small steps with you.

3. Get the Inside Track

When you cannot derail the pitch, your objective is to gain the inside track – to gain concessions in the selection process that would see your firm being treated differently than the others. Someone almost always has the inside track. If it’s not your firm, it’s another and the odds are against you.

4. Pitch or Walk

You will secure new business through one of the means above only if the prospect recognizes and values your expertise. If he does not, then it’s decision time. Do you preserve your integrity and future business opportunities by walking away, or do you get out the dogs, ponies and dancing girls and play the pitch game, against the long odds? If you do decide to walk (as I recommend) it’s important that you do so properly in order to preserve future opportunities.

Step One: Why Us?

When an RFP comes in for work that is well suited to your expertise, your first response is to pick up the phone and ask, why us? In doing so you are endeavoring to determine if the prospect recognizes and values your expertise. What you want to hear is, “You come highly recommended by ____”, or “We love the work you did for ______.” What you do not want to hear is, “We Googled ‘ad agency’” or “We sent this RFP to every firm we know.” Be selective and strive to be seen to be selective.

Step Two: Say No

After digging deep to determine whether or not the prospect recognizes and values your expertise you then deliver the first objection: “I need to let you know that we don’t typically respond to RFPs.” Any objection you raise can always be removed by you at a later date. Here you are trying to gauge the flexibility in process the prospect might afford you; their willingness to let you derail the pitch or offer you the inside track. Continue with, “But, before I say no, let me you ask you a few questions.” These would be your questions around explicit need, and the fit between the prospect’s need and your expertise. What are they looking for in an agency? Do they see that expertise in your firm? Poor fits might be put off by this reversal of the qualification process (you trying to determine if they qualify), but good fits and good clients will appreciate your selectivity.

Step Three: Substitute Appropriate Next Steps

Here’s where you ignore what has been asked of you in writing and suggest a next step that is in line with what is almost always your stated objective: to determine if there is a fit between the prospect’s need and your expertise suitable enough to take a next step together.

“Why don’t we come and see you and your team” (if they’re local – use the web if they are not) “and in 45 minutes or so we can determine if there’s a suitable enough fit to pursue this.” If they’re sticking to their process and denying you your suggested next step, then you will not be able to derail and it’s unlikely you will gain the inside track. Then it’s time to walk – step seven below. Note that the appropriate next step is not always a meeting. It might be a needs assessment, or more information in other forms.

Step Four: Use Case Studies

If you do get the meeting you begin with stating your objective: to determine if there is a fit between the prospect’s need and your expertise suitable enough to take a next step together. Now walk through your case studies of how you’ve helped companies like theirs solve challenges like their own. I have written extensively on the crafting of these process-framed case studies that demonstrate a defined way of working and allow you to stay on the right side of the line that separates talking about how you would solve the prospect’s problem from actually solving their problem. Use them here.

Step Five: Suggest Another Way

After reviewing your cases studies that should prove that you actually use the process you talk about on your website and in your brochure, you then check to see if the prospect still sees a fit. Can they see themselves benefiting from the consistent outcomes your demonstrated methodology implies? If so, suggest a phased engagement as an alternative next step.

Instead of committing the entire budget to your firm at this time, a phased engagement (usually a diagnostic in some form that let’s you get to the heart of the opportunity and prescribe a strategy, plan and budget). The phased engagement allows the prospect to take a small first step with you to try on the fit. Add in an opt-out clause (“At the end of the first phase, if you think you’ve made a mistake in engaging us we can part company and you can go back to your RFP”) and a money-back guarantee, and your proposition is a compelling one. When yours is the right firm for the job, this approach is a viable alternative to the client’s selection process in which a number of firms are asked to take on risk instead of just one.

If the prospect does not see the value in your offer then it’s time to walk. You’re not likely to win the business anyway. If they like what they see but are sticking to the process and want your written proposal, now’s the time to reassert that you are not in the proposal writing business. The relevant, detailed case study that you’ve just shown them, is your proposal. “We propose to do this (case study) for you.” Remember, the proposal is the words that come out of your mouth. The document is the contract that is produced only once the proposal is agreed upon in principle.

Step Six: Seek Concessions

If the prospect is demonstrating that they recognize and value your expertise, that they really think yours is the right firm for the job, but for reasons of policy or politics they need to go through the RFP process, then it’s time to see if they will walk their talk and show you the inside track by allowing you concessions to the RFP process. It’s negotiating time. Concessions can be made on costs (will they pay your travel costs or pay you fairly for work they’re asking of you?), on what you will submit as an RFP response (case studies versus free thinking) or a host of other areas. If the prospect is willing to treat you differently then it may make sense to proceed on the newly negotiated terms.

Step Seven: Walk… For Now

No concessions, no inside track, means it’s time to walk, but with a polite professionalism that will preserve any future opportunities. “It doesn’t seem like there’s a fit here. Why don’t you go ahead with your RFP process and if you don’t find what you’re looking for, feel free to give us a call. We’d be happy to have another conversation with you at that point.”

People want what they cannot have. Walk away in this manner and see if the phone rings after the usually flawed RFP process runs its course. Occasionally the prospect will call back, and when they do you will be in the driver’s seat. If they do not, then call them in a month or two and ask how they made out. If the prospect hired an agency and is perfectly happy with that firm then congratulate them, wish them luck, and tell them you’ll check in with them down the road to see if you can be of assistance in another manner, on another day. There is always another day and if you’ve handled the departure properly you will be better positioned for that day.

Guest Author and Expert – Blair Enns of Win Without Pitching

How Stressed Are You? Drew McLellan of AMI Will Help You Analyze

Written by ChuckMeyst2015 on . Posted in Blog Posts, Business Development

We manage our people, we manage client expectations and we manage our finances. And then there’s email management, biz dev management and a host of other things that are under our watch. But all of that focus on making sure that everything is running like clockwork can also jack up our stress. That stress shows up in a lot of little ways:

  • We are short tempered with our team, family and friends
  • We feel like we can never let up or wind down
  • We miss deadlines (internal or external)
  • We fall behind, putting incredible pressure on our teams to cover our rear ends
  • We are distracted when we’re with our family and friends
  • We feel our jaw clenching, our head pounding or our back knotting up

Our “normal” work day is to run around and put out fires all day. I don’t know about you, but I don’t think I have ever had a work day that played out exactly how I thought it was going to when I woke up that morning. We have chosen to live in chaos. And sometimes, we even like it. But like it or not — it’s our reality.

And that’s before you add in our personal life and the challenges that sometimes come from that side of the equation.

The truth is — we can’t escape stress. They say, in moderate doses, it’s actually good for us. But left unchecked, it can diminish our effectiveness and we bring a less than ideal version of ourselves to work and home. And we all know — there are some serious physical/health consequences to boot.

To survive that reality, we need coping mechanisms. Yes, I know for many of you, it’s that first glass of wine in the evening! But I’m going to suggest that for most of us it needs to be something bigger. Something scheduled. Something that releases the tension and rejuvenates you to boot.

Here’s the kicker — you have to put it on your calendar. Whether you do it (whatever your “it” is) before or after hours, on the weekend or during the work week — if it isn’t on your calendar, it is not going to happen.

I think most of us suck at this. We know what we should do or stop doing. But we don’t. We think things will slow down, get better, more organized or whatever. But the truth is — that’s not how it works.

Please pull your calendar out right now and schedule your stress relief. For this week. The rest of the year. And into 2019. I want you to be around, to be productive, happy and to be capable of bringing the best version of you to your team, clients, partners, family and friends.

Thanks Drew!

 

Seven Reasons Why/How Ad Agencies Lose Business

Written by ChuckMeyst2015 on . Posted in Blog Posts, Business Development

The late, great David McCall used to say that the day an agency gets an account they are a day closer to losing it.  A bit cynical, but very true.  As a recruiter, I have asked many advertising agency executives why they lost an account and many client executives why they pulled their business from their agencies.  Here are my observations from the many answers I have received.

1)    Change in client key personnel

No surprise here.  As they say, “The new broom sweeps clean”.  Many a CMO, CEO has fired their agency and hired a new one in order to work with someone they previously knew or a friend who they trust.  Many simply hire a new agency to insure loyalty to them.  It happens frequently and often without warning, but this happening should be at least anticipated by any ad agency if a new senior person joins their client.

2)    Clients who become tired of their advertising

Clients often become tired of their own advertising long before the consumer does; after all, how often can a company show the same commercial to their sales force? All agencies should anticipate this problem and should be constantly working on ways to refresh a current campaign in order to keep the client enthusiastic.

3)    Agencies do not listen to their clients

I have had dozens of client advertising and marketing executives tell me that their agencies just don’t listen.  Sometimes what the clients want is significant and, ironically, sometimes it is merely the feeling that the agency is not paying attention to their needs.  I had a client tell me that he had been asking his agency to prepare an FSI (Free Standing Insert) coupon ad for both print and digital and his agency simply ignored him.  He hired a new agency to do that and it opened the door for the existing agency to lose the account.

4)    Agencies become arrogant about their own work

Apropos of two and three above, sometimes the work does wear out.  Many agencies have insisted on not changing the campaign when a new solution is long overdue.  This is very common, especially with long-running campaigns.

5)    Agencies don’t insert themselves into their client organizations

A common complaint is that clients don’t see their agencies except for major presentations.  One client told me that he had actually not seen his agency management in two years (although he had seen his account team). Agency management needs to see its clients, no matter how small, on a frequent basis.  Another client told me that his account team never came to see him on a one-on-one basis.  They only came to see him en masse or for major presentations.  Many have told me that they do not hear from their account teams with regularity.  Account people need to talk to their client counterparts every day, even it is just to say hello and ask if there is anything they can or should be doing.

6)    Agencies that have not learned their client’s business

I have heard about agencies presenting work that is rejected because it is not consistent with the client’s objectives or which is inconsistent with the client’s business situation or issues.  In many cases, the client has not communicated its problems or objectives to the agency, but it is up to the agency as a service supplier to learn its clients’ business, even at the risk of being pushy.

Agencies need to have a constant presence at their clients in order to know and understand their account(s).  They must take the time to learn their clients’ business.  And agencies cannot use the excuse that the procurement people won’t allow frequent visits.

7)    Agency Merger and Acquisitions

Never been sure what actually happens, but from observation, accounts seem to leave agencies once they have been purchased or merged.  Change in management and procedures certainly has a lot to do with it.  All too often, senior account and creative people get moved, rotated or terminated which angers clients because it upsets the status quo.  I have never figured out why one agency buys or merges with another and then completely decimates the culture – causing the very clients they purchased to leave.

Guest Author Paul Gumbinner, President of The Gumbinner Company, executive recruiters for advertising.

Rebuilding Your Business Model

Written by ChuckMeyst2015 on . Posted in Blog Posts, Business Development, Marketing Consultancy

As the old axiom goes, all you need to start an agency is a desk and a phone. In the 21st century version, the desk might be replaced by a laptop computer, but the perceived simplicity of professional service firms is based on the fact that we are essentially knowledge businesses. We don’t have manufacturing facilities, product inventory, warehouses, or distribution centers. Just the same, professional firms are built on top of a set of capabilities and practices that constitute a business model.

The problem is that most leaders have never stopped to consciously identify, examine and modernize the interlocking pieces of their business model framework. In truth, precious few leaders of professional firms could even map the elements of their business model on a piece of paper. So when we see headlines about “The death of the agency business model,” the issue is more a matter of benign neglect than mismanagement.

A triangle of value

Even among business school types, “business model” is an amorphous term habitually referenced in books and articles, but scarcely defined in a way that allows for productive discussions about how to optimize the business strategy of the firm. Over the years, my colleagues and I have worked to develop a useful framework to describe the key elements of a professional firm’s business model, which has resulted in what is essentially a triangle of value. Each side of the triangle represents one of the three key reasons a professional firm exists:

  1. To create value
  2. To deliver value
  3. To capture value

Creating value is the foundation of your firm’s success, and it rests on a clear definition and understanding of the specific client challenges your firm is best prepared to address. Most firms approach this question precisely backwards, showcasing the obligatory bullet point list of services as the standard bearer of their business strategy. But the capabilities you offer must emanate from the types of business problems you solve for your clients. Clayton Christensen frames this in context of Jobs to Be Done Theory; the idea that clients hire a specific service to solve a specific problem.

The essence of this leg of the model is to clearly define and articulate “What are the problems we solve for our clients?” The most powerful way to do this is to state these problems from the client’s point of view, in first-person language.

Equally important is a clear articulation of the markets you serve. The answer can’t be “everyone with money,” as some firms regrettably define their target market. Peter Drucker famously observed that marketing starts with the question “Who is your customer?” and this question applies just as much to professional firms as to the clients they serve. Your target market doesn’t have to be a type of industry category; it can be a type of audience or even a type of brand.

Delivering value is the second piece of your business model. This means developing and supporting an effective engagement model, which is comprised of your operating model and your production system. Most agencies get high marks from client organizations when it comes to responsiveness; meeting deadlines, reply client requests, and fulfilling scopes of work. In other words, we’re seen as very responsive. (Unfortunately, client ratings for agencies being proactive are dismally low.)

When it comes to the operating model, the central issue agencies must address is differentiating between short-, mid-, and long-tail offerings. These solution sets vary widely in perceived value to clients, and must be delivered in very different ways by agencies. Short-tail offerings are the agency’s unique blockbuster competencies; uncommon services and programs that provide high-value solutions to client problems. Mid-tail offerings are capabilities that are routinely applied in most engagements. And long-tail offerings are the widely available executional services and activities that are seen as standardized (and therefore commoditized) by most clients. These three classes of offerings must be developed, delivered and priced in very divergent ways. The mistake most firms make is bundling all three service classes under the banner of the dreaded “blended rate,” the absolute worst way to address the continually-evolving disintermediation of agency services.

Capturing value is the part of the business model where professional firms struggle the most. The root of the problem is trying to package up the value of knowledge work in a unit of time; a hugely suboptimal way to get paid for the expertise and intellectual capital that resides in your firm.

Effectively capturing value is dependent on having an actual revenue model (billing for your costs is not a revenue model, it’s just a reflection of your cost structure). Professional firms with actual revenue models have replaced their rate card with a “pricing stack, a variety of ways to capture value in ways that align with the principles and practices of modern pricing. These include such approaches as dynamic pricing, two-part pricing, royalties, licensing IP and more. At the very least, it means pricing based on the perceived value of the outputs or outcomes, not the cost of the inputs.

To fully capture the value you create also requires commercial alignment; uniting the entire organization behind a shared vision of what you really sell and how you should get paid for it.

Not planning, but choosing

Especially if your firm has been in business a decade or more, it’s very likely that you’ve arrived at your current business model more by default than by design. You are living with an emergent strategy rather than a deliberate strategy. If this describes the current state of affairs at your firm, you have the opportunity (if not the obligation) to deliberately design your business model.

Your remix is not necessarily to make plans, but to make choices. Business planning is about taking steps and deciding what to include. Business strategy is about making choices and deciding what to leave out. As you examine each element of your business model, the job is to not to figure out how you can be better, but how you can be different. As design thinker John Koklo recently observed, “Leading companies say No much more than they say Yes. Rather than chase the market with follow-on features, they lead the market with constrained focus.

Propulsion is written by Tim Williams of Ignition Consulting Group, a global consultancy devoted to helping agencies and other professional firms create and capture more value. 

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