Harness the Power Of Teams

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Essential no 4. Consistent client acquisition

Clients for your agency is like petrol for your car. Without petrol your car won’t go ; without clients your business won’t grow. Just like your car, you need to be able to fill up whenever you need to. You would happily set off on a very long  trip in your car without a care for the simple reason that you know that whenever you need to, you can fill your tank and keep going.

Consistent and continual client acquisition is a hallmark of agency growth. It has to be. Agencies that want to grow understand this, accept this and take action. They invest in the capability they need to bring on clients at their discretion, as and when they need them. Once that point is reached, there is no stopping the growth.

Using the Reactive Media example again, this was a seminal point in the evolution of their business. They committed to and made an investment in client acquisition. We developed an approach that gave them entré to top opportunities. Most importantly, they did not wait until things were getting desperate before getting to work on building out their sales plan. This was a well planned and well executed strategy, that not only secured their revenue’s, but provided momentum for their rapid growth and gave the directors peace of mind.

The sales process that we developed was a tour de force, with conversion rates consistently over 65% and an ever rising average deal value. 

Many agencies in their early stages are primarily focused on producing quality work and this is understandable and not a bad thing. At this stage, almost all client acquisition work is the responsibility of the owner. If you think about it, that has severe limitations when it comes to growth.The owner has a lot more on his plate besides client acquisition and so as the agency grows, a smaller and smaller proportion of his/her time can be spent on client acquisition and the result is not pretty.

The most common remedy used to bring on more clients is the ‘get a sales guy’ strategy. If you’ve been down this road you probably know how this story goes, and it’s also usually not pretty.   Usually after a couple of underwhelming months, they are fired and a new sales guy is sought.

Nowadays, the individual salesperson role is quite challenging.It usually requires a lot of hard prospecting work, which is something that most sales people abhor so they do it badly and so simply never have enough value in their pipelines.

Even when a good salesperson is found, it’s not a robust, dependable component of the business and it is a point of weakness in the long term. A good client acquisition system deals with that. Instead of perhaps 3-5 appointments a week (and that’s pretty good), you should be thinking 3-5 appointments per day. This can only be achieved with a systems approach and a properly engineered sales system.

If you look around at the high growth agencies with say 60-80 staff, and only 2 or 3 sales execs, you know they’ve got this nailed. They will be unstoppable. They are not reliant on any individuals, cannot be held to ransom by greedy sales people and can scale their sales efforts with relative ease. Their growth will continue and the businesses will become prominent and the target of an acquisition. The owners will not only make a lot of money while they are working there, but will exit with tens if not hundreds of millions in their pockets.

Isn’t that’s exactly where you want to be? 

Essential no 5. Entrepreneurial spirit

The owners of agencies that are on a growth trajectory fall into one of two categories:

  1. Entrepreneurs that do not come from a creative marketing background, i.e. they are first and foremost business people who have chosen an agency model to build a business
  2. They have made a transition from being a marketing expert, designer, developer, copywriter, media buyer etc., etc. to being an entrepreneur.

What does the word ‘entrepreneur’ mean and what is the entrepreneurial spirit?

The traditional definition of the word entrepreneur is something like: “the capacity and willingness to develop, organise and manage a business venture along with any of its risks to make a profit.”

‘Entrepreneurial Spirit’ however refers to a mindset. A mindset that is change orientated and that seeks out change, innovation and opportunity. In fact today you might ad the word disruption to that list.

The entrepreneurial spirit implies an empowered, motivated approach, where there are no problems only solutions and opportunity and where the challenges of risk-taking are accepted as part of the game. Think “Shark Tank” and “Dragon’s Den”. 

In the context of an agency,  the entrepreneurial spirit manifests itself in a keenness to getting deals done for the purposes of growth rather than for the purposes of portfolio development or technical accomplishment.

What attributes does an entrepreneur need to be successful?
  • Always looking for opportunity
  • Well developed commercial acumen
  • Able to analyse risk
  • Able to think laterally
  • Able to communicate and sell 
  • Always able to find a way

The entrepreneurial spirit is a leadership position. If you want your agency to reap the benefits of the concept, then it needs to be baked into the culture.

You may not feel that you quite have the entrepreneurial spirit yet. It’s a big part of what I teach my clients and how I help them develop the mindset and the commercial acumen that makes this possible.

Essential no 6. Close client relationships

It’s generally well accepted that it costs anywhere between 4 to 8 times as much to get a new client than to keep an old one. 

There are a few variations of business model in agencies. Some are one-off deals, others are ongoing contracts with regular payments i.e. subscriptions, and a few are hybrids. It is always preferable to have as much of your revenue coming in on a regular predictable basis as in a subscription, and many agencies are able to do this.

If you study the financial model of a subscription based business versus a one-off deal model, you will quickly see just how powerfully revenues build up and how much lower the overall cost of selling is. Agencies owners that are pushing forward on their growth trajectory leverage this. So client retention is a big focus and as a result, so is staying close to their clients.

That said, there is the real potential for business relationships of an ongoing nature to decay over time for a variety of reasons, some insidious. It could be because of some delivery shortcomings on the agency’s side, and that would obviously require a management response. But equally possible is because the clients perceptions of your business, and the value you deliver changes.

So how do you deal with that? Stay close to your clients.

Now, you might think “well we have account managers handling things, so were ok”. Not true. It’s a good start and a necessary element, but it’s highly unlikely that the account manager will be able to do the fix if it gets to that stage, unless the account manager is the owner. 

There can be many reasons you can lose a client, and there can be many circumstances where there is not much you can do to avoid it. But there is one cause for losing a client that is entirely avoidable. Perceived indifference. And that needs to be dealt with proactively.

You see everyone likes to feel like they are being given special treatment; business class seats; a special welcome and attention by the maitre d’ and so on. That’s why owners/directors are pulled into sales meetings – to give that extra bit of attention and make the customer feel they are important and that you really care.

But it needs to continue on after the sale. 

What do you need to to

You need to pay special attention to the ‘emotional’ needs of clients.That means that you need to take care of how they feel about your organisation and show that you care about them and their business.

This should be factored and costed into the way you do business. By attending two or three meetings a year with your clients and inviting them to one or two functions, you will have this in the bag and extend the length of the client relationship considerably. The extra revenue that the continued commercial relationship generates, takes pressure off the new business sales components of your business and stabilises revenue.

If one day you come to sell your business, two of the key metrics that drive profit multiples in agencies are ‘client lifetime value’ and ‘average client lifetime’. If you have not been doing what is recommended here, it will be far too late to start and you will have lost an important value booster.

Essential no 7. Multiple sites

One of the big breakthroughs in terms of Reactive Media’s evolution was to open a second office in Sydney.This happened when there were between 20 and thirty employees in the company, so quite early on.

Why?

Why open a second office when things were going well in Melbourne; the product was digital so it could be delivered anywhere, there were plenty of client opportunities in Melbourne etc., etc. Indeed there are generally many strong arguments for avoiding the expense and hassle of multiple sites. So why opt for such a risky, costly initiative?

Here’s why:

  • Clients generally feel happier dealing with suppliers that are in close proximity if they have the option
  • Marketing initiatives invariably emanate and are driven from head offices
  • It’s easier to be more sales effective in multiple small locations than it is in one big location (think how the real estate business works)
  • Having multiple locations creates a perception of success, size and capability and so makes a great impression

We put a lot of thought and planning into Reactive’s Sydney office and it was a big success. They learned how to operate a satellite business; how to make it self sufficient and profitable. After that they went on to open in London, New York and Auckland with equal success. So when Accenture started looking around to make an acquisition, guess who was one of the most prominent and visible agencies in Australia? So they got the call. It was not a fluke. It was the result of some strategy work we did several years earlier.

If you look at agencies who don’t open in multiple locations, its generally because they don’t feel like they have their businesses sufficiently under control. And mostly that comes down to a lack of confidence in relation to client acquisition. They don’t have the cast iron confidence borne out of solid systems that make their businesses easy to run.

If you look at agencies that do, generally it’s not only a great commercial success, but potentially a huge valuation multiplier in the long run as well.

Essential no 8. External Accountability

Public Companies represent the highest form of commercial enterprise yet devised. A public company in good shape, from the founders point of view, is an unequalled opportunity for multiplying your investment capital or in other words, make a sh1tload of money. 

But, unlike a private company, a public company comes with a whole lot of regulations aimed at ensuring the interests of the shareholders. Without the safeguards that these regulations guarantee, there would be no public confidence in the system and it would not work. Simple.

Possibly the most important element of a public company is that there is a board of directors. Their role is to ‘govern a company on behalf of the shareholders or members of that company’. If you look up the definition of the word govern: ‘conduct the policy, actions, and affairs of (a state, organisation, or people) with authority’. Notice that they do not run the business, their job is above that.

In the case of companies, the company’s management reports to, and is accountable to the board. The board uses the combination of big bonuses and lucrative share option schemes combined with unequivocal accountability to ensure good results. This is what external accountability is all about. This system works really well. There is none better.  I personally spent 14 years at the highest levels of public company management and as the CEO of such a company for a period. 

The constructive tension between the board and the CEO and his team really works. The rigours of good management are inescapable and there is simply no room for excuses or sub-par performance. The CEO is there at the behest of the board. They can fire him. Even if he was the founder or is a major shareholder.

High achieving private companies understand the virtues of such a structure. Some make use of Advisory Boards to try and achieve a similar effect, with varying levels of success. (There are no regulations that govern advisory boards)

Coaches like myself are another way of achieving a similar effect. Coaches bring the added benefit of in-depth business knowledge and experience which are not a prerequisite for directors or advisers, although many do come with this.

Conclusion

Creative, marketing, design, development, branding, digital and all the other types of agencies can be fabulous, fabulous businesses. There are excellent opportunities for providing great value and scope for structuring them to make a lot of money over a long period. 

Like any business they don’t achieve this on their own. 

Fancy a business and an outcome like Tim Fouhy and Tim O’Neill pulled off? 

We should talk.