How expensive is lead generation? Stop beavering around.


I recently met up with an ex agency head.  We’d met before when he was looking for help with lead generation. Alas we didn’t win his business then.  All water under the bridge.

However, he did tell me what had happened with his lead generating over 3 years. And I doubt his story is that unusual.

He’d met a new business agency full of promises and they worked together for a year.  He got on well with them and they worked hard, they generated over 24 meetings and two pitches but no business wins – total cost in excess of £30k

They got tempted by another lead generating agency similar to the one before, making cold calls and doing e-mail marketing etc.  Same thing give or take – £30k cost.

One more try for another year with a lead generation agency that would also help with the agency’s positioning first then do the lead generating –  and the cost would be higher.  In fact they got less meetings and the cost was £36K p/a.

That’s over £96k in just fees not to mention the true cost of going on all the meetings and dealing with the pitches and the briefs that came their way too. Add that on and we’d be embarrassed. wouldn’t we?

Say 70 or so meetings that cost 500 pounds each, say 3 pitches that cost – I don’t know – say £20k in time each.  What’s that another £35k + £60K  = £95K and that is being kind no second meetings even added in – That’s a combined cost of £191k – how much revenues does an agency need to make that profit – 3 times i.e. £570K at 33% gp?

The truth was that most of their work about 80% came from referrals because they did great work and yet they had no practical system in place to get more referrals. And clients buy form a referred supplier more often than form any other source.  It is the most commonly used heuristic to judge an agency buy a buyer – ‘do I know someone who already trust them.’

A referral is the Money Ball stat of new business.  We all sort of know of it but rarely qualify lead by it.  If you are referred your chance of winning the business sky rocket. You can even be a lousy salesman and still win referrals.

Let that story be a lesson to all of us.  Lead generating is a very risky business and often, in fact more often that not, leads to an increase in the agency’s cost of sale rather than revenues. And can be de-stabalising across all departments too as planners and creatives get sucked into the processes generated by the cold leads.

Agencies need to sell the way buyers buy and in the majority of cases that is from a strong referrals. Most leads generating from cold introductions just lead you up the garden path.  It is so tempting to put the rose tinted glasses on – but before you know it you are on a wild goose chase. Go on enough and you’re down over £190K.  Agencies spend too much time as free consultants working in columns C and D – otherwise known as cannon folder.

Be careful being a busy beaver and throwing good money after bad.  It’s not the sales method it’s the buyer’s system – but you may have already guessed that by now.

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Clients need agencies with happy ears.

Somewhere there is a meeting going on. Shut the front door, no way!  In a boardroom. Wow you’re so on it today Jim.

What I am trying to say is that there is a meeting going on for sure,  but not this one I am  about to make up.  Or maybe it is – who knows – I am beginning to wonder why I even started this.

Let’s move on shall we? I am about to paint a picture of  a pretend meeting that will show you how many decisions are made when it come to hiring agencies.  Have I exaggerated? Of course , why bother otherwise?

Although it is made up to prove my point I’d like to know if you think it hold some water so to speak.

Let’s begin – Six people are sat around a board room table – it could be 4 it could be more, they are talking about one of the current suppliers, I mean partners.

It could be any of them really but let’s pick on advertising, they’re a soft target and if they’re good enough for stand up comedians to pick on they’re good enough for us.

Someone in the meeting, most likely the marketing person says something along the lines of – “Enough is enough, we need another one.” – don’t quote me on that btw – make up your own pretend meeting, if you’re going to be fussy..

Perhaps they say “I think it’s time to think about getting a new agency.”

The others continue in the conversation saying they agree for various reasons – lateness, changing account teams, no sales, blah, blah, blah. Don’t like this, don’t like that… Then the CEO, who is chairing the meeting,  says something like “Okay we are all agreed let’s find a new one.”

(That’s the important bit you see. Until they all agree they need to change for reasons they discussed in that meeting they’ll be no change.)

So what do they do next?

Well they could go to an intermediary – not un-common is it?  The Mkt Dir or CEO says I’ll get on the phone to the intermediary and book us in.

Or the discussion could continue a bit like this. Marketing Directors says –  “I’ll get my marketing manager to go meet some potential suitors?”

The attendees nod.  Then one of the c-suitors says have you got any agencies in mind already? “Yes I think so?”

“Who?” the CEO asks.

“Well I was out with another Marketing Director last week who I have known for ages in fact we used to work together and the work he is getting from his agency sounds perfect for us, so I have booked to go out for lunch with them both next week.”

Lots of nodding and smiles “Great, good luck” says the Opps guy and then the Procurement guy quickly pipes up remember protocol – must have at least 5 agencies involved. The marketer nods respectfully and the meeting ends with a chat about AOB and they leave.

The Marketing Director calls in his marketing manager and says “You’ll be glad to know that we are going to look for a new agency at last, I’ll put Mint Jelly on notice. I need you to meet some potential new agencies, cool?”

“Brilliant I have some great ideas already.”

“Really – who were you thinking?”

“We’ll I’ve been in contact with an integrated agency for over a year now they have some great work and we always get on really well he’s sent me creds, case studies, he’s called me  every other month for  year so he’s nothing if not persistent. I am sure they’d work well with us too.”

“Perfect – do you want to go meet them at their office and check them out?”

“Can I? That would be great – I’ll book them in for next week?”

“We need some more too?’

“Well I like the people who did that TV ad with the monkey and the motorbike?”

“Find ‘em and book ‘em perfect.”

“Err, I could google top ad agencies to fill the gaps?

“Nice one good old google, do them first will you?”

“I’m on it”

The marketing manager returns to their desk.

Types in integrated agency in London look at a few websites – finds one that has some experience in their sector. Eventually finds the telephone number hidden in FAQ’s and surrounded by wacky pictures of  ‘The A-Team ‘talking about their favourite fruit and their most embarrassing antics.  Apparently one of the account directors once got some toilet roll caught on her shoe. Mad.

Picks up the phone, dials and gets to reception  “Hi can I speak with Top Tim please?”

“I’m afraid he’s busy today can I help you?”

“Err not really it’s Tim I need to speak with.”

“He doesn’t take cold calls I am afraid – you can send an e-mail to info@wejustlosttheplot.com”

“Thanks but no thanks.” And hangs up.

Returns to google finds another suitor – same agency give or take just a different name and their Team had to make funny faces on their profiles – whatever. Their work looks so-so and they have some experience in the required sector too

He makes the call “Can I talk with Mister Big please?”

“Can I ask who is calling?”

“I’m the marketing manager at All Kinds of Stuff.”

“Just putting you through.”

“Hi Mister Big I am from AKOS and I have looked at your agency and I really like your take on advertising and especially keen on your work in our sector.”

“Thanks very kind of you to say so.”

“I’d like to send you an RFP – I think you’d be a good match for what we need, would you be okay to pitch?”

Mister Big punches the air and try to keep cool –  “Of course but we’d be keen to see the RFP and the brief etc before we commit?”

“Of course, no worries, will be with you next week, all the best – bye now.”

“Quickly before you go – how many pitching?

“Just 5.”

“Thanks for that have a nice day – bye now”

Mister Bigg calls an emergency meeting – “I’ve just a call from a defining piece of business – all hands on deck – let’s smash it.” Excitement ensues.  “This is right up our alley and the marketing director has already told me how much they love our website – great work Jon and Fanny on that site – and they really love the work we did for Most Stuff People Use.”

Err RFP and brief thinks the marketing manager.  I’ll just use the last one it’s only two years old add after all what has changed – we still make stuff,  we are still looking to sell stuff – job’s a good ‘en.

He moves on to his fav agency that has been romancing him for a year or so. He starts to dial reception and quickly remembers he has his direct dial on an e-mail.

“Is that you Lovely Larry?”

“It is – who is this mystery caller – you’re not showing on my caller ID?”

“Well….today could be your lucky day?’

“Are you from the Lottery?’ And snorts.

“Nope – better than that, it’s me from AKOS we’d like you to pitch for our business next month.”

“Thats amazing news! – Thanks so much!”

“I knew you’d be pleased, all your hard work has a paid off – and I look forward to meeting you, I’ll send you a brief etcetera is there anything else you need to know?”

“How many are pitching?”

“Just 5”

“Cool – can I just say thanks so much for including us we here at Relationships Inc are very grateful and we can’t wait to meet you all at a tissue meeting. bye now?’

“Bye now.”

Bloody hell he thinks – I forgot about those tissue meetings – well that’s easy enough 2 hours slots provide sushi and sit it out.

Larry goes to see his boss with they good news.

“You know that company I’ve been prospecting for a year?”

“Which one?’

“AKOS – well we’re in – we’re pitching next month – brief etc about to hit my inbox – I knew they’d come good.”

“Good work fella, fill me in over lunch.  That’s your target hit for the quarter hit isn’t it. Reckon your hit target again next month?”

“Hopefully.”

“Good job – well done – onwards and upwards.”

The day at AKOS progresses pretty much but not exactly as above as I said I am making it up.

But does any of it ring any bells so far? Taken any of those calls before? Sure you have – but does it look different now you can see behind the scenes potentially? Let’s continue –

The Marketing Director calls the Marketing Manager up and say “The incumbent (Mint Jelly) was distraught and wants to pitch too. How many agencies have you booked in so far? “

“Err – We have Monkey on a bike agency that I did by e-mail,
Relationship Inc and Mister Bigg’s ”

“Well done – so 3 and with the incumbent that’s 4  and I have one in mind so that’s 5. But can  you just get us 1 more please, just in case someone drops out, you know how procurement are these days?”

“Don’t I just! Sure easy? I’m on it, in fact I have a great one for us.”

Feeling lazy and slightly revengeful and wanted to give his favourite agency a lead he phones back that agency with the receptionist who fobbed him off earlier at Top Tim’s place..

The receptionist answers “Top Tim’s place, good morning.”

“Can I speak with Top Tim please I’d like your agency to pitch for our account I am not a cold caller.”

Cringe – “Yes certainly just putting you through.”

“Hi Top Tim here.”

“Hi Top Tim, we’d like you pitch for our account. I am calling from AKOS and me and my boss think the work on your website is simply outstanding and I’d like to  send you a RPF and a brief to pitch for our account.”

“Great news – I’ll get the creatives straight on it I know exactly what you guys need.”

“Perfect – look forward to meeting you all bye now, bye.”

“Ciao.”

Top Tim high fives himself, pick up the phone and books his fav restaurant with his lead creatives to celebrate the win. Job’s a good ‘en.

Meanwhile – the Marketing Director from AKOS arrives at the latest Tapas bar to meet his old pal another Marketing Director and his current agency’s new business director Steve from Rain-dancer’s.  After small talks – the AKOS Marketer Director asks “So my pal here says you do good work for him?”

“I like to think so.  And he told me you maybe thinking of moving away from Mint Jelly.”

“Pretty much.”

“Pretty Much? You’re not sure?

“No we are – I put them on notice already?”

“So do you think you could handle an account like ours?”

“Well you are probably the same size account as his – why don’t you ask him?” Does that laugh thing.

He turns and looks at his pal and smirks knowingly.

“I have already told him you’d be perfect for him but maybe he’d like to know more?”

“Sure – what would you like to know that Tim hasn’t told you already?”

“I guess not a lot really.”

“Can I ask you some questions?”

“What did Mint Jelly do that is making you leave them?”

“In short they are not up to speed?”

“Which means?  Delivering late?Bad account management?”

“All of the above,” And laughs

“How has this impacted the business?”

“We’ll at our last board meeting everyone was pretty annoyed with them for various reasons and KPI’s have not been hit.”

“Which KPIs in particular?’

“Sales mainly?”

“And you’re out by how much?”

“5%”

“And in money terms that is how much?

“8 million pounds”

“So there is plenty of work to do then?’

“You could say that.”

“Do you see that as a big number to turn around or a small one, ever turned that corner before?’

“It isn’t a particularly big number and yes it is doable ,if that is your question – we have had fluctuation like this before”

The meeting ambles on with business conversation…where Steve gets a low down on the business issue and the hurt it is causing our Marketing Director at AKOS (consultative selling)

So who is going to win this pitch, readers?  And why?

Have you ever been the receiver of one of the phone calls earlier in the story and had happy ears?

The marketing team are putting together a list with clear columns A – B – C – D & E right?

So who is in A column, that will share the spoils with column B about 85% of the time? You know who is in B – don’t you? Column B has got some work to do though mind – don’t you reckon?

And who is in C , D And E?  Would you know when your agency is in columns C,D or  E – would you be able to fold? What if you were chasing a KPI and that pitch helped you hit a target or earned commission even, could you turn it down then?

Do you know those three agencies (C,D and E) share about 15% between them?  We know who is the rank outsider right? No chance at all – pure column fodder.  Would he know that though?

Clients are more likely to buy from a referred supplier than any other source by miles. Mind your happy ears when a buyers calls you out of the blue saying nice things, especially marketing managers.  You maybe column fodder just to keep procurement happy.

 

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Why we should still diagnose before we prescribe.

 (Clip features – Mahan Khalsa – Let’s Get Real or Let’s Not Play: Transforming the Buyer/Seller Relationship)

How do people make decisions?

Okay, how do we make business decisions ?

Okay, how do you get a marketer to choose your agency?

It’s not a one sentence answer is it?

I have noticed that more and more agencies are spending time implementing or talking about psychology. Fair enough you might think.

They seem to think that decisions can be influenced in a substantial way by mirroring body language, breathing rates, never using negative language, sitting in certain positions,  and in essence creating bonding sessions.  You’ll often hear in new business circle “it’s all about the relationship and chemistry” and yet the evidence is scant – see here. Blair Enns has them down as myths #4 and #6 in his top 10 of new business myths.

You’ll see it in new business job ads all the time – ‘we want some who can build relationships‘.

Do you know why they are looking for a person like that, when they employed someone good  at that about 18 months ago? Guess what happened? They fired them?  And they cited the reason as ‘the relationship didn’t work out”. Irony.  What they really mean is they didn’t bring in any business. I often hear MDs say ‘lovely person but…” And they go off and do the same thing again and again.

So what happened to making a business case?  What happened to the corner-stone of consultative selling.  The idea that your goal is make a good economic business case for them to give you their hard-earned cash? Is that old hat now?  Or is it just superfluous now?  Have we given up any hope that people can act rationally.

Has the business world decided that people make all decisions emotionally and so why even bother with a business case? Trying run that by your FD.

What happened to understanding a prospect by asking a series of questions that show you have encountered and understand the pain that the prospect was enduring be it in time or money? Diagnose then prescribe.

I sometimes ask agencies once they’ve won a piece of business be it for a new web site design, a DM campaign, and ad campaign or a PR account.  How much was it costing the prospect  in time or money with the ways things were?  Where do they hope to get to and over what period of time working with you? SILENCE.  Well I’m not filling the empty air time I’m not a DJ.

If both parties are unaware of the business case then what happens when it comes to fees?

So I ask them – did you get full fees? Again SILENCE.

Eventually they talk – “You just don’t get it do you Jim, we got on really well they had already decided they needed our services they loved our case study but they didn’t have much cash so we did a deal? FISH !

Is it profitable? I ask.

It’s okay? They say.

And you set out to run an okay agency? I say.

The problem is they failed to diagnose so ended up being commoditised.

Relationship selling is not just bad for an agency’s coffers it is also a down graded view of humanity.  It is supposed that people get upset very easily. They are victims who will get easily put off by the slightest comment or facial gesture that disagree with the chemistry gurus and soft skill teachers.

They can’t handle you doing your job and attempting to build an economic case and help the prospect see if they do or don’t need your services.  The assumption is that prospects are weak and easily disturbed so we best just get on with them instead, creep, creep, creep. That says more about the seller than the prospect – how’s that for folk psychology 101 ?

Consultative selling is great at helping you make a business case for creative services but there is no reason why it can’t allow you to get on well too.  By understanding the business case you should notice that as you start to walk in their shoes you stay in rapport.

Rapport often related to bonding is actually different.  Rapport is a state where both parties are comfortable talking about tricky subjects – like money and awkward business concerns.  Prospects rarely come to agencies when things are looking dandy.  How many times has a prospect come to you and said our agency is 9 out of 10 we just wanted to find Mister 10/10? Never I’d wager.

Relying on relationship building skills is a sure way to end up being a free consultancy or at the best a poorly paid one.

Behind consultative selling techniques is in essence a search for the truth. And although the truth can hurt it’s valuable.  And telling it sometime is not easy but that is a more valuable part of a new business person role that relationship building IMO –  Honesty is a very expensive gift. Do not expect it from cheap people.” William Buffett.

Do prospects make decisions solely on the economic case – No – but it has to be there.  If it isn’t you have no leverage to negotiate with – you have no understanding of their business and you have no way to write a ‘decent’ proposal either. You’ll just end up selling a solution where there is no problem.  You’ll be pricing as a commodity.

In general I believe that people make decisions in a rather idiosyncratic way – they decide based on loads of factors and there will be some things that you will never uncover even with the best consultative selling questions skills.  There are things that the prospect experiences in their particular workplace and home life that are specific to their experience that only relate to them. You won’t find it.  And they will unlikely tell it to you anyway.

People live their life surrounded by un-written rules and beliefs that affect the way they make decisions.  That is why agencies I bet employ so many extroverts – they look and behave like they are full of passion and energy – isn’t  that what clients want to see after all? Isn’t that the unwritten rule – be full of energy, smiley and full of passion at all times?

However today agencies are fired faster and faster than ever before.  The IPA reckons 2 years and 7 month is average tenure.  So much for employing people who are good at bonding and forming a relationships then?

Don’t throw the baby out with the bath water here folks.  There is no reason not to have manners and be able to ask a tricky or awkward questions in an understanding way.  My case is not that you need to become a robot, far from it.

In fact my case is that we need to become more human.  And within that finding out the truth about a prospect’s business situation and being brave enough to tell the truth over faux relationship building  and chemistry skills. Do it well and you stand out as someone to do business with, especially as nobody else will be doing it well.

Even as people’s decisions making abilities are so idiosyncratic even in business making a well thought out business case is still a key skill a new business person can have.  Yes the prospect will make their decision their way based on some factors we hardly ever thought about asking.  But as we are doing business, on average a very good place to start is to make the business case.

Or is it?

Today prospects seem to come to agencies so late in their decision-making process.  Often a team of people have sat down and said enough is enough we are getting a new agency.  Perhaps they have already made their own economic case?  They have probably even looked over competing websites and case studies.  So by the time they come to meet you what is the point of making the economic case.  They’ve already done that right?

Well consultative selling skills is like a test drive.  It is a free example of how you do business.  It shows you understand their situation.  You may even spot things that change the business case based on your expertise? The reason for being good at consultative selling – asking questions to fully understand the business requirements shows that you can be trusted and that is the key ingredient in my opinion the prospect is looking for, They have a selection of creative agencies but which one to trust?

Well the easiest way to trust someone is to get a referral because when  you are refered you are piggy backing on the trust that already exists between two people.  If your best client introduces you to another marketer who they know very well (4 years plus) – when you arrive you are carrying the referrers level of trust in your pocket – so don’t mess it up.  Don’t ruin it by not carrying out consultative selling that elevates you further as be trustworthy and also make the prospect understand your fees.

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Can’t you see we are busy!

squarewheelsIn my piece about new business programmes being largely dysfunctional I mention that the problem is the unwritten rule that an agency must be proactive.  Which is Steven Covey’s Rule #1.

I wasn’t saying don’t be proactive but think about your proactive activities.

Agencies in my experience tend to choose the easiest proactive activities imaginable for their new business programme i.e. e-mailing, DM or cold calling a wish list.

Easiest in terms of setup time,  from zero to prospecting in no time. And easiest in terms of skills and bravery. Not hard to e-mail a few people a case study, is it now.

When in actual fact most (usually around 85%) of an agency’s new business come from referrals and yet they rarely have a  organised method in place to capitalise on this.

Agencies rarely have a systematic way to integrate client serving methods with requesting referrals. Despite that making sense If most of an agency’s work comes from referrals we need to get more referrals then don’t we? Because great referrals come from our best clients don’t they?

Without referral there would probably be no agency. And if you continue to neglect requesting them…I’m just saying.

Just compare the cost of referrals to your largest cost of sale which is meeting tyre kickers and pitching for new business when we have squeezed onto a pitch list and then lose.

Not to mention the cost of the hiring and firing of new business people over and over.  Hire them, be proactive in the usual ways, fire them because it failed. Get a new shiny one, polish the wish list, hit them again with DM, watch it fail, fire them…That’s dysfunctional you’re just chasing some KPI that has been set arbitrarily – we must get 3 meeting per month etc and chasing your tail before long.

New business people are good people – very good people –  smart – intelligent – they are just too frequently put to task on the wrong activities. They are hoping to get lucky, the MD is hoping they’ll get lucky too. When they don’t they fire them or they quit and then the agency does the same thing again. And the new business manager goes onto their next new business role clutching their four-leaf clove.

Of course we can add to this proactive list lots of other things today (there’s me being old-fashioned) be it social media marketing activities that take time and resource but generate very few ‘winning’ leads. Maybe a few leads but do they close?  Are they worth it? Time will tell I am sure.

The issue is not the new business person it’s the marketing system.

So Coveys rule #4 is worth mentioning he calls it –  ‘sharpen the saw’. He tells a story of a man in a forest cutting down a massive tree.  A passer-by interrupts the lumberjack – “Wow that looks hard work how long you been doing that?”
The lumber jack replies “5 hours and I am beat.”
“Wow, you must be ,why don’t you stop for a minute or so, catch your breath and sharpen the saw. When you start again I am sure it will be easier to saw that tree.”
The lumberjack impatiently replies “Can’t you see I am busy using the saw, I haven’t the time to stop at the moment.” and then he carries on.

Here is Steven Covey telling the story.

This is what agency new business programmes sometime suffer from.  Agencies get run ragged by their new business programmes.  The cost of which get completely out of control – what is your agency’s cost of sale, dare you look?

Yes, you need to be proactive, it is rule #1 after all but choose wisely how you spend you time and it won’t be the easiest or most trodden path that works best.

Let’s face it thousands of agencies are banging out DM pieces right now to the same wish list as you are. Then you are all following up with a cold call. You need to be braver and more thoughtful and add to your skills the ability able to ask for referrals comfortably within a client servicing programme as a priority then add selectively other proactive activities.

Abraham Lincoln – “If I had 9 hours to chop down a tree I’d spend the first 6 sharpening my ax?”

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Try to see it my way. We can work it out.

The art of conversation is becoming underrated in new business today – which is great news for some of you who still value it.

I often sing this song in my head before a sales meeting.  It reminds me I need to see it their way first.  Then and only then perhaps we can work it out.

You should find yourself saying ‘we can work it out, can’t we?” a lot in new business.  They have a problem after all, right?  If it was easy to solve they’d have solved it already with their current agency maybe or internally.

So to see the problem their way – you need to ask questions. I think must people in new business get that. Problem is you all sound the same asking the same old questions.  Good questions get to the heart of the problem not skirt around it.

Let’s deal with it head on – they are trying to find an agency that wasn’t like the last one. Agreed? Isn’t that what they are trying to do?  Bring it up I say. Bring it up early.  You’ve just bought some credibility I think.  You just said I now what you have to do. I understand your role.

And how are they going to do this search?

Well, chances are they will do some combination of RFI, RFP, chemistry / tissue meetings, creds meetings and pitches?   Agreed? That’s what it looks like to me anyway.  But isn’t this how they choose their last agency, give or take? The one that’s now defunct. The one that they are giving the old heave ho to. The elbowed one?  The one they sent the Dear John letter to citing a break down in the relationship? Not that one surely? I’d bring that up if I was in your shoes Mister New Business person.

Isn’t it a part of your role to stop marketers making mistakes that are career limiting?  Do it sincerely and not like you are trying to get your rocks off by showing them up. But by asking if it makes sense to them? Or why wouldn’t the same mistakes happen again?

“Considering you most likely used these methods to pick an agency last time what makes you think it we will work out better this time?”

Isn’t that better than asking – how many people are you giving the RFI to or how many are pitching?  Suppose the answer you get are too high you know 6 or 7 etc – then you’re out right?  How about staying in the game and saying the whole process is questionable?

Let’s go further – How about asking “When I find myself in this situation where I am considering pitching I always remind myself of that last time I did and remember that the marketer I am talking to usually has a favourite agency he’d like to appoint but is forced to pitch by procurement to gauge market prices – is that what is happening here?”…”What stops you just appointing your favourite agency based on their previous work, how they understand you and of course chemistry?”

At some stage they’ll tell you it is process that makes them behave this way.  But if we have already shown the process is at best fallible and at its worse the road to insanity.  “And what happens if you end up here again in less than two years or will you be gone by then?”

However, maybe, just maybe, we can work it out? Life is very short for fussing and fighting my friends.  No need to fight but lets at least be straight with each other.

 

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Is this what your new business programme looks like?

 

New Business Programme-1(Click the pic to enlarge in)

Is this what your new business programme looks like, give or take?

Quite crammed isn’t it, wouldn’t you say like, quite crammed isn’t it? Quite crammed I say, what do you reckon now? Crammed? I’d say it was.

So where should you spending you new business budget?

Maybe you should look at where most of your new business comes from instead of guessing.

Or doing activities because other agencies are.

Approx –  85%% of agency business comes from referrals, that’s the green stuff in the mind-map.

Yet agencies spend most their time and resources on the other colours. They still have value by the way but evidence show that they are less successful than getting referrals.

Anyway at least you’re busy, right. Nothing like being busy is there. We call than being dysfunctional where I come from see here.

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The Homer Simpson loop for (agency) new business people

I heard it said on linked-in last week that the demand for new business people is about to rocket, it was on linked-in so it must be true right?  Oh and a recruiter said it too, let that be proof if proof be need be.

What I wonder is will the agencies looking for yet another new business person make the same mistakes as last time?  Of course some will say “what mistake?” We don’t make mistakes here, how very dare you Jim.

Well, did you or did you not employ a new business person in the past for about 9 to 12 months then have to ‘let them go” because results were not forthcoming?  Yes, yes you did.

And nothing unusual in that at all is there? It’s the norm in fact. But could it be avoided?

For the record I have been let go in the past too, in fact way more than once.  But I think I can now see why. Maybe you’ll agree, maybe you won’t, let see if this rings any bells.

The reasons you gave last time for that new business person (who you loved when you hired) not working out was something vague like “not quite working out, or tried hard but, but,but or didn’t quite understand our offering” or something that pretty much lets everyone (including you) off the hook for hiring them. Because all of these things could have been picked up at interview stage, no?  Why else interview? So how were they missed?

However, the biggest mistake you are most likely to commit – just like last time – is to employ someone just like the last person (give or take) and set them the very same task using the pretty much same methods and wonder why they pretty much failed too?  You can play the ‘this time is different’ card but in all likelihood it isn’t. What’s changed? In reality nothing.

You will give the same resource and empowerment (yeah right) as last time.  It will go something like this.  Put together a wish list of brands we’d love to work for, you can make it as simple or s complex as you like, however that it was it is – a wish list. Gold, silver and bronze prospects, ring any bells?

Then you’ll send them stuff in one form or another, right? A DM piece or an e-mail with a link to join your agency mailing list.  Just like the last person did.  You may even chase up with a few cold calls.  You may even have a new proposition who knows.  But will results change? Granted you’ll get a bit more SEO savvy and blog heavy too.

The way agencies tend to grow historically is a  mixture of incoming referrals and incoming cold opportunities.  But we know empirically referrals close circa 85% of the time and colds close 6% of the time and some never close at all – no decisions etc.

So a new business person looks great when referral opps come in compared to cold opps but this is just luck, right? If you are the new business person when the referrals come in you’re made and if you are unlucky enough to just pick up the cold ones then the likelihood is you will fail. Because you spend you time chasing those prospects like a headless chicken wearing rose tinted spectacles on a wild goose chase. Admit it, we’ve all done it.

Problem is that the opportunities come in  higeldy piggeldey not normally distributed and agencies don’t qualify by how the leads come in – and they should.

Typically they still qualify the old way e.g. by spend or if the decision makers is involved or if they have a brief or if your agency has relevant sector experience, if the prospect said nice things about their work / website etc..

In all likelihood all those boxes get ticked because why else would they have sent you the RFI / brief?

And they need you on the list to keep procurement happy – them’s the rules today, they must have 4-5 agencies per project even if they know who they are going to use and you maybe just cannon fodder. Vendor beware!

And of course you as a new business person is delighted because you hit a KPI and that keeps your boss off your back at the next pipeline status meeting and the new business functions now looks functional. Phew!

Agencies love proxy KPI’s – quantity of e-mails/ DMs – qty e-mails opened, qty or RFIs or RFPs, qty of briefs, qty of meetings, qty of pitches. So you cant blame new business people for hitting them by hook or by crook.

So if referrals and cold leads come in and are not identified as different qualitatively because of their statistical close possibilities and they don’t come in equal measure what happens is this –  depending which leads the new business person picks up randomly, referred versus cold, will determine their success rate way over and above what you asked for in you job spec. Typically being passionate, determined, GSOH, team player, experienced at working in agencies, good at building rapport and relationships and so on will have less impact then the qualifying criteria.

So the mistake that looms for agencies now is whether they can move towards qualify leads by strength of referral over the typical metrics and put in place methods of marketing that are supported and guided by referral qualifiers. Or they will fire and hire again and again till one gets lucky i.e. hits a run of referrals.

For example as we have spoken about many time on the blog is your current new business person given access to all your clients to ask for referrals or do they monitor all the client facing teams progress on asking clients for internal and external referrals?  Most new business comes in via referrals and yet having no method in place to capitalise on this is bonkers / dysfunctional and it’s so easy if you dovetail it will client servicing protocols like NPS.

Direct marketing is the same – instead of looking at wish list brands to DM instead looking at who your current client knows on linked-in for example.  Then send an e-mail to the new contact quoting a reference from your current client.  Doesn’t that make more sense?

Because if that much needed prospect calls in as a referral you are more likely (85% ish)to close that business than the cold one 6% ish) and yet agencies spend the exact same time, money and heart ache with each.  But you need to repeat the same process with the cold one up to 16 times.  And in my experience the cold one gives you the run around far more because there is no trust there like there is with the referral.  A referral transfers trust and that is what business relationships are built on.

So do you think agencies will make the same mistake when hiring new business people? Will you?  Time to be smart this time? Of course it is.

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New Business / Splitting the Atom

atomDo you know how physicists split an atom?

No, me neither,  That is why I have wisely used that analogy to talk about how agencies can find more clients.

Of all the hundreds of agencies that I have worked with over the last 12 or so years one thing stands out. And that is they all told me that the majority of their work comes from referrals, often 70-90% of it.  It is often the way the owners set the business up in the first place.

Many agencies are set up the good old fashion way, where two or three people nab a client or two do a sneaky deal, jump ship and hey presto new agency with two clients on-board in no time. Ring any bells?

Then over time chance referrals come their way.  Sometimes their client often a Marketing Director leaves their employer to work elsewhere and bring their favoured agency with them.

Sometimes a Marketing Director tells another that is not in the same sector as them about his preferred agency, then a meeting ensues and hey presto we got ourselves another one.

So in a way (wish me luck I am going in) that person who moves around and gives referrals is like an atom.

That atom (person) pays the agency money but also he has a referral value too. So the true value of that person (atom) is how many referrals they give you over time that you close into business. The higher that value the higher its atomic value. Great referrers are like plutonium.

Like plutonium they are valuable and need to be looked after because they are so full of energy (referral value).  Unlike plutonium they are not radioactive or that hard to find. You probably have at least three under you nose and you don’t even realise it. I repeat they are not radioactive so worry not.

If an agency traced where all there referrals and work came from they may find that one to three people (atoms) have supplied all their energy (referral value).

If they now compare this cost of sale which is negligible to all the time and cost they have spent on direct marketing, going to events and what not it is truly depressing.

Noticeably some atoms split on their own i.e. they move around a bit to other jobs and bring you with them or they tell others about you on occasions, releasing more energy your way.

But what would happen if we consciously tried to split the atom?

What if we realised that the value of our client is not just the money they spend with you per year but also the people they know that they may be comfortable introducing you to.

If you look at your current client list and then work out how many atoms – I mean people – you know across all your clients, then we get an idea of their mass and we know that E (energy)= mass x speed of light squared right?  We might not need the speed of light bit granted, but hey.

So to release the energy from that mass we need to ask for referrals face to face – or we can wait and wait for the referrals to occur naturally.

What I am suggesting is that if you continue to do great work for a client they may move on and take you with them.  You may of course have issues dealing with the incoming marketing director but by and large agencies in my experience an agency grows when people move around not always of course but largely.

But also that if you learn to have conversations with your best clients about who they’d feel comfortable referring you to we are shaking (gently) some of that energy out of them.  We are splitting the atom. Phew –  I made it, well sort of.

Luckily asking for referrals is not nearly so complex, although to some it takes a while getting used to.

The truth is people rarely mind giving referrals if you make it easy for them to do so and you ask nicely and sincerely. By being clear about who you’d like to meet and how they can help facilitate it effortlessly.  They don’t want have to go into deep thought to do you a favour of a referral – they don’t want it to be particle physics, they want an easy process.

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Can you reason someone out of their beliefs?

Sam Harris makes an interesting point here – that people often prefer to change their mind in private. Rather than do it when they are face to face with you.

This should be interesting to new business people.  If you are face to face selling and you spell out a contradiction in the prospect’s current thinking, don’t expect a certificate for your efforts there and then.  Understand that they maybe uncomfortable with what you had said.

As is noted in this video on Aristotle you may find using wit and humility to bring them out of their discomfort, saying for example something like – ” Hey, everyone gets un-comfortable when I tell them that.” Or when I show them the true figures or hint at a contradiction in their thinking…I sometimes wonder if I should do it at all?”  Or “I think you took that quite well, the last person I told that – kicked me out!”

You still have to be brave enough to spell out the contradiction in the first place most new business people don’t have the guts to do this.

However, if you are brave enough to speak the truth,  you also have to mop up the atmosphere as the vibe can be sucked out of the room. Kind of medicine then sugar I think.

Interesting to me is that people do this very ‘naturally’ in most of their lives but when it comes to business dealing they stiffen up. If they give a friend a home truth and they can see them cower they then mop up a bit.

To answer Sam’s question who hasn’t changed their beliefs over the years?I shudder when I think of some of my beliefs last week let alone those I held growing up.

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Which virtues do new business people need?

Aristotle noted that virtue sits between two vices and to be persuasive one should have the right about of certain traits.  I reckon these traits that need to be practiced and taught would benefit new business people in agencies. For example you need to be courageous but not fool hardy. Witty but not a buffoon.

Aristotle lists 11 key traits as courage, temperance, magnificence, magnanimity, pride, patience, truthfulness, wittiness, friendliness, modesty, righteous indignation. Looks like I have some work to do. And that’s the point really. You have to keep practicing.

To be persuasive in rhetoric Aristotle noted that you have deal with the emotional side of a problem as well as the rational, you need to be witty and you need to use examples to make your point.  Sounds pretty good to me. Sounds like selling. No point humiliating (Socrates style) the person you are in conversation with and similarly no point in agreeing when you don’t. It takes skill and patience.

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