I will be using poker as a metaphor for pitching. Poker is a game of people played with cards and it’s not for the faint hearted. The similarities to explore are starting hands, pot odds, handling bad beats, value bets and finally lay downs. All designed to help you reduce the costs involved with new business programmes, increase quality and form a strategy to growing your agency. Before I deal, this is an ongoing article so just starting hands and pot odds today.
The top starting hands in poker, the high pairs AA, KK, QQ and high suited connectors AK, QJ, JT (T = 10), and T9.
What equates to a good staring position in a pitch?
What would make your agency more likely to win the pitch over the other agencies?
The best starting position is that your agency was referred in. The referral can take a few forms, with the highest ranking as follows, the marketing director is one you have successfully worked with before; you were referred by another marketing director who you have been successful for recently and the two marketing directors know each other well; you have networked with this person on several occasions perhaps heard you speak or read your book. There are other ways to get referred but these are the best. How many agencies actively ask for referrals or introductions?
Finding exact stats to support this have been more scant that I thought. I have seen tons of articles quoting between 50% and 85% of pitches are won by a business being referred in. I know it is generally agreed too, but it’d be nice to see some stats. Personally when I ask agencies what percentage of their business comes from referral (WOM) they report 80%-90%. When asked what % of pitches they win from referral they say 70% – 100%. Is your agency similar? This is the easier of calculation I help agencies with. Be worth knowing I reckon. Then see where are you spending your time to compare.
To back up these figures here are some stats. Most buyers buy from a referral followed by networking, then seminars. If someone has better stats from a non-biased report for marketing agencies I’d love them.
There are medium weight factors that can be considered too, do you have experience in this sector, chances are all the agencies on the list do btw. If you are the odd one out, think again. Also are you the likely size of agency needed to do the job, is the budget right, all these factors that to be fair most agencies are well aware of. Get better at asking tough question to people asking you to pitch.
There are some hands to be wary of in Poker. Small pairs 55, low suited connectors 34, unsuited un connected high pairs KJ and low unsuited connectors 56. What would be the equivalent in the agency world. Well, what you need to be wary of is being put onto a pitch list when you have no chance and you’re being flattered to be on it, you may hear flattering things from marketing dept such as “We love your….. website, your philosophy, your work for an un-connected brand, your mailer, your profile page, the persistence of your new business guy.”
Happy ears have been the death of many a lead. All of these reasons need a meeting to find out more info. And you must ask some tough questions to determine your starting hand. Info that helps you make a call about what are the odd of winning the account. If they will not afford you time to meet be wary, very wary. If they will not meet maybe ask for a pitch fee, you are probably there to make up numbers. A great article here on using pitch fees to qualify winning chances citing Droga5.
Pot odds in poker is how much you need to bet to win the pot. So if it costs you £100 to call a bet into a pot already of £300 – you are betting £100 to win £300 – 3 to 1 right. In poker that is important because you may feel you are behind on a hand and you need to work out the odds on improving your hand. Let’s say you needed one of two cards left in the pack to improve your hand the chances of that happening are slim – this odd will vary in poker (I don’t want to explain too much poker) depending on cards dealt so far – but let’s say 8% or 12.5 to 1. Now the situation is that you will get 3-1 on a bet that is only likely to happen 12.5 to 1 times. You fold right?
The thing is in advertising or big pitches the pot odds always look fantastic. Let’s say if you won the account you’d make fees of £240,000. You calculate it will cost you £30,000 in costs and time to join the pitch. As long as your odds are £240K / £30K, just over 8 to 1 or 12.5% you’re in right?
Let’s look at a fictional 4 ways pitch.
Agency A (referred agency with experience)
Agency B (experienced in the sector)
Agency C (approached with timely call or DM piece)
Agency D (wild card)
Agency A = 65% or 1.53 to 1
Agency B = 20% or 5 to 1
Agency C = 10% or 10 to 1
Agency D = 5% or 20 to 1
From that simple example you can see that agencies C and D are cannon fodder. Procurement needs them for reasons known only to themselves. And unless Agency C or D get lucky (yes it does happen) they are down £30K not to mention the demoralising effect of the loss to the agency and the ongoing post-mortem of why they lost.
I believe that simply they should not be in the hand / pitch. Also worth noting is that now £30K goes on their (COS) cost of sales sheet. A slightly more complicated equation that we do for agencies. Cost of sale is a cumulative cost over a period that compares costs including hidden cost to actually gains including potential referral gains.
Worth noting is that their next win will have to take into account of that £30K cost. So let’s say it takes 4 pitches to win £240K – that is 4 runs on 30K = £120k. And that is just the pitch costs, once you factor in cost of creds meetings that go no where and 2nd meetings and proposal writing and how many RFP are answered to get to 4 pitches the value of understanding your odds of winning business from different sources makes a lot of sense.
So that’s a start at evaluating your chances of winning a pitch and we aren’t even at the pitch bit yet. Or what happens if you find interesting info half way through a pitch process. What are the tough answers you need to qualify the pitch? What if you annoy someone? What happens if you ask for a pitch fee and they say no, do you have to fold?
Oh and btw I am not a huge fan of pitching at all if you can help it. If the referral is strong enough you may get out of it…why not? Costs and time can be saved on both sides…….but procurement may have something to say about that in big corps. So my advice is consider long and hard if you should be in the hand or not.
Next time – value bets, handling bad beats and lay downs.