The dysfunctional new business system

dysfunctional

So why do agencies use the same practices over and over to prospect for new business despite the evidence that says it doesn’t work? Well not very well at least.

They employ far better strategies for their clients than they do for themselves.

Let me put forward some of my explanations.

Chances are that agencies actually know they need to be proactive to gain new clients. Rule number 1 – Be Proactive.  

The most obvious way to do this is to proactively contact people (Marketing Directors, Head of Marketing, Brand Managers) who they know buy similar services to theirs.  Makes sense, right? How hard can it be?

How do we do that though?  Well, let’s put a list together a wish-list of brands / companies which we would like to work for right? Base the list on how much they currently spend on your sort of services, your current experience in their sector, location and so on.  

The list get procured and even cleaned for errors maybe.  Then the decision is made to email / DM them a thought piece or a case study showing their value to the receiving marketers.  In short ‘we did this for brand x – we could do the same or better for you’.  Then follow-up with another email or phone call. Or some variation on the theme.

In short the agency is asking – How about it then?  We look good don’t we?  We may be better than what you have currently… so  let’s meet.

All very reasonable you might say, right?  This is what most agencies do, isn’t it?

But if we look at how marketers actually buy they rarely say we wait for direct approaches from agencies, do they?  Of course not.

In fact my evidence is that most agencies buy from either a referred agency that was recommended to them or they go to an intermediary for advice. Or search for a specific agency based on a piece of their work that tickled their fancy.

Note that most agencies say their clients come from a referral based often based on reputation. So ‘they’ buy like that and agencies sell like that albeit unconsciously or passively, i.e. waiting for the referrals..

But even before a marketer and their team look for a new agency they ALL  have to agree something is broken. Something is not quite right isn’t enough – it has to be broken.

Because if it isn’t they will find a work around, this means client people can find ways to cope with working with say a design agency even if the work is not great for example or they’ll fix the issue internally or get their current agency to where they like them to be.

This is because the ‘system’ is sacrosanct.  A system (group of working people) is largely made up of written and importantly unwritten rules and beliefs that makes them carry on behaving in a particular way even if dysfunctional. You have them. I have them. Your agency has then. Society has them.

Change may contravene the unwritten rules and beliefs of the system.  No change occurs until everyone concerned in the system sits down and communicates that the system is broken and they need outside help. Until this has happened things stay the same – homeostasis.

A sure sign that the system prefers to stay dysfunctional or in homeostasis is when people say stuff like “that is how we have always done it.” or “I have seen it work once before” or “others do it like this too” or “we are going to try it one more time” or “this method is easier to set up” or “if we change this then we will also have to change abc too.”

It is well worth noting if one part of a system changes other parts change too – changes are consequential! And even unpredictable. Sometimes favourable and sometimes not, often called 2nd, 3rd and 4th degree effects, they are sometimes hard to predict too.

So even if you meet a prospect and they see you as sliced bread, unless the people in the system agrees it needs a fix from outside and not inside it stays dysfunctional or at least settles for not being more effective than it could be. This kills agencies – “I can save them x time or make them £x and yet they won’t change!” Ring any bells? Annoying isn’t it?

Being dysfunctional is not unusual you know.  And it is fine, in a way, we are all a bit dysfunctional, who doesn’t do things they half know they shouldn’t, what is often called ‘cognitive dissonances’.  Individuals continue to do these practices they really need to stop, right up until they get a kick up the pants from a loved one, a doctor, or even a bank manager, right?

And agencies are the same.  They can see the evidence that most of their work comes from referral (around 85% seems common in my experience) and yet they have no method in place to get more referrals.  

They prefer to hire and fire new business folk constantly, who spend their 18 months tenure being pro-active doing DMs, e-mails, PR , social media and cold calls.  The agency spends a disproportionate amount of time and money on these activities not to mention the cost of meeting the tyre kickers (column C and D leads)  that cold marketing often brings in.

All to make sure they hit their meeting quota or whatever arbitrary KPIs they are chasing. The way in fact to build direct marketing lists should be based on who your current clients knows.

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