The most successful independent marketing agencies grow because they win initial projects with the right clients and are very adept at growing those clients once they’re on board.
Over the last 15 years in new business for agencies we’ve worked with a lot of clients, the vast majority of them independent, medium sized agencies in their first 5-10 years. Agencies such as these have unique challenges. New business is vital to their growth but they operate in a really competitive environment and have to work extremely hard to outperform their peers. That’s why it’s so important that they get things set up the right way.
I had coffee the other day with an old contact who’s been brought in as Business Development Director at a medium sized (£4.5m) independent communications consultancy. His new agency has never done proactive business development so the first task is to put in place a growth strategy. He has a lot to consider and ultimately he’ll be judged on the revenue he brings in so it’s important he gets it right quickly.
Putting in place a framework that is capable of delivering sustained growth over the next 3 years in an agency that has no history or experience of pro-actively pushing new business brings challenges from several directions. He has to build a successful new business pipeline from the ground up, he has to address the lack of readiness of the agency’s staff and the board’s expectations around what is achievable and how quickly, and he has to overcome all of the other hurdles too – lack of data, CRM system, incentive scheme, etc. – and on top of all that he has to define the proposition and decide who to target.
One of the key conclusions of our discussion was that he should actually write two plans – one for new business and one for growing existing clients (business development) – and that the main driver behind new business targeting should be ongoing revenue potential. The new business plan should be to target big, national brands that spend a lot of money and the business development plan should be to prioritise potential big spenders and then grow those accounts. If new business activity brings in the right clients then in the second year those clients become part of the business development plan.
That makes new business’s job a simple one – win initial projects, no matter what size (within reason), from clients with big potential spend. And it makes the business development job simple – grow existing clients with revenue potential into bigger clients. Don’t waste proactive new business time going after one off projects of limited value because in the long run it’s not worth it.
The two functions can work together to implement it but the principle is simple – one year’s new business target become the next year’s business development targets.
Over years, a new business team such as this can generate dramatic growth because each new client’s potential lifetime value will be well over 10 times that of the initial project. A key ingredient in this model is an account team that are adept at developing each client (a good starting point is a business development plan for each key client – but that’s for another post) so it’s vital that you address any shortcomings in that area.