Why do some agencies navigate their early years and then power on to real growth, while others succeed initially but can’t quite get past the ‘difficult second album’ stage?
That was the question myself and fellow consultant Alastair Dryburgh explored at a recent event we co-hosted (at The Wolseley, get us!) for a diverse audience of agency chiefs.
When agencies launch, they typically work their networks, fighting tooth and nail to bring in those early successes; often leveraging their agility, newsworthiness and founders’ direct impact on client business.
But once things calm down a little and the agency is forced to grow-up, they reach a plateau. Some flounder; burning out by dialling-up the ‘hustle’ that got them going. Others recognise that, as the saying goes, what got them here won’t get them there.
So we set about exploring some of the typical challenges.
The first discussion centred on how changes in the agency landscape have made standout more difficult than ever.
Not only is there now more competition, greater over-claiming and more blurriness between disciplines, but also agencies are suffering from a post-credit crunch under-investment in their new-business and business development teams.
In short, while growth’s got harder, newbiz skills have gone backwards – with many agencies regressing to archaic tactics.
Another major challenge is ever-shorter client relationships. In effect, putting even more pressure on growth.
Alastair argued that this is essentially a profitability problem. If annual churn increases from 10% to 20%, then your new-business investment needs to work twice as hard just to stand still – unless you can make more money per client.
Thankfully, he wrote the book on how to do exactly that, so do shout if you’d like a copy and a coffee to explore how the lessons apply to you.
These issues have contributed a worrying disconnect, where agencies have lost sight of what clients need. As an example, we talked about chemistry – and how each party treats this vague but critical factor very differently.
This is explored in full in Marketing Week, but many agencies default to using chemistry as their main differentiator across the entire sales cycle, from awareness through to conversion.
In contrast, clients only really think about chemistry at the sharp-end of selection – particularly in pitches. The rest of the time, they’re far more focused on what your agency can actually do i.e. what problem you solve.
In this complex world, clients quite rightly find reassurance in rapport. But they also need to be certain that your agency can do the job. Now, more than ever, expertise creates more confidence than chemistry.
So if you’re creating clarity and reassurance based on expertise, then you’ll need to behave differently – stating your value more explicitly and then proving it.
Unfortunately for everyone, too many agencies are not only saying the same thing, but also using the same vague language. If you’re going to establish your credibility, then something has to change.
Some agencies claim hygiene factors as USPs. But I’m sorry, being ‘highly creative’, ‘starting with the customer’ or having ‘a real focus on ROI’ is not a point of difference.
Others promote themselves simply with ‘superlative + discipline’. The content agencies are particularly guilty of this. As if clients believe there’s a meaningful difference between ‘performing content’ and ‘inspiring content’. C’mon, seriously?
Another pitfall is thinking in terms of inputs not outputs. This usually results in the agency spending months – or years – wrestling with language that ultimately just re-articulates their discipline, rather than the value they deliver.
A good yardstick for spotting this kind inward-looking sloganeering is to ask ‘could the opposite ever be true?’. If the answer is no, then you’re just adding to the noise.
These barriers to a compelling proposition demonstrate that strategy requires sacrifice (who knew?). Doing everything for everyone just isn’t credible.
There’s really no difference between your business plan and new-business strategy – an opportunity, an audience and a means of creating value. This clarity is why a clear, client-focused elevator pitch is such a motivating force.
At its heart, a value proposition is no more than ‘X for Y’ – creating a specific outcome for a discrete audience. Making you a scarce brain surgeon not a generic GP.
This is an exercise in focus. As Alastair noted, it’s no coincidence that turnaround specialists force companies to adopt no more than three priorities.
Once you’ve decided on what-for-whom, you’re ready to set about the second challenge – proving you can do it.
Very often, agencies view growth as a game of effort – the more legwork, the better the results. Perhaps from a coldly rational perspective, there’s some truth in that. And doing something will certainly achieve more than doing nothing.
But with limited time, money and resource, thinking smarter about how you invest should be a big consideration for CEOs.
Aim to build a distinct customer experience. All the reasons why CX is so important for brands also apply to agencies – oversupply, little differentiation, ease of switching; plus the experience being (at least) as important as the marketing.
A strong agency CX provides much-needed standout and client reassurance.
It also creates a tonne of efficiency. Serving a specific audience reduces effort as certain routes to market become irrelevant and the team, its structures, processes and assets can be more tailored.
In short, when everything your agency says and does serves as proof of your proposition, it’s less work to standout more. Definitely, a win-win.
These changes have, unsurprisingly, changed the new-business role as well as how agencies structure their teams.
New disciplines, ever-expanding capabilities and similarly burgeoning client-side roles and titles have added huge complexity to new-business – particularly for unfocused generalist agencies.
There are also far more channels through which your agency could (not should) communicate with prospects and existing clients.
Combined with a lack of strategic clarity, these changes have made the day-to-day management of growth – thought leadership, awards, events, led gen, RFIs etc – increasingly thankless, endless and pointless (no wonder nasty phrases like ‘Pitch Bitch’ and ‘RFI Monkey’ have made a comeback).
You could hire an expensive chief growth officer to provide the thinking, but what will they do once that’s done? Or you could hire a cheaper model to handle the legwork, but they won’t have the experience or authority to make change happen.
Depending on your particular agency, there are a range of growth models to consider. But whichever one you choose, you still need modern practices for modern challenges.
Our event gave the audience a whistle-stop tour of the challenges agency CEOs must address to stay in growth. And while our focus was younger agencies as they mature beyond adolescence, the lessons apply for life.
If you want your agency to genuinely standout, win consistently and command a decent margin, then you need to focus. That will allow you to cut-though – and give clients the reassurance they crave, without outsourcing the task to ‘chemistry’.
Delivering against this approach requires a rethink of your growth model. And it may well be faster, cheaper and more effective to approach strategy and plate-spinning in different ways at different times.
Robin Bonn is the founder of Co:definery – a management consultancy for agencies, as well as a columnist for Marketing Week.
Alastair Dryburgh is an author, Forbes columnist, international speaker and the founder of Akenhurst Consulting, a 25 year veteran of high growth and turnaround situations.
If you’d like to attend future events, email robin.bonn@codefinery.com