A variety of sources estimate the batting average or win rate for advertising agencies at about 25% - 30%. That fact alone is a huge complex amalgamation of circumstances that hardly represents your agency yet does provide a starting point for this question. What should it be? The majority of agencies think it should be 50% – 100%, yet they are likely in the average. If you take the number of opportunities won divided by the number pitched or proposed, you can benchmark your success against the industry. Whatever percentage it is, the question we all agonize over is why the win rate isn’t better.
I’ve heard a lot of reasons in postmortem calls and interviews.
- The other agency had more experience in our category
- We felt the other agency understood us
- The other agency’s creative was better
- The other agency’s strategy was stronger
- We didn’t think the chemistry was right
I’m sure you’ve heard the same and many more. But these are only the outcomes and don’t help get to the cause of why. My job is to help agencies win more and so I incessantly seek to analyze and understand this issue. I recently fielded a survey among 156 small, medium, and large agency owners and business development leads. About 83% full-service and 61% handle both B2C and B2B. One of the questions in the survey was this very subject. It certainly isn’t scientific but helpful in my quest to find answers. I fielded this survey a few years ago to gauge current practices. You can download the survey results at the end of this post.
The top reasons agency owners reported:
The most common problem agencies report is Lack of time. I hear it every day. Most agencies handle agency growth as a secondary effort, after and in between client work. After all, clients pay the bills, right? If business development isn’t your most important client, you will never find enough time. What if you told your clients, I’m sorry, I didn’t have enough time to get your work done? You have to treat your agency as your most important client. If you don’t, all the other factors you will see in the survey and what you experience every day will continue, and your win rate will reflect it. Current income is important, but future income is essential to the future of your agency.
Prospect quality, Chasing too many prospects and Too much competition suggest a need to focus the business development effort. We are all guilty of thinking quantity versus quality will overcome our other issues. We’ve heard the typical sales formula of playing the percentages – 100 phone calls will get 10 meetings and 1 win. Honestly, I’ve seen hundreds of phone calls get many meetings and no wins. A waste of time, money, and staff. I am not disparaging phone calls rather a lack of focus on who the best prospects are that will likely value your services and be interested in a relationship. Taking the time to do this homework will improve all of these issues and more. Simply dialing more calls, sending more emails, disrupting more marketers will only perpetuate the notion that advertising agencies are only one step above used car dealers.
I am surprised that No consistent BD program did not score higher. No matter the size of the agency, we are all guilty of taking our eye off the ball when client demands soar, multiple RFPs come through, staff turnover, and the many other factors that impact the agency. The truth is, a well-planned new business program can be consistently executed to keep a pipeline full despite most of the obstacles agencies face. And, a well-planned program requires much less time to execute until the best prospects surface, allow agencies to spend their expertise on the right parts of the BD program where it counts the most.
The full list of reasons:
Some additional issues raised:
- Internal alignment on pitch process, content, and objectives
- Too many opinions and no leadership
- Strategy and creative don’t align
- Some people never get work done until the last minute
- Our pricing is at the upper end of the competitive set and more buying decisions are focused on price
- We work to a conclusion and then it all gets changed at the last minute
- Too much internal fighting and dysfunction
- Pursuing too many not right fit opportunities
- We're great, and we're terrible - we think our positioning is strong - some consultants agree, and some disagree
- Clients don't fit our program
- The staff doesn’t take the time to understand the challenge and objectives
- RFPs are the problem, and we are finding that responding to agency cattle calls is not worth the effort. Better to work our leads and win without a cattle call
When you look at the issues in aggregate, the picture becomes clear. Even the agencies that I’ve worked with share many of the same challenges – no time, limited resources, inadequate tools, no content, too many misses. As a business owner, you have to drive cash flow and growth, and many think those conflict. You want to see the results of your investment right away. I get it. I’ve lived it. I’ve answered to the CEO and CFO every day. My advice, it doesn’t have to be one or the other.
Approach your agency as your #1 client. If YOU can’t, hire someone from the outside who can. Determine (not guess) what your most desired and respected offerings are to your target prospects. Optimize the agency brand to be competitive with your target prospects. Model and identify only those prospects that best fit your service offering. And finally deploy a sensible, systematic marketing program so that the right prospects know you and have an interest in your services when their time comes to close! Be relentless about saying NO to the rest!
Does fixing these problems sound too hard? What is easy is to calculate a 10% increase in new business or 15% or 25%. Do the math and see if making new business your best client will pay off for you. Of course, if we were talking baseball, Outfielder Ty Cobb has the highest batting average in MLB history at .366 over 24 seasons, a win rate of 36%. In 2015, Miguel Cabrera had the highest season average at .338, a 34% win rate earning $22 million dollars and an even bigger contract for the next eight years. What would a modest 10% increase in your batting average net for you?
Download the full survey here. #LetsGrow!
I’ve got a lot more ideas about why agencies struggle with their business development program, and I would enjoy sharing if you are interested. If you want help or simply want to talk about your business development program, I’m always open to a conversation. If you like this post, click the thumbs up, so I’ll know, and then sign up for my new business newsletter. Connect with me on LinkedIn for daily tips, tricks, and insights. #LetsGrow!