Many people think that cold prospecting is the only tactic for agency growth. Unfortunately, response rates from prospecting have been declining for years. Win rates are low. The investment in people and pitches is high, and the disruption to the agency overall is immense. Cold prospecting often means a lack of differentiation, no awareness, too much competition. The truth is that putting all your effort behind prospecting means you may be ignoring as much as two-thirds of your potential growth.
High growth agencies that I have worked with don’t rely on prospecting alone to grow. While they have a prospecting program running, they also work two other channels with the same vigor. In addition to cold prospecting, they execute a strategy for organic growth within their current clients and a strategy to pursue and activate referrals and recommendations. Generally, each of these contributes about 1/3 of new revenue every year. That percentage varies from agency to agency and year to year, but each is a consistent contributor.
Why then are these two areas neglected? Compared to prospecting, the data tells us that personal recommendations, a friendly introduction, a trusted source, a credible referral are the top factors that lead marketers to hire new agencies. I see a couple of factors many agencies share that keep them from achieving organic and referral success. It starts with leadership, acknowledging the importance of all three channels and developing strategies for each. It succeeds when those strategies are faithfully executed with tracking and accountability, just like cold prospecting.
1. Organic Growth
Many agencies leave this to their account people and often commiserate about a lack of success. Lack of time is always a challenge for leadership to focus on organic growth. They are often over-scheduled with client work and agency management, leaving little time to think about or plan for new client opportunities. Management needs to ensure they have reserve time for client growth and defend that time from all the other demands no matter what. A team should be assigned to that channel and manage it just like they would manage a client assignment. Goals should be set, tactics defined, activities tracked, and progress reported every week. And no one, not even the CEO, should be immune from accountability.
Organic growth can be a little tricky because of seemingly endless issues within the client relationship that may impact the account team’s ability or confidence to ask for more work. Having someone other than the primary client team do the hunting helps separate those conversations from any present-day struggles. A fresh set of eyes and perspective also helps see opportunity and facilitate conversations about things the agency can help with outside of the current engagement. That role may be best served by the president or head of a strategy; whoever can engage the client outside of the day-to-day issues with a higher level of authority in the mind of the client.
The account team and organic growth team must work hand in hand to identify opportunities and develop strategies to pursue them. They must also work in a complementary way that doesn’t strain the client relationship or come across as less interested in the importance and success of the current assignments. The client may think new assignments will strain their resources or take their focus away. With careful consideration of all aspects of the equation will ensure a win-win for everyone.
One thing I have observed is that many agency leaders have an overly humble attitude toward the value of their work. They are reluctant to ask a friend or associate to make an introduction because they feel like they are selling something. A better way to think about it is to suggest an introduction because the agency can solve real business problems. They get caught up in the day-to-day agency management challenges and forget why their clients hired them and why they keep paying for their service.
An agency exists to help its clients generate revenue, increase profits, and the overall value of the business. For the most part, agencies provide a very favorable return on investment. If a friend or business associate knows someone who is struggling with sales or under siege by a competitor, why wouldn’t they want to recommend a solution, especially one that they know and trust? A referral isn’t selling. It’s helping.
The challenge is educating your network about what you do, what kinds of companies you help, and what kinds of help you provide, in the simplest of terms. When they are in a conversation, and the subject of business challenges comes up, you can’t expect your friend to say anything more than I’ve got a friend who owns a marketing agency. He works with companies like yours and was telling me about a program that increased leads by 50%. Would you like me to introduce you? You can’t expect much more, but odds are, that’s enough.
I’ve oversimplified it to illustrate the idea. Write your own script, one that’s relevant to what you do, the knowledge of your network, and the kinds of people they are likely to network with. Regardless of the circumstances, the goal is the same, get a friendly introduction so you can give a proper introduction. Ideally, your friend can turn that introduction into a drink or a dinner with all three of you to go from a cold first contact to a warm, friendly, social meet up to make the conversation flow freely.
Activating your referral network and the networks of your other leaders take time and follow up. You need to stay in touch regularly to reinforce the points you want them to make, encourage them to reach out, strategize specific people, and by all means, ask how you can help them. The best networking is a two-way relationship.
3. Cold Prospecting
Prospecting is generally the first thing anyone thinks about when they want new clients. It is also the hardest. In the organic and referral categories, the prospect already knows you or your surrogate, knows what you do, and the results you can achieve. They are warm opportunities ready to be converted. Cold prospecting requires you to go from unknown to cold to warm with the chances of getting through those stages, small. That said, it is an essential tactic to reach new people, new verticals, and new opportunities that can’t be gotten elsewhere.
Agencies that diligently work all three channels will see consistent, predictable growth year over year. Each has a different strategy and tactics, but all three should be rigorously managed and consistently executed to maximize the resulting revenue. Your revenue percentages may be different because of your services and strengths. The rule of thumb suggests that each contributes to a third of your new revenue. However, if you are stronger at prospecting than organic or weaker at prospecting but a great networker, your ratio will reflect it. Spreading your growth like this will help smooth out the peaks and valleys in any one channel and provide stronger growth overall.
To many agencies, it is a cultural change. Some think prospecting is the only way while others say networking is all they need. In fact, data shows that organic growth and referrals are far more likely to lead to a new client and new revenue while far less expensive than cold prospecting. As Philip Kotler said, the sales department isn’t the whole company, but the whole company better be the sales department. Personal connections, networking and referrals, and organic are the richest sources of new business but have limitations. Prospecting is the broadest form of new business but the most difficult. Developing a strategy and implementing a process to leverage all three is time well spent. If you aren’t sure how, I can help.
I’ve got more advice on how to make your business development efforts more effective and would enjoy sharing what I know. If you like this post, sign up for my new business newsletter. Find me on LinkedIn for daily tips, tricks, and insights. And, please feel free to reach out at any time. #LetsGrow!