Growth and profitability have become increasingly challenging for the advertising agency world – and all of marketing communications for that matter. That’s not news.
Agencies have been trying countless ways to change this. New offerings, new talent, new fee structures, mergers, start-ups, alliances, you name it.
Yet I still hear complaints from my agency clients about the inability to retain and grow key or new accounts at acceptably profitable levels while doing the kind of work that energizes and engages clients and employees.
There are unique aspects to every situation. Yet there are also common elements which I think both explain the prevalence of the problem and provide clues to its solution.
McKinsey recently published an article called “How to Unlock Growth in the Largest Accounts.” It listed four best practices. I want to emphasize two of them:
Quantify the full customer experience
Build “value selling” muscle
Make it easy
Prepare for negotiations the way customers do
Numbers 2 and 3 seem to offer tremendous upside to agencies.
The cry for a greater emphasis on value has been heard for years in the agency community. Yet few have attempted to place value ahead of price. As long as it’s a pricing/fees game, the value argument stays on the sideline. That is until the bold agency is willing to bring it forward.
Agencies absolutely must start to press the value issue. Only then can fees become more equitable and relationships more enduring. This takes strategy and skill. You need to plan how and when to raise the issue, then sharpen your persuasion, negotiation, and objection-handling skills.
As for “make it easy,” here’s another of my bigger concerns. Ask any senior client about the relative strengths of their agencies, and I’ll bet you’ll often see fingers pointed at account management as an area of weakness. Not to indict account execs alone. Cross-functionally, agencies lack the client care, proactivity, and understanding that clients value so much in all their providers They have strong trusted advisor relationships with their management consultants, law firms, auditors, and other providers/partners. “Trusted advisor” is a term much less frequently heard regarding marcomm agencies.
In the absence of strong relationships, the account will always be at risk. Growth will be much harder.
Savvy agencies must strengthen client relationship skills. I would suggest that stronger account management might even lead to more fruitful fee discussions.
- Bob Wiesner