Luck Or Judgement: Surfing The Incessant Waves Of New Business
Why do agencies seem to go through peaks and troughs of winning and losing business? I don't think it’s an accident, I think it’s a rational strategy.
When I was working within agencies I spent more than half of my time with some form of new business opportunity on my desk, whether that be a media or advertising pitch, a proposal to write or managing an agency's entire review. I recently tried to tot up the value of the pitches I'd been involved in or managed and it is at least around $7bn in billings terms (which is about the size of Zimbabwe's economy. Or just three of GM’s media pitch).
Some years we would win a lot, some years nothing and we always assumed this was due to some natural, unexplainable cycle of peak-and-trough. When we were winning we didn't question it too much of course. However when we were losing we often lost to the same one or two agencies and always considered that the winning agency was having a purple patch whilst we were having a tough streak. Beyond that, there was no rational explanation. We always fought hard at every review we decided to go for so losing was always a shock beyond the normal disappointment.
Now on the consulting side and having more visibility of the different ways that agencies pitch I can see more clearly perhaps why these trends might exist. Put simply, I think that agencies themselves work in cycles of winning and losing. It is clear that some agencies will over-invest in their business development resources for a period (probably on a 3-5 year cycle) and then spend the next few years investing less in business development and focusing on bedding in the new business that they have hopefully won.
No agency can manage to win pitches consistently over the years because the focus of the agency primarily has to be on either winning or servicing. I don't believe you can ever do both at any one time. It takes a huge concerted effort to land the big pitches, these cause a massive distraction and disruption to any agency that has not staffed up its business development resources to take much of this strain. It also requires that the agency has to gamble somewhat on slightly dialing down servicing their existing clients to free up sufficient resource to focus on pitching. This is a gamble because you don’t want to start losing business while you are in the process of winning.
In addition, the agency management must be aligned behind that strategy and also (without exception) be prepared to divert a good proportion of their work time towards winning business, which is hard when the day-to-day operations of existing client are so consuming.
The model is akin to the 'crop rotation' approach that those farmers and geography students amongst you will know well. Work the land hard in cycles, giving it room in between to replenish its energy.
The implications here are that it means an agency has to make a considered long term plan for the coming 5-10 years an identify when to put the foot on the gas and look to win, and when to ease off and consolidate what you've won. Winning of course is more than a simple determination. It’s hard competing in an industry with too much competition in the agency market and ever increasing demands of clients in managing agency reviews, it requires incredible dedication to the process of a pitch to even have a sniff of victory.
Much like a talented racing driver seeking the fastest qualifying lap, each 4 year cycle of business development can be broken down into laps:
- Entry lap (get the right resource and structure in place),
- Warm up lap (be prepared to compete and lose a few but get match fit and tweak the process),
- Flying lap (pitch for everything you can and try and win everything going),
- Warm down lap (pick off a few more before dialing down your over investment and spent the next few years over-servicing those clients to reach maximum profitability).
This ID COMMS article originally published on M&M Global