Many agencies fail to market themselves effectively. Why is it important for agencies to have a consistent pipeline of new business?
Historically, agencies are experts at telling the story of their clients but struggle to tell their own. Most agencies grow organically through WOM/referral and rarely proactively prospect for new clients. This strategy can be dangerous to the growth and overall health of the business since the agency’s pipeline of business is usually low. It’s very important for agencies to maintain a consistent and full pipeline of new business to safeguard against what every agency fears, the loss of a client. If agencies fail to have backup business in their pipeline, they risk putting their employee’s jobs in danger or risk shutting the doors altogether if a major client is lost and there is nothing there to replace it quickly.
Landmarks to look out for
Some landmarks that indicates a prospective client is on their way to becoming an actual client might sound obvious but I think it’s important to note.
- You’re speaking to the decision maker(s). You have access to the person making the final decision and they know the details of what is being proposed – solution, terms, pricing, etc.
- They are engaged and asking the types of questions they would if they were already a client. This shows they are thinking about this solution critically and taking it seriously.
If they're requesting references/testimonials, that's a good thing. Additional trust is created when the prospect can understand how the solution in question has impacted others in a similar situation. You should probably think about segmenting your clients into industries and problems you solve, what they do, how big they are in terms of revenue and employees, along with revenue and growth goals. If you can build case studies around how you've helped them achieve their goals, you'll have testimonials for most situations at your fingertips.
Measures for agencies to use as prospects move through the pipeline
- Sales cycle – Agencies should determine how long (on average) it takes to bring an account from prospect to client.
- Revenue potential/opportunity stages – There are usually 3 stages of opportunities:
- Stage 1 – Pre-proposal (this is about 20% revenue)
- Stage 2 – Proposal (this is about 50% revenue)
- Stage 3 - Hot (this is about 90% revenue)
You definitely need ample opportunities in each stage as they move along. It’s dangerous to be top heavy on one end or the other.
- Number of opportunities needed to hit revenue goal based on close ratio/rate. If you’re close ratio is 10%, you will need to adjust for the number of opportunities in the top of the funnel (pre-proposal) to give you more chances to win the business.
Measures to determine whether an agency new business director is successful or to help them focus their efforts
- Lead to pipeline conversion rate – this should vary based on what type of lead it is (cold or warm). In my opinion, if the lead conversion for cold leads is 20% or higher, that’s a very successful new biz director. Warm leads will tend to convert at a higher rate but that doesn’t mean it’s the type of business the agency wants or needs.
- Speed to market – how quickly is the new business director able to educate his or herself about the agency to be able to speak intelligently about the agency and their solutions. Are we talking 1 month, 6 months?
- Growth/acquisition rate- number of new clients per month/year. Every agency should factor in some kind of client attrition. Not all brand/agency relationships last for years (most last only a couple), so knowing how fast you need to run just to stay in place is critical.
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