When agencies should say NO to new business

New business giveth, new business taketh away

Having worked in several advertising agencies over the course of many years, I can attest to the fact that new business is both the lifeblood of an agency and its biggest nightmare. It’s very difficult for an agency to say no to new business. Why would they? New business means more revenue and more revenue means more success.

New business can breathe new life into an agency that, perhaps, has become stagnant with current clients. On the other hand, new business, poorly chosen, can wreak havoc on an agency’s inner workings, its culture and its people. We thought it might be interesting to ask a few agency executives how they approach new business and how they decide it might be best to just say no.

Echoing what, in my experience, has really been the de facto approach to new business, Evol8tion founder and CEO Joe Jaffe said, “I was always taught: never say no to new business. Ever. How many times have you turned down a new business opportunity only to find an existing piece of business evaporate? Two birds in the bush worth more than the one in the hand? That said, overextending a company — especially if small and growing — by taxing existing resources or, worse still, having to hire and put more overhead pressure on cash flow, can be equally challenging.”

A challenge, to say the least. Take on too much new business and you risk stretching the agency’s capabilities. Say no or take on too little and risk losing the backfill needed when an existing client inevitably leaves or goes out of business.

Consider your culture and mind your morale

While revenue considerations are of paramount importance when considering your approach to new business, that’s not the whole picture. Cake Group head of social innovation Stacy Fuller says culture is equally important.

“At the end of the day,” she said, “this is a service industry. If your working style and culture are totally disparate, you’re going to have a harder time. It’s not impossible and many times clients are interested in working with organizations that are very different than their own, but all parties in the organization need to be open to that. Both points ladder up to a client being very honest about what they need vs. what they want from a partnership. Going into a pitch with very realistic expectations will help both parties.”

This, of course, is easier said than done. While both client and agency always have the best of intentions, emotions are heightened, excitement affects logical decision making and over-promises are made. That’s a recipe for disaster right from the start. Levelheaded thinking is the order of the day.

Seconding the importance of culture and highlighting the importance of the ever-elusive “chemistry,” theMIX agency founder and CEO Vanessa Camones added it’s important “not to work with a-holes. If you know you won’t enjoy any part of the client/agency experience with someone, why bother starting the relationship in the first place? At the end of the day, all it does is kill the morale of those working on the account who are doing high-quality work for a thankless client.”

Camones also says respect for creativity and fresh ideas are important in deciding whether or not to work with a potential client. Her advice? “If early in discussions with a prospect whose market you know a lot about, you toss out several ideas that are shot down, you need to assess the long-term potential of the relationship and decide whether or not it’s likely to work out. If the client won’t sign off on the ideas you believe will achieve success, then you’ll have a difficult time succeeding.”

Finance, culture and creative and strategic respect are all important considerations when saying yes or no to new business. Some of these considerations are objective. Others are subjective. None are written in stone.

The scorecard system

In some new business pitch scenarios, a scorecard system is used by the client to (as fairly as possibly) judge each agency’s capabilities. Boston-based Winsper, when possible, likes to ensure this scoring system is as truthful as it intends to be.

Explaining his approach to the scorecard system, Winsper founder and CEO Jeff Winsper said, “We always ask for the [new business] decision committee’s pre-approved weighted scorecard before we enter into an agency review process. A weighted scorecard consists of the key criteria that may include a range of attributes such as chemistry, industry experience, [agency] understands our customer base, ability to prove results, if the creative idea is aligned with supplied creative brief, etc. Here’s the kicker. Even if they are mature or disciplined enough to have one issued, then we ask if there is an additional weight applied to each decision maker’s scorecard. Chances are they don’t, but I believe it’s our responsibility to help them understand why this is important; otherwise we could fall prey to the usual scenario where the CEO steps in last minute without context and trumps the entire process.”

In other words, a scoring system is useless if the client CEO decides to trump the entire pitch process and override the recommendations of the new business committee. Knowing who and how exactly the agency selection process will play out upfront will provide important insight into whether or not an agency should pitch the business in the first place.

So – when should you, as an agency, say no to new business? It’s a hard question for any advertising executive to answer absolutely. But a close look at your agency’s financial situation, your culture, how your strategic and creative approach are received and how exactly the client will decide to whom to award the business will all help make deciding whether or not to pitch much easier.

Post by Steve Hall

Steve Hall is a marketing professional, publisher, writer, community manager, photographer and all-around lover of advertising. Steve has held management positions in media and account service at Leo Burnett, Starcom/Mediavest and others, working on such accounts as Reebok, Marriott, Monster.com and Marshmallow Fluff.