Consider a typical, successful PR agency start-up. The principals sign their first few clients and treat them like gold. They are often directly engaged in each client’s business and everyone is happy. Word spreads about the new firm that helps attract more clients – even larger clients. The more business that comes in the door, the larger the agency becomes. Getting addicted to winning and growing becomes an understandable outcome. (Of course the addiction is not confined to start-ups, but I digress.)
Eventually the forces of the marketplace take hold, and this relatively new firm will go through a period where their rapid growth begins to wind down. There are no longer as many prospects in the new business pipeline anymore. The response? Redouble new business efforts of course. Principals respond this way because they are wired to believe that:
The greater the new business effort, the more new clients, the more the agency grows.
So principals become obsessed with adding new clients, and because of this, employees learn all too quickly that success in business development is the fastest and easiest way to achieve stardom and claim a more senior leadership role in this growing firm. Unfortunately, with the attention of the principals focused on the next new prospect, the emphasis on existing relationships becomes compromised just enough to result in some client losses. Remember, these clients signed on because they were being treated like gold – silver or bronze may not cut it for most of them for very long.
Now do agencies typically respond to these client losses by examining what may have happened and what they can learn? Not usually. The firm collectively brushes it off by convincing themselves that it’s the client’s loss." “Look at how much new business we’re winning? We know we’re good, so it has to be them.”
Now the agency finds itself in the position where winning new business isn’t just about growing, it’s about maintaining and surviving. Principals quickly become familiar with the concept of “net” growth, or new business growth minus client losses. So now the bar has been raised even higher, and it means the pressure to win more new business just increased. Time to double-down on the agency’s new business effort. You have probably already surmised that this agency is going to struggle, and it will do so for a while unless something changes.
So What’s An Agency To Do?
- Think about your firm as a whole system not as a linear growth equation
- Make your current clients your top priority
- Celebrate organic growth with as much exuberance as a new client win
- Recognize and promote your great practitioners, not just your strong business development people
- Create a client service culture supported by a sustained initiative that‘s at least as robust as your business development program.