Client Procurement Depts. Ad Agency Friend or Foe?

July 15, 2009

ProcurementWhen you make mention of the client’s procurement depart to ad-agency people, their eyes automatically role to the back of their heads and they invariably let out a groan of frustration. It really does not have to be like that. Let me share with you why.

Whether we like it or not, I can assure you that client procurement departments are going to continue to become more and more involved. This is especially the case in difficult economic time’s when companies are trying to better manage every cent of expenditure. Their focus is not necessarily lowest cost, but more often than not best value for their company. They will pay a reasonable fee for acceptable perceived value. If you approach the relationship understanding this, you actually have a good chance of making them your friend versus your foe.

Inherent within the ad-agency business are legacy practices that tend to be “like a red flag to a bull” to most procurement professionals. Ignoring this fact and trying to “pull one over them,” is counterproductive and will only make your life more difficult. Put yourself in their position and consider what approach would be best from their perspective. Here are some suggestions:

  • Focus on the value you deliver first and then move on to fees. Just because you put in the hours does not mean you should be paid for them. Most procurement people perceive paying for hours as nothing more than an incentive for you to spend more time than necessary. Start by documenting the value you bring and the results you deliver. Then move onto to fees.
  • Know your audience. Spend some time in advance researching what is likely to be important to them, both from a company perspective and individual perspective. What company initiatives are top of mind? What is that particular person’s hot buttons? Forewarned is forearmed.
  • Share industry information. The procurement person you are dealing with may not be very familiar with our industry. Most of the job may entail purchasing products and materials. Take the time to share with them industry information and common practices etc.
  • Be confident, prepared and stand your ground. That does not mean be arrogant and demanding. Rather exude a quiet confidence, know your facts and have back up at your fingertips. Do not cave to intimidation in the early stages. Quite often they are testing you to see just how much conviction you have.
  • Simple, easy to read and no hidden extras. Procurement people are born skeptics and are always looking for the trap. Make sure your proposal is simple, clearly laid out with adequate explanation, and does not contain ambiguity or other misleading items.

What you want is a procurement department that is just as comfortable with you and confident in the partnership as the client marketing team. They can in fact end up being one of your best allies as opposed to you biggest foe.



Ad Agencies…Increase Your Profit By 25-85%!

July 13, 2009

customer loyaltyI am certain that all of us know that loyal client relationships commonly deliver more profitable margins, last longer and often lead to referrals to other clients. According to “Service Profit Chain 2007,” a 5% increase in customer loyalty can produce a profit improvement ranging from 25% to 85%.

The basic premise is very simple. Strong existing client relationships are based on trust, confidence, integrity, professionalism and shared values. The client expects the agency, acting as a trusted advisor to continually and proactively identify problems or opportunities and suggest innovative solutions to address them. According to Millward Brown’s ‘What Matters Survey, 2007’ the reality is that clients believe that agencies are only effective at helping them meet their biggest challenges 56% of the time!

To me this signals a significant opportunity for all agencies. Take the next twelve months and focus on developing a “High Performance Organic Growth Strategy” for your agency. This approach will not only drive incremental organic client growth, but will also help you reduce your client churn ratio.

Here is my suggested approach:

  • Make your client service leaders accountable for growth. Yes, we have all heard the response, “I did not sign up to be the sales person”. But that’s not true. Outstanding client service professionals are good at nurturing the relationship, delivering on a day to day basis, and looking for new growth opportunities.
  • Develop key client growth plans. Mutually agree on what the growth goals are, jointly develop key account plans for your top 5 clients. Document what actions are to be taken over what time period of time, and who is directly responsible.
  • Give them the support they need. Senior management support and most importantly, encouragement is a critical component. Not only does the client team need to know that this is a priority, the whole agency should be aware of it and supportive of it
  • Provide them with tools that may help them to succeed. There are a number of useful tools that you can use to generate discussions with the client. Avoid the temptation to go in and sell the agency, rather focus on them and their business and use diagnostic based discussions to identify opportunities. Some suggestions are;
    • Scheduling quarterly client/agency review meetings. At each meeting take the opportunity to share a new idea.
    • Brand Audit Update. Scheduled every six months or so to assess progress. This is an opportunity to include more senior clients who are not involved on a day to day basis.
    • Agency CMO summit. Invite the CMO’s from all your top clients to a joint meeting hosted by your agency.
    • Client of the Month. Each month the agency chooses a client. Then everyone in the agency is challenged to proactively come up with new ideas etc for that client. The best of the ideas is then presented to the client in a two hour meeting, followed by lunch with the people responsible for the ideas.

So, as an alternative to spending time reading the latest industry survey, telling you that clients have again cut their budgets, spend that time developing your own “High Performance Organic Growth Strategy”.