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Tuesday, June 14, 2011

Why Agency New Business People Turn Over So Quickly

It is my observation that senior new business people at agencies turn over about every 18-30 months.  This is no different than their client counterparts where Chief Marketing Officers turn over at about the same rate.  I have been observing this for many years and have concluded that this high turnover is either because agencies  use the wrong criteria for hiring, their expectations are not realistic or, just like their clients, they ask their new business people to be responsible for things really not in the purview of a marketing or new business person.

Let’s tackle the last point first.  Much has been written about the rapid turnover of corporate CMO's.  I would like to give it a different spin.  Corporate marketing people are constantly asked to tackle things not in their domain.  Every senior executive at a supermarket chain knows that as soon as they refurbish and refresh a store, sales go up.  This is an operations issue and has nothing to do with marketing, per se. But supermarket CMO’s are constantly being asked to remedy the issue of declining sales due to a decrepit physical plant.  Similarly, the marketing director of a quick serve restaurant cannot solve the problem of lower sales which are related to the rise in gas prices that causes their customers to be reluctant to drive a distance for a meal.  This issue can be partially solved by promotion; but the promotion, which may increases sales, drives down profits.  The CMO often gets blamed.  Look at what is and has happened at Burger King.

And so it is with agencies. 

All agencies seem to go though cycles.  When agencies are on the upswing, new business people are heroes.  When they are in a down mode or just flat, new business people get blamed for the agency’s inability to close or to even get meetings.  That inability can be due to factors way beyond their control:  they can’t fix a bad creative product;  they can’t silence senior executives who say stupid things in presentations;  they aren’t responsible for creative which gets low test scores, which often determine the winners of a new business shoot-out.  And, they can’t resolve significant business problems – imagine being the new business person at Arnell right now. 

But they get blamed any way.

Agencies often use the wrong criteria when hiring.  Just because someone is highly successful at one agency, does not mean that that success will be translated to another.  Before soliciting and hiring someone who has done well at another agency, it is important for the new company to come to a complete understanding of the elements that made that new business person successful previously – could be as simple as attitude or chemistry among the principals or great positioning of the agency and its work.  Often, those elements simply do not or cannot be duplicated at another company.    All too many agencies simply hire a résumé, not a person.  When it comes to new business, many disparate elements must converge to create a successful new business program.  There are too many executives who have been successful at one place and cannot duplicate that accomplishment at another. 

Realistic expectations are critical to the success of new business people.  I have had many assignments over the years where the hiring executives verbalize their understanding that putting together a successful new business program may take many months or even a year or two.  However, all too often, the verbalized expectations have nothing to do with the reality that the new agency really expects it to happen in only a few months or when it doesn't happen quickly enough they become antsy.

I have previously written about writing realistic job specifications.  When it comes to new business there is no magic bullet.  The new business process can take months or even years.  If an agency is truly expecting their CMO to bring in new business within a short period of time, they have to tell their new hire up front and they have to provide him or her with the tools with which to accomplish this feat.  They also have to realize that their expectations might not be realistic.  All too often, I have seen new business people hired who spend their first three or four months merely getting the agency organized and up to speed with things like materials, mailings and presentations.  By the time these are ready for a full court press, agency management is chomping at the bit to have a new client and is unhappy with the progress of the new business person.  Prospecting and cultivation can take months or years.  All of this needs to be part of actionable job specs.

Every agency president and CEO knows that new business must be cultivated, which takes time.  I have never quite understood why they would think that their own CMO/new business person can do it faster. 

8 comments:

  1. Nice article Paul. I think what agencies struggle with when it comes to New Business People is what you are getting from them. With an experienced business development executive you are paying for experience which has been built up over years of work. That person has built up knowledge and connections which will ultimately expedite the new business process. You can't learn this at an MBA program. This is a job function where life experience comes into play.

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  2. Good insight, writing for test scores isn't all that hard - it's slightly more difficult than the human variation of stupid pet tricks. Jonathan Crainin has a good story about test scores and winning the MasterCard business.

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  3. Spot on, Paul!

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  4. Well said, Paul!
    Quite often what it takes to 'on-board' a new executive is not factored in as key ingredient and part of the strategy to ensure success. Taking the time to equip a new executive to succeed in their new organization pays great dividends and sadly often receives no investment. Then, when there's turnover of key talent, there's gnashing of teeth and all get set to spin the hamster habitrail once again. To paraphrase what you said so well, ensuring success through talent, requires the investment of time with eyes - wide open.

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  5. I didn't want to go off on a tangent so I did not talk about the importance of well-crafted job specs. All too often hiring managers get caught up in adjectives: leadership, aggressive, well-educated, etc. but forget to define the issues and the problems. This helps insure a good hire.

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  6. Paul,

    Nice article, I truly believe you nailed it when you said "Every agency president and CEO knows that new business must be cultivated, which takes time. I have never quite understood why they would think that their own CMO/new business person can do it faster."

    I am stunned to watch this happen to CMO's/BDO's every year. Business Development is about building trust levels and respect....and this doesn't happen overnight. New Business is a 24/7/365 day thing. You can not expect to win a huge percentage of new brands that have already shortlisted 5-6 agencies.

    Importantly, CEO's must concentrate more on customer retention than chopping and changing on the new business front every 18 months. I simply don't understand why most CEO's don't realize their most valuable customer is their current customer or client. Growing existing clients is also more profitable too.

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