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Tuesday, June 12, 2012

Why New Business Directors Turn Over So Rapidly, Part II


I previously wrote about why new business people turn over so quickly.  I reread the post the other day after interviewing a very successful new business director who had recently been let go.  Like all CMO’s, the heads of new business have rapid turnover.  I realize that I had previously addressed only some of the issues, so I thought I would complete my thoughts here.

Some agencies approach the hiring of new business people as a “quick fix”.  The principals of the agency know full well that it takes months, even years to cultivate a prospect.  

Many agency principals are egocentric enough to believe that no matter what a new business person does for him or her, it is always that principal who brings in the business.  So what do they need a new business person for?  The answer is complicated, but the simple version is that new business people do for the agency management what management cannot or have not done for themselves.

The first thing a new business person or marketing director does is to learn that agency’s business.  They do this so that they may properly position and sell the agency. Learning the business may entail spending hours with creative people, planners, account people and others who are involved with running accounts and pitches.  It may take weeks, if not months, to learn the strengths and weaknesses and processes of an agency.

Secondly, the new business person has to develop the tools for presentations, RFP’s, etc.  Quite often, agencies lack the necessary case histories and other information required for the new business chase – Power Point presentations, material needed to fill out most questionnaires.  Developing this material may also take months.  (I know one new business person who spent over six months just getting the agency to agree on how to position itself.  It took another three months to develop materials.)

Finally, they have to develop a prospect list. This often leads to tremendous disagreements. But this list is critical to the process.  But when finally determined, it is time to start prospecting.

The problem is often that by the time the new business person is in full swing, doesn’t matter if it is a month or six months,  management often gets antsy for results.  And these expectations often get in the way.  We all know that it takes years to cultivate prospects.  So realistically, if it takes six months for the agency new business person to get into full swing, that means that results may not happen for a full 18 months.  Many companies, despite protestations to the contrary, are not prepared to invest for that long.

So what happens? During the 18 months, business turns down and management looks at cutting costs.  Well then new business material is complete, the prospect list has been developed and some have been cultivated.  And the agency CEO or COO or ECD decides that he or she can take over the new business program so the marketing director becomes expendable.  After all, they are not directly tied to an account. 

But what is often forgotten is two-fold: first, while a new business person is not directly tied to an account, they are indeed tied to revenue, even if it is not measurable.   Second, few CEO’s have time for all the prospecting and cultivation. They are tied up on the exigencies of their day-to-day business. New business momentum takes time to build. (I learned when I ran an agency that if I stopped spending a huge percentage of my time on new business for even three weeks, that it took six weeks to catch up to where I should have been.)  If account hunting is given up for even four months, it may never recover.   

So when the agency gets ants in their pants over the current new business person, it lets him or her go and then what does the agency do?  It hires a new new business person and starts all over again.

And that is the definition of insanity.

14 comments:

  1. Through many, many years of being a principle in a small business, I found that no one can sell the company as well as the person who does the work. Small agencies must find the kind of person who is good at both doing and selling, and then allocate enough time for both. It is a rare individual, but it is the most authentic and most effective. The most successful companies have several people who can and are willing to juggle the two tasks.

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  2. Rachel: You are lucky enough to have worked for a smart, enlightened company. I speak to so many new business people who are really good, but just when they get things going, their company decides that there has not been enough movement and starts all over again, repeating the process. But you are right in your point. New business is always the job of the people who do the work, but they aren't necessarily the door openers.

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    1. You and Rachel both make good points. The ideal scenario is when the biz dev expert is also an agency partner.

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    2. John, you are right, but, alas, there are very few. Most biz dev people are merely hired guns.

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  4. Paul, your synopsis of the dilemma is spot-on. Absolutely perfect. Problem with new biz is that it's always expendable in the short-term, because the benefits (even though they can be huge) are always in the long term.

    My advice to new biz professionals: demand a contract that at least provides enough time for your outreach and prospecting efforts to begin to show results in terms of at-bats. Three years would be best, but at least two years. Tell the managers who want to hire you that if they aren't willing to invest three years' worth of one person's salary, then they aren't serious about new business.

    - Don Peppers

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    1. Hey, Don, so nice to hear from you. Your advice is excellent.

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  5. Love the last line the best! New BizDev can be measured...better reporting could be implemented to see what milestones, conversation, meetings, information exchanges and the like that are happening with the prospect. And, even if the BizDev person leaves, if the deal closes, you can easily see the impact BizDev had for the opportunity. I love being in BizDev :) Happy to talk some more (but I never worked for an Agency).

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  6. New business comes mostly from personal contacts. It comes from people known, once known or referred to the agency. Very little comes from people who are entirely unknown or have no connection to the agency.

    The new business job is different depending on the size of the shop. At the top, a small number of agencies are fighting over a small and easily identifiable number of clients, say the top 75 advertisers. New business directors are often coordinators, taking referrals from boardrooms and managing a rigid RFP process.

    Your remarks address smaller shops, where the new business person is expected to find revenue from scratch, whether they realize it or not.

    In this realm most agencies don’t see the difference between account cultivation and account stewardship and mistakenly lump the two together under salesmanship. They end up hiring stewards when they should be hiring cultivators. The problem is few people are good cultivators and lots of people are good stewards.

    One solution then is to ask every senior employee at a smaller agency to play a role in finding new business. It should be part of the job description, performance review and compensation structure. Obviously involvement will vary by function but that can be worked out.

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  8. Paul, as Don commented, your analysis of this problem is spot-on. There is a constant pressure on the biz/dev exec. to bring in new business and it has been my experience that once the business is brought in, the company isn't structured in a healthy, functional way to even service it (Hence why they probably never had the work in the first place). I would encourage anyone who is thinking about taking on a biz/dev role to proceed with caution. Oftentimes, the company may not be in a healthy enough place to even appreciate the work you bring forth, which may explain why new business is met with less appreciation and more resentment at having to fit it into the work flow.

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    1. @Anonymous: You make a good point. However, in fairness, there are many ad agencies which have had the same biz/dev directors (and staff) for many, many years. Those agencies are enlightened. The trick is to determine the history of the previous people when interviewing. If it is a new position, the company's timetable must be explored thoroughly.

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    2. Agreed, Paul.

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