I met Peter Preston at a business networking event recently and was extremely impressed by his down to earth presentation on developing sales teams, so asked him if he'd write a piece for us focusing on the creative industry and I'm delighted that he agreed to do so.
How agencies can gear up to focus on their sales pipelines
by Peter Preston
Existing clients are a great source of business, they already like what we do, they like the way that we do it, they know our people and as a result they are less expensive to win business from.
So we need to keep that relationship fresh.
We need to keep talking to them, surprising them with the creativity we deliver on their briefs and working to set their brands and campaigns as the stand-out in their sector – all of the facets of the relationship that they bought into the agency for in the first place.
Delivering creativity and strategy is what good agencies are all about but the most successful invest heavily in client services to manage the commercials and to keep the agencies brand alive inside the client.
Working the pipeline to increase its ability to forecast revenues is a vital part of success in any agency, allowing operations to run effectively and client expectations to be matched with the agency’s ability to deliver the brief. Running client service through the pipeline won’t create business for you but it will stop you wasting time on prospective business that you won’t win.
Business flows from our relationships if we keep talking to our clients.
Not just when we are bidding for business, not just when we have just won or just delivered and certainly not just when something goes wrong – not that it ever does….
Great client service plans time to engage clients when there isn’t any business on the table too. Clients love to get something for nothing, they hate being asked for business, they want a relationship that will run over a number of years, even if you aren’t their only supplier.
Talking to them about their business challenges, their personal goals and the brand issues will always uncover opportunities that you can bid on – even if they open the work to all suppliers you generally have a head start with a clearer understanding of the brief.
Agencies that are trusted to keep the client relationship running work build better revenues and better creative solutions for the client – work that gets better recognition in the market and makes it easier to attract new clients.
And what of all that business from prospects we really want as clients but haven’t won yet?
Generating great creative on spec to take to clients you haven’t met yet is a high risk, high cost proposition that is only justified in very special cases. Good business comes from clarity in identifying the clients you really can do business with, matching that with the right creative and using that platform to create a relationship through which profitable revenues flow.
Prospects love being wowed with great creative but they also like to be wooed. Imagination, consistency and persistence are the cornerstones to making those communications really deliver business.
Agencies that focus on generating relationships with clients and prospects that they really want to do business with will make their businesses successful in 2011 and for years to come.
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Peter makes a valid point here about our relationships with our clients and having attended a fascinating marketing strategy workshop run by South East Business Innovation and Growth I thought I’d share a handy tool to measure and manage your business relationships of today and in the future.
The Boston Matrix
Understanding the Model
To understand the Boston Matrix, you need to understand how market share and market growth interrelate.
Market share is the % of the total market that is being serviced by your company, measured in revenue terms.**The higher your market share, the higher the proportion of the market you control. The Boston Matrix assumes that if you enjoy a high market share you will be profitable. The question it asks is, "Should you be investing additional resources into a particular service offering just because it is making you money?" The answer is, "not necessarily."
This is where market growth comes into play. Market growth is used as a measure of a market's attractiveness. Markets experiencing high growth are ones where the total market is expanding, meaning that it’s relatively easy for businesses to grow their profits, even if their market share remains stable.
By contrast, competition in low growth markets is often bitter, and while you might have high market share now, it may be hard to retain that market share without lowering your rates. This makes low growth markets less attractive.
Understanding the Matrix
The Boston Matrix categorises opportunities into four groups, shown on axes of Market Growth and Market Share:
These groups are explained below:
Dogs: Low Market Share / Low Market Growth
In these areas, your market presence is weak, so it's going to take a lot of hard work to get noticed. You won't enjoy the scale economies of the larger players, so it's going to be difficult to make a profit. And because market growth is low, it's going to take a lot of hard work to improve the situation.
High Market Share / Low Market Growth
Here, you're well-established, so it's easier to get attention and exploit new opportunities. However it's only worth expending a certain amount of effort, because the market isn't growing, and your opportunities are limited.
High Market Share / High Market Growth
Here you're well-established, and growth is exciting! There should be some strong opportunities here, and you should work hard to realize them.
Question Marks (Problem Child):
Low Market Share / High Market Growth
These are the opportunities no one knows what to do with. They aren't generating much revenue right now because you don't have a large market share. But, they are in high growth markets so the potential to make money is there.
Question Marks might become Stars and eventual Cash Cows, but they could just as easily absorb effort with little return. These opportunities need serious thought as to whether increased investment is warranted.
How to Use the Tool:
To use the Boston Matrix to look at your opportunities and then use the following steps:
Step One: Plot your services on the matrix according to their market share and market growth.
Step Two: Classify them into one of the four categories. If a service seems to fall right on one of the lines, take a hard look at the situation and rely on past performance to help you decide which side you will place it.
Step Three: Determine what you will do with each service offering. There are typically four different strategies to apply:
- Build Market Share: Make further investments (for example, to maintain Star status, or to turn a Question Mark into a Star).
- Hold: Maintain the status quo (do nothing).
- Harvest: Reduce the investment (enjoy positive cash flow and maximize profits from a Star or a Cash Cow).
- Divest: For example, get rid of the Dogs, and use the capital you receive to invest in Stars and Question Marks.
The Boston Matrix is an effective tool for quickly assessing the options open to your business. With its easily understood classification into Dogs, Cash Cows, Question Marks and Stars, it helps you quickly and simply screen the opportunities open to you and helps identify where best to invest the finite amount of money, time, and effort you have available.
** Design Council research conducted in a survey in 2009 revealed that there are 232,000 design consultancies in the UK earning a fee income in excess of £15bn. http://www.designcouncil.org.uk/