INBOUND 2016: Jody Sutter "8 Essential Elements of an Ad Agency New Business Plan"

Hi, everyone. All right, first I'm going to turn my mic on and then I guess ask if you can hear me. It sounds pretty good, right? Nice to see everyone. I was a little bit concerned when I woke up to the news of what can only be called an historic election last night. I wasn't sure if maybe I'd be staring at a sea of empty chairs with everyone else staring at their screens or listening to Hillary's concession speech. So thank you for being here, especially if you stayed up to watch the results. Today, I want to talk to you about building an annual plan for new business and specifically eight essential elements that I think have to go into it. I remember the first time that I was asked to do an annual plan for new business, and I was terrified. I didn't know where to start. I didn't quite know what it meant. But when I did it, what was great about it is that I found it so illuminating, and it became an invaluable tool to mark my success for the next year. And not only that, it got better and easier every year. I was also lucky enough to have a mentor, someone who had more experience doing this than I had at the time. And so that's what I'm hoping to kind of replicate a little bit for you in 45 minutes here today as a bit of a guide to get you started and help you through. So first I wanted to find out, though, how many people in the audience, just to get a sense of who we have here, how many people would call themselves inveterate planners and not like media planner or strategic planner, but people who love to plan things? Maybe you planned your days at inbound to increments. Okay, a good amount of people, but probably not the majority, which then tells me that the rest of you are somewhere along the spectrum of people who hate planning, who see it as some sort of futile attempt to control the future, which by its very nature is unpredictable, and then maybe those who just aren't quite sure where they fit in. Well, this is going to be for both of you. For the planners, it's going to align well with your natural sensibilities. And for those who are skeptical of planning, I think it'll give you a structure. At the very least, it's going to give you a structure to work within. And maybe I can convert you into why planning is so important and having a plan is so important. So that was the first couple of questions. The other question that you actually may be having for me is, what is an annual plan for new business? Well, Quite simply, or simply put, it is a roadmap to help you measure the growth and plan for the growth that you need to achieve for your agency in the coming year. And maybe more significantly, the questions are, why is it important? Well, first of all, it aligns everyone's expectations. Not only does it set expectations for you, but it aligns the expectations of the people that you work for and your colleagues as well. And related to that, it's going to provide clarity not only to you, but also to the rest of your agency on what everyone is working for. It gives you something to aim for. I find that sometimes the new business function in advertising agencies or other creative agencies can be a little bit shrouded in mystery. Maybe more so in big agencies and small agencies. But having a plan for new business, especially one that you can share with the rest of your agency, gives everyone something to shoot for and gives them a real understanding of what you're aiming for, too. I'm one of these people who believes that planning is partially looking back. And by looking back, it helps prepare you for what's ahead. So you start to see patterns, you start to see the sweet spots, you start to see trouble areas. And you're much better prepared to take advantage of the sweet spots and fix what needs to be fixed. And finally, your boss will be impressed. How many have already been asked to create or to develop an annual plan for next year? Okay, again, a few. So I don't know if it was your idea or your manager's idea. But for the rest of you, if you like what I'm saying today, then maybe later on this afternoon, send an email to your boss saying, look, we need to do an annual plan for new business. I know what it's going to look like. I know what it's got to include, and I want to get on your calendar and so that we can talk about my outline and our shared intentions. So your boss will be impressed. The other reason why I think it's important for you, and I'm making some assumptions, that a lot of the people in this audience are related to agencies that either specifically do content marketing or have that as a specialty. So, and this is a quick look at the numbers that I did, 75% of marketers are expecting to increase their investments in content marketing. 70% lack a consistent or integrated content strategy. And maybe because of that, 43% have an intention to grow their content marketing team. 51% have an intention to put someone directly responsible for content marketing in place in 2017. So if you're an agency that specializes in content marketing, the future looks really good. You're already off to a great start with your plan. So let's get into these eight essential elements that every new business plan should include. Now, I'd mentioned, well, I mentioned that I want to give you the easiest way possible to start. So my goal is to give you something as simple as fill in by numbers, paint by numbers, being realistic. It's probably not going to be that way. It's going to be more like a blueprint. But there's still going to be a lot of work to do. But it's much easier to build that house successfully with a strong foundation that's going to last for a long time and be pleasant to live in if you've got a good blueprint. Now, the first place I start going back to this idea of looking back, to move ahead is the marketplace, the field on which you play, in other words. And when you start looking at this, you want to start looking at the trends that you're seeing in the market in which you compete and the consequences those trends are going to have on how you need to stay competitive. So I work a lot with or work partially with a lot of large ad agencies. And so they have been struggling with the trend from agency of record relationships, for instance, to more project based work. So that really has caused them to change the way they approach business development and maybe even set up their agency in general. That may be less a concern for you, but maybe think about that that I just showed you. With the growing importance of content marketing in the marketer's toolkit, that's a pretty big trend. So boom, now you've got a trend you can start your plan with. You also, maybe you want to look at your competitors, who you're competing against now or who you have competed against in the last year. Are they the usual suspects or do you see ones that are maybe new? And what does that say? Does it say that you're pitching the wrong things or does it say that there are new competitors entering again? What are the consequences? And then aspirational. Who do you want to compete against next year? Along with the marketplace, you also want to look at how you're playing on that field, your own performance. You start to generate data when you start to do an annual plan for new business. So if this is your first year that you're doing it, you don't have a lot of data. This is maybe an area you spend a lot of time in, going back and looking at how many pitch opportunities you participated in. What were the nature of those? Were they quick meetings that converted quickly? That's pretty nice to have. Were they long drawn out negotiations? Were they the right ones? Are you pitching the right clients? What's your ratio of reactive to proactive? How likely are you to go out and pursue your prospects versus how likely are you to sit back and have a business development plan that essentially relies on a wing and a prayer? Not good. And I think only then once you understand the marketplace and how you're playing in that marketplace, then you can start to put some realistic numbers around where you want to go. I think the goals first have to be strategic and then you apply the numbers to those. And also at this point, well, you're going to. Your revenue for the most part part is probably going to come from two key areas. One is organic growth. And if your account teams are doing a good job, if you're doing a good job in general as an agency, you're ideally picking up more and more clients. So if you've got a robust organic growth, maybe that's going to be the primary way that you generate revenue. But usually you have to supplement that with some type of proactive prospecting, some type of new unidentified client business development. And so how much do you need to do that? So I've developed a little bit of a scenario for you here. I have to warn you, for those who maybe are more aligned to the language arts rather than the mathematical arts, this might seem a little frustrating. But here's a quick equation to take a look at. Let's say we're an agency with $2 million in revenue, and you've decided, and by you, by the way, I mean you and your CEO, if you don't happen to be the CEO yourself and your chief financial officer and your director of finance and any other leadership that makes the decisions about what your growth goals are. So let's say you're going to grow 20%. That math is fairly easy. Even for those like me who are a little bit more aligned to the language arts. That's $400,000 in new business seems pretty straightforward. But what I find is that there are two areas that sometimes people overlook and they're going to be really important for how you plan for growth. The first is client attrition. So we talked about organic growth, and if you've got a strong organic pipeline, that's great. But the fact is you're probably going to lose. You're probably going to lose clients next year. It may be because client relationships sour, maybe it's because of forces beyond your control, like personnel changes on the client side bringing in new people that maybe want to work with their own agencies, or maybe it's budget cuts and you get cut along with it. So you want to again, go back to your cfo, go back to your CEO and figure out what the client attrition is going to be. Because there are usually signs in place. You can usually look at your client roster and figure out which ones may be a little bit at risk. So in our scenario, let's assume we've got a projected client attrition of 20% or $400,000. So that means not only do you have to make up, do you need to meet that new goal of $400,000 new revenue, but you've got to actually potentially make up for $400,000 in revenue you might lose. So your new business number is actually $800,000. And my purpose in telling you this is not to scare you because it can be like a little t terrifying, especially for some reason your number has to double. But it's to make you aware and to give you a better idea of how you need to plan for it. Now, the other thing that sometimes is overlooked is when this business development, this new business is going to be coming in, when in the pipeline sits. If you've got a nice robust new business pipeline right now, maybe, probably rare, but maybe you're going to walk into the office on January 2 after the holidays and you're going to find signed contracts on your desk for that $800,000 in new business. It would be really nice if that happens. It probably won't, but maybe if you've got a robust pipeline, certain you're closer to it. But I've seen a lot of slow first quarters in my experience. I'm not sure why. Sometimes it's because the clients can't get their act together and to get out to close new contracts. So let's say you got a slow first quarter and you don't actually meet your numbers. Unfortunately, what that means is that you've got then more new business to squeeze into nine months. You've got 12 months of business to squeeze into nine months. So it actually means you've got, in this scenario that you might actually have more like a million dollars of new business. And if that is weird, think about it like one of the analogies I use to explain that is either when you were a kid or your kids, they come home, they've got four hours of homework to do, but they don't actually start it until an hour before they're supposed to be in bed. Well, it's really hard to squeeze four hours of homework in one hour. You're probably either not going to do it well or you're going to miss your goal of those four hours of completing four hours of homework. And it goes on. So no wins until the end of Q2. I hope that's not the case and you got more money to bring in, et cetera, et cetera. Again, this is not meant to alarm you. It's just more so that you can understand. Take a look back and understand when you tend to close business. If you tend to have a bottom heavy year, a lot of agencies bring it home in the last half of the year, the last quarter, then understand what you need to do to make up for that and make sure that there's a realistic number for when you need to close. So you've taken a look back, you understand where you've come from in terms of the marketplace and your performance. You've had thoughtful conversations with your management team. So you've got a realistic and intelligent number to work against. Now you need to figure out how you're going to meet those goals. And this is kind of, I think, where the fun part comes in. There's a little bit of figuring out how much activity needs to be wrapped around this. But it's also a very creative process when you get to think about the activities that are going to get you there. So some of the things you want to ask yourself, how much activity do you need to fill the pipeline is kind of the first and obvious one. How many pitches do you need to be in? But also, what's a reasonable sized client? What's an aspirational client in terms of size? Are you pitching in the right categories? If you want to go into new categories, then what kind of level of support will you need? So if you're pushing yourself into a new category, business category, it's likely that maybe you need to do a little proprietary research, maybe you need to do some. I don't even know if I want to say the term, but maybe you want to do some spec work with your creatives so you have something in your portfolio. So what level of support will you need from the colleagues in the agency? And what's your budget? How many people know what their new business is? Budget is? Yeah, I can practically count it on my. On one hand, that's not. This is not an unusual situation. I'm not sure why it is, but. Well, I do know why it is. I'm actually going to get to that. But ask for a budget. When you're having those thoughtful conversations with your CFO and with your CEO, ask for a budget. Or even better yet, anticipate what you think that budget is. They're probably going to cut it anyway. As we'll see, new business budgets are a little bit weird, but they're important. It's important to know what it is. Let's go back to Darren for a moment. In our scenario, so when you're trying to figure out the amount of activity that's got to go through your pipeline, one of the things you might want to do is, again, you've looked back. You should know by now what your average client revenue is because you've done that work in analysis. For the sake of this scenario, I took a benchmark that David Baker. I don't know if anyone's familiar here, familiar with David Baker. He's also a consultant that does a lot of management consulting with advertising agencies. And I think he's speaking here, I'm not sure which day, but he's got a lot of smart things to say. I think there's already an overflow room for his talk, but try to see him, too. But he says, or he has said in the past, that ad agencies, regardless of size, should have between eight and 12 clients. If you have less, you're probably too reliant on a few big clients that if one of them leaves, you're going to be left without a lot of revenue and very vulnerable. If you have much more than eight to 12 clients, then you probably have a lot of smaller clients that may not be very profitable that you should probably think about shedding. So if it's true, let's say what David Baker said sounds right to us, what he says sounds right. Then in this scenario, our average client is about $200,000. So that also gives us an idea of what we want to shoot for as well as an aspiration. Again, let's say that your likelihood to close at the early stage in the pitch in the new business funnel, at the credential stage, when you're starting to introduce yourself, maybe it's one and two, and that's not bad. That's one out of two at 50% is pretty good. Let's say through your analysis, you've also identified that something goes wrong, you're less successful as you start to close. So first of all, you got to figure out why that is so you can fix it. But now it also gives you A formula to figure out that given these numbers, you've got a pitch 24 times. You've got to be in 24 pitches in that coming year if you're going to meet that annual average client annual revenue of 200,000. So 24 pitches, that's six per quarter. That may not seem like a lot. Maybe you do twice that now. Maybe it seems like way more than you can handle. Again, it's where you have to think back. Well, that's unrealistic. So how do we make up for that? How do we maybe close that gap at the conversion at the pitch stage? How do we increase our win rate and reduce our pitch rate? So let me go just a couple words on budget. New business is a funny thing. So I completely advocate having a benchmark for the amount of money you want to spend on your new business efforts, the amount of money that each pitch should theoretically cost. The problem is that you may win some really big clients and spend very little getting them. And that may be for a bunch of reasons. Often it's because there's already a favorable relationship between your agency and the person at the client side. On the other hand, you might spend a lot of money. You might really go for it for a project that you ultimately don't get. So it's tricky. But the benchmarks are important. Really. The bottom line, though, is that pitching is expensive. So again, you want to lower your pitch rate, increase your win rate. Your team is also important. So this becomes the fifth element of your new business plan. The first part, again, you looked backwards. You've set some realistic goals. You've kind of figured out what you need to do. Now, how are you going to get there? Well, your team is pretty essential. So who's on your team? What do they do? And are their strengths aligned to the goals that you need to reach? Now, this is also your own team, if you're lucky enough to have a team that works directly with you. But I also think you got to think about the agency as a whole. I've seen, I was going to say very few. I've seen zero agencies. I've never seen a situation where the new business function is so autonomous that it doesn't require the help and the input of other people at your agency. But there are various variations on a theme to what a new business team looks like. For a lot of agencies, this is what it looks like. How many people does this describe? Yeah, and maybe that's you, as well as doing about with three other functions as well. If this is the case, perhaps you're lucky enough if you're not also the CEO to have a really strong relationship with the CEO. And I think this is so important because it's the CEO who has the drive and the passion and the vision. Passion and vision, I think are two words that I try to avoid because they've become so overused that they're virtually meaningless in our world. But typically, but I have actually worked with a lot of CEOs, especially smaller agencies, who actually do embody passion and vision for their agency. And so if you can work closely with them, it's really important. And if they can support you, very important. So that if it has to be you, make sure you got a good relationship with your CEO. Maybe you're at a larger agency and you've got a team that can support you. Again, what are their strengths and how does that align to your goals? If you're a new business team and maybe also they've got some support team, maybe they can become that engine that helps you generate new business content so you can go out and sell. If they're really good at organizing chaos or really good within processes and systems and you're good at selling. I have to apologize for some of the formatting. I think that's where Mac meets PC. But anyway. So as I said though, you're going to have to rely on others at your agency, especially if you're interested in going beyond your comfort zone. So it's a good idea to let the people who run these departments know now. Get them involved in your plan, let them know that you might need extra production help or, or extra strategic help or extra creative help. And then perhaps you are part of a network of agencies, perhaps you're part of a holding structure. So if that's the case, sometimes holding companies can actually hold you back. But if you can use that relationship intelligently, take a look and see what the assets are at the holding company level or maybe skills and expertise that's represented at sibling agencies and see if those maybe help you achieve your goals. And do you need to include them in your new business plan. So there's the organization and the different types of new business organizations that you might exist in. And then there's also the personalities or the personality of the agency. And I've defined them. This is not a definitive list. Certainly there may be others, but some agencies or you might be part of an agency that is filled with natural born hunters. And this is not just the new business people. These might be your account people. Maybe you know, I'VE seen actually creatives who are also really good salespeople, really charismatic with their clients. So if you recognize that your agency is a. Is a company filled with natural born hunters, then maybe what you need to do is put a strong prospecting program in place, divide it up intelligently, assign it to different people, give them their prospect lists and set them loose. The problem is that this is very rare. I see very few agencies that are like this. But maybe another variation is you're an agency of natural born promoters. So if there's anyone from VaynerMedia in this room, your boss, Gary Vaynerchuk is a natural born promoter with someone like that at the helm, or Bob Greenberg, if people are familiar with rga, Natural born promoter, he's someone. They are people who generate a lot of their own ideas, have strong opinions. You can build thought leadership around that. You can merchandise that into speaking engagements, books, social media. So I say then give them those outlets that they need for ideas and approach it that way. Maybe you're a small team, multiple hats that new business department of just you that may be also the head of account management. I say be practical and think about the one to two things that your team can do and do well. If you're not a sales culture, then maybe think twice before trying to put sales methodologies into that sales culture. And there are solutions there. Either maybe you need to go into more of a marketing approach or maybe you need to hire a third party to do that. Outbound prospecting. That's one two things that you can do and do well. Another variation CEO, the chief sales officer. That woman or man who is so passionate and has such a clear vision and is charismatic. What I see often though is that CEO who says I need to find a new business person that's just like me, a clone of me. If I could only duplicate that. You know what? It's never going to happen. So if you are either the CEO or, or you're the person who reports into the CEO and is responsible for business development, my advice is to do what you can to offload some other stuff from your CEO's plate and get them to do more sales. That person is the lifeline to your business. So tee up the ball from them and let him or her hit it. Keep them organized and on track. That'll be your role. And then the final variation, I actually hope none of you are, none of you can relate to this. And that is the type of agency that once they finally hired, maybe they finally hired that new business that dedicated new business role and their response is it's your job, keep us out of it. Well, the first thing you might want to do is actually start looking for a better job because this is always going to be a frustrating environment to work in. But if that's the case, then your plan should probably be about the one to two things that you can do and do well. And again, it's important to get in there and manage expectations with your CEO, your CFO and the other department heads. So I think that lead generation, the early part of the, of the sales funnel and the end part, pitching and closing, have to be or ideally are supported by marketing and pr and I call it the new business triumvirate. And once you get to know, once you know more about what your agency's strengths are and what your goals are, you may want to adjust those weights a little bit. And maybe you're not, maybe you don't. Maybe you're more of an agency of natural born hunters. So marketing will take a smaller role, maybe your natural born promoters, marketing might take a larger role, but regardless, you should include it in your new business plan. The first question you might want to ask yourself is, does your agency's positioning serve you? And I've seen a lot of agencies where that answer would be, there are too many agencies out there who have positionings that are vague, that sound like everyone else. And by sound like everyone else, they don't sound good. They actually sound vague and uncertain. I think there are a few other sessions here too being given by folks like me on how to better position your agency, how to specialize. And you might. So if you're thinking, wow, my positioning doesn't serve me, when I go out and I make those calls or send out those emails or talk to people at conferences and I say, oh yeah, we're an integrated marketing company, marketing agency that puts the client first. Yeah, you're probably the 50th person that has said that to that person that day. So that's not a position that serves you well. But let's say you do have a really strong positioning. Then how are you telling your story? Do you have a set of a hierarchy of sales messages? Is it being told consistently in your case studies on your website and the way you pitch and then what tactics align well with that story? So you probably want to include. This is a little hard to read, some sort of marketing calendar. Marketing calendar in your plan. So this is actually something that I did this time last year with a client of mine. The client is a network of content Production Studios. Content creation. Creation studios. They had just hired a very charismatic CEO. And by the way, for anyone who would like this, I'd be happy to make this presentation available to anyone who would like it. So hired a charismatic CEO, Natural born promoter. They had just gotten an infusion of private equity, so they had a budget. So that became. All right, how do we use that? Well, we develop thought leadership. We got him out speaking. We sponsored certain conferences that were going to be right for us. We had a robust email marketing campaign going out. Our goal was twice a month. Well, they ended up doing about once a month, but at least it was consistent, a strong PR campaign. We hired a third party PR person to help us get exposure. We started producing our own events. We also had a strong internal communications plan. So depending on your agency, maybe you only have a couple of lines, but think about it through the calendar. It's going to help you also understand where and when you need to focus your resources. Then finally, the last big chunk of your plan should be your operations. This is an area that I often see overlooked, which I think is a shame. And the first thing you want to see is what was your operational level of excellence. So you may be taking for granted the things that you did to make your job, your life easier. The processes that you put in place, the systems and tools that maybe you invested in to make things easier, the staff that you may have hired. Essentially what you want to do here is you want to identify what you've put in place and what you need. The stick stuff. You need to keep track of your prospects and your progress. In other words, a CRM system. A lot of my agencies, their CRM system is an Excel spreadsheet. I don't advocate that it's better than nothing because a lot of my clients have nothing also. But there are a lot of really great CRMs out there. You're probably all familiar with them. You probably already use them. Salesforce Insightly. Sugar CRM. Keep track of your prospects and your progress. You need something to find intelligence on your prospects. Thank God for LinkedIn. Do you ever think like, what did I do without LinkedIn 10 years ago, 15 years ago? So LinkedIn is a great place to look for intelligence on your prospects. But sometimes if you want to go specifically into a certain category or you need to get deeper, it might make sense to invest money in a third party database that collects names and information and contact information about the people that you need to pitch. So there is, in my world, there's the list which has a product called winmo Access Confidential. There are also a lot of specialty ones for, say, retail, the stuff you need to communicate with your prospects, clients and partners. I hear HubSpot is pretty good at that, so you may want to talk to the folks at the HubSpot booth if you haven't already, or if you don't already use them. And finally, depending on how big you are as an agency or how maybe geographically spread out you are, you may want to think about investing in tools to help you communicate with each other. So so that could be things like basecamp for organizing projects and pitches, or Docurated to help organizing your new business content, your case studies, your old proposals and pitches, and finally, and again, apologies on the formatting the executive summary. So when I first did this, I actually had the executive summary summary as the first essential element, and that didn't sit well with me. Well, it's the first thing that your readers should see, but it's got to be the last thing that you put together. And that sounds so obvious, but I think that a lot of people take that for granted as well. So it's the last thing that you see. Just like you would do for a proposal or for a report, you want your readers, who don't have a lot of time, to be able to understand what they need to pay attention to. It's also a great way for you to control the agenda, to make sure that the things that are most important to you to grow the agency are highlighted there. So there we have our plan. The executive summary is back in its correct place for when you distribute the plan. And I think I've got a few minutes for questions, but now is a great time to start writing plan, if you haven't already. It's early November. You've got six to seven weeks to get this done. And if you're still feeling overwhelmed, by all means feel free to contact me either with questions about this presentation or your new business plan. So thank you very much.