Business Development-More Reactive Than Proactive
In our 2023 Agency New Business Report, we asked agencies:
Are you satisfied with the success of your new business plan/program?
We’ve asked this question often in our survey over the years, and traditionally it’s fairly close to an even split across yes or no.
This year that’s changed, with 56% reporting no and 44% reporting yes.
Our RSW agency clients are predominantly small and mid-sized agencies (as were predominantly the takers of this survey), and as the stats have reflected so far in our report, it’s incredibly hard to find an individual to drive new business.
Which means that process, if there is one, falls to a partner, principal, or owner.
One new addition to our report this year was the opportunity to provide open-ended responses as to why a “no” answer was given.
Here are a few some of those responses from your agency peers:
- Feels way more reactive than proactive.
- We are better doing lead gen for our clients than we are for ourselves.
- Continue to find it difficult to find any strategy or content that is getting through in our current environment.
- We are chasing too many of the wrong opportunities.
- It was historically based on referrals which have mostly dried up and we’ve struggled to create an outbound program due to lack of experience and time.
- It’s me running it and budgets have shrunk.
- There is no plan here. Principals are too busy with overwhelming existing work and may not fully understand the value of constant new biz efforts.
Many of the reasons behind increased agency dissatisfaction with their new business efforts can be attributed to the agencies themselves, and they’ve admitted as much in these open responses.
If there is no real plan created or acted upon, then yes, you will be dissatisfied.
However, other factors are much harder to control, like shrinking referrals, diminished budgets, and the extended length of time it’s taking to close opportunities.
Three ways we’ve seen agencies, including our own clients, combat these are:
- Ensuring organic growth is a priority.
- Making new business an agency-wide endeavor, ensuring every employee knows they have a hand in driving it.
- Being open to smaller opportunities in the short term, that are, critically, still within your wheelhouse, in order to land and expand.
Certainly another reason agencies are unsatisfied can be tied directly to another question we asked:
Relative to last year, have you seen the dollar volume of new business opportunities increase, decrease, or remain the same?
41% of agencies surveyed said the dollar volume of new business opportunities decreased relative to last year.
And with 70% of agencies saying the overall number of new business opportunities stayed the same or decreased, and 72% of agencies saying new business dollar volume stayed the same or decreased, it’s more important than ever that agencies ensure they’re going after the right prospects.
Per one of the open-ended responses from an agency above,
we are chasing too many of the wrong opportunities.
Leading into 2024, now is the time to look at your current client base:
- Are you holding on to clients who don’t pay you enough, or in a timely manner?
- Are you targeting right-size prospects, in terms of revenue?
- And lastly, are you charging enough?
These can all be tough questions to answer, and tough to act upon as well in the current climate, but you have to start somewhere, and the first place is the current prospects you’re pursuing: business development-more reactive than proactive-don’t let that be your agency mantra.
And lastly, another factor in the overall dissatisfaction:
45% of agencies said business is down somewhat to significantly, and 28% said the business is unchanged to this point.
The reality of 2023 from a business development standpoint for many agencies, especially those trying to handle new business internally:
prospects have been harder to break through to and slower to respond, and are dragging their feet once it’s time to start the work.
On top of that, it’s been tougher to fill the pipeline.
While you can attribute this to the current state of the economy, another contributing factor in equal measure is the lack of an ongoing business development engine.
That engine will not solve the time it takes to start the work, to be fair, but it will ensure you have a plan and structure in place to consistently stay in front of your prospects in a meaningful way.
And potentially good news, the economy is showing some signs of becoming healthier, but not overheated, in terms of employment and inflation.
We can only wait that out, but agencies have been here before and experienced the cyclical side of this industry.