Avoid These Four Agency Client Types at all Costs

boat for saleYou may have heard the expression popular among some boat owners:

The two best days of being a boat owner are ‘the day you buy it’ and the ‘day you sell it.’

Others use a similar expression. Like those who have purchased a vacation home they never have time to enjoy.  Or that convertible as a full-time car (if you drive in New England).  I’ve heard some hackers on the golf course say the same about their Titleist blades.

And it’s been said on many occasions in the PR agency world; on those occasions when a new client turns out to be everything the agency hoped they wouldn’t be – when the two best days are the day the agency wins the client’s business and the day the agency fires that client.

A boat.  A second home. A roadster that’s to die for.  That shiny new client. All seemed like great ideas at the time. All looked wonderful from the outside. And then the honeymoon ends…and you’re in it for real.

For better or for worse, things we learn in life are often learned through trial and error. While we may try to not repeat the same mistakes over and over (there’s a definition for this type of behavior), we sometimes do.

Unlike the regretful boat owner who is typically one and done, PR agencies have histories of chasing bad client after bad client, deluding themselves into thinking that this time things will be different because they will “control” the relationship and not let the client run roughshod over them.

What do I mean by “bad’ client?  Well they come in many shapes, sizes and disguises.

There’s the client whose initial budget is below the agency’s minimum monthly retainer but promises that the budget is going to increase after the first three months or when the next round of funding comes in.  Three months come and go … another three months come and go … etc.

There’s the know-it-all client who has never worked with a PR agency before but skimmed the Public Relations for Dummies Cheat Sheet which has a section entitled, “Convincing Editors to Print Your Press Release.”  Seriously.  This client knows just enough about PR to be dangerous but still doesn’t make the distinction between an article written by an actual journalist and a news release replayed verbatim on one of those free press release web sites.

Of course, there’s the client working at his third start-up, the first two of which had successful exits and were media darlings and who is expecting and demanding the same level of media interest for his also-ran entry into the dying market du jour.

And finally, there’s the worse client type of all: the one who hires you and then disappears expecting the PR program to run smoothly without them having to pay any attention to it now that a firm has been hired.  You know the type … they make a living of hiring and firing agencies as a job protection ploy.  They blow off weekly check-in meetings, rarely return your phone calls or email pleas for information but are fast to get in your face when their company is left out of a story.

But they are happy to take credit for any positive results the agency does manage to generate.  When that happens, it’s time to sell the boat.  Don’t you think?

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Love The One (Client) You’re With

220px-Stephen_Stills_-_Love_The_OneWhat’s the real cost to a public relations agency of losing a good customer?

Well, there’s the risk of bad publicity via word-of-mouth. Clients can be pretty open with their network about why they’re ditching an agency.  Many even go as far as sharing the specifics with the agencies who are vying for their business. We’ll hear anything from “I only saw the agency executives when I called them” to “they put only junior people on my team” to “we really didn’t have a good sense of what we were getting for our retainer.”

There’s also the risk of low employee morale.  Each time a client leaves a firm, there’s the concern by the now underutilized rank and file that their job is in jeopardy.  Instead of only focusing on their remaining accounts, they’re distracted by the outgoing one. They ask their friends at other agencies to keep an eye out for opportunities for them, start talking to recruiters and look for reassurance from agency principals that all will be OK.

And then there’s the mad scramble to replace the business.  Initially, the intention is to replace the outgoing client with a competing company to leverage the account team’s domain knowledge.  But the stars have to align for this to come to fruition.  For one, the prospect has to be either actively seeking a new agency partner at the time, has to be dissatisfied with its current agency and is mulling a change, or your agency was doing such fantastic work for the outgoing client (unlikely given the circumstances) that the prospect would have to be crazy to not jump at the chance to make a switch.

What happens in many cases, despite the best of intentions, is that an agency will wind up chasing the first piece of new business that comes there way even if it isn’t strategically-aligned business; even if the firm knows going in that it can’t create and sustain value for the prospect.  This creates an entirely different set of client (and employee) retention issues. Losing a good client is one thing, but replacing it with non-aligned business because employees are underutilized leads to the same nasty outcomes:  1, bad publicity (“XYZ Firm will go after anything that moves”), 2, employee morale suffers because staffers are forced to work on bad business, and 3, non-aligned business will leave a firm…eventually…starting the vicious cycle all over again.

Replacing an existing customer can cost up to five times more than retaining an existing one.  A one step forward, one step back strategy is not a growth strategy – for any business.

Client profitability increases over the life of the agency-client relationship (customer lifetime value).  The longer an account team stays on an existing account, the more knowledgeable they become about the business and thus become more deeply engaged on the account. There’s a direct correlation between high employee morale and deep engagement.  The more an account team knows about a client’s business, the easier it is to grow that account organically.

Even a small improvement in client retention rates (as little as 5 percent) can have a significant impact on a firm’s overall profitability.

Courtesy of Entrepreneur.com special projects editor and WSJ alum Colleen Debaise, here’s a great list of client retention tips directly from a few folks in the trenches.

9 Telltale Signs An Agency-Client Relationship Is On The Rocks

2008_09_24-nordicrocksWhen the relationship between a public relations agency and a client is on the rocks, the agency is all-to-often the last to know.

And in many cases, the agency has no one to blame but themselves for either not proactively managing the client relationship, for not really listening to the client or for missing client clues that all is not well — or for all of the above.  When you add it all up, it boils down to neglect – taking clients for granted and then acting surprised when a client takes the business elsewhere.

Sound a little familiar?  If you’re an agency veteran, it should.

Nothing stings more than losing a client for reasons of poor agency performance, and the realization — once the dust has settled and your firm or account team has gone through the five stages of grief — that the the client is right.  As mentioned in a previous post on client retention, proactively managing and measuring the expectations and value of the agency-client relationship begins on the first day of the relationship and only ends when the relationship does.

Once the telltale signs of a dissolving agency-client relationship have surfaced, it’s often very difficult to repair and rebuild the relationship — though not impossible.  Having been on the client side, I know from first-hand experience that once a client believes his or her business has been taken for granted, recovery is a long shot.

The good news is that many clients will fire a number of warning shots before shopping their business to competing agencies.  The bad news is that not every account team recognizes them and thus go about their business like nothing is wrong .  The hole gets deeper, and deeper…and deeper.

So what are a few of the warning signs that all is not well between client and agency?  While some are quite obvious, others are very subtle and can be missed by all but the sharpest of account team members.

Here are nine signals: 

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  • The client cancels consecutive weekly team calls, or doesn’t cancel but just doesn’t dial in only to apologize later “because something came up.”
  • The client emails you a creative program idea sent to them by another agency and asks you for your thoughts on it.
  • The client sends you a news article favorably positioning a competitor and asks, “When are we going to start seeing coverage like this?”
  • Competing agencies start following your client on Twitter, and are followed back.
  • Your client asks to see your media pitches before you send them out.
  • The interactions you are having with your client are all business and devoid of any small talk (the client can’t wait to get off the phone).
  • The client asks if you’ll consider reducing the monthly retainer by 10-15 percent while keeping the team in tact and not reducing the number of program hours.
  • The client starts expressing frustration with certain account team members and ask you to make some changes.
  • The client asks you to send over your list of tier one and tier two influencer contacts, complete with phone numbers, emails address and twitter feed info.

Am I missing any tell tale signs that a client-agency relationship is on the wane?

Client Retention Is NOT a 4-Letter Word

IMG_0143Client retention and the seemingly ever-present threat of client churn keeps public relations agency principals up at night. If you know any, just ask them.

Client retention keeps other agency leaders, like vice presidents and account directors and account managers up at night too.  If it doesn’t, well they’re in the wrong role.

There are so many good reads re: client retention advice out there that I dare not try to list them here.  But there are a few that stand out.  One in particular is the Tenacity Clients for Life Blog.   I highly recommend you check it out.  John Gamble and Steve Wurzbacher have been consulting companies on client retention for close to 30 years.  If client retention is important to you, you’d be remiss if you pass on their posts.

But while reading what the experts advise is often very helpful, those of us (and that may mean you) who have been living the agency life know that client retention doesn’t have to be a 4-letter word.  If you have ever been on the receiving end of a phone call where a client is firing you, then you know EXACTLY what I’m talking about.

100 per cent client retention is not possible.  If you think it is, you’re living in La-La Land.

But a high level of client retention (70-80%?) is possible.  And a business requirement if a firm is going to prosper.

So what are a few of the keys to client retention?

First and foremost, every prospect should be looked at by an agency individually.  What is your client acquisition strategy to help create and sustain value for a particular prospect?  It’s always easier said than done, especially when business is soft, but if more agencies closed the door on non-aligned business, client retention rates will edge up.

Secondly, take a really close look at why clients leave your firm.  There are as many reasons as there are clients.  But outside of M&A and financial issues (Chp. 11), core reasons for losing a client likely include the following:

  • you’re not acquiring the right clients under the right terms
  • you’re not proactively managing and measuring the expectations and the value of the agency-client relationship
  • your new business team is held in higher regard, are the agency “rock stars,” than are members of the client relations team; the reward for bringing in new business is higher than the reward for retaining business or growing existing business.

What’s your client retention magic?

Stay tuned for a few more ideas on how to keep client churn below the industry average.

Stop Burning Through PR Agencies – Here’s How

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Stop wondering about the relationship with your public relations agency and find out exactly what’s working and what’s broken.

If you don’t want to become one of “those clients” known for burning through one PR agency after the other, and if you don’t want to be known as a PR agency that churns through clients — then measure, measure, measure.

The mid-point of each year is always a good time to reflect on one’s business and business relationships.  It’s an opportunity to review goals against accomplishments for the first six months of the year and to consider course corrections for the next six. If you’re in corporate communications and work with a PR agency, this means it’s an optimal time to assess and evaluate this critical relationship.  Whether your agency relationship is a relatively new one (perhaps it started on the first of the year, as many do), or a well-established one, a six-month evaluation is worth every bit of time and effort.  It will nip-in-the bud elements of the relationship that may be heading in the wrong direction.

The mid-year agency assessment can be as big an undertaking as client and agency want and need it to be.  But just because the managers of the relationship “feel” things are going well and everyone is so busy anyway doesn’t mean the assessment should be a gloss over.  In fact, just the opposite is true.  If the relationship is being managed by “feel” vs. by agreed to measurement and evaluation criteria (e.g. strategy, execution/tactics, results/impact, income/investment) and on a regular basis, then plan for a bumpy road ahead.

Here’s a little help.  Consider these questions when you sit down with your agency to discuss the hits and misses of the first half of the year and your expectations for the second half.  And if you work on the agency side, insist that the senior-most client stakeholders participate in the assessment process.  If the client dismisses the process by not making enough time for it or by delegating the process to junior-level people, then a BIG problem is already brewing.

  • Does your agency team know your business, markets and your customers at least as well as you do?
  • Do your agency account team leaders understand your internal pressures or do they only see the world through one lens — theirs?
  • Is your agency team visible and communicating with you enough?
  • If not, why not?
  • Do you think your agency team is too busy working on other accounts or out trying to win new ones?
  • Is your business important enough to them?
  • When do you see or hear from the senior-most agency executives — only when there’s a problem or only when there’s good news to share?
  • Are the agency’s senior client service pros truly engaged with your business, in the trenches with the account team generating ideas and creating insights to propel your communications program forward?
  • Is your agency listening to you or do they insist on doing things only their way and throw a temper tantrum when you insist on an alternative approach?
  • Does your agency hold itself accountable by following through on their commitments or has accountability waned since the early days of engagement?

In the best agency/client relationships, issues that come up during a review shouldn’t be a big surprise to either party.  In the best relationships, communications are open and frequent enough so that major issues are raised and addressed in real-time. However, the “best” agency relationships are far and few between. In too many agency/client relationships issues stay in the parking lot with both parties hoping the issues will disappear on their own.

They won’t.

What’s the relationship with your agency like? It’s the mid-year and a good time to find out.