Insights

In times of turmoil

The future is looking even less predictable for clients and therefore their agencies.

We’re in a recession – and that’s not just in the UK.

Some of your clients may become jittery as they find it harder to predict the future and anticipate their sales. Some clients will become more risk averse and avoid making decisions. They procrastinate. Your projects get delayed, frozen or even cancelled. Some clients may look to consolidate their agencies, others may choose to take some work in-house. The danger is that agencies may see their revenues decline as a result of these challenges. Agency Profitability can come under pressure in addition to the cost of living crisis and inflation.

So, what can an agency do to help their clients, protect their own revenue and profitability? Here are 7 suggestions.

1. Review the financial KPIs of your agency ie the revenue, your profitability, cash-flow and spread of business. Watch them closely each month for change. In my conversations with agencies, I often hear about over-dependence on one or two clients. I’m often told it is not a problem and then the situation changes and now it’s a problem. This risk will be exacerbated in tough times. No client greater than 15% of your revenue is a good rule of thumb to aim for.
   
2. Have real business conversations with your clients, especially the senior decision makers. Ideally do this face to face. It’s too easy to hide behind emails and zoom calls, which are wonderful, but not the same as sitting in the same room with your clients on a reasonably regular basis. When we’re in the same room with our clients it is far easier to build rapport, trust and have an open two-way dialogue.
   
3. Focus on mission critical activity for your clients. Activity which is on the radar of your client’s Csuite. Mission critical activity is less likely to be cut when your client’s FD decides to cut budgets, which they will be more likely to do in times of turmoil and uncertainty.
   
4. Understand what your clients see as value, what they see as success for their business. Then provide campaigns and projects that deliver massive value for your clients. Of course that’s obvious but sometimes we can get side-tracked. Some agencies are becoming more interested in value-based fees. For many agencies and consultancies this could be a good route to pursue.
   
5. Think investment, not cost. See it in two key areas. Firstly, see clients as investment opportunities. You choose where to invest your time and effort, especially those clients with potential for profitable growth. Secondly think about whether your work is viewed by clients as their investment with a healthy return rather than a ‘cost’ coming from a specific budget.
   
6. Don’t just think about now, think in the future. What precedents might you set now which you might regret in 12- or 24- months’ time? It may be tempting to offer reduced rates or discounts to attract or retain business in the short term (as many agencies did during Covid). The danger is that can send the wrong message to clients who are then very unhappy when you want to return to previous higher fee levels.
   
7. Taking time out to stop and think is vital. Many of my agency clients find that taking time away from their day to day and working with me to grow their business for the future is so important. I don’t have all the answers however having worked with 160+ agencies I have seen the ‘all too easy’ mistakes that can be made or avoided.

If you sense turmoil is affecting your agency let’s have an exploratory 30-minute chat – the sooner, the better.