Respected and well-known agencies cannot depend 100% on referrals for their business anymore. Frankly, I doubt that was ever the case.

The concepts in this blog probably apply to all BtoB lead generation and new business building activities.

But since I was personally responsible for new business either totally or in part for several agencies, I have developed some dos and don’ts when it comes to building new business for them.

Advertising agencies are like any other American business. They never seem to have as many qualified prospects as they would like to meet the organization’s sales goals. So why do 90% or more of these expert, high-quality organizations consistently struggle to attract new business?

Let’s start with the things that work against sustaining new business for your agency over the long term. In a follow up article, I will talk about what to do.

1. Don’t put all of your eggs in one basket.

How many new business meetings have you attended when somebody suggested the agency select the top 10 prospective clients the agency should go after? Sounds like a good idea because this focuses the agency on what type of client they want. It also sets the stage for action.

So the team proceeds with the necessary tasks of researching the companies’ target markets, competitive environment, advertising portfolio, present agency of record, overall marketing budgets and corporate infrastructure and list of decision makers. Then the agency contacts each company to present its capabilities.

After 6 months of effort, the agency was able to secure two capabilities presentations resulting in one new business pitch. But the incumbent agency kept the business. Some agencies do not even get this far in the process.

What now? After 5 or 6 months of effort or more, there is nowhere to go.

Does that mean selecting another 10 fresh company names next year only to end up with the same result?

The moral to this lesson is that the agency must maintain new business momentum with a set number of capabilities presentations each month to sustain and grow the agency. So make the prospect list as large as possible based on your selection criteria.

Your prospect database must exceed 10 prospect companies to keep your new business program alive.

Make this tactic a part of your whole new business program, but not the only thing.

The strange thing is that some agencies don’t even go this far with their new business efforts. No wonder that they are going out of business or succumbing so easily to mergers and acquisitions (Note: not the only or even significant part of the reason for the flurry of mergers. But it certainly is a key factor).

2. Don’t set up a strategy without defining success.

Quantify how many new accounts are required to define success in the next 12 months, 24 months and 5 years.

Further qualify the accounts by preferred size, by industry, by market position and any other criteria that match the account needs to the agency’s strengths.

The reasons why this step is so critical: expectations and resources required for success need to be determined prior to creating the new business plan.

There is nothing more discouraging to leaders than working hard on the selected strategies only to find that the internal staff and corporate resources are not available to complete the new business effort.

I always recommend that agencies need to allocate between 10% to 15% of their people and investment budgets for new business efforts.

It takes talent, energy, leadership management focus and money to create your new business machine.

3. Don't create a new business-winning machine

if the top executive is not personally engaged in it.

New business costs money and requires access to the agency’s talent. Only the President has the authority to pull people off of existing business in order to dedicate a portion of their time to new business.

Any other approach starves the new business effort due to an inability to set priorities.

After all, the agency’s most important client is the agency itself. But those words mean nothing without powerful action from the agency leader.

If the President or day-to-day operational leader does not lead the new business effort by example and personal zeal, then the chances of growing the agency drops nearly to zero.

Such agencies can exist for 10, 20, even 30 years. But they eventually go under because they are typically too dependent upon a single client that represents 60% or more of their revenue.

So when that key account is acquired, merges or simply goes out of business, so does the agency. I have seen this happen personally several times.

My new business philosophy for agencies is to view every account as an account that the agency will loose through no fault of its own.

Betting the agency on a single account is folly.

With most single account agencies, they are making major profits every year, saving a lot of the money and operating debt free with a huge credit line. But when that account goes away, the agency cannot survive very long without revenue.

When that key account departs, getting serious about new business is too late. The contact base and leads in the pipeline take years to build.

What’s worse, the agency knows how to manage existing accounts. But neither the top executive nor the account team have the interest or developed the skills needed to bring in new business.

Let me add here that the creative director --- in fact, the whole agency --- must demonstrate a willingness to get involved in the new business effort.

But the greatest problem about the top executive’s non-involvement in new business revolves around resource allocation.

4. Don’t place your trust in the concept of the “heavy hitter.”

The idea that a single individual will make or break the agency’s new business effort always struck me as an excuse for others in the agency not to get involved in the risky and dirty business of “new business.”

By default, such individuals are only as good as their Rolodex. Once they run out of names, then it is back to the drawing board.

Additionally, this concept relies on the concept that the agency as a whole can concentrate on making money on their existing accounts while essentially ignoring new business. And then, if they have time, they may choose to pitch an account.

Another problem is that hiring such individuals represents the agency’s answer to the new business effort. The agency as a whole does not have to buy in to the success or failure of new business. That’s the “heavy hitters’” responsibility.

For agencies, the integration of the organization’s people, focus and energies are essential to new business success. If anything, the “heavy hitter” gets in the way of this strategy and actually isolates the agency from new business activity.

This blog is getting longer than I like. So I will finish this up with some of the “dos” that build a successful new business program for the agency in a future blog. What other “don’ts” should businesses watch out for when organizing for new business?