So You Want to Run an Agency? (and Maybe

8/14/2019 So You Want to Run an Agency? (and Maybe

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So you wantto run anagency?(and maybe sell it one day)

BY MARK SHERRINGTON


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2009 Mark Sherrington

Design & layot: Gabrielle Gy

Coer photograph: New Age Portraits

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INTRODuCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Section ISO WHAT IS IT YOu DO ExACTLY?How to position yor agency or growth. . . . . . . . . . . . . . . . . . . . . . . . . . 8

Section 2

ITS ALL ABOuT THE PEOPLEChoosing the right partners. How to attract, retain

and motiate the right team. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Section 3

GET OuT THERE AND HuSTLE!How to win new bsiness. How to make a great pitch

to a prospectie client. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Section 4

THE POWER OF PROCESSThe need to deelop methodologies and how to go abot it. . . . . . . . . . 30

Section 5

BEAN COuNTINGHow to manage the bsiness nancially and hit the targets.

How to charge and manage pricing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

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Section 6

SEx WITH THE CLIENTHow to deelop the key clients in the bsiness. . . . . . . . . . . . . . . . . . . . 48

Section 7

ERGONOMICS AND FENG SHuICreating the right physical enironment to do great work

and bild yor brand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Section 8

GLOBAL DOMINATIONThe perils o an international network and how bestto bild one protably. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Section 9

THIRTY SILvER PIECESWhen to consider selling ot and how to go abot it. . . . . . . . . . . . . . . . 66

Section 10

BITS AND BOBSRandom additional nggets o adice. . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

ABOuT THE AuTHOR

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

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so you want to run an agenCy? BY MARK SHERRINGTON

Idi

Oer the years I hae had many conersations with people who wanted meto share my eperience o rnning a marketing serices grop. It seemed like

a good idea to write as mch o it down as I can remember in a short eBook

and make it aailable to whoeer may be interested.

I shold eplain my backgrond.

I only eer ran one agency/consltancy, The Added vale Grop, rom 1988ntil 2002 when it was sold as part o the Temps Grop Plc to WPP. AvG

was ocsed on marketing bt we had 4 diisions who all worked ery

closely together. These coered:

Brand marketing in all its acets inclding innoation

Design

Market research

Internal commnications and brand engagement

Temps was a media grop and I hae also known many dierent ad

agencies rom both sides o the ence

So that is what I know abot. We started in the uK in little old Hampton

Wick, jst otside Kingston-pon-Thames to be precise bt ended p with

oces in France, Germany, Soth Arica, Astralia, Greece pls another

cople o small satellites. We eentally acqired agencies in Japan and the

uSA. Dring my time we grew to roghly 1000 people.

I inclde some iews abot epanding internationally and acqisition as well

as what is inoled in selling ot to a bigger grop and in act being acqired

by an een bigger one.

5baCK to Contents Page >


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AvG was a project based bsiness, we had ery little by way o retainers

and predictable income streams. This infenced or deelopment and the

way we managed the bsiness and I coer that too. Yo will need to make

adjstments, thereore, i this does not describe yor bsiness.

We worked in eery indstry sector imaginable with the eception o ery

hi-tech or indstrial. Or client list was what is oten described as Ble Chip

the key point to make here is that or clients were neer spending their

own money! They worked in the main or large corporates and had decent

bdgets.

AvG was eentally sold or, eectiely (its a long story) $100 million. It

is now part o the WPP grop, the design and internal commnications

bsinesses were spn o into dierent diisions and other consltancies

were added nder the AvG fag. To the best o my knowledge it contines to

thrie, many o the original team stayed or a long while and so I gess we

created some kind o a legacy and a brand.

Anyway, this is not a credentials presentation. All o this is by way o

backgrond to help the reader nderstand the basis o the adice and

perspectie I oer. I dont oer it as a seminal work or een close jst

an honest personal iew o what I learned abot rnning an agency. Any

o the team and many o the clients will tell yo it was not all plain sailing.

Like eeryone else I learned as mch throgh ailre as sccess. Bt what

I did learn I share with yo as grist to the mill. Something or yo to think

abot and weigh alongside all the other adice yo will get pls yor own

eperiences. I shold also say that I neer stopped asking adice o other

people specically, people who ran other agencies or consltancies and

generally, bsiness people I respected. That wold be my rst piece o adice

to yo hae a point o iew bt neer stop being crios.

Enogh o the set p, let me get on with it. I yo are rnning yor own

bsiness yo hae no time to waste.



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This is what I coer, yo can read it as one piece or dip into it whereer yo

want jst by clicking the headings.

s h xc?

How to position yor agency or growth.i h pp. Choosing the right partners. How to attract,

retain and motiate the right team.

g h h! How to win new bsiness. How to make a

great pitch to a prospectie client.

th p pc. The need to deelop methodologies and how to

go abot it.

b c.

How to mange the bsiness nancially and hit thetargets. How to charge and manage pricing.

sx h h c. How to deelop the key clients in the bsiness.

ec F sh. Creating the right physical enironment to

do great work and bild yor brand.

g . The perils o an international network and how best

to bild one protably.

th sv pc. When to consider selling ot and how to go abot it.b random additional nggets o adice.



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seCtion i

S h is i d xl?

HOW TO POSITION YOuR AGENCY FOR GROWTH.

When yo start an agency and, at arios times thereater, since things

change yo hae to decide a) what yo are going to call yorsel and b)

what it is yo do.

Lets start with the easy one. What do yo call yorsel? There are 3 choices:

The srnames o the onders and partners e.g. Bartle, Bogle, Hegarty

Something that more or less describes what yo do e.g. The Sales

Machine

Something entirely abstract e.g. Yellowhammer

Note: ery oten options 1 or 2 become acronyms whether yo like this or

not so think it throgh.

Please do not go or option one! It is tacky, clichd, pretentios and

ltimately limiting. Also, since most people will ignore this adice, it will ail

to dierentiate yo rom thosands o others. Obiosly it can work bt what

abot when one o the senior people leae or go mad (it has happened), what

abot ambitios senior colleages who want to get their name inclded,

what i yo merge? It is a really bad idea go or options 2 or 3.

We went or option 2, althogh in a airly abstract way The Added vale

Grop. It had something to do with marketing bt we cold dene it the way

we wanted and it allowed s a high degree o reedom in how we deeloped.

On the other hand we called the design agency, Brown inc, ater the onder

Dae Brown. His partner Peter Hollingsworth neer enjoyed this bt that is

another story.



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My adice is simple. I yo really are, or eample, a design agency, that is

the market yo wish to compete in and yo are clear that yo hae some

kind o competitie adantage (e.g. cheaper or more creatie) then call

yorsel a design agency. Do not call yorsel a Brand Agency no-oneknows what that means despite lots o people sing it, and please dont call

yorsel something dat like Brand Stewards.

On the other hand i yo want to position yorsel to be able to grow yo

may be starting in conentional PR bt yo want to epand and change the

way clients see the category then either go or the list o 3 (maimm)

distinct bt complementary areas or een consider something that ladders pto a broader benet e.g. Reptation Management.

On yet another hand, The Added vale Grop neer gred this ot. No-one

eer got Marketing Agency. Ater 5 years we moed on to Brand Growth

and ery ew people got that either. They now call themseles a Brand

Deelopment and Insight Company better bt they are 20 years old now

and most clients hae long since made p their own minds.

Obiosly it did not hold s back too mch, bt it did not help eternally.

Internally I like to think that the continos debate abot this (and it was

continos, resracing eery time we did a new brochre or web site)

was actally qite stimlating and led to some great innoation in terms o

serices. In all likelihood we scceeded becase we did some o the other

things mch better.



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seCtion 2

Is ll b h ppl

CHOOSING THE RIGHT PARTNERS. HOW TO ATTRACT,RETAIN AND MOTIvATE THE RIGHT TEAM.

I hae had many long discssions with people abot their choice o partners

how critical it is, the criteria yo shold se and how yo mst NEvER

compromise. I dont hae the statistics bt I wold hazard a gess that the

ast majority o agencies that go bst do so or no reason other than the

partners ell ot.

So heres my adice (reprodced by kind permission o SOGiants.com where

it was rst pblished)

Pick yor bsiness partner like yo pick yor lie partner

At the heart o eery great bsiness is a partnership which is more importantthan yor choice o wie or hsband. OK the latter is more important to yo

bt the sccess or ailre o yor bsiness partnership has a big bearing on a

lot more people. So how do yo know yo hae the right bsiness partner?

There are 3 simple tests.

Neer mind TLC leae that or the partner yo go to bed with eery night.

Im talking TLR trst, like, respect. Yor bsiness partner (or partners) hae

to pt a tick in eery bo EvERY BOx!

t can yo trst the person 100%? Not jst money, althogh that is pretty

important, bt can yo trst them completely abot anything. They will get to

know yo pretty well, can yo trst them with keeping secrets abot yo?

lk do yo really like this person. Yo dont hae to loe them, yo dont

een hae to like them that mch bt yo mst like them a bit. Yo spend



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more time with this person than anyone else. Do yo hae anything in

common, can yo share a joke, do yo enjoy being with them?

rpc do yo respect them or who they are and what they cando, especially the things they do really well which yo dont the best

partnerships complement each other.

Tick in eery bo yo cant jst like them and respect them bt not trst

them 100%. Yo cant trst them and like them bt not really respect them.

Great qote rom a partnership that broke p: Allegedly, someone commentedto Messrs Lennon and McCartney that Ringo was the best drmmer in

the world. They both brst ot laghing and said, Hes not een the best

drmmer in the Beatles. Bt they probably liked him and trsted him.

So get yor partners together or prospectie partners i yo are abot to

start a bsiness. Look each other in the eye and ask yorseles do we

trst, like an respect each other? Any dobt on any one and yoe gotproblems.

I speak rom eperience as someone who had a great partnership that

eentally, ater 10 years, started to crmble as the mtal trst, respect and

liking diminished.

The net part o this section comes in 3 parts:

Attracting/selecting the right people

Retaining the right people

Motiation

Beore lanching into this let me jst make the mega point that people are

yor single biggest isse. Yo may think it is clients, hitting the nmbers,

the competition bt it is, in act, people. With the right team none o the



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other things become isses. No amont o time yo spend on people will

be wasted, it is yor single biggest sccess actor. I yo become ecellent

at nding and hiring the best people, the place where eeryone wants to

work and where eeryone is happy and motiated yo will bild a erysccessl bsiness.

I probably spent 25% o my time on this and 100% worrying abot it. We

also had one o or ery best directors take this on as their special ocs and

hired a really otstanding HR director long beore most agencies or size

wold hae done.

Attracting/selecting the right people

Yo mst think and behae as i yo are always looking or good new people

becase yo shold be. It does not matter how togh the bsiness climate

is, there is always room or a really good new recrit. I I came across

someone ecellent I always went ot o my way to hire them, irrespectie o

or crrent trading position. In togh times, jst set the bar higher (bt thenyo shold always do this). On the other hand, een i yo are riosly bsy,

resist the temptation to lower the qality standards in terms o who yo hire.

As Stee Jobs once said better a hole than an asshole. Any compromise

yo eer make on people will always come back and bite yo in the ass .

By ar the best sorce o good people are the people already in the

bsiness. Yo hae to be a little carel with this, they are sometimes

relctant to introdce people who they think are better than them (we did

not nd or senior team were ery good at nding other senior people).

Howeer, they are yor best scots so we oered big incenties or anyone

nding good people.

The right head hnters are also a big adantage. We made a ery deliberate

point o cltiating a cople o the best rms o headhnters in or area. We

broght them in to the bsiness, eplained eerything abot s, bilt the



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relationship and made it clear that i they eer had good people we were

always interested. This had two adantages:

We went to the top o the list or any good candidate they had

They were antastic PR or s

Head hnters are always ot there talking to people. We won seeral

clients who told s that they had heard great things abot AvG rom or

head hnters. We paid their ll ess, we did not haggle and we were well

rewarded or bilding this long term relationship.

O corse, yor ery best PR comes rom yor clients. The better yo treat

yor clients the more likely they will be to recommend good people to yo

and een to want to join yo themseles. Seeral o or clients came oer to

work or s.

We occasionally ran recritment ads or new people bt de to the sccess

o the aboe, not oten. When we did, we treated the recritment ad aseectiely an ad or the agency as a whole not jst or new people. In a

recritment ad yo are allowed to be immodest and really talk p what a

great place yo are, how yo only hire the best etc. And, o corse, clients

read this as well!

So assming yo now hae a fow o good people lets moe on to the

selection and indction process.

SELECTION AND INDuCTION

We latched on airly early to the idea that choosing the best people was a

critical sccess actor or s and that hiring people who did not work ot

was a disaster. So we deliberately set ot to design an interiew process that

helped s choose only the best.



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To begin with we had a ery clear idea o what best meant. It will ary or

dierent types o agencies or consltancies bt or s it was:

Really smart

Passion or marketing (and their particlar specialty within this)

Radiators

Let me eplain radiators. We had a iew that there are 2 types o people

radiators or drains. The ormer are warm, optimistic, energetic, empathetic,

spportie, condent (bt not arrogant). The drains are the opposite een

thogh they may be bright and passionate abot marketing. We discoeredthis the hard way we lost (thanklly) seeral o the senior team early on.

Some were regretted losses bt most were not, they were drains. In their

place we hired some tre radiators.

We also had this notion o the Christmas Party test. very simply i we

looked at the prospectie hire and elt, een thogh they were bright

and good at what they did, no-one wold want to sit net to them at theChristmas party we trned them away. Conseqently we had great parties

and, or the most part, great people.

INTERvIEW PROCESS

Bt there was more to it than that. We had a 4 stage interiew process.

There wold be an initial interiew. In this interiew we asked the obios

qestions abot their Cv and the things they were most prod abot. We

also had a cople o qestions designed to probe their tre passion or

marketing. One eample o this was I yo cold work on any brand in the

world, which wold it be?. I someone is passionate abot brands they

hae no problem answering this. I they are not they gie some bllshit

answer abot being a tre proessional able to be enthsiastic abot any

brand. I also sed to gie them another qick test to discoer what kind o

marketer they were. Id pick a brand (oten I chose Nike) and told them to



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imagine I was their new boss bt someone who had neer worked in this

category beore. So the qestion was, What wold yo tell me on my rst

day when yo were brieng me, what is the most important inormation

to get across. This seemed to neatly diide eeryone into one o twogrops. Either they told yo all abot the market size, how mch it was

growing, who the competitors were, the distribtion channels, pricing etc

etc. In other words they described it as a bsiness albeit rom a marketing

point o iew. Or else they started talking abot the brand and some sel

insight like People by Nike Trainers with no intention o eer going near

an athletic track they pay a premim or perceied athenticity and brand

ales. We aored the latter grop bt other types o managementconsltancies might go or the more bsiness oriented. The point is yo

mst know what yo are looking or and the kind o qestions that tell yo

whether yo hae ond it.

I they passed the interiew then we asked them in or the morning and set

them a real task based on a real project. They had a ew hors to sit throgh

some backgrond material and then they were asked to brie a team o 4-6o or people on how they saw the isses and how they thoght we might

tackle them. This worked nbelieably well it really sorted the wheat rom

the cha. With this eercise lots o things became ery clear whether

they cold handle pressre, assimilate arios data and make sense o it,

commnicate and present well, work with the team.

This last point was so important with this mock eercise yo cold see

whether the person cold actally listen to other people while standing their

grond on things they elt strongly abot; whether they cold accept bilds

on their thinking and bild on other peoples ideas.

It was amazing how some people with really strong Cvs, who had

interiewed brilliantly, ell down at this stage. Eqally we discoered that

some people who we were nsre abot ecelled when yo actally

worked with them.



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The third stage came immediately ater the mock project eercise. The

candidate was taken to lnch by a grop o agency people, some o whom

wold be their peers, one or two might be more jnior, bt no senior

people. The candidate was able to ask any qestions abot what it wasreally like at AvG and or people cold also orm a nal jdgment on the

Christmas party test.

People wold sometimes all down at this stage. Once let alone with their

peers and some jniors, less attractie aspects o their personality might

come throgh e.g. arrogance. I they ailed to engage the jniors and talk to

them on an eqal leel this was the kiss o death or s.

Finally, they wold hae one nal interiew with the most senior person

we cold eld, oten, at my reqest, that meant me. I neer regarded time

inested in selecting people a waste.

McKinsey hae a 7 stage interiew process althogh I sspect it does not

inclde the criteria we sed.

For the record I only eer oer-rled the process once. The person in qestion

had not gone down well with the team at lnch. They thoght she was

haghty and aloo. I knew she was shy. At the time o writing she is the CEO

o the entire grop, loed and admired by all her team and her clients. On the

way to the top she was also, or many years, the person we pt in charge o

all people isses, working alongside the HR director.

Also or the record, my partner, who was brilliant in many ways sadly not

inclding his jdgment o people, oten by-passed the selection process

altogether and jst hired people o his own bat. They were all nmitigated

disasters, as may hae been the case i I had done the same thing.

When yo hae deeloped yor own niqe selection process yo mst stick

to it no eceptions. Een i yo personally take the nal decision at least



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yo do so haing ollowed the ll process.

AvG also had a ery well deeloped indction process that coered not jst

the rst week bt the rst ew months. I am not saying we always did thisbrilliantly bt we did pt real eort into making sre that the new recrits

were properly introdced to the bsiness and trained in all or processes,

methodologies and cstoms.

There is more I cold say bt hal the ale and n is gring this ot or

yorseles. Jst remember, THERE IS NOTHING ELSE YOu DO THAT IS

MORE IMPORTANT THAN THIS NOTHING!

Retaining the right people

OK this is pretty important too bt irreleant i yo do not get the right people

in the rst place.

O corse AvG lost people oer the years and some o these losses weremore regretted than others (some were positiely celebrated we didnt

always hire the right people and ineitably people change). very ew people,

and none o the regretted losses, let to go to a similar job or a bigger title

and more money. Why?

We worked ery hard to make AvG a really n place to work,

We constantly recognized and rewarded sccess and eort,

We promoted people as ast as we cold, we responded as best we cold

to peoples need to try new things and take on new challenges.

Some o this was semi-ormal we had reglar Friday get-togethers where

we awarded silly prizes and small gits. A lot was ery inormal. We had 3

bars in or London (Hampton) oce and I spent a lot o time in all o them.

Normally jst or an hor or so, I and other members o the senior team the

smokers and drinkers especially wold go down and jst hang ot with the



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team. Wed talk work and wed talk a lot o nonsense.

We inested a hge amont or a bsiness or size in training. We did

this in sch a way that it orced together dierent grops o people within theagency and we made it a lot o n. The training reinorces or cltre.

I, and others, went ot o or way to get close to the really high fiers. We

were always aailable to share any isses they had, proessional or personal.

Eeryone is special bt some are more special than others. Yo need to know

who yor real stars are and make an etra eort with them. Obios bt

not always done that is why we were oten able to hire really otstandingpeople who were looking arond or new opportnities becase their crrent

employers did not show they aled them enogh.

We were always ery nice to or clients (see below) bt we stck p ercely

or or people i we thoght they were being badly treated by them. We

deended their work and we passed the bck p not down in the eent o a

problem. We did not always do this and we had some clients we were notprod o becase they treated or people badly on occasions, bt they were

thanklly ew and or them we elded or more robst teams.

We worked hard to balance the aspirations and bsiness plan o the bsiness

with peoples own needs. We were opportnistic in the way we took chances

based on what key people wanted to do. To gie jst one eample o this, we

had a French woman who joined s. She did really well or a cople o years

bt then one day she came to my oce in tears her hsband has been

posted back to Paris and she had to leae. My response was to sggest we

opened an oce in Paris not on or ocial plans bt not a crazy idea either.

AvG Paris became the biggest and most sccessl o or international oces.

There was a best practice article on motiation in the Harard Bsiness

Reiew many years ago. It is one o their most reqested reprints. Basically it

says that the two things that work best are recognition and rewarding people



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by oering things that enhance and enrich their job rather than jst more

money. Bt the money does matter as well!

BENEFITS

So, what abot the hard st the money and share options?

Or iew, and I wold commend it, was that we aimed to be among the best

salary payers bt neer the best. Yo cold always leae the agency or more

money. We bilt or competitie adantage in being a great place to work

with really interesting projects.

As regards shares we did go down the road o giing both shares and share

options. By the time we sold ot almost hal the agency was owned by

people in the agency other than the onding partners. This was obiosly

skewed towards the senior team bt we pshed share ownership deep

into the bsiness. I we had not done that we wold hae had to pay higher

salaries and bonses, I am sre, and I do not beliee that we wold hae

grown so big. The ery biggest people bsinesses actally operate aspartnerships. We were sort o a hybrid.

There are other ways to do this yo can oer phantom shares. This gies

people a stake in the tre ale o the agency bt keeps the actal share

register and oting rights clean.

There are pros and cons and no ed ormla it depends how things work

ot or the agency. No point in oering shares i yo neer intend to sell any

part o the bsiness. Bt no-one eer beliees yo wont so it is hard to hide

behind this and keep all the shares or yo and the onding partners (I did try

bt it didnt work!).

My iew is simple i yo aspire to grow yo hae to spread ownership

nless yor margins are so big yo can oer-compensate or not doing so by

oering ery high remneration and prot share.



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BONuS SCHEMES

As regards bons schemes I stdied what seeral other people were doing

and we cobbled together or own ersion that worked qite well not erywell or s.

This was or ersion:

For eery $1000 salary yo earn yo can in theory get 1 point.

How many points yo actally get depends on how yo perorm relatie

to yor 6 key tasks or the year (see below) and some oerall iew o yoerss yor peers.

So i yo earned $50,000 yo wold hope to get 50 points. I yo had not

hit yor key tasks or others were seen to hae done better yo might only

get 45. I yo did brilliantly yo might get 55 or 60.

The ale o a point depended on the achieement o the prot target

typically a point was worth $150 bt o corse less i we had a bad year,

more in a good year.

Great in theory, not so great in practice or two reasons. Eeryone did well

(or at least we thoght so bt we were sot markers as yo might hae

gathered) so there was not mch dierence in the points spread. Also,

howeer hard we tried, otside the senior team, no-one really elt connected

(able to hgely infence) the ale o the points. I dont think or bons

scheme was that eectie in retaining or motiating so why am I telling yo

abot it?

Well, at least we pt thoght into it and at least we made it ery transparent.

We tried to redce to a minimm the arbitrary natre o bonses. I wold

certainly recommend yo do the same een i yo deise something simpler

and/or more eectie than or scheme. (Interesting that it is always called a

bons scheme not a system people dont trst schemers!)



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Motiating people

A lot o this has already been coered. The point to make is that it is the st

that does not cost mch money that works best. Recognition, gratitde,making it a n place, personal deelopment opportnities, pride in the

company and its reptation these are the big motiators.

We were a project based bsiness and not eeryone howeer hard we tried

to make it so was responsible or selling the projects. The reslts o the

projects typically 6 weeks in terms o client delight and desire to award

more work were airly eident as the year went on. Isses and problemswere rectied along the way mostly.

Oer and aboe this we introdced what I later discoered was the best

practice in perormance management a 6 key task system. We jst made

it p!

PERFORMANCE MANAGEMENT

We started with the oerall 6 key tasks or the bsiness and eery diision

and then we cascaded that down to eery indiidals 6 key tasks. These

normally inclded tasks related to client work (i they were client acing),

tasks related to their particlar nction, and personal deelopment tasks.

These ormed the basis o the appraisal system (done twice a year) and as

already noted the bons scheme. All o this was done ery transparently

eeryone knew abot (and most were inoled in deciding) the company 6

Key tasks. Personal key tasks were no secret either. When this system works

well there is a clear connection between the company and the indiidals

key tasks they are mtally spportie.

It is a great system bt it needs to be implemented in a determined and

consistent way. It also needs to take accont o changes that happen throgh

the year.



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I it is done well it also nderpins all the sot aspects o motiation and the

hard aspects o the remneration system by giing eeryone a clear sense o

what they need to do and how well they are progressing.

The killer point or me is that I wold introdce this system i the company had

only 10 people in it. By the time yo hae 50 or more it is essential. I mst also

stress that it applies to the senior team and CEO as well they mst hae their

6 key tasks and they mst eel responsible and accontable or them.

WHY DIDNT I GET PROMOTED?

People are ambitios and in a small bsiness like an agency they hae a

ery clear, ery personal iew, o where they stand erss their peers. Titles

matter the moe rom accont manager to accont director, getting a

place on the actal board, make a big dierence to yor sel-esteem not jst

yor take home pay. In a big corporate they nderstand this bt they do not

need to oer-react to it. I someone in BP is disappointed they did not get

promoted this year tant pis as the French wold say. Sad i they leae, pityi they lose motiation or a while bt not the end o the world. In an agency

people leaing or being demotiated is the end o the world becase it has a

direct and immediate eect on yor bsiness.

Yo cant promote eeryone all the time bt we did nd a way to mitigate

the eect o people not getting promoted. Firstly we ensred we had seeral

layers so the leap rom one title to another was lessened (althogh making

it on to the board always was and always shold be an important jmp).

Secondly we set ot ery clearly, nder a series o criteria, eactly what was

epected and reqired or each leel. This was made ery transparent. At

appraisal time, i the person was not to be promoted we made it clear why

and what they wold need to do oer the ollowing year to change this.



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seCtion 3

g h d hsl!

HOW TO WIN NEW BuSINESS. HOW TO MAKE A GREATPITCH TO A PROSPECTIvE CLIENT.

I sed to take eery opportnity when chatting to people rnning other

agencies to ask abot new bsiness. How do yo go abot it? Do yo hae

a New Bsiness Director? What works or yo? How do yo market and

promote the agency?

Eeryone had a point o iew, no-one seemed to hae the answer.

By looking at what other people did and generating some ideas o or own

we tried a lot o st. We ran ads. We did brochres. We did cold calling.

We pblished special sreys to get PR. We employed (wasted a great deal

o money) on PR agencies. We attended trade shows and conerences.

We targeted a particlar client and went ater them. We tried jst aboteerything.

Once we got in ront o someone, and especially i we got as ar as writing a

proposal (which we always pt a lot o eort into) or strike rate was good

75% or higher. So what do I think really worked in terms o getting in ront o

people and how do yo make the all important great pitch?

Lets look at it in terms o the target response or the prospectie client. Yo

want to hear them say one o two things:

i hv h h , h h

h p . i.e. Receptie

i h i h h , i h h,

i k h. i.e. Interested



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The best way to achiee the rst o these receptie (or as we say in

marketing, top o mind awareness and brand salience) is throgh thoght

leadership. Yo need to pblish lots o st, get on as many platorms as

possible and o corse i possible, yo wold like to top the leage tablesand win the awards bt pblishing and platorms are the most reliable

and are within yor git to achiee. Hae a point o iew abot isses that

people want to write abot and that interest clients. Look or opportnities to

deelop points o iew.

Thoght Leadership

A client once asked s to gie or opinion on what was a typical bdget or

a brand like ors. It wold hae been so easy to say how long is a piece

o string and gie them all the theory and best practice on bdget setting.

Instead we sed one o or people who had a little spare time to do a short

stdy and as well as telling the client we pblished the reslts. For the net

year we had loads o oers to speak at indstry conerences and lots more

colmn inches simply becase we had a point o iew abot a topical area.

Interested

The best way to achiee the second target response interested is throgh

word o moth recommendation. Stdy ater stdy has proed this and I

know it rom my eperience on the client side the most important thing

is that yor clients rae abot yo. It is as simple, and o corse as hard, as

that. Withot yo asking or een knowing, yor most enthsiastic clients

will tell their mates abot yo they want to! They want to show o that

they are working with great people. And i their mates hae an isse on their

mind they will ask them Who do yo se or design work? And they will

happily tell them and sing yor praises becase people like doing that in

jst the same way they like to tell yo abot the latest, best restarant they

hae isited.



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I yo nd yorsel in a bit o a new bsiness lll yo can always actiate

yor reptation with clients and ask them to recommend and introdce yo

to their mates. I they do really like yo they will be happy to do so.

At AvG we sed to say (it was in or mission statement):

We treat eery assignment as or rst chance to show how good we are.

Jst keep doing great work or clients, eceed their epectations, smother

them with loe and attention, commit and oer delier. Bsiness will walk

in throgh the door and yo will realize I was right when I said haing great

people is yor single biggest isse certainly it is not winning clients.

The Pitch

So, i yo hae made people receptie and yo hae got them interested

yo may get inited to do a credentials presentation. Typically yo get

an hor althogh i the prospectie client is interested they oten let the

meeting oer rn.

So what do yo say in that hor to maimize yor chance o getting an

assignment?

The answer will srprise many o yo yo say as little as possible.

So many agencies/consltancies, especially ad agencies, make the mistake o

spending the whole hor o the new bsiness pitch talking abot themseles.

How great they are, what makes them dierent, case stdies, eamples o

their work etc, etc. They se all the time to talk abot themseles. WRONG.

use the rst 10 to 15 mintes maimm to introdce yorseles and gie

the headline o who yo are, what yo do (big point, I will come back to

that*) and what makes yo dierent. Make it as brie as possible and

jst inclde typically we do this or these kind o companies. Resist

all temptation to epand jst be brie, enthsiastic and condent (not



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arrogant). Then get the client talking.

Ask them abot their career, their Cv. Ask them what isses are on their

mind, what is going well, where do they hae problems. Jst get themtalking and as they are talking nd a ew important places to show that yo

know something abot the isse and hae done some work in that area (i

yo actally hae, i not jst wait ntil they come p with something yo can

comment on).

The ery best pitches are where the client actally spends most o the time

talking abot themseles the worst are where yo spend all the time talkingabot yo. As Bett Middler said Bt that is enogh abt me, why dont we

talk abot yo and what yo think o me.

Gien the chance, clients want to talk abot themseles and what yo think

o them.

* I said Id come back to the point abot being able to say, sccinctly andpront, eactly what yo do and thereore what yo are selling. This was

really drmmed home to me when I went back on to the client side. The

nmber o new agencies who managed to talk solidly or an hor and neer

once say precisely what they did wold amaze yo. In the rst ew mintes

when yo do yor introdction yo mst inclde some ery clear statement

abot what yo do. A good way to do this is jst to say A typical project or

s is when we are asked to.

A ew more obserations abot the Pitch that might help.

I yo make a statement abot how great/dierent yo are back it p with

something. For eample:

We hae really great people, the best in or indstry.



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Mch more powerl i yo can back it p with, or eample:

We hae deeloped a really eectie and thorogh way to nd the ery

best people, we spend more on training and we pay the highest rates

Now I beliee yo.

We deelop great relationships with or clients.

Back it p with something:

On aerage or clients hae been with s or 10 years and I deote a day a

month prely to check in with my clients abot their bsiness, how well we

are doing or them and where we can improe.

I yo mst brag, be selectie, make it brie and back it p.

In the nal analysis, two things impress a client.

Firstly, enthsiasm we all like enthsiasts. This is hard to ake bt i yo

can coney a genine passion or what yo do it will get yo most o the

way there.

Secondly, condence we all like people who make s eel condent. Again

ery hard to ake, either yo hae a sccessl track record or yo dont, bt

there are other things yo can do to make the client eel condent:

Pase and think beore yo answer a qestion.

Show that yo listen.

Find something that yo can get back to them on and then eceed their

epectations by coming back ahead o time obiosly haing done a lot o

work to address their qestion.

Sggest, at the right point, that they might like to talk to one or two o



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yor clients o the record to get an honest iew abot yo.

Yo will also nd that consistently doing great work or eisting clients

makes yo condent see point aboe!

Who does New Bsiness?

I hae let ntil last who shold be doing all this. Shold this be the

responsibility o the New Bsiness Director, the boss or CEO o the agency,

eeryone in the agency or a ew key, senior people?

I dont hae mch time or New Biz directors nless it is a prely clerical role researching the targets, making arrangements or the meeting etc. Yor

best salesmen are yor best people, yor best practitioners. Prospectie

clients want to spend time with whoeer does the work. Field the top team

bt also recognize that among them some will be better than others at

selling (which as I hope I hae shown is actally abot letting the client by

by allowing them to open p abot what they really need).

We spent years bldgeoning all the senior team and most o the agency into

doing new bsiness. In the end we recognized that more jnior people were

great at indentiying targets and yo cold incentiize them to do this. We

also recognized that some senior people (me) really enjoyed selling and some

did not so we ocsed on the ones who enjoyed it and let their enthsiasm

shine throgh.



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seCtion 4

th p f pss

THE NEED TO DEvELOP METHODOLOGIES AND HOW TOGO ABOuT IT.

Eery great agency or consltancy deelops their own set o processes and

methodologies and inests the time and money to ensre that these are

nderstood and sed. They also improe and pdate these, they innoate,

bt they do this sparingly and selectiely by sing the people who nderstand

how the crrent set o processes work beore they set abot changing them.

People think this is only the presere o the management consltancies

and their like bt eery good agency does it. Ad agencies may do it ery

inormally (probably to their cost), they may be commnicated by word

o moth and eample rather than by training manals. Bt eery serice

bsiness has to codiy what they do well in the important areas o their

bsiness and somehow nd ways to ensre that this is sed consistently,throghot the bsiness.

At AvG we were process mad at least I was. We deeloped the AvG way

o doing jst abot eerything:

How to take a brie

How to rn any and eery type o project we sold

How to interiew and hire people (see aboe)

How to think creatiely and rn an ideation system

(which we branded Idea Generator)

How to do nancial orecasts

How to rn a training workshop

I worked with a small and ery senior team to reiew all or processes and

methodologies at least annally and we had lots o teams throghot the



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bsiness working on deeloping new ones.

We een had a way o designing certain physical areas o the agency like

the Idea Generator rooms that we had in eery AvG oce arond the world.

We were I was a process qeen. We probably had too many and we

certainly missed a ew key areas we had no time management system,

or eample, and did not keep time sheets (becase I hated them). We also

resed to se anyone elses system we always deeloped or own.

It created a ery strong cltre becase as a ery wise CEO once told me,yor cltre is in eect yor operating system. The way we do things arond

here is eectiely what it is like arond here. It made sre that certain qality

standards were maintained, it allowed s to indct new people qicker

and more eectiely. It gae clients condence. And rather than stifing

creatiity in thinking or in approach it released it becase it gae people

a ramework in which they cold innoate. I anything goes then nothing is

new and nothing can be ealated.

Most importantly, it got the margins p becase it saed time and that is

really yor only big cost. I eeryone does it their own way and constantly

reinents the wheel inconsistently yo waste a lot o time and money.

Eery sccessl people bsiness the proessions obiosly hae learned

that they need process. I it is jst a collection o indiidals, each doing their

own thing, then it is a co-operatie with shared back oce costs and yo can

neer eact an economic rent on the people yo employ.

Process does not kill creatiity

I sense I may be losing the interest o readers who rn creatie agencies

ad agencies, design agencies becase they see process as stifing real

creatiity. I hae already said I do not, qite the opposite, althogh I coness



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my passion or process was neer shared by or design agency. They hated

process and resisted eery attempt I made to get them to introdce more

discipline. They certainly rejected the kind o processes and the way they

were trained into people by the Added vale side o the bsiness. Theywere branded dierently Brown inc and they ran their bsiness ery

dierently. Bt mch to my qiet satisaction, oer the years, they deeloped

their own ery eectie set o inormal processes that were releant to their

work and their people and rankly their boss, the eponymos Dae Brown.

And they did it brilliantly.

Process does not need to be heay handed and i the agency is small enoghit can be more inormal, more word o moth tradition. It does not need to

be like McKinsey nless yo are McKinsey (still the biggest and best at what

they do). Bt there has to be process a way o nderstanding what works

and what does not and a way o making that yor niqe way o working.

Be Selectie

As I hae said, AvG, thanks to my obsession, were a bit process mad. It is

best to start by being highly selectie jst gre ot what are the critical

sccess actors or yo and ocs on these areas to establish what yo

beliee to be best practice. Spend some time identiying what works and

why and then think abot how best to captre and share this with the people

who need to know. Maybe it is the hiring process, maybe it is the way yo

take and write p a brie? There are some obios ones bt eery agency

is and shold be dierent. I know o one who ocsed ery heaily on what

it took to make their company the ery best place to work they way they

treated people, the parties, the riendly eedback, the enironment, HR policy

eerything. They worked ery hard at it, they won top awards as the uKs

best employer (not jst among agencies), they commanded erce loyalty

among their sta and they hae done ery well. That is a process althogh I

sspect they did not call it that. They codied what being the best place to

work really meant so they cold delier it year ater year.



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using eperts to deelop Process

I hae already hinted at a little o how yo go abot this. There is one thing

I wold add. This is an area where I wold and did inest in otside help.There are specialists with specic epertise who can help yo and oten only

an otside perspectie is able to detect what yo do dierently intitiely

and do well. AvGs idea generation and acilitation process were deeloped

with an otside consltant (e-Synectics) who eentally joined s. The

approach to semiotics similarly inoled an established otside epert who

then joined the team. A lot o the HR processes really only took shape when

we broght in a ll time HR director.

Steal with Pride and get clients to pay

As with many isses I also learned a lot by asking arond. When a ery

sccessl mate o mine eplained their bons system we set abot

reinenting ors. One o or headhnters had a great process or oering

sabbaticals which we stole with pride and rolled ot across the grop.

We also set abot deeloping new methodolgies or projects by rst

analysing what other people were doing.

Most importantly we sed client work to deelop or processes. until

we won and did or rst two market segmentation projects we had no

methodology we made it p as we went along bt we ery qickly

gred ot the best way to do it and then trned that into a really thorogh

methodology and set o processes which became a major income earner or

s. We sed work with leading ashion brands to help s deelop a process

or identiying trend setters.

The best agency innoation work is paid or by a real client yo jst need

to be able to bl yor way throgh it or hae a really great client who

backs yo.



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seCtion 5

B i

HOW TO MANAGE THE BuSINESS FINANCIALLY AND HITTHE TARGETS. HOW TO CHARGE AND MANAGE PRICING.

Most agencies and consltancies are ery simple to nderstand rom a

nancial point o iew. They hae ery simple P&Ls, cash fows and balance

sheets. Why is it then that they are ery hard to rn nancially and indeed

most are badly rn commercially? Martin Sorrell nderstands the latter and

that is his ace in the hole as a bean conter himsel he deeloped a wayo sqeezing an etra point or two o margin rom badly rn agencies by

enorcing a ew simple nancial tools and processes. Good or him, bt

I neer elt he nderstood the rst point theyre actally qite hard to

manage nancially i yo ale people, clients and ideas.

I only eer presented or nancial reslts to him once. He spent some time

reading all the charts we were told he did not like yo to comment on themas he was qicker at reading nmbers than yo, which was ndobtedly tre.

So I jst sat as he sqinted at the gres we had prepared they were not

ery good. Ater a ew mintes he made his prononcement Yor margins

are too low.

I replied bt thanklly only in my head Thanks Sherlock any smart

ideas on how to get them p other than raising prices or redcing costs

withot losing good people and clients?

And that is the point.

Yo can orget abot a balance sheet o an agency there isnt one to speak

o since nearly all yor assets are intangible with the eception o cash in

the bank. And yo can een orget abot cash fow it really is not that

complicated, yo jst hae to get yor payment terms right and enorce



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them. The only thing yo need to ocs on is yor P&L and as part o that

yor orecasting.

So lets keep it simple.

Yor P&L consists o 3 items:

Pc what yo charge

V how mch client work yo hae

C what yo pay people and how many yo hae (pls a bit or yor

oces and any disbrsements i.e. money yo pay sppliers)

Lets look at each in trn.

How mch do yo charge?

I all yo sell is time this is airly simple. Let me back this p with a simple

ormla:

Take the cost o someone their salary and all ringe benets pls a bit or

their share o the oerheads (jst add on 20% or sake o argment). Then

add a rther % or the prot yo want to make. I yo want to make a

30% prot then mltiply by 1.3.

Assme they can reasonably do 200 days a year ater weekends and

holidays. They will neer be 100% occpied earning money rom clients

there will be slack times, training times and new bsiness times. Assme

they are 60% occpied or 60% billable. (I yo think this is sot then take a

higher percentage). This will gie yo 120 days.

Diide their total cost by the nmber o days and that is their daily rate.

That is what yo need to recoer rom a client project. I it takes them 10

days then yo need to recoer those days times their daily rates.

O corse more than one person works on a project and yo cannot always



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accrately predict how long eerything takes, bt yo hae a basic system

yo can work to.

I yo keep time sheets which I hate yo can keep track o this. And thatis precisely how all the management consltancies, who only sell time, do it.

All yor eort has to go into predicting how long eerything takes and

ensring yo get yor target % o eeryones time occpied e.g. 60%. All

that st abot methodologies we talked abot comes in here i or no

other reason this is why management consltancies hae set ways o doing

eerything.

I am not saying it is dead simple bt it is airly simple.

Charging by ale not jst time

Bt what i yo want to charge according to the ale o an idea? Forget

what it costs in terms o time, what is it worth to the client? What i yowant to bild in a sccess actor? What i it is worth selling one project at

break een or a loss becase yo actally make yor money with ollow-on

implementation work?

Eamples: Accentre make a lot o money rom IT systems; ad agencies

sed to make a lot by selling media or the ads they created; promotion

agencies get a mark p on the widgets the consmer can win etc.

Most agencies neither are, nor want to be, prely time based. So how do

they price things? The answer is normally some sort o hybrid, ad hoc,

comple, intitie way with a heay regard or what their competitors are

charging (who do the same). It is not easy.

Are yo waiting or the answer? Pity I dont hae one. I think yo hae

to behae as i yo were time based and at least know yo are always



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recoering all yor costs pls some kind o prot margin. Yo hae to make

some eort to nderstand on aerage what arios types o typical projects

inole in terms o time. From this yo hae to deelop a price list or rate

card, i only a notional one i.e. not pblished to clients. Yo then need to sethis as a way o keeping track. I yo eel yo can charge more to refect the

ale to the client and/or lack o competition, or yo hae to charge less to

make sre yo get the ollow on implementation work, then yo can bt at

least yo hae a baseline.

Price Increases

There is another ale in haing daily rates and a price list een i only sed

internally to help deelop the proposal price. Yo can take price increases.

We did this at AvG and eery now again we wold annonce in the agency

that we were ptting prices p by, say, 5%. Somehow it worked, yo wold

qite qickly see that the aerage project price went p by at least that

amont bt o corse that might mean we did not price it correctly in the

rst place!

Peer grop Reiew o Pricing in Proposals

We also institted a system that worked well or a while where any proposal

had to hae both the work programme and prices checked by someone

else senior not inoled with the client. That way we kept an eye on qality

and pricing. This kind o peer grop reiew to keep yo honest is highly

recommended.

Other ways to Price

There are many other ways o managing pricing. I hae heard o agencies

charging eery client one price $50,000 per month in ees which coered

the cost o the agency team pls a air prot and ensred that no client

sbsidized another.



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I hae heard o a PR agency a good, ll serice one that charges a set

amont per colmn inch achieed. They do a lot more than jst get colmn

inches bt they se that as a proy or pricing.

Obiosly people discss an annal workload with clients and then negotiate

a monthly retainer. Both parties accept there will be swings and rondabots,

light months and heay months bt oer the year it all comes right and at

least the agency has a predictability o income. Tre bt in my eperience

one side or the other, client or agency, always gets screwed with a retainer.

Retainers can be ery tricky to set and police. They also only work or certain

types o agency/client relationship where there is repetitie work.

Conclsions on Pricing

So what do yo take ot o all this? Pricing is the rst item on the P&L and

it is not straightorward as it is in, say, a manactring indstry. The only

adice is that yo MuST gie it thoght and yo MuST monitor it constantly.

It is also REALLY HELPFuL i yo hae some notional price list and or ratecard so yo can monitor it and so yo can take price increases.

Reene is what really interests yo and reene is, o corse, price times

olme ...

volme how mch client work yo hae and will hae

I am tackling this beore cost bt let me make the point here that i yo do

not know how to price and cost yor bsiness it is ery hard to know when

to go ater work and when to trn it down. It is ery hard to know where yo

make most prot.

Becase most agencies do not know how to price or cost their work they

hae a simple refe:



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Get as mch work as yo can and only stop selling when people start alling

oer throgh ehastion and clients desert yo becase they eel neglected.

This is natral bt not smart. So it is nder the heading o olme that I wantto talk abot orecasting becase that is the key. The problem is partly that it

is hard to predict what will happen with a project yo hae won it may take

longer, one stage might get delayed, the client may ask or additional work

bt mch worse than that, yo cant predict how mch work yo will win in

the rst place. Yo discss projects with eisting and new clients all the time

chances are i eery single one came to rition yo wold be sted and

i too many ail to come throgh yo are also sted. Agencies are thereorelike airlines they oer book in the epectation that not eery passenger will

pitch p.

At AvG we deeloped, ater mch trial and error, a brilliant and simple

system.

We had A, B, C and D lists. These were reiewed by the senior team eeryweek.

The A list was ongoing work, st yo hae raised a prchase order or and

were able to inoice. These were discssed rst how was it going, wold

the client denitely want to do the second stage and when, were there any

resorce isses, was it roghly working ot as predicted in terms o costs

and time employed etc? We also checked whether inoices had been issed

and discssed any late payment problems

The B List were all the projects or which we had sbmitted a proposal. We

had a good strike rate bt we did not assme we wold win eerything (or

more oten win it and start when epected since there were oten delays). So

we assmed 60% wold come throgh as predicted.

A lists and B lists were laid ot oer the months we knew what or costs



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were so we cold see where the shortalls were likely to come and thereore

how mch we had to trn p the new bsiness eort. Which brings s to the

C lists and D lists.

The C list captred the hot leads people we were talking to, or abot to talk

to, bt who had not yet asked or a proposal the new bsiness pipeline i

yo like.

The D lists were the targets new clients and new diisions o eisting

clients that we were going ater. These always had someones name net

to them as the person in charge o getting or oot in the door. In act eeryitem on any o the lists had someones name against it.

The A, B, C and D lists were all in one docment (on a compter system

eentally) and we spent 2 hors eery week going throgh it. This worked

ery well and we got better at spotting where we had isses and where

we needed to ocs or attention. It also gae s the ability to rn seeral

international oces nancially at a distance (althogh there was lots o aceto ace contact or other reasons). We knew what the costs and prices were

the real isse was orcasting the olme, and we cold monitor that rom

the A lists etc.

At least we thoght we knew what the costs were.

understanding, controlling and allocating Costs

A nance director a good one once said to me that irtally eery

bsiness is inadeqate at lly nderstanding and allocating costs. It mst

thereore be dobly tre o agencies, not traditionally the most disciplined o

bsinesses, and yet it is so easy i yo try. It reqires simple systems o job

nmbers and only the most modest procrement system (how mch are we

spending on tais????). Most agencies dont do this well becase they dont

want to. They may hae systems bt they dont enorce them becase the



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senior team does not enorce them. I think I nderstand the psychology o

this. I wold highlight three actors.

Most people want to rn their own agency bsiness precisely becase1.they do not want to work in the kind o corporate enironment that conts

eery cost. They ltimately care abot the qality o the work more

than the cost and thereore prot. They are jst ndamentally not cost

oriented. They will commit more time than estimated i they think the

client needs it, they will throw a laish party i they think the sta need it.

They will inest in nplanned new entres, a new meeting room and yes,

a new Porsche (been there, done that).A ecessiely cost conscios agency enironment is bad or bsiness2.

becase it is bad or the sta and the clients. I hae recently worked

with a decent agency bt a ery cost conscios one I did not enjoy it

and dont think their sta did either. Cost conscios agencies eel like

sppliers not partners.

There is a logic fow in all this agencies are abot people in eery sense.3.

Yor single biggest cost is, directly and indirectly (nice oces, greatparties, innoation projects etc), people. Yor only real assets are yor

people and yor processes, which themseles are largely people based.

Good agency heads oer-inest, npredictably so, in people. Someone

has a personal isse yo carry them or a while. Yo see someone great

yo hire them whether or not yo hae work or them right now. Yo

always err on the side o oer-inesting in people and that screws yor

costs bt in a good way.

So what is the adice. very simple hire a really good nance director well

beore yo think yo need one. Do it early, go or the best and pay or qality.

Let them manage among other things the costs. Let them keep yo

honest.

I wold not recommend Martin Sorrell he wold be way too epensie

bt it is o corse how he got started. The Saatchi Brothers broght him



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in and I eel sre he did a great job or them bt o corse he spotted the

chance to do it or himsel. So maybe hire someone with less ambition or

global domination. Howeer, WPP are ery good at KPIs.

KPIs

... are o corse key perormance indicators, the set o measres yo se to

rn the bsiness inclding the nancial KPIs. The typical KPIs that are sed

in agencies are:

Income per head

Prot per head

Fied costs (oces etc) to income ratio

Aerage length o tenre per client

Aerage income/prot per client

% o proposals won

Aerage serice time per member o sta

Sta chrn (leaers to joiners ratio)

There are lots more and many ariations on these. Yo can initiate certain

measres, like some measre o client satisaction, preerably one condcted

by an independent person. Best practice in this area (or any indstry)

is to look ery hard at client delight the % o clients who say they

wold recommend yo to a colleage, who eel yo eceeded deliery

epectations. This will neer be 100% bt stdies show that i yo raise it

rom een 10% to 15% it has a hge eect on yor bottom line it is trly a

key perormance indicator.

There are a ew pieces o adice abot KPIs I wold oer:

Yo really mst hae them!

Yo mst actally se them to help yo manage the bsiness. That means

they shold be in some way linked to incenties.



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It helps to be selectie and ery thoghtl yo dont need to measre

and track eerything, jst a small selection o the right things (see point

aboe these are not complicated bsinesses).

Yo will need to be able to measre and allocate costs with a reasonable

degree o accracy.

They shold inclde KPIs that coer inpts and otpts. Prot per client

is an otpt as is a measre o client satisaction or delight. It is what yo

get as a reslt o doing certain things. Yo mst also thereore measre

the inpts what it is that best achiees the desired otpts.

McKinsey measre and reward the nmber o relationship bilding meetingsa partner has with a client. Interestingly, so a McKinsey riend always told

me, they measre bt do not reward income per client. Their theory wold

be that i all the inpts are right the otpts take care o themseles.

I yo hae been smart and hired a really good nance director this will

be their area. They mst orm a point o iew based on analysis not jst

opinion o what the KPIs shold be. As a senior team yo mst be certainthat they really relate to the sccess actors o the bsiness so they mst

inclde a lot o KPIs to do with people.

Charles Broome ran the AvG oce in Soth Arica (and then the Arica

Asia region). At the start o his A/B/C/D list meeting eery Monday he ran a

temperatre check with his team. He asked them to rate the agency on 3

dimensions:

s v how oer-worked eeryone elt, what was morale like.

Q k how happy were clients, how good was the work they

were doing

bk to what etent people elt they were progressing

personally and to what etent the agency was deeloping better ways o

doing eerything.



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It was a qick 5 minte eercise bt it helped him keep track o what he elt

were the key people isses beore they tackled the nancial KPIs.

Time Sheets and the alternatie

This is an interesting debate I hae already said I hate them. Finance

directors o corse loe them and point ot, with some alidity, that it is ery

hard to measre and allocate costs i yo cannot track the single biggest cost

peoples time. Management Consltancies (and all the proessions) lie by

them, Ad agencies lagh at them. Bt some management consltancies do

not se them and there is at least one ad Agency BBH that does alwaysse them.

So what is the answer? My answer is do not hae them bt I hae adice to

oer i yo go this road.

Yo hae to break the bsiness down into small nits, preerably 20 or less

people. At that size the head o the nit always has a pretty good idea whateeryone is doing and can, with an acceptable degree o accracy, estimate

what time shold hae gone in to a project erss what actally did. For

the rst 5 years AvG was eectiely less than 30 people, it was a bsiness

I cold completely get my arms arond, I did not need time sheets to

tell me what was going on. As it grew, we kept it in small nits (all ery

interconnected) and this seemed to work.

Periodically yo can adit a ew things. Eery qarter or so yo can dip into

a project and do a check on what happened erss what was estimated in

terms o time spent and thereore costs. This lets yo spot i yo are going

badly wrong in terms o the income retrned on time inested.

We did look at income per head. I wold not sggest yo describe it like this

to the team in the agency bt this is yor retrn on assets employed and it

has to be monitored oer some time period. It depends a lot on the type o



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bsiness yo are in bt a qarterly monitor o this shold be adeqate.

Moing Aerage Totals

Yor eyes may be glazing oer bt I promise yo MATs are yor riend. They

are simple to do and ery inormatie. Yo se them or income (gross or

nett or both) and costs (ariable or ed or both).

Here is how yo se them.

Look at income by month. What is the tre Moing annal total i.e, the

last 12 months (the net month yo add on that month and knock o the

13th month).

What is the 6 month MAT? Take the last 6 months and doble it to gie a

12 month MAT bt based only on the last hal year.

What is the qarterly MAT? Do the same with the last qarter bt o

corse mltiply by 4 (am I being patronizing here?)

Now stick all three on the same graph. I yor qarterly MAT is higher than

yor 6 month, and the 6th month MAT is higher than yor 12 month MAT

yo are in great shape in act yor biggest isse will be growth pains.

I the qarterly slips below the 6 month which has slipped below the 12

month yo are in deep shit.

Yo then do the same thing with costs and compare the two. It is the

simplest, prest way I discoered to keep a constant eye on bsiness.

MATs set them p and watch them like a hawk.

Managing the peaks and troghs

Both peaks and the troghs are yor nightmare i yo rn an agency. The

peaks case hge strain on eeryone in the agency, the team gets stressed,

yo risk the qality standards dropping and losing a ew good people and

clients. Bt they are better than the troghs.



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In a trogh yo may well hae to let people go and they will oten be

yor riends. The nmber o people I hae had to re let s not se the

ephemism depresses me as did the eit meetings. Troghs are shitty.

So how do yo manage this. Mch o the st already discssed holds the

answer A/B/C/D lists, KPIs, MATs etc. The better yo manage the bsiness

and orecast tre olme o work the better yo manage the peaks and

troghs. Bt jst like the boom/bst economy that we all thoght we had

said goodbye to, yo neer manage them ot o the bsiness completely.

The ale o reelancers

It took me a long time to discoer that the only tre saegard is haing circa

25% o yor people as reelancers. I coninced mysel that all or people

had to be or people. They had to be on ll time contracts to maintain

qality, to inest in training, to ensre client condentiality (reelancers

work or anyone). So they all were. Or design agency totally ignored this

and rom day one they sed a high % o reelancers (p to a third at sometimes). Now I cold arge that yo can do that in design and other types

o marketing serice bsinesses like adertising. Bt the act is they were

smarter than me and eentally AvG went the same rote. We were helped

by the act that ater 10 years the agency was big enogh and established

enogh that we cold absorb a ew hired hands withot losing or cltre

or standards. We were also helped by the act that ater a while a ew o the

team wanted to go reelance and we were able to bring them back in to do a

project seamlessly.

I hae mentioned ed and ariable costs. The accontants will tell yo that

in the long term all costs are ariable, eery contract or oce lease can be

re-negotiated. Bt oer a certain period some costs like yor oces are

ed and in theory yor sta costs are ariable. Bt they are only ariable i

yo treat them like an neeling bastard. I yo hae hired well and deeloped

people with coniction then they are a ed cost yo neer, eer want to



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re someone yo really ale, it is nbelieably short sighted. So yo mst

make sre, throgh the se o reelancers and otsorcing that some o yor

people costs trly are ariable. I learned this the hard way.

I will stop here and moe on to the net topic. Bt I will end this section with

one admission I was neer ery good at the nancial side. A lot o what I

hae written is do as I say, not as I did or it was done by better people in

AvG than me. As a reslt o my actions or inactions I cost the bsiness a lot

o prot bt I was neer mch motiated by prot.



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wold ask, sometimes a really dmb sggestion. No we haent, good

thoght, well think abot it and get back to yo I wold reply and we

wold nd some o way o showing that it was, in act, a good qestion

which rather irritatingly it oten was. O corse yo want yor client to thinkyo and yor team are smart, bt they want yo to think they are smart

and they are. So make it obios.

Let the team shine

I worked ery hard to pass the credit o the work to the rest o my team.

It was in my interest to do so. As well as motiating the team (I alwaysendeaored to let them present the work i they had done it) it meant that

eentally yo cold delegate more the client wold gain condence in the

team and be happy to see them instead o yo. That bond them closer into

the agency.

No sch thing as a ree lnch

Interestingly we did all or client relationship bilding in the contet o

bsiness not corporate entertainment (with a ew eceptions bt that was

only becase the client was geninely a riend). We did not oten take them

or lnch and I always told them it was better i they paid becase we wold

only charge it back with a little etra or ta and admin. The natre o or

work, and the way we worked, meant that we spent a lot o time with the

client in work shops or at ocs grops. So we did get the chance to break

bread, to get to know each other, to hae a lagh, to talk abot lots o st.

I not strictly bsiness, it was still bsiness. We did not gie silly gits we

sent ot bsiness books we thoght were really good.

Hire nice people who are better than yo

I gess we did or hard work in choosing who we hired they had to be

bright and radiators so we all liked each other and thereore so did or clients.



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Take the brie, think abot it and come back with a proposal, nder-pinned by

yor processes, that meets the brie. Hae a point o iew abot the way yo

do bsiness and stick to it. I the client has a problem, or eample it costs

too mch or takes too long, o corse yo mst work with them to see i theproposal can be modied bt only p to a point. Treat the psh back as a

problem soling isse. We know we hae to do this stage o work bt yo

say there is no time or bdget. Maybe i we did it this way we cold do it

qicker and still get what we need to help yo sole the problem.

To deelop the relationship the client mst like yo and they will i they see

yo are enthsiastic and keen to do great work or them. Bt ndamentallythey mst respect yo and thereore yo hae to hae points o iew abot

how yo work, what yo need to be able to do to delier great work, and this

mst be principled. Yo will occasionally lose work bt ar more oten yo will

deelop a mch stronger relationship.

Cross bying erss cross selling

Let me now tackle the isse o cross selling which is oten mistakenly sed

to try to deelop client relationships. Yo by or research serice, why not

se or design agency? Becase that is inside ot thinking yo are selling

me yor design becase it helps yo not becase it helps me, the client. I

already hae a design agency partner thank yo. I yo hae a relationship

with the client and yo talk abot lots o things and they tell yo they are

nhappy with their design agency and why, then maybe yo can introdce

yor design agency. In this instance it is not cross selling, it is allowing the

client to by. It is cross-bying and it is client centric not agency centric.

Bild p the proposal

The other way to help clients to cross by is to bild it into the proposal.

Allow me to go back to the knee doctor. Yor knee is sore and yo want him

to it. Yo know there will be an operation inoled bt he tells yo ery



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clearly that nless yo agree to do the physio-therapy ater the operation it

will be a complete waste o time. It makes sense, yo trst him yo pay or

the physio, in act yo positiely by into the idea o the physio not jst the

operation. That is the best way to get clients to cross by.

In the proposal yo mst show yo hae nderstood the isse not jst the

task this is what yo are asking s to do bt this is why, this is the isse

yo are trying to sole. In order to do this we mst do both the research and

the design. This works i it is genine in my design and research eample

it can be. The client gets one team who both deelop and research the

stimls and the reslt is a better design brie at the end o the project.

At AvG we had an internal commnications diision. We tried hard to cross

sell them with irtally no sccess. Then we changed tack. We bilt their

work into the proposal or other projects. So or eample, Daid Taylor,

now at The Brandgym, started eery proposal or a brand positioning with

the statement that in or eperience most o these projects ail (tre) not

becase the positioning was not good bt becase there was inscientinternal by-in. Ce or the oer to inclde the serices o or internal comms

team in the proposal.

There is a strategic angle to this o corse which is that yo shold only

add on new serices, like design or internal comms, i they do indeed allow

yo do to yor core work better and the add-on serices are themseles

improed by the core oer i.e. there is a irtos circle. I yor motie is

Or client spends a lot on design so i we had or own design company

they wold spend more with s wrong, this is inside ot thinking. As I

always sed to say They spend a lot on tais too, shold we start a mini-cab

company?



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others with comy soas, pictres o good work yo hae done, nice

reception bt not too pretentios, oces that t 6 people who orm their

own little commnity, big walls where yo can stick fip chart sheets and

post-it notes. Yo might like bare brick walls and eposed iron girders withlots o neon and an inner city clbby eel. Or yo might like wide open

spaces, minimal rnishings, lots o white and a calm ordered eel. It doesnt

matter, it jst matters that it matters.

I know it works. We sed to hae lots o workshops, sometimes in or own

cstom designed ideation rooms (called the Idea Generator) in or oces

arond the world, sometimes in some hired ene. The ones that happenedin or Idea Generators or other really great enes that had lots o space

and big iews prodced better work. The ones that happened in some

crmmy client meeting room or, worse still, some windowless bnker in the

Intercontimarriottsheriton prodced poor work.

The ergonomics make a statement abot yo and that statement is we care

abot or people and great work.

On seeral occasions we oer stretched orseles, got ahead o orseles,

and took on oces or inested in acilities we cold not aord. It always paid

o we all raised or game.

GIZMOS

Bt there is more to it. Were yo eer in a gang or a sccessl sports team?

Did yo hae silly little catch phrases, aorite songs, nicknames, some dat

piece o clothing yo all wore, in jokes and secret handshakes? They matter

too they bind yo together, they gie yo an ecse to behae in a certain

way, they initiate newcomers, and other people recognize that. They may hate

yo bt they see yo hae something special going, they remember yo.

Some o these kind things jst hae to happen, some can be deliberately



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seeded, bt a good agency has them. I am not jst talking abot AvG here

I hae isited a lot o agencies oer the years and I loe and re

So You Want to Run an Agency? (and Maybe

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