Your competitors will be desperate and undercut costs, but you still need to retain clients and make money
Recessions lead to recovery, argues Chris Savage. But to get there, agencies need to buckle in and do the hard work it takes to keep clients.
Agencies must move with lightening speed to get ‘recession-fit.’ Laggards won’t make it. It’s as simple as that.
To protect jobs and help the economy recover, creative and communications agencies must make money.
Client volatility is a certainty
Plan for a W-curved recovery. Things start to improve, then a re-occurrence of the virus sees regular new lockdowns. Stop, start. Repeat. Clients will have little visibility to set new longer-term budgets.
Commit to agility: Agility and speed are the keys.
“Being on the fastest trajectory matters more than having a great plan because plans become quickly outdated” – McKinsey & Company
‘Plan-ahead team’: Put equal effort now into planning ahead as you are into short-term business survival.
Have a team driving planning around: pleasing existing clients, product, people, pricing, process, profile, pipeline, and profitability.
Quarterly sprints: Plans will be out-of-date quickly. Regroup quarterly to ‘start again’ – reshaping and prioritising the next 100 days. Focus on shorter-term goals and decision points.
Clients will be ROI-obsessed
Good times breed fluffy ‘nice-to-haves’. Recessions see every dollar put through the ‘value’ ringer.
Speak their language: Get deeply connected to client KPIs. Know their language to describe their recession strategy. Cast everything you propose in that language. If your client is an auto CMO fixated by ‘sales funnel’ thinking, link everything you do to adding value to that funnel.
Obsess about their results: It’s always your first question: “How are sales?” Keep probing. What’s working? What’s not?Bring competitor insights, and ideas on how to out-gun. Show you’re sweating what they’re sweating.
Get the narrative right: Your ‘chat’ must be razor-sharp; talk about how maintaining spend will deliver fast share-of-voice and sales gains, how what you bring is perfect to turbo-charge growth, how ‘bad costs’ (eg fancy property) should be cut, and ‘good costs’ (eg spend on digitalisation/ digital marketing) maintained. Persuade. Influence. Don’t ‘sell’.
Measure everything: Set (conservatively aggressive) KPIs for all you propose. Seek tracking data to validate. Regularly ‘report back’ on results. Claim it. Be brave. Act bigger than you are.
Expect vicious price competition as clients ‘de-risk’ spend
Recessions bring relentless downward pressure on prices and costs. Clients are constantly under pressure to cut costs, and get more for less. Risk-aversion permeates spend decision-making.
Your competitors will be desperate. They’ll undercut. Lower operating costs to keep competitive advantage.
Whenever possible, maintain prices, and add more value. For clients, though, ‘lower cost’ and higher value is Nirvana.
De-risk engaging your agency: Become easier to use. Propose short-term projects. Sell ‘bite-sized’ work. Develop fixed-price products. Create product bundles with phased spend. Align with the 12 months of marketing ‘tactical ping pong’ ahead.
Run towards the ‘retainer’ fire: Accountants look for set budget spend lines they can cut. Retainers stand out like the proverbial. They’re the first to go.
If your retainer client is doing well, ignore this counsel. If struggling, quickly propose a lower retainer (for less work). Go hard for ‘over and above’ projects. Take the lead to protect on-going work. Short term pain, long term gain.
Lower your fixed cost base: Cut all flab. Compensation is around 65% of most agencies’ costs. Pre-COVID salaries have enjoyed a decade of ‘good times’ creep. Rebase salaries, yours included and more than others, for the long-haul.
Refresh roles when they open up with less expensive talent from the eager, large pool now available. Add flexible compensation options (eg bonuses if targets reached). Maintain the right core billable capacity.
Build a brilliant freelancer bench: The market is awash with great talent, wanting to contract. Get a strong freelancer bench ready. Negotiate hard on costs. Have the contractual option to stop work immediately if projects stall.
Measure real-time productivity: Inventory management is our key profitability lever. Measure realised billability (the time log actually billable to clients) relentlessly. Know likely billability for the week ahead.
Ensure leaders regularly coach staff on billable targets. Measure daily what’s time-sheeted, and what’s ‘real’. If available work is not being done, take action. Fill idle capacity, fast, or cut it.
Existing clients are the route to salvation
Keeping and growing revenues from existing clients is the lifeline of recession survival. You’re proven, ‘procurement-approved’ and on-board. Don’t blow it. Become indispensable.
Become client-obsessed: Focus on gritty commercial outcomes. Narrow your services. Do fewer things, better. Even small clients can grow.
Look for new work that counts: You have a one in two chance of selling something new to existing clients. Look for work, not budgets. Where can you add value to a burning problem? Price solutions sharply. Get more, small projects.
Flex, fix or freeze: Mark Ritson identifies three client categories: flex (doing well), fix (scrambling to keep revenues healthy), and freeze (hibernating). Where do your clients sit? What does that mean for communications as they move through the three phases? Shape thinking for clients per phase.
10 day sprints: Fortnightly, review actions on key clients from the past two weeks. What we learnt, what needs changing.
Look ahead a fortnight: What are the five non-‘business as usual’ actions to take to add spark, energy, and momentum? Bi-monthly, spend 90 minutes doing longer-term account planning.
Be ‘energisers’: Be the most energising people in client’s business lives. Clients must leave time spent with us inspired, with a spring in their step, and a lightness of spirit. Be dealers in hope.
Become feedback junkies: It’s the food of champions – regular feedback, formal or informal. Seniors must check in regularly. How are we doing? What can we lift to deliver even more value? Keep close to how the client views us. Attack issues with speed. Show we take nothing for granted. Ever.
Good things come to those who hustle
‘Hustle’ drives agency success during downturns.
Conditions perfect for a land grab: Expect a pitch fest once WFH eases. Clients will want fresh thinking, efficiency, certainty, and ease-of-relationship. Some will look to consolidate with less agencies.
Defend hard. Grab what you can. Be ready.
Remember, the best idea usually wins. Present it in the most persuasive way.
Innovation: Review your products, processes, pricing, client service, and promotion. Task an innovation team with an ‘idea a month’ that adds relevant ‘new’ to the agency. Your offer will quickly be more competitive.
Sharpen the saw: Use this time to reshape your team. A-grade talent is now affordably available. ‘Try before you buy’ through freelancing. With current staff, create an opportunity to learn new skills, or deepen specialisation. Safeguard jobs, but do not tolerate passengers.
Drive profile that matters: Stay vibrantly top-of-mind. Develop points-of-view linked to issues clients care about. Lift your profile through webinars, social media, trade press, and direct presentations. Hard to believe, but marketing works!
Plump up your pipeline: You have a one in four chance of winning work from dormant clients, even if they fired you. Check all invoices sent during the past five years. Who do you no longer work with? Where are those executives now? Reconnect. Share something of value. Good things will happen. Five conversations a week.
Cash is king, and queen: For independent agencies, without the cushion of multi-national support, cash flow is everything. For recession survival, do whatever you can to build your cash reserves. Seek additional credit (if you can).
Lead from the front: Lead by example, every day. Teams working through adversity create powerful bonds, a winning spirit and do special things. The magic created working together to get an agency and staff safely through the rapids is unforgettable. It all starts with energised leadership.
In summary, recessions lead to recovery. Agencies that move fast to tackle the right priorities with courage, can survive, and thrive. Go hard. Be bold. Get a little mongrel. Now is the time to win.
Chris Savage is the former chief operating officer of STW Group (now WPP) and was the founding staff member of Ogilvy PR Australia
Once again, Chris provides excellent advice.
Businesses, particularly, independently owned businesses must continue to make profit.
As much as doing everything possible to keep all staff employed is admirable, it can’t be done at the expense of the business; all that will result in is the business closing and no jobs being saved.
Businesses that no longer exist can hardly create jobs can they?
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“Businesses, particularly, independently owned businesses must continue to make profit.”
So THAT’S where I have been going wrong … w-a-y too much non-de-risking…
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Thanks Chris, you have continued to provide excellent advice for agencies and I have no doubt those that follow it will survive and thrive.
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