Why Winning New Clients from ‘cold’ Is Vital for Agency Growth, or Why You Should Hire a New Business Agency in the First Place
Over the last thirteen years we’ve worked with hundreds of agencies of every type, size and discipline, as their dedicated new business agency partner.
We’ve built close relationships with their founders and leaders, as well as their business’ development and marketing teams and we’ve been lucky to be retained for many years at a time thanks to the commercial effectiveness of our work.
This privileged viewpoint means we’ve seen the long term commercial impact of the new relationships we’ve helped to build, and we’ve been able to understand the real value delivered by them and the real commercials of agency growth.
Anyway, first things first, on the surface most agency growth is delivered organically (this is a blessing but also a bit of a curse sometimes).
Clients leave and go to new companies, recommendations and referrals drive inbound enquiries, friends and friends of friends use you and mention you. You know the form.
This begs the first question – why if my growth is mainly organic should I even bother using a new business agency or marketing to a cold audience? We get asked variants of this all the time and it is a fair point.
To answer this you’ve got to first look at the total value that a new relationship delivers over the medium term, say three years, not just the value or margin of the first project, or even the first year’s revenue that comes directly from a new client.
Here’s a real example. Our client, a design agency specialising in packaging and point-of-sale, picked up a project just before Christmas for a coffee brand to look at a new brand creation, this was worth approximately £25,000. The client, using existing relationships as a benchmark, had to be persuaded that this was worth pursuing.
This client carried out three more jobs over the course of the year which delivered another £40,000 in revenue. So the revenue from year one was £65,000. Not really setting the world alight! In fact, this didn’t put them within the top 10 clients in terms of spend of that year.
The MD of the business left, a new one came in who appointed a number of new people to the marketing team. The brand then moved from primarily a foodservice brand into the High Street. This resulted in a large amount of work for the client totaling around £450,000 in revenue in year two and £350,000 in revenue in year three. Putting it in the top three of the clients in terms of spend.
The client also won another three projects from people who had left the business, including a major one. Over the two years these equate to approximately £180,000 in year two and £290,000 in year three.
The total revenue that can be attributed to the initial project is £1,335,000.
There are as many examples of this happening over the last 13 years as there are of projects being limited to one offs.
This gives a number of important takeouts to finish on:
- New opportunities should be looked at based on the long-term potential not on short-term revenue.
- Do not treat or measure new projects in the same way as existing ones.
- Set achievable targets for new from new revenue, do not base targets on existing client spend.
- Trace back existing clients to the project that they originated from.
- Aim to secure at least 25% of agency revenue from new for new business, these will grow into the big clients of the future and increase the amount of organic business you win in years to come.
So cold business here is vital, we just need to set expectations and recognise its future importance. If you'd like to know more or have a chat about how we can help your business, get in touch.