Adapting your agency for risk-averse clients

Agency Leadership Podcast

Are you finding biz dev harder in 2024 than you expected?

In this episode, Chip and Gini discuss the increased risk aversion and prolonged decision-making processes among clients and prospects in the agency industry, especially in light of economic uncertainties and the 2024 U.S. election. They emphasize the importance of agencies adapting by providing project-based work and suggest looking into using AI for optimizing tasks and offering new services.

The conversation also explores the benefits of flexible, short-term engagements and the potential pitfalls of long-term contracts.

Key takeaways

• Chip Griffin: “Something that agencies frankly should always be thinking about, but particularly in times like this is how do you offer less risky solutions, or at least things that appear less risky to the prospect if you want to close business in the near term. And, a lot of agencies don’t want to hear this, but that means doing more project work.”
• Gini Dietrich: “The flip side of a short-term engagement is it gives you the opportunity to know if they’re the right client for you because you’re not married to them for the next year.”
• Chip Griffin: “I think that agencies by and large today would say that they are more fearful of AI than hopeful for it. I think that is a giant mistake.”
• Gini Dietrich: “I don’t think the industry is quite here yet, but I think Artificial Intelligence is going to offer agencies a really big opportunity in the next couple of years.”

Related

• Is business slowing down for agencies in 2023?
• How to build accurate PR agency project budgets
• The challenges of project-focused agencies

View Transcript

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.

Chip Griffin: Hello and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin.

Gini Dietrich: And I’m Gini Dietrich.

Chip Griffin: And Gini, I really don’t have an opening today, so I guess…

Gini Dietrich: I was waiting patiently.

Chip Griffin: Yeah, I, I just, I, I couldn’t come up with something on the fly today. I don’t know whether my brain’s not working or what, but we’ll just, we’ll just have to dive right into the topic without that witty opening that I always have.

Gini Dietrich: Witty is in quotes.

Chip Griffin: Wow. Wow. Already taking shots at me in less than 30 seconds.

Gini Dietrich: You’re welcome.

Chip Griffin: Well, thank you. Thank you. I appreciate it. Probably well deserved today since, you know, I couldn’t even come up with my bad opening. So what we are going to talk about though, is whether our, our clients out there in agency land are taking longer to make decisions and, and more risk averse when it comes to spending their organization’s money and what that means for agencies.

Here in, in mid 2024.

Gini Dietrich: Yeah. I mean, we talked earlier this year about how crappy 2023 was generally overall for agencies, and 2024 hasn’t gotten much better. I keep saying to clients both on the agency side and coaching clients that part of that’s because it’s an election year, and as we all know it’s not exactly calm and sane and rainbows and unicorns out there so that’s that’s partly why because And we see this during every presidential election year where our clients tend to go, let’s see what, let’s wait and see what happens with this election.

But I think this year in particular and four years ago as well, you know, we, we were, we’re facing some unprecedented times that make everybody just go, okay, let’s just keep things status quo for now. And then we’ll start to loosen our belts a little bit. So I don’t anticipate it getting any better for the rest of this year, but I do anticipate hopefully in January that things start to lighten up a little bit.

Chip Griffin: Yeah. I mean, I think we have, you know, right now we’ve got the coalescing of a number of factors that cause people to be in the business world, more risk averse, right? We’ve got economic indicators that continue to be mixed. Some you look at and you’re like, wow, things are going great. Some you look at and you’re like, this still doesn’t feel quite right to me.

And then you, you mix in with that, the politics, the geopolitical situation globally, and you start to say, you know, there, there are a lot of things here that will cause many organizations to sit there and say, well, you know, I don’t want to make long term commitments. I don’t want to make big financial commitments.

I need to have flexibility. And frankly, a lot of agencies are making those decisions themselves. So it’s hard to be critical of our clients when they do the same thing that we’re doing. Right. And we’re all thinking the same way. So, it, it is something that is, is challenging to navigate. And I’ve had conversations with a number of coaching clients over the past few months about, you know, what do we do about this?

And how do we, how do we turn things around? I know that, that many are really struggling because clients have cut back and the pipeline hasn’t necessarily dried up, but the amount of time it takes to close business is really elongating. And so it is a challenging place to be. As you know, we’ve been there before, four years, four years ago, you know, I’m not sure that’s the most apt because, you know, we had COVID four years ago, too.

Fair. That’s also fair. That was dramatically different.

Gini Dietrich: It was.

Chip Griffin: Certainly there have been any number of instances. over the past 20 years that I’ve seen where, you know, businesses have been in a similar situation and that has put agencies in a similar situation. So it is far from unprecedented.

Gini Dietrich: And I think right now we have something else that we, that we haven’t seen in recent years, which is in, because inflation is so high and all of the stuff that goes around that consumers in general are cutting back.

And there’s, I was just reading last week about this big trend of. I can’t remember. There’s a, there’s a trendy name for it, but essentially that people are saying, okay, well, I’m not going to spend any, it’s, I think it’s like the no buy pledge or something, I’m not going to spend any money on things that I don’t need this year.

And so there’s a trend toward renting your clothes, which I do. There’s a trend toward buying sustainable products that last longer. There’s like even things like sustainable what this helps for both the earth and your pocketbook, but buying sustainable, bags and paper towels that you’re not just throwing into the landfill and they cost less in the long run.

So this whole idea that because things cost so much more money, and inflation is high and all these other things that go into it. Everybody’s doing it. So you have this trickle down effect where it’s affecting everyone. And I haven’t seen that piece of it, the consumer piece of it in several years, probably since the Great Recession, where it has affected sort of everyone going into it.

Chip Griffin: Can we, we rewind on what you said there, because I’ve learned something new. You rent your clothes. First of all, I didn’t know you did that. Cause I didn’t know it was even a possibility to do something like that.

Gini Dietrich: Yeah. You rent clothes.

Chip Griffin: I mean, I don’t rent clothes. I mean, I, I know this will shock. I buy $12 specials from Amazon.

Gini Dietrich: Right, right, right. There’s no, there actually, there’s not a service for men yet. We were just, cause we were just researching it, but like there are lots and lots of services for women where depending on what, which package you buy, you can have, you know, once a week you get new clothes, twice a month, whatever, once a month, whatever it is, but you go in and you choose what you want and they, they dry clean it and send it to you and then you wear it as many times as you want and you send it back.

It’s great. You don’t even have to do laundry. It’s fantastic. And so you always have new clothes. And you’re, you’re, you know, you can cycle through trends and seasons and all that kind of stuff without having to buy new and it costs significantly less than if you were to go out and buy new clothes.

Chip Griffin: That is very interesting.

I, you know, I love when I learn new things. This is obviously not directly related to agencies, but, but nevertheless, listeners may enjoy. Learning about this.

Gini Dietrich: Yeah. Yeah. Yeah. But like the, there’s that whole trend of like, you know, helping the earth and sustainability and all that as well as saving money because things are so tight.

Chip Griffin: Right. And ultimately it’s also the same thing that a lot of agency prospects are thinking, which is de risking, right? Because you’re not buying an expensive piece of clothing that, you know, you’re going to have to hold onto, even though maybe you won’t like it after you, you know, wear it once or twice, you know, it’s not comfortable, it doesn’t look good, whatever, right.

But because it’s rented you’re lowering the risk. And I, and I do think that this is something that agencies frankly should always be thinking about, but particularly in times like this is how do you offer less risky solutions, or at least things that appear less risky to the prospect if you want to close business in the near term.

And, and unfortunately a lot of agencies don’t want to hear this, but a lot of that means doing more project work. And I, I really, for the life of me, do not understand why agency owners tend to be so resistant to projects. Because I think that it’s healthy to have retainer business, but I think it’s healthy to have a mix as well.

And we’ve talked about this before. I think it gives you kind of the best of both worlds. And by, you know, a time like this is the best time to embrace project work because it’s the kind of thing that clients are more likely to pay for now. So if you want to close a deal and you want to close it faster, you need to find a way to offer projects that provide value to the client, but are also profitable for you.

And I think that’s why there tends to be resistance on projects because they don’t get priced correctly. So they’re not turning a profit on them because they say, well, we’ll just do this project and it will lead to X, Y, or Z retainer down the road. Forget about that. Make the project profitable itself.

If you’re going to offer them.

Gini Dietrich: Yeah. And I think to your point, because we, we tend to think, Oh, well, we’ll start this and I’ll get our foot in the door and it’ll lead to longer term projects or a retainer down the road. Because we tend to think that way we don’t go, okay, we’re going to treat this as a project with a beginning and an end and a profitable outcome for us.

Right. And here’s the tangible. We tend to say, okay, well, we’ll do this for three months. Like we normally would. We’ll do media relations or crisis or whatever it happens to be for 90 days. And then it’ll lead to longer. And what you have to do instead is say, okay, we’re going to actually create for lack of a term, a product or a package that they buy.

And one of the very best pieces of advice I got when I started speaking, internationally, to audiences is, a guy who was a strong vistage speaker said to me, Hey, listen, if you’re going to be speaking to vistage groups, which is a group of CEOs that you get into a room for three hours, it’s great.

It’s a captive audience. It’s your target audience. if you’re going to be doing that, you can’t say, well, our minimums are 10, 000 a month and you, you sign an annual retainer and you get this, this, and this, he’s like this, that won’t work for this audience. But what does work is you say to them, we can do a strategic planning session and you, the outcome of that will be this, this, and this, and it costs X.

Or we can do a social media audit or we can do a content audit or, and the result of that is X and it costs this. So when you, he said, when you package it up like that, it’s a lot easier for them. A to buy on the spot and B to take that baby step in. So I give you that same kind of kind of advice because A, it works and B, it gives you the opportunity to say, if we’re going to do this, it’s going to take us six weeks.

It’s going to, your outcome is going to be an audit that tells you what’s missing, what, what you have, what you can repurpose and what you, you need to include. And of course, hire us to do all that work and it costs X, right? So it has a beginning, a middle and an end. It’s a very succinct package that’s easy for clients to buy.

And then there is the next step is either they do it internally. Or they hire you to do it themselves or to do it for them. And most of the time they’re going to hire you to do it for them.

Chip Griffin: Yeah. And I mean, what I would encourage you to do is, is think about the first 30, 60, 90 days that you are working with a new client.

Most agencies I know have a similar formula that they use when they onboard a new client. Yep. So if you can figure out what it is that you do in those first couple of months, and you can you know, put it in a package where you can clearly communicate what it is. And it’s probably a mix of strategy and putting together some key message points, maybe a little bit of training, you know, but just try to think about what those first couple of months are and present it in a way that it is a short term engagement to jumpstart their communications activities or whatever it is.

I mean, whatever your first few months look like package it up and sell that. And if you do that in a way that it’s profitable for you, You’ve done a good job of being able to show the prospect what you can do. You’ve kept the budget down. You’ve kept the timeline down so that they’re not saying, Oh my God, I’m committed to this for the next 12 months.

And it’s a lot of money, but yet you’ve whet their appetite. And, and frankly, if they’re not interested after that, that’s probably a sign. If they’re not interested in doing the basic, you know, foundational work, that’s a red flag too. Right. So, I mean, cause that’s the pushback I often get was, well, no, we don’t, you know, they don’t want to pay for that.

Well, first of all, sprinkling enough deliverables that you give to them beyond the strategy so that they feel like we’re getting more than quote unquote, just strategy. But if they’re totally disinterested in strategy, you probably don’t want to work with them anyway. It’s probably not, not a good fit for most PR and marketing agencies.

If someone just wants you to jump in and start spewing out press releases or blog posts or social media or that kind of thing. You need to figure out why you’re doing it and how to do it effectively.

Gini Dietrich: And I would say on the flip side of that is it gives you the opportunity to know if they’re the right client for you because you’re not married to them for the next year as you try to stumble through and figure it out.

Maybe they’re terrible. Maybe they’re like, they’re going to get 60 days in and start bullying you. Like, this is a great opportunity for you as well to go, yeah, these are great clients for us. This, this client sucks and I can’t wait until the 60 days are up. Right. So it’s a great opportunity for you to test them out too.

Chip Griffin: Well, and I think, I think too many agencies don’t think about those things. Right. Because when, when we think about, well, we’re locking the client into a contract, that’s what we want to do. Remember you’re locking yourself into that contract too. And honestly, you’re more locking yourself into it than you are locking the client because clients will break contracts without a second thought in the world.

Right. I don’t know many agencies who are either inclined to do the same or probably could withstand that because most of the clients that we work with are bigger than we are. And so if we try to say, no, we’re out, we’re going to get a lot more pushback and have to deal with a lot more problems because they’ve got a legal team or executives or other people that can just make our lives difficult.

Gini Dietrich: Absolutely.

Chip Griffin: We think about it in terms of locking in the client, but we’re really locking in ourselves. And it’s why I prefer to have some sort of a paid discovery approach. Like what we’re talking about here. It’s why I, I personally prefer 30 day outs on my contracts. I don’t want to lock myself in any more than I want to lock them in.

And particularly early on in the relationship, you don’t know how they’re going to turn out. You don’t know if you priced it correctly. You don’t know if they’re going to be abusive to work for. If you have these projects, it allows you to have that means of figuring out do I want to work for them? If I do want to work for them, do I need to charge them the PITA tax that I always talk about?

Right. And those are all helpful things to you. So this is, this is why fundamentally, I think, agencies need to get over their fear of projects because I think it is a great way to get started. And frankly, it’s not a bad way to work with clients, even on an ongoing basis, as long as you’re, as long as you’re scoping them and pricing them properly and profitably, you’ll be fine.

Gini Dietrich: Yeah. And I know we’ve talked about this before, but the way that we work is kind of like that. I mean, clients do sign a contract and it does have a termination clause and blah, blah, blah, blah. And it renews every year if there’s no, like all of that. Right. But the way that we work from a statement of work perspective is quarterly.

And we say, okay, in this quarter, these are the goals. This is what we’re trying to achieve. This is what the, what the outcome is. And at the end of every quarter, We have a meeting with the executive team and we go through everything and we say, you know, like we just had the, had one at the end of quarter.

One with a client and we said, you know, you wanted to focus on email marketing to generate leads and it didn’t work. Like, yeah, you got a couple of 40, 000 clients, but it, what, like the, what, what we were expecting to have happen and what you wanted to have happen didn’t work. What we, what does work is this, this, this, and this, as we’ve proven in the past.

So we’d like to transition back to that and do that. Start implementing that stuff again. And so we were able to do that in quarter two, just to get them back to the level that we were at before. If we were locked into a full year of this is what we’re going to do every month, we wouldn’t be able to have that.

And it also allows us to say, okay, if you want to try email marketing, we can do that, but it’s going to cost X more. Now that we’re transitioning back, we can take that budget and either move it around into more things, or you can take the budget back. So you have the ongoing budget conversation too, so that you’re never over servicing. Ever.

Chip Griffin: And you’re also making sure you’re devoting your resources to the right stuff. So you’re actually being effective. Because I think that’s, it’s one of the reasons why agencies tend to lose some of their long term clients, because you’ve just been operating on autopilot. And if you start doing something, you keep doing something because you don’t want to rock the boat.

You don’t want to upset the apple cart. You don’t want to cause the client to talk about things where they might want to change their approach or their budget or whatever. No, you want them to do that. You want to invite those conversations because you’re better off making adjustments, even if it may mean less dollars in your pocket in the short term, because often it may mean more dollars if you’re able to figure out how to do it effectively and what new things to offer them and shed that, that dead weight that you’re bringing along, because you started at six months or six years ago and you just keep on keeping on.

Gini Dietrich: Yeah, I think there’s one other thing that we can think about and we’re, I don’t think the industry is quite here yet, but I’m going to put this in your brain to start mulling over and think about. Artificial intelligence, I think is going to offer agencies a really big opportunity in the next couple of years.

I’m actually working on some content for Spin Sucks on this right now. So it’s not fully baked, but there is an opportunity for us to use the existing AI to create things that will make our clients more effective. And I think there’s an opportunity for us to create AI that uses our process or our framework or the way that we do things in a really effective way that we could sell the clients.

So now we have retainers, we have project fees and we have a membership subscription model with the AI that says, okay, if you’re going to, like right now, I know that many agencies in the PR industry will go into their media monitoring and they’ll do a sentiment analysis and they’ll look at key messaging and they’ll look at share voice and they’ll do that.

And a lot of that’s manual, but if you could create AI, use existing AI to help you do that work and do it without a human being, that you could just provide to a client ongoing for a subscription. There’s an opportunity there as well. Like I said, I don’t think that generally the industry is there yet, but I think it’s something for you to keep in the back of your mind and think about, okay, as we’re using AI and as we’re onboarding new clients, and as we’re going through client work. What are some of the things that we can optimize and automate and then sell that to clients as an add on subscription while we’re over here doing the more strategic human necessary work?

Chip Griffin: I think that’s a great point. And I think there are so many opportunities with AI even today, but they will only grow.

Yeah. Over time. And I think it will substantially transform a lot of industries, but certainly the agency world, certainly the, the world of media monitoring and analysis that I was part of and have been a part of decades. And I, and I know that there’s a lot of research and work going into this, from a lot of people.

I think that agencies by and large today would say that they are more fearful of AI than hopeful for it.

Gini Dietrich: Don’t be fearful.

Chip Griffin: I think that is a giant mistake. We’ve talked about AI before, but it’s probably worth revisiting on an episode here in the not too distant future because it does continue to evolve.

And I think that you need to evolve with it. And, and the most important thing whether you’re, you know, just concerned about generating business today or how you use AI in the future is to think about it in terms of what are the results that clients are looking for,

right?

And I think too often agencies think in terms of actual outputs and they and they’re thinking about I’m producing press releases, blog posts, social media updates, whatever.

That’s not why you’re being hired. And so you can’t focus on that with your clients today. And certainly as you think about AI in the future, it’s going to make a lot of those things a lot easier to do. And, and if it’s a lot easier to churn that stuff out, you need to figure out how to do it more intelligently and put the human intelligence to partner with that artificial intelligence.

Absolutely. And there’s a huge amount of opportunity there today and in the future, if you’re willing to look for it.

Gini Dietrich: Yeah, I don’t think we should be fearful of it at all. I think that it’s, to your point, it’s evolving. I think that it’s going to make us more effective and it’s going to do the stuff that really, truthfully, none of us want to do anyway.

Right, right. So let it do it.

Chip Griffin: Yeah, absolutely. And, and so today, if you are sitting there and you’re saying, geez, you know, what am I going to do? Because clients are, or prospects are being slow to respond. You know, I’m seeing people want smaller projects, embrace that, but figure out how to embrace it in a way that can be successful for you.

Don’t view it as, well, I’m just going to take this as a foot in the door. You need to think of, of as profitabe in itself. Yeah. because that’s how you can make it work for you. That’s how you can close any revenue gaps that you have today, but also position yourself for the future. And, and I think there’s still a lot of opportunity to be had there.

Gini Dietrich: Totally agree. 100%.

Chip Griffin: So with that, we have the opportunity to bring this episode of the Agency Leadership Podcast to a close. I’m Chip Griffin.

Gini Dietrich: I’m Gini Dietrich.

Chip Griffin: And it depends.