The Power of No

“An agency is essentially two things; the people that work there and the clients you have. Agencies are always extremely careful with the people they hire, and the same should go for the clients they work with,” said Ian Schafer, CEO of Deep Focus. “A toxic employee is bad for an agency, but a toxic client is worse because it effects everyone. The clients you accept or decline will shape what your business is.”

And yet there are very few instances of agencies breaking with clients. There are the usual press releases saying a client and agency are parting by mutual decision, but few put much stock in those. Incumbent agencies drop out of reviews, but it’s usually because they know they don’t have a shot at retaining the business. That puts more pressure on getting it right with a client beforehand, agencies say.

There’s also the costs and time pursuing clients. Agencies are essentially in the business of selling time, and every minute they spend doing something other than client work is an overhead. As a result, it’s becoming increasingly important for them to scrutinize the new business opportunities that come their way, too.

Several agencies, for example, complain about pitches where a search consultant promises a juicy budget that, once the agency has won is whittled down to a pittance. There are also prestige clients that expect agencies to take a loss on the account, figuring the agency can simply recoup the value of having the brand’s logo on the site in its work with other clients.

A major consideration for any agency is, of course, whether or not it can make money from a piece of business, but it’s also important to work with clients that can help fulfill their long-term ambitions, said Sophie Kelly, president of The Barbarian Group.

For The Barbarian Group that increasingly means shirking those clients more interested in execution and predefined deliverables, and gravitating towards those that will allow it to play a more strategic role.

“Without filtering new opportunities through a clearly defined business strategy, agencies can get lost in the short-term revenue game which can completely distort or destroy the direction of their business,” Kelly said.

That approach works well in theory, but actually turning down a revenue opportunity is a different thing entirely. Kelly admitted it’s always tough to turn people away, but maintained that it’s better for both the agency and its clients to form long-term partnerships rather than short-term, project-based ones.

She added that the bar is somewhat lower for those clients with which it has ongoing relationships, though. “Pragmatically speaking, when you’re in a long-term client relationship there will always be block and tackle things you do in the spirit of partnership.”

That’s because it’s the long-term relationships that make agencies money. Revenue is one thing, but profit is another. Saying yes to everyone might keep money flowing through the door, but keeping it there is a different challenge. “Profit is generated as a result of a lot of different things, including culture, happiness, and turnover of both clients and employees. That’s why it’s important to get it right,” Schafer said.

As 360i CEO Bryan Wiener put it, “We want to drive value over several of years. It’s more like a marriage, we don’t jump into bed with just anyone.”