New Business Opinion 2
THE COLD CALLING LANDSCAPE
Are cold calling agencies a valid way to start a relationship with a client?
The following discusses an article by Rachel Gardner: “Agencies Turn to Cold-Calling Companies for New Business – But are they a valid way to start a relationship with a client?” The article featured in Campaign, questions the effectiveness of lead generation suppliers. It tells us that ad agencies (mentioning Saatchi & Saatchi as an example) are increasingly turning to cold callers in emulation of many clients as marketing budgets show signs of growth. The piece asks whether this is appropriate for businesses where "people and relationships really matter".
What conclusions does the piece make?
Cold-calling companies are described as working on a fee retainer, with commission per meeting set on top. The piece says that this is more cost effective for start-up agencies than a permanent new business department.
We're told VCCP had an unsuccessful 3-month trial with such a cold calling company but took new business back in-house after the supplier got them in front of poor quality opportunities - smaller clients, marketing managers with time on their hands and people with ad-hoc requirements. We are informed that clients are increasingly knowledgeable about advertising agencies and so "cold calling is superfluous." Additionally, clients are too busy to see agencies unless there has been much careful consideration. A further downside is that lead generation companies have limited understanding of agency businesses with a failure to take a bespoke approach so that credentials are not tailored correctly. We also learn that "lead generation callers have been known to employ deception in their relentless quest for meetings".
In Haystack's opinion, there is a danger that the use of such companies exacerbates a "sometimes fraught relationship between agencies and clients", with clients "seeing straight through lead generation callers". They feel that clients already have a low opinion of new business directors and cold callers don't help. Diageo UK Head of Innovation Philip Gladman says he's not a fan of lead generation agencies and claims he's never followed up one of their calls in ten years of deciding pitch lists. He says, "I know who I want to work with in this world and I will go and do that. The people who rely on cold-calling do so for a reason."
The piece says that with so little difference between the big advertising agencies, establishing relationships with clients is key to getting onto pitch lists, and so it concludes that this is unlikely to happen through what is "essentially a glamorised telesales function". JWT New Business Director Peter Cowie says, "I would not want anyone else representing our company who cannot know exactly what makes us tick. How can someone from a lead generation agency really be able to have a fruitful conversation with a prospective client? For an agency such as JWT, it would only reduce our power and our brand".
Rainmakerlive’s Analysis: So what does this mean for my agency?
The piece takes a negative view of lead generation suppliers, with some poor practices cited as the reason. Perhaps a more balanced view would include some successful examples where effective techniques are being delivered. The piece is also rather fatuous (and maybe a little vain too). Are advertising agencies "increasingly well known to clients"? We don't think so - discipline fragmentation and poor differentiation, especially for the larger agencies, means that the opposite is true. Also bear in mind that Pearlfinders' DecisionMaker Moves charts 1500 decision-maker job changes each year - with people on the move all the time, how can you be sure the organisation you’re targeting knows about your agency? Why precisely do "people and relationships really matter" more for agencies than they do for clients? Only the grubbiest "cold-calling companies" charge commission on top of a retainer for meetings. Only the grubby are cheaper than an in-house new business function. If an external new business supplier isn't proposing a bespoke, thoroughly knowledgeable approach for such an important function, why are they being used - unless agencies sometimes thrive on false economies? Additionally, "employment of deception in the relentless quest for meetings", is we suppose conceivable for those lead generation agencies under pressure to reach meetings quotas. Again, this is only practiced at the lower end of the market - if you use cowboys, you might receive a cowboy outcome.
In conclusion, we believe the lead generation companies referred to here are not representative of the mainstream sector. The agencies that use them, by not investing in new business properly, are also unrepresentative of the wider market that certainly does. We'd like to see a more realistic picture of this sector, which illustrates the successes as well as the failures.
“How can someone from a lead generation agency really be able to have a fruitful conversation with a prospective client?” (Peter Cowie, JWT)
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