Restoring your revenueLet’s do a maths exercise. Let’s pretend that (as a result of the COVID-19 epidemic) your company is facing a 10% loss of overall and projected revenue. Let’s also pretend that your revenue forecast is $1 million. Therefore, the expected loss is $100,000, or the equivalent to one agency Account Director’s annual salary.
Management has a choice to make. Can a 10% saving in overhead expenses (rent, power, internet, etc.) be quickly achieved? Do they need to make one senior role (or, perhaps, two junior roles) in the business redundant to cover that 10% loss? Alternatively, do they ask all of their staff to accept a 10% wage reduction to avoid losing anyone from the team?
Now, do the maths and imagine if the revenue loss is forecasted to be 20%, or 30%, or up to 100% as we’ve seen in some agencies. That paints a devastating picture. What, then, must be done to get your business back up to speed and restore that lost revenue? In some instances, that’s a significant and daunting revenue gap to have to plug.
First, you have to ask some fundamental questions, such as:
- Where did the drop in your revenue come from? Was it from one main client (e.g. a tourism client) or one major campaign? Or did a number of your clients stop their spend all at once?
- What are your clients saying now? What are their projections for marketing spend over the next six months? Will they bounce back to their pre-COVID plans, or have plans changed? Are you still their preferred supplier? Have you had these types of conversations yet (if not, why not)?
- Are the gaps in your revenue permanent or can some of the work be salvaged (especially in the short term)?
Like all sales approaches, you can increase revenue in one of two main ways:
- From existing clients; or
- From new clients.
Obviously, given the current situation, finding more revenue from clients who have just pulled back their spend could be an unrealistic expectation. In a time where empathy is critical, it’s not a good look to be seen squeezing money out of clients who may also be in a difficult financial situation.
One alternative is to try to source new business from new clients. The rub is that we are now operating in a hyper-competitive marketplace, with agencies jostling for a decreased pool of clients.
The good news, when it comes to agencies looking for new business, is that the COVID-19 situation has created an unexpected level of uncertainty for marketers. This uncertainty has resulted in some companies reviewing their stable of creative comms suppliers. Are their current agencies right for their post-COVID requirements? Will they need to redirect their spend into new or different channels, therefore will they require new or different expertise? This shake-up provides your agency with the opportunity to promote their services to new prospective clients.
Here are some links to articles I have written in the past, specifically about agency sales. I hope that they will help you in this challenging time, and beyond.
- Sales? No thanks!
- The cost of acquiring new clients
- Is an account manager a salesperson?
- Cross-selling to increase your revenue
- Whale hunting: landing a whopper account
For agencies in New Zealand, if you haven’t done so already, please visit my new website AgencyWhosWho.nz to set up a FREE basic listing for your agency (or upgrade to a paid listing). Advertising your presence through Agency Who’s Who is one way to increase your visibility to marcomms buyers.
All the best to you!
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