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A tough year for new business, but far from impossible and the mercury is rising.
The jfdi/Opinium New Business Barometer tells a story of agencies having to focus hard on upper funnel and being creative when spotting opportunities. But it also hints that new business teams who adapted and focused on core activities – including engaging with prospects and staying engaged – have entered 2021 far fitter and probably more fit for purpose.
Published in April 2021, the jfdi/Opinium New Business Barometer is the largest survey of new business professionals in the UK. The team spoke with 74 – primarily senior – new business folks from a good mix of agency sizes and almost all agency disciplines during January to March 2021.
I’ve taken a detailed look at what’s happening in agencies with 50 or fewer staff (you can download the full version here). Here’s my summary. So what did they find?
Who leads new business? It’s the CEO (or equivalent) in 3 out of five agencies, with a New Business Director making up most of the rest.
How many people are dedicated to new business? A staggering 3 out of 10 agencies have no one directly committed to new business. And another 40 per cent have just one person. Virtually none have more than four people.
Revenue targets were lowered by around a fifth on the previous year and targets were concentrated between £200-500k (37 per cent) and £500-£1m (28 per cent).
Annual Marketing spend hovered at around £50k on average. This was unchanged from the previous year. But that average hides a split in attitude to marketing spend with 70 per cent spending less than £50k and the bulk of the rest spending between £50 and £250k.
Sources of new business are perhaps a little surprising. Two thirds of agencies cite managing connections as essential prospecting sources. Two interesting avenues being exploited are just behind with “asking clients for referrals” (I go on about this all the time) used by 49 per cent and “forming partnerships” used by 46 per cent.
Volume of opportunities. On average, agencies are pursuing two opportunities each month. But this is an average. 24 per cent per cent pursue between 1 and 10 opportunities; 35 per cent 11 to 20 opportunities and 22 per cent chase between 21 and 30. So it’s quite a wide spread.
The value of new opportunities for agencies with 50 staff or less did fall during 2020. Which can’t be a surprise. Average total value of opportunities was £1.25m, down 23 per cent on the previous year.
New business focus has shifted a bit. Agencies are more focused on generating opportunities by filling the pipeline (76 per cent up from 71 per cent) than converting pitches and growing clients. This does suggest that as clients sat on their hands last year, pipelines started to look a little less healthy.
Conversion rate comparables are always like gold dust. So here they are. Those 24 opportunities typically converted into 9 pitches and 4 wins. So that’s a 38 per cent opportunities to pitch and 42 per cent pitch win rate. How does that compare for you?
The value of pitches won looks to have slipped slightly. 33 per cent of wins are under £100k, up from the previous year. 48 per cent of wins were valued between £100-500k, up from 31 per cent previously, but only one in ten wins were worth £500-£1m, down from 26 per cent the previous year.
Total new business revenue. Agencies with fewer than 50 staff won an average of £601k in new business, and lost pitches worth a total of £650k.
Reasons for pitch loses. Vary of course, and often clients will tell you what you want to hear (remember that old lie “it was so close, you just got squeezed into second” – they say that to everyone who didn’t win!). But in 2020, it’s not surprising to see 35 per cent not won because “the budget was withdrawn”. Next, with 22 per cent was “no reason” (never let this happen to you). Then two on 18 per cent – “didn’t demonstrate the expertise we wanted” and “remuneration terms weren’t right”.
The biggest challenges in new business reflect the pandemic generally but have left us with great lessons learned. Top challenges were: “getting attention of prospects” and “keeping them engaged”, both at 36 per cent; followed by “turning conversations into pitches” (32 per cent) and “making initial contact with prospects” (30 per cent).
If we addressed that at the time, we’ve all come out of lockdown fitter and sharper.
If you’re interested in receiving more agency related articles on everything from the psychology of why we behave a certain way to practical, actionable tips then please consider signing up to Rambling On, my weekly newsletter.
Andy.
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