How good is your business proposition?

How to maximise the value of your agency #2

Media Corporate Finance Partners, Paul Winterflood and Dan Leaman, sat down with Chris Matthews, Principal at Sutherlands, to discuss how to maximise the value of your agency.

They focus on the drivers of value and how these key elements help to maximise the value of your agency to ensure it grows, increases profitability, and is ultimately in a position to sell for the maximum value in the future.

Transcript

00:00:00 Chris 

Very hard, surprisingly hard to really distil down what it is that you want to offer the outside world. And I know that you've got a sort of formula for a good proposition, which is big, simple, unique and true. Could you just break those down for us? So what does big mean, for example? 

00:00:19 Dan 

So big, in terms of the value to the client and the benefit they get from it, something they need is what we talk about in big. 

00:00:32 Chris 

So it's a must have. Yes. Yeah, absolutely. OK. 

00:00:37 Chris 

Unique is probably self-explanatory. 

00:00:40 Chris 

What about the other ones? 

00:00:41 Dan 

Simple means someone has to be able to 

00:00:43 Dan 

understand it. 

00:00:44 Dan 

There's no point in having this big proposition that no one can get their head round, because they just won't bother and they'll walk away. 

00:00:51 Chris 

So we've got big, simple, unique and true. 

00:00:54 Dan 

True means that we can evidence what we've done. 

00:00:58 Dan 

So that's normally in the form of testimonials or some other form of evidence. You know, ROI (return on investment), whatever it may be, so that people can say, you know, are you just saying that? 

00:01:10 Dan 

Or can you actually really deliver? 

00:01:12 Chris 

I think it's a really good test actually, and I invite people listening to this podcast to look at 

00:01:17 Chris 

their own firm's proposition. 

00:01:19 Chris 

And just work out: does it match those tests? Big, simple, unique and true and I suspect a huge number will not. 

00:01:26 Paul 

I think that's definitely what we find when we do it as well, to do this exercise. I think there's an acceptance with agencies that as a broad rule that sort of a 25% pitch conversion rate is acceptable. 

00:01:42 Paul 

When we do this exercise, the leading agencies, they find a niche to hone down in and we definitely do work with agencies that have a pitch conversion rate significantly north of 50%. 

00:01:55 Chris 

Oh yeah. I agree entirely. I'd say to people if you're not winning 75% of the pitches you choose to go after, you're doing something seriously wrong. And it it's not just agencies, it applies to other companies too. 

00:01:57 Dan 

I'd say 70 is a good benchmark. 

00:02:10 Chris 

I worked for one of the Big Four and they were  saying there's four of us, so one in four is an acceptable win rate. 

00:02:17 Chris 

Yeah, horrifying, there we go. 

00:02:18 Chris 

Do you want to choose another area in 

00:02:21 Chris 

the 360 and talk about it? 

00:02:21 Dan 

Well, I mean. 

00:02:22 Dan 

Yeah, following on from that, I 

00:02:24 Dan 

mean. You know, I think differentiation is really important. 

00:02:28 Dan 

So one of the things I would do is line up their proposition against five of their competitors and see if you can actually spot a difference. 

00:02:34 Dan 

I think that's a fun exercise to do, and very often quite telling.  And the other thing I think is: 

00:02:41 Dan 

A lot of the clients I work with, think they know what their clients value but don't know what their clients value. 

00:02:50 Chris 

That's interesting. They think they know what the clients value. They don't know what 

00:02:53 Chris 

the clients value. That is interesting. 

00:02:54 Dan 

It's a very easy way to find out and I'll do it. I do it for clients. I'll speak to their 

00:03:01 Dan 

customers. I'll talk to them and I'll feedback on what they say. And very often that exercise 

00:03:08 Dan 

is one of the most useful exercises 

00:03:10 Dan 

I'll do for 

00:03:12 Dan 

clients and very often has the highest ROI of everything we do. 

00:03:17 Chris 

That's interesting. 

00:03:19 Dan 

And there's another thing. In this industry, 

00:03:25 Dan 

your potential buyers 

00:03:27 Dan 

will do that as part of due diligence. Very few, these days, transactions happen without that kind of exercise happening. It probably happens late in the day. 

00:03:37 Dan 

And if you've got some key customers that your agency is reliant upon and the buyer speaks to them and they put them off at that point, you've wasted a huge amount of time. 

00:03:51 Dan 

Yeah, so having an idea what they're going to say before you get to that point, it's probably quite valuable.