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Why Your Agency New Business People Don’t Last 18 Months

Posted by Mark Duval on Feb 2, 2017 10:58:42 AM
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A few years back, AdWeek published a post about the short tenure of business development executives at agencies. Citing data from a 2014 Agency-Marketer Business Report, they revealed that 80 percent of agency respondents said their New Business Directors lasted two years or less in their role. The survey also showed that only 26 percent of agency executives considered their New Business Directors either somewhat or very successful, with most of them blaming this on the New Business Directors’ lack of a solid methodology.

Nearly three years later, it appears that the factors underlying these abysmal figures remain unchanged. And let's be clear; even if the perceptions of New Business Directors’ effectiveness are valid, the burden lies not only with them. The agency is the employer, the product, and the context. The agency shares responsibility for the outcome and —most importantly bears the high costs associated with frequent turnover, so it is in everyone's interest to understand the issue.

Why Should You Care About the Reasons for New Business Director Turnover?

  1. We must understand the reasons behind the high turnover before it can be corrected
  2. Correcting the issue/s is likely to result in more sales and agency growth
  3. Turnover is costly, whether due to mis-hiring or not, and whether due to firing or quitting (we did the math to ballpark agency costs of mis-hiring here)
  4. Turnover can hurt your client and prospect relationships
  5. Prematurely firing someone can set your sales efforts back and make it more likely that you will repeat the cycle of hiring and paying New Business Directors for 18-month intervals and then firing them before you see any ROI

There are many reasons why people don’t last long in sales roles at agencies. Industry conditions are poor, and there are more obstacles than ever to closing new business. Agencies face challenges retaining employees in any role, and employee loyalty is at an all-time low across industries. Retention struggles are certainly not limited to Directors of Agency New Business, but the frequency with which New Business Directors are leaving (or being fired) demands attention.

Whether they are fired or quit, the underlying reasons are many. Perhaps they should not have been hired in the first place (a hiring/vetting problem), or perhaps they were qualified, but some combination of factors resulted in an inability to retain them. We put together a list of common underlying reasons for turnover. Which do you think might apply to your agency?

Why You Can’t Keep Your New Business Directors:

  • They don’t have what they need to succeed in their role. If your New Business Director is the main one performing in a sales role, agency executives may not be able to identify where there are gaps in their agency’s sales toolbox. It would be difficult for even a rockstar salesperson to overcome these fundamental challenges, which may include:
    • Your agency’s positioning fails to differentiate your business
    • Your target prospects are not defined
    • Your agency doesn’t have an explicit, cohesive sales process
    • You don’t have a formal new business plan
    • You don’t have a sales onboarding process
    • You don’t have adequate sales tools (CRM, etc.)
    • You don’t track your agency’s KPIs, so you don’t know things like the length of your sales cycle, revenue per client, or how leads are generated
  • Your compensation plan is stacked against them. This one tends to be tricky for agencies. Salespeople are typically compensated by a combination of salary and commission, but agencies tend to compensate strictly by salary for most positions. So structuring the commission breakdown and salary/commission split can be especially challenging. I covered compensation plans in greater detail here, but the general takeaway is that they should be consistent, clear, and attainable. When they are not, it will hurt your ability to extract your best performance from your New Business Director and retain them.
  • You didn’t hire for the qualities that you needed someone in this role to have. For example, you hired a “Farmer” personality type, when you need someone who can push back and establish equal stature when interacting with business leaders (i.e., a “Hunter”). I talked more about Farmer vs. Hunter types here. Agencies with good account managers may already have adequate coverage for Farmer roles and might need a Hunter. If you hire the wrong type of salesperson, you may be surprised when 12 months later they aren’t closing new business. Perhaps you shouldn’t be.
  • If you did hire correctly for your needs and secured a qualified Hunter, are they authorized to close? Or must they bring leads to the agency owner? If the latter, is that person reliably available to close deals when they are ready to go? If not, then your Hunter may be in a no-win situation.
  • Sales expectations and benchmarks are not clearly defined or monitored. A good salesperson is proactive, effective, and self-motivated, but they still need to be accountable to someone. Communication must be maintained between the agency owners and salespeople, and I don’t just mean small talk. I’m talking about asking the right questions of your salesperson to be sure they are on track. For example, if you know your New Business Director is making the calls and connecting with the right people, but they still aren’t getting results, that is indicative of a different problem from them simply not doing the work.
  • Your New Business person is tasked with too many things that pull them away from their core sales responsibilities. This is particularly harmful when the New Business person is responsible for meeting benchmarks (for performance evaluation and/or compensation) and even more so when they were not informed of these other responsibilities at the time of hire. Be wary of this, as it can send people running in the other direction.
  • The New Business Director is never really made a part of the team. A common issue for people in agency sales roles is that they are isolated from what is going on with the rest of the agency. There is no process set up to bridge the communication gaps so everyone knows what is going on and opportunities aren’t dropped. This is not only frustrating but also can make your salesperson feel undervalued, helping to nudge them out the door.
  • Perhaps the biggest problem on this list is unrealistic expectations on the part of agency owners. Unrealistic expectations mean that you think your New Business Director has definitively failed if they haven’t closed new business within 18 months. It may sound counter-intuitive, but data and experience don't support this conclusion.

Here’s why: Even in the best case scenario (where the other aforementioned factors don’t apply, and the necessary sales tools, positioning, and processes are in place) the sales cycle to close agency new business is long (it varies, but I’ve seen it estimated at as much as 18 months to three years). Onboarding can take a few months, and the time for new sales reps to ramp up, on average, is over ten months (CSO Insights). It is important to be realistic about the time frame in which you can expect to see results, and the factors necessary to secure those results.

Have You Been Too Quick to Fire?

Failure to close new business in 18 months could certainly be an indication that something is wrong, but it does not necessarily mean that your New Business Director is the source of the problem. Ditching your New Business Director at the 18-month mark without adequately exploring the issue may only set your agency back further.

If you are communicating with your New Business person, you should know whether they are doing the tasks they need to be doing, the logic behind the leads and prospects they are reaching out to, and the results they are getting. At 12-24 months, a good salesperson will be very conscious about the factors hurting their close rates and whether those conditions are likely to change. The smartest route for your agency might be to work with the salesperson (and outsourced support) as soon as possible to strengthen the agency’s sales toolkit and tackle obstacles together. If you’ve hired carefully and see they are doing the right activities, stay the course with your investment—and encourage your New Business person to do the same.

Most New Business Directors don't last two years. Let us help you break the two-year barrier:

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Image credit: © flairmicro / 123RF Stock Photo

Topics: Hiring an Agency New Business Person, Agency New Business

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