Cutting the Cost of New Business
LinkedIn Article by Tim Williams
February 2, 2014
Why is acquiring new business so expensive? For some firms like advertising agencies, the cost of new business can be staggeringly high. In addition to all the normal expenses associated with the sales process, agencies are usually expected to invest their own time and money producing speculative work and recommendations. Just watch an episode of AMC’s “The Pitch” to get an idea of how intense – and expensive – this process can be.
Architectural firms can, of course, have similar experiences. Frank Lloyd Wrightfamously refused to participate in such reviews, believing that architects should be selected based on their talent and reputation, not their ability to guess what their client wants in the form of speculative work.
New business development can also be expensive for a lot of firms because of their batting average. Believing that new business is a “numbers game,” they resign themselves to the fact that they will win only a third of the time. Firms also throw a lot of money at traditional outbound prospecting methods like mailing and calling programs. They broadcast their sales pitch to as wide an audience as possible.
But let’s contrast that with firms that win most of the time – or better yet, rarely have to compete in a shoot-out situation at all. The firms that are the most successful in business development aren’t just the ones that are the most talented, but those that are the most focused. They have answered what Peter Drucker calls the first essential question of any business: “Who is our customer?” They have committed to stand for something rather than trying to stand for everything.
Narrow and deep trumps wide and shallow
If you’re an advertising agency competing for a large hospital system, it’s possible you could win the business based on sheer determination and creative brilliance, but it certainly helps if you have deep expertise in the healthcare category. Time and again in my consulting work, I hear agencies say “We lost to the specialist.”
More to the point, firms that have chosen a clear area of focus often don’t have to “sell” much at all. They’re so well positioned that prospects actively seek them out. Based on a clear positioning, they have devoted themselves to a content marketing strategy that allows them to showcase their thought leadership in a particular service area, category, or market segment.
Senior living specialist GlynnDevins brings their positioning strategy to life by publishing regularly about their extensive expertise regarding this important and growing audience. Their blog posts, tweets, white papers, and webinars all are based on providing useful information about this market to their current and prospective clients. As a result, they are regularly invited to speak at conferences, contribute guest columns, and serve as expert resources to the trade and business press. This is essentially inbound marketing, which is infinitely more effective – and less expensive – than traditional outbound techniques.
Content marketing needs a content strategy
Unfocused firms resist a content marketing strategy because they feel it takes too much effort, and that the few times they have mustered the energy to write a blog post, it produced little interest. This is, of course, because these firms lack a positioning strategy. They don’t really know what to write about because their firms are generalists who lack deep expertise in much of anything. So they write superficial posts and tweets that do little to build their reputation.
I was fortunate to know the late Stephen Covey, author of “The Seven Habits of Highly Effective People.” During a lunchtime conversation, I asked him what he regarded to be the optimal marketing strategy for a professional services firm. "Provide useful information and insights to the people you’d like to do business with without worrying if you’re going to get paid for it,' he advised. In other words, help, don’t sell.
Self-referencing business development programs are usually ineffective because they’re focused on the accomplishments of the firm instead of the interests of the prospect. Countless newsletters, blogs, and Twitter streams are all about the company, its latest work, awards, successes, and people. While some of this may be moderately interesting to clients and prospects, it doesn't work as an inbound marketing approach because it breaks the first rule of marketing: start with the customer.
If you’re willing to spend a little more of your intellectual capital on a customer-focused content marketing program, you can spend a lot less of your financial capital on business development.