Understanding the cost of agency business development

A recent post by a member of the Spin Sucks Community raised the topic of calculating the cost of winning new clients — and determining how to account for that expense properly.

“Any thoughts on how to account for the time spent on proposals (calls and revisions) to get a job? I’m the one that has to do the work. When I’m doing that, it’s ‘lost time’ for me. My first thought is to see how many hours I’ve spent in the first half of the year and then see how that is accounted for in my profitability margin. Perhaps I need to consider making that number a little different to make up for it.”

Chip and Gini tackle this question and explore the importance of factoring in the cost of business development into not just your pricing, but also your identification of ideal clients and the right opportunities to pursue.

Key takeaways

* Chip Griffin: “A lot of the agencies that you and I talk with don’t in any way keep track of the amount of time or cost involved with business development. I think it’s a huge issue that agencies have because agencies are willing to do almost anything to try to find revenue.”* Gini Dietrich: “I no longer want to work with executives who don’t value the long term investment of communications. I ask questions to help me understand whether or not the CEO understands what it is that we’re doing and what that investment is. I listen for things like, ‘I really want to see how it’s translating to sales’. Because those are the red flags that are going to help me understand whether or not this is a good client.”* Chip Griffin: “You shouldn’t be buying lottery tickets in business development, you should be looking for those more sure things. I was just talking with a client this morning and part of the focus was how many people can we reach? How big can we build our email list? And it’s not about the quantity, it’s about the quality.”* Gini Dietrich: “It goes to human psychology. When you start to be intentional about it and you very politely say, thank you, but no, thank you. They start to chase you. You go from being the one that’s supposed to be pursuing to being the one that’s being pursued. And it gives you a lot of leverage.”

Resources

* The Spin Sucks Community

View Transcript

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.

Chip Griffin: Hello, and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin.

Gini Dietrich: And I’m Gini Dietrich.

Chip Griffin: Today, we’re gonna try to figure out the cost of listening to an episode of the Agency Leadership Podcast, right after this.

So that’s actually not what we’re gonna talk about because…

Gini Dietrich: No, it’s not what we’re talking about.

Chip Griffin: But, but if you do some of the things that we’re going to suggest as part of this episode, you could actually calculate the cost of listening to the Agency Leadership Podcast. What we’re actually gonna talk about though, is how do you calculate the cost of business development? Because…

Gini Dietrich: Now I want to know the cost of listening to this.

Chip Griffin: Well, it will be different for every listener.

Gini Dietrich: Sure, right.