I have been a New Business hunter most of my marketing life. I have also witnessed a lot of good and bad hunting when I have conducted agency reviews.
So how much is an agency New Business person worth these days?
A good friend of mine shared a job spec the other day for a New Business person. The agency was looking for that key individual who would play a crucial role in shaping the agency’s future and bringing it to market. This person would have a seat at the table and be the guiding light.
This person had to have a great rolodex for sure. They would need to have a proven track record of winning projects valued at $100,000 to $1,000,000 in revenue and a myriad of other mumble jumbo adrenaline building qualities.
Compensation? Can I have a drum roll please? 100% Commission.
Why would somebody with all those attributes and qualities work for free in the New Normal? A 100% commission structure might work when you have something to sell that everybody wants and no competitor has. The pickings are easy. But when you are selling digital or advertising solutions offered by too many 100% commission isn’t much of a draw.
I don’t hear people telling me that New Business is like shooting fish in a barrel too many times these days.
You see the irony of the New Normal is that we live in a world that moves too quickly but where closing New Business moves in slow motion. Deals are harder to close these days. More people are involved, more people want their say, and more people are needed to be included so the risk can be shared.
In my past experience as a hunter I had a track record of knowing that if I had four leads in the hopper I would land one of them. A 25% success rate because they leads were based on a personal relationship. They called me at night at home and said you are going to get the business. I then would call my boss at home and repeat the same. A virtual love feast. A night of a job well done.
Today online leads can have less value because there is no face time. If I listen to a free webinar I get a call. If I download a white paper I get a call. I am a consultant. A business of one. I am not going to buy their stuff.
A really good New Business person with relationships knows how to have those personal relationships that doesn’t need to play that game.
If you want commitment you need to have skin in the game. Agency New Business people should have a competitive base salary. The old model of paying them a little and then a bigger incentive to motivate them is a flaw. They aren’t slackers.
The comp gives your New Business people more runway and the time to develop and nurture the relationships that provide a future funnel of success.
So how much is a New Business person with a great network worth today?
They are absolutely priceless.
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I agree with all of this but would add that new biz people have a half-life which is directly proportional to the breadth of their network unless they are constantly investing in growing that network. The number of relationships anyone has is certainly a starting point and the revenue potential from those existing relationships could almost be forecasted. And even then it needs to be spread over time since, unfortunately, nobody gets 100% of their contacts to convey 100% of their business the minute you change companies. So when an agency is hiring a new biz person because of the strength of existing relationships, one of the interview questions should be “what are you doing to continue building new relationships?” And the more important question would be: “how can we help you do that?”
That is certainly true. You need to refresh your network constantly. Thanks for reading.
The adage comes to mind, you get what you pay for!
A qualified business development person or team is worth its weight in gold. The key to survival in this decade will be the generaltion of New Business!
In an era where client loyalty is more difficult to sustain than ever before, new business initiatives must take priority. Service companies sell their ability to craft competitive, result oriented strategies to manage clients’ growing needs and build their businesses. Within this, service organizations sell innovation and customization. Today, the companies that continually create new specialized services for their clients will be the post recession winners of this decade. And the people who can successfully craft sales strategies to sell this payoff will be critical. While client retention and growth are of high priority, it is new business and the incremental cash streams it creates that will allow such companies to continue to grow their services, gain intellectual capital in new categories and expand their engagements with a larger variety of corporate cultures. In doing so, service organizations will be able to expand their resource to current and future clients, as well as, build tools to outflank competition. Again, the people assigned to generating this new business are worth every penny you pay them…and probably more.
Thanks Elliot. Could agree with you more. Hank
Very true Hank. Most companies forget how hard true business development is in a very competitive market. In my world the deciding factor is the trust the client has in me and in my companies capabilities to perform the project to the highest standard.
Well you can get me going on this quite easily as one who has been in sales and new business development as a career. Shifting from the publishing side, as it has diminished, to the more agency/services side the last four+ years in a down economy.
You have to invest for the long haul. I also support the idea that hiring someone strictly on the “Rolodex” is skewed for many reasons including that you have no guarantee old contacts will do business with you in the new environment or with your new company. Even if you get some business (depending on the scale of the budget and work), you still new to create new relationships for longer term success unless you can bring in the one major contract and ride it for a period of time. That is a rare occurrence.
Along with the lack of pay in the scenario described, you also have to consider the support system. Again, depending on the nature of the sale is the company going to invest in marketing support like T & E to get to industry events or trade shows if those are logical venues for prospecting? What sort of support will exist in the office for admin support or marketing materials? How “tooled up” will the person be to represent the company with or without a base salary?
A buyer makes five buying decisions in a purchase. They are making a choice about:
1) You
2) Your company
3) Your product/service
4) Cost/value
5) Timing
Just focusing on the first two, I can put the best foot forward on behalf of the company and build credibility but if there is no “brand” reputation about the company preceding contact with the prospect and there is no demonstrated distinction in value in the perception of the company (even if competent or competitive), I am in a much tougher position to compete for business and move along a relationship at a faster pace for consideration and commitment.
Thumbs up on this insight!!!!!!!!!!!!! You can be the best New Biz Dev person, but with no incentive, resources, or ongoing value prop. — you aren’t going anywhere!
Great observations Steve. You have obviously been there.