COMM2333: CLIENT

MANAGEMENT

Week 2
Managing clients:
Retention and
Acquistion &
Financial
Considerations.

Class program week by week content.

Week 1: Course introduction, Industry overview, Teams & Case study method

Week 2: Managing Clients: Retention and Acquisition.

The role of the client manager and client collaboration.
Week 3: Organisational Culture and Climate & Case study discussion
Week 4: Leadership and Management, Wilson Matrix and Case.
Week 5: High Performance teams and Case. Assessable Case brief
EASTER BREAK 2nd April to 8th April 2015.
Week 6: Negotiation Principles and negotiation exercise. Hand in Assessable
case
Week 7: Negotiation Part 2 and exercise. Team 1.
Week 8 Guest Speaker and Assessable Case. Team 2
Week 9: Legal considerations in advertising and Case. Team 3
Week 10: Ethical considerations in advertising and DVD. Teams 4&5
Week 11 Managing your career & yourself and Case. Teams 6&7
Week 12 Individual Presentations

Session Outline
What is a consumer?
What is a Client or Customer?
Client Retention
Client Acquisition definition and process
Client Portfolio Concept
Financial considerations .

What is a Consumer?

A consumer is someone who buys goods and

services.
Penguin English Dictionary 3rd edition 1979

A consumer is a person or group of people that

are the final users of products and or services
generated within a social system. A consumer
may be a person or group, such as a household.
Source: Wikipedia.

What is a Client (also a customer?)

A client is one who employs another

professionally as an advisor or agent
(Penguin English Dictionary)

Customer one who buys at a shop.

(Penguin English Dictionary)

A client or customer is a recipient of goods or

services in return for monetary or other valuable
considerations. Source: Wikipedia.

Client/Customer Retention.
Client/Customer Retention is the activity that a selling organisation
undertakes in order to reduce customer defections. Successful customer
retention starts with the first contact an organisation has with a customer
and continues throughout the entire lifetime of a relationship. A companys
ability to attract and retain new customers, is not only related to its product or
services, but strongly related to the way it services its existing customers
and the reputation it creates within and across the marketplace.
Customer retention is more than giving the customers what they expect, its
about exceeding their expectations so that they become loyal advocates
for your brand. Creating customer loyalty puts customer value rather than
maximising profits and shareholder value at the centre of business strategy.
(1) The key differentiator in a competitive environment is more often than not
the delivery of a consistently high standard of customer service.
Customer retention has a direct impact on profitability. Research by John
Fleming and Jim Asplund indicates that engaged customers generate 1.7
times more revenue than normal customers, while having engaged
employees returns a revenue gain of 3.4 times the norm.

Client/Customer Acquisition
Client Acquisition Management is a term used to describe
the methodologies and systems to manage customer
prospects and inquiries, generally generated by a variety
of marketing techniques. It can be considered the
connectivity between advertising and customer
relationship management. This critical connectivity
facilitates the acquisition of targeted customers in an
effective fashion. (1)
Source: http://www.destinationcrm.com/articles/web-exclusives/viewpoints/the
missing-linl-in-CRM-customer-acquisition-management-44024.aspx

Client (Customer) relationship Ladder Andrew Sobel

Rank from the weakest to the strongest relationship.

Vendor of Steady supplier

Trusted Partner
Contact
Expert
Trusted Advisor
Acquaintance

The six levels of professional relationships: Sobel

Level

How a client would describe the relationship

Contact

Weve met. I think she works for

Acquaintance

Ive known him for a while. We have some things in

common and know some of the same people.

Expert

Shes very knowledgeable in that area and did excellent

work for us on a project.

Steady Supplier

Weve had a relationship for a while now. He and his fiorm

consistently deliver and Ive recommended him to a few
colleagues. For this type of work, we will continue to use
them.

Trusted Advisor

Ive know her for a long time. Shes superb at what she
does and has great business sense. I really trust her
judgment and I will definitely use her as a sounding board
for important issues.

Trusted Partner

I view them as a long term partner in growing our

business. Theyve built many strong relationships with our
people and they consistently add value. I feel we get the
best that their firm can offer.

Acquiring new clients: Know your Market

Winning business not

easy

Well serviced local market

14+ major agencies and lots
of specialists
Category exclusivity

Identifying potential clients Deciding When To Pitch

Global alignments

Is it for real?

Mergers

Is it profitable?

Like-minded brands

Can the time and energy be

spared?

Networking & relationships

Unhappy advertisers?

Challenges of Acquistion (or Pitching)

Time & resources - average pitch typically requires 600800 internal head hours
Disruption to marketing process and also incumbent
agency if shortlisted
Exposure of brand/business information to the market
Time and resources to induct and orientate new agency
Knowledge loss with change of agency
Managing the process in a timely & professional manner
for corporate reputation

* Adapted from Trinity P3

What makes a good contact or prospect for an

advertising/communication agency?
A client that:
Provides a sound brief that engages with other elements
of the marketing mix
Allows enough time. Innovative, customised solutions
take longer.
Is open minded and prepared to listen to new ideas
Is not driven solely by cost per thousands and price. The
wrong environment is never the right price.
Rewards a media agency for the quality of their thinking

* Adapted from Trinity P3 Top 10 tips to ensure you get the best media strategy

Top 10 Tips for acquiring new clients

1. Avoid The Pitch!
2. Why a pitch... Is there a hidden agenda?
3. Know your prospect
4. Read the brief
5. Win the pitch before the presentation
6. No standard formula tailor to each clients needs
7. Be real and relevant, live your brand personality
8. Short and sweet
9. Show real passion and commitment
10. Prepare early and rehearse, rehearse, rehearse

1. Avoid The Pitch!

A review is a pitch
A pitch means you are a chance to
lose
Pitches cost money
Retaining clients can be as good as
winning new ones

2. Why a pitch?

Is there a hidden
agenda?
What are the real
reasons for pitching?
Make sure these
reasons are addressed
in the response

3. Know your prospect

Cast smart,
likeable, talented
people
What is the clients
background?
What are their
personal interests?

4. Read the brief

Check your response

against the brief along
the way and prior to
presenting
Address what the
client wants a million
apples is no good to a
client that wants
oranges

5. Win the pitch before the

presentation
Everything should be
prepared and in order
All questions answered and
likely questions anticipated
Great delivery should be
enough by the time you
deliver the pitch

6. No standard formula

Tailor to each clients

needs
If you are cut and
pasting, make sure its
relevant
Show what you can do
for them, not just what
you can do

7. Be Real and Relevant. Live your brand personality.

Demonstrating a
point of difference is
critical in a service
based industry
This is the falldown
of many agencies,
particularly media
agencies
Must be seen as a
communication
solution provider and
not a commodity

8. Short and sweet

No one ever asked
for a presentation to
go for longer!
Get your key points
across quickly
Say it the shortest
way possible

9. Show real passion and commitment

Need to be an expert in
whatever you are selling
Advertising is the business of
knowing other peoples
business
Demonstrate your
enthusiasm
Ask questions

10. Prepare early and rehearse, rehearse, rehearse

Make

your work

count
Dont fall at the
last hurdle
Very hard to fail
when you are
prepared

Becoming a Trusted Partner (or Trusted Advisor).

Trust leads to higher retention rates and increased profitability
Trust is achieved through Credibility, Reliability and Intimacy vs. Self
Orientation
Credibility: expertise and presence
Reliability: dependable and consistent. Achieved through action.
Intimacy: emotional closeness, building rapport
Self Orientation: defensive behaviour, focus on self instead of client
(C+R+I) / SO = Trust Factor
Example 1 (existing client): 9 + 9 + 8 / 5 = 4.2
Example 2 (new client): 7 + 6 + 2 / 8 = 2
The development of trust:
Engage, listen, frame, envision, commit

COMM2333: CLIENT
MANAGEMENT

Week 2
Financial
Considerations in
Client Management

Outline
Why do we need financial analysis?
How to use Financial Analysis?
Key Terms
Break Even Analysis
Foundations of Budgeting
Setting the campaign budget
Advertising Budgeting Methods

Why do we need Financial analysis?

To assess the current financial health of our agency (and
our clients)
Are revenue, costs, and therefore profits, increasing or
decreasing?

To assess the future financial health of our agency (and

our clients)
I.e.: Is there a concern with future revenue and/or the cost
structure of the agency, which indicates future financial difficulties?

How to Use Financial Information

To answer specific questions NOT just to show that you
calculate a few financial ratios!
Therefore you MUST draw conclusions from your analysis
i.e. How profitable is the Agency?
How much revenue is required to reach B/E given the
current cost structure of the agency?
What is the overall financial health of the agency?

Purpose and Key terms

Purpose of the firm: to make a return (ie Profit) to cover all costs and
provide a return on investment sometimes in the form of dividends to be
shared by shareholders and other stakeholders
Income statement (Profit and Loss) usually prepared quarterly and
provides an easy to understand picture of profitability
Balance Sheet - shows at a point of time (usually end of FY) the assets,
liabilities and equity of the firm
Assets the resources available to the firm to make a profit
Liabilities the creditor financing of the assets of a firm
Equity shows how the assets of a firm are financed (ownership)
Cash Flow shows the liquidity of the firm which is a function of how
quickly a firm collects the money owed to it and how slowly it pays out
money.
Collections of 26 days and not paying its own bills for 42 days means??

Break Even Analysis

Break-even analysis is a tool to calculate what revenue is
required to cover all costs (variable and fixed costs).
VARIABLE COSTS COST THAT VARY WITH
REVENUE
FIXED COSTS GENERALLY DONT VARY WITH
REVENUE
You can also use break even analysis to:
set price levels
target optimal variable/ fixed cost combination
determine the financial attractiveness of
different strategic
options ie increase advertising

Agency Revenue - FEES PAID BY CLIENTS

Different methods of rewarding an agency for its work.
1.Percentage of the Advertising budget
2.Fixed Fee per annum
3.Hourly Payment
4.Project payment
5.Based on Performance
6.Hybrid - Combination of the above

AAA Ad Agency - Illustration

Revenue total ad spend/fees paid by the client
Client A TOTAL AD SPEND$200M; FEE TO AGENCY $5.0M
Client B - $10.5/$2.1M
Client C - $4M/$1.0M
Client D - $1.0M/$0.5M
Client E - $0.250M/$0
Costs both fixed and variable costs senior management (2 persons)
salaries $1.5; staff salaries (12 persons) $0.895M, staff on costs $0.479, rent
$1.5M, printing $0.5M, computer costs $0.5M, entertaining $2.5M,
miscellaneous $3.5M.

Is this Agency profitable?

What else have you noticed about the financial
performance of the agency?

AAA AD AGENCY ILLUSTRATION

REVENUE = $8.6M minus COSTS = $11.374M
PROFIT(LOSS) = $2.774M
Heavy reliance on one client (Client A) 58% of the revenue
Only 5 clients
Fee structure for clients highly variable (based on fees as a % of budget):
A 2.5%
B 20%
C 25%
D 50%
E N/A- maybe start up or pro bono
High senior management salary (av. $750k) vs. staff (av. $74.6k)
Rent appears high in relation to revenue and no of clients (17.4% of rev)
Big entertainment ($2.5M) and miscellaneous costs ($3.5M)

BCG Portfolio Analysis Balance of Clients.

BCG Portfolio Analysis Balanced folio of clients

B/E for a client advertising budget - B=F/(P-V)

B= break even volume
F = fixed promo costs (ie advertising)
V= unit variable costs
P=price per unit
Think Hyundai and its latest Genesis luxury car
Ad budget $10,000,000
Price = $60,000
VC = $50,000
Profit per car = $10,000
B/E = ? units

Foundations of Budgeting Jugenheimer/Kelley (2009)

1. There is some relationship between advertising and sales
2. There is always some return for an additional advertising
investment BUT consider the concept of diminishing
returns
3. There are threshold levels of advertising and below the
threshold advertising will have no impact on sales
4. The sales returns are spread over a substantial time
period after the advertising runs ie the lag effect
5. Some sales will be made even with no investment
6. No amount of advertising can push sales beyond a
maximum ceiling

Advertising considerations (Rossiter Chapter 13)

Adspend in an industry recession should you decrease/increase?
Adspend set and a competitor attacks should you change your adspend?
Advertising Budget setting (Schroders Method)
Budgets should not be set nationally but locally
Examine largest competitors SOV/SOM and our own SOV Vs SOM
If your largest competitors SOV is below SOM, then attack with a larger
comms budget and be prepared to sustain 13+ months
If SOV matches SOM then defend which requires matching LCs
expenditure
Important to track impact of ad expenditure (sales, m/s, and TA
awareness, preference, intention to purchase etc)
SOV = share of Voice
SOM = Share of Market
LC = Largest competitor

Advertising Budgeting - Methods

1. Percentage of sales (past years sales/anticipated sales)
2. Percentage of profit (past years profits/anticipated profits)
3. Match the competition/share of voice (SOV)
4. All you can afford
5. Allocation per unit sold (similar to % of sales)
6. Objective and Task
7. Zero based (clean sheet similar to objective/task)
8. Industry norm
9. Minimum effective level
10. Investment spend
11. Remainder or whats left over (similar to all you can afford)
12. Top Down/Arbitrary

Resources
Sobel A (2009) All for One 10 strategies for building trusted client
partnerships. Wiley
Sebastian T (2008) Tell your clients where to Go!
Gibson P (2012) The world of customer service
Solomon R (2008) The art of client service
Po-Chedley (2001) Client Relationship Management
Ogilvy, D. 1968 Confessions of an Advertising Man Mayflower Dell, Great
Britain.
Maister, D, Green, C. & Galford, R. 2000 The Trusted Advisor, Free Press,
New York.
Axelrod, A. 2002 Everything I Know About Business I Learned From Monopoly,
Running Press Book Publishers, Philadelphia.
Trinity P3 - Marketing Management Consultants.
http://www.trinityp3.com/downloads.php
Penguin English Dictionary 3rd ed 1979 and Wikipedia accessed July 2013

HOW TO ANALYSE A
CASE STUDY.

FORMAT BUSINESS REPORT

Write your report as if you were writing to senior management.
Business report format
Exec Summary
Introduction
Page numbers
Headings and sub headings
Reference list

1. Statement of Problem
Identify the Core or underlying problem (just ONE problem)
Separate problem from symptoms
Be Succinct and paint a clear picture usually one sentence

2. Background /Situational Analysis

This section provides context
2.1 External to Agency
Business and Competition
Environment
Consumer trends and attitudes
Communication strategy of brand and competition
2.2 Internal (including Clients & Personnel Issues)
Clients/client portfolio
Hiring/Structure of the agency
Personnel appraisals/salary
Manpower application
2.3 SWOT SUMMARY of your situation analysis
Note:
State any assumptions you have made
State the timeframe
Draw on material from the case first

3. Discussion of Alternatives (list)

Develop three or more alternatives
One alternative could be to maintain status quo

4. Recommendations/ Rationale
Choose one of your alternatives and support your recommendation with a
strong persuasive argument
Recommendation is a straightforward statement followed with bullet points to
support your preferred option

5. Action Plan or Next Steps

implementation
Specific task, timeline and whos responsible
Use a table foramt
Budget - optional
evaluation or measurement and methodologies used - optional

6. Contingency Plan
Identify the biggest Risks with your recomendation
What if it goes wrong?
Statement saying : If this happens this is what we will do

Three things to do before week 3

1.

Work on your team proposal also familiarise yourself with the library
cross search facility (refer slides at the end of this slide pack on
WARC/GOOGLE)

2.

Check content on Blackboard lecture and tutorial resources AND find

your blog on Blackboard (let me know if you cant find it).

3.

Read and Prepare Boswell Agency (posted to week 3 Blackboard

course content tab) using the case study method

Slide 51