Biz Dev is on life support at most shops.

WTAF is going on here? That's what a lot of digital agencies were asking themselves as things started slowing down in the 4th quarter of 2022. And not just leads and their pipeline, but long term clients on retainers were canceling too. To find out, 28 shop owners got together last Friday to compare notes on what they're seeing. Keep reading to learn more about what they discovered.

What is going on with biz dev in digital services?

There has been quite a bit of conversation in the Bureau community about how sales started slowing in the 4th quarter of last year. So to kick off the new year, 28 of us got together to talk about what we're seeing and how we're preparing for a potential downturn. Here are the highlights from that conversation. 

How long the recession will last? Shocker Alert! We don’t know. 

  • Economists say 1-2 years

  • Others say 6 months

  • Some think it’s all in our heads and we’ll be fine

  • A few shops have had clients say they are waiting until the 2nd quarter to resume projects

  • Much like the pandemic slowdown, there’s a thought that clients will eventually realize they have to create demand so they will re-engage faster than anticipated

What are people experiencing?

  • 75% of shops on the call saw a drop in leads, slow down in the pipeline or retainer cancellations in the 4th quarter of 2022

  • 44% reported that their time to close a lead had increased, and 44% said it was the same with 12% who weren’t sure

  • 56% say their close rate has dropped, 19% say it’s the same and 25% weren’t sure

  • Partner referrals are increasing for some

  • Some feel they’re losing to other shops because the quality they offer has gone down as they lost key talent and couldn’t afford to replace them with seasoned folks

  • A few shops have said they see the tide turning already with some new projects closing and better leads coming in

Is this part of a correction because of salary and rate increases since the pandemic started?

Why are retainer clients leaving? This feels new.

  • Almost 68% of shops on the call said they had experienced retainer clients leaving

  • Clients are restructuring their internal leadership and with new leadership comes new agency relationships

  • As clients constrict their internal leadership teams, those that are left are looking for agencies who can do more so there isn’t an issue with managing multiple agencies

  • The idea of having an Agency of Record is resurfacing as clients try to maximize budgets with longer-term commitments

  • Budget cuts

  • Building internal teams to handle the work that had been outsourced

  • A larger shop reported 21% of their lost clients in 2021 moved to AORs or said they were leaving as part of an agency consolidation

Are there any trends in clients/prospects that are canceling?

  • Industries

  • Tech-oriented clients (including SaaS companies)

  • Healthcare

  • Financial Services

  • Smaller prospects ($250 million AR) are saying no

What are owners doing to combat the slowdown?

  • Repositioning their value to a mandatory need for clients and not a nice-to-have offering, aka sell painkillers over vitamins

  • Tightening their positioning 

  • Initiating conversations with retainer clients about the potential recession and how they can keep working together

  • Being flexible in billing procedures to make it easier for clients to stay without sacrificing too much profit (i.e., cancel anytime retainers vs annual retainers)

  • Reduce the number of service offerings focusing on the more profitable offerings clients are still buying

  • Optimize wherever they can in terms of process and tightening their budgets

  • Become a repository of their client’s institutional knowledge to increase their value during the client’s internal layoffs and turnover

Thanks again to everyone on the call for sharing this great information. You are legends!

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