Selling to Clients With In-house Resources
Blair wants creative firms to quit viewing in-house resources as the enemy and demonstrates how the arrangements between the two can be mutually beneficial.
DAVID C. BAKER: Blair, today we're talking about selling to clients with in house resources. But the first question is what do you call these folks, not the enemy, obviously you call them in house departments. Do you call them client-side departments? What do you call them?
BLAIR ENNS: Yeah, in house departments or I increasingly I just refer to them as in house resources. Like it might be an in house agency or it might just be in house video production capabilities or in house social media capabilities, et cetera. And so the client might not even view it as an agency, but in house resources.
DAVID: Okay. And these are obviously on the rise. We pretty much all know that if we're in this field. I was reading some research yesterday that the ANA put out, which is the opposite of the four A's or the folks who represent the client side. And they said that the average size of these departments by employee count is five to 25 which was a little smaller than I anticipated. So five to 25 the other interesting thing they said, which really plays into what you want to talk about today is that 90% of them still use the folks listening to this podcast. So even though they have a department that exists to do the same stuff, in some cases that doesn't preclude them using outside. Does that number surprise you at all?
BLAIR: No, it doesn't surprise me one bit. And it was also interesting to see the main reason why clients are going in house. It's really all about efficiencies, the pursuit of cost efficiencies. And there were some other benefits that were identified there as well.
DAVID: Yeah. Which is kind of funny, isn't it? Efficiencies, I don't normally equate in house departments as super-efficient and I've actually measured the economic viability of these and then never in a single case was it more efficient financially to use an in house department. So it's not just about money, but probably time as well. So are these folks, competitors or colleagues to our listeners, how should they think about them? That's the big kind of universal question we have to start with I think.
BLAIR: Yeah. And I think that's the perfect place to start because the message that I would deliver is let's quit viewing in house resources as the enemy. They absolutely are not the enemy. Even in a sales situation where you discern or infer or even the client states outright that they are considering going in house as an alternative to hiring you. So even in a situation where you find yourself competing against them, it's really in your best interest to not view the in house department as the enemy, but to look at them as simply a resource that's available to the client. And if you view your responsibility as a salesperson, not to talk people into things, but to help the client facilitate the best choice for them, then you will acknowledge that they have some in house resources and it might make sense for them to utilize those resources for the project the client is talking to you about or more likely certain parts of that project.
DAVID: So what role do they play actually in hiring a firm? Are they always in the loop sometimes and how much sway do they have over the process? That's an honest question. I really don't know the answer to.
BLAIR: Well, I was hoping that you did know the answer because I don't know the answer to that either. I can only answer that anecdotally and I would suggest that in most cases there might be a little bit of influence. If you're at the table, it's usually somebody who's above or outside of the in house department who's looking to engage you. And if it's not, if it's the person who's directly responsible for running the in host department, then it's likely that they viewed the work that you would do as an overflow to their work. So it's less likely to be the more lucrative strategic work. So I think that question of whether or not the in house people are involved in the decision says a lot about the nature of the work that you might be doing.
DAVID: So even if they don't have much sway over the decision, if this company hires you, they'll certainly know about that. And that plays back into your point about how to view them. Right? How much will you want to cooperate with them to make the impact of your work deeper and to make the experience better? It's not going to be a secret, right? If you do get hired.
BLAIR: What we need to do is when they're at the table or they're under consideration or you even suspected they're under consideration, you follow one of our key tenants, which is to say what you're thinking. If there's an objection, put it on the table. If you have a concern, if you want to know how the roles will be established, then put that on the table for the discussion. I like the language of saying outright, "Hey, I understand you have internal resources. We're happy to work with your in house team if that's something that you're looking for us to do. We found we just need to be clear on the roles before we begin." So if you see the in house department as the enemy, you set up this adversarial situation. You find yourself trying to kind of discredit them or convince the client why they should not use resources that are already available to them and effectively already paid for and you're kind of fighting a losing battle at that point.
BLAIR: So just acknowledge that I know you have these resources, we're happy to work with them. Let's just figure out the roles because as we get into this, you'll see there are multiple roles that you could play and some of them are actually quite lucrative and some of them, ideally in a best case scenario, you are capturing the most high value, most strategic and lucrative work, and you're allowing the client to use those in house resources for the reasons they put those resources in place in the first place. And that is to gain some efficiencies on the more rote tactical implementation work.
DAVID: So it might even be a wonderful opportunity to hand off some of the work that you really shouldn't want to do anyway. Right? Is that another way to interpret what you just said?
BLAIR: Yeah. So if you just acknowledged that as we've already stated this ANA research shows that the number one reason why clients build these in house departments is cost efficiency. So it's the cost efficiencies on the high volume kind of lower value work. So let the client have those cost efficiencies and in exchange see if you can't gain the more high value strategic high margin work that's kind of at the front of the engagement. And then there are ways for you to stay involved. There are ways for you to add value short of taking everything on. Now there might be situations where it makes sense for you to just go head to head with the internal department in the sale and compete directly with them and try to make the case that the client really should give the entire engagement to you. So that's going to vary from situation to situation.
BLAIR: But the point I want to make around identifying roles is don't view the clients in house department as the enemy and any frustration that you might have from having the clients in house resources competing with you is really just the frustration born out of a poor understanding of how the client values them versus how they value you. Your frustration stems from you guessing and again, we want to break down the barriers and create the open channels of communication. So if you have a concern, all right, you've got an in house department, like what are you thinking here? Just say it. Just have this straight forward conversation that we have in the rest of our lives that we find it so difficult to do when it comes to new business development.
DAVID: Yeah, and so we'll want to put a link to that previous podcast where you talked really so eloquently about the value of saying what you think. And so for you listening, if you haven't caught that episode, you'll want to look at the notes there and pick that up. Let me put you on the spot just a little bit. Let's assume that you are running the in house department and you hear about the fact that the mother ship is about to hire this external agency. What would make you relax and look forward to this relationship? So how could the agency conduct themselves in this way to immediately endear themselves to this supposedly competent manager of the department? How would that work well?
BLAIR: I think we need to acknowledge that often when in outside agencies being brought to the table for a client who has in house resources. One of the things, and we may have talked about this in a recent podcast, one of the things they're looking to get from the outside agency is some knowledge transfer. So there's kind of a sharing of the workload and obviously you as the outside agency you have some expertise that they value and they're bringing you in and hoping that some of that expertise will rub off on their internal department. And usually this is another area where we need to have direct conversations because usually it's an anticipated benefit or value driver on the part of the client. This is something that they value and they're hoping to gain and on the agency side you suspect that this is some value they want, but you view it as them stealing it from you. So if we just acknowledged that the client values knowledge transfer, the fact that if you work with their internal department, their internal department will get better at what they do and will diminish the need to hire you in the future.
BLAIR: If you recognize that this is something the client values and this is something that they're going to get from you anyway. Have the direct conversation about the fact that this is something that we will make sure happens in the engagement and you put a price on it.
DAVID: I hear these little gears in my head because I'm almost picturing it in some cases the head of this department hearing your recommendations as the external agency and saying to themselves, you know what? I've been saying pretty much the same thing here, but nobody's been listening, so thank you.
DAVID: So in that sense it's going to make their job easier as long as everybody keeps their ego in check and still has these candid conversations along the way.
BLAIR: Yeah, and I think back to your question about if I'm running the in house department, what am I hoping to get out of this? Or how am I feeling about this?
DAVID: Yeah. And how would the agency conduct themselves in a way that made me look forward to the fact that my company is hiring them?
BLAIR: Yeah. So I would want to hear from the external agency. I understand you, I understand the situation you're in. I understand you're probably giving really good advice and strategic council that is probably being ignored because you're in house. You also understand that we've got a level of creative quality and skill and expertise that you can't possibly have in house, even though you're going to have client knowledge that we can't possibly have and that when we work together we'll learn more about clients. There'll be some osmosis or transfer of knowledge about the client from you to us and there's going to be some creative or skill transfer from us to you and it's a mutually beneficial arrangement.
BLAIR: And so if we acknowledge that it's a mutually beneficial arrangement, then we will acknowledged that it's a benefit that should be paid for. So knowledge transfer in situations like this happens all the time, but it's usually one party trying to steal it from the other party and not paying for it. Or at least that's a way that both sides could look at it. And the way you kind of eliminate the theft here or the notion of theft is simply to have the open conversations about, I'm sure that you would value this and we're happy to provide that value for you. Let's put a price on it.
DAVID: Yeah. I feel myself relaxing even though this isn't a real situation because you're almost pledging by having these kinds of conversations at the very beginning, you're setting a tone for the relationship. Like when we see tension rising, whoever sees it let's just have an honest conversation and express our perspectives and enlarge them if we haven't understood something completely. So let's say that you aren't quite this far along in closing the sale and you're not sure how much you should sell, how much of this you should do, how much of it you shouldn't do. What are the triggers that you should consider as you think about how much of this work you should aim to grab? Is it all about your own expertise? Is it about capacity, is about price? Like how do you want agency's listening to this to think about how much of the work they should grab? What are the factors they should consider here?
BLAIR: Yeah, that's a good question. So we just did a podcast on the six reasons why clients hire you. There are not seven reasons.
DAVID: The title of that podcast was the best part about it as I recall.
BLAIR: And if you haven't listened to that episode, you don't know why we're laughing. But I want to mention the four reasons why you might be at the table. And there are not five reasons. There are only four reasons why you might be at the table for consideration when the client has in house resources and some of these we covered in that podcast but the first one is overflow, so essentially you are there to supplement the client's current capacity or ability to do the job in house and it's they're at capacity and their internal team is full and they just have more work. You want to ask the question?
BLAIR: I see you've got a team, I'm sure you've got all these wonderful in house capabilities. I have to ask, why are you having this conversation with us? You need to ask that conversation directly. Don't set it up in any way that presupposes anything and don't try to buy us the answer. Just set it up. Be nothing but positive when talking about the in house resources and ask the question like why are we here? If the answer is overflow as I've just talked about. If you're there to supplement their internal ability to do things with their hands essentially, then that's probably low margin work that you don't want to have anything to do with unless you happen to have a whole bunch of internal capacity right now and you're essentially selling them excess capacity. So the reason number one you're at the table might be overflow.
BLAIR: Reason number two, we need to think about this is you might be at the table to challenge, so not to supplement but to challenge, to push or even supplant the in house team. The client might look at their in house team and think, you know what? They've gotten lazy, lazy in their thinking. They're just kind of pounding out the rote work. I want to shake them up the way a client would do an agency review just to challenge or push their existing agency.
BLAIR: The same thing happens within house departments that you've got a client who says, "Yeah, I've got in house resources, but I haven't been all that happy with their work." And they're just tying to terrify them or inspire them to do better work. So if you suspect that's the case, you ask the question directly, you might say, "All right, so you've explained what you're looking for here, but correct me if I'm wrong, I'm getting the feeling that you're talking to us in firms like ours because you're unhappy with the performance of your team and you want to use the fact that you're looking at an outside agency to push them to do better work."
BLAIR: If that's what you're thinking, say what you're thinking, put the question on the table, be as direct as possible and see how the client responds to that. So reason number one, you're at the table. It might be overflow. Number two would be to challenge to push or supplant the client. And then a third reason might be to lead. That's just a way to think about it. Yeah, I have these internal resources and they're really good at getting a high volume of work done quickly, but I'm not overly happy with their high level conceptual or strategic work. So that's what I mean by lead and I've referred to this a few times already to come in at the beginning of the engagement to think differently about things, maybe to even set the creative or strategic or technological kind of framework of the work to come.
BLAIR: And then the client would be happy to have their internal team do the implementation work. And the fourth one is one that we've already talked about, this idea of train or grow through knowledge transfer. So there are one of four reasons that I can think of. There are probably five or six, but I see these as the four main reasons why you are at the table at all when the client has internal resources, you're there to supplement, to supplant, to lead or to train or grow.
DAVID: As I was thinking back to some of our earlier conversations about when you should actually agree during one of those rare times to participate in a pitch, you certainly want to know who else is involved. And in this case we have the incumbent involved. Right? The incumbent is the in house department who's always going to be, especially if there's some sort of a charge back system and more and more there is a charge back system involved. So in other words, these departments are not viewed exclusively as a cost center like they used to be in the past. Nowadays they're viewed as more than that, and if you decide as a department head at the mother ship that you're going to use the in house department, it's going to be charged to your budget.
DAVID: So it's actually more of an entrepreneurial play that they're making. And so they're saying, should I hire them or should I hire you? The incumbent is always participating in this thing and you're just saying. Make sure you realize that and that you don't waste your time. Do you let pricing help them decide how to pick and choose and what they should use you for? Is that a part of this conversation?
BLAIR: Well, in the theme of being direct and asking the direct questions, you want to know if price is a decision, it's not likely. So you could just put the objection on the table and say, I know you have in house resources and if you're considering using in house resources, you're talking to us, surely you must know that we are going to be far more expensive than any internal resource. Right? Pause. Right? So you can put the objection on the table. My assumption is if you're at the table, they already know that, they already know you're an external expense that they don't necessarily have to incur. So of course there's a financial issue. But again, let's not assume anything. Let's put everything on the table for discussion. So some clarifying questions that I like around why are we even here in what will the roles will be moving forward?
BLAIR: Probably my favorite one is you've got internal resources. Is this decision that you have to make? Is it about us or them or is it us and them? Are you looking to keep the work in house or hand it to us or are you looking for a way for us to be able to work with you and your in house team? And if the client says, "Well that's a good question." I'm glad you asked. It's the ladder. I have these resources, I have to use them. But there's certain things that I think you might be better at. You endeavor to clarify the roles. So just keep asking questions. So things like what would you be looking for from us? So you're looking for strategy, are you looking for concepts, are you looking for execution, are you looking for oversight on your internal team?
BLAIR: And then this question of just speak directly to the subject of knowledge transfer. Would you value some knowledge transfer in the engagement? Is one of the benefits of working with an outside agency the idea that by working with your in house team we would raise the skill level of your team. Is that something that's important to you? All the frustration comes from not knowing which comes from not asking. It comes from guessing. It comes from assumptions, so put everything on the table for discussion, ask direct questions. If you have a question in your mind, ask it
DAVID: And this discussion is so relevant now. It's more relevant now than it ever has been. I was just thinking about how this is such a great example of how our world has changed radically because in the past it was either or. You either had an in house department or you had an agency and now since most of these companies have an in house department and most of them, 90% of them also use an agency. It is not an either or question. Again, we have to teach ourselves how to work with these firms and what's our proper stance. That's what you're talking about it. It's interesting how this world has changed pretty radically and so quickly too.
BLAIR: I think that's a great observation. It really is a new world order. Whether or not it stays, I doubt it, as we've talked about before, I think the pendulum always swings both ways and we just happen to be at the point now where it's way out on the end of large and common in house teams and it's not necessarily going to stay there. And some of your research and other research shows that it might not necessarily be the best move. So the pendulum will swing the other way. But the reality is you have a client with these resources and if you're trying to talk them into it giving all the work to you, you're putting them in a bit of a risky position internally by choosing to not use internal resources. So learn to play ball. And again, it comes down to having these direct conversations. Now having said all of that.
DAVID: Here we go.
BLAIR: There are situations where you are going to be presented with an opportunity and the client's going to be clear or you're going through an infer that they're considering taking all or some of this in house and maybe the client wants you to work with the in house team. There will be some situations where you look at it and you think that would be a mistake. That would be a mistake. The best thing this client can do is to give us all of the work including the tactical work, implementation work and if you really truly believe that, and it's not a self-serving comment or belief, but it really is the truth as far as you think what is best for the client, then I think you should fight for it. You should make your case for whatever the rationale is, there certain types of work where the execution is as valuable as the idea or the strategy because a bad execution of a good idea is as bad as a bad idea.
DAVID: Yeah. It gets lost in translation somehow and you've seen it happen too many times or maybe you know something about this company or the people that occupied this department that you're really doubting whether it's in the client's best interest to hire you to come up with the big plan and then let somebody else execute it. I could see that happening for sure. You're making an argument that it's a common thread through everything you talk about, about having respectful, open, transparent conversations with prospects who then become clients. Do you see other mistakes that keep popping up as people navigate this issue besides the really big one that we've talked about here around transparent conversations and honesty with them?
BLAIR: Yeah. I'm not sure that I see anything nearly as meaningful as the mistakes of seeing the in house department as an adversary and then I'll use the word greedily trying to get it all when it doesn't make sense for you to get it all. I think those are the two big ones, but I do want to come back to this point about the argument for keeping it all. I remember back in my career as an employee at agencies, I was working for a design firm. We would do some rebranding work for a business or a brand and then we were to watch as the in house departments rolled it out and it would just make mistakes in the application and so at some point devised a policy. I used to just make up policy all the time and I still do today and again, a policy is just a predetermined decision.
BLAIR: So I would say, listen, it's our policy that if you hire us to design something that we do the first application of all newly designed items. So I would state it as policy. If you want us to do the branding work, then the first time that new identity, the new look and feel is applied to anything than we do it, after the first application. Then if you want to do the ongoing reapplication, you're free to do it. And the line that I used to use that I stole from, I forget who is. If we design your new identity and you guys make a typo on the president's business card, you get shot. We get hit with the spray and it's not the best metaphor.
DAVID: You were watching Dexter at the time, apparently.
BLAIR: Your favorite show.
BLAIR: But this idea of screwing up the execution. I see the four stages of the engagement. There's stage one you diagnose the problem. Stage two you prescribe the solution or the therapy if we're staying in a medical context, stage three is the initial application of that therapy and stage four is the ongoing reapplication as necessary. The first two, the thinking stages are the most highly most valuable, they're basically the strategy phases of diagnosing and prescribing. Those are really valuable stages. They shouldn't be priced by the hour. They should be really high margin stages in the engagement. Then when you get into the doing stages of initial application of therapy and ongoing reapplication as necessary, that third stage, which is the first one on the doing side initial application, that's really valuable too because again, strategy can be destroyed in the execution.
BLAIR: Creativity can be destroyed in the execution. So this idea, if you believe strongly, if it's just a philosophy of yours that you believe you should do the first execution of everything, then go ahead and make that a policy and you don't have to use your policy all the time, but if you're fighting for it, use the line policy because as we've talked about before, when you battle policies with preferences and inclinations, you always lose people respect policy.
BLAIR: So you just put it forward and say it's our policy that if you hire us to do X at a strategic level, whether it's creativity or it's code, it's the first application of X. After that, we take responsibility for, now at that initial application, that kind of third stage. That's a great place to work with in house teams because the fourth stage of ongoing reapplication is necessary. That's the one that could go on for ever, but it's also the lowest margin work. Right, and less and less, as the years go by and agencies get increasingly specialized, there are fewer of them whose business models are built on the requirement to have that high volume, low margin work. Increasingly firms are getting paid for their expertise for more strategic parts of the engagement upfront that allows this firms to be smaller, they don't have to staff up for the less profitable, more competitive work.
BLAIR: It keeps them out of these horrible procurement driven battles or selection processes, et cetera. So that third stage of the initial application of therapy, the first time you're applying the creative tools, the elements, that's a great one to hold onto, but to also, if you're going to sell knowledge transfer and transfer over to an in house department, that's where you would do it. So they can kind of be side by side or observe as you do the initial work and effectively that's when you're training them to do ongoing reapplication. And the last point I'll make on that is if you're going to do that hand over. If you're selling knowledge transfer, you can also make a lot of money on templates or standards guides. If you're handing over work to the in house department, you can sell some level of standardization or system that allows the client to implement it in house while reducing the likelihood of some failure of execution.
DAVID: Yeah, the people making money here are the ones who are inventing new products out of milk, not the people milking the cows twice a day. Right? It's going to be the high margin, the high risk of failure. That's where you have an opportunity to really change your future as an agency and not milking those cows twice a day. I just looking out over a field here at cows. I don't know why that came to me, but...
BLAIR: I've got that metaphor rolling around in my head now. Now I have to sell my dairy farm.
DAVID: That's right. This is an example of how if you're in this field, these kinds of conversations are so interesting to you and if you're not in this field, you wonder what in the world we're talking about. It's such a great example of a specialization. This has been an interesting discussion. What I kind of hope people will do right now while this is fresh in their mind is they'll scurry over to the conference room and write down what their policies are, knowing that those policies will change, but what are the policies that they want to typically enforce and working in a situation like this? What are the questions they're going to ask to surface the truth and obviously like I just said, how they answered these questions is going to change over time, but just putting them down while it's fresh in their mind would be a good exercise.
BLAIR: What about cow hunting? What if you had a bunch of cows and you can just open up a cow hunting ranch?
DAVID: Are we still recording? We got to stop this.
BLAIR: Thank you David. This has been fun.
DAVID: Thank you Blair.