How to Stop Competing in a Buyer’s Market

If you’re frustrated by your prospective client’s desire to do an apples-to-apples comparison of agencies, there is a simple solution: stop being an apple.

This is especially true when it comes to your proposed compensation structure. Professional buyers (procurement) want to be able to line you up on a spreadsheet to compare your pricing with competing agencies. That’s their job. Your job is to propose a different way of working that is actually in the best interest of both parties. The next time you’re asked to provide your “standard rate card,” you can instead respond with something like this:

Unlike most other agencies, we don’t operate within a time-based compensation model. Instead, we provide a variety of pricing approaches based on the value we create, not the costs we incur.
We believe that our clients, as marketing decision-makers accountable for business performance, should care less about how many hours it takes us to do something and more about what we’re ultimately delivering. This means that instead of tracking hours and staffing plans, we devote our attention to tracking the outputs and outcomes we create on behalf of your brand.
We recognize our model differs from the guidelines set forth in your RFP, and we would be happy to discuss our approach in more detail as a next step in your process.

Standing out means not fitting in

We have all heard the axiom, “The greatest risk is to not take a risk.” Nowhere is this principle more applicable than in new business situations. The worst possible approach is to answer every RFP question precisely as asked, check every box exactly as instructed, and provide the literal information requested no matter how intrusive or irrelevant. How do you expect to stand out if all your actions are designed expressly to fit in?

This isn’t to say you should disregard the process altogether or flagrantly ignore requests for legitimate, relevant information. But consider the dangers of answering standard questions in a standard way. The goal isn’t to fill in the blanks; it’s to win the business.

Your mission is to demonstrate that you are not like every other agency under consideration. The unfortunate remedy attempted by most agencies is simply to look different. A well-designed proposal is important, but it’s never just the style that wins the day; it’s the substance.

Your firm must rank high not only on the scale of differentiation but also relevance. It’s this combination of different and relevant that truly stands out in new business situations. Relevance is achieved by showing your prospect how your firm is perfectly suited to effectively address their business challenges. This requires that you come to terms with the idea that your firm can be excellent in something, but it can’t be excellent in everything. You can be an expert in some categories, but not all categories. You can have deep knowledge and expertise in some sectors of business, but not all sectors.

Harvard’s Michael Porter observes that many firms attempt to be different but are not truly differentiated “because they pursue forms of uniqueness that clients do not value.” Some of the most prominent examples of this are agency credentials: awards, years in business, growth in revenues, etc. These are table stakes, not points of differentiation.

Are you uniquely qualified?

Your ideal client is one that has a problem that you are almost uniquely qualified to solve. Their core needs match your core competencies, and their target customer is one of the audiences you know best. Here’s a useful way to think about client selection:

One of the underlying principles of economics is “What’s scarce is valuable.” If what you do is rare and hard to find, a price premium is easily justified. On the other hand, if what you offer is widely available from other firms, you’ll have very little leverage.

With every prospective assignment, consider the following five questions:

1. This problem can be effectively solved by virtually any agency

2. This problem can be effectively solved by a majority of agencies

3. This problem can be effectively solved by only certain agencies

4. This problem can be effectively solved by only a very few agencies, including ours

5. This problem can be effectively solved by our agency alone

It’s been said that the ultimate business strategy is to be in a category of one; to be the only firm in the world capable of effectively solving a certain type of problem. As The Grateful Dead’s Jerry Garcia once observed, “You don’t merely want to be considered the best of the best. You want to be considered the only one that does what you do.”

An achievable aspiration

This is not an impossible aspiration. Arguably The Grateful Dead are a one-of-a-kind band. It’s entirely possible to become a one-of-a-kind agency. The path to this type of distinction does not include following “best practices.” Copying the practices of other firms is simply a form of “karaoke capitalism.”

If and when it feels you’re competing in a buyer’s market, it’s only because you’ve chosen to be there, if not by design then by default. It’s true that many professional buyers view their job as running apples-to-apples comparisons. But you, the seller, have a job as well — to be an orange.