In my work I often see the same mistakes being made repeatedly. These mistakes are really expensive financially and in their effect on your mojo.
The seven mistakes are interconnected:
1. What's special about your agency? You might think you’re different but too often PR agencies look the same to clients. Then you’ll be bought predominantly on price. What’s the real or perceived difference between you and competitors?
2. Not understanding your value is the next mistake. It is easy to become focused on the ‘doing’ rather than the result or impact of our work. Clients want to buy the result of the PR campaign, not the PR campaign. Value is in their eyes, not yours.
3. As a PR agency making a fair profit is a fundamental business goal. Revenue growth without profit growth is nuts. Don’t be too focused on the topline revenue rather than on the right balance between revenue and bottom-line profitability.
4. Under-pricing is a massive and costly mistake. By under-pricing we set a precedent with that client going forward and it will be hard to increase our price with that same client for subsequent work. Price is the number one factor to influence profitability. Price is A factor; it is rarely THE factor.
5. Over-dependence can be costly. If a client represents more than 15 per cent of your business there is a danger that you avoid increasing your prices, avoid challenging the client and avoid presenting standout work. Instead we play safe, avoiding 'rocking the boat'. Just because you’ve had a client for 10 years, it is not a guarantee of the future. I have seen too many agencies destroyed or decimated by the loss of one or two major clients. Hope is not a strategy.
6. Poor briefs are costly to PR agencies. What makes a poor brief? A verbal or poorly thought through brief is dangerous. It’s your responsibility to extract a great brief. A verbal brief isn't worth the paper it's not written on.
7. Scope creep and over-servicing drain profits. Clients will ask 'could you just...' and expect that extra work to be covered by the original budget or fee. Scope creep is like a disease. It won't get better unless it is treated. It simply gets worse. Your ability to tackle scope creep is linked to your confidence, your differentiation, your pricing, understanding your value, the brief...
Chris Merrington is the author of 'Why do smart people make such stupid mistakes?'
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