Free new business? That'll cost ya...
A few times a week, we're asked to run business development campaigns "commission-only".
Sounds good, right? If we're any good, we'll make money - SURELY?
Well, the answer is simple.
It's illogical to do it, both for us and for the "client".
You see, if someone did offer that, they'd be able to sign up hundreds - maybe thousands of clients.
If they had that many clients, either their overheads are pretty huge, or they're not really doing any work for most of them.
Now, imagine they find a digital lead, building a website for say, £18k. In any group of 500-1000 agencies, there'll be dozens who could do that.
So who gets the lead? The most suitable agency? The one paying the highest commission? imagine you're one of the agencies using this magical commission-only service and you didn't get that lead. You'd wonder why.
The alternative is that they put ALL their suitable agencies in the "pitch" (which by now isn't a nice simple informal pitch situation and is frankly a mess). They've got to call the prospect in many guises, maybe doing accents (I worked somewhere where we had to book prospects multiple times using accents). Is that how you want your agency represented?
Now imagine you're the mystical, magical commission-only new business agency. When are you gonna get paid for all this work? Well, how long until the project is won? And how long until the agency invoices? And now how long until they get paid? And now how much of the £18k is profit? And how much of it is commission? For it to be worthwhile, you're gonna be slashing your margin or increasing your price.
The model doesn't work. It's a waste of time.
Sometimes "free" is the most expensive option of all.