It's Not You, It's Me: The Proper Way to End a Client-Agency Relationship

Breaking Up Is Hard to Do, but Sometimes It's the Right Choice

Posted by Jennifer Modarelli on 04.23.09 @ 12:09 PM

Jennifer Modarelli

When we in the agency world talk about client relationships, we tend to cast them in romantic terms: the starry-eyed courtship, the thrilling early days, the comfy phase where you finish each other's sentences and, eventually but inevitably, the break-up and the need to get their stuff out of your apartment as quickly as possible.

It's cute, but the analogy misses something fundamental about agency-client relationships. Agencies rarely break up with their clients, because their post-breakup prospects tend to look much bleaker. For a client, replacing an agency is relatively easy, even if there's a distracting period in which you discover that your new lover laughs through his nose or leaves wet towels on the floor. Replacing a client is, on the other hand, relatively hard. One generally doesn't get to issue an RFP for new clients.

So why would an agency ever break up with a client? White Horse recently took the first step toward ending a four-year client relationship. For most of its lifespan, the relationship had tapped our full set of services with interesting, creative work, and we felt respected as a true strategic partner.

So what changed? Well, all of the above. Faced with a massive retail slump, the company believed it could save money by consolidating its marketing work -- White Horse was responsible for the digital portion -- with the offline agency and by bringing some of the web development in-house. White Horse still had a substantial volume of site maintenance work and the chance to develop upcoming promotions. But we have chosen instead to initiate an amicable parting and to begin implementing a transition plan.

Is this foolish pride in the face of a howling economic storm? Not at all. We believe the economic crisis actually underscores the need for agencies to take a clear-eyed view of their client relationships and get laser-focused on building and sustaining the ones that will stay mutually rewarding through the crisis. It's not quite Pareto's Law (maybe 20-80 instead of 80-20), but we're confident that both we and our remaining (and future) clients will benefit from our focus on sustainable best-client relationships. Here's why:

1. Pure production work is a race to the bottom. Our business model relies on clients that want smart strategy driving their digital initiatives. With pure production work, there is, to paraphrase the 19th century critic John Ruskin, always someone who can do it a little worse and sell it a little cheaper. When agencies chase after a waning relationship, they often over-commit resources to holding on to work that is declining in long-term value. Their time is better spent elsewhere, which brings me to...

2. The agency's best brains can do better. Good digital agencies are masters of elasticity, i.e., the ability to take on new work from new clients without an immediate bump in headcount. This is essential, because client work often begins as a single project before evolving to a multi-tiered relationship. As a result, your strategic resources -- your relationship managers and subject-matter-experts -- get stretched the furthest as you grow key accounts.

Inevitably you end up with a number of mid-sized accounts that could mature in mutually rewarding ways, if only you could devote more strategic foresight to them. By saying goodbye early to that large account with a short future, you get more from your existing relationships. And vice versa.

3. No one gets left at the dance. Sure, it can be awkward to be around your ex after the break-up, but it's better for the kids. When clients fire agencies, they tend to do so abruptly -- a clean break -- creating unintended expenses for both parties. Agencies experience an abrupt drop in revenue, and clients lose all kinds of intellectual (and actual) capital: knowledge of legacy systems, analytics, ad cookies, processes, etc. The costs and risks of onboarding a new agency also run substantially higher.

By initiating the break-up, the agency can facilitate what the State Department likes to call an "orderly transition of power." The agency can better anticipate the revenue hit with a 90-day transition plan that specifies processes for knowledge and asset transfer. They can even help on-board the new agency.

In a perfect world, of course, none of this ever happens, because love conquers all. But no one who has glanced at a business headline in the last 6 months would believe in a perfect world. The guiding principle is simple: we owe all of our clients our best work, and when the work or the client or we change to the point where that's no longer possible, we owe them the door. And who knows -- maybe we can still be friends.

4 Comments

By Bill | Raleigh, NC April 23, 2009 01:56:00 pm:

Couldn't agree more. We hung onto a waning relationship long past its prime, for two fallacious reasons:

1. Even painful billings are better than no billings
2. Things might turn around/get better

In the case of #1, we ignored the morale drain the client was having on our staff. Sure, we were making money, but the cost was far greater. As for #2, we had legitimate reasons to believe it, because the client had previously brought on a hostile consultant whose first order of business was to dismiss us. Once the consultant himself had been dismissed, the client had come back to us, apologetically, and for awhile, our relationship was stronger and more profitable than ever.

In the end, though, you've nailed it. Are your resources being used to the best of their ability? Are you shortchanging other clients in the process? Are you diverting energy that could be used to attract better clients?

Hey, it's only money.

Bill Cokas, Creative Director
Strategic Insights
http://wevegotideas.com/

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By PHILIP | CAMBRIDGE, MA April 23, 2009 03:37:19 pm:

You got to love anybody in advertising who quotes John Ruskin. Nicely done. Interesting post. http://twitter.com/philjohnson

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By rolfolsen | Lebanon, NH April 24, 2009 08:50:44 am:

One door closes, another one opens. Leap and the net will appear.

I'm impressed with such courage and clear thinking.

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By Grant ONeal | Raleigh, NC April 24, 2009 02:34:15 pm:

Often the relationship changes gradually over time and, like an aging athlete, the mind believes everything is still good, but the body (reality) has lost a step, can't hit the tricky pitches, or duck the left hook as well as it used to. The real trick for agency and client management teams is to recognize when it's starting to fade, and take steps to ensure that the energy and skill sets stay in top form on both sides of the relationship.

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