Seven mistakes PR agencies cannot afford to make

“Experience is a wonderful thing. It enables you to recognise a mistake each time you make it” – so goes the saying, and so goes the practice.

In my work, helping PR agencies be more successful and profitable, I often see some classic negotiation and (let me use a really dirty word) sales mistakes. I've worked with around 20 PR agencies as well as over 80 other agencies (advertising, media, design, digital, research, sponsorship and experiential) and see the same mistakes being made.

The seven mistakes are interconnected.

1. The first mistake is being too focused on the top-line revenue rather than on the right balance between revenue and bottom line profitability. As a PR agency I believe making a fair profit is a fundamental business goal. Revenue growth without profit growth is nuts.

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.

3. Under-pricing is a massive and costly mistake. Mark Ritson once said "most businesses strategy for pricing is a mixture of voodoo and bingo". By under-pricing we set a precedent with that client going forward and it will be hard to increase our price for subsequent work. Price is the number one factor to influence profitability. Price is a factor, it is rarely the factor.

4. What's special about your agency? Too often PR agencies all look the same. If you look the same don't be surprised if you are commoditised and bought predominantly on price. What’s the real or perceived difference between you and competitors?

5. Over-dependence can be costly. If a client represents more than around 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 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. A verbal brief isn't worth the paper it's not written on.

7. Scope creep and over service drain profit. 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 ... the list goes on.

Chris Merrington is the author of "Why do smart people make such stupid mistakes?" His company, Spring 80:20, specialises in consulting PR agencies.

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