Unsophisticated Relationships with Sophisticated Clients

I'm struck sometimes by how separate agencies describe the same client so differently. In other words, I'll talk with one agency about their client and they describe them as respectful, appreciative of good work, and fair in their compensation structure. I'll work with another agency who also works for that same client and their experience is very different. From their perspective, the shared client beats them up on pricing, insists on a special process for nearly everything, and is generally difficult to work with.

Let's look at why that might be.

• First, the same client sees these two agencies very differently even though they do similar work. Clients believe most everything you tell them about your positioning, and if you trumpet your bend-over-backwards account service and then reinforce it with "boundaryless" order-taking, that's exactly how they'll see you. Go look at your website and try to see inside your firm through that window. Are you an expert or a creative? Are you highlighting research methodologies or creative exploration? What do the images speak to? Are the claimed results specific or do they sound like generalizations?
• Second, one of you would appreciate the opportunity to apply your expertise for the client...and one of you wants to prove yourself really, really badly. See the difference in tone? To put this differently, the best relationships in business are ones that are characterized by distributed control. The client’s control is obvious, from wasting your time or not giving you enough of it. And then all the way to firing you. But what control do you have? The only control you have in a professional service relationship is to withhold your expertise. And when you do that, hypothetically, the clock starts. Tick. Tock. Tick. Tock. When the client believes that they have found a suitable substitute, the clock stops--and that elapsed time correlates inversely with how much control you had in that relationship. The quicker they can replace you, the less control you had. The more substitutes there are, the less power you have, because you can more easily be replaced. If you are an undifferentiated firm, you’re facing a world with ca. 45,000 substitutes (i.e., competitors).
• Third, one of you is selling your thinking and one of you is selling your doing. If you are in business, it's safe to assume that you do good work with good people and you've been around the block, but there are thousands of great firms also doing great work. The truth is that your work must be good enough so that they don't notice, but your thinking must be unassailable. If you wrap that thinking in great account leadership and project management and do good enough work, you'll be able to charge more. But even though three-fourths of your staff are involved in doing, that's where you'll find marginalization and downward price pressure.
• Fourth, one of you is pricing the work to snag it and the other is pricing it to make money. If you are pricing work to get it (which is what happens when account people lead that charge), clients smell that desperation and they don't give you bigger opportunities. You've seen this, too. There have been opportunities for which you were a good fit at a reasonable cost. But the client never gave you a shot, instead hiring what they perceived as a more expert firm...at three times the cost! Agencies who are pricing the work to make money are sending a signal of confidence.
• Fifth, one of you is leading the client and one of you is accommodating the client. This isn't antithetical to what I've said above about client leadership, either. Leading a client kindly does include being empathetic and reasonably flexible. Being an order taker is gladly letting the client dictate the relationship, and those are the client relationships that can be unsophisticated, even if the client is actually sophisticated.

You can't have sophisticated relationships with unsophisticated clients, but you can have unsophisticated relationships with sophisticated ones. I love seeing client-agency relationships where both sides value and respect the relationship. It all starts at the outset, too, so be careful about positioning and be patient. Some prospects will evaluate your firm for many years, and each of those impressions can build the foundation for a fruitful relationship. Wait until the timing is right.