Measuring Up

It's sad when credit companies haven't a clue about credit

Peppercom has always used American Express for our small business needs. The company has always given us the benefit we need. That's why it's sad that we were forced to TRY and change credit card companies recently.

You see, my business partner and I (and a lot of our other senior executives) fly a lot on Continental Airlines. AMEX had a great points partnership with Continental and we used those points to purchase free tickets or upgrade. But, to our dismay, that relationship is ending in September.

We recently switched over to a Chase Small Business Card because that's Continental's big partner now. What's sadder, and equally as frustrating, is that Chase has no idea how to service the small business market and doesn't know very much about its target customer either. That became apparent yesterday in an appalling call I had with a Chase Small Business representative.

The call only happened because Chase gave us a paltry $17 thousand limit on our cards. With upwards of 15 executives using these cards to travel for clients, we knew that at a minimum, we needed a limit of 250k. That's what we have with AMEX. The credit professionals there understand our needs, how we use it and they see how we easily pay the balance each month.

Chase told us they needed two years of our audited Peppercom financials to approve this level of credit. We told them no problem. We're profitable, pay our credit debt on time and have plenty of revenue to qualify for this amount.

Yesterday, a Chase Small Business analyst left me a voice mail telling me that our credit request was declined and we are stuck with the original $17 thousand limit. That made no sense at all. So, I called him to discuss the matter. Here was our basic conversation (paraphrased):

Ed: "Hi, you denied us the amount we are asking for. Can I ask why? AMEX has no problem approving this amount or even more."

Chase Rep: "This card is really only meant for one person. While we appreciate your business, we're not sure how you could need that much credit."

Ed: "This is a small business corporate card, right?"

Chase Rep: "Yes."

Ed: "Well then if it is, you'd understand that it isn't for one person's personal use, but instead will be used for travel, hotels, client campaign purchases, office needs, etc., by many senior Peppercom employees. Thus, we could be spending 100 or 200 thousand per month and just want to have a safe limit in case. Again, we've had a 16 year relationship with AMEX that we are now looking to transfer to you. But, you need to understand our needs."

Chase Rep: "Thank you. We do understand your needs. But, that limit is just much too high for one person doing business, sir."

Ed: "Do you understand that this is for my company’s business, not one person? Why did you ask for two years of financial records from Peppercom if you only care about my card? I am not asking for a personal credit card. This is for all Peppercom's needs."

Chase Rep: "I understand and appreciate that. It just seems that our credit analysts feel that 17 thousand, your current limit, should suffice to fill those needs."

Ed: "That's ludicrous. Do your credit people see any issues with our financials? Ok, what about if I lower the limit to maybe... 200 thousand?"

Chase rep: "Nothing on my documents shows any issues with your financial statements, Mr. Moed. That's not a problem. But, 17 thousand is all that we can approve."

Ed: "Ok. I'm getting nowhere. How long have you worked in the small business area for...because you clearly don't comprehend the difference between consumer and business needs."

Chase Rep: "This is my third week, Mr. Moed,"

Ed: "Good-bye."

Based on my experience, Chase should not be in the small business credit card market business. The company wasted my time and that of Peppercom's financial managers as well. Any bank or credit vehicle that understands small business credit would enthusiastically want Peppercom as a customer for that amount of credit.

The moral of this post is for companies to stick to the knitting they know versus trying to expand into areas where a lack of experience will only damage their reputation. I'm done with Chase and every time I see one of its ridiculous small business commercials it will remind me to tell this story again and again and again...

You’re the agency to beat

There’s very little Joy in Mudville when a client tells you that his/her account will be going up for review. That’s because in almost every circumstance, the agency is stuck in a no-win situation.

The simple fact is that once an account goes into review, it’s extremely rare for the incumbent agency to keep the business. Yet, what often transpires is that the agency receives very positive communications from the client about how it should definitely stay in the game and pitch the business because the odds are quite good that it will win. So, never wanting to lose a good piece of business, the agency spends countless hours and $$$ trying to show the client(s) just how well the team understands their business, the great results that have been achieved and a host of other positive factors that it believes should position it well above the bright eyed competition.

While I’m sure this isn’t the only reason why incumbents lose, the key reason why the agency is actually the underdog from the beginning of the pitch process (contrary to what the client says) is because everyone likes shiny, new objects in life. And, when the pitch review starts, those shiny new objects (as in the other competing agencies) represent a fresh look at the world. That, in itself, is very appealing to any client… even though he/she will never tell the incumbent that.

We recently found ourselves in just such a position. We’ve had this client for 9 years. It’s a pretty dysfunctional company. That might sound like sour grapes, but it isn’t. If you asked our client contacts there this question, they would agree. The company has had a revolving door of CEOs (probably 7-8 over the last nine years). And, as much as they wanted us to provide them with strategic communications, they never had the ability to let us do anything beyond tactical media relations… up until the last 9 months, that is.

Ironically at that time, a new CEO came into town to shake everything up. At first, we viewed this as a very scary new reality. He beat us up pretty badly (I still have the bruises to show for it), as well as our clients. He wanted to know why there hadn’t been more strategic work executed on the brand to set the company apart from the serious competition that exists in the marketplace. Those were anxiety ridden discussions because as much as we tried to push through new campaigns that could have delivered the type of results he screamed about not seeing, nothing ever happened due to the internal inertia that exists within this giant company. So, we assumed that our agency and some of the clients would be summarily terminated.

Instead, because we pushed so hard (for one more try) this CEO gave us a reprieve. For the first time, he provided the tools we needed (and senior level approval) to offer a strategic assessment of where the brand should be and then we implemented a nine month campaign to generate results. I tip my hat to our team because those results are simply phenomenal… and they keep on coming. Our client(s) gave us uber praise and this hard-nosed, tough CEO actually handed out a number of compliments as well.

Still, that wasn’t enough. This CEO decided that his marketing people needed to conduct an account review just to see what other firms are out there. According to the CEO, he wanted to make sure that his company had the right firm for the long run. We talked it over and decided not to enter this review. We felt that our work should speak for itself and understood that incumbents rarely every win. But, one of our clients told us that because of the great results achieved, we had a very good chance of keeping the account and it really was “ours to lose.”

So, we decided to compromise. We didn’t officially pitch the business, but still left our hat in the ring to potentially keep it. Of course, that never really mattered and we pretty much understood that from the beginning. Ironically, I think we won the CEO over. In our last meeting a few weeks ago, he said to me, “You are the agency to beat because you know us and have generated some really good results. We’ll make a decision very quickly.” Those words were his last to me, though. Last week he was ceremoniously let go. And yesterday, those marketing people decided to choose a shiny, new agency to take our place. The parting words we received were, “We just need to make a change.” Nothing more was said.

So, what’s the moral of this post? I’d say that there are actually a few:
    1)  Incumbents rarely win – regardless of what the client says. Keep your head about you and know that you     have very little chance of maintaining the business for all the reasons I explained above.
    2)  If your client organization is completely dysfunctional, know that it often takes more than a very strong     willed CEO to actually change the culture or your ability to really make a dent.
    3)  Don’t get upset or angry about being terminated. Use your experience as an advantage. We will – we’re     excited to leverage our knowledge of the industry to help a different competitor in the not so distant future.

Are you receiving senior-level attention?

There’s an interesting debate in PR Week’s “Gloves Off” column this week. Two agency CEOs dispute whether senior executives should spend most of their time serving clients or focusing their efforts on other agency responsibilities.

Monty Hagler, CEO of RLF Communications, feels that agencies need to depend more on their dedicated account teams to handle the bulk of the work. He feels that these teams are seasoned and should be responsible for providing strategy, creativity, execution of programs… and results. Monty feels that senior folks should focus on bigger picture stuff like quality control processes and enhancing agency resources, because by raising the bar in those areas, clients across the board will receive more value and better results.

Amy Binder, CEO of RF Binder, argues the opposite. Her reasoning suggests that with the advance of all new factors (like social media and everything digital), we need to give our clients senior level thinking all the time to navigate through the challenges and take advantage of opportunities. That means senior level professionals need to be a dedicated part of each account team.

While this issue isn’t black and white and both of these smart leaders make good points, I tend to agree with Amy. In fact conceptually, her thinking is pretty much the way Peppercom was built 16 years ago (before this digital landscape even mattered).   In any consultative, professional services industry, clients want and need senior level thinking. And, it shouldn’t only be given at a monthly or quarterly update or planning meeting.
The world of communications has indeed changed greatly. Every single day, most companies can leverage or should be concerned about news that swells up in the media/blogosphere about it and/or its competitors.  Businesses are adapting new models, changing product lines and just assessing new strategies within their marketplaces quicker than ever before because they now have valuable information at their disposal through a push of the button.

Only very seasoned, senior communications practitioners have the experience to turn data into insightful strategies/approaches that are recommended to clients. That critical thinking is what clients typically want and pay us for. As good as most account teams are in executing programs, they don’t have the wherewithal to offer this value. And, they aren’t at a level where recommendations can be communicated with the conviction that is needed to provide clients with peace of mind.

Monty makes some valid points. The most senior agency people need to also step up to ensure that their firm is always improving resources, ensuring quality control and watching over a host of other critical factors to maintain agency sustainability. But in my eyes, that should never come at the expense of working with clients and our account teams week in and week out, to provide critical direction to their communications efforts. Our industry has a bad reputation for constant client turnover. There’s no doubt in my mind that the major reason why this occurs is because clients aren’t feeling enough love from our industry’s senior level folks. This reality will never change until this key aspect of client service does.

Defending Your Turf

The most telling line I’ve heard to describe agency account life is, “The day you win an account is also the first day you start to lose it.”
 
Almost every agency deals with a month to month (sometimes it’s actually week to week) ‘siege’ mentality that its accounts might go up for review, or could end suddenly because of any number of factors. Through years and years of experience, most agency veterans have acutely honed their antenna to sense any potential disturbances in the agency/client ‘life force’ which could lead to the business walking out the door.  I know we face this ongoing challenge. Unfortunately, as we’ve all seen, there are certain instances where the agency is almost completely powerless to change the end outcome.

For those ‘Mad Men’ fans, think about how Sterling, Cooper, Draper & Pryce lost the Lucky Strike account after controlling the business for a number of decades. In one swift moment, the Lucky Strike Board decided to consolidate agencies, therefore combining all the brand accounts under the auspices of large agency partner. Roger Sterling received the terminal body blow over a seemingly non-eventful, ‘catch up’ dinner with the client, while global powerhouse BBDO reaped all the rewards (and subsequent billings) of being the chosen one. In the end, there was nothing Sterling or his partners could have done (or foreseen) that would have allowed them to keep this critical business.

We’ve certainly faced moments like that (thankfully though with smaller accounts) over the last 15 years. Anytime there is a management shift and a new CEO or CMO  takes over as the head honcho, he/she also typically comes in with new ideas, relationships with other agencies that have been forged through past experiences, and often a general attitude of ‘out with the old and in with the new.’ In those cases, most agencies and a host of other vendors are cast out of the company without a thought.

Of course, there are other uncontrollable reasons for an agency’s demise as well. Cuts in budgets are certainly every-day occurrences (we all experienced a lot of that during the last two years).  And, there are a few select times when the clients’ needs have changed or evolved to a point where it doesn’t have a need for any agency services. But, that’s rare.

With all that, the plain reality is that most agency/client relationships end because the client believes the agency isn’t providing the services/results that are needed. Sometimes that is the reality. But, my agency brethren would certainly feel that many times it’s really more about perceptions (or misperceptions in these cases). Still, it doesn’t matter at the end of the day. Regardless of who is actually correct, that client has all the power and in this case, is always right.  Just in the last month or two, Peppercom suffered through a few of these scenarios. That got me thinking about some of the essential responsibilities that agency leaders need to consistently undertake to ensure (as best as possible) healthy, ongoing client relationships:

•    Do you really understand what the client cares about?  It’s not good enough to assume that (hypothetically) generating a lot of media hits will make the client happy. In fact, even if the client(s) say that’s what he/she wants, it’s up to the senior leaders to dig further to understand what will make the client look good to his/her boss and what needs do the most senior client level relationships have that the agency can achieve.  Sometimes, it’s more a matter of constantly consulting with that senior executive to offer strategy and advise about how to sell programs through his/her organizations. Other times, it’s something else.  The point is, one doesn’t know, unless one is regularly asking the question.
•    Do you have relationships built at all critical levels? This leads to my next point. I think most agencies try to create relationships all the way up to the CEO. But, that rarely happens. There is an absolute correlation between having those good high level relationships and maintaining the account for longer periods. Sometimes, the day to day client doesn’t want the agency lead speaking to his/her boss or the CEO. That has danger written all over it. Somehow, it’s critical that the agency overcome this by finding ways to show value at higher levels. If that doesn’t happen, I can guarantee one of two things will occur. Either the relationship will not last long, or it will always be a bumpy ride with this client because typically the CEO has very little visibility into our program and that means senior management will ultimately start to wonder what their ROI is.
•    Can you have a frank conversation with the client? I know this sounds obvious. But, it doesn’t happen as much as it should. There are plenty of times when we should be stepping in to speak to our highest client contact to discuss when we see the program going in the wrong direction. Or, to talk about hurdles that exist that are challenging what the team can do. Or, just discuss issues we see dealing with the client’s business. Most senior level clients want to hear this and appreciate the conversation. Those who don’t, well… at least you’ll be able to clearly understand the reality that this account may not last long because of it.
•    You think the team is doing well. But, how do you really know it? We try to have ongoing conversations with both the main client contact and his/her boss every few months to listen to the good, the bad and the ugly (if any actually exists) regarding what our team is doing.  I think it’s too easy to receive those good reports and then assume the client will reach out to us if he/she ever feels differently. That typically never happens. It’s always up to agency leadership to have those conversations. Consequently, those talks also provide an opportunity to build a deeper relationship, as well.

What’s in store for the future of communications?

As part of our on-going recognition of Peppercom’s 15th anniversary, my business partner, Steve, and I recently had a lively and thought provoking conversation with three premiere corporate communications leaders:  Monica Teague, Senior Manager, PR, Brand Business Teams, Whirlpool, Tom Topinka, Public Relations Leader, Genworth and Amber Harris, Manager of Digital Communications for Discovery Communications. 

I posted the first part of the podcast last week, as we focused on the existing state of our industry and what undercurrents drive our business today.

I now want to share the second part of our conversation wherein we look ahead and discuss what challenges and developments will plot our course into the future.  I hope you will enjoy listening to the conclusion of our dialogue as we discuss the digital age’s world domination and shaping of the potential of global communications.

Click on the gray bar below, to listen, and as always, I would like to hear your comments- good, bad or indifferent.

15th_Year Anniversary Podcast-Part 2