Should you fire your client?

I learned a lot from my first boss.  

Malcolm McDonald was a wise old owl who looked a bit like Lane Pryce from Madmen (hence the picture). He had worked through the fifties and sixties in London agencies, mainly at Masius Wynne-Williams.  And when I joined Cogent Elliott in 1972 as a trainee, he very kindly took me under his wing.

He taught me a lot about the business of advertising; lessons which I still value. Because even though the business may appear totally different now, the underlying principles really haven’t changed very much at all.

Why is it so?

Among our many talks, we had one about clients.  With me asking all the dumb questions.  About 'how do clients choose their agencies'?  About 'why do agencies handle the clients they do'?  'Was a good thing or not' (for either party)?  And if so, 'how could you tell'?

Three reasons.

Malcolm told me that from an agency point of view, there were three main reasons why any agency handled a particular client:

1. Good work.

One. You are doing fantastic work on the account; it's a wonderful showcase for the agency's talent, and helps bring in lots of new business.

2. Good money.

Two. You are making pots and pots of money on the business; money that allows you to fund other things you want to do, make the improvements you want, pay for the people you need and, sometimes, offset against the clients who fit into option one but aren’t very profitable.

3. Good fun.

Three. The client is a complete delight to work with; they’re receptive and appreciative. Meetings are fun. Working with them cheers everyone up. That feeling spreads, so they act as a tonic for the whole agency.

How many is enough?

Malcolm made the point that any one of these reasons was sufficient, and that any two out of three was a bonus.

He observed, rather sadly, that a client that met all three criteria was such a rarity that you may have only one or two in your entire career. (Forty years on, I can vouch for the accuracy of that).

The awkward bit.

Here’s where it gets difficult. 

Because Malcolm added a corollary, which was that if you didn't have any one of these factors in your relationship, you might as well fire the client tomorrow. And you wouldn't be any worse off.

That may sound radical, but actually makes sense.  Just think about it.  If you’re not doing good work, you’re not making any money and it’s making everyone miserable, what the hell are you waiting for? Fire the bastards. Today.

Of course, that was then ...

When Malcolm formulated his criteria, an agency usually had the luxury of deciding for itself whether or not to keep or fire clients. (Of course, clients have always made their own decisions about agencies).

These days it’s not at all clear that most agency managers and directors have the authority to do that.  (Nor do many clients either, for similar reasons).

The agency I worked at with Malcolm in the early 70s was a smallish, but profitable private company. The Directors actually owned the agency. They had a silent partner, an investment bank, which was also a private company. And the bankers didn’t interfere in day to day management decisions in a business they didn’t really understand, but which made good money for them.

Almost all agencies were like that then, even the very largest such as JWT and Ogilvy & Mather. The exception was the Interpublic empire, then the only listed entity in the ad business. 

The Saatchi brothers were still a creative boutique.  Martin Sorrell was only just starting to realise how much money could be made buying up genteel, slightly down-at-heel London agencies (less for their client billings and creative talent than for the imposing West End office buildings they had carelessly left grossly undervalued on their books). 

But this is now ...

That was the beginning of the consolidation of the industry.  A process which has lead us to where we currently are, with the majority of medium and large agencies wholly-owned by one of the major listed holding companies.  Like any other global franchise, in today’s agency branch offices local management is governed by strict formulae handed down from head office.  And it’s pretty rare for them to have the authority to fire a client, even in the most egregious of circumstances. The finance department rules the roost.  The computer says ‘no’.

Do the math.

Just for a moment, forget the relentless obsession with head hours, staff/billings ratios and gross margin percentages.  Try using Malcolm’s much simpler formula. 

If only as an academic exercise, ask yourself:  how many of your clients fit into each of these categories?  How many fit none?  Of those who meet none of the criteria, ask if you would really be any worse off if you fired them?

Naturally, if you want to do anything about it, you'll need to get on the phone to Martin, John, Michael or Yannick to ask permission. I’d be very interested to hear what they say. 

As for me, I think I'll stick with what Malcolm said.