Life Science Marketing Agencies: The RFP is Dead

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1 Life Science Marketing Agencies: The RFP is Dead This transcript was lightly edited for clarity. My guest on this episode is Laura Brown. Laura is the CEO of Covalent Bonds. Covalent Bonds works with scientific and tech companies for free to develop a brief for their marketing program and help them select the right agencies to ensure their partnerships are as powerful and long-lasting as possible. I should also mention that Laura has been helping out a lot on the program team for the ACPLS annual meeting and I really appreciate that huge contribution she's made for that effort. Laura, thanks for joining me on LiveSense Marketing Radio again. Thanks for having me again, very much enjoy it. This episode is a little different than what we did before. In the episode we talked about previously it was about helping companies align their budgets with their marketing strategies and focusing on outcomes and so on. This episode is directed specifically at agencies, but if you're in house marketer, this should also help you understand how some agencies work and maybe help you develop better relationships with them which of course if valuable over the long haul. Laura, if you're an agency there are certainly challenges with working with different kinds of clients, and we're not going to talk about all of them but let s talk about the challenges of just finding and connecting with clients. 1 Page Words 2 Wow Life Science Marketing LLC

2 Sure. To set this in context Chris, I used to head up business developments at an agency. So I know exactly what I'm talking about here, and I've got to say that business development is one of the biggest pains for agencies in the market. Now we have the same challenges that any company have in terms of prospecting so that thing of knocking on the door as a company and hoping they want to buy from you when you're ready to sell. The same challenge that everybody has, but we also have this element that makes it really challenging in that companies don't always come to the table with clear intention to buy. So often they use an agency selection process to determine their budget or to determine what they actually want to do. So they basically use it as a free strategy session and then at the end once agencies have spent a long time and effort on pitches or on developing the relationship, the company will turn around at the end and say, for example, "Oh we just don't have this kind of budget. We can't do this, but thank you very much for your time. We very much enjoyed working with you so far." At which point the agency has not had any money out of that at all and might have invested up to three and some cases six months on that agency selection process. So we have a double whammy that's really hard for agencies. One is finding the companies to work with in the first place, which everybody has. When we look at that there's also the challenge that agencies are often treated with a bit of suspicion I think. So it's very hard to reach marketers. They don't pick up the phone. They don't like to talk. They always feel that they're going to be sold to, so there's a real difficulty getting through to the people that you need to speak to. Whatever you do, or you get invited to do an RFP or take part in a pitch process, there is no guarantee that this is actually a real business that will result in revenues for you at the end anyway. So it's a very expensive, time consuming, and often painful process for agencies to go through. Absolutely. I understand all of those challenges on both sides of that, and we're going to focus on those challenges for the agencies, but just for anybody who is listening, can you briefly, and they may not have heard the other episode which I highly recommend, but what's the disadvantage quickly or briefly to the companies that are using that process? So they come with an undefined plan and hope that the agency is going to drop the magic solution in front of them and then may decide, "Yep, you're right, we don't have that budget." So they go away. At the minimum they've wasted time, but probably more than that. 2 Page Words 2 Wow Life Science Marketing LLC

3 Sure, and the biggest challenge that we see for agencies is that companies come to them with a predefined list of tactics. So they might come in saying, "I want to do content marketing" or "I want to do influence in marketing". Agencies take that at face value. So they will spend the time developing programs for companies and budgets only to find out, if they even get appointed, that the company becomes disillusioned because it's not generating the results that they need. So the relationship often breaks down and that's because the companies haven't actually done the work upfront to see whether this tactic is actually the right one that they need to do to achieve their objectives. Because of the way that they do the agency selection process, they don't pay the agencies the money to actually audit the strategy to make sure it is the right one. So many agencies basically they pick up the mantle ] as soon as the company briefs them, and says, "Okay, you've briefed us so we deliver what you've briefed us." If you paid for somebody to look at it and look at that strategy and say, "This tactic will achieve your strategy" or "This tactic won't". Then you're able to spend the time to make sure the budget that you've allocated isn't wasted and you're not going down the line of a massive campaign that actually will never have a chance to achieve the results that you need, because you've not defined what those goals are. Right. So we really, strongly recommend that before a company even begins to think about talking to an agency, that they have spent the time to ensure that they have internal alignment on the strategy, so everybody knows what they're trying to achieve. That that's been turned into KPIs that are measurable and specific so everybody has the same goals, and that you then and only then, do you start to match the tactics to those KPIs. Then you work out what budget you've got and then you put the measurements in place to ensure that you can actually check that those are actually being achieved. One of the biggest reasons why a relationship between an agency and a company break down is because; one, they're not all working to the same goal, but the second one is that the company has no way of actually measuring the outcomes. So it becomes a subjective thing that somebody might feel that the relationship s not working or they might feel that the agency's not generating the results, but unless you've got those clear KPIs and measurement systems in place, how do you know? 3 Page Words 2 Wow Life Science Marketing LLC

4 You're not choosing an agency based on how they make you feel. You should be choosing an agency based on what kind of results they're going to get. You can't possi bly measure that without those KPIs and that strategy in place up front. Now we're back to the agency side, so if a client comes to an agency without having done their homework, you've sort of described, this might look like a wide open opportunity for the agency, but it might go down a different path where you spend three to six months developing all your strategy ideas, giving those away, basically for free and then having the client come back to you and say "we don't have the budget to do that, thank you very much". Exactly. What is the alternative? What do you recommend an agency does if a client comes to them with that, without having done their homework? So, there's two options, well actually there's three options. One, that you just take them at face value and think what would the company, during your business development process to identify all these KPIs and do all of that stuff. Now that will build a strong relationship between you but it will take a lot longer and it will cost you a lot more money in terms of- The company is not paying the agency to do that work, so you are basically giving them all of that strategy for free, to then come out with a program that is one that you want to deliver. Now you can't guarantee at the end of this that they're going to buy from you, so this is like a roll of the dice for an agency. The other options are that you go to them and, this is a very strong selling point for an agency, and say, "Look guys, you've not done the work properly. You could be wasting your budget if you carry on with the selection process the way you're going. You have to do your strategy. You have to do the KPIs. You have to put the foundation for measurements in place. You have to know what those budgets are." And if you tell them that, you could then potentially sell them that strategy piece as a discreet project. Now, a challenge that you have here is that all of the agencies, if they're worth the salt, are going to try and do that and try and sell it, and as a company, that makes it really hard. Which agency do they choose to then help them do that strategy piece, and does that then- it sort of makes it 4 Page Words 2 Wow Life Science Marketing LLC

5 harder to do the agency selection for the companies but then it also makes it harder for the agencies on the other side of it. The third option is to use an external broker, like Covalent Bonds for example, who can go in and do that work, do the foundation work, so that the company are in the best position to do the right tactics and choose the right agencies to deliver what they want, and then the agencies can know that when this opportunity comes to them, that all of the due diligence has been done. That they know what the strategy is. That they know that it's a real budget that the CFO has signed off against and that they can then make the right recommendation within that budget, but they also know, and this is a key thing that I have not mentioned, is that the company has an intention to buy within three months. Now, a lot of companies go to market to order agencies start with discussions and they have no defined point at which they want to work with them. They're just testing the markets and they think maybe in a year we might buy from an agency. Now companies won't tell agencies that because they wouldn't engage in conversation. So agencies could spend a lot of time on that opportunity, when actually it might not be a real opportunity until a year down the line, by which time the strategy work has been done but becomes obsolete and needs to be done again. So the three things you've got to ensure as an agency, before you start working with them, is; has this company done the strategy, do they have a realistic budget that has been signed off and committed internally and do they have commitment to buy within three months? If not, I suggest you don't start going down the road of the agency selection process because it's just too risky for you. And from a company, that will then stop them having access to a lot of these agencies. I was talking to one of the top agencies in the industry, or I should say one of the most well known agencies in our industry, and they said they wouldn't have a conversation with a company if they couldn't tell them straight away what their budget was and that they were going to buy within a certain matter of time. So you're missing out on the agencies that are very good just by not doing that in the first place. Yeah. Of course my wheels are spinning here. I'm thinking many agencies are probably afraid to give up that opportunity because if that conversation 5 Page Words 2 Wow Life Science Marketing LLC

6 shuts down the client, they know they're walking out the door and maybe they don't have an alternative. However, being upfront in that way and with guidance and so on would be a huge trust builder I would think. Exactly. That's a very very good point Chris. We get a lot of companies that say they would be seriously impressed with a company that says, "Look, you've not done the work. This would be a waste of time and money for you right now." They really see that as a foundation of a great partnership. You're not buying somebody that just agrees with you. You want to buy somebody that actually challenges you and gives you the right advice and you need to show that from the outset. So don't just be a yes-man. As an agency really challenge the client. Yeah, it takes courage to do that but I think most people would be impressed to say, these guys aren't immediately after our money, they want to do the right thing. Even if you're not one of the better known agencies and you haven't done that, I can imagine that, still maybe for the more well known agencies, the budget won't be right anyway. So now you're looking at companies who might have the budget to work with you but you have to be willing to say, these are the conditions under which we accept clients. Exactly. I can give you a great example. I was working on an agency selection last month and the company had been talking to agencies on and off for two years and there was one agency that they were especially keen to work with. Now this agency is a very well known one. A large, very effective agency. Now they had been having, they reckon they'd had five meetings by the point I'd got involved. The agency had not been able to get a budget out of the client. Now that simply was because the client had no idea what budget would be and had just got a bit scared and just kept ignoring answering that question. So they reckon the agency spent five face-to-face meetings and then they'd had phone meetings and all the dialogue. When you think about that in terms of money and time, that's a huge cost to an agency. After we'd done a workshop to work out what the budget was, we were able to identify that this client only had $25,000. Now that is nothing. I was able to go to the agency and say to them, "This is $25,000. You shouldn't be doing this." And they said, "Absolutely, we're not having anymore conversations." And backed out. Their entry level was $15,000 a month that they would work on on a retainer with a company. They hadn't been able to find that out and by doing this process the agencies were able to say "this isn't for us, we walk away" 6 Page Words 2 Wow Life Science Marketing LLC

7 but it also enabled the company to then go, okay, so realistically we can't talk to these kinds of agencies. We need to find somebody that is maybe a consultant rather than this and find it, and they were able to find the right partner and they signed the contract today and it started their long term relationship, but this had been going on for two years before we got involved and were able to pin it down and it all hung on that budget discussion. Yeah, wasted time again for everybody. Yeah. We did an analysis actually for companies of how much time is spent on an agency selection typically and what that translates to in terms of money and we're looking at between $15,000 and $50,000 spent on an effective agency selection. That includes developing your budget, meeting with all the agencies, writing your RFP, etcetera. Doing all of that stuff. Getting everybody involved. That is a significant investment, but you can't risk it going wrong. You need to get it right. Make it as effective as possible to be able to get the outcomes that you need. Yeah, lets chase that idea for a minute about why companies- I understand, you know you're afraid to say, "this is our budget" because, in my experience, your thought is, they're just going to take it all. Right? And you're hoping maybe you can get it for less I guess. Or that they're going to propose something that's just beyond it because I've seen that too because they know once you get into it you're thinking, "Oh yeah, we'll spend that little bit more" or something, but I'm trying to get to the idea or get your thought around making companies comfortable with saying, "this is our budget" and I think what you're going to say is if you know your plan you will have that and you'll be comfortable to say, "this is what we're willing to spend" and now you move the conversation to a different place. You're not committing to spend that with anybody, you're saying what can you do for this amount of money, right? Exactly. I just want to pick up on one of the first point that you made and you talked about scope creep and budget creep which is, agencies will agree on something and then suddenly it ends up costing more. Now, that invariably happens because of how the selection has happened in the first place. That you are essentially selecting on price by going to them without your budget in the first place. So the agencies have no guide. They've plucked a figure- 7 Page Words 2 Wow Life Science Marketing LLC

8 that's not being fair. Not plucked a figure from the air but they've worked out a figure that they think they can deliver within that will hopefully undercut all their competitors that they can still be profitable on, and they've presented that to you and then you buy that. But because you haven't necessarily done all the strategy work that comes upfront, once you get into the relationship with the agencies, they realize that what they were briefed was essentially a lot of times incorrect and needs a lot of work, which means the programs that they recommended weren't right, which means that they ended up costing a different price structure or costing more. I've never come across personally, agencies that have a business model where they say go in and then sell more on top of it. What they do is they go in and then they discover that what they were briefed was wrong and that actually it's going to cost a lot more because the company didn't actually know what they needed in the first place and so they weren't able to quote for that. If you do it the other way and you go to them and you give an agency a budget, and you say, "This is the finite budget, what can you do with this?" You're more likely to get a much more accurate proposal with very clear costings that you can tie people to. That becomes much more powerful, especially when it's tied to outcomes. So you can actually start to measure, is this having the impact on the market that you want? It all comes back to, again, strategy, planning, and appropriate budget setting before you start talking to the agency. Beautiful. Back to the agency challenge here. I think we're going to wrap up on this question. Everyone, if you're an agency, no one wants to do a proposal right? I mean, you want to do a proposal that lays out what you've agreed to do, essentially with fairly high confidence of it being accepted, but not a "let's put a lot of work into writing this up and hope that we get picked out of the five that they're looking at". Yeah. A lot of work and it can turn into nothing. What's the best way to eliminate, or simplify that process? Sure. We can look at this from two perspectives again. From an agency perspective, you don't want to have to create a program, present it as part of 8 Page Words 2 Wow Life Science Marketing LLC

9 the pitch, because you're essentially giving your idea away. But it's not good for the companies either, because anybody can say "This is what I want to do." You know? "This is what I could do and isn't this a great idea." But can they actually deliver on it? So first of all, I want to take a step back and never do a request for proposal. The RFP is dead because it always puts the focus on cost, not on capabilities. Whereas you want to be able to work with an agency based on their capabilities. So we've taken a model that s used by many governments now in their procurement processes called Qualifications Based Selection. This is all about, is the party that you're talking to actually qualified to deliver the services that you need? And the only way you can find that out, is by finding out what they've done before. Not what they might do in the future to solve your challenge. This is similar to interviews. I'm sure you've all come across now, the behavioral questioning technique where they say if you're doing an interview for somebody to join your team, you don't ask them their view of something, you ask them what they've done before and to give a concrete example, because it's very clear when they're lying. You can really tell straight away if somebody's telling the truth or they're telling a story in the context of what people said. It's very much the same in an agency selection. What you need to do is find out what they have done before so that you know that they have the qualifications to do what you need them to do. You can actually pin them down and say, "What outcomes came out of this?" I don't want to know about what tactics you're going to do. I want to know outcomes you got. By focusing on what they've done in the past, you get that. It also removes a lot of the subjectivity from the agency selection process. So a lot of people buy agencies based on the people that sit in the room with you, so you're buying the relationships, when actually, the people in the room are very unlikely to be the people delivering the programs that you've briefed them. What you need to find out is what processes the agencies have in place, w hat proven methodologies they've used before, because that is essentially what you're buying. The only way you can find that out is by finding out what they've done before, not what they're going to do in the future. So as an agency, if you're asked to present a program as part of the selection process, I strongly suggest you to push back and say that that's not going to help the company to choose the right agency. They need to know what you've done before and to focus it on case studies. 9 Page Words 2 Wow Life Science Marketing LLC

10 And as a company, ask them for case studies on other companies they've worked for in your industry. Similar challenges that they've addressed. If somebody's got the same challenge from a separate industry, give us that case study. Then thirdly, a case study of a similar budget so you can see what kind of outcomes they got on that budget. That will give you a much more objective approach to be able to compare each agency and to be able to select the right agency for you. All that is fantastic. I really like everything we've covered here in this episode. So if you are an agency, you need to insist that companies come to you having done their homework, which includes a strategy, a budget, and a timeline for purchasing. If you're a company, you should stop sending out RFPs. You need to come up with a strategy, a budget and a timeline. Exactly. Evaluate your agencies based on what they've done before and proven results, not just relationships and what they say they would do for you. Exactly. Summed up very nicely. I took good notes today. Laura Brown, thank you again for being on this podcast. It's been a pleasure and we will- Again is there something we should link to in the show notes? A guide for agencies? Yeah. Absolutely. If you go to the website covalentbonds.net, there's a lot of resources there for agencies to help sort of push back on companies to educate them and there's a link to a great video that was produced by a guy out of Canada who's pushing for the qualifications based selection methodology. He's not talking about it in terms of marketing but it's definitely something that we should all be pushing for as an industry to go forward, so all of that's on the website. Fantastic. Well thank you again very much. Not a problem. Thanks so much for having me again. My pleasure. Bye-bye. 10 Page Words 2 Wow Life Science Marketing LLC

11 The Next Golden Age of Audio There is no better way to grow an engaged audience of loyal brand advocates than through a podcast. But getting started might seem a bit daunting. I know how you feel. There's a lot to learn. The good news is you don't have to do it alone. I've been creating podcasts and audio stories since 2014 and I'm ready to help you set up for recording and handle all of the editing and post production. It's easy. 1. Schedule a call. 2. We'll develop a clear strategy. 3. Start growing your audience. 11 Page Words 2 Wow Life Science Marketing LLC

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