To Defend or Not To Defend – It’s a New Business Decision

A few years ago I was faced with a decision about whether or not to file a lawsuit. As I considered my options, an old friend related to me what his even wiser lawyer once counseled him about lawsuits:

You have to decide if this is about business or about pride. Because if it’s about business, the cost outweighs your potential return. But, if it’s about pride, then I’ll happily take the case and you’ll help put another one of my kids through college.

I thought about this advice after reading a recent article in Ad Age, which reported that only 5-10% of incumbents successfully defend an agency review. And yet, as Judy Neer of Pile and Company estimates, incumbents are asked to participate in nearly 50% of their reviews, and most of the time they do. (Which means that those agencies are losing a lot of money.)

Let’s turn that statistic around:  Your agency has a 95% chance of losing a review.

Before making a decision about whether or not to participate in a review, I encourage you to do two things:

  1. Determine the following numbers: your average cost per per pitch? Your win rate? Your cost per win? You need to know these numbers so that you can make a smart business decision about what you’ll likely spend defending the business – before you’re faced with the emotion that comes with actually losing a client.
  2. Decide as an agency: do you want to set a firm policy about whether you will or won’t defend? The Ad Age article cites examples of how agencies like Crispin (won’t defend) and the Richard’s Group (usually won’t defend) handle it.

When to participate?

  • Mandated reviews (e.g. government contracts; rules set by procurement or purchasing departments).
  • Roster reviews.
  • Agency consolidation reviews.
  • When you have very strong, deep relationships and the results to back them up (and there’s been no change in management).

When not to participate?

  • When there are serious concerns (from either side) about the agency relationship or business performance.
  • Management changes, particularly when you know that the incoming leadership has successfully worked with other agencies.
  • Announcement of an unscheduled review.
  • Announcement of a non-roster review.

Like the emotion of wanting to get even, defend yourself, or inflict equivalent harm that you might feel when thinking about sueing someone, it’s easy to get caught up in the emotion of wanting to fight and “spend whatever it takes” to keep your hard-won or long-tenured client. However, the smart new business decision may well be to spend the money winning a new piece of business.

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