Are you recession fit for 2023?

Buckle up for a roller-coaster 2023!

Corporate Australia is predicting a tough year, and is aggressively tightening budgets in readiness.

Agencies must move with lightning speed to get ‘recession-fit.’ But it’s not just about not ‘losing’ in 2023. Have the mindset to accelerate and win market share in tough times.

Here are the five big realities agencies must tackle with pace if they are to survive and – importantly – thrive this year.

Revenue uncertainty is a certainty

Clients will have little visibility to set new, longer-term budgets. Revenue outlook for agencies will be patchy at best. Actions to take:

Commit to agility: Agility and speed are key. McKinsey & Company: “Being on the fastest trajectory matters more than having a great plan because plans become quickly outdated.”

‘Plan-Ahead Team’: Put equal effort now into planning ahead as you are into short-term business issues. Have a team driving action around Pleasing existing clients, Product, People, Pricing, Process, Profile, Pipeline, Profitability.

Quarterly Sprints: Plans will be out-of-date quickly. Regroup quarterly to ‘start again’- to reshape and prioritize the next 100 days. Focus on short-term goals.

Clients will be ROI-obsessed

Recessions see every dollar put through the ‘value’ ringer.

Speak their language: Get deeply connected to client KPIs. Know the language they use to describe their strategy. Cast everything you propose in that language. If your client is an auto CMO fixated by ‘sales funnel’, link everything you do to adding value to that funnel.

Obsess about their results: Keep asking: “How are sales?” Keep probing. What’s working? What’s not? Bring competitor insights, and ideas on how to out-gun. Show you’re sweating what they’re sweating.

Measure everything: Set (conservatively aggressive) KPIs for all you propose. Seek tracking data to validate. Regularly ‘report back’ on results. Claim it. Be brave. Act bigger than you are.

Expect vicious price competition as clients ‘de-risk’ spend

Clients are constantly under the cosh to cut cost, to get more for less. Risk-aversion permeates spend decision-making.

Competitors will be desperate. They’ll undercut. Whenever possible, maintain prices, and add more value

De-risk engaging your agency: Become easier to use. Propose short-term projects. Sell ‘bite-sized’ work. Develop fixed-price products. Create product bundles with phased spend. But still police scope creep with vigour.

Run towards the ‘retainer’ fire: Accountants look for set budget spend lines to cut. Retainers are often the first to go. Consider (I know, not all agree on this) proactively proposing a lower retainer (for less work). Go hard for ‘over and above’ projects. Short term pain, long term gain.

Lower your fixed cost base: Cut all flab. Be lean. There is no growth without pruning. Add flexible compensation options (eg: bonuses if targets reached). Maintain the right core billable capacity (aim at $200,000 per every FTE).

Build a brilliant freelancer bench: The talent market will likely ease as redundancies rise, with more talent wanting to contract. Get a strong freelancer bench ready. Negotiate hard on costs. Have the contractual option to stop work immediately should projects stall.

Measure real-time productivity: Inventory management is our key profitability lever. Measure realized billability (the time staff log that is actually billable to clients). Coach staff on billable targets. Fill idle capacity, fast, or cut it.

Existing clients are the route to agency salvation

Keeping and growing revenues from existing clients is the lifeline of recession survival. Don’t blow it. Become indispensable.

Become client obsessed: Focus on gritty commercial outcomes, get your narrative right, prove ROI at every step. Narrow your services. Do fewer things, better. Even small clients can grow.

Look for new work that counts: You have a one in two chance of selling something new to existing clients. Look for work (where we can add value), not budgets. Price your solutions sharply. Get more, small projects.

Drive 14 Day Sprints: Fortnightly, review progress on key clients. What we learnt, what needs changing. Look ahead a fortnight: what are the five non-BAU actions to take to add spark, energy, momentum

Be ‘energisers’: Be the most energizing people in your client’s business lives.
Clients must leave time spent with us inspired, with a spring in their step. Be dealers in hope and enthusiasm.

Become feedback junkies: How are we doing? What can we lift to deliver even more value? Attack issues with speed. Show we take nothing for granted. Ever. Who cares, wins.

Good things come to those that hustle

‘Hustle’ drives agency success during downturns. Recessions are tough. Don’t get bitter: get better!

Be better! Double down on being more creative and more strategic. It does not cost more, says David Droga. Focus on delivering better work. It solves most things.

Conditions perfect for a land grab: Expect more pitches. Clients will want fresh thinking, and efficiency. Be ready. Refresh narrative, credentials, marketing materials. Sharpen creative process, and presenting skills. The best idea usually wins. Present it in the most persuasive way.

Be super-selective: Qualify new client opportunity hard. Not all revenue is good revenue. Keep the bad fits out!

Plump up your pipeline: You have a one in four chance to win work from dormant clients. Check all invoices sent during the past five years. Who do you no longer work with? Reconnect. Share something of value. Five conversations a week.

Innovation: small steps of progress: Review your products, processes, pricing, client service, promotion. Develop an ‘idea a month’ that adds relevant ‘new’ to the agency. Your offer will quickly be more competitive.

Drive profile that matters: Stay vibrantly top-of-mind. Develop points-of-view linked to issues clients care about. Lift profile through webinars, social media, trade press, direct presentations. Hard to believe, but marketing works!

Cash is king, and queen: For independent agencies, without mothership support, cash flow is everything. Do whatever you can to build cash reserves. Seek additional credit (if you can).

Lead from the front: Lead by example, every day. Teams working through adversity create powerful bonds, a winning spirit and do special things. It all starts with energized leadership.

Recessions lead to recovery. Agencies which move fast to tackle the right priorities can survive, and thrive. Go hard. Be bold. Invest in things that matter. Get a little mongrel. Now is the time to WIN.

Chris Savage, business growth specialist, The Savage Company