Regular listeners know that Chip and Gini aren’t fans of most agency RFP processes and believe that most of them should be avoided.
But if you choose to play the game, you need to watch out for onerous terms and conditions — especially ridiculously slow payment terms.
The co-hosts pick up on news reports about 1-year payment terms being proposed (and defended) by Dr. Pepper. This turns agencies into banks, something for which they are ill-suited.
Rather than focusing primarily on price, with a secondary interest in scope, agencies need to look at the entirety of the contract terms that they are agreeing to with prospective clients.
- Chip Griffin: “If you’re small, lean into it. It is much better to be small, admit you’re small, and sell that as an advantage, as opposed to being small and trying to look bigger.”
- Gini Dietrich: “I wouldn’t have known why the prospective client was looking for a new agency if I hadn’t acted like I was a 3 year-old and kept asking why.”
- Chip Griffin: “If they’re trying to figure out whether they’re happy with their existing agency or not, they’re not.”
- Gini Dietrich: “You just ask questions. Why are we here today? Tell me more about that. What’s your biggest pain point? And at the end of that meeting, the prospect will say, that’s the best meeting I’ve ever had. Every time.”
The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.
Chip Griffin: Hello and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin.
Gini Dietrich: And I’m GiniDietrich.
Chip Griffin: And Gini, I’ve got some specifications that I’m gonna give you and I want you to think about them and let me know how much it’s gonna cost to actually record this episode, but okay. But I’m not gonna pay you for a couple of years, so…
Gini Dietrich: Oh, okay. Well, cool.
Chip Griffin: Right after this.
So we’re gonna talk about RFPs, dog and pony shows, RFIs, all these fun things that agencies like to play in to feel like they’re doing something with business development and whether or not we think it’s a worthwhile use of your time.
Gini Dietrich: No it’s not.
Chip Griffin: Did I, did I already not give away perspective the way I framed that?
Gini Dietrich: No it’s not, the end.
And that’s the shortest podcast episode.
Chip Griffin: The shortest episode ever. Ignore RFPs. Don’t do them. Just don’t do them. Just don’t do them. We’ve talked about this before, but I, I, I think it is worth talking about again because it is a topic that has been back in some of the agency news lately in part because of. the good old people at Dr. Pepper who have decided not just to make a soda that tastes foul, in my opinion.
Gini Dietrich: I agree.
Chip Griffin: But they, they’re also trying to push a foul set of payment terms on agencies, and this really highlights one of the challenges of doing RFPs and frankly, working with big brands, which I know a lot of agencies just dream of working with the big brands.
because apparently they like just banging their heads against the wall because that’s what it’s like. That is what it’s like nine times out of 10. When you work for a big brand as an agency.
Gini Dietrich: That is 100% accurate. Um, yeah, so Dr. Pepper released this RFP looking for a new agency, and in there, in the the RFP, they, they quoted their payment terms as being a year.
So you will work for them for an entire year before you get paid. I don’t know about you. I cannot tell my bank that I will pay my mortgage in a year after I’ve lived here for a year. Um, I cannot go into a restaurant and tell them that I will pay them in a year for the food that I just consumed. I cannot go to the grocery store and buy my groceries right now and pay them in a year.
Although I hope that in a year eggs will cost less than they do now. So maybe that’s a good strategy, but that’s not how the world works. And yet, All of these big brands seem to treat agencies like they’re some second class citizen vendor that can quote, unquote loan them money until they’re ready to pay you.
And we’ve seen it over the years where it’s gone from 30 days net to 60 days to 90 days to 120 to 180, and now we’re at a full year. And it has to stop. And part of it get, part of getting it to stop is that we have to stop participating!
Chip Griffin: Yes. That that’s the problem. It, it’s the same reason that spam works, right?
We sit there and say, oh my God, I’m tired of seeing these emails about the Nigerian Prince.
Gini Dietrich: It works.
Chip Griffin: Those emails go out because they work. It’s not because someone’s like, oh, I feel like sending out useless emails and wasting time and effort on it. It’s because they work. These obnoxious payment terms work because agencies end up accepting them.
These, these just awful RFP processes that are in many cases, not scams, but shams, right? Yep. They already know what they’re going to do, or they know already between one or two agencies who they’re gonna work with, but they cast a wider net because they have to have a process. Maybe it’s because procurement wants it, maybe it’s because the boss wants to know what’s out there.
There’s all sorts of reasons that clients do this, but don’t get sucked in. Do not. And, and don’t – even if it’s not a formal RFP process. We just, we’re trying to talk to some agencies to see how they can help. By all means have a conversation, but don’t go into it and bring a whole team of people and put together a fancy creds deck and do a whole presentation and all.
Don’t do that. Have a conversation. If you don’t know what the challenge is that the prospect has and how you might fit into it, there’s no point in spending the time and money that it takes to put together an RFP response or a full fledged presentation or anything like that.
Gini Dietrich: And I will also say from experience when they’re doing a request for information or they want you to do a dog and pony show where they’re bringing, you’re bringing your team and doing a creds deck.
Two things. Number one, they’re, they’ve already chosen an agency and they’re having to do this, you know, just to show the, the chairman of the board or the procurement that they’ve talked to different agencies. And two, for most of us, we’re smaller agencies. The big agencies will go and do this dog and pony show and then you’ll show up and because you just don’t have the resources or the team that the big agencies do, you look smaller too.
And I actually had an experience where, a prospect kept saying to me, we really want you. We really want you. We really want you. And I kept saying, we can’t compete with Edelman and Golin Harris, which is who we were going up against. And she kept saying, but it’s already carved for you. We’re doing it for you.
And so we did. We went, I will say they paid for our trip. Because I was like, I’m not paying for this. Um, and we did our dog and pony show and we did our creds deck and she called me the next day and she’s like, I’m really sorry. You just look so much smaller that I couldn’t talk them into it. And I was like, I tried to tell you that.
So you do – like, and it has nothing to do with whether or not you’re smarter because you probably are, or whether or not you can do the work because you can. It has everything to do with, they just have resources you don’t, and they’re going to look bigger because they are.
Chip Griffin: Right. Well, and, and part of the problem is that small agencies too often go into these conversations, whether they’re formal or informal, trying to look bigger than they are.
Right. And, and honestly, if you’re small, lean into it. Yes, it, it is much better to be small, admit you’re small, and sell that as an advantage, as opposed to being small and trying to look bigger by listing… I’ve, I’ve seen these creds decks where, you know, it’s a two-person agency and the creds deck all of a sudden has 10 people on the people slide.
Sure. I’m like, who are these people? Yeah. Well, they’re so, you know, and they’re basically someone that they had coffee with once, right. And said, you know, Hey, I’d be happy to help if you ever have a project. And so they slap ’em on their, sometimes it’s even on the website. Don’t do that. If you’re small, lean into it.
Be honest about it. And, and maybe you can, it, it’s, it’s a, a long shot play, but maybe you can convince them that they’d be better off going with the small guy, right. Who can give them the tailored service, if that’s what you really want than going with one of the, the really large players who bring eight people to the table without even batting an eyelash, which frankly, I think even for the big agencies is stupid, but I’m not advising the big agencies, so by all means, go waste your money however you like.
Gini Dietrich: The other thing that I will say is, you know, you’re right that many of us want the whales, we want the logo, we want the work, we want all of the things that come with having a big client that would send out an RFP like this.
But I am telling you right now that the headaches it costs. Because you are not going to do the work. You’re going to work with procurement and you’re going to sit in meetings with procurement while they walk you through a deck showing you how they want you to work with their process. And then you’re going to have to be submitted as a supplier and you’re gonna have to give them all sorts of information.
Your financials, who’s really on your team versus a contractor. All of this stuff. Your insurance certificates, everything. And then you submit all of that, and then they come back to you with 1700 other requests, and then you submit all that, and then maybe someday you can submit your first invoice, but at this point you’ve already been working with them for six months and nobody’s getting paid.
Chip Griffin: Right. Right. You make it sound so appealing, Gini.
Gini Dietrich: No, it’s so frustrating.
Chip Griffin: It is. And, and look, I’ve, I have worked in larger, mid, and larger agencies that have done work with big brands that have procurement, and it’s, there’s nothing worse than procurement because you think after you’ve run the gauntlet and the contract is signed, you’re fine.
No, you’re wrong. You’re wrong. You still get to have these lovely conversations with procurement on a regular basis. Maybe it’s quarterly, semi-annually, whatever it is. You get to keep having them. Where you have to keep justifying your existence to someone who doesn’t even understand what you do.
Gini Dietrich: What you do. Correct.
Chip Griffin: And so you do one presentation for the actual client team that you have that that understands it, gets it, and knows what they need. And then you get to also talk to procurement often. And talk more about what was in the original statement of work, which by the way, you’re probably not even adhering to because the client asked for something else and you just went ahead and did it.
Right. But then procurement says, well, you said here, you were gonna produce these two reports. Well, yes, but the, you know, the CCO said, we don’t, we should spend our time working on something else instead. But your, your statement of work says that you’re going to do this and, and we need to see that in order to correct clear payments.
Yes. It’s just, it’s, it is ridiculous and not something that you want to get involved with.
Gini Dietrich: It’s terrible. It’s horrible. I mean, just sitting on Zoom with them, walking you through the deck on how you need to work with them should be enough for you to say no, not doing it, because it’s significantly easier for you to your point, to sit down with a prospect and have a conversation with them. Ask them questions, listen, gather information, gather in intel, and then create a plan and a proposal that will help you win the business versus spending your money to to do an RFP, which is gonna cost you a lot of of time and a lot of money.
And then traveling somewhere to do your dog and pony presentation and like, it’s just, and then let’s say you win, then you have to work with procurement. Like it’s, it’s not for me, obviously, that’s not something I wanna be spending my time on. I would like to actually do the work.
Chip Griffin: And, and when it comes to business development, you really need to avoid things that, that give you the feeling like you’re doing something, When you’re really not.
Gini Dietrich: Really great point.
Chip Griffin: I think it’s one of the reasons why agencies latch onto RFP responses and things like that, because it’s an easy way to sort of say, I spent three hours this week working on business development because I was putting together, you know, a response where I was hunting for RFPs on some, you know, search engine.
And it just, it’s not real progress. Business development in the agency environment is about having meaningful conversations with your prospects where you actually begin to understand each other. Yes. It’s matchmaking, it’s not ticking boxes and relying on formulas. Yes. And so you need to move away from these 80 page proposals and 40 slide creds decks.
Frankly, I get asked to review a lot of creds decks. My first answer is get rid of it. Now the reality is you probably can’t fully get rid of your creds deck, but you can shorten it way down and you can do, you know, you can provide the basics. You don’t need to provide excruciating detail. No. In your creds deck.
It should be just very basic because, and it shouldn’t be the first thing that you do. If you’re meeting with a prospect, even if they ask for you to give your creds deck. Say, before we do that, let’s talk for a minute and that will help guide you as far as how you go through the creds deck. And so someone said to me, well, I, you know, I don’t really understand this.
If you’re not gonna start out by talking about yourself and what you do, what do you do? And I said, it’s simple. The question I always ask is, what brings us here today? What caused you to book this meeting? Yes. And they’ll usually say, well, cause we’re looking for an agency to help us with, fill in the blank for whatever you do.
And, and, and I always say, don’t, don’t accept that answer. Right. Because that’s not what brought them here. That’s right. They’re here because something happened to trigger it. Yep. They, they got a report that their sales are down. They had a CEO bang his fist on the table and say, I hate our website. We need a new one.
Yep. Something happened to trigger it, that they talk to you and they’re talking to you today. So dig and keep asking until you get that answer. If you don’t have that answer, you have no idea what their real pain point is and how to go about figuring out if you’re the fit.
Gini Dietrich: So I actually just had a conversation with somebody the other day and I asked that question and they said, well, we’re just, look, we’re just kind of kicking the tires to find a new agency.
And I said, why? And she said, well, you know, we’re trying to decide if we’re happy with the work or not. And I said, why? And I just kept asking why. And finally it came out that the agency that they have wasn’t delivering. So they would set deadlines and it would be two days later and they’d be like, where’s our work?
And they’d say, we haven’t done it yet, or we are not finished yet, and there was no communication. And so really what was frustrating them is the agency was not meeting deadlines and wasn’t providing work product. And so they were looking for a new agency that could promise that they would meet deadlines.
Shouldn’t be that hard. But it is apparently. And, but I wouldn’t have known that if I hadn’t just kept, if I hadn’t acted like I was three and kept asking why. And she finally got, she finally said that to me and I was like, okay, now we’re getting somewhere. So now we can have a conversation about what that looks like and how our process works.
And you know, one of, I know I’ve said this many times before, but one of the things that always happens always without fail, Is you will go into a new business meeting and the only thing you will do is ask questions. You don’t talk about yourself, you don’t talk about the agency. You don’t, you don’t talk about your cred.
You don’t go through your creds deck. You just ask questions. Why are we here today? Tell me more about that. What’s your biggest pain point? And at the end of that meeting, every like 100% of the time, every single time, the prospect will say, that’s the best meeting I’ve ever had. Every time.
Chip Griffin: Absolutely. Best meeting I’ve ever had. They say, you asked me questions that, that nobody’s bothered to ask me before. You’ve made me think. I love it when someone says, you’ve made me think. Yep. Yep. Because, because that means, if you ask the right questions, you demonstrate far more expertise than by just reciting your past successes or these kinds of things. Yep. And, and it, it allows you to figure out if there is a good fit and if there is, it shows to the prospect that there is a good fit because you get it. It’s like the conversations I have now with agency owners. When I do my free consultations, I, I don’t tell them a thing about me at the start of the call.
Never. I used to do a two minute just, you know, here’s my quick background. I stopped doing that a about 18 months ago, and I just, now I just dive right in with, let’s just start, you know, exploring your agency. Tell me more about yourself. Tell me what your challenge is. And we do that, and it’s not until like minute 28 out of 30 that we ever get to what do I do? What does SAGA do? Right? Right. And it’s always brought up by them. I still don’t bring it up. If, for whatever reason, it’s one of those random ones where they don’t ask, fine, we’re done. Yep, we’re done. Yeah. Great. Hope to talk to you sometime in the future. Yep. And, and, and people are stunned.
Like, I thought you were gonna, in fact, I had, I had one of these a couple weeks ago and, and the agency owner said, I’m totally unprepared for this because I figured you were just gonna spend the time selling me. So I didn’t think it was a real consultation , so I didn’t prep for, he said, can we reschedule it for a time when I’m actually prepared and can bring questions?
I’m like, sure. That’s funny. Right? And, and if you’re having these conversations with prospects, you will learn so much more. And you also wanna understand, for example, the, the instance you described where they, they’re trying to figure out if they were happy with their existing agency. First of all, if they’re trying to figure it out, they’re not. They’re not, right.
It’s, it’s like when someone comes to me and say, well, we’re trying to figure out if we should fire this employee. You should. But I haven’t told you anything. Doesn’t matter. You’re thinking about, it doesn’t matter if you. My experience is you’re six months past where you should have done it, so just go do it.
Yes. Let’s move on with our lives. Um, and that’s a little glib, obviously, but you, you get the idea. These are things that if someone’s wondering it, they’re probably already there. And so now you can, you can read into that and pursue that, but more so if someone’s unhappy with their current agency, really dig into why. Why, and if it’s, and in, in your instance where it’s deadlines, I wanna know, tell me more about this.
Mm-hmm. Because missed deadlines are not always the agency’s fault. In fact, usually are not entirely the agency’s fault. Usually there’s some shared responsibility here where maybe the goalposts are getting moved. Right? Or they’re not getting what they need as far as information. So dig into that because the last thing you wanna do is just work for someone who hates agencies effectively.
Gini Dietrich: Right. Yeah. Or they’re the ones that are the problem.
Chip Griffin: Or just go work for Dr. Pepper. Because we know they hate agencies. They basically know they’re, because when called out on, on their terms. They’re like, no, we’re good with it. We’re, we’re sticking with these terms.
Gini Dietrich: And I think they found an agency too, so.
Chip Griffin: I’m sure they did.
Somebody, somebody’s playing. You’ll always find someone who is willing to accept even the most horrendous terms. But you need to understand when, when you’re negotiating with a prospect, don’t focus just on the total dollar amount and the, the scope of work. Right. And, and the reality is almost everybody focuses just on the, the total dollar amount.
Right. Very few agencies focus as much as they should on the scope of work to make sure there’s true agreement on that. Yes. Yep. And almost none of them bother even thinking about the terms, you know, maybe particularly for the larger brands, because they’re just gonna sign whatever contract the brand sends.
You need to understand that the terms make a huge difference and it’s, it’s basically changing the price of the service that you’re offering. Yes. Every bit of delay you have a cost because you’re now effectively a bank. Yes. And so there is a cost to you of loaning this money in kind to the prospect.
Yep. Know what that is, and understand that if it’s a hundred thousand dollars contract, you’re really only getting 80,000 effectively because of the payment terms in a crazy scenario like that. Yeah. Are you okay with that? Would you be willing to give a 20% discount? Probably not. I hope not. At least I would hope not.
I hope not, but I guess I’m probably deluding myself there too.
Gini Dietrich: Yeah, so I would say, I mean, if you’re going to respond to RFPs, no, I, there are certain scenarios where you have to, like if you’re doing government work, right.
Chip Griffin: There, there are certain, government, tourism, higher ed there, there are certain industries where you’re just, you’re never gonna get around having to do them.
Gini Dietrich: If you’re in those industries, you have the process and you know how to work it.
Chip Griffin: Right. And we’ve had past episodes where we’ve talked about some of these exceptions in more detail. Sure. And, and if, if, uh, if I think of it, we’ll make sure to have a link to that episode in the…
Gini Dietrich: I mean, I, I think you, you mean if Jen thinks of it.
Chip Griffin: Yes. Thank you, Jen, as you’re listening to this.
Gini Dietrich: Thank you, Jen! Yeah. But, but the point is be really smart about it. You know, anytime that a client says to me, oh, we got this RFP and I’m thinking about responding, I’m like, Nope, nope, no. And then they do, and then they don’t get it, and then they’re mad. So there may be occasion, and there may be exceptions, but for the most part, please protect yourself and don’t go after RFPs.
Chip Griffin: And, and if you’re gonna do it, please, please add up the total cost of responding. That’s great. Yep. Figure out how many hours you and your team put into responding to any particular RFP. Factor in anything that you may have outsourced. Because a lot of agencies for big RFPs will outsource some graphic design or some even some animation.
Oh, we just need to have a little gee whiz kind of thing to show them. Some agencies even do a little bit of spec work as part of an RFP. That’s mind boggling to me.
Gini Dietrich: It is mind boggling. I agree.
Chip Griffin: Add up all those costs and, and ask yourself when you lose that business, and you will. And you will. Was it worth spending 10, 15, $20,000 on it?
Because you’ll be surprised at how fast those costs add up, and then when you start adding them all up for all of the RFPs that you respond to in a year and don’t win. You then have to ask yourself, let’s say I won one, so I feel good. You know some, I know they’re low pro, but we sometimes win them. That’s one of the things I always, we sometimes win them, so we feel like we need to participate.
Cool. Add up the total cost of all the ones you’ve lost. Subtract that from the profit of the one that you did win. How’s your bank account look now? Feel good?
Gini Dietrich: On that note…
Chip Griffin: And if you’ve come this far and you still believe in RFPs, there’s nothing more we can say. You’re on your own.
Gini Dietrich: You’re on your own. I hope you win.
Chip Griffin: So that will draw to an end this episode of the Agency Leadership Podcast. I’m Chip Griffin.
Gini Dietrich: I’m Gini Dietrich.
Chip Griffin: And it depends except when it comes to RFPs.