Structuring an Agency Business Development Team
Written by Joe Koufman, Founder & CEO of Setup
As marketing matchmakers, we at Setup are often asked by agency leaders how to best structure marketing and business development teams for growth.
In addition to working with hundreds of marketing agencies at Setup, I have worked at a small digital firm, an independent full-service marketing agency, and a massive holding company, which gives me a unique perspective on how to best structure marketing and business development teams in an agency environment.
Skills:
What are the skills and attributes that agency leadership should look for in their first business development hire?
Agency leaders believe that they are looking for a business development (BD) person with a strong “Rolodex” of potential clients. One of my favorite books - The Challenger Sale by Dixon and Adamson makes it clear that while clients may form a strong bond with relationship builders, that does not mean that the customer will ever buy from this person. A great BD person will bring a (not totally obvious) insight to the client, get their agreement that that issue exists within the customer’s organization, then will show how the Challenger’s solution is uniquely suited to solve that problem. The beautiful thing about The Challenger Sale approach is not only that the skills can be learned, but it is possible to build an entire organization of Challengers.
Small agencies that finally grow enough to make their first business development hire (usually at around the 15 full-time employees mark), are often looking for a unicorn - someone with hustle and patience, a big picture thinker who also pays attention to details, a strong collaborator who also needs little guidance. I am here to tell you that it is almost impossible to find a single person who is all of those things. So, where do you begin? I would start by finding someone who is curious and tenacious. Those are the two qualities that are foundational for anyone who will be successful in business development. From there, that person can be molded into a Challenger who will help clients see the issues within their organizations and why the agency’s solutions are uniquely suited to solve those problems.
Scaling the Team:
As agencies mature and grow to 30-40 full-time employees, they are in a position to hire their first marketing person. Again, unicorns are pretty impossible to find, so I recommend looking for someone with a strong writing background who is comfortable creating professional content that will get the agency noticed. They need to be provided with adequate tools like Grammarly, Canva, marketing automation/CRM, and other web-publishing tools.
Once your agency has scaled up to 100+ people, it may be time to build out an entire team responsible for business development and marketing. Each person on the team has a dedicated role that is crucial to creating that “well-oiled machine” focused on winning more, bigger deals with brands.
The roles are clearly outlined in this post going into more detail about the processes, people, and tools that are needed to create a great outbound and inbound business development and marketing effort for an agency:
Compensation:
I am often asked how business development teams should be compensated. A good business development person should be incentivized to perform the behaviors that match the agency growth strategy. Are you looking to add a few marquee clients? Are you looking to diversify your client portfolio? Are you looking to grow organic business? Your approach to compensating your BD team should vary based on these goals.
Generally, to attract the right BD person, you will need to offer a base salary + commission. The base can range from $50k to $75k to $150k depending on the experience of the person you are hiring. Commissions can range from a few percent of an initial deal, to a percent of the first-year fees, to an annuity that pays for the life of the account.
I strongly recommend including a structure that incents the BD person along with the account person who is ultimately responsible for the growth of the account. The value of structuring a shared beneficial relationship between the BD and account lead is that it creates a cooperative environment. When the account team is not incentivized to grow their book-of-business, they view new business opportunities as extra work rather than potential income. In the past, I was paid 4% of the agency fees from the first year of total billings with a new client and the client partner who led the team that would be doing the work got 1% commission. Rather than cringing when BD approached the account leader with an opportunity, the client partners began lobbying the BD team to be tapped for the next opportunity. It created a culture where everyone on the team was excited for growth.
Additionally, I have often seen agency leadership put caps on business development commissions. Some come in the form of minimum deal sizes or volumes before commissions are triggered and others are maximum commissions that can be earned on a per-deal or total compensation basis. These caps generally serve as a huge demotivator for a BD person. If your BD person lands several giant, new clients and helps grow the agency significantly, you should be happy to write those large checks.
It is important that guardrails are in place for the kinds of deals that the agency wants to pursue - for example, are there minimum deal sizes that are dependent on the client’s overall size or industry? A small deal from a Fortune 500 company could be a “foot in the door” to larger opportunities, but the same small deal with a local chain of coffee shops is likely the full budget. Also, there should be expectations set about where the business development person can negotiate and what the minimums are - for example, is there a minimum average hourly billable rate that can never be undercut? Empower your BD person to negotiate and close those deals without needing to check back with someone else.
Summary:
At the end of the day, growth benefits everyone in the agency (more salary/bonuses, bigger teams, better offices, newer technology, etc.), and so the entire agency should have a growth mindset as outlined in this post:
Building an Agency Culture of Business Development
Marketing agencies should scale their business development and marketing teams as they expand and should instill a culture that supports growth. Properly staffing and paying the team can lead to significant growth for agencies, which ultimately should benefit agency leadership, staff, and clients.
Should you need consulting advice, Setup offers several services designed to help marketing agencies scale/grow.
This blog was written by Joe Koufman, Founder & CEO of Setup.
Armed with 20+ years of marketing, business development, and management experience, Joe Koufman founded Setup to ignite relationships between marketing agencies and client-side marketers. His unique agency perspective – having worked at a small digital firm, an independent full-service marketing agency, and a massive holding company – is what inspired Joe to help marketers find agencies that are the perfect fit.
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