Survival Strategies: AGENCY.COM Challenges the e-Consulting Collapse

Masters of the dot-com universe like iXL, Viant, and marchFIRST continue to suffer more than any other segment of the IT services industry. Despite efforts to focus on Fortune 1000 clients, the dot-com exposure of the formerly sizzling e-consulting firms left them ill equipped to handle the e-business slowdown. Layoffs, bankruptcy filings, and desperate searches for investors and buyers have dominated the segment for months.

Amid the downturn, executives at AGENCY.COM (Agency) are confident they can survive the shakeout and emerge in good shape. True, they had to lay off almost 200 employees in December, more than 10 percent of total staff, and their stock is limping along at less than $2 per share. But with a decent cash position, a strong client base, and an aggressively focused sales and marketing program, company leaders say they are strong enough to separate themselves from the pack.

Agency can legitimately boast of a number of important strengths, including recent client wins such as Cigna, Citgo, and Visa, substantial international presence (25 percent of 2000 revenues), and demonstrated expertise in emerging technologies like wireless and interactive television.

Is this enough? Not necessarily. Big clients often move on; Europe appears to be following the U.S. slowdown; and the near-term prospects for big money consulting in wireless and i-TV are quite uncertain.

In a recent discussion with ITSMA, John Joseph, executive vice president of client services, and Shane Lennon, director of alliance and marketing programs, highlighted six specific initiatives Agency has undertaken in recent months to leverage their strengths and forge ahead of their struggling e-consulting rivals.

Refocusing the alliance program

As detailed in a recent ITSMA Best Practice Case Study, Agency has invested heavily in its alliance program as a source of revenue generation, training, and collaborative service delivery. Responding to the slowdown, the marketing team has adopted the 80/20 rule to focus almost exclusively on top revenue producers. “Well focus 95 percent of our efforts on our top ten partners,” notes Lennon.

Deepening vertical market expertise

Like many IT services firms, Agency has moved toward a vertical industry marketing approach over the last year. With the slowdown in the fourth quarter of 2000, the firm redoubled efforts to hire top industry talent to strengthen vertical practice areas such as financial services, health and medicine, and manufacturing. “We’ve got to be able to talk with senior executives about every aspect of their business on their terms,” says Joseph.

Strengthening relationships with top clients

Early in 2001, Agency created an “Executive Steward” program for its top accounts. Senior executives at Agency, including the CEO, are working harder to build high-level relationships with client counterparts to increase client satisfaction and drive new revenue opportunities.

Using i-traffic to build existing client relationships

Agency acquired i-traffic, an online marketing firm, in October 1999, but operates it as an independent subsidiary. Over the last few months, Agency has developed a more integrated business development effort, using i-traffic’s marketing expertise to win new clients, increase business at existing clients, and create follow-on engagements as other project work winds down.

Developing new thought leadership workshops

Filter-in-Action is a three level workshop program highlighting such issues as m-business (wireless), eCRM, and online marketing. Level one creates initial contact with business prospects through free half-day workshops. Level two provides a more customized full day program to explore an interested firm’s opportunities in greater depth. Ideally, participants then move on to level three, a paid “mini-engagement” which includes a more substantial strategic assessment and test application development. This try-before-you-buy approach has generated great feedback, according to Lennon, and several prospects are now planning mini-engagements.

Adding company-wide business development incentives

Finally, and perhaps most important, Agency has put in place an incentive program for everyone in the company to bring in new business. “This shifts the mentality,” says Joseph. “Now everyone is thinking about new business all the time.” The new approach has already paid off; two recent client wins have come from departments far removed from “normal” business development channels.

Some of Agency’s survival strategies are basic marketing efforts that should have been underway all along. But far too many IT services firms continue to neglect such fundamental marketing rules as targeting and segmentation, client penetration, and internal marketing. The lessons for other firms struggling through the slowdown (and who isn’t?) are clear: get everyone in the company involved, get as close as possible to your best customers, help wary prospects check you out with minimal risk, and lessen distraction from non-producing programs.

What do you think of Agency’s approach? What are your best survival strategies? E-mail ITSMA and let us know

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