Client conflict is a growing problem for agencies. Working more frequently online with remote clients nation- and worldwide, the boundaries become increasingly blurred.
This is a difficult issue for smaller agencies, as they lack the ability to manage client conflicts through different service teams working independently. Fewer employees means the same teams serve multiple accounts, making client conflicts a very real problem.
It can be very tempting to take on a conflicting account when you already know an industry, the business climate and the players. Carefully weigh all the issues, including the relationship with your current client(s), before you blithely invite a conflicting account on board.
Set Your Boundaries
Boundaries are very important when you take on a new client, or even take a first meeting with a potential client. Don’t rely on fuzzy creative logic. Think about what that client will bring into your agency (besides extra dollars). Where potential conflicts exist, do your research.
Is the conflict big (the accounts are directly competing across nearly all product/service offerings), or small (the accounts compete is one relatively narrow product or market niche), or somewhere in between? Accounts with smaller degrees of conflict will be more flexible than direct competitors.
Also consider the ethics of working with competitors. Few people can play chess with themselves without favoring the side that plays into a winning position. If you conduct industry research for one client, is it okay to share some of the results with the other client? When and how much? And how do you bill that? Can you honestly create brand campaigns that are in direct opposition without drawing on your knowledge of both accounts? Who gets the “best” idea in such circumstances? Be honest about whether you can truly keep your thinking about these accounts “separate but equal.” If you think it will be a problem, give up one account.
Open Communications Are Necessary
If their product offerings or services are closely aligned with other clients that you service, then you need to have a frank, open discussion of the situation—after you are friendly enough to have such a discussion. Do this right up front, before you move further into the relationship. Discuss all of the pros of the situation (you're familiar with the market, competition, etc.) and the cons (how you will have to work hard to ensure “separation of church and state”). See what their comfort level is, and what type of obstacles this may place in the way of optimum relations.
Should I Stay or Should I Go Now?
Sometimes the best approach is to resign the account. For instance, if one of your clients acquires, or is working to acquire, a new business that directly conflicts with a long-standing client, you may need to take a proactive approach, or risk losing one, or both clients. Of course, along with loyalties comes the ever-present need to grow your agency. The merger of Omnicom and Publicis created a near-legendary level of client conflict (Pepsi vs. Coke; Bud Light vs. Miller Light; AT&T vs. Verizon; Apple vs. Microsoft, to name a just a few. Of course, Anheuser-Busch and Miller are now merged under the auspices of Inbev, making that conflict a moot issue.) Should you chance to acquire new clients as part of an expansion or merger, examine the situation, and make sure you are not shooting yourself in the foot financially. It might be necessary to stay with the larger account for survival. Just make sure that the larger account is going to stay with you for the long term.
Rules of Reciprocity
Your client’s loyalty to you is just as important as your loyalty to them. If you are indeed going to maintain exclusivity in certain market areas, they need to offer you a higher level of commitment (think Agency of Record with a nice retainer). Read Client Exclusivity.
Policy: Your Agency's Best Friend
Trust between you and your clients is paramount. Everyone benefits by putting something in writing defining your commitment to keeping conflict at a minimum. Three policies are relatively easy to put into place: agency confidentiality agreements, employee non-disclosure agreements, and ensuring a secure team and work environment.
Separate for Security
Create separate teams whenever possible when you face potential conflict issues. You can do some of this, even if your agency is very small. Having the right systems in place can also go a long way to ensuring security. Look into extranets, and security coding for all confidential information. Make sure your people fully understand they can’t divulge details of projects for competitive clients… and have each and every individual (especially any freelancers or contractors) sign confidentiality and non-disclosure agreements.
Consult Your Lawyer
Make sure you don’t allow conflicts to grow into lawsuits, intellectual property battles or worse. It may be wise to include a binding arbitration clause in your contract, to protect against expensive lawsuits. (Check on state regulations, as binding arbitration is not available in all states.) Keep a sharp eye on conflicting accounts, and try your best to spot potential problems before they blow up in your face.
Realistically, smaller and midsize agencies are more likely to thrive with a diverse client and industry base. Being too heavily vested in one client or one industry is dangerous… especially if there is a problem within that industry.
Instead, use client conflict to your advantage. Big business is eager right now (it’s always “right now,” isn't it?) to become more diverse and unique. Work the diversity angle... you’re not a generic big agency, you don’t wear $2,000 suits (most of you, anyway). You are a design house, a consultancy, or a boutique firm. Above all, you specialize in whatever it is that they need, and have experience in their market or niche.
Whatever you do, don’t convince the client that you can manage the conflict cleanly, then drop the ball. Commit to protecting the interests of both clients. If you find you can’t support the arrangement and be fair to both clients, back away, with regrets. That is the only way to protect your agency and grow into a truly global firm.