You’ve heard a million stories by now about the benefits of specialization in your agency – whether it’s an industry vertical, a particular tech competency, or a practice focus (like influence marketing, for example).

For the record, I’m a believer in the power of niching your agency.

But I’ll admit it comes with some potential downside.

Let’s talk about exclusivity – the expectation of a client that your agency will serve no others in its category or who compete with them. The more specialized your agency, the higher the likelihood you will face this challenge as you negotiate your next MSA.

The Ways an Exclusivity Demand Can Show Up

During the New Business Conversation

A client request for exclusivity in the relationship usually first emerges during the negotiation of your services agreement with the client.

But it can show up even earlier – during the pitch, proposal or “courting” stage of your relationship with a prospect. Some prospective clients will flat-out ask if your agency works with any competitors, or, even bolder, asks you which competitors, before there’s evidence of a commitment to move forward to engage.

So, what should your agency do?

If you face this type of questioning during business development conversations, your confidentiality and nondisclosure commitments to existing clients can serve you well.

Here’s an example of a “script” we shared with one of our agency clients when they faced this very issue:

“Our agency has nondisclosure obligations to its clients that prevent us from identifying them by name. We’re confident we have the talent and expertise to deliver results to you based upon our client roster and work portfolio, and we’ll treat our relationship with you with the same care and consideration. We’d love to share our ideas about your opportunity/challenge/goals.”

In other words, “we can’t share those names, we won’t share your name or information with others, now let’s focus on what we can do for you.”

It worked for them. Will it work all the time? No – your mileage will vary. But many prospective clients will respect that the agency is required to protect this information and also needs to protect its standing with current and former clients.

During the Contract Negotiations

Once you’ve passed the new business conversation and the parties know they want to work together, the next place you can expect to see an exclusivity demand is in the language of the proposed MSA itself. Especially when the client is the party providing the contract document.

Provisions about agency exclusivity can show up in the confidentiality clause of a proposed MSA, or in a provision titled (inaccurately) noncompetition, or, in the rarest of cases, in an actual “restrictions” or exclusivity-titled section.

You’ll have to work in the negotiation to eliminate the exclusivity language or get it dialed back to something livable for the agency.

How to Push Back (or Dial Back) an Exclusivity Demand

The agency has a few choices when presented with the reality that the client expects exclusivity:

– Say no (my personal favorite from a legal perspective, but not always a practical business option)
– Agree with the language as presented (likely never advisable)
– Tailor the language around exclusivity to something that is livable and makes sense for the agency.

First, it’s important that you have full participation in the negotiation from all the client stakeholders – procurement if they’re involved, the client legal team, and, most importantly, your marketing counterparts at the client company.

Why? Mostly because you would be very surprised to learn how little time these people actually spend talking with one another about your contract and so they’re rarely on the same page about the deal points. Legal or procurement might be pushing for exclusivity when it’s something about which the marketing team is actually not concerned.

Once everyone involved is up to speed, here are some negotiation options for your agency to consider in carving back an exclusivity clause – or to make the clause more livable for the agency:

– Narrow it to a short list of potential competing companies
– Narrow it to a very specific product or group of products
– “Grandparent” in any existing competitors that are already agency clients, or used to be agency clients
– Make the exclusivity terminate whenever the agreement or work terminates (not for a tail period after the agreement ends)
– Require a minimum term of the agreement that is longer than your normal term
– Require a minimum spend by the client to make it worth the other opportunities your agency is leaving off the table

Make sure any of these creative solutions are clearly documented in your Agency Services Agreement.

And remember that agency exclusivity is a negotiated client privilege, not a right. If you’re going to limit your agency’s business options, make sure your compensation reflects that fact appropriately.