I regularly debate with myself whether or not the incumbent has the advantage or is cursed. For a client, change is a hard thing and the agency would have to give the client a really strong reason to want to take on the work and risk involved to change. But then again, there are a lot of forces working against the incumbent.
To start, often because you have had the client's business for some period of time, the agency knows exactly what the client wants and what the client will push back on. As a result, the ideas that get brought forth in a pitch environment often get squashed because the inherent attitude will lean away from what the client cant or won't do. With a culture like this, innovation can get stifled. To win as the incumbent you have to create and foster a culture of not being afraid and pushing for new thinking even though the team is entrenched in the current way of doing business. It can be very hard to balance the future and the reality, which lends the advantage to the new agency because their thinking is not biased based on the political or technological reality.
The incumbent is also disadvantaged because they have to continue on with work as usual while prepping the pitch. This can often mean managing multiple campaigns, attending a variety of client and vendor meetings as usual while conduct research, preparing written replies to briefs, and thinking through their presentation. This is a logistical juggling act. Again I would think the advantage goes to the new agency pitching the business because, while they have business as usual too, there is something different about pitching and servicing the same client at the same time.
But the incumbent agency knows the client more intimately. This should count for something and clearly it does -- because while it might be harder on the incumbent, they do often seem to retain the business more often than not. This then begs the question, was the RFP and pitch process just procurement for lower fees? If so, the incumbent still loses as the pitch process cost time and money to retain an account for less. Then again, the agency did keep the business.
This is particularly problematic for smaller and newer agencies because they don't have the resources to throw at the challenge. Smaller agencies often win and retain business by over-servicing, centering their success on a few senior executives, which is not scalable. But even for larger agencies, the wear and tear on the incumbent and competing agencies can be overwhelming.
Whether being the incumbent is a benefit or not, the only solution is efficient scalability through training of the right people, implementation of a technology backbone, and having a consistent process to provide the required framework. Without people, process, and technology, it is almost impossible for an agency to delivery quality services in the first place -- never mind service their existing client roster and effectively pitch new clients. In this case the advantage would tip to the larger agency, incumbent or not, but often there is a perception that too-big is bad. As of late, large agencies have become dirty. I don't think this is quite fair, but as football coach Bill Belichick is famous for saying, "It is what it is" -- and so must be addressed in the pitch.
While I don't have answers to many of the aforementioned questions I posed, I have experienced the pains of success and failure across many of those very situations. In any case, the one ingredient for success is efficiency, I think. Whether that comes via people, process, and/or technology, if you are not efficient, the best ideas and innovation will get lost along the way or won't be delivered in a passionate, digestible way. Inefficiency isn't good for your agency and it isn't good for your peace of mind, because after a multi-week or month process, you will get to the final presentation and feel dead and hollow. This certainly doesn't help you win new business, whether you're the incumbent, large or small.