R&F Series: Overlooked risks to better efficiency in client-agency relationships (CMOs, Marketing Leadership)
Last month, after much trepidation, the US Federal Reserve finally announced it expects a three-quarter recession beginning in April. For marketing leaders, the news only adds to the mounting pressure for reductions, even though experts recommend continued investment during a downturn.
Rash budget cuts today, albeit perceptually prudent, could have significant impact tomorrow. With growing scrutiny, marketing leaders need (the right) data, with context, to demonstrate the value delivery of their current investment decisions.
Making up a growing proportion of total spend, ensuring optimized agency services cost - in a fast-paced workflow environment coupled with limited internal resources - can be difficult. But not impossible.
Now is an ideal time to confirm that expectations and value delivery from your agency service partners are meeting expectations. And to help companies get started, Reynolds & Fyshe has a few suggestions for marketing leaders to 'zero in' on often overlooked problem areas.
Get to Know Your Contract.
Millions can be spent unnecessarily due simply to overlooked non-compliance with key contract terms. A compliance review of your agency contracts can ensure that the intended value negotiated with partners is being realized.
A review should start with a look at the document itself to confirm that: agency requirements are clearly outlined, complex compensation terms and calculations are understood (rate cards, out-of-scope charges, and cost multipliers, to name a few), reporting and disclosure provisions are described, and Corporate risk items like IP, insurance, and privacy are properly outlined.
Due Diligence is Required.
Yes, the volume of documentation and data the agency supplies can sometimes be overwhelming. But insufficient awareness and understanding will significantly increase the risks of poor value delivery, unnecessary spending and lack of trust.
Take another look. Take a good look.
A thorough review (and possibly an expert assessment) of your agency's defined scope-of-work and corresponding staffing plan, 'actual' staff time data, MPAs, production estimates, 3rd party pass-through costs and billing reconciliations will provide a clear understanding of critical gaps and opportunities for improvement.
Has the agency staffing plan shifted without being correctly disclosed? Are out-of-scope estimates and invoices lacking important detail (which could be required later)? Is necessary supporting data and documentation either poorly formatted, late or missing entirely?
The results often quickly identify areas of non-compliance with actionable error quantification.
Limit Inefficiency From the Outset.
Breaking down your agency staff time plan and analyzing proposed time and function allocations at a more granular level can often expose costly inefficiency. Identify 'too-many-cooks in the kitchen' situations that manifest themselves in unnecessary expensive senior client services staff and strategic leadership staff allocations. Identify misalignments like an art director and designer assigned to the same creative outputs. Identify unspecific role assignments between Account Manager, Project Manager and Producer. Identify missing assignments slated for OOS that could be more efficiently integrated within the Retainer scope.
Dealing with a multi-agency partnership model? Assess possible overlaps or unnecessary duplication of billable effort between agencies.
These can be quickly remedied if caught in the early stages of the agency's proposal.
Revisit your Retainer Regularly.
Is your annual 12-month plan full of unknowns? Unknowns are expensive, but contract terms in good partnership agreements should allow context adjustments throughout the year.
While your team may prepare a fulsome annual agency briefing allowing the agency to respond with its defined Scope and Staffing Plan - on which your annual Retainer fee is based - only near-future planning should be considered accurate. Limit unnecessary Retainer fees based on long-term unknowns by scheduling 'interim reconciliations' in advance. Paired with a re-briefing from your team as more specific information becomes available, interim Retainer reconciliations build context on agency activity YTD and allows the agency to respond with a more accurately defined Scope and Staffing Plan. Besides being good spend management practice, your team will benefit from the discipline.
Clients Must Lead.
Human nature often chooses the path of least resistance. Over time, this can become expensive, difficult-to-change learned behaviour.
Even as other critical business issues draw away your attention, don't let agency performance, disclosure and expectations issues slide off your radar. Get help to identify and remedy these issues as soon as possible by bringing on external expert assistance.
While often romanticized as a dynamic partnership, in reality, the best client-agency relationships rely on disciplined client leadership (and enforcement).
Next Steps:
Showing tangible results from spending on agency services has always been important. For marketing leaders, growing scrutiny due to an impending recession makes access to accurate agency cost and performance insights crucial to demonstrate the value delivery of your current investment decisions.
Now is an ideal time to check typically overlooked areas and confirm that expectations and value delivery are being met:
· Know your agreement (and agency compliance)
· Conduct due diligence on agency proposals and disclosure documentation;
· Limit inefficiencies from the get-go;
· Plan to revisit your retainer scope and staffing plans;
· Don't let issues slide. Take the lead.
Let us help you 'zero in' and plan for success. Reynolds & Fyshe has consulted with numerous top-tier Canadian brands on value delivery, contract compliance and oversight processes impacting client-agency relationships. We provide a wide range of advisory, marketing management and client-agency operations support services backed by extensive in-market experience. Contacts us for a discovery consultation.