Transactional Relationships Are Out
August 9, 2019
We've heard it before: Don't treat your agencies as mere vendors, unless, of course, a commodity is what you are seeking. But the label "vendors" shouldn't be such a dirty word. In principle, "vendors" are delivering services that have reasonable commercial value and getting paid for them. The real issue is in such a competitive environment, relying on a "vendor" or transactional type of relationship to fuel your growth won't cut it anymore.
What CMOs and their organizations need are "agency partners" that can turn into empowered talent and create stronger work. When agencies are enabled and supported by their clients, they do amazing work and both parties prosper. By "empowered," I mean that they are encouraged to take risks, challenge the status quo, and push the limits. How do you build such partnerships? Here are the five stages.
Stage 1: From Transactional to Supplemental Engagements
There is a natural tendency to focus on the financial nature of the relationship with the agencies you work with. After all, a sizeable part of your marketing budget is being handled by them. However, by over-emphasizing the transactional nature of the relationship, we miss out on the opportunity to get more from them. The value-add agencies can provide is often realized when they go above and beyond the call of duty. They are simply motivated to do so because they are passionate about the work, feel appreciated, and feel their work makes a difference.
What we must do differently: We must set clear expectations about what "value" is in the relationship. We must reward for work that adds supplemental value. We must incorporate value-oriented questions in the annual or semi-annual agency performance evaluation survey. We may also consider bonusing based on these criteria when expectations are exceeded.
Stage 2: From Siloed to Synergetic Approach
Advertisers play a critical role in setting up an environment of collaboration, idea and information sharing among their roster of agencies. Otherwise, agencies tend to operate in silos, focusing on their individual contribution instead of the whole, and fighting territorial battles that are wars that clients end up losing. Advertisers have much to gain from a more synergetic, integrated approach to working with their various agencies.
What we must do differently: We must set up the right agency model, defining both partnership and collaboration principles. We must train agencies on these relationship parameters at the onset of the relationship and ensure that agencies are not just invited to collaborate but enabled to do so with regular check-ins. Consider setting up an agency forum or bringing your agencies together at key events like annual planning, quarterly business reviews, and work reviews.
Stage 3: From Cost-Driven to Investment-Minded Perspective
Advertisers apply much effort to ensure right-sized budgets so that they realize their ROI objectives. In partnership with their procurement counterparts, they may even focus on ways to drive costs down. They must do so without compromising the work quality, or the relationships. Having a robust scope of work (SOW) process with the ability to evaluate costs and resources empowers them to make better scope and investment decisions. By shifting their mindset to approach their agency spend as an investment, they allow for opportunities to present themselves where the R of ROI is far greater than the I.
What we must do differently: We must build a robust SOW management system that generates insight on the appropriate resources required to deliver quality work. We must allow for some exceptions, innovative concepts, and ideas that may have higher costs but show phenomenal return potential. We must think about agency budgets as investments. Our budget decisions must be informed by sound analysis and discussions about what works and what doesn't.
Stage 4: From Risk-Averse to Opportunity-Seeking Culture
Advertisers operate with great constraints at times: limited or declining budgets, reduced headcount, talent gaps, bold goals, and increased competitive pressure. So, it's not surprising that many choose to minimize risk and resist pursuing risky ideas proposed by their agencies. Yet agencies shine most when they are offered some autonomy, some room to come up with innovative concepts and ideas, and the ability to express their creative nature.
What we must do differently: We must set clear parameters of engagement while allowing agencies the freedom to show innovative ideas and concepts. We must encourage and foster creativity and innovative thinking. We must assign budgets to support innovation — finding the allocation of budgets between "now," "new," and "next" — and allow for reasonable amounts of risk-taking. Consider innovation forums or awards to celebrate an opportunity-seeking culture.
Stage 5: From Order-Taking to Problem-Solving Relationships
The days of using agencies as order takers are long gone. If your agencies are order takers, then you are getting minimal value. These days, there are too many ways to solve for a given challenge and too many challenges to expect generic answers. Agencies are best suited to address client needs when those are stated as clear problems or opportunities. A relationship that is grounded in problem-solving contributes to better strategy, stronger execution, and more effective use of budgets.
What we must do differently: We must improve how we guide agency partners by providing them with relevant, actionable information and the resources they need. We must improve our planning with the right tools and processes. We must also improve our briefing practices, with far more effective input for agencies to work from.
As leaders of their organization, CMOs set the framework for these various stages of "partnership" and are instrumental in turning those into tangible partnership principles that govern not just the work, but how the work gets produced. We must do things differently. We must do more to empower agencies. Managing vendors effectively requires some skills. Yet, building a business partnership necessitates an organizational and leadership commitment combined with a deep and genuine sense of mutual accountability. You give more, but you also get more in return.
Bruno Gralpois is the co-founder and principal of Agency Mania Solutions. Bruno's latest book Agency Mania 2nd Edition: Harnessing the Madness of Client/Agency Relations for High-Impact Results is out now.
The views and opinions expressed in Marketing Maestros are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.