When you equip clients and prospects with options, you’re not only providing immensely useful decision-making context, you’re also fundamentally altering the dynamics of the agency compensation game. Offering different options changes the dialogue away from “How many hours will this take to “Which of these options would work best?” Showing different combinations of program elements and deliverables keeps the conversation focused on what clients really buy: outputs, not inputs.
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When we walk into a store to purchase a product in a category in which we have no prior experience, how do we make our choice? Mostly, we depend on value signals. The same dynamics apply to evaluating and selecting professional services.
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Next Friday you have a new business presentation that requires spec research, spec thinking, and spec concepts executed in multiple channels. You have engaged your very best people and they have given you their very best work.
Some agency executives bristle at the idea that their work is becoming “commoditized” by clients. Admittedly, “commoditized” is a strong word. So “devalued” if you prefer. The simple truth is that clients won’t pay much for what they consider to be widely-available services, and its killing agency profit margins. So instead of changing their business practices, many agencies just keep cutting staff, reducing benefits, etc. as though they’ll be able to save their way to success.
It surprises most agency professionals to learn that many clients are intensely interested in exploring a value-based compensation arrangement with their agencies. A recent position paper from the Association of National Advertisers (ANA) states it clearly: “Traditional metrics used in today’s cost-plus compensation agreements (usually based on time) have no relationship with the external value created for the client in today’s intellectual capital economy. Therefore, pricing should instead be based on results and value created.”