by scott.gillum | Aug 28, 2018 | 2018, Entrepreneurship
Clients have complained about it for decades. Agencies have been wrestling trying to find a new model for years, but yet it still exists. Partly because they know that abandoning it will require them to move to fixed fees, and most likely fixed timelines, and that is more risk than they can, or want, to stomach.
Before I start highlighting why the billable time model doesn’t work, let me tell you when it does — with a caveat. In my seven years working in this environment, I can say I have only seen the model work effectively for the client once. Here’s what it took to make it work.
- The client had a pipeline of projects – the client went through a process of consolidating marketing budgets to move to a single agency retainer. They then identified enough projects to fill the agency capacity and smalls one off efforts to cover production gaps when the priority projects were delayed.
- They put the basics in place – knowing that efficiency is essential for optimizing a retained relationship they had the foundational building blocks for developing campaigns. The client had their audiences defined, value proposition and messaging tested, and an approved media budget with CTAs. You want as much of your marketing dollars going to execution as possible. Don’t burn agency fees on the basics.
- Quarterly reviews – they set clear priorities each quarter and conducted quarterly reviews. Learning what worked, what didn’t and why/how to improve in the next quarter. Typically, no month goes according to the plan so they had budgets rollover month to month and a defined point to reconcile fees.
- Built in flexibility with “on demand” resources – a core client team was defined with “specialized” skills that were “on-demand,” not dedicated. They used contracts/freelancers on their team to pick up work that may come in “over the transom.”
- Strong management of the relationship and retainer – they took an active role in managing the relationship with the agency, with a dedicated agency team that included ex-agency people. One person prioritized and managed the work internally before it went to the agency. That person was the central point of communication, consolidating feedback and restricted others from contacting the agency with requests or changes.
If this doesn’t sound like your organization, let me share with you what you’re up against and why the billable time model is not in your favor.
- The production process – flexibility gives agencies problems once you’ve committed to a retained team and defined work. Think of it this way…let’s say you hire an organization to build a car. The company gives you a price to build it. Sticking to the production schedule the car will cost you exactly what you contracted. The problem in marketing is that few things go according to the production schedule. Issues with approvals and getting content or legal feedback within the defined time is often the exception rather than the rule. So, let’s say your car is making its way down the production line and it gets to the person who is handling the windshield install but the windshield isn’t there because the size and shape wasn’t approved. As a result, the entire production line is now slowed, or the car is taken off the line so other cars can progress. Either way, costs are now being incurred due to the delay. This is what happens when marketing assets are being created. A client doesn’t approve an image on time so when the agency production schedule has the image retoucher scheduled to work on the image, it’s not there. The image retoucher is then reassigned to other work and this task goes back into the scheduling pool, causing delays further down the line.
- “Microspecialization” – perhaps you’ve noticed that your team has blossomed with “specialists.” For example, content development; long form, short form, digital, technical writers, etc. A good writer is a good writer, or at least one would think. If you are working with a large agency they will have the luxury of having broad skill sets in house or contracted. These “specialist” are assigned to work on multiple projects. Their time being divided among 5-7 or more projects during the week. Let’s go back to the production line analogy. The work is progressing down the line, now there are twice as many stops as in the past because of the microsegmentation of the work and skill sets needed to complete it. This means we have twice as many people to schedule, coordinate calendars and manage handoffs. Let’s say the main copywriter creates the campaign content that moves to the digital copywriter to chunk it up for the website. Then, it’s off to the short form writer for emails, and the technical writer for the sales sheet. You get the picture. Each step is a handoff, an opportunity or risk to come off of message, change the tone, or lose the intent, etc. All which result in burning more hours to fix.
- Efficiency and creative – speed is the enemy of the good, not always, especially in a billable time model. Being more efficient is not necessarily aligned to a billable time model. There is no incentive (beyond due dates) to move work quickly or efficiently. If a creative is assigned to spend a half day working on a banner ad and can complete the task in a hour…“work expands to fill the time for its completion” as they say. Agency folks have to meet a certain threshold of billable time, similar to attorneys. This is not all bad. To be fair, you want to allow the creative team to have the time to well, be creative. Rushing the creative process can produce poor outputs but it is often times at odds with efficiency. More on this later…
- Revenue recognition – for an agency to recognize revenue they have to have time billed against it. If you have a $100K a month retainer, for example, you will get a large team. It starts out with good intentions. Agencies will assess the work to be done and then assemble a team to do it, that’s how the pricing model is built. But the model is built in a vacuum based on previous client engagements. It allows agencies to assign and/or hire resources. Once the team is constructed and the real work begins, the team may or may not be aligned to capacity needed. However, it is aligned to the capacity needed to fill out timesheets to justify the fees.
- You, the client – yep, you are complicit in this problem. To get the most out of your relationship (and money) you need to take an active part in managing and partnering. Consolidate feedback internally, force internal stakeholders to make decisions and tradeoffs. Stick to and/or set realistic timelines and expectations. Do your homework and have as much of the prep work done prior (more on this below) to selecting or working with an agency partner. You know that time is literally money (your money) so be active in finding ways to be more efficient. Agencies do their best work when there is clarity on goals/objectives and communication.
Here’s the funny thing — the billable time model doesn’t really work for agencies either. It restricts growth, creates rigidity, causes inefficiencies and counterproductive employee behavior. So why do they keep it? Because it protects them from you.
Marketing can be messy and managing clients can be challenging. You miss a deadline or change a deliverable, and here comes the change order. To abandon it would require discipline, analytic rigor, and STRONG client and project management skills, which few possess. The billable time model is the devil they know, but unfortunately, can’t kill.
by scott.gillum | May 23, 2017 | 2017, Marketing
Marketers, channeling their inner Maverick (Tom Cruise’s character in ‘Top Gun’) often find themselves thinking “I feel the need, the need for speed” but are plagued by internal speed bumps and stop signs. Little do they know that buried in Jeff Bezos’ annual shareholder letter is an approach for helping them accelerate marketing efforts, and navigate past internal road blocks.
Working with hi-tech clients, I learned the necessity for quick execution. Pipelines must be filled, leads progressed and converted, and quotas achieved. IBM had two “mantras” when it came to accelerating marketing execution. The first was the rule of “70%” and the second was “Fail Fast.” Once you had roughly 70% o
f what you needed (information, insight, etc.) to execute you then got into the market, letting the results refine your program and thus quickly course correcting. Built on the idea of the yield curve, the greatest gains in progress were made during the first 70% of effort, refining the remaining 30% being too costly and time consuming.
“Failing fast” was built on the idea of quickly testing “concepts” or theories. If IBM wanted to experiment with something new or different it would construct tests to quickly measure results to either scale or kill the program. These two guide points have influenced my thinking over the many years.
So it was interesting to see Jeff Bezos picking up on these same principals in his annual shareholder letter. Except he added his own twist. In his letter he warns of becoming a “Day 2” company. He defines Day 1 companies as obsessed with customers, skeptical of proxies, eager to adopt new external trends, and perhaps most importantly, their ability to make high velocity decisions. For him, Day 2 companies become static, quickly becoming irrelevant and out of business eventually. The key to staying in “Day 1” is the ability to move quickly, experiment patiently, accept failures, and “double down when you see customers delight.”
Bezos believes that there is no “one-size-fits-all” to decision making but rather “two-way doors” where decision can be reversed. Those decisions in his words use a “lightweight” process. It starts with what he phases as “disagree and commit.” Given the growing number of stakeholders in the decision-making process, could this be the secret marketers have been searching for to eliminate speed bumps?
As Bezos describes it, “If you have conviction on a particular direction even though there’s no consensus, it’s helpful to say, ‘Look, I know we disagree on this but will you gamble with me on it? Disagree and commit?’ By the time you’re at this point, no one can know the answer for sure, and you’ll probably get a quick yes.”
Giving the success of Amazon, this is a piece of advice we should all heed. For marketers, the key to making this approach work is “conviction.” It means doing your homework, having the facts to support your point of view, and the courage to take a risk. Going fast brings with it the risk of failure, but as Bezos states “being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.”
And Mr. Bezos knows a thing or two about flying fast. On the day he released his annual shareholder letter, Amazon stock closed over $900, up 50% over the year. Need any more proof that this “maverick” got it right?
by scott.gillum | Jul 27, 2016 | 2016, Marketing
A few weeks ago, I participated in an interview with CEB‘s new Marketing Solutions group. The focus of the article, as they described it, was to “understand what it takes to have a healthy client-agency relationship.”
The article was published in their July monthly newsletter to members. CEB was kind enough to allow me to share an excerpt of the article with my readers (see below).
We asked agency leaders from key partners in CEB’s recently launched Marketing Solutions* effort to answer the question “What key relationship-building steps do clients most often overlook?” Below you’ll find our curated list of top overlooked steps:
- Make Sure They “Get It”: No matter how well the agency knows your industry, there needs to be discipline on both sides, ensuring the agency invests time getting to know your business, customers, brand, and the expectations of key stakeholders.
- Keep the Creative Spark Alive: Saying “no” too many times or being too directive can kill a client/agency relationship. You’re looking for a fresh perspective, not a passive, tactical partner. Challenge your agency to do at least one wildly strategic or creative thing for you each year, something that might even make you a bit nervous.
- Be Constructive: Creative teams invest time in understanding a clients’ issues/objective and then brainstorm on possible solutions. Keep in mind that it’s not what you say, because agencies need your input, it’s how you say it. First be complimentary, what you like, and then give notes.
- Don’t Miss the Magic: Too often RFP’s are focused only on qualifications and price. The real magic in an agency relationship is how well you work together. Be mindful of the way your teams will work together—and bring out the best in each other—that will really make a difference.
- Understand Limitations: A good creative campaign can change perceptions about your brand, products, and even service capabilities. However, it is the burden of the organization to deliver on the “promise” being communicated. Be realistic of what your agency partners can and cannot solve for.
- Agency’s Ability to Help You Bust Internal Silos: Assess agency candidates for their understanding of key partner functions (like sales, service or operations) and their ability to help you bring those other partners into creating seamless customer experiences.
- Agency’s Ability to Disrupt Your Customers: Winning marketing efforts disrupt what customers think, believe, and assume about themselves (not about you). Bottom line: pressure test your agency’s empathy—the ability to go deep into how customers think about themselves and their own world.
Additionally. CEB is now providing execution support on B2B go-to-market messaging and content creation. They’ve partnered with select agencies, like gyro, to offer engagements that help create messaging and content that reflect the latest insights from CEB’s B2B buyer and best practice research If you’re interested in learning more, send me a note.
by scott.gillum | Jun 16, 2016 | 2016, Sales
I’m a “binger.” I’m “all in” when it comes to consuming content and I’m not alone. Netflix reports that of it’s 40 million US subscribers, over 60% report being “binge watchers.” We also know that our personal habits influence our professional habits, so could there be a group of “binge buyers” who are currently being underserved with our content efforts, and could that be hurting our sales efforts?
For example, I’m working with a client to help them “digitalize” the organization. As part of the effort, I’m evaluating software tools to help improve the performance of their content marketing efforts. So I’ve been binging on vendor content, going deep into their sites and watching hours of video to evaluate their fit for our client’s needs. However, one of the vendor’s limited the information on their site forcing me to request a demo to learn more about their tool.
Ten days after I requested the demo the vendor finally reached out to me. It then took another 3 days to align our schedules. The day of the “demo” was disappointing. I didn’t get to see the tool, but instead I got a 10 page powerpoint pitch. Running out of time that day forced me to set up yet another call more than a week away. Needless to say, they didn’t make the short list of vendors to consider.
Here’s the point we know from CEB, Sirius Decision, and Forrester decision makers are more than half the way through the buying process before they engage a sales person. If you are an organization that is trying to insert a sales person in upstream, you run the risk of slowing the buying process and/or being eliminated from it.Your prospects maybe “bingers” like me. Let them go deep and gather all of the information they need on their own. It will accelerate your sales cycles, increase lead volume, and lower the cost to sell. I know it will set off alarms with your lead tracking process, but the fact is, buyers control the process and they will let you know when they need to talk to someone.
Still skeptical? Atlassian, an open source provider of project management and app software sold over $300 million in enterprise software without a single sales person. The keys to their success: a great product, word of mouth and letting buyers sell themselves. “Customers don’t want to call a salesperson if they don’t have to,” says Scott Farquhar, Atlassian’s co-chief executive officer.
“They much rather be able to find the answers on the website.”
Don’t get me wrong. I believe sales people can serve a very valuable role for the buyer, and for organizations. But that role has shifted, instead of being the product “spokes person” they should now focus on better understanding what information buyers need to drive a consensus on a decision within their organization.
Unsatisfied with my first call with the rep that left me without seeing the tool, I found a product demo video on Vimeo. I doubt they even knew it existed, so by second call, I was already well versed on the tool. I knew how it differed from the other tools being evaluated, but what I didn’t know was why my client would need that functionality. That is where the sales person could have been helpful, and could of earned themselves a shot at the sale. The lesson; bingers are out there and growing, if you throttle bandwidth on content you could be limiting, or in this case, eliminating opportunity.
by scott.gillum | Feb 28, 2016 | 2016, Marketing
Having a hard time convincing “the powers that be” to invest in the brand? Ever wonder why it’s so hard, why all they want from marketing is leads? Let me explain.
In organically grown companies, an organization develops a product or service and goes to market through a sale channel, either owned or via a partner. At this point, the organization is focused on acquiring customers and generating revenue. With low market awareness the organization typically has more sales capacity than demand for its products or services.
If marketing exists, it’s in its infancy, and plays a tactical role developing sales material, supporting business development activities, and it may have a small social media presence.
To fuel the company’s growth, the management team begins to realize in order to make sales and revenue objectives it has to be able to create demand beyond what the sales channels can generate on its own. As a result, marketing expands beyond its most basic sales enablement role into being responsible for generating leads.
When growth slows and/or begins to plateau, the executive management team will (or should) begin to explore the value of “strategic” marketing. Unfortunately, these strategic marketing activities and investments aimed at broadening awareness of the brand are often misunderstood and/or dismissed all together. Here’s why they shouldn’t be, and why they are critical to unlocking a company’s next phase of growth.
Why it’s so hard getting to “Yes”
The challenge in convincing the organization that marketing can be a strategic growth level is one of perception. Because marketing evolves “bottom up” as I just described, the common perception among executives is that marketing is a “tactical support” function.
The second issue is the messenger. The staffing needs of marketing in its infancy are simple, and usually satisfied by an entry-level hire or someone without a marketing background. Rarely, will this person rise to a senior management level. Achieving senior executive “gravitas” is critical for changing perception among the senior management team, especially if the company has a strong sales and/or product culture.
How to win the battle
To convince executives, you have to tie brand investments back to something “tangible.” Your argument has to show a direct connection to an organizations performance, be it sales, profit or the customer. And, if you can improve your message, you will also improve how your executives view the messenger. Here are three areas to explore.
- A strong/valued brand lifts price point. Are reps constantly complaining about being beaten up on regarding cost/price? A company that has a strong brand can command a price premium. Years ago, I did some work with competitor of Cisco and found that the Cisco brand had a price premium of 7% over the competitors. Why? B2B purchases are high risk, and as a result, are emotionally charged. Buyers that connect personally to brands are willing to pay more for their product if they believe it will reduce the risk of a bad decision. Need proof, click here.
- Improving top of the funnel performance improves the performance of the entire pipeline. Need to increase leads? You have two choices, expand the top of the funnel, or increase conversation rates. The best solution is to do both. By expanding the number of prospects aware of your product you increase the number who will also consider it, which increases the number of opportunities, leads and wins. If you only focus on increasing leads, you’re stuck with improving conversion rates, which may be much more difficult and/or costly.
- Brand building doesn’t mean you need a big budget. The fact is you’re doing it everyday, for better or worse. Every conversation a sales rep has with a prospect creates a brand impression, every unresolved service call to the contact center has the potential to damage the brand. You can make great strides by clearly and consistently communicating what the brand stands for both internally and externally. Once defined, put it into the language of your audience in the simplest terms possible. Complex, “consultant like” words and terms are meaningless. The really smart folks simplify the complex.
Now that you’ve made the argument, it’s time to close the deal. When an executive evaluates a proposal from your company against other competitors, do you know what tips the scale in your favor? No, it’s not price, or the “relationship,” it’s your reputation, your brand. It’s how they feel about your company…and that’s not in your proposal.
