For most performance marketing agencies, a long term (1 year +) client commitment is usually a key goal with account development.
But is it really the best method for everyone?
I don’t think so.
In my experience most agencies strive for some level of long-term commitment from their clients tied with their fee structure. A minimum monthly retainer over the course of a year, for example.
At first sight, it makes sense
The agency wants to be able to plan sufficient resources for the relationship. In order to do this they need a commitment from their client. The problem I have is this type of agreement typically benefits the agency more than the client. If the agency performs poorly they are still able to collect their minimum fee until the agreement has expired.
Even after establishing a relationship with a client getting them to move to the ‘next level’ and commit to something more long term can be difficult. They are happy with the flexibility they have. So why not just offer this right from the start?
I’m not saying that there shouldn’t be a mutual commitment from both parties. I mean that there doesn’t need to be a contractually predetermined amount of time that the agency will work for the client.
If the agency is doing poor work, they can and should be fired. On the flip side, if the client is impossible to work for then the agency should respectfully leave the relationship.
A simple model to start with
A small trial
A small project that gives a chance for the agency to get to know each other. This needs to be a predefined scope of work that has a clear beginning and end. Ideally this type of engagement should last between 2-6 weeks.
Both parties get to ‘test the waters’ and ensure that it’s a good fit to work together.
Commit mutually to a predetermined amount of time to work together, not contractually. Then agree to a two-way exit timeline that allows for sufficient time for each side to find/source another agent/client if things aren’t working out. As an account grows larger this would become longer, but likely never longer than 4-6 weeks.
Then review outcomes and work regularly.
Plan from Day 1 for an account transition.
It might sound counter-intuitive for most performance agencies. But I believe there should always be a plan in place for account transition. Could be to an in-house team, or even another agency. Either way that conversation should be had in advance to ensure there are no surprises when it comes time to transition the account.
This is part of the issue with ‘always-on’ type engagements. One, or both, side(s) become comfortable, work quality begins to slip which eventually leads for the need to change.
Instead agencies should plan for the inevitable and do what’s best for their clients.
What about anxiety?
I can already hear some agency owners sighing about the anxiety working like this might cause. It doesn’t have to be like this with open and regular account communications.
Trust me, I’ve been in the position where there was no long term client commitment and the client had a very short notice period. It was agonizing because we over-thought every client interaction, trying to read into what might, or what might not happen.
‘Was that it? Is it over?’
‘No we’re good.’
‘We need to speak with their finance team, this is bad news.’
‘Performance is good again, I think we’re in a good place.’
It was a rollercoaster of emotions spread over a one and a half year period. And would have been much easier if we established early trust and then felt comfortable simply asking ‘what’s our status as your partner as an agency?’ and knowing that we would get an honest answer.
But really it was our fault for not establishing open communications from the start of the engagement. In addition we were focussed too much on ‘securing long term work’ than we were on delivering great work, regardless of outcome.
Avoid client concentration
As a final thought, I think it’s important to mention that avoiding client concentration issues is also a factor. Working with one single client that is responsible for a large percentage of agency revenue is the quickest way to feel that the agency needs a long term contract.
Rather than focus on this, it’s more important to resolve the client concentration problem. Even with a contract the day will come when the large client will go away.
You may have seen that I have six pillars as to why I decided to start Nobl Marketing. This is the first of those six and I will be writing about each over the coming weeks:
- No Long Term Commitments, Ever (this post)
- Radical Transparency (coming soon)
- Billable Outcomes (coming soon)
- Shared Risk (coming soon)
- In House Acceleration (coming soon)
- Commitment to Good (coming soon)