Commentary
The REAL Problem With The Client/Agency RFP Process
- by Aaron Goldman , Op-Ed Contributor, February 4, 2009
I had a notion to pick up the thread Gord Hotchkiss started about emerging applications of search but, once again, Steve Baldwin, derailed, er... inspired me. In his last column, Steve discussed the issues he sees with the current SEM agency procurement process -- namely, that it's comprised of tactical responses to long questionnaires created and evaluated by client in-house search personnel.
When All You Have is a Hammer, Everything's a Nail
While I commend Steve and George Michie -- whose Search Engine Land post Steve referenced -- for casting a spotlight on this very dysfunctional process, I don't think the answer lies in asking different questions in the RFP or reassigning responsibility for SEM agency selection. The problem with the process right now is the process itself.
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And it's not just agencies that are dissatisfied with the status quo. A recent survey of 184 client marketing execs revealed consensus that the agency search process is "too time consuming," citing the quandary, "you're told so many things that you're not sure what to believe."
I recently posted a 4,000+ word manifesto on my digital marketing blog outlining the glitches in the current client/agency RFP system and a step-by-step guide to fixing them. That post covered broader pitches involving full-service creative and/or media AOR reviews, so I'll tailor it here to SEM-specific RFPs -- and try to do it with less than 1,000 words.
Reinventing the Wheel
Let's do away with the shuttling of paper back and forth between client and agency in the RFP process. Not only is it eco-unfriendly. but it's the cause of a major pain point cited by clients in the aforementioned survey. How can you know what to believe when you don't know who wrote what you're reading? (Hint: It ain't the day-to-day person that'll be working on your business.)
The only people qualified to tell you just how good an agency really is are their current clients. So, rather than asking the agency to respond to a list of RFP questions, let's have that agency's clients respond via 30-minute interviews. Who better to answer questions like, "Is the agency able to scale results year-over-year?" or "How often does account management staff turn over?"
Making a List, Checking It Twice
Another source of friction in the client/agency RFP process is how the considered set of agencies is chosen. As it stands, there's no definitive source of agency rankings with unassailable methodology. Sure, Ad Ageranks the top search agencies by estimated revenue (which is a crapshoot given most agencies can't disclose these figures) and you have the Forrester Wave report that evaluates select search firms on criteria like "campaign planning" and "executive vision" -- but these lists don't (and can't) provide a true indication of clients' overall satisfaction with their agencies.
I've become quite enamored with the Ultimate Question as a means to gauge how effective a company is at providing value to its customers. The idea is that responses to the question, "How likely is it that you would recommend this company to a friend or colleague?" can tell us more about that company than any exhaustive survey ever will.
I propose the creation of a third-party system that audits all clients at each agency on a quarterly basis, gathering responses to the Ultimate Question. This data would then be made available to clients when deciding what shops to include in their RFPs.
It's Not Me, It's You
The next step in improving the RFP process is to do away with all the speculative work that's required of agencies. Whether it's strategy development, full keyword list builds or performance projections, it's not fair to ask agencies to produce this without proper time and data disclosure to craft accurate solutions -- not to mention, turn all this intellectual property over to the client without compensation. It's also not fair to ask agencies to pull their people off current accounts to spend three to four weeks working on a new biz pitch.
My answer? Changing the scope of the RFP presentation round from "What will you do for my business?" to "What have you done for another business?" Anyone can make wild claims and promise, but only proven case studies can show prospective clients what they can expect from their new agency. Furthermore, I propose the presentations be attended by the actual client that the agency is offering up as a case study.
You Break It, You Don't Have to Buy It
The final component of my RFP makeover is to set some guidelines around how scopes of work and fees are developed. Rather than ask agencies to determine pricing during the RFP process based on limited information, let's have clients issue non-negotiable first 90-day SOW and fee requirements with the RFP. At that point, agencies can either opt in or out.
Once the winning agency is selected, the 90-day term commences and, at the end of that period, negotiations take place for ongoing scope and fees. Now, both sides are armed with the ammo needed to make sound decisions for their business. Should the client and agency not be able to come to terms at this stage, an industry-standard severance fee would be awarded to the shop and the two would part ways.
The Devil's in the Details
I've only scratched the surface in this column describing the system I think will create a more perfect union between clients and agencies. On my blog, I go into further detail about the specific parameters required to make this process work and list the pros and cons as well as barriers to adoption (chiefly, the fact that it puts most of the burden on clients rather than agencies.) I'm eager to hear people's thoughts on my proposal and encourage you to comment here or at Digital Sea Change in the hopes that we can collectively build a more effective RFP process. As James Ingram sang, "There's gotta be a better way."
I know there is a better way, but it requires prospective clients to do their homework. Often times they have not defined their business objectives or don't want to share them with you (Top Secret). We also see those who don't understand the marketing process who go out for bid on tactical part and pieces (I need a website first and later I'll rebrand) without having the big picture. Then there are those just "phishing" for strategy and creative concepts who at the 9th hour, "lost" their budget.
I too believe that the referral is the best form of investigation. So lets change the paradigm starting by talking with our current clients. CJ
I love it. The only problem I see, is who wants to tell the clients? I sure can't see my GM signing up to be the first guy to tell our prospective clients that we want to do it differently, despite the fact that I'm sure he'd agree with all of your sentiments.
I suppose we could start talking to our current clients about the new revolution, but then they might decide to give it a try...with other agencies.
Amen, brother Aaron! Unfortunately, our experience has been that prospective clients often abuse referrals. We have two clients who now refuse to provide referrals not because of our service, but because prospects would take literally over an hour asking inane questions. One even followed up with an 8-page, single spaced form they wanted our client to complete. Also, many companies refuse to provide referrals because of "deep pockets" litigation. One client provided a referral on another vendor and, when that vendor screwed up, both it and the client were sued.
How realistic is it to expect current clients to offer referrals? A lot of clients seem to forbid agencies to even disclose the relationship, sometimes stating that their vendors are a competitive advantage. Nice for the agency to be seen that way, but hampering.
And, if I'm an advertiser who has gotten great results from my agency, honestly, do I want others to know that?
First, the new business might distract the agency or dilute its attention. Second, even if the prospective client isn't a competitor, won't I worry that, once I turn this client onto my terrific agency, it will in turn give a referral to someone I think is too close a competitor?
Good post, Aaron. I would add that clients might want to talk to both happy agency clients and unhappy ones. All of us know the value of "referrals" when they're chosen amongst your best friends or supporters. Clients should ask to speak with unhappy clients to understand what made them unhappy.
Another problem with RFPs is when clients are biased, have already made up their minds and chosen their agencies (who sometimes have helped draft the RFP questions in a way that only them can answer) and are just complying with their boss's request for shopping around.
Shouldn't the RFP process be a paid one? I would lean towards asking clients to pay a fee for receiving RFPs, which fee might then be deducted from the contract if the agency wins the bidding process.
Daniel
I like the thought process, but this avoids another real problem we've encountered over and over. Clients use the RFP process to defer responsibility to others.
“We” made the selection not “I”. I therefore survive if the agency craps out.
I think you mentioned in your article that many of the people involved on the client side of the RFP process are not Marketing people nor are they the day-to-day contacts with the agency.
Here's a table turner - ask the client why you should work for them. What are they bringing to the table that will make this a successful relationship.
Unrealistic? Yeah, but it was fun to consider, right?
Thanks for weighing in folks!
Carey - good point on the phishing. My proposed platform would eliminate this by making sure agencies don't have to give work/ideas until after being hired.
Dorothy - well said. It is a vicious cycle. My thought is that the place to change the paradigm is at the outset of the relationship. This is certainly not an overnight or all-encompassing solution to the problems you outline but you have to start somewhere.
Meredith - I'm happy to be the one to tell the clients. Heck, if enough people buy in conceptually, I may just become an agency search consultant myself.
Mark - great points. Would definitely need to put some structure around how this would work (ie, 30 minute calls maybe even with a 3rd party present).
Susan - you raise some important issues. I address many of them on my longer post at DigitalSeaChange.com. To sum it up, though, I'd say to clients, "If you want to benefit from the system, you have to contribute to the system."
Daniel - I hear you about including unhappy clients. On my blog, I suggest that clients pick multiple clients from each shop to interview, including former clients. As for the RFP bias, reducing the amt. of time/money req's by agencies to respond would reduce the impact of "formality" RFPs. In regards to the fee, my proposal essentially shifts the RFP phase (where ideas and other IP are turned over) to the 1st 90 days of engagement so it does require the clients to pay.
Jeffrey - no dobut the current RFP process is more CYA than anything else. "Well, the agency scored a 92 on our scorecard so we had to pick them." I'm all for turning the tables but we have to start with baby steps. Methinks shifitng some of the heavy-lifting in the RFP process from agencies to clients is a good first step.
Keep the comments coming. Looking forward to continuing the dialogue!
Courtesy of Bob Hoffman (http://adcontrarian.blogspot.com/) , how about this:
Dear XYZ Agency,
We are looking for an agency. We would like to consider yours. If you're interested, please read the information we've attached, then answer two questions:
1. In your opinion, what are the key marketing issues we're facing?
2. If you were our agency, what would you do about it?
You may take as much or as little time as you need. Please call me and let me know when you'd like to come in to answer these questions.
Thank you,
Bob
Matthew - while that might beat the status quo, I don't think it solves the crux of the issue... how an agency acts during the courtship process is not a good indicator of how strong a partner it'll be after the relationship has been consummated. The only folks that can truly tell you how good an agency is their current and former clients.
As a former client, I think your total disclosure approach works fine in theory, or in a universe where all things are wither black or white, with no shades of grey. In practice, however, great results for a current client doesn't guarantee great results for a prospective client. I witnessed first hand the hiring of a new agency based on its remarkable achievements for several of its current clients, a decision that was based primarily on this fact and that ended up being a total disaster. Of course, the client as well as the agency were to blame but my point is that asking another client, which by the way is putting them on the spot, about their "satisfaction" is also an uncertain approach.
What you're proposing is a sort of Angie's List for agencies. The problem is, an agency is more of a shrink for the client than a plumber. You don't find shrink reviews on Angie's List.
Carlos - point well taken. No doubt success with current clients does not guarantee success with future ones. But I think it's the exception, not the rule, that an agency with a strong track record performs poorly for a client. Let's look at it the other way. Surely we can agree that an agency with lots of unhappy clients is unlikely to do a good job for the next one (nor would any client want to take that risk). That said, by no means should a client hire an agency just because they top the list of satisfaction ratings. Rather, the part of the process where clients interview each other is key. That way they can flesh out the "why's" behind the agency satisfaction rating and hone in on the areas that are critical to success for their specific business needs. Again, I agree with you that this is not a bulletproof solution but it's better than the current state of affairs.