Pay Me Based on Sales Growth? I like it, but...
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I recently talked with a prospective client that was eager to hire my marketing communications company if I was willing to work for a percentage of the increased sales the marketing communication developed.
I told him I very much liked that idea; as a matter of fact, I told him that I've worked with clients in exactly that manner.
There's only been one problem: it doesn't work.
Why?
Circle of Influence vs. Circle of Concern
I call my company Accountable MARKeting for a reason. I expect to be held accountable for every aspect of a client's marketing communication effort over which I have influence. That would include selecting the medium to be used, negotiating the rates, writing the copy, producing the piece, placing the buy, etc.
But, here's the problem: there are factors beyond even the most effective marketing communication effort that determine if a sale will be made, and all of these factors, while in my circle of concern, are outside of my circle of influence.
According to the Harvard Business Review there are five resource factors that determine the success of a business. In the order of importance to consumers they are: Place (geographic location as well as the physical plant), People, Product (service), Price and Promotion (including marketing communication). These five create a sixth success resource: the exPerience consumers get when they do business with you.
But, here's the problem: every client I've offered to work with for a percentage of the increased sales has refused to let me: rent new space for them at a higher traffic location (Place), remodel their store (Place), hire and train their people (People), select their product mix (Product), and determine their pricing (Price).
Why the Resources Matter to Sales
Consider this:
A man is driving to work one morning. He's listening to his favorite radio station and he hears an advertisement for a restaurant with which he is not familiar. He's impressed by the ad which promises great food (Product) and spectacular service (People). He decides that, as soon as he gets to work, he will make a reservation for himself and his wife for Friday night.
Did the advertising work? I think we can agree it did. Has the restaurant made the sale? Not yet. Do I get paid? No.
The man gets to work and, en route to his desk where he intends to phone in his reservation, he detours past the break room. While getting a cup of coffee a co-worker joins him. He tells her that he is going to make a reservation at a restaurant he just heard about on the radio.
The co-worker asks him which restaurant. He tells her.
The restaurant is now enjoying positive word of mouth! Is the advertising working? Yes! Do I get paid? No.
The co-worker says" "Oh! Do NOT go there! My husband and I ate there last night and it was awful! The food was terrible and the service was even worse. We will never go there again!"
Oops.
The restaurant made a Product promise (food) and a People promise (service), and according to a person that has exPerienced the restaurant, the restaurant fails to deliver on their promises!
We've agreed the Promotion resource (the marketing communication) worked. Yet, now, due to negative word of mouth-lousy food and service-the man now decides NOT to make the reservation.
All three resources-People, Product and the resulting exPerience-are not functioning properly. And each of these resources are outside my circle of influence. So, even though the marketing communication-a resource inside my circle of influence-worked, no sale is made and I don't get paid.
And here's the real kicker: the client blames the marketing communication! He fires me, hires another firm, and the results are repeated ad naseum.
How does that saying go? Doing the same thing over and over again, expecting different results, is the definition of insanity.
I expect to be held accountable. I agree that accountability includes telling truth to power. So, I make this pledge to my clients: should I discover something going on with any of the resources that is hindering sales, I will tell you about it right away!
In the meantime, I expect to be paid for doing the best job possible within my center of influence. That seems fair, doesn't it?
Thanks, and sell a bunch!
Mark
Click here to return to Your Phrase that Pays.
I recently talked with a prospective client that was eager to hire my marketing communications company if I was willing to work for a percentage of the increased sales the marketing communication developed.
I told him I very much liked that idea; as a matter of fact, I told him that I've worked with clients in exactly that manner.
There's only been one problem: it doesn't work.
Why?
Circle of Influence vs. Circle of Concern
I call my company Accountable MARKeting for a reason. I expect to be held accountable for every aspect of a client's marketing communication effort over which I have influence. That would include selecting the medium to be used, negotiating the rates, writing the copy, producing the piece, placing the buy, etc.
But, here's the problem: there are factors beyond even the most effective marketing communication effort that determine if a sale will be made, and all of these factors, while in my circle of concern, are outside of my circle of influence.
According to the Harvard Business Review there are five resource factors that determine the success of a business. In the order of importance to consumers they are: Place (geographic location as well as the physical plant), People, Product (service), Price and Promotion (including marketing communication). These five create a sixth success resource: the exPerience consumers get when they do business with you.
But, here's the problem: every client I've offered to work with for a percentage of the increased sales has refused to let me: rent new space for them at a higher traffic location (Place), remodel their store (Place), hire and train their people (People), select their product mix (Product), and determine their pricing (Price).
Why the Resources Matter to Sales
Consider this:
A man is driving to work one morning. He's listening to his favorite radio station and he hears an advertisement for a restaurant with which he is not familiar. He's impressed by the ad which promises great food (Product) and spectacular service (People). He decides that, as soon as he gets to work, he will make a reservation for himself and his wife for Friday night.
Did the advertising work? I think we can agree it did. Has the restaurant made the sale? Not yet. Do I get paid? No.
The man gets to work and, en route to his desk where he intends to phone in his reservation, he detours past the break room. While getting a cup of coffee a co-worker joins him. He tells her that he is going to make a reservation at a restaurant he just heard about on the radio.
The co-worker asks him which restaurant. He tells her.
The restaurant is now enjoying positive word of mouth! Is the advertising working? Yes! Do I get paid? No.
The co-worker says" "Oh! Do NOT go there! My husband and I ate there last night and it was awful! The food was terrible and the service was even worse. We will never go there again!"
Oops.
The restaurant made a Product promise (food) and a People promise (service), and according to a person that has exPerienced the restaurant, the restaurant fails to deliver on their promises!
We've agreed the Promotion resource (the marketing communication) worked. Yet, now, due to negative word of mouth-lousy food and service-the man now decides NOT to make the reservation.
All three resources-People, Product and the resulting exPerience-are not functioning properly. And each of these resources are outside my circle of influence. So, even though the marketing communication-a resource inside my circle of influence-worked, no sale is made and I don't get paid.
And here's the real kicker: the client blames the marketing communication! He fires me, hires another firm, and the results are repeated ad naseum.
How does that saying go? Doing the same thing over and over again, expecting different results, is the definition of insanity.
I expect to be held accountable. I agree that accountability includes telling truth to power. So, I make this pledge to my clients: should I discover something going on with any of the resources that is hindering sales, I will tell you about it right away!
In the meantime, I expect to be paid for doing the best job possible within my center of influence. That seems fair, doesn't it?
Thanks, and sell a bunch!
Mark
Click here to return to Your Phrase that Pays.
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