Financial Empathy Delivers Better Results
Posted 18th February 2020
Clients score the quality of their teams 21% higher and their creative 16% higher
Financial empathy rewards marketers with better results from the agency. Aprais has the data that shows why.
The relentless drive to reduce agency costs is often seen as a hallmark of marketing procurement success. While the saying “you get what you pay for” might date from the 15th Century, we’ve learned that it remains true in today’s digital age.
We mined the Aprais database of over 21,000 client-agency evaluations to investigate whether a marketers’ empathy for its agency’s remuneration impacts the service it receives.
We searched through thousands of questions in our system to focus on those related to the financial health of the agency. These included issues such as;
- Acceptance that the agency needs fair compensation
- Regular reconciliation of fees against scope of work
- Timely provision of business metrics that impacts the agency’s compensation
Financial empathy delivers better returns
Our analysis revealed that clients rated in the top 10% for their sensitivity to their agency’s finances received a much better (21%) staff allocation to their business than the least considerate counterparts. What’s more, top scoring clients achieved 16% better creative performance from their agency compared to the low scorers.
Significant advantage is also evident across other agency disciplines, as shown in the chart below
Clients who are scored highly for being aware that their agency’s need to be financially healthy, get the best results.Aprais
Key messages for agencies
- Be transparent about the relationship between fees and the resources it buys – especially the access to senior-level agency personnel.
- Ensure your team contains at least one trained and experienced negotiator. Don’t confuse the skills of ‘selling’ and ‘negotiating’.
Free download: How to be a good agency
Key messages for marketers
- Agency agreements should be negotiated in two stages. Marketers should first decide the required involvement of the agency’s senior management. The first negotiation is between marketing and procurement to create a workable fee package. Only then can the client-agency negotiation take place.
- Clients should seek cost savings from their agency, but these should be achieved through the optimization of work processes and reducing the number of stakeholders rather than by reducing the input of key staff.
Free download: How to be a good client
‘Win-win’ works best
A business relationship where both agency and client ‘win’ financially, achieves the best results. Clients must carefully and realistically define the ‘scope of work’ and agencies must respond with a transparent proposal.
These are crucial initial steps in building a mutually profitable relationship. Financial empathy may sounds soft in the context of a client-agency relationship, but get it wrong and the relationship will suffer, and with it, the work.