Evolve your compensation model

YOUR TIMESHEETS DO NOT INTEREST YOUR CLIENTS

Consulting agencies traditionally build the pricing of their services according to the time spent, the costs incurred to deliver them, and then apply their margin. It is simple and, until now, it more or less worked. But today this compensation model generates dissatisfaction because the advertiser wants a partner who commits alongside them and who takes on their share of the risks, but also of the benefits.

This translates into a clear sharing of objectives with the advertiser and the definition of KPIs upstream. The advertiser must feel supported in learning the new tools and methods related to the digitization of all their communication. The agency must feel free to change the strategy in an agile way, in line with the contract defining the objectives and the obligation of means. In the long run, this builds trust between the two parties.

BEWARE THE DICTATE OF DELIVERABLES

At the request of clients concerned about profitability, agencies are increasingly putting in place service offerings that result in deliverables. This way the client knows what to expect because they clearly identify the assignments: SEO, white papers, Community Management, advertising campaigns. These can also extend beyond the strictly digital sphere: flyers, brochures, but also press relations and event organization.

They offer the advantage of transparent pricing, provided you keep costs under control.

In particular by setting fixed-price packages and precisely describing in your contracts the types of services included. In this way the agency can charge extra for any requests that are not part of them. However, it is quite difficult to apply these additional charges in reality, because they are often perceived by the advertiser as poor project control. If you stick to standard offers, you run the risk of positioning them badly. Too low, you discourage your teams and worsen the relationship with the client; too high, you remain in competition on all the other services. Whatever formula is chosen, you place yourself in a head-on position with the client, who will always be able to argue either on quality or on price.

EMPHASIZE YOUR VALUE

With the development of ROI measurement tools, you now have the possibility of aligning the price of your services with the objectives pursued by your client. Because deep down, clients do not want to buy your time or your services, but your ability to contribute to their growth.

You change paradigms and the agency is then paid based on the value delivered, whether by bringing in additional revenue or saving resources.

Thus you no longer think in terms of deliverables. You commit alongside the advertiser, with everyone laying their cards on the table. The final result does not depend only on you, because you do not control all the data, and in particular not the company’s sales performance, nor the keys to its business model. So, when setting your prices, do not commit to the evolution of revenue, but only to the performance of the actions you manage, the part of the value chain that you control. By engaging in an “inbound marketing” process, you can easily control three of them: traffic acquisition, lead generation and conversion.

“Webmecanik brings profitability to agencies.” Interview with Stéphane Couleaud – CEO @ Webmecanik

What is Webmecanik’s positioning in the Marketing Automation market?

“Marketing and, a fortiori, inbound marketing are matters for experts. Companies turn to agencies whose job is to define their brand and content strategy, implement it by providing quality content and automation solutions that allow them to capitalize on their production.
By building a long-term relationship with their clients, they are the only ones able to accurately determine the price of their service. We wanted to leave them complete freedom to market our solution to their clients. Rapid ROI for the latter, recurring margin and additional service for the consulting agency: this model satisfies everyone.

What is specific about Webmecanik’s offer?

We have developed a flexible, close partnership program with the agency.
We offer a free license to familiarize the agency and its staff with the solution. Applying to yourself what you recommend is a good way to get started!
We then make it possible to pool client contacts. The initial pack of 10,000 contacts can, in fact, be used by different client accounts. This way, agencies can finally offer each of them pricing tailored to their needs and enable everyone to start their campaigns with an immediate return on investment. The marginal cost of a user account starts at €150 for the agency, which is 1/10 of the cost of our competitors.
Finally, the number of emails sent is unlimited and has no impact on pricing. For an agency, that means all the more content that can be designed to win over each market segment and deliver personalized messages to all client personas.

How can Webmecanik make such an attractive offer?

We decided to focus our efforts on the product and on supporting our partner agencies.
The solution is functionally equivalent to competing solutions, and we add a marketplace of partner solutions that enrich opportunities to qualify contacts (videos, online games, webinars, online surveys, point-of-sale systems, ecommerce integration). Our open-source ecosystem allows us to benefit from the expertise of hundreds of developers around the world. That is how we were able to have a solution available in 12 languages, including Chinese (Simplified), in less than a year.
We then set up a partner training program for the pre-sales phase of a Marketing Automation strategy, as well as for implementing the solutions. This makes agencies autonomous very quickly if they wish.

LAY THE FOUNDATIONS OF A VALUE PROPOSITION?

To build a value proposition, you will rely on data provided by the client: the “life time value” (LTV). Indeed, only they know the estimated average revenue generated by a client over the duration of their relationship with the company. “Life time value” varies considerably from one sector to another and makes it possible to adjust the level of marketing and communication investment according to the growth objectives being pursued.

LTV matters to you because it provides a valuable indicator of the budget to allocate to acquiring a client.

Indeed, the acquisition rate must be consistent with the LTV. It is up to the client to choose the one that seems reasonable to them. In the launch phase, they will have an interest in investing. The longer the customer lifetime, the more this cost must be weighted, because they will have an interest in focusing on loyalty.
The other data point concerns the marketing and communication cost of customer acquisition (M-CAC). It indicates precisely the performance of the actions undertaken. Note that at equal acquisition cost, performance increases according to the value of the LTV. The higher it is, the more effective the investments are.
Depending on the budgets allocated, you will be able to commit, not to the result, but to the number of visitors you can bring, the number of leads and conversions you can generate. The idea is then to set these objectives over time according to the client’s expectations. Do they want to significantly increase their revenue or, on the contrary, maintain it?
You can set your compensation as a percentage of the LTV (generally 10%), provided that the customer lifetime is long and the growth objectives are low, or take a margin on the acquisition rate by sharing a conversion objective.

8 TIPS FOR PROPERLY FRAMING YOUR SERVICES

1. Customize the standard contract for each client
2. Rephrase the expectations and objectives of the entire assignment and what you propose to achieve them.
3. Detail each of your services by indicating: a) your role and that of the client, b) the ROI objectives and the indicators chosen to measure them, c) the time allocated to each service, d) provide the framework for possible renegotiations.
4. The contract duration, payment deadlines, renewal date, termination clauses, and the payment method used.
5. Indicate the costs necessary to carry out the service (graphic design, Community Manager) and when you will be able to invoice them.
6. Define the rules governing the service (respect for confidentiality, use of company data, etc.).
7. Take care with the presentation by introducing visuals so as to encourage the reader to go all the way through.
8. Do not hesitate to illustrate your contract with one of your client cases that “speaks” to the company.

KEY TAKEAWAYS

• Sell your value in the overall strategy, not your “time-sheet”.
• Calculate your advertiser’s investment capacity with them and review it again according to the results.
• With the ROI measurement tools provided by Marketing Automation, it is now possible to commit to tangible results that will no longer be constantly called into question.
• Compensation based on the value delivered (traffic acquisition, number of leads, number of conversions) offers the advantage of making the service part of a long-term relationship and of being able to generate recurring revenue for your agency.
• Lead your advertiser to produce more content and Inbound strategies with a return on investment of 6 to 12 months.

The 6 key factors of the connected agency: Download the full guide

As comprehensive as it is pleasant to read, the guide is structured and paced with advice and interviews from connected agencies. The studies with concrete, quantified cases provide you with the essential points to remember in order to grow your business: