RFM163 – Clients are bigger than Contracts

RetainFM – Build your Digital Agency on Recurring Revenue

Main talking points include:

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Agencies as a Commodity vs Marketing Partner

The perception of an agency as a commodity service can have several negative impacts on its growth. Here are the key issues:

1. Price Competition: When a service is viewed as a commodity, the price often becomes the primary differentiator. This can lead to a race to the bottom in terms of pricing, squeezing margins, and reducing profitability.

2. Reduced Perceived Value: If an agency is perceived as a commodity, its unique selling points or unique aspects may be overlooked. The perception of value can decrease, causing clients to be less willing to engage or less loyal.

3. Difficulty Differentiating: In a commodity market, it's challenging to set yourself apart from competitors. Angela's agency may struggle to differentiate its services, resulting in lost potential clients to competitors who appear to offer the same services at a lower cost.

4. Limited Innovation: Commoditized markets often stifle innovation because of the relentless focus on cost-cutting. An agency might find it difficult to invest in new ideas, technologies, or processes that could actually improve service and client satisfaction in the long run.

5. Customer Loyalty and Retention: With services seen as interchangeable, customers may be less loyal and more likely to switch providers for minor price differences. This could lead to higher client churn rates and increased costs in attracting new clients.

6. Short-Term Relationships: If clients view the service as a commodity, they may not see the value in developing long-term partnerships. This can limit opportunities for repeat business and referrals, critical aspects of growth for many agencies.

Viewing contracts as business partnerships rather than commodities can have several beneficial impacts on an agency. Here are some of the key benefits:

1. Long-Term Relationships: Viewing clients as partners foster long-term relationships, which can lead to repeated business, referrals, and ultimately more stable and predictable income streams.

2. Improved Collaboration: When clients are viewed as partners, they're more likely to engage in collaborative and productive discussions that can lead to innovative solutions, better outcomes, and higher client satisfaction.

3. Better Understanding of Client Needs: Treating clients as partners typically involves a deeper dive into their business, allowing the agency better to understand their needs, challenges, and goals. This understanding can help the agency to provide more personalized, effective services.

4. Increased Trust and Loyalty: Partnership implies a certain level of trust and shared commitment. This can increase client loyalty and reduce client turnover.

5. Value-Add Services: With a better understanding of the client's business, the agency can more easily identify opportunities to add value beyond the specific terms of the contract, increasing the client's overall satisfaction and willingness to continue the relationship.

6. Enhanced Reputation: An agency known for treating clients as partners is likely to have a strong reputation in the industry, attracting more potential clients.

7. Reduced Price Sensitivity: Clients who feel they have a partnership with the agency are likely to see the value of the services provided beyond just the cost. This can reduce price sensitivity and increase the potential for higher profitability.

8. Shared Success: In a partnership, the success of the client translates to the success of the agency. Clients' growth can lead to larger contracts and more business for the agency.

9. Higher Engagement: When clients are considered partners, they're more likely to be engaged and actively participate in projects. This can lead to better outcomes and solutions that are more aligned with the client's vision and goals.

10. Innovation Opportunities: Close partnerships with clients can stimulate innovation as both parties work together to solve challenges, potentially leading to new services or improvements that could benefit the agency's entire client base.

Ultimately, the shift from viewing clients as commodities to viewing them as partners can lead to more fulfilling, productive, and profitable relationships that benefit both the agency and the clients.

Let’s rerun the original issue…

The commodity agency says “This is not in the scope of the contract – it is beyond the scope and the client’s responsibility”. What does this say to the client? We don’t care? We just want your money? We have our business as our priority and not yours? Moreover, what happens when the client realises this could / should have been taken care of and asks why you didn’t do it?

The partnership agency says “This is something we need to take care of. Don’t worry, we have it covered but we’ll need XYZ from you” (this could be information, access, money).

What’s more what happens when the client from the partnership agency speaks to the client of the commodity agency who is complaining that they’ve lost XYZ data… The client from the partnership agency says “well the people who look after me took care of everything – there were no issues. I’ll give you their number.”

Score 1-0 to the partnership approach. Clients are ALWAYS more than contracts.

Why is this important? Your brand is what people say about you when you’re not in the room…

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