Do you pitch or benchmark to reduce fees? What is the best strategy? Pitching can take 3 or more months, while benchmarking and negotiations takes six weeks. Pitches consume huge amounts of resources both internally and externally. Benchmarking and adjustment takes a few days of planning and negotiation. Pitching can cause huge disruptions, while remuneration benchmarking is business as usual.
In this edition of TrinityP3 e-news, we look at case studies where clever marketers made the clever decision of having TrinityP3 benchmark their fees, with amazing ROI.
Case Study 1 - FMCG client
Consolidating Service Providers
Background
Client had two rostered agencies providing the same services across a portfolio of brands with little or no competitive pressure. Reviewing the range of services, mix, costs and resources, there was clearly duplication of resources and costs, that were not justified by the volume of work across the two agencies.
Recommendation
TrinityP3 recommended that the two suppliers be reviewed to consolidate services with one agency.
Result
On a fee base of more than eight million dollars, a reduction of more than $2.7 million was realised through the consolidation.
ROI
Return on investment against the fee for service charged by TrinityP3 was 5500%.
Case Study 2 - Automotive client
Aligning Remuneration Models
Background
Over time the client had evolved a number of different remuneration models for the various rostered agencies, which proved difficult to manage and almost impossible to evaluate the value delivered. TrinityP3 reviewed and benchmarked the various models against scope of work delivered and resources, and developed a number of models for review.
Recommendation
TrinityP3 recommended that the client adopt a single remuneration model across the various rostered agencies and proceeded to negotiate and implement the agreed model.
Result
On one retainer of just under $3 million, a reduction of almost $450,000 was delivered without any changes to the resources or the scope of work.
ROI
Return on investment against the fee for service charged by TrinityP3 was 2200%.
Case Study 3 - Telco client
Benchmarking & Adjusting the Resource Mix
Background
The client had two rostered agencies and was concerned over the high cost of the retainer and the apparent large numbers of account management staff on the business. TrinityP3 benchmarked the remuneration and resource level and mix against the delivered scope of work and quantified the client's concern on the number of staff.
Reviewing the contract, it was found that the remuneration model had more junior account management staff at a premium and this had driven significant and disproportionate increases in recruitment at this level.
Recommendation
TrinityP3 recommended altering the contract remuneration to be more neutral and to make adjustments in the resource mix with fewer, more senior staff to better deliver the client’s requirements.
Result
The adjustment in the level and mix of the resources realised a reduction in agency fees of just under $1.4 million dollars, while delivering a more sustainable and balanced mix.
ROI
Return on investment against the fee for service charged by TrinityP3 was 2800%.
Case Study 4 - Government client
Benchmarking resource to Scope of Work
Background
The client had a long established relationship with a single agency. Yet year-on-year, while the scope of work changed significantly the retainer had grown consistently with CPI or more. The contract was due for renewal and the client wanted to undertake a benchmark review of the agency’s proposed fee for the coming year.
TrinityP3 reviewed the previous two years of agency fees and resources against the delivered scope of work and then calculated the fee going forward against the new scope using our Scope Calculator.
Recommendation
TrinityP3 found that the level of remuneration and associated resources was excessive for the proposed scope of work recommended, and the remuneration was adjusted accordingly.
Result
The base retainer fee was reduced by more than $300,000 per annum from a previous year high of just under $1.5 million.
ROI
Return on investment against the fee for service charged by TrinityP3 was 1600%.
Changing your level or remuneration?
It pays to benchmark first.
If you want to make sure you have the right remuneration model, the right level and mix of resources and a way of managing the process going forward, contact TrinityP3 today to discuss remuneration benchmarking in Melbourne on 03 9682 6800 or Sydney on 02 8399 0922 or email Darren Woolley personally on darren@trinityp3.com
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