This post is by David Little, who has been working in Procurement Category Management for 12 years within FMCG, Telecoms and Consulting. He has a special interest in Marketing categories, Procurement Leadership and helping others develop their Procurement skills.
Otto Preminger’s ‘Anatomy of a Murder’ (1959) is the genre of courtroom drama at its best: Jimmy Stewart plays a rural lawyer defending a man convicted in a revenge murder case. It’s a tense and dramatic film and was shocking at the time it was released, even facing bans due to its language and moral ambiguity. The artwork is cool and so too is Duke Ellington’s jazz soundtrack. I recommend it.
Lt. Frederick Manion: “How can a jury disregard what it’s already heard?”
Paul Biegler: [shaking head] “They can’t, lieutenant. They can’t.”
Despite the potential allure of a courtroom thriller, I don’t recommend conducting agency reviews as if the agency is on trial; it doesn’t guarantee a clear, balanced picture of events, and is focused on recriminations rather than resolution. So how do we stay away from blaming and accusations, and stick to rational discussion when conducting a decent agency review?
Regular performance reviews
Performance reviews are the culmination of a robust agency remuneration framework, identifying successes, failures and (importantly), allowing remedial action to get brands (and bonuses) back on track.
They should be done regularly with all agencies, and in a common format (with common frameworks and metrics for similar agency types) so that senior Marketing personnel can easily compare like for like. Unless you have specific Marketing resources, most marketers will be glad to hear that Procurement should be taking care of all the administration associated in arranging them.
So how should they be conducted? Well, there’s much you could put down to common sense and discipline, but for me the game-changer is coincidentally also the stamp of a skilful Procurement professional — you’ve maybe gathered how biased I am on the importance of Procurement involvement… bear with me though —the attitude of facilitator and, above all, a commitment to positive results for both parties.
The structure, content and style of performance reviews
And here are some tips for getting the structure, content and style right…
- Don’t bore; duration roughly 1½ hours per review
- Prepare! This is what should happen beforehand:
- Make sure your CMO has agreed on the process and its impact on key brand metrics and is a sponsor of the whole performance review process. There’s no point in the CMO and Procurement giving the agencies a different version of priorities.
- Book the meetings for the year well in advance and at intervals where you can assess a meaningful volume of historic information – e.g. half-yearly – and that will give time to impact performance before year-end.
- Make sure people attend! If there is reticence here, make sure your marketing colleagues understand the importance of tracking and managing your Return on Investment, and of clear, coordinated feedback.
- Divide into separate brand teams, preferably with meetings booked on one day for the one agency. Brand /marketing managers principally responsible for agency relations and budget should be there.
- Release your KPI scores/metrics before meetings; scores can come from a third party like your Market Research agency and should have been agreed formally in the remuneration agreement. You should have established a baseline whereby you can monitor the incremental impact of individual campaigns. KPIs should be linked to brand performance, and Procurement’s role is to secure agreement on this, so you should be well-versed in the latest stats before the meeting.
- Catch up beforehand. If you have metrics released in advance, the agency GAD/SAD can prepare suggestions for counter measures in advance – give them the chance to be proactive. The agency may also have feedback on how successful reviews are conducted from other client experiences that you can learn from. Address disagreements before the meeting where possible; they’ll monopolise time and change the tone for the worse.
- Allocate meeting roles! If you’ve ever tried to chair a meeting and take notes at the same time you’ll know the importance of deciding who does what. The agency isn’t there to do your admin just because you’re paying their fees – it’s terrible value for money and constant abuse is demoralising for agency staff – and it’s important you have a common format for minutes and that they be followed up.
- No Grand Jury! Keep the meeting tight: maximum 5 or 6 attendees.
- Recap priorities! During the meeting cover your ‘Hard’, ‘Medium’ and ‘Soft’ KPIs, their relationship to business performance and the associated incentive (%) payments. This link is the core to the value-add proposition that Procurement agrees with Marketing. Link your agreed measures to the incentive rewards by stating how much bonus the agency has achieved or is tracking against. If you’re up to date on agency remuneration trends, you’ll know that industry standards are moving to a model with 20, 30, even 50% bonuses.
“Drop the stone, Counsellor. You live in a glass house.” Paul Biegler
- The agency isn’t in the dock:
- Let both teams have their say – feedback can be invaluable
- Separate the subjective and objective
- Acknowledge that the agency is being consulted as an expert in its subject matter
- If there is disagreement, round it off by assessing if it is relevant to performance; if ‘facts’ are in dispute, assign actions to check information
- Don’t ‘ambush’ with bad news; you’re not there to catch someone out by having more information than them. Get deviations addressed and actioned.
- Accentuate the positive: Everyone wins (or everyone loses)
- Identify ‘pain points’ like unclear or inconsistent communication or inefficiencies. These are the seeds that turn relationships toxic. Help nip them in the bud and you’ll be saving immeasurable millions.
“The prosecution would like to separate the motive from the act. Well, that’s like trying to take the core from an apple without breaking the skin.” Paul Biegler
- Trend info: go back several months or quarters, showing key events like campaigns, competitor activity, market changes or KPI changes as milestones.
Make it concise and clear!
- Get all the evidence you need! As long as it’s relevant to your performance – i.e. not a pitch for new capabilities – why not ask the agency to provide market intelligence?
- Follow through!
- Issue draft minutes for everyone to comment on within 2 days, and formalise these within a week.
- Follow up actions until the next meeting
- Publicise and celebrate success! Tell the marketing departments and encourage the CPO and CMO to jointly promote your collaboration and any RoI gains.
Involve a skilful Procurement professional
Procurement’s intervention in this process should be both a source of comfort and understood to have a direct impact on the Marketing department’s effectiveness; but proper buy-in from the CMO comes only from Procurement’s ability to demonstrate value through agency reviews.
What’s the true measure of this? How much bonus you pay your agency at the end of the year. Yes, you should gladly be paying 20, 30…50% over your base fees to the agency. If you don’t, you’ve all failed, and playing ‘prosecution’ won’t have got you anywhere.
“… let’s not make a Federal Case out of this.” Judge Weaver
As formal updates on agency and brand performance, keep reviews strictly structured and adhered to. If done correctly, however, everyone should come away with the will to perform even better rather than coming up with alibis.
Good luck and have fun!
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