Financial Services is particularly competitive. Already there are a plethora of brands across the category and there is now significant disruption caused by FinTech start-ups, plus increased competition and fragmentation of the category.
The market leaders are focused on innovating and transforming to stay ahead of the competition, but they are also looking for more effective and efficient ways to build and maintain their share of market and share of customer wallet.
Marketing budgets in Financial Services are constantly under pressure, as they are in most other categories, but there is also an equally important pressure to deliver measurable growth and return on marketing investment (ROMI).
Financial Services marketers are reviewing roster, agency remuneration, go to market processes including agile marketing and media investment options looking for the incremental performance improvement to provide a competitive advantage.
Recently we have been engaged in reviewing agency roster structures and agency remuneration arrangements to deliver a number of improvements depending on the current arrangements, the planned strategic direction and the specific requirements of that strategy and plan.
Case Study 1
Financial Services – Moving from top down to bottom up retainer approach
Challenging Problem: This marketer had a very large single agency relationship, with a retained resource plan that used top-down methodology, which was not specifically tied to individual deliverables across the various business units.
Creative Solution: It was unclear if the current remuneration arrangement was delivering value, as the scope of work and channel requirements were constantly changing on an annual basis due to the constantly evolving market landscape. We needed to provide an evaluation of the current remuneration to determine the value delivery and identify areas where value was being created, lost, duplicated or hidden.
Process: TrinityP3 conducted a thorough remuneration review, including defining the scope of work outputs, the agency resource levels by discipline and seniority and the total review both within the retainer and outside of the retainer.
This remuneration benchmarking process was able to highlight significant variations in efficiency across the different business units, which highlighted some smaller divisions were utilising higher levels of resourcing than other divisions, which had a significantly higher commercial impact on the marketer’s overall business performance.
Results and Feedback: TrinityP3 recommended each business unit have its own separate retainer across each business division to allow the marketer to invest higher on those business units which have a higher level of commercial significance across the business and its performance.
TrinityP3 observed that some business units, which had a significantly lower impact on commercial success, were actually resource heavy, and consuming a larger component of the retainer, when compared to more crucial service sectors, which should incur significantly lower levels of investment from a return on investment perspective.
TrinityP3 believes the marketer would also benefit from considering a value-based remuneration model, which would allow each business unit to manage their own service requirements using bottom-up methodology, and be more agile in their specific service division in a highly tactical and responsive category.
You can find out more about our process and methodology for assessing agency remuneration against scope of work here.
Case Study 2
Financial Services – Moving from multiple remuneration models to a consistent value based model across the roster of agencies
Challenging Problem: This marketer has a large roster of agencies that support a large ‘lead’ creative agency, which currently has a pre-agreed retained resource plan using top-down methodology, which is not specifically tied to individual deliverables across the various internal business units.
The marketer wanted to be more flexible and responsive with spend, but had a range of remuneration models across it’s supplier roster ranging from ‘committed’ retainers through to project estimate based agreements, with limited ability to assess value across the different roster relationships based on the services acquired.
Creative Solution: The marketer was looking for a more efficient and effective way to engage its panel of partners, and drive better value through the utilisation of a ‘tiered’ investment structure for services, which was also aligned to agency partners from a cost based perspective.
Process: TrinityP3 conducted a thorough review of the ‘lead’ agency, and also some ‘tier 2 and 3’ services suppliers, to gain an understanding of value from a cost based perspective. Using this cost and value perspective TrinityP3 was able to develop a fixed price tiered rate card against outputs, effectively creating an all of marketing price matrix for the vast majority of marketing outputs to be used consistently across the roster of agencies.
Results and Feedback: TrinityP3 introduced a ‘hybrid’ remuneration model, which retained key ‘lead agency’ resources, and then acquired services through a value based remuneration approach. The ability to place a value on a specific outcome to the marketer, allowed the agency to utilise the best supplier for specific types of services as required, and based on a pre-agreed value for the service deliverables.
This model then allowed the marketer to engage its ‘lead’ agency for all levels of investment creative requirements, but retain the flexibility to engage ‘tier 2 and 3’ service providers for services as required, allowing the marketer to achieve better flexibility and value across all services acquired.
The new engagement structure also allowed the marketer to set investment levels from a strategic and commercial performance perspective, and retain the ability to choose from the entire roster of suppliers as required, and have a basis for assessing value and performance across the entire roster panel.
You can find out more about our process and methodology for the development and implementation for value based remuneration here.
Case Study 3
Financial Services – Aligning roster and remuneration under a holding company solution
Challenging Problem: This mid-sized marketer had a ‘lead’ creative agency, with a retained resource plan that used top-down methodology, which was not specifically tied to individual deliverables. The marketer was not querying value, but was looking for a ‘new’ approach to engaging its creative partner across its service requirements, and to deliver better outcomes for the marketing department.
Creative Solution: The marketer was looking to improve the way it engaged its creative partner to be more ‘agile’, and gain exposure to a range of service providers outside the current relationship in a more integrated manner.
Process: TrinityP3 conducted a thorough review of the ‘lead’ agency to gain an understanding of value from a cost based perspective within the current relationship and provide a range of solutions to create a more integrated arrangement that could support an agile working process. Each of these options had identified strengths and challenges, with each requiring differing levels of investment.
Results and Feedback: The marketer choose a ‘network’ based model, which would allow the marketer to engage and acquire services from a range of various different services suppliers, but maintain value through negotiating an agreement at a ‘network’ based level.
TrinityP3 recommended the introduction of a new ‘hybrid’ remuneration agreement which retained key ‘project management agency’ resources, and then acquired services from a range of network owned partners through a value based remuneration approach.
This model also placed a pre-agreed value on specific outcomes to the marketer, whilst allowing the marketer to utilise the best supplier for specific types of service requirements.
This model also allowed the marketer to set investment levels from a strategic and commercial importance perspective, and retain the ability to acquire services from the entire network panel, and deliver access to a range of service providers on the ‘network’ panel.
You can find out more about our process and methodology for assessing and developing more aligned agency rosters here.