Performance Based

    • Performance based fees have a reputation for being difficult to implement and have poor outcomes. This is usually because they have been badly implemented to lower agency fees.
    • It is also because often they are based on ‘soft’ measures such as relationship and task performance and not measurable marketing and business metrics.
    • They ideally work in direct response business models where the agency inputs have a direct and measurable result.
    • It also requires a balance of risk and reward for the agency and therefore setting metrics and fees is critical in getting this right.
    • Performance based fees are often part of a hybrid model where the base fee is paid to the agency with a performance component on top.
    • Read more on successful Performance Fees here