Ask any CEO if they’d be willing to share profits with a marketing firm or consultant who provided a positive impact to their bottom line. “Absolutely!” is the response that you’re likely to receive. Now ask them how they compensate their marketing agency, service suppliers, or in-house marketing department. Exactly.
Finding a true marketing partner isn’t easy to locate but they’re out there. In fact, they’re becoming increasing more common.
For many businesses, the realities of the current economy have resulted in a reduction in marketing spending and staff. Marketing firms, agencies and consultants too are experiencing general belt tightening. Yet, each has a need to drive revenue. Combined, these factors have created a unique opportunity for both parties.
Marketing firms and consultants who satisfy more fundamental or complex needs such as branding, demand generation and cross-channel customer acquisition (services that are typically provided on a project or hourly basis) are now singing for their supper but they’re eating well.
While some firms have always worked under a performance-driven model, others are now beginning to partner with their clients and truly put their talents, time, and even their money where their mouths are.
Marketing partnerships can be are structured on a long term or month-to month basis and can take virtually limitless forms. The shape it takes is dependent on the client’s goals, offerings, and budget as well the core capabilities of the marketing service provider. However, these arrangements are generally based on a lift in client revenue, of which a percentage is paid to the service provider, or they receive a stake in the company, along with a minimum retainer.
Partnerships of this type are best suited to small and mid-sized companies who are seeking reduce marketing costs and/or acquire more profitable customers yet lack the resources or wherewithal to manage the marketing effort effectively. It also works well with start-ups or companies seeking launch a new venture or expand an existing offering.
There are challenges in establishing successful marketing partnerships however. Firstly, it’s a two way street. Mutual trust and performance weigh heavily on both parties therefore and, unlike traditional work-for-hire relationships, the agreements are more comprehensive and the qualifying process is extensive and may require that you disclose privileged information that goes far beyond your marketing efforts and experiences.
Before you enter into a marketing partnership or start your next marketing initiative, ask your vendor if they’ve built successful companies themselves; if not it’s unlikely that they will be able to do the same for your organization. Learn what services they provide in-house and which services they outsource; excessive outsourcing is likely to be reflected in their guaranteed compensation. As with any vendor-client relationship you’ll want to learn more about their industry expertise and client-partner successes.
Marketing partnerships are not for every organization but for those clients and marketing services suppliers that are willing to share the risk, a good match can often reap greater rewards for all.