Do your clients treat your agency as a vendor or partner…There’s a huge difference!

dog_newspaperMy discussions with other agency leaders invariably results in them lamenting the fact that over the years the agency/client relationship has continued to deteriorate. They all mention the fact that we have slid down the ladder when it comes to being seen as strategic partners, and most of all the apparent lack of client loyalty.

The dictionary definition of a vendor is, “A person or agency that sells”. Related words are “marketer”, “seller” or better still “trafficker

On the other hand the definition of partner is “a person who shares or is associated with another in some action or endeavor; sharer; associate. A player on the same side or team.”

The reality is that some client companies have a culture of treating all external suppliers of goods or services as vendors. It’s inherent to their way of doing business and is unlikely to change any time in the near future. It therefore becomes your decision as to whether you want to do business with them and accept the implications of that type of relationship.

Remember that vendors are usually interchangeable, on average do not contribute any strategic value, can command only a commodity price for what is seen as a commodity product, and are perceived as reliant on the client for business and revenue.

The result is that these clients are generally not very profitable to the agency. They drive margins down to the lowest possible level without regard for the agency’s financial outcome. They are often the least loyal, changing vendors frequently. Price bids are commonplace and there are even instances where one agency’s great idea is subsequently bid out in order to achieve the lowest possible price for execution.

If you now turn and look at those clients who pursue a strategic agency partnership, you get a totally different picture. Partners are valued for their knowledge and expertise and what they add to the relationship. They are engaged early on in the process and their opinions are both sought after and respected. Their deep knowledge of the client company and their acknowledged contribution towards the company’s success makes them hard to replace.

These client relationships are commonly more stable, more profitable and have motivated client teams working on their business. These clients acknowledge that the agency needs to make a reasonable profit to survive, and they will adequately compensate the agency for the value and work it delivers.

I know which type of client relationship I would rather have. Of course underpinning this is an assumption that the agency is consistently delivering value, being proactive, executing flawlessly, looking for ongoing innovation and delivering against actionable insights.

 Those clients who take a more collaborative approach and search out strategic partnerships from agencies are generally more valuable clients overall.

 

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