RFP's, Agency Compensation
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1) It is a difficult negotiating environment right now, so agencies need to do a better job of articulating their value and supporting their pricing rationale
2) Preparation is 90% of the battle.
- Determine your "gotta haves" and "deal-breakers" in advance.
- Ask the right questions of the client upfront (the 4A's Standardized Marketer Questionnaire is a good starting point).
- Make sure you have sufficient credible information to develop a relevant proposal.
3) When developing a proposal, sweat the details, determine when/how viable alternatives can be presented, focus on the client's goals (not just the agency's cost) and be clear about what is included in the scope of the proposal and what is excluded.
4) Develop a negotiating strategy in advance—keep the negotiation focused on the client's goals and the agency's requirements. When negotiating, be creative and solution-minded. Stay objective. Bend but don’t break.
5) Watch for red flags:
- Incentive approaches that are unrealistic or disguised fee cuts. Establish your reward-risk tolerances as well as goal criteria and measurement thresholds in advance.
- Unreasonable or unnecessary client requests for financial details. Suggest alternative information such as aggregate or summary "fully loaded" labor rate information.
- How low can you go? If your preparatory questions reveal that the client is basing their decision primarily based on price either provide a "best and final offer" or consider walking away.
6) Establish a formal after-action review plan that allows you to check original assumptions and estimates, monitor scope changes, and communicate value-added contributions and cost efficiencies that benefit the client.
Today's environment demands that agencies put as much discipline, thought and communication into pricing proposals as you do with your client campaigns.