Payment by results

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By: Neil Edwards on 23rd January 2009, 2 minute read

I was asked at a recent networking event if I knew of a telemarketing agency that would be prepared to work on an exclusively payment-by-results basis. The same question has been asked directly of me in the past: the 'put-your-money-where-your-mouth-is' challenge.

Agencies willing to work on this basis undoubtedly exist (try, but I don't think it is a good idea for the client or the supplier.

The client is asking the agency to take all the risk - the risk that the product or service is saleable and that there is a market. If the client believes there is a market for the product or service, then it should be prepared to make the investment required to promote it: it is not for the agency to finance the hopes of the client on the promise of later riches.

For the client, the risk is that the agency is inappropriately motivated to deliver results. This can result in poor quality leads, unduly aggressive tactics to achieve sales or other forms of corner cutting to accelerate the cash-flow.

The whole scenario is a recipe for blame and the relationship to breakdown.

Any choice of agency (or client) should be based on trust. The client needs to be discerning in the choice of agency and the agency must convince the client of its credentials and competence. If the client has doubts that the agency can deliver the service they want, then the agency shouldn't be employed in the first place.

I don't object to agencies being accountable for their performance: on the contrary, they should be. Clear objectives should be agreed and under-performance dealt with through termination of the contract or pre-agreed non-payment conditions. If the agency has done all the work, but the results are slower than expected, then it should be a matter of partnership to work out the next steps. This makes for a much more satisfactory and ultimately successful relationship for both sides.

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Neil Edwards


Neil Edwards

Neil is a Chartered Marketer and Fellow of the Chartered Institute of Marketing with many years' experience in marketing, brand and communications.

CEO / The Marketing Eye

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