Posts Tagged ‘Clarity Marketing Support


Pay for Performance. Bring it on if you dare

Over the years I’ve been a big proponent of pay for performance when it comes to engaging clients as a marketing firm. What could be better? Clients love the concept because both parties have skin in the game and we get paid according to how effective our work is. The assumption is that we’ll do better work, go the extra mile and deeply care about the client’s success. Everybody’s happy.

However, the reality is not so simple. There are a number of issues that raise their ugly heads every time I’ve attempted to implement such a compensation strategy.

Issue #1: Most clients and agencies don’t really understand how pay for performance (PFP) works.
Most expect the firm to work for free and then be paid only if the work delivers some predefined performance – usually revenue. If the goal is met, the client will then pay the firms normal rate. Why it doesn’t work: The problem here is that no company can stay in business working for free. The other issue is that there needs to be compensation for risk – above and beyond what a firm would earn if they weren’t taking on the risk of the client (plus their own company’s risk).

The solution: The service provider agrees to a specific scope of work at a rate that covers it’s overhead plus out of pocket expenses. This would give the client a significantly lower rate for the work. If the agreed upon metrics and milestones are met, the agency would receive their usual profit margin PLUS a bonus to cover the risk incurred. This is not unlike what an investor requires. In effect, the agency is investing in the client’s business (taking on the client’s risk) and should be compensated above and beyond it’s usual “no-risk” rates. The greater the risk, the higher the compensation.

Unfortunately, clients don’t like this idea even though they are still coming out way ahead and have significantly reduced their risk. The choice is to simply pay the agency and shoulder the risk that the effort may or may not work or transfer the risk and pay a premium.

Issue #2: Metrics and goals not within marketing’s control
Most clients demand that an agency gets paid when they get paid. In other words, if an increase in revenue can be tracked directly to the agencies work, the agency gets paid. The problem here is that there are a myriad of variables that effect the realization of revenue. For example, the sales team is less than effective, the product isn’t good, lousy customer service prevents repeat buyers, market conditions change, supply chain problems, etc.

The solution: The client and agency need to agree on metrics that are measurable and tied to agency performance overall. Often, “leads” are the preferred metric. However, there are often arguments over lead quality, suitability and viability. Another challenge is tracking leads to specific activities – did the lead come from an ad? A press release? The web site? The reality is that an integrated marketing program should be measured as a whole and with a few exceptions (Pay Per Click) cannot be tracked to individual tactics.

Issue #3: Handing over the keys to marketing to the agency
More often than not, clients pick and choose what they want the agency to do allowing only certain activities to be performed by the agency. For example, the agency may insist on doing research to ensure a positive outcome (what everybody wants) but the client doesn’t think it’s worthwhile. Or the agency may build a campaign with certain response mechanisms that the client later changes. From planning to research and implementation, the agency works on a piecemeal basis with little control over the work.

The solution: The client must follow the agencies process and recommendations – including budget. The agency must also be allowed to work long enough for the strategy to work – even if the first six months don’t produce results. If the agency is going to take on risk, the client must do what the agency says. If the client doesn’t trust the agency to work in its best interest, they shouldn’t engage them in the first place. Effective marketing and promotion almost always takes more effort, money and time than any client prefers.

Again, this issue is usually a deal killer for the client. They typically refuse to allow the agency to do what it knows works. The result is a less than effective effort and everybody loses. Issue #4: Disclosure Tracking financial performance (or other metrics) takes time, money and effort. Many clients are uncomfortable sharing financial information or doing costly research to confirm that the agencies work is having a measurable impact. PFP also requires extra legal fees to create and enforce the agreements – thus raising costs even more.

The solution: There needs to be transparency and trust for a PFP arrangement to work. The process of disclosure and confirmation should be spelled out in the client/agency agreement at the beginning.

The above issues are only the tip of the iceberg when it comes to PFP. Any marketing firm or agency that’s any good welcomes a fair PFP agreement because we know our work is effective. In my experience, it is usually the client who ultimately decides that PFP won’t work.

Please post your comments on this topic. I welcome disagreement from my peers and from client organizations. How can we bring agency compensation into the 21st century?


Do your customers trust you?

I’m reading a very good book that hits the nail on the head when it comes to the sea change that is happening in marketing. “Trust Agents” is a NY Times Best Seller written by Chris Brogan and Julian Smith that lays it out clearly and if you plan on being in business five years from now you better pay attention.

If you’ve been reading my stuff for any length of time, you already know that I advocate building credibility and trust as a core principle of marketing strategy. Brogan and Smith’s book not only agrees but it takes the concept to a more focused level (I’ve never been accused of being focused…). What I really like about this book is that it doesn’t just tell you WHY it shows you HOW to leverage social media and other digital tools to achieve the holy grail of marketing – trust.

If you’ve been wondering why your marketing and advertising just doesn’t seem to work anymore (and it doesn’t matter if you are Proctor and Gamble or Joe’s Fish Shanty) it’s because of a  perfect storm of factors including:

  • people are tired of you shouting how good you are or your widgets and interrupting them
  • people don’t believe you anymore and they know you are just trying to sell them something
  • media fragmentation and info overload overwhelms them
  • the very nature of a “market” has changed since the Internet came along
  • buyers have scads of information at their fingertips and are better educated and more informed than ever
  • basic human behavior drives interaction and community building

I’m sure there are more but I hope you are seeing where this is going.  Buyers seek information. They buy from those individuals and brands they trust. No longer will a clever ad on TV do the trick. No longer can you hide behind a carefully crafted brand – there is no hiding on the web. No longer can you trick people into buying. The new era of marketing is about truth, reciprocity and value. It’s about being a good human. It’s about relationships.

The problem is that what works (relationships and building trust) is at odds from what company shareholders want (fast results). Creating trust takes time and dedication.

The good news is that the web is awash in tools and communities where you can shine like a benevolent diamond of value and helpfulness. I haven’t read the whole book yet but from what I have read, the deal is not technology or social media or computers. It’s about people – sharing, connecting, conversing. Take part in this conversation, do the right thing always and you’ll be awarded with trust and business will follow.

Oh, I also had lunch with Chris. He lives by his principles. We had salad.

I’ll be blogging more about this in the coming weeks. Why not leave a comment so we can have a conversation?


Ask for advice then go with your gut

Research or Gamble?

Research or Gamble?

How many times have you reached out to friends and business partners to get advice about a marketing or branding concept? And how many times have you received fifty different opinions leaving you more confused than you were when you started? Over my two decades of marketing consulting, I’ve seen this situation play out over and over. In fact, I’ve fallen into this trap myself.

It’s a good idea to vet ideas, concepts and designs with people who fit your target profile. Their advice and input can in invaluable. But you need to look at it as research – not as a substitute for making a decision. In other words, there are things to be learned during this process – things that you may not have considered before you asked. However, ultimately you need to make your own decision as to which direction to go. Only you have enough information to make these decisions and only you will bear the consequences if you get it wrong.

The problem with vetting marketing and creative decisions with a group of “outsiders” (people who are not trained in marketing) is that they will not understand the criteria used to develop the concept or approach. They will simply make a knee-jerk comment or reaction (which has some value) but keep in mind that most people feel that they must “critique” the effort – finding something wrong with it is part of their perceived responsibility. It is almost impossible to put your approach in context for them.

Another issue that skews this sort of advice is that people generally prefer concepts and approaches that are safe, familiar and predictable. They will invariably suggest you remove any aspects that create tension, that are interesting or provocative. This is death for effective marketing. “Safe”, “Familiar”, and “Predictable” equals weak “me-too” marketing.

On the other hand, if everybody simply loves your approach this is a clue that you haven’t pushed it far enough to be compelling. Effective marketing takes measured risks. If you are slightly uncomfortable about your approach,you are probably on the right track.

Now, I’m not saying you should go nuts and be offensive. The key is to find enough edge to be interesting and stand out of the clutter. Marketing by committee is well known to kill good strategies. Bouncing ideas off of your peers is not a bad idea. However you need to be careful not to base your ultimate decisions on this input alone. It is a great way to bring additional data into your process. But at the end of the day, your gut will tell you if it’s right. I don’t know about you but my gut is almost always right.

If you need some objective input on your marketing approach, message or brand, I’m happy to help. Contact me at and I’ll give you my opinion as a professional marketer. Just take it with a grain of salt.


Nasty Networker – “Vomitous from the mouth”

This is a great article by a friend of mine –

Recently I asked my network through LinkedIn: “What are the visible attributes of a ‘Nasty Networker?'” I’ve boiled the answers down into some common categories ranked by the frequency of their appearance

Signs of a Nasty Networker

  1. Selfish. Not interested in helping others.
  2. Doesn’t ask questions. Talks too much.
  3. Bashes or otherwise acts inappropriately towards competitors.
  4. Uses high pressure and other bad sales techniques.
  5. Abuses contact information. Sends spam and other unwanted communication.
  6. Ignores business card etiquette.
  7. Social climber. Always looking for somebody better to talk to.
  8. Not open.
  9. Naive and needs education (about proper networking).
  10. More interested in the quantity of connections, not their quality.
  11. Disrespectful.

In the end I think that “Nasty Networking” is driven primarily by either naivete or desperation. I saw a quote recently that suggested that the selfish type of taker networking is not networking at all, but rather Needworking. My hope is that by sharing this list we can help the naive/needworkers get onto the path of true networking.

Continue reading ‘Nasty Networker – “Vomitous from the mouth”’


The State of the Central Texas Economy

Optimism and Confidence Prevail Among B2B Leaders
by Pete Monfre

Discussion: Comment below with your thoughts and analysis.


Click to download a copy of the survey report

If you’ve turned on your television or radio over the last six months or so, you’ve been the recipient of an almost unprecedented drumbeat of economic doom and gloom. It is no wonder that business owners and executives are concerned over the performance of the economy and its impact on the bottom line. From the time we wake up to the time we go to bed, we are bombarded with stories about rising unemployment, Wall Street histrionics and the credit and housing crisis.  However, it is difficult to glean any useful information from a medium where “if it bleeds, it leads” while presenting information about complex subjects in sound bites. Adding to the difficulty, the media is even less reliable during an election cycle.

There is little doubt that perception can become reality.  Most business owners acknowledge that their business is still growing but still have concerns whether this growth will continue – citing mostly media reports as the source of this concern. The reality is that, in Central Texas, businesses have experienced strong growth over the past few years so any slow down might be perceived as more dramatic, even though we are still doing better than the rest of the country.

In October of 2008, Clarity Marketing Support , SomersetGuild and Business District Publishing, set out to find out what is really happening on the street in Central Texas. We surveyed 239 business owners, leaders and executives to get a statistically accurate picture of how businesses are performing in our local area and gauge their outlook and confidence in the coming year.

The grass really is greener in Central Texas
Most people feel that Central Texas is somewhat insulated from the rest of the country. Indeed, Austin has seen amazing growth in terms of people moving to the city as well as business startups. According to the Texas Workforce Commission, The statewide seasonally adjusted unemployment rate as of April 2008 fell to 4.1 percent, down from 4.3 percent during the same time period in 2007. The unemployment rate in Texas remains far below the U.S. rate of 5.0 percent. Business in Texas continues to expand with an annual job growth rate of 2.5 percent.

86% of respondents thought the Central Texas economy was either average or above average. However, there was little expectation that the local economy would improve over the next six months with only 4% indicating they expected improvement. Only 24% expected the economy to turn substantially worse. 44% had a great deal of confidence in the local economy.

While people toss around terms like “recession” and “economic meltdown”, the reality in Central Texas is that there won’t be any soup lines in the near future. Business leaders here seem to understand economies are cyclical.  Any steep decline in economic activity will likely be offset by future surges in the economy’s growth. In the long term, the highs and lows average out to form the trend, or average, economic growth rate. This trend growth rate is subject to change, but it has remained relatively steady in the past, indicating the general rate of growth that we can expect to see in the future.

Since the late 1940s the United States has suffered 10 recessions. On average, they’ve lasted 10 months. The worst recessions of 1973-75 and 1981-82 lasted 16 months with peak unemployment reaching 9.0 percent and 10.8 percent respectively. With the current national unemployment rate at about 6.5%, this indicator would have to rise dramatically to match post World War II levels. The duration of recessions has steadily decreased over the years – a testament to the ever increasing strength of the American economy. In fact, Austin has experienced a decline in unemployment dropping from 3.8% to 3.6% in recent months.

The most serious issues facing Central Texas businesses

When asked to think about their own organizations, respondents said the most pressing issue facing their company concerned some aspect of the economy with 20% mentioning availability of credit and 10% citing some aspect of consumer confidence. Outside of the economy the issue that received the most frequent mention was finding and keeping talented, trained employees (6%).  A common theme throughout the survey was anger at the negative tone with which the economic crisis had been covered by the news media.

It is interesting to note that the issues cited by leaders are not particularly new issues. Growing businesses struggle with obtaining adequate credit, the whims of customer confidence and the difficulty of recruiting and retainment as a matter of course. While these issues may seem more acute in the short term most of the concern is about the future – not focused on what is happening today.

“There’s a bombardment of negative news about the economy…people here are feeling scared and withdrawn even though their lives have not been affected directly as of yet.” says Dena Roberts, an Austin-based psychotherapist. “We seem to lose distinction as to what’s happening in the local market as opposed to the national market – What do I see actually happening around me as opposed to what I’m afraid might happen to me. ”

When it comes to financial performance compared to expectations, about a third of respondents indicated that their company was performing better than expected with 34% responding that performance was about what they expected and about a third stating they were not meeting expectations. There was some concern about possible future reductions in customer spending.

Job Growth Evens Out
The majority of respondents indicated that they will remain at their current levels of staffing with only 21% planning to add staff. The last figures available (July 2008) from the Texas Workforce commission,  show an unemployment rate of 4.7 percent in Texas overall, a figure much lower than the national rate of 6.5 percent. A rate of 4.5 percent is considered “full employment” by the U.S. government. This jump in unemployment shows that Texas is beginning to feel the effects of the national economic slowdown and our survey, while optimistic, confirms this.

Texas has always shown a healthy propensity for job creation. In fact, Texas accounted for 60% of all job growth over the past year according to a new report from Toronto-Dominion Bank. The rest of the nation has experienced six consecutive months of job losses.

“If there is any reason that we are more insulated from the rest of the country, it’s probably because we have more companies that aren’t revenue driven, they are driven by investors.” says Peter Strople, CEO of Zero2 Holdings. “And now we are starting to evolve, we’re starting seeing bigger businesses, were starting to see later stage early businesses that are becoming successful. And those things are being affected by the market. As Austin grows and we  get less investment and more revenue, we’ll probably be more effected by the national economy.”

How are Central Texas Businesses adapting?
When asked how respondents were adapting to changing market conditions, the majority (44%) anticipated no change in marketing budgets or plans. However, a surprising number (34%) were planning on increasing budget and activity. This is an interesting finding given the level of concern expressed about possible reductions in client spending. Not surprisingly, when asked to evaluate their organizations marketing efforts, the numbers break down similarly with 44% indicating their marketing efforts were better than average and about a 25% indicating efforts were below average.

There is little doubt that improving customer acquisition processes and programs can help offset changes in demand. Even when rating efforts as “better than average” most business leaders feel that there is always room for improvement.

In terms of business development, about half of respondents felt that their efforts were above average. When asked about sales performance, answers were equally optimistic, with 48% giving a rating of above average and only 19% rating sales activities as below average.

According to Will Guild, principal of SomersetGuild Research, “It is important to note that (when it comes to rating respondent’s own marketing and sales abilities) these are very optimistic answers statistically. In some respect, this data might reflect a tendency for people to overestimate their own position and ability. Only about 25% thought their marketing efforts were poor.   That says that the majority believe they are above average. It just can’t be true.”

Matching a national trend, about a third of companies were shifting marketing resources toward social media to a substantial degree including more emphasis on the web, blogs, on-line communities and other tools. Another 24% indicated they had shifted in this direction to a moderate degree.

According to a new study by Forrester Research, marketers are likely to decrease spending in traditional media geared to building simple brand awareness. However, direct response advertising is still a strong performer. The study forecasts online direct response vehicles like search and email marketing will gain market share because companies can tie them to sales. Interest in social media continues to grow but businesses struggle with how to measure it.

No one knows for sure what lies ahead for Central Texas businesses in the coming year. But one thing seems clear: Texas is uniquely situated to prosper and grow regardless of national economic trends. With a GDP ranked 12th in the world(higher than India, South Korea and Australia), Texas’ economic engine is resilient. Perhaps this is due to a low cost of  living, effective business incentives and a robust, highly skilled workforce. Or maybe it’s just the hard work ethic and the pro-business Texan attitude that keeps the wheels of commerce turning. While we may not see the levels of growth we’ve become accustomed to, it seems clear that Central Texas will weather this storm just like it has before.

For a copy of the report from this study, visit

Pete Monfre is the founder of Clarity Marketing Support and is known for his common sense approach to marketing and sales development. A prolific writer, producer, raconteur and consultant, he draws from two decades of working with B2B companies ranging from start-ups to the Fortune 100.  Contact him at 512-868-8460 or by email:

Who is Pete Monfre

CLICK HERE to visit my web site

I'm a serial entrepreneur, marketing and media guy, raconteur, writer, producer and consultant. I write this little blog to help you unravel the mysteries of marketing and selling, to expose the silliness that masquerades as marketing and help you make better decisions that will grow your business. And I have fun with it. Why not comment? That way we can have a conversation. Or better yet, hop on over to my web site and drop me a line.

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