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Desperate Times Do Not Call for Desperate Measures

Published: December 5, 2011

Author: David Rodnitzky

One thing I’ve never liked about typical marketing agency contracts is the obsessive desire to ink the longest, most iron-clad contract possible. Typically this means asking for between one and two years of commitment from the client (though I recently heard of a contract that demanded a three-year commitment!). Ultra-long-term contracts seem to create adverse incentives for the agency and the client. What’s to prevent the agency from moving its senior people off the account and replacing them with un-proven junior team members the moment a long-term contract is inked? Why should the agency’s executive management spend any time keeping the client happy – at least until the contract is close to being up for renewal?
I know there are many good-hearted agencies out there that will work hard for clients regardless of contract terms, but really, if you feel like you provide great service, why lock someone in for years in the first place? The truth is, in any business these days, you live and die by the service and results you provide to clients – both today and in the future. Think about it: if you lock a client into a bad contract, as soon as the contract ends (i.e., as soon as the client escapes your grasp), that client is going to tell as many people as he can to avoid your agency. You’ve won the battle, but you’ve lost the war.
I had this sort of bad experience last week as a consumer. After many years as a loyal subscriber to, and brand evangelist for, TiVo, I came to the conclusion that it was time to cancel my TiVo service. Comcast’s DVR was “good enough” and cheap enough for me to make the switch. So – with a heavy heart – I went online, logged in, and went to the “My Account” page to cancel my service. There, I found plenty of opportunities to upgrade my service but no cancelation options. So I then searched the “help” section and finally found this page:

TiVo – a technology company, mind you – has figured out how to upsell me online, but they never quite got around to offering cancelation functionality. Of course, we all know it’s not because they couldn’t do it; it’s because they know that forcing consumers to call in to cancel is an additional layer of inconvenience that could lead to a customer just giving up their quest to get out of TiVo service.
I’ve seen this before – in the olden days of online poker, it was painlessly simple to add funds but painfully difficult to get your funds back. This is also a common tactic used by sketchy continuity programs, perhaps most infamously by the “Girls Gone Wild” video series, which ended up paying a $1.1 million fine to the FTC for such practices. Of course, continuity programs and offshore betting magnates tend not to care much about what customers think of them at the time the customer is about to depart. These are fly-by-night operations, after all.
You’d think, however, that TiVo – a company that spent millions building up a great brand and now faces the toughest challenge to its business model to date – would want to make sure that net promoters like me don’t leave the family with a bad taste in their mouths. Apparently not. Apparently, TiVo has decided that a dollar today is worth much more than tens of dollars of positive branding tomorrow. That’s pretty much the definition of being short-sighted, isn’t it? “Studies show that a satisfied customer will tell 2-3 people about his experience with your company. A dissatisfied consumer will share their lament with 8-10 people.”
Returning to the world of marketing agencies, here’s my philosophy: do the best you can for your clients. Wow them with passion, service, results, and transparency. But also wow them with flexibility. Give them the shortest contract possible (most of our contracts are two-day contracts). And when a customer decides he needs to move on from your agency, make it easy for him to do so. Sure, you can try to schedule a call to understand his reasons and perhaps change his mind, but if it’s clear that he wants to move on, let him. Offer to set up a transition call with your team. Provide him with whatever documentation he needs. Offer to refer him to another agency if that’s what he wants. It’s the right thing to do for the client, but it’s also the right thing to do for your agency’s long-term survival.
David Rodnitzky, CEO
– Questions? Comments? Email us at blog at ppcassociates dot com.

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