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HACKING AGENCY
COMPENSATION
Presented by Tim Williams
Ignition Consulting Group
www.ignitiongroup.com
WHICH LEVER SHOULD YOU PULL?
VARIABLE COSTS
REVENUES
PRICING
A 1% improvement (reduction) in variable costs will improve p...
COSTING
THE COST TO THE SELLER
Requires the expertise of production
and finance professionals
A CALCULATION
PRICING
THE VAL...
A PRICING REVOLUTION
#4AsWebinars
A PRICING REVOLUTION
#4AsWebinars
A PRICING REVOLUTION
#4AsWebinars
A PRICING REVOLUTION
PAY YOUR AGE
#4AsWebinars
A PRICING REVOLUTION
#4AsWebinars
A PRICING REVOLUTION
#4AsWebinars
A PRICING REVOLUTION
TIRES BY THE MILE
#4AsWebinars
A PRICING REVOLUTION
#4AsWebinars
UNINTERRUPTED
FLYING TIME
A PRICING REVOLUTION
#4AsWebinars
COMPETITOR-BASED
Penetration Pricing
Skim Pricing
CUSTOMER-BASED
Solution-Based
Value-Based
WEAK
Pricing
Competency
MODERA...
KNOWLEDGE
WORK
MANUAL
WORK
COST-BASED
Time Spent
Cost of Labor
Cost Plus
#4AsWebinars
The only place “time spent”
should matter is in prison.
#4AsWebinars
1. Whose job is it to change agency pricing strategies and
compensation approaches?
#4AsWebinars
POLL QUESTION
A. The indu...
SELLERS ROUTINELY RE-EDUCATE BUYERS
ABOUT PRICING IN ALL TYPES OF MARKETS
Software
#4AsWebinars
SELLERS ROUTINELY RE-EDUCATE BUYERS
ABOUT PRICING IN ALL TYPES OF MARKETS
Airlines
#4AsWebinars
Professional Services
SELLERS ROUTINELY RE-EDUCATE BUYERS
ABOUT PRICING IN ALL TYPES OF MARKETS
#4AsWebinars
Not a fair fight
Agency-side sellers and
client-side buyers
An even match?
#4AsWebinars
THE WORLD OF THE
PROFESSIONAL BUYER
#4AsWebinars
Why amateur sellers
are vulnerable to
professional buyers
#4AsWebinars
1. We fail to establish value up front.
2. We focus...
Not a fair fight
#4AsWebinars
12 PRACTICAL WAYS
AGENCY PROFESSIONALS
CAN BEGIN HACKING
COMPENSATION CHALLENGES
STARTING TOD...
Outcomes
Results, market effects
Outputs
Deliverables, work product
Inputs
Hours, time of staff
©Ignition Consulting Group...
Trade the language
of cost for the
language of value
A change in language
is a critical precursor to
a change in behavior....
Align the parties’
economic incentives
Instead of a discussion
about who gets the biggest
slice of pie, show how you
can g...
2. We begin every major assignment with a
discussion of “Scope of Value” (expected
outcomes) before we discuss Scope of Wo...
Focus on transparency
of expectations in place
of transparency of costs
Guide your client to
focus on “Scope of
Value” bef...
Attach different
pricing to different
classes of value
Proactively decouple
your high and low
value services.
5
#4AsWebina...
Put your value in
perspective by
offering options
Options provide context
for the value you’re
providing and change
the di...
Diversify your
compensation
portfolio
Just like a personal
financial portfolio,
diversifying your
compensation portfolio
pr...
Apply the same
creativity to pricing
as you do to solving
marketing problems
Once you take
hourly billing off the
table, t...
Always provide pricing options,
but never ranges.
9
#4AsWebinars
Never quote a price on the spot.10
Never, ever lower your...
CPOChief Procurement
Officer
PURCHASING AS A
CORE COMPETENCY
CPOChief Pricing
Officer
PRICING AS A
CORE COMPETENCY
PRICING C...
ESSENTIAL ROLES OF THE
PRICING COUNCIL
Identifying and championing the multiple dimensions of value
the firm creates for it...
NEGOTIATE SOMETHING BOTH
PARTIES WANT TO MAXIMIZE
COST PRICE VALUE
SELLER’S PROFIT
(Agency)
BUYER’S PROFIT
(Client)
#4AsWe...
SHARED VALUE
#4AsWebinars
INFLUENCER
TWilliams@IgnitionGroup.com
@TimWilliamsICG
linkedin.com/in/TimWilliamsICG
Presented by Tim Williams
© 2017 Ign...
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Hacking Agency Compensation

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Ignition's Tim Williams explores better ways for agencies to capture the tremendous value they create for their clients.

Published in: Marketing
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  • DOWNLOAD FULL BOOKS, INTO AVAILABLE FORMAT ......................................................................................................................... ......................................................................................................................... ,DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ......................................................................................................................... ......................................................................................................................... .............. Browse by Genre Available eBooks ......................................................................................................................... Art, Biography, Business, Chick Lit, Children's, Christian, Classics, Comics, Contemporary, Cookbooks, Crime, Ebooks, Fantasy, Fiction, Graphic Novels, Historical Fiction, History, Horror, Humor And Comedy, Manga, Memoir, Music, Mystery, Non Fiction, Paranormal, Philosophy, Poetry, Psychology, Religion, Romance, Science, Science Fiction, Self Help, Suspense, Spirituality, Sports, Thriller, Travel, Young Adult,
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  • DOWNLOAD FULL BOOKS, INTO AVAILABLE FORMAT ......................................................................................................................... ......................................................................................................................... ,DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ......................................................................................................................... ......................................................................................................................... .............. Browse by Genre Available eBooks ......................................................................................................................... Art, Biography, Business, Chick Lit, Children's, Christian, Classics, Comics, Contemporary, Cookbooks, Crime, Ebooks, Fantasy, Fiction, Graphic Novels, Historical Fiction, History, Horror, Humor And Comedy, Manga, Memoir, Music, Mystery, Non Fiction, Paranormal, Philosophy, Poetry, Psychology, Religion, Romance, Science, Science Fiction, Self Help, Suspense, Spirituality, Sports, Thriller, Travel, Young Adult,
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  • This is an excellent presentation on how to change the conversation on costs to value. Makes complete sense. Thanks for sharing.
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Hacking Agency Compensation

  1. 1. HACKING AGENCY COMPENSATION Presented by Tim Williams Ignition Consulting Group www.ignitiongroup.com
  2. 2. WHICH LEVER SHOULD YOU PULL? VARIABLE COSTS REVENUES PRICING A 1% improvement (reduction) in variable costs will improve profit by: 4% A 1% improvement in volume (revenues) will improve profit by: 7% A 1% improvement in pricing will improve profit by: 11% Fixed Costs Variable Costs Volume (Revenues) Pricing A 1% improvement (reduction) in fixed costs will improve profit by: 3% PROFIT IMPROVEMENT #4AsWebinars
  3. 3. COSTING THE COST TO THE SELLER Requires the expertise of production and finance professionals A CALCULATION PRICING THE VALUE TO THE BUYER = A JUDGMENT Requires the expertise of pricing professionals #4AsWebinars
  4. 4. A PRICING REVOLUTION #4AsWebinars
  5. 5. A PRICING REVOLUTION #4AsWebinars
  6. 6. A PRICING REVOLUTION #4AsWebinars
  7. 7. A PRICING REVOLUTION PAY YOUR AGE #4AsWebinars
  8. 8. A PRICING REVOLUTION #4AsWebinars
  9. 9. A PRICING REVOLUTION #4AsWebinars
  10. 10. A PRICING REVOLUTION TIRES BY THE MILE #4AsWebinars
  11. 11. A PRICING REVOLUTION #4AsWebinars UNINTERRUPTED FLYING TIME
  12. 12. A PRICING REVOLUTION #4AsWebinars
  13. 13. COMPETITOR-BASED Penetration Pricing Skim Pricing CUSTOMER-BASED Solution-Based Value-Based WEAK Pricing Competency MODERATE Pricing Competency STRONG Pricing Competency PRICING PRACTICES COST-BASED Cost Plus Hourly Billing PRICING PARADIGM PRICE TAKER PRICE FOLLOWER PRICE MAKER THE (R)EVOLUTION OF PRICING #4AsWebinars
  14. 14. KNOWLEDGE WORK MANUAL WORK COST-BASED Time Spent Cost of Labor Cost Plus #4AsWebinars
  15. 15. The only place “time spent” should matter is in prison. #4AsWebinars
  16. 16. 1. Whose job is it to change agency pricing strategies and compensation approaches? #4AsWebinars POLL QUESTION A. The industry at large — all agencies must agree together B. Advertising and marketing associations like the 4As and ANA C. The marketers who hire agencies D. Each individual agency
  17. 17. SELLERS ROUTINELY RE-EDUCATE BUYERS ABOUT PRICING IN ALL TYPES OF MARKETS Software #4AsWebinars
  18. 18. SELLERS ROUTINELY RE-EDUCATE BUYERS ABOUT PRICING IN ALL TYPES OF MARKETS Airlines #4AsWebinars
  19. 19. Professional Services SELLERS ROUTINELY RE-EDUCATE BUYERS ABOUT PRICING IN ALL TYPES OF MARKETS #4AsWebinars
  20. 20. Not a fair fight Agency-side sellers and client-side buyers An even match? #4AsWebinars
  21. 21. THE WORLD OF THE PROFESSIONAL BUYER #4AsWebinars
  22. 22. Why amateur sellers are vulnerable to professional buyers #4AsWebinars 1. We fail to establish value up front. 2. We focus on defending costs instead of proving value. 3. We are willing to reduce price without also reducing value. 4. We believe all price challenges are real.
  23. 23. Not a fair fight #4AsWebinars 12 PRACTICAL WAYS AGENCY PROFESSIONALS CAN BEGIN HACKING COMPENSATION CHALLENGES STARTING TODAY
  24. 24. Outcomes Results, market effects Outputs Deliverables, work product Inputs Hours, time of staff ©Ignition Consulting Group Sell your value instead of your costs 1 DRIVEN BY UTILITY TO THE BUYER DRIVEN BY COST TO THE SELLER INPUT-BASED PRICING OUTPUT-BASED PRICING OUTCOME-BASED PRICING Move the dialogue away from inputs to what clients really buy: outputs and outcomes. #4AsWebinars
  25. 25. Trade the language of cost for the language of value A change in language is a critical precursor to a change in behavior. LANGUAGE OF COST LANGUAGE OF VALUE Cost Estimates Hours Rates Billable Time Labor Utilization Time of Staff FTE’S Price Talent Results Solutions Outcomes Results Value Metrics of success Accountability 2 #4AsWebinars
  26. 26. Align the parties’ economic incentives Instead of a discussion about who gets the biggest slice of pie, show how you can grow the entire pie. 3 #4AsWebinars
  27. 27. 2. We begin every major assignment with a discussion of “Scope of Value” (expected outcomes) before we discuss Scope of Work. #4AsWebinars A. Always B. Most of the time C. Sometimes D. Rarely E. Never POLL QUESTION
  28. 28. Focus on transparency of expectations in place of transparency of costs Guide your client to focus on “Scope of Value” before getting to Scope of Work. 4 #4AsWebinars
  29. 29. Attach different pricing to different classes of value Proactively decouple your high and low value services. 5 #4AsWebinars
  30. 30. Put your value in perspective by offering options Options provide context for the value you’re providing and change the dialogue away from inputs to outputs and outcomes. 6 #4AsWebinars
  31. 31. Diversify your compensation portfolio Just like a personal financial portfolio, diversifying your compensation portfolio produces higher returns. 7 #4AsWebinars UNIFORM PRICING Cost-based calculations based on a formula that creates a self- imposed ceiling on profit VARIABLE PRICING Employing varying pricing approaches based on customer value; create many more opportunities to capture profit
  32. 32. Apply the same creativity to pricing as you do to solving marketing problems Once you take hourly billing off the table, there are virtually unlimited ways to get paid for the value you create. 8 #4AsWebinars
  33. 33. Always provide pricing options, but never ranges. 9 #4AsWebinars Never quote a price on the spot.10 Never, ever lower your price without also stripping out value. 11 Formalize pricing as a function separate from costing. 12
  34. 34. CPOChief Procurement Officer PURCHASING AS A CORE COMPETENCY CPOChief Pricing Officer PRICING AS A CORE COMPETENCY PRICING COUNCIL AT THE CLIENT AT THE AGENCY #4AsWebinars
  35. 35. ESSENTIAL ROLES OF THE PRICING COUNCIL Identifying and championing the multiple dimensions of value the firm creates for its clients. Experimenting with various pricing approaches to maximize profits and diversify the firm’s pricing portfolio. Developing tools that will keep the firm focused on value instead of cost, including changing the language. Overseeing the development of pricing options and presenting pricing proposals to current and prospective clients. Creating new revenue streams by cultivating, packaging and monetizing the firm’s intellectual property. #4AsWebinars
  36. 36. NEGOTIATE SOMETHING BOTH PARTIES WANT TO MAXIMIZE COST PRICE VALUE SELLER’S PROFIT (Agency) BUYER’S PROFIT (Client) #4AsWebinars
  37. 37. SHARED VALUE #4AsWebinars
  38. 38. INFLUENCER TWilliams@IgnitionGroup.com @TimWilliamsICG linkedin.com/in/TimWilliamsICG Presented by Tim Williams © 2017 Ignition Consulting Group, Inc.

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