CAN WE RETHINK OUR BUSINESS MODEL?

Has the time come to rethink the creative business model? The new 'new economy' has begun to emerge with a leaner and more focused meetings and events paradigm. While this evolves there remains uncertainty and confusion in the marketplace. Of course this has had an impact on the projects our clients undertake, driving down budgets and significantly reducing the time we have to produce events as decisions are often put off while clients get a better sense of what kind of event they even need to have.

The bid process has been made even more frustrating by awarded projects being significantly downsized and in some cases being abandoned. Bids are ever more frequently being cancelled in middle of the RFP process. The negative impact on agencies and producers is huge as very tight funds are expended on fruitless efforts. The effects on our clients - though not always apparent to them - is that ultimately these costs must be recovered in the fewer projects that do actually go forward.

The effect on creativity is formidable as well. There is less willingness to spend the time (and money) to get close to the client and understand thier culture and objectives. Less time is allocated to the process of developing a proposal (this can be positive - more on that later) and often fewer risks are taken creatively - partly due to time, but also because researching and pricing creative options is also expensive. The result - get to an idea quickly, do something we have done before and can price predictably, and focus on winning the job with the lowest up front costs possible.

This is not to say that moving quickly and going on your gut instinct (think BLINK) cannot often result in truer 'high concept' ideas that can be provocative and compelling. It takes a very confident sales team - and a progressive client - to be excited by an idea on a high level, and take it on faith (to some degree) that the creative and production team can deliver.

WHAT ARE WE TO DO?

Well - reeducating the marketplace is never easy. However we do have the economy as an ALLY in many ways. We have found clients a bit more open minded about the level of execution in a proposal - ready to acknowledge that their vendors (and sometimes friends) are facing a tough economic reality. Perhaps this is the time for our marketing efforts to include a new way to do business?

We would all like clients to select a vendor on the basis of past work and capabilities presentations. Of course because, as they say "past performance is not an indication of future results" - this may also need to include a high level pass at client specific solutions. Here is a suggestion for a way forward.

TALK TO THE CLIENTS - CURRENT AND PROSPECTIVE

BIDDING out a contract is not always the best way to get the results they are after. It is expensive to do and depending on the size of the project- even COST them real money - money they think they are saving through competition. It takes time for their team to prepare, solicit, brief, supervise and evaluate bidders AND bidders have to recover the cost of the bid somewhere, driving up prices.

That is not to say fostering competition is not a worthy by product of open contracting. My suggestion is we promote a three project or three year contract process (some may think me naive but this has worked) -

• YEAR ONE - Open competition - open to all comers - capabilities presentations, with a focus on big solutions related to the clients current challenge. Eliminate all but 3-4 bidders that compete for the project more completely.
• YEAR TWO - A performance review - which if satisfactory lets the vendor renew by presenting up to three ideas with a cost reduction in the budgets of at least 5% (net inflation) - which if accepted means a no bid renewal or award of the next project
• YEAR THREE - a non competitive pitch - new ideas, new budgets done early enough that if found unacceptable, still lets the client go to an open bid. This will motivate the vendor to be more inventive and cost effective to secure the business one more year.

After all of this a vendor may feel they have won and deserve the business in an ongoing basis, and they may. However the best way to prove that is in an open bid - and the process would repeat.

IS THIS A PIPE DREAM?

As I mentioned, this has worked successfully for the agencies and producers we work for on more than one account. The client has seen real benefit in continuity and even purchasing has seen the light as costs have been controlled and the money they all save from not doing an RFP is substantial. Management sees the vendor as still being held to account and the risk of losing the work at any stage via an agreed mechanism keeps us all on our toes!

Take the plunge - try this with your most open minded and trusted clients- blog about it- write about it - talk about it. This may not be THE answer- but it can be a catalyst for redefining our business in the new 'new economy'.