How to mitigate risk when changing marketing outsource partners
More than 68% of businesses outsource services, and these providers can become valued performance partners.
But in marketing, tensions can arise. From time to time, marketing departments will change these partners, citing greater operating efficiencies or more imaginative input.
If this transition is to be trouble-free, rigorous protocols must be followed to avoid risk and manage senior leadership expectations. Failing to change from an under-performing partner could damage an organisation’s competitive position and performance but failing to manage the risk of transition effectively (or, indeed, appointing the wrong one) could have a similar impact. There’s a cost of not changing; but there’s also a cost to poorly managed change.
From the outset, organisations transitioning suppliers should be divided into two camps. The first is those at the consideration stage – deciding whether to change or maintain their current partnerships (and who to opt for, if so). The second is those who have already decided.
When considering whether to change provider, the issue is usually either: the risk is perceived as too high; or the client organisation does not have a detailed understanding of what the outsource partner is doing, and how they are performing. The latter is not a failing; outsource partners are engaged because they are the experts in their specialism. If the client had the in-house expertise, they would not need to outsource.
To mitigate the perceived risk of change, organisations should engage early with potential new partners to understand how they would manage transition. How do they handle risk? Can they evidence a careful, methodical approach which pilots change before rolling it out? How will they interface with your colleagues in IT – and can your IT counterparts confirm they are convinced on these methods? Are they prepared to share transition risk – to the extent of it determining their payment?
The second challenge, the lack of a detailed understanding, is remedied simply by transparency from the existing supplier. Ask for a clear exposition of how intellectual property is shared and protected in your engagement. The outsourcer is, effectively, lending you some of their IP (that’s part of the value you’re getting); but where does that stop and your own IP begin? Where is the definition of what belongs to you, and how that is protected? How would you extract your own IP from their systems if the relationship were to end?
Any resistance encountered to these enquiries should raise suspicions. An honest partner will be as transparent as possible, without undermining their own IP. Always be wary if the partner cannot give you a good understanding of what’s under the bonnet. You should be able to reach a granular understanding of how the partner operates relatively easily. A good test of this if you have more direct control of aspects of your marketing operation. Are there levers that you can now intelligently control – perhaps campaign selection parameters or scheduling? Whether or not you decide to change partners, this exercise will deliver value in terms of insight, understanding and control over your processes.
What if you’ve already decided on a new partner?
First up is the HP test (referring to the famous fictional character!), designed to find out if you’re being sold some form of ‘wizardry’ by the supplier. The right partner will be able to explain everything in a way that you can understand. And as the adage goes, “If it sounds too good to be true, it probably is!” That’s why any hint of wizardry should be avoided.
Second is the human factor. Assessing a potential partner’s technical capability is simply a hygiene factor, and is, of course, necessary. But the real road to success is all about ‘fit’. ‘Fit’ is a matter of culture, team spirit, innovation and improvement. It also works both ways – client to partner and partner to client. So how can you determine ‘fit’?
Tailoring that fits
Enquire how much of the service you receive is bespoke. This will reveal how special the service you’re getting is, which is an indicator for the attitude your potential partner has towards your business. Of course, in the real world, SMEs can expect that most of their marketing service provision will be standardised – a factor of the scale of fees paid. However, a more substantial organisation should expect a truly bespoke service. After all, this helps determine how your brand stands out and – ultimately – the individual value that your customers feel they are receiving from you. Clearly, the specialness of your brand will not be marketed effectively through a cookie cutter approach.
Respecting the past
Does your potential new supplier see any value in the incumbent’s work, or are they determined to throw the baby out with the bathwater? Remember – the greatest risk in any transition is sudden and major change. But well-managed change is the route to better performance. If a potential new partner shows no respect for the incumbent and their work, you should investigate why such wholesale change is necessary, what risk it carries and what the commercial benefits will be.
It’s worth investigating a potential partner’s understanding of what change means to your customers. Seemingly small changes in the way you communicate with customers may not seem huge to you, but they can have a much greater impact customer-side. Removing a salutation can depersonalise; conversely, adding one might seem intrusive to the customer who’s not used to it. Increasing cross-sell offers too much can come across as overwhelming. Removing a communication that doesn’t directly drive sales can rob your programme of its appeal to some groups – possibly undermining loyalty and value. This is a really important area to ask the potential partner for anecdotes and proof points.
Finally, it is important to ask the partner about hybrid possibilities – an analysis of in-house expertise and capabilities, and a suggestion of how your teams can collaborate for best value. Having your people work alongside the outsourcer will help retain corporate memory around skills, processes and IP. An outsourcer confident of their quality will be collaborative, suggesting how in-house capabilities can be retained, and only delivering outsource provision where it adds value. The practical implementation of hybrid teams may have teething problems, but these can be ironed out with a can-do attitude.
Once the hygiene factors of technical capabilities are established, making time for a careful exploration of the people and their attitudes will be hugely beneficial.
Ultimately, there are two recommendations. First, make the time to investigate a new partner properly. Start looking around 18 months before contract end (and don’t be afraid to conclude that change may not be the best solution). And put as much method into examining the human factors as you do into the technical capabilities. Technical mastery is not the whole route to success. People, chemistry, attitude, ‘fit’ matter. No organisation should be afraid of change – it simply has to be well managed.