Pay-for-performance will only gain ground in MR when researchers are given the chance to work with companies on the implementation of research and business strategy, says Jessica Bath.
Let me tell you what I think
“I’ll take pay-by-performance from clients who give me genuine involvement in implementation” – that was my off-the-cuff response to Research’s recent article on how performance-related incentives have been slow to take hold in research compared to marketing, where 49% of advertisers report using them.
In fact, on the day I tweeted this I saw a TV ad for a product for which I had conducted some research. Our findings said consumers didn’t like the product’s name, features or positioning. The ad showed it unchanged from when we tested. The research was unequivocal, but local marketers in global companies have little leeway for adaptation.
I may not hold out much hope for the performance of that product in the short term (although arguably truly innovative companies need to lead consumers instead of following them). But what about our own product – research. Leaving aside the question of pay based on quality or client-service targets (you only get to slip up on these a couple of times before you’re off the roster anyway), pay based on commercial outcomes gets us right to the pointy end of questions about our industry’s reason for being.
The data, information and, hopefully, insights that we generate have value to our clients only when they are applied. Particularly as technology lowers the value of the data-collection-and-collation proposition, our continued existence depends on us getting better at proving that we should be invited to advise on the application of our findings in the real world.
But at the moment even our counterparts within client companies have difficulty influencing implementation, let alone those of us working in agencies. Proving that research and researchers (both agency and clientside) have something to bring to the table when it comes to deciding what a business should do next requires a raft of new thinking and new breeds of consultants, with different types of experience from a variety of backgrounds. It’s a transformation of the value proposition – not just a change to the pricing structure. And this is before we even begin to consider the complexities of applying pay for performance: for example, how do we value advice not to proceed with something?
Leaving aside advertising for the moment, we need to see what lessons can be learnt from other professional services. In 2009, I reported on pricing in the legal industry, where the hourly rate is in slow decline relative to fee structures like fixed-cost (which we primarily use in research), value- and success-based pricing. Law firms and general counsel are more likely to agree fixed-costs for low-margin, process-focused work. Value- and success-based fees are more likely to be brokered for high-margin, strategic work.
So for clients and agencies wedded to trackers, our fixed-cost system is probably right. But where clients believe our expertise and experience can be applied to devise and – crucially – help implement business strategies, we may be willing, in the right circumstances, to put our money where our mouth is in backing those strategies.
Jessica Bath (@Jess_IpsosBC) is an account director for Ipsos Business Consulting in Sydney, Australia