Selecting a creative agency is a very important part of the Direct Mail equation. The interesting thing is that much of how you select or evaluate an agency has nothing to do with creative at all. Agencies can have a huge impact on your ability to make deadlines and to work within cost constraints. If you are going to choose an agency, here is a checklist to follow. I would suggest grading existing agencies as well as new candidates on a standard 5 point scale for each area (1 being very bad and 5 being very good).
FINANCIAL STABILITY: Yes, this is very important. How strong is their balance sheet? How much will you be (or are you) of their business? The last thing you need is to have an agency strapped for cash working on your projects. They will skimp on talent and resources and cut corners. They may be motivated to bill you for more hours and headcount than they are truly working on your account. You also don't want an agency that is detrimentally reliant on your business. If you are 65% of their San Francisco office, you may think you are in the drivers seat, but you may also be one project away from total chaos. Oh, and if you cancel their retainer, you will be laying off 65% of their staff as well.
COST: I have paid a tad more for agencies that do exceptional creative. I have also negotiated very competitive rates from very good agencies. In the end, you must decide how much you can afford and what you will get from it. Remember, agencies have various levers that they can push or pull to adjust the cost structure of an RFP or retainer. Namely, those items are:
Number of hours worked a month or year - you need to do the math to ensure their folks are not taking 6 weeks of vacation a year and working a 27-hour work week. Take a detailed look at the headcount and hours mapped to each project in your scope. Net, the more detailed the scope, the more refined/defined figures you will be able to acquire.
Total full time employees (FTE's) on the account - this one can get tricky. My rule of thumb is to ask for the detailed list of each person working on the account, the percentage that the FTE will be working (15%, 50%, 100%?), how much their salary is (this may come loaded with benefits so be careful), the overhead associated with the FTE(s), and the title and role of the FTE. You need to ensure you are not top heavy with management and weak on worker bees (e.g. do you have enough folks managing projects versus those working on them in areas such as copy writing or HTML). Most of the time, the agency's first response to an RFP is to make it top heavy and fat. They know (or should know) that you are going to analyze and make cuts. Just don't cut too deep on the management though, or you will be missing deadlines and managing their folks for them.
Total cost per FTE - this is the "blended" or loaded cost per FTE. You need to compare this to agencies of the same cloth if you are not getting an "all in one" shop (e.g. online agency, direct mail agency, email and SMS agency etc). Remember, your cost per FTE is directly correlated to the project list you are requesting the RFP on, the quality and seniority of the team they are assembling for you, and the costs they are loading into the equation. You MUST work all parts at the same time or a smart negotiator will play them against you.
Hidden Surprises - read the entire RFP response. Look for triggers such as costs associated with "out of scope work". Most agencies will charge one rate for in-scope work and another (sometimes much higher) rate for out of scope work. Why? If you are going to hammer their costs down by managing to a tight headcount and project-based scope, then they will have to bring on free-lancers to cover any work not planned for. This is especially true if the agency is running at full tilt. Net, you have some skin in the game to manage your internal partners to stay true to the project list bid out.
DIVERSITY: I am not just referring to diversity of ethnic background - which is very important. I am suggesting that diversity of thought is critical. This means that the agency should have folks who come from all types of backgrounds, countries, etc. Diversity leads to innovation.
OPERATIONS: This is an area that is much easier to evaluate if you have worked with the agency before. If you have not, get references of past clients. Speak to them. Ask them a series of questions based on the punch list provided below. Take this very seriously. It is this area of agency performance that usually is lacking. I have almost never seen an agency get released simply because of poor creative. Usually it's things like poor project management or faulty financial auditing processes that become the kiss of death.
Quality of Work / Deliverables - Traditionally, DM has an average of 3 rounds. The first round is the concept, the second is the copy/tone/offer, and the third is the final review before going to press. Each round takes several days. If you are spending too much time correcting little mistakes or having to point out prior corrections that were mistakenly omitted by the agency - then you have a problem. I like to ask an agency for an outline of their internal creative process including QA (quality assurance). If they don't have one, be worried.
On Time Delivery / Responsiveness - When you set deadlines with your boss, peers or the market, you need to make them. How good is the agency at managing their processes to make your deadlines. Are they delivering creative 2 days late and causing you to rush your internal review process? If you call them about a major shift in the program due to executive decisions, are they calling you right back? Or, are you leaving voice mails and hoping that the key players at the agency will call you back between their business development pitches. I canned an agency for just this reason.
Communications / Ease of Doing Business - This is basic blocking and tackling. Are you in the dark about your projects? Is it difficult to get an image swapped out or a font changed? Are you arguing too much with the creative team about strategic direction? I had one agency that refused to make changes to copy requested by my product team because they liked their verbiage better. What I found out was that the creatives had leverage over the new account director. That relationship did not last long. It's okay to differ on copy and creative, but logic and reasoning must be presented. "No" is not an adequate enough justification.
Financial Stewardship - Let's get this clear right up front, this area is usually the WORST area of a creative agency (Agencies will say the same about the client). And, unfortunately, it's usually the reason most agency/client relationships become strained. It's simple. You should not pay them 90 days late. You will only kill your trust with them if you do. They should not bill you for projects that are older than 90 days. Next verse, same as the first. Build a relationship with the CFO. Audit the processes up front. When do they bill you? What is on the bill (details, line items, project numbers, etc)? How are you receiving and releasing funds? You must set up a quarterly review process if you are working from a large retainer. Build in a buffer for billing - say 10 to 15%. If you go over your retainer by 10% for the month or quarter, it is considered "covered" by the agency - that way you are not hit with hidden surprises. Face it, you will have last minute or out of scope changes to manage over time.
CREATIVE AND STRATEGIC EXPERTISE: I have always said that you can manage adequate processes out of an agency, but you can't muster better creative and strategic thought (unless they change out the key players). The best creative comes from ideas that are based on consumer insights. Those insights should provide the basis for your offer. The insight and the offer help build the creative. The creative should support and highlight the brand. Make sure your agency has creative and strategic assets under the hood. If not, pass. You should be able to evaluate this from examples of their prior work with other companies.
This list is not all inclusive, but it covers the key areas of agency evaluation. I would suggest making a simple spreadsheet and have many partners input their rankings. Ensure that submissions are blind and individual. This should give you a wide variety of opinions to derive a base (average) score. I would also suggest keeping track of how the agency performs over time. You can do this by sustaining this spreadsheet or you can hire an outside company to audit both parties quarterly and track this and other key areas. This helps the agency evaluate you at the same time. What? You mean you can be a horrible client too? Yup.
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