Retail World Article August 2024 – -Matt Lloyd

“How to challenge your outsourced Field Marketing/Retail Services provider”

I’ve long been an advocate for enhancing professionalism within the third-party outsourced retail services industry. This commitment is one of the 7 key strategic drivers for Strikeforce. As Chair of Activate (our industry collective body), and Managing Director of Strikeforce, I’m dedicated to ensuring that all who play in this space demonstrate the professionalism, value, innovation, and ethics that define our industry. Historically, some may have considered third party field marketing as less prestigious compared to more glamourous areas, like above the line advertising. However, we are increasingly a career of choice, a pathway, notwithstanding an integral ingredient in our clients go-to-market sales and marketing recipes. So, what should you consider when running a pitch process for such work?

Firstly, I’d recommend running a formal pitch process, starting with a request for information (RFI), and then progressing to a request for proposal (RFP), which typically involves presentations. You might be surprised by how many decisions are made in this space without a structured process. Without it, how can you ensure you’re getting competitive proposals and the best solution for your needs? Additionally, request a day in the life of the brand activator or ambassador. Observing their processes, standards and reporting in a real store setting will provide valuable insights.
Increasingly, we see global or local Procurement teams getting involved in the buying of these services. This is inevitable and reflects good due diligence from the client/prospect. That said, Procurement professionals need to remember that buying human capital/labour is very different from purchasing raw materials. Be sympathetic when the providers suggest longer notice of termination periods given that they would have to unwind teams in the event of business reductions or relocations. Similarly, whilst longer payment terms might align with global policies, outsourced field marketing providers often have significant costs walking out the door every fortnight, especially if they are providing substantial casual resources whom, in the main, are paid fortnightly.
On the other hand, prospective clients should challenge providers by requesting ambitious KPIS’s. Such measures should align with your overall strategic imperatives as well as being laced with operational KPIs, such as store coverage and completion of assigned tasks. Establish clear KPIs with a performance-based fee structure that rewards exceptional performance and includes consequences for sustained underperformance. This approach can ensure that the provider is invested in meeting targets and sharing the risks involved.
Be sure to compare pricing on a like-for-like basis. This is a perennial challenge in pitch processes. Hourly rates are often used as the primary metric, especially in casual labour contracts where staff are paid hourly. However, consider the add-ons as well? A seemingly low headline hourly rate might be undermined by additional charges revealed only when the invoice arrives-such as travel, reporting and other expenses. By then, it may be too late to address budget issues with your CFO without losing face. Be sure to get transparency in these rates and even where possible, adopt a cost plus, open book methodology from the outset so you can see what margins are being made by your agency/provider. Use a clear and simple pricing template for all to pitch to, ensuring the best like for like comparisons and ask if any costs are not included. Consider moving away from hourly rate thinking and think cost per call. Furthermore, think more about the return on investment (ROI) versus the input cost of hourly rates.

So, this is intended simply as a taste of what you might think about when outsourcing your field marketing/sales effort. Having a third party to hold accountable contractually has plenty of advantages versus the politically more challenging internal team. Consider factors such as, the pitch process, the contracts, the pricing comparison, and lastly, the providers stake in the outcome.