Agency Ties Fees To Its Results

February 27, 2004
Print
Text Size:
A A
TRAVERSE CITY — Luke Haase says his marketing and business consulting company, called The Intelligence Agency (TIA), is introducing a gimmick — tying its fees to the results it obtains for clients.

He explained that when he sits down with a client, he doesn’t give a rhapsodic pitch about client-financed advertising campaigns.

“We’re not going to talk about the nice, beautiful, fun stuff we can do,” Haase said. “We sign on to create results. Period.

“The metrics are decided in advance,” he added. “Usually it’s revenue, but sometimes it’s profitability, or productivity, or awareness — it could be anything.”

The key thing, he said, is that if TIA doesn’t produce the agreed-upon results for its client, it receives a fraction of its fee. If it achieves the results, it receives a full fee.

If TIA exceeds results, then it receives a multiple of its fee.

“I think it’s very new and entirely unique,” Haase, adding with a chuckle, “I don’t know if there’s anybody else smart enough or stupid enough to try it.”

Haase cites a case involving LDMI Telecommunications, of Southfield, that he said was planning to spend $600,000 to $700,000 on a marketing campaign for a new telecommunications product.

“They expected to sell 70 of these products, these widgets, a month,” he said. “So we said, ‘What if we can help you sell 300 a month?’ And if we didn’t sell 300 a month, we wouldn’t get paid.

“And they said, ‘First of all, you’re crazy. Second of all, where do we sign?’”

“And six months later, we failed,” Hassee said, indicating that sales are running about half of what LDMI and TIA agreed upon as a result.

“To make a long story short,” he said, “they’re delighted. But let’s be honest: We failed and so we didn’t get our full compensation.”

Since then, however, Haase said LDMI has directed a lot more business to TIA. “They’re saying, ‘This is how we want to do business. This makes sense.’”

Haase said his firm is a group of four people who have no particular magic, but who help bring alignment to thinking and strategy.

“And as much as I hate the word ‘strategy’ — and so many people do — all that strategy is and all that marketing is, is a revenue plan,” Haase said. “That’s all we’re talking about. That’s it. Nothing fancy. Nothing about ads, nothing about PR,” he added.

“We’re not going to engage in the conversation about the tools we use. We’re going to say, ‘We’ll help you build a revenue plan with a number at the end.’ And we’re going to hit it. Our word is ‘results.’”

Haase says TIA contemplates opening an office here because, as he puts it, “the agency is laser-focused on Grand Rapids.

“Our activity in GR is growing because there are companies there we can help. Our sweet spot is companies somewhere between $10 million and $200 million.” Its newest client locally is Windemuller Electric.

“We’ve got a bank here (in Traverse City) and they love us,” he added. “But they love us so much they don’t want us to work any other local banks. So we want to sit down with some banks in Grand Rapids.”

Certain to be on TIA’s side of the table in such conversations is Henry Doss, formerly a senior manager in banking and financial services and now TIA’s executive vice president. Other key TIA staffers are Sherwood Smith, vice president and account executive and former president of Blue Sky Marketing, and Marika Struik, account assistant, who came to TIA from Publicis New York and Saatchi & Saatchi.

Haase said TIA’s method is to agree with a client on a result. “This is powerful,” he said. “We’re not setting a goal, we’re just going to do it.”

After TIA and the client set the result, he said, research comes next.

“There’s no guesswork,” he said. “A year or two or three ago I would have viewed research as expensive, something that was only for big companies. It’s at 30,000 feet.”

But he said he learned differently in work for a telecommunications firm that was concerned about attrition among customers,

“We selected 100 customers who left them, and had deep-dive, half-hour conversations with these people. ‘Why did you leave? What would have made you stay? How can we bring you back? What media outlets do you watch? How do you feel about the competition?’

“That stuff is priceless!” he said.

And with it, he added, TIA was able to construct a price elasticity model for the client. “So we can actually tell the client that if we bump the price a penny, we’re gonna lose X customers. If we cut a penny, we’re going to gain X customers.

“The result was that we cut attrition by X percent,” he said, “and the client’s no longer saying, ‘We’re churning too many customers.’”

Among TIA’s other clients are the Botanical Society of Northwest Michigan, GLIMAS (Great Lakes Interactive Marketing Association) Northwest, TracerNet, of Chantilly, Va., MorePhotos.com, of Traverse City, and others in Petoskey, Arizona and Anchorage.

Haase, incidentally, gave The Intelligence Agency its name after deciding to opt out of a job offer from the CIA.

“I had to decide, do I want to be a spy, or do I want to do PR and marketing back in Detroit?

“Ultimately I chose both: I kept the name and went into PR and marketing.”    

Recent Articles by Scott Payne

Editor's Picks

Comments powered by Disqus