Why Performance-Based Agency Compensation Doesn't Work

Sarah Sikowitz

I embarked on the topic of performance-based agency compensation because I was getting A LOT of questions about it. Mostly, folks wanted to understand how to structure it. 

As I set out to answer that question, I uncovered a topic that is probably one of the most hotly debated topics in the industry. People are passionate – on the agency side, on the finance side, on the procurement side, and on the marketer side. Everyone has an opinion.

So, instead of doing a straightforward report on how to structure performance-based compensation, I took a step back to dive into whether performance-based compensation is actually achieving the desired results – which is better performance from agencies.

I found that:

  • Performance-based compensation, as it is most commonly structured and applied, is being used as a stand-in solution for a much larger issue – the fact that CMOs are having a very hard time measuring and explaining the impact of their agencies' work on ultimate business outcomes.
  • Adding financial incentives to agency contracts gives organizations a way to measure the impact of agency work and assign that impact a monetary value.
  • These organizations are not getting better work from agencies because of this. And by using performance-based compensation as a motivator, they are missing an opportunity to truly motivate their agencies.
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Four Questions Aspiring Global eCommerce Brands Ask Of Technology Partners

Zia Daniell Wigder

A growing number of digital business leaders are being tasked with global expansion. Their technology partners play a critical role: eBusiness professionals rely on partners not only to help build new digital offerings, but also to provide strategic advice on how to effectively penetrate new markets. Some of the key questions solution providers can anticipate from clients and prospects include:

How quickly can I get up and running?  A common scenario looks like this: After years of discussing the need to go global, senior leaders within an organization finally decide to pull the trigger. A frenzy ensues. Digital business leaders are given just a few months to propose which markets to prioritize and how to enter those markets. Given how quickly the new international expansion must happen, business leaders seek out technology partners that promise rapid turnaround on new global initiatives. Solution providers that talk about launching new initiatives in years rather than months are often sidelined in favor of those that can execute more rapidly to fulfill the corporate mandate. 

What will going global cost? Few leaders have access to an endless stream of cash when it comes to launching new global eCommerce offerings. To the contrary: It’s more typical to see businesses pouring a small fraction of what they invested in the domestic business into their international initiatives. Cost is therefore front and center when it comes to evaluating new technologies. Solution providers that can help businesses launch across multiple countries in a cost-effective manner are well positioned to capture new business, even when the prospect may be only ready to enter one or two new markets at the time of vendor selection. The exception? When a market is large or strategic enough to merit selecting partners with solutions that cater specifically to that market (think China).

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The Rise Of Federal Chief Customer Officers

Rick Parrish

Hundreds if not thousands of leading corporations have created chief customer officer (CCO) positions in recent years to help them become more customer-centric. Now US federal government agencies are toying with the idea of adding CCO positions and four have already taken the plunge. In my first Forrester podcast, I spoke with hosts Sam Stern and Deanna Laufer about how federal CCOs can help achieve their agencies' missions and dispeled common objections to creating federal CCO positions. For more of my federal CCO research, check out my Executive Q&A: Federal Chief Customer Officers report on forrester.com or my blog post on the subjectRead more

The Data Digest: The Multifaceted Journey To Purchasing Health Insurance

Anjali Lai

If you’ve been following our blog, you’ll know that the Data Insights team here at Forrester has been tracking the evolution of US healthcare reform over the past three years and its implications in terms of consumer behavior, attitudes, and expectations. Our study began in July 2012, when we advised health insurance companies how to prepare for the flood of new customers entering the market. Two years later, my colleague Gina Fleming extended this analysis into Forrester’s Healthcare Segmentation, which provides a refined understanding of key customer profiles. Now, with our 2015 Consumer Technographics® Healthcare Survey just back from field, we can complement our understanding of the US consumer health insurance market with another layer of insight: the member’s journey to purchasing health insurance:

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Introducing... Forrester's CX Cast

Deanna Laufer

That's right, Forrester's Customer Experience team is jumping on the podcasting bandwagon and launching a weekly CX podcast! Each week me and my cohost, Senior Analyst Sam Stern, will be speaking with an analyst from our team about their hot-off-the-press research or discussing relevant CX topics in the news. We'll package these up in easily digestible 10 to 20 minute episodes and best of all, these podcasts are available to everyone.

In our first episode, Sam interviews me about how to build a shared customer experience vision. You can listen below, but we recommend you subscribe on iTunes or through your favorite iPhone podcasting app by searching for "Forrester's CX Cast" so you never miss an episode. If you need help accessing or subscribing to the podcast, please contact our producer Curt Nichols at cnichols@forrester.com.

Happy listening!

Decisions, decisions...

Rusty Warner

We all know that empowered customers expect brands to deliver contextually relevant experiences based on their individual preferences for content, timing, location, and channel(s). How do customer insights (CI) professionals decide the appropriate course of action – not just for a single customer, but for all customers? How do they then execute on those decisions and measure the impact? Systems of engagement like Real-Time Interaction Management (RTIM) provide answers.

Forrester defines RTIM as: Enterprise marketing technology that delivers contextually relevant experiences, value, and utility at the appropriate moment in the customer life cycle via preferred customer touchpoints. In my latest brief “Demystifying Real-Time Interaction Management,” I explore evolving RTIM requirements.

The five keys to implementing RTIM as part of your contextual marketing engine are:

1.      Customer recognition - Engagement based on individual identity resolution

2.      Contextual understanding – Persona analysis with real-time behavior and external data

3.      Decision arbitration – Next-best-action based on advanced analytics

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Capture The Global eCommerce Opportunity

Zia Daniell Wigder

eCommerce growth continues unabated around the world, with eCommerce being cited as a driver of overall economic growth in markets from China to Nigeria. Indeed, online retail revenues continue to soar in every market that we forecast—China alone will generate more than $1 trillion in eCommerce sales by 2019.

As eCommerce markets in different parts of the globe flourish, a growing number of digital business leaders are being asked to take their brands into new markets. What opportunities exist for eCommerce leaders looking to expand internationally? How are they tapping into these opportunities? Our newly updated report (client access req’d) addresses these questions. We find that:

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Mobile World Congress 2015: Expect Even Shinier Objects

Julie Ask

Mobile World Congress (MWC) is “the” event in mobile. It is the event where Samsung, HTC, Huawei, Sony, Microsoft, LG … well, really everyone (but Apple) will launch new mobile phones, tablets, and wearables. And, yes big-screened mobile phones are still “in.” I’m more likely to buy a leather jacket with bigger pockets or a larger purse than to buy a smaller phone.

 

Thousands flock to Barcelona annually to hold these devices in their hands. Words too often fall short in describing the feeling of holding the next Samsung device in your hand or the emotions of delight and bewilderment when you turn the device on.

The question then is: “So what? What does it mean for my company?”

Here’s what you already know:

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Are you a loyalty company?

Emily Collins

A version of this post originally appeared on AdAge.

It's harder than ever to earn your customers' loyalty. They are "always on," have instant access to myriad choices, and can easily find the cheapest prices from any supplier. Many companies think they've solved this with a loyalty program, but the competition is stiff there, too. On average, consumers belong to eight loyalty programs -- the majority of which are ruled by points, discounts and financial rewards. And let's face it: These transactional benefits are more about increasing frequency and spend than influencing emotional loyalty and devotion to a company.

The bad news? Traditional approaches to loyalty don't cut it anymore.

The good news? I'm not going to tell you to scrap your loyalty program. But, in my new report on customer loyalty, I am going to tell you to reframe how you think about your program. It should be treated as one of several tools -- alongside customer experience, brand and customer service -- that helps foster customer loyalty wherever customers interact.

Be A Loyalty Company, Not Just A Company With A Loyalty Program

Truly great loyalty strategies create a meaningful exchange of value between the company and the customer. This exchange encourages customers to share all kinds of profile, preference and behavioral data. And the insights derived from that customer knowledge have broad applications for all customer-facing strategies, and should radiate out across the enterprise to do the following:

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The Data Digest: Celebrating China's New Year And Consumer Tech Boom

Anjali Lai

Today marks the beginning of the Chinese New Year. Kicking off the 2015 lunar calendar and the year of the goat (or sheep or ram), today celebrates the emergence of spring, the coming together of families, and the arrival of good fortune. Given China’s prosperous technology evolution, the superpower has a lot to look forward to. According to Forrester’s Consumer Technographics® data, the country is already home to the most mobile-savvy population on the planet, with nine out of every 10 metropolitan Chinese online adults using a smartphone; within the next two years, the nation will see an additional 200 million unique smartphone subscribers: 

What will happen when the world’s largest mobile phone market becomes even bigger?

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