Is Your Organization Suffering From RIDS?
by N. Ramasubramani

It afflicts the best of agencies; it is widespread; its impact is lethal. More business is lost through it than you can ever imagine. Ladies and gentlemen, welcome to the world of Retainer Induced Deficiency Syndrome, or RIDS for short. As every agency big or small which has handled a retainer based account some time in its corporate life will tell you, RIDS is real. And it results almost always in loss of an account and perhaps some casualty in the form of some one's career.

Why do agencies contract RIDS? How does one identify if one's organization is afflicted by RIDS? And having diagnosed an outbreak of RIDS how does one go about exterminating it? Is there a cure at all or is one destined to live with this deadly disease? Questions that are beginning to give many an agency head sleepless nights. We will try and address a few of these issues in this article.

Retainer - the origins

The concept of a fixed monthly retainer as against a purely variable fee based on performance was proposed by professional agencies as a protection against the vagaries of business. The performance based variable pay model had a several deficiencies - when an agency is handling a marketing program, the output could be influenced by a host of factors some of which are strictly outside the control of the agency. Secondly, in some cases such as frequent flier programs, if the agency fees are calculated as a percentage of the monthly expenditure, it left the agency at the mercy of the customers, since the redemption patterns depended purely on the customers' need of the month. Thus the fee for the agency would fluctuate widely from month to month while the resource commitment by the agency had to be above a certain minimum standard. Thus a fixed monthly retainer was conceived of to allow the agencies to focus on the marketing task, instead of figuring out how to keep balancing the resource commitment vis-à-vis the monthly earnings.

Today the concept of a retainer based engagement is widely practiced - not only in marketing but wherever an organization buys professional services from another organization. Retainers act as the buffer to reduce uncertainties in agency revenue forecasting and allow the agency management to focus on their brand/ business building activities. From the client's perspective too the retainer fee makes eminent sense, as the payouts do not keep growing. So for a while it appeared as if the retainer model was God's gift to the business world.

RIDS - A good thing mutated?

The problem with a retainer account is that the deliverables are often not so well defined. So at the end of the day if you compare the results, the client and the agency view the program from diversely different perspectives. Secondly agencies tend to take the account for granted, as there is a belief --- though mistaken --- that the client will not terminate the program. As a result, work on a retainer account usually takes a back seat giving pride of place to those other accounts where the agency has to fight to get every penny.

As the agency slides into what we have termed Retainer Induced Deficiency Syndrome, the account shows all signs of turning sick. Deadlines are repeatedly pushed back, agency top management spends less time reviewing the account, and even less time meeting up with the client while at an operational level, the agency and client teams meet routinely to review ongoing work with few new ideas being discussed. The operational team from the client side tries to be reasonable in the early stages but as the malaise deepens, the meetings become more acrimonious and finally the matter gets reported to the client top management. At this stage the agency, if it is lucky, gets a fair warning from the client to pull its socks up. Sadly, in ninety percent of the cases, if matters have come to such a pass, the agency does not prepare an adequate action plan and hence the account is lost. One more corporate victim of the dreaded RIDS.

Diagnosing RIDS

Detecting RIDS is simple. Runs a scan through all your retainer based accounts. And run this self-diagnosis test for each retainer based account:

  1. How many new ideas has the team handling the account generated for the client? In the last one month? In the last three months?

  2. How many weekly meetings has the team held with the client team in the last one month?

  3. How many complaints have been received from the client's operations team in the last one month? Last three months?

  4. How many of these complaints have been resolved immediately? How many were left unresolved?

  5. How many review meetings have been held internally on the account?

  6. How many review meetings have been held with the client's top management in the last three months?

  7. How many times have you interacted with the client's top management in the last three months?

  8. On how many occasions in the last one month has this client's jobs been pushed back in priority to accommodate other more pressing jobs?

  9. When was the last time that 'the industry fact book' for this client got updated?

  10. How many times has the team on this account forced a brainstorming on the account in the last three months?

  11. When was the last appreciation letter/mail received from this client?

  12. What percentage of their time is the team on this account devoting to the account?

Be honest in your assessment and you will be able to diagnose all potential candidates for RIDS - hopefully before the disease strikes!

RIDS - Is there a cure?

Not surprisingly, prevention is better than cure. It is far easier to look out for those tell tale signs and nip the disease in the bud than attempting a radical surgery at a later stage. But that -- as the cliché goes -- is more easily said than done. So what do you do if your organization has contracted RIDS? Getting out of the RIDS trap is very difficult and requires concerted effort from all layers of the organization. Occasionally it will necessitate seeking the help of an outsider to perform a service quality audit of your organization and suggest suitable remedies. And in extreme cases, it may need the redeployment of the professionals in the organization. But assuming that an organization has not reached such alarming levels of the malady here is what you can do:

  1. Institute a system of periodic review, preferably monthly: Push the team handling the account to present a complete ,all round review of the account including factors of customer delight that the team delivered in the period under review.

  2. Co-opt your clients into a service quality audit: Request your clients to participate in service quality audit. It provides a formal forum for the client to give feedback and it ensures that you are not caught napping while the house is on fire.

  3. Educate the team on the right orientation to retainers: A retainer is not a license to relax-it is a responsibility. A client signs you on a retainer because he respects your integrity and expects you to keep service levels to the best in class. Unless the team handling the account views retainers from this perspective, all efforts will fail.

  4. Teach the team that a retainer is not a restraint - it is the foundation for further business: Very often the team gets bogged down with the idea that nothing more than the retainer can be earned on the account and so all creativity goes out of the account. The truth is far from that-after all if a client trusts to enough to give you a fixed retainer, he believes in your capabilities and hence is open to any suggestion from you. When the team looks at the account from such a perspective then something happens to the chemistry on the account.

  5. Compile an issue log and monitor the issue log every day. See how many times the name of a retainer account crops up on the issue log. Is it more than a non-retainer account? This simple device can help you detect and take corrective action against the RIDS malady

Handling any account on a retainer basis has great advantages. However, it comes attached with a great responsibility and calls for a greater discipline on the part of the agency. Any organization or professional service agency which does not have that discipline, risks becoming a victim of the RIDS malady. And as we observed at the beginning of this section prevention is far easier than cure.


N. Ramasubramani (Ram) is a practicing loyalty manager from India. He works for Surfgold, which is a pan Asian Loyalty management company with world class IT clients such as Hewlett Packard, Microsoft, Advanced Micro Devices, Seagate and many more. He has more than 20 years of experience in marketing, advertising, brand building, direct marketing and online brand building. Visit www.surfgold.com or telephone:911142399899 Mobile: +919810774676 .

Many more articles in Customer Relationship Management in The CEO Refresher Archives

   


Copyright 2006 by N. Ramasubramani. All rights reserved.

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