You Can't Put a Discount on Loyalty

Bargain-Hunting Marketers Will Get What They Pay For

By Published on .

Jennifer Modarelli
Jennifer Modarelli
Recently our agency experienced a change that represents, in my view, the sad and slow decline in the value of loyalty.

We were not awarded a job from one of our long-time customers. It was especially painful because we were the agency that developed the strategic solution and helped the core team sell the needed project to upper management for funding. The project had to go out to bid due to its size (procurement rules), which we understood. And so we responded to the RFP. We never took it for granted that we would be awarded the project even though we were told we had the obvious inside track. We've worked so long with this company that we trusted that it would be upfront with us about any issues it had with our approach or pricing, as we have had many of these discussions in the past.

Losing any big opportunity is always an opportunity to learn, but as I reflect on this one, I do not find errors in our approach, pricing or staffing. Our final proposal was priced even lower than the estimate we developed for the business case. So what happened?

According to our client, the selection team chose to go with a much lower bid from an agency that was also willing to fix the bid price. We know our client well enough that we too would have been able to honor a fixed-bid contract, but not at a 30% (or more) estimated reduction. The client undoubtedly feels like it got the best possible deal, but when you don't invest in loyalty, you end up paying elsewhere. There is little question that the winning agency had to loss-lead the project to buy the loyalty we thought we'd earned, and doing so virtually ensures that the project will turn out poorly for both parties.

I have followed the dialogue in our industry regarding the "value" of agency services and the exploration of different methods of compensation, and I can't help thinking that the pervasive decline in loyalty is pulling apart relationships that need to be symbiotic and trustworthy in order to achieve excellent results for both parties.

We separated without any tears, and with lots of good experiences and work under our belt. We would not have been willing to purchase loyalty that we thought we'd earned.

And that is the sad truth: not only has the value of loyalty declined but now you can actually buy it instead of earn it. At least in the case of this particular company. A word of caution for customers and agencies alike: Ultimately you get what you pay for.

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