PAY TO WIN

The trend towards performance-related pay is beginning to gain acceptance in the event industry, especially among companies keen to prove the effectiveness of their work. But not everyone is convinced, says Richenda Wilson

Among law firms touting for personal injury cases, the “no win, no fee” principle is gaining popularity. It offers a degree of relief to the client that they will not have to fork out a fortune if their claim fails, and they will generally be more than happy to pay a premium if they win. In times when value for money is critical, could the same principle be applied to the event organisation business?

Crown Communications managing director Nick Lamb’s answer is a resounding yes. “A client of mine was dubious about a particular presentation I’d suggested for a pitch he was about to make. So I said: ‘OK. If you don’t win, don’t pay my fee, but if you do, pay me double.'”

Needless to say, the pitch was a success and Lamb was laughing all the way to the bottom line. Another advocate is Jerry Starling, managing director of The Eventworks. “If we were paid on the basis of performance-related fees, I’d be rich,” he crows.

The idea may have great appeal to production companies which are confident of doing an effective job, but Lamb warns it is not always easy to determine what ranks as success. It is relatively straightforward when a presentation is forming part of a pitch for new business. “If the client wins, you get the money,” he says. “But what if the client wins only half of the intended business? And what if it’s a different sort of event – how do you quantify the success of a conference whose object is to motivate staff?”

On the first point, Miles Johnson, managing director of The Presentation Company (TPC), is unequivocal. “If the clear objective is to win business and they’ve won any business at all, they’ve got the deal,” he insists.

But other clients and event producers may favour a more intricate pricing structure, which will have to be thrashed out between them. So a good relationship with the client is essential. “The only element of the fee that can be variable is the profit. You can’t gamble with the basic costs,” says Starling. “So you have to be honest about the profit.”

“The client and organiser must have tremendous trust,” says Lamb. “Especially when the results aren’t necessarily tangible.” The double-or-quits deal he struck was settled with a handshake from a very senior client he had dealt with before, but he would be far more wary of suggesting such an idea to a new client.

Johnson agrees: “You can’t go into a new relationship with it. Too much trust is required.”

But Spectrum Communications director Christine Chapman suggests that offering performance-based fees may help pull in new contracts. “People are always looking for added value,” she says. “It may work in your favour to offer a performance element in fees. It shows you are dedicated to hitting your objectives and measuring the return on an investment.”

A typical deal might be on an event that costs 10,000 to stage. The client could pay 8,000 up-front, and then, depending on the success or otherwise of the event, they would pay either another 4,000, including a 20 per cent premium for good results, or nothing at all.

But before you can implement a payment structure such as this, you have to assess how successful an event has been. This means you have to find some way of evaluating the conference, something that companies still neglect. “It’s amazing how slow clients are to adapt to measurement,” says Starling. “I think they’re frightened of it. But many conferences are ineffective precisely because they don’t set measurable objectives.”

Event producer Roger Furnival, who designed Conference Audit, a post-event questionnaire with software to analyse the results, agrees: “I find clients saying they are holding a conference because they did it the year before, but they have no idea whether it was successful. They ought to send a questionnaire to delegates, but they’re reluctant.”

Furnival suggests one of the reasons clients shy away from evaluation is the effort involved. The event organiser within the client company has spent months planning the conference, putting all its other work on hold. Once it’s over, they just want to forget it, return to their desks and get on with other things. “They get a pat on the back from the boss if it’s gone smoothly, but is that enough?” he asks.

Ron Alldridge runs the Visual Communications Register, a database of 87 conference and event organisers, which lists, among other things, what evaluation methods companies use. “There should be less doing, and more asking if what we’re doing is right,” he believes.

“Any organisation that doesn’t evaluate events is throwing money down the drain – and won’t even know if it is,” adds Furnival. But he is wary of performance-based fees, because he says the success of an event is so dependent on the effort the client puts in. “You may only have the sketchiest of briefs and the client may not really know what they want to achieve with an event. You can’t be paid on results if the production company doesn’t have total control.”

Clearwater Communications chief executive Pete Brady agrees. “Technically and product-wise, an event might be fine,” he says, “but it might miss the target because the client has got the message wrong.”

However, Starling argues: “If people adopted performance-based fees, client organisers would have to take more responsibility for the success of events. You’d find effectiveness rocketing. Analysing the purpose of an event may even demonstrate that a live event is altogether the wrong vehicle for the communication.”

TPC’s Johnson maintains that performance-based fee structures and thorough measurement help the client and production company to align their objectives. “It focuses their minds and ensures they are working towards the same vision,” he says. “You have to agree pre-determined goalposts.”

Spectrum’s Chapman agrees. “Discussing a system of measurement gives you a better understanding of clients’ needs,” she explains. “The greater involvement will take your relationship with them to the next level. Sometimes, during this process, you find that the reason for holding the event may be different for the organiser and the audience.

“Once you’ve set the objectives, you can do pre-event analysis to find out what delegates already know, then post-event analysis to determine what messages they have retained,” adds Chapman. “The evaluation may identify that you haven’t hit the nail on the head and this will show you what follow-up communications are needed.”

Furnival chooses to wait until the post-event euphoria has abated, two to three weeks after a conference, before sending out questionnaires asking delegates what they thought of the facilities and what they remember as the message of the conference and of particular speeches.

“If they say they can’t remember anything, you have a pretty good indication of how memorable the messages were and how high the information retention has been,” he jokes.

Some critics point out that much event evaluation is still too simplistic, focusing on the logistics of an event. “Measuring a conference on the basis of what the food was like or whether the chairs were comfortable is like judging the effectiveness of an ad campaign by checking the copy is spelt correctly or assessing a car’s performance just by turning on the ignition. These are essential factors anyway,” says Starling. “You have to look at whether the conference delivered results.

“The hardest part is establishing a baseline of average performance, but it can be done. For example, BMRB research has concluded that standard information retention after a theatre-style presentation is 25 per cent. We could set an objective of delegates remembering, say, 80 per cent of what they’ve been told. When we achieve 90 per cent, we should get a bonus. Or if we asked the staff how motivated they felt before and after an event, we could set a target of a certain increase in motivation.”

Chapman adds: “There is no set formula for determining how a fee will be related to performance. I think it would be easier to implement that sort of pay structure on a long-term project than on a one-off conference.”

Clearwater’s Brady agrees: “When each show is different, it is very difficult to establish the criteria against which it’s being judged. You have no benchmark.”

Johnson concedes: “It is an imprecise art that works only for some clients. We evaluate each project on merit.”

TPC has recently struck a deal with transport company TNT, which involves an element of payment by results for a global employee roadshow. But this was struck only after TPC and TNT had conducted a similar project on the basis of a conventional fee, and the two companies had agreed on how the event had gone and where improvements had been made.

Even Crown’s Lamb, payment by results’ greatest advocate, sounds a final note of caution: “It’s a minefield, partly because there has to be such tremendous trust involved. If payment by results was really easy to implement, then it would be more prevalent. Even in the US, where these ideas often come from, it still isn’t really done.”

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