Evaluate outsourcing partners through competitive pitches
For those of you at manufacturers and other companies (clients), commissioning outsourcing partners has become one of your indispensable tasks.
Outsourcing partners come in many forms, such as consulting firms, advertising agencies and systems companies, and they are indispensable in supporting corporate operations. (We call these companies partner companies.)
However, according to various surveys, dissatisfaction with these outsourcing partners is said to be as high as around 70%.
Since you are spending large budgets on outsourcing, it is self-evident that how you evaluate these outsourcing partners has a major impact on your company's performance.
This time, we will share one way to evaluate outsourcing partners.
That is to “evaluate them through competitive pitches.”
When a company does business with a partner company, the first action is often a “competitive pitch.”
The “pitch” therefore determines the future relationship—but are you making that decision based on off-the-cuff ideas, the atmosphere in the room, buzzwords or the latest tools?
In fact, many clients tend to select proposals for reasons like these without being able to identify a truly “good plan,” and naturally we often hear of cases where, even after implementation, the desired results are not achieved.
This column will help you find “truly good plans” by looking at the surrounding information rather than the content of the plan itself.
In fact, the people in charge at many of the companies I work with have become able to score proposals quite rigorously thanks to these instructions.
At the same time, however, evaluators at the same companies who have not received these instructions often give quite high scores, resulting in a large gap in the ability to score proposals.
This time, we introduce 10 points for selecting proposals in a “competitive pitch.”
(1) Proposals from companies that bring lots of people are usually of low quality
Some partner companies bring a lot of people to their presentation.
They may think that the more people there are, the more the client will feel they are putting in effort, but this backfires.
Usually only a few of them actually speak.
A team with many people is a sign that “no one has a grasp of the whole picture.”
I will explain in detail in part (4), but the number of people and the quality of the proposal tend to be inversely proportional.
Having many people does not mean it is a good company or a good proposal.
Rather, if such a proposal is selected and implemented, there is a high chance the project will start to fall into confusion.
(2) The title and index of the proposal tell you everything
Now, the title of a proposal is extremely important.
For example, whether it is a branding strategy or a promotion plan—how the company interpreted the orientation for the order and how it titled the proposal tell you everything about what the proposal is going to talk about.
Also, there is probably an index on the second page; since it outlines the proposal, you can tell at a glance how the proposal is structured.
In most cases, it is already off the mark at this point.
It's like saying you want to go to Hawaii, but heading for the Philippines...
Both seem to be headed south, but more often than not they end up in the wrong place.
Yes—first, check whether the title and INDEX are in line with what you asked for.
(3) Track records and the like are written at the beginning
Some partner companies start by explaining their own track record and their staff's backgrounds.
This is a technique used in scams!
It is an attempt to first win trust in the company through the halo effect, and it is a sign of a lack of confidence in the substance.
Listing a track record is not bad in itself, but many partner companies that write good proposals put their track record toward the end. Of course, if there is substance, it is fine to put it at the front, but most proposals that lead with it sink in the second half.
This halo effect is actually tricky: clients can become intoxicated by it and may not be able to tell whether the proposal is good or bad until the very end.
Companies that know what they are doing put an abstract (a summary of the proposal) at the beginning.
(4) The chapters are not connected
Even when the flow of the index is perfect, there are many proposals in which the chapters do not connect to one another.
As explained in (1), many teams work separately, and often no one oversees the overall flow.
For example, when proposing an advertising strategy, the flow goes from environmental analysis to resource analysis, formulation of promotion strategy, creative, advertising plan, KPI setting and so on; but the conclusions reached in each part are often different, and none of it connects. Some chapters may contain good proposals, but if the whole does not connect, it is meaningless.
And, worse still, the partner company “doesn't even notice that the flow has broken down.”
You can tell, because they look satisfied once the presentation is over...
Having been taught that a proposal should flow from upstream to downstream, I find myself confused about what such a presentation is trying to achieve.
Rather than focusing on individual ideas, it is more important to check whether this flow is properly constructed.
(5) Lack of specialized knowledge
Moreover, specialized knowledge in individual areas is often low.
I don't intend to go into detail here either, but there are many times when I think people who call themselves marketing or advertising experts “know far too little”—for example, getting the definition of a brand wrong, not knowing the difference between marketing and promotion or between KPIs and KGIs, or how to calculate them. (Conversely, they make frequent use of buzzwords and English jargon.) It is fine for the client not to know such specialized knowledge, but it is rather embarrassing for experts at a partner company not to know the basics of their own field. This, too, is common.
What you particularly need to watch out for is
the frameworks used in proposals. (*These are different from diagrams that organize information.)
It is very good to understand the basics of frameworks and draw original ones, but whether it is a framework created in one's own way without knowing the basics, or one created to steer the plan arbitrarily, either undermines the credibility of the proposal itself, so I want people to think carefully before using them. (Example: you wouldn't want to board a plane whose pilot doesn't know how to read the instruments, would you?)
(6) Beware of how subcontracting and copyright are handled
Proposals may contain many traps.
For example, a famous actress is featured in the graphic design, but her fee is not included in the estimate...
To avoid these traps, what I pay the most attention to when preparing an orientation sheet is the handling of subcontracting (1) and copyright (2).
If left unchecked, you will be charged exorbitant amounts not only for the pitch's order cost but also for extended use and secondary use of copyrighted works.
In most cases the client is unaware of this, so if it goes unnoticed it becomes a source of trouble. To avoid this, we prepare an orientation sheet that includes the following provisions. (There are many more items as well.)
(1) Subcontracting: For subcontracting, we require either a prohibition on multiple layers of subcontracting or disclosure. Subcontracting means the primary agency places an order with its subsidiary, which then orders from an outside company, which orders from yet another outside company; a third-tier subcontractor would be one thing, but eighth-tier subcontracting is not unusual. Why is this bad...
Taking an advertising agency as an example, it deducts overhead of 15% or more and places a production order with its subsidiary. This subsidiary in turn takes about 30% in overhead and then outsources to an outside company. If this continues further—yes, things get pretty bad.
In short, we require disclosure of subcontracting so that you don't end up in a situation where you place an order for 10 million yen and the actual production cost at the end of the chain is only 1 million yen.
(2) Copyright: This kind of trouble really happens often. As a rule, we ask for a buyout of copyrighted works such as designs, logos and copy that are produced. Of course, some works cannot be bought out (for example, actors' portrait rights), but we negotiate for the other works. We often hear stories of companies being billed tens of millions of yen in extension fees for TV commercials or web content a year later because this was not handled properly.
(7) Not knowing the difference between a menu and a plan
This is also common: people often do not understand the difference between an advertising menu and a plan or strategy.
For example, in the media plan chapter, they only say things like “With a budget of 100 million yen, that comes to 1,000 GRP,” or “We think XX is good for web advertising, and we expect to achieve 1 million PV.”
Let's make this explanation easier to understand.
- 1,000 GRP costs 100 million yen.
- To achieve 1 million PV, use this web ad.
No, that's not a plan. That's a menu.
- Strawberry daifuku, 100 yen
- With 600 yen, you can eat two bowls of gyudon
It's that kind of thing.
For clients holding a competitive pitch for the first time, even this kind of menu proposal can seem fresh.
However, anyone can write a menu. If you really want to achieve results, you need to determine whether it is a menu or a plan.
Incidentally, a plan (in the case of a media plan, for example) identifies which target is exposed to which media, then creates a media allocation and schedule in light of costs to maximize reach.
That kind of thing is a true plan.
(8) The Q&A time is important
Even so, it is difficult even for partner companies to develop a plan in only about two weeks after the orientation. We tell our clients that, if anything, what matters in a pitch is judging whether you can work with the company as a partner.
It is therefore no exaggeration to say that a partner company's true nature is revealed in the Q&A session.
Not only their attitude but their eye movements, how they answer questions, facial expressions, which way their feet point, hand movements, leg jiggling and so on—their true nature shows through everywhere.
For example, when you ask, “It says your KPI is to raise awareness by 10%—what is the basis for that?”, one person may appear to answer politely, but if you look at the others, you will see a variety of attitudes, such as sullen faces or jiggling legs.
Those attitudes become important information for predicting whether the future partnership will be good or bad.
Incidentally, after receiving a proposal from an advertising agency, I left the presentation room early and was on the phone outside; not knowing I was there, the agency's people came out after finishing their presentation and were badmouthing the client.
Then again, the client was watching closely too, and that agency was not selected...
One more thing.
Once, to find partners (advertising agencies) for several clients,
I made the rounds of advertising agencies.
I concealed my purpose and role and visited the agencies in my former capacity as a production company.
Since the advertising agency did not know my role, the person in charge spoke frankly.
“Well, I'm handling a 3-billion-yen pitch right now, so I don't think I can do it... Oh, but if this pitch falls through, it would help a bit, so maybe I'll do that ad...”
That's being far too frank.
But this person was only thinking about himself.
For the client, even if the budget is tens of millions of yen, it may be money squeezed out of profits earned by painstakingly selling products that cost a few hundred yen apiece.
It is not money for securing their department's sales, and you cannot entrust work to a partner company with such true intentions.
(9) Poor manners
I will refrain from giving specific details, as the cases could be identified, but I feel that more and more outsourcing companies lack basic courtesy.
Some creators don't greet people, someone shows up in jeans at a client where wearing a suit is the norm, presentations run far over time—problems that come before even basic professional manners are seen here and there.
I am not trying to impose old-fashioned Showa-era thinking, but in practice, when work is awarded to such outsourcing companies, their attitude often changes abruptly (perhaps because they feel secure), leading to frequent trouble.
Poor manners carry over into how they conduct the subsequent project.
(10) In the end, it's the content of the proposal
To sum up the above, my impression is that many outsourcing companies think that if they have a corporate brand and bring lots of people, they will be forgiven even for a proposal with disjointed chapters, no substance and a lack of courtesy...
I often think that arrogance and the quality of a proposal may be inversely proportional.
When it comes to proposals, a good partner company is not defined by its size or name recognition, but by having balance and power in mind, skill and body—sincere effort devoted to the substance, respect for the client, experience and intellect.
In my experience, proposals from outsourcing companies that showed this arrogance had almost no substance. Conversely, partner companies that behave in the opposite way submit high-quality proposals.
Summary
What do you think?
Many of you probably found some of this familiar.
The requests our company receives from businesses have changed considerably compared with the past.
In the past, we often took on work from advertising agencies, prepared marketing and product proposals, and presented them to clients; recently, however, we are increasingly managing pitches to advertising agencies and the like together with clients.
Our company is opposed to the pitch system (in various senses), but we also understand the circumstances that require many companies to hold pitches.
We are therefore consulted on how clients can conduct pitches safely and reliably.
Why have such requests increased?
Probably because we were originally on the proposing side, receiving planning orders from advertising agencies and others, so we understand the behind-the-scenes realities of the proposing side, such as its circumstances, skills and feelings.
I believe this kind of insight is why we are asked to manage pitches.
This time, we introduced one way to evaluate partner companies: “evaluating them through pitches, tenders and the like.”
Above all, proposals in pitches, tenders and the like are the first hurdle in determining whether a partner company can work with you as a partner.
It is very important to evaluate partner companies at this hurdle.
The above are insights gained from experience. For your reference.