Have you ever purchased a new house, only to later discover that the contractor cut some corners?  And that buck or two savings for the contractor now translates into thousands of dollars of extra cost for you?  Unfortunately, many branding agencies and design houses have taken a page from the building trade, and are cutting corners as well.  Clients who only see a shiny new visual identity, logo, or website – or a lower bid price – will never know until it’s too late.

After quite a few rebranding engagements (and web design engagements) since 1994, and fixing just a few too many cut corners, we’ve seen just about everything.

Four key reasons branding agencies cut corners:

1) The team is under extreme pressure to bid the project at the lowest cost possible.  Competitive RFPs and policy-bound purchasing departments, for example, always reward the cheapest bid price: this means that work effort must be squeezed out of the project somewhere in order to even appear “competitive”.  Mitigation: buyers (and purchasing departments) must work more collaboratively with the agency before the selection is made – and more importantly, before the RFP is even issued.

2) The firm is inexperienced (or shifty).  In this situation, the firm is ignorant of (or ignore) certain time-consuming discovery, validation, or design tasks, so the work-effort for these tasks doesn’t even factor into the project budget. For example, when it comes to a website design, developing the site to reduce the client’s ongoing maintenance effort, or adding robust security, may not even figure into the project plan.  Even worse: unethical folks who purposefully omit key parts of the process to produce a budget that is initially lower, but will be increased through a later scope change.  Mitigation: Examine the assumptions, especially if there is a wide cost range amongst competitive proposals.  It could very well be that the most expensive proposal is actually the cheapest.  (Or, that they may be the best partner, but their assumptions are out of sync.)  Ask references about work quality and responsiveness.  And of course, ask if the portfolio of work has actually been done by the people who are still there.

3) The firm wants to improve their margins.  The less work that gets booked on any given project, the higher their profitability.  Profit isn’t actually a dirty word: it pays for recruiting top talent, training, investments in technology, and rent.  Mitigation:  Check out their offices, and consider whether their “gold-plated” facilities are why they need to have excessively high margins.  If you’re willing to shoulder the risk yourself, pay for the work on a time-and-materials basis.

4) The high cost of  responding to an RFP (Request for Proposal).  Onerous RFP response requirements, contractual terms that are completely one-sided (and must be agreed to as a condition of submitting a response), and RFPs that are sent to dozens of potential suppliers, all set up a future relationship where the firm must somehow find a way to recoup their proposal response investment – not just pay for the work done on the job.  Mitigation:  Flip the selection process upside down: conduct informal screening meetings beforehand where you can see if there is a “fit”, and review their portfolios.  Then send a simplified RFP to a select pre-qualified few.  Reducing the cost of participating in a selection process (and improving their chances of winning) sends a clear message of partnership, and allows for more substantive conversations.  Note:  For us, we simply do not respond to RFPs that are sent to more than two others.

This week’s action plan:  Are there factors in your purchasing process that encourage cutting corners?  If so, how might these factors be removed?

Editorial comment:  We have seen some RFPs that contain clauses that border on the ridiculous, and do no credit to the organizations that have sent them out.  From an RFP that we won: the supplier must take out general commercial liability insurance naming the client on the policy, and that the policy must be in place for three years after the engagement has been completed.  From one that we lost: that the winner commit to a ten year warranty – when the website updates after launch are 100% the responsibility of the client… and the expected life of the site is only 3-4 years.   Each time we participate in a selection process, we do so knowing full well the investment that we will need to make, and that the process, imperfect as it is, is the process we will need to follow. This post has been written to improve the outcome of your branding project, both for agencies, and their clients.

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