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Changing Compensation Models

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5 posts
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Les Hazelton
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Wow, we love clients who subscribe to the "traditional" 15% of gross media commission model, But they're fewer and further between.

A move from commission to fee-based has made make sense to some of our clients.

Have any of you seen any compelling "non-traditional" compensation models?

Thanking you...

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Member 204
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The agency business is moving very quickly to fees instead of commissions and mark-ups. That being said some of this still exists, so you should treat each situation differently.

What we've seen different is risk/reward compensation programs for agencies and simply reward based.

The details are complicated. We have a lot of writings on the web site, search through the knowledge base and white papers. Also, if you want a talk, call Audrey and set up a phone meeting with me.

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Drew Allen
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Hi Tom,
We have one client in particular that was looking for a non-traditional media compensation model and what we came up with is similar to what Tony mentioned based on rewards. Essentially we're only taking 10% of the commission for now and the additional 5% is being held in a reserve account by the client to be determined at the end of the year as to whether or not we earned the additional compensation. It's a risk on our part, but the client is happy with that model and we stand to make a decent bonus at the end...assuming we do a killer job for them.
My two cents.
Hope it helps.
-Drew

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jeff567
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I've used two alternative methods of billing. One is fee based. The client objected to 15% on each insertion, so I simply took the yearly budget for media, took the total of the 15% commissions and divided it by 12. I bill them that fee each month, and have the media bill the client directly for the net amount. For some reason that was more desirable in the client's eye. That commission could be any negotiated number of course. I've been doing that for a few years now, and their actual media budget has varied slightly - higher and lower - but my fee has stayed the same.

I've also billed purely for time....not desirable, but I track each and every phone call, time for email, research and analysis time, etc. and send an itemized bill each month. I converted one of this type client back to a straight commission because there were months my bill was greater than 15%.

Hope that helps.

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DebB_SW
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Per Tony's suggestion, Here are our writings on Risk or performance-based compensation:
http://www.secondwindonline.com/knowledge_list.asp?cmd=topic&id=282

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