The Office of Fair Trading has launched an investigation into large accounting firms' fees to find out if they are using their professional status to overcharge for consultancy work. The Times last week reported that some earn more than eight times as much out of consultancy from clients such as banks as they do from auditing.
For example, Barclays paid £4.2m for its statutory audit but £34.8m for advisory and consultancy work. It doesn't seem to have been money well spent, judging by Barclays' current malaise, but there is a far deeper issue here, affecting those in marketing as much as those in the board room. That is, the amazingly amateurish approach so many business people take when dealing with external advisers.
The joke may be that a consultant is the one who takes your watch to tell you the time. But in this era of supposed transparency and the imperative of shareholder value, the lack of solid buying skills and disciplines in those making buying decisions amounting to millions is staggering.
Purchasing seems to be the forgotten discipline. According to a recent report from consultancy Relationship Audits and Management, marketing departments could learn a lot from their buying counterparts on how to handle demanding negotiations with suppliers. For the past few years, the consultancy has examined that murky area, the customer/client relationship, with regard to a wide range of marketing service providers.
It carried out in-depth interviews with over 2,000 individuals in major client companies, mainly in the UK but also in the US and Europe. It wanted to examine just how thoroughly relationships were being regularly assessed to determine why they worked or why they didn't. It found that almost three-quarters of clients undertake a formal or informal review of their relationships with advertising agencies and PR consultancies on a 'regular' basis, with the frequency of regular reviews rising when it comes to relationships based mainly on project work, such as design, sales promotion and direct marketing. Most reviews are done by a client-originated questionnaire filled in by both parties before meeting to discuss the results. Increasingly, these appraisals contribute to the levels of performance-related bonuses. The reviews are also often supplemented by informal meetings between senior individuals from both sides.
Guess what? Despite this, according to the report, clients don't seem particularly happy. A large proportion feel that the reviews too often dance around softer, but more crucial 'people issues' because of the client's fear of seeming too critical. Others say the assessment systems are too inflexible, while others moan about poor agency follow-through and the inability of their partners to rectify acknowledged problems.
In other words, when things go wrong, we know who is to blame. After all, isn't the customer always right? Well, no - and particularly when it comes to big clients in big companies with all the resources they can command. They have few excuses for unprofessional purchasing practices. Embarking on a relationship without having done some serious due diligence, and then bleating when things aren't working out, is simply a waste of the company's money.
So, caveat emptor. Or, to put it another way, clients get the consultants they deserve.
MARKETING 04/05/2000 P20
