Overhauling the agency pricing model

Agencies are potentially losing out on beneficial and worthwhile commissions due to a fundamentally flawed approach to pricing their work.

(Note: My experience with pricing is almost exclusively tied to research agencies but I think this is broadly applicable to all industries).

Projects are commissioned when there is agreement between what an agency is willing to offer, and what a client is willing to pay.

My issue is that both of these components are based on cost.

Instead, they should be based on value.

The agency side

The current model

Looking at the agency side first, it is clear that the focus upon cost makes the process far more transactional than it should be.

Using a dodgy equation (channelling John. V Willshire, who does this sort of thing far better).

P = d + αi + βt + p where P =< B

In English, Price =direct costs + a proportion of indirect costs/overheads + an estimate of the time spent + profit, where price is less than or equal to the client budget

(The alpha sign has arbitrarily been assigned to meaning a proportion, and beta an estimate)

d + αi + βt can be simplified to C for costs. Thus:

P = C + p where P =< B

Explaining the equation (this can be skipped if you trust me)

Of course, this is an oversimplification (though if agencies don’t use timesheets then the equation will lose the time segment and become even simpler) but it does explain the majority of the considerations.

Competitor pricing will be a factor. Market rates are to an extent set by those that have offered the service – an agency will seek to match, undercut or add to a premium to this depending on the relative positioning. This is reflected in the equation through time (premium agencies will generally spend longer on the delivery) and in desired profit.

An agency’s price will miraculously match the stated client budget (or in some instances, come in £500 under which I don’t understand since a) I thought psychological pricing had been phased out b) that spare £500 is not going to be able to cover any contingencies, expenses or VAT that aren’t included in the cost).

However, there are (at least) two things that aren’t yet factored in:

• Opportunity cost – the cost in terms of alternatives foregone. This isn’t included since the only time you can really be sure that new requests for proposals appear is at the end of the financial year. Otherwise – for ad-hoc project work at least – there is no way to accurately predict the flow of work.
• Competitive bidding – where profit is multiplied with expected success rate to give expected profit. While guesses can be informed by previous success rates, I don’t rate it as a) closed bidding processes mean competitor bidding strategies are unknown and b) perceived favourites are just that – perceptions (for instance, an incumbent may be secretly detested)

So what does this mean?

Ultimately, an agency will only submit a proposal if they think the profit they will make is worthwhile. The above equation can be reframed to reflect this:

p = P – C where P =< B

Or profit is price minus cost.

And this is where my main problem is with agency pricing. Profit is expressed purely financially.

Undoubtedly, finance is crucial. An agency requires cashflow to operate, it cannot survive solely on kudos. But it shouldn’t be the sole consideration

What I think should be included

Value should be added to the equation.

An agency should think not only about the financial margin, but about the business margin.

In addition to revenue, an agency can receive:

• Knowledge – will the project increase knowledge of markets, industries, processes or methodologies that can be applied to other projects in future? This can be used to improve the relevance of business proposals, or be incorporated into frameworks of implementation
• Skills – is the process repeatable, which can create future efficiencies? Does the project offer opportunities for junior staff to train on the job? If so, savings in training and innovation can be made
• Reputation – will the results of the project be shared publicly – in testimonials, trade press, conference circuit or otherwise. If the agency is fully credited, there is PR value in terms of profile and attracting new business
• Follow-up sales – will the project lead to additional work, either repeating the process for another aspect of the business or in up-selling follow-on work? Again, this can save on business development and can offer some future financial assurances (which will influence the amount of money borrowed and subsequent interest paid)
• Social good – perhaps not as relevant for those in commercial sectors, but will the project create real and tangible benefits for a community – referencing Michael Porter’s concept of shared value

Thus, project gains are far more than financial. These intangible benefits should be applied as a discount to financial profit

Dodgy algebra (this can be skipped unless you want to pick holes in my logic)

Because while net gain would be:

N = p + β(k+s+r+f+g)

The net gains from a project are profit plus estimated gains in knowledge, skills, reputation, follow-up sales and social good (note that these factors can be negative or zero as well as positive). These can be simplified as intangibles:

N = p + I

These intangibles offer alternatives to financial profit. Increasing the amount can be gained effectively increases the budget:

P = C + p where P =< B + I

Assuming that an agency won’t offer psychological pricing, we can assume that P = B. This makes the equation

B + I = C + p

Substituting budget back in for price, and rearranging gives:

P = C + p – I

However, this assumes that the entire surplus is passed onto the client. Obviously, this shouldn’t be the case but equally the agency shouldn’t keep all of this surplus. Instead, I propose a proportion of the benefit is passed onto the client via a discount (in order to make the agency more competitive and improve chances of success).

Value is therefore a function of profit and discounted intangible gain:

V = fn(p – ɣI) where gamma is a discounted proportion

What this means – the conclusions bit

All of this long-winded (and probably incorrect) algebra effectively changes to equation

P = C + p

becomes

P = C + V

Financial profit is substituted for value.

I believe that the price an agency charges should be a reflection of their costs and the overall value that is received from the profit – both in tangible revenue and intangible benefits. Some of these benefits should be passed on to the client in the form of a price reduction, in order to make the bid more competitive and improve chances of success.

This also works in the converse. If there is a project that an agency isn’t enthusiastic about – it might be laborious or for an undesirable client – then the intangibles are negative and so profit needs to increase in order to make the project worth undertaking (in a purely financial equation, this means costs will need to fall within a fixed price/budget).

I should also make it explicit that I am not advocating a purely price-driven approach to bidding. Other factors – communicable skills and expertise, vision and so forth – are still vital. The reality is that markets are highly competitive, and price (or more accurately, the volume of work that can be delivered within a fixed budget) will be a large factor on scorecards used to rate bids.

The client side

This section doesn’t require algebra (fortunately).

My main issue with client budgeting is that it only concentrates on purchasing outputs. While these are tangible, these outputs (at least in research) are a means to an end. A client may want eight groups and transcripts, or a survey and a set of data tables, but the client doesn’t want these for the sake of it. They are purchased to provide evidence to validate or iterate a business process.

Therefore, I believe the client budget should be split into two.

• The project budget – the amount that a client is willing to pay for the tangibles – the process required to complete the delivery of the project. These outputs are outcome-independent.
• The implementation budget – which is outcome-dependent. The complexity or implications of a project are often unknown until completion. A project could close immediately, or it could impact critical business decisions in nuanced ways. If the latter, additional resource should be assigned to ensure the business can best face any challenges identified.

The majority of costs are incurred in the project, but the real value to the client comes in the implementation. This needs to be properly reflected; it currently isn’t.

Effectively, I propose a client should commission an “agency” to manage the project and a “consultancy” to manage the implementation. These could be the same organisation, they could not.

Wrapping up

There are undoubtedly things I have overlooked, and I’m pretty sure my algebra is faulty.

However, I believe my underlying hypothesis is valid. The current agency pricing model is flawed and needs overhauling because

• Agencies ignore non-financial benefits
• Clients ignore implementation requirements

Both of these are easily correctable, and these corrections can only improve the process.

sk

Image credit: http://www.flickr.com/photos/chrisinplymouth/3222190781

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Be nice

I’ve just returned home from a week’s break in Berlin – my first visit to the city since 1990, shortly after the Wall came down and when there were street vendors selling fragments of it (I have a piece somewhere).

I saw many great things, ate some good food and drank some even better beer. Berliners are on the whole very friendly, and the vast majority responded to my poor attempts at German (my GCSE was gained through rote learning and memorising key phrases) in near-flawless English.

However, this isn’t a travel blog so I’ll limit this blog post to a quick contrast.

• At one bar, we were welcomed in by the barman who made friendly conversation while pouring our drinks. We were there to see the blues band playing (this was actually our second choice of entertainment, but the New Indie Bands night at Lido was sold out), When we realised we were in the wrong room, the barman personally took us to the right place. When he saw the doorman was distracted, he stamped our hands and waved us through. A thoroughly nice fellow.
• Whether it is because Germans are particularly fond of going to restaurants on Sundays, or whether the rain drove everyone insides to make it seem busier, but the restaurants in Hackescher Markt were particularly crowded. The restaurant we chose was the wrong one. From being herded to wait by the bar to the long waits between courses, it took 2 hours to get our main meal. The service was pretty poor and the food wasn’t much better – I’d like to give the benefit of the doubt to the staff who looked overworked, but it is the restaurant owner’s fault for not employing enough staff on what was clearly a busy time

The second venue was in a primer location, and was far busier. Yet the experience was far worse. Location is undoubtedly a factor in success, but it pales in significance to customer service and customer experience. Venues survive and thrive via word of mouth – the internet and social media is amplifying its power.

Things can and will change. I’m but one small player in the constant interactions between nodes and networks, but I am nevertheless a player. Therefore…

I recommend going the the Junction Bar in Kreuzberg for some live music and a friendly atmosphere (nearest U-Bahn is Gneisenaustraße).

I recommend avoiding Dante am Hackeschen Markt in Mitte (nearest S-Bahn is Hackescher Markt).

sk

Image credit: http://www.flickr.com/photos/bump/758310/

Chosen as a more mature alternative to my original choice of image

Treating respondents as commodities

Treating respondents as commodities – don’t do it, kids.

Yet it happens, particularly with online surveys.

I recently had a sales call with a provider who said that their panel was no better or worse than any competitor; they sought to differentiate themselves via client management and survey aesthetics.

This experience is backed up by a pithy comment from Tom H.C. Anderson in his Linked In group (NGMR – I won’t link to it, since it is only visible to members) who said “There is really only one panel that is used by everybody. Counting panelists is like counting fish in the sea and or clouds in the sky. One day they’re being used by company X, the next by company Z & Y”

Online panels aim to be as representative as possible; thus there is little difference in their make-up and so companies compete on other grounds. Primarily, this seems to be price. This means providers are continually trying to squeeze more out of their respondents for less.

This has contributed to the commoditisation of sample (it is by no means the only reason – it is perhaps an inevitability given the need to maintain respondent anonymity and confidentiality) and the research process. The research experience is at best variable (at worst, terrible) for respondents.

Surveys are now analogous to Farmville – drones click on different parts of the screen to complete monotonous tasks for a tiny reward.

This has to change. Perhaps it will – two recent articles on Research Live have broached the topic

• Robert Bain channeled James Surowiecki to say that respondents are customers, and that panel providers should do more to protect their interests
• Roger Sant argued that we should be less concerned with being representative, and instead engage respondents more by allowing them to self-select research topics

As a user of online panels, I know I am part of the problem. But it is the panel providers’ responsibility to protect its users. This would require coordinated action across the industry. Given that market research is regulated, this shouldn’t be an issue.

And the providers could start by treating their panel members as humans, and not commodities. Notwithstanding the inefficiencies of asking questions rather than capturing data (I’ve written about this previously in “If data is the new oil, we need a bigger drill”), some simple user experience testing could provide opportunities for easy, impactful changes.

For instance, why do surveys need to always ask demographic information? I’ve been stonewalled on this by several different companies, who say that it is “standard” (which sounds like commodity-speak) or that they need to ensure information is up-to-date. It is conceivable that a panel member may have changed their gender in the interim period between surveys, but I wouldn’t expect their ethnicity or age birthday to change. Cutting out extraneous questions can easily reduce survey length, and the burden on respondents.

This is a discussion the industry needs to have, and one I’m happy to be a part of.

sk

NB: I’m not concerned about whether they are called respondents or participants. Actions are more important than semantics.

Image credit: http://www.flickr.com/photos/baconandeggs/1490449135/

Customer retention shouldn’t be inferior to business development

New business development is obviously an important part of business.

But client retention is integral.

It is far more important than new business development in terms of sustainable growth, yet doesn’t always have the prominence necessary to achieve this.

In some respects, it is a false comparison since client retention is a form of business development. Sales and revenues can increase from existing customers – increasing volumes, increasing margins or benefiting from advocacy and referrals.

And this is what the core focus of a business should be – servicing and delighting its core customers.

A successful business doesn’t need the most customers in its category, but it helps to have the happiest and most loyal segment (or “tribe”, to insinuate some of Seth Godin‘s beliefs).

This shouldn’t be sacrificed for the sake of bringing in more customers.

It leads to overpromising and underdelivering, causing problems for both current and new customers. I’ve witnessed a couple of examples of each

1. Making unsustainable promises: New customers may receive incentives to convert – a discount price or an extra level of service. Sometimes this is made clear, but often it isn’t. At work we were initially happy with a new supplier, but gradually the price rose and the quality of service deteriorated. It is understandable that quality of delivery varies by employee, but companies should ensure the bare minimum is of acceptable quality. This wasn’t.

2. Misselling a service: I find this issue more prevalent when the person/department for business development is different to that for ongoing account management. The sales peoples’ bonuses are short-term and based on bringing customers i; this incentivises them to oversell and make unsustainable promises. The project team then have an impossible task to live up to. And so it proved.

The above two examples highlight the problem of churn. There will always be some level of churn but a high level of departing (unsatisfied) customers completely counteracts the work that has gone into developing new business. Eventually the opportunities dry up, and the company retreats to its core.

If that core remains

3. Alienating the core audience: Moving into new markets or new segments risks alienating the core audience, if the messages used to entice the potentials aren’t consistent with what attracts the core audience. A couple of years ago ITV1 spent a lot of money on contemporary drama to try and bring in a more upmarket audience. Unfortunately, the programmes weren’t received well by the core audience and viewing figures were dismal.

4. Offering sub-standard products or services: Reaching out to new audiences may divert resources away from maintaining the quality of a core product or its associated service. I’ve seen this with MLB.tv. I’m a casual fan living in a timezone where most games don’t start until after midnight. I’ve found the archive service perfectly fine. But the core product – live games in HD and with DTR functionality have developed several faults. Not only are the core fans being deprived of their need to support their team, but the online customer support has been completely inept. Two examples of this are (you may need to click on them to enlarge and make them readable):

When this happens, the company ends up as a doughnut – it has some mass at the edges, but no centre.

Business development might make some short-term gains, but losing sight of customer retention will only hurt in the long run. An organisation needs to ensure it delivers on the factors that causes its core to be loyal advocates – whether uniqueness, timeliness, durability or aspiration. It’s brand promise, essentially.

Customer lifetime value might be factored into business development strategies. But without adequate support across the organisation, it remains unfulfilled as core customers depart and new customers reject the offer.

Companies need to avoid turning into doughnuts. Well, the ring kind anyway. They would want to be the other type of doughnut – with all the good stuff in the centre.

The mantra that Rob Campbell gives in this short interview sums it up better than my terrible analogy*

“We treat all clients like they’re new clients – it’s the lifeblood of our survival.”

sk

Image credit: http://www.flickr.com/photos/hackett/159428076/

* I’d even rejected another analogy; one inspired by X-men. Wolverine and his adamantium skeleton is good. Penance and his empty body is bad

Bigger isn’t always better

As part of my ongoing Diploma, I have to write several assignments based on the company I work for.

This is pretty good in that it means my studying ultimately has some practical benefit. But the reading literature isn’t making it easy.

Leaving aside the fact I’m not a marketer (and that Essential doesn’t even have a marketing department), the textbooks all carry the implicit assumption that the reader is working in a large consumer-facing organisation. Which is silly.

Obviously a lot of marketing theory surrounding processes becomes redundant in small companies, but that doesn’t mean they should be ignored.

According to government statistics recently published, “Small and medium-sized enterprises (SMEs) together accounted for 99.9 per cent of all enterprises, 59.4 per cent of private sector employment and 50.1 per cent of private sector turnover.”

Another constant theme in the literature is that companies should strive for “bigness”. Growth is the engine of the economy, and thus organisations should aim to grow.

Fine, but growth doesn’t have to be in unit sales. If there is an excess demand, basic economics states that the price should be increased. Growth can be maintained through higher profitability.

And for the service industry, bigger isn’t always better. Quality should be prioritised over quantity. A company is built on the vision of the founder(s) – the larger the company gets, the harder it is to maintain that vision and the more reliant the company becomes on work delegated to colleagues. Careful training and recruitment (“Always hire someone smarter than you”) are one thing, but they don’t compensate for that experience or existing relationship.

A restaurant is a good example of this. I enjoyed reading this article about the Great Lake Pizza shop. The founders insists on making each pizza by hand, and are unwilling to compromise. In their words:

Ms. Esparza: [Expansion] would change our values. That is the American way — to expand without really thinking.

Mr. Lessins: We really enjoy the work that we’re doing and we don’t want to cheapen it. Consciously or unconsciously — probably both — we’re trying to create a manageable way to earn a living and still maintain our sanity. We value time as much, if not more so, than money.

I believe Franco Manca, in Brixton, operates on a similar principle.

It might seem painful, but putting a notice outside of the restaurant saying it is fully booked can often be the best thing it can do. It must be busy for a reason, and so people are prepared to queue, and even pay a premium for it. A restaurant relies on its good reviews, and for this it needs to have satisfied patrons.

Being small isn’t a hurdle, or a restriction. In many ways, it is a benefit.

sk

Image credit: http://www.flickr.com/photos/emeryjl/2676435494/

A second set of eyes

In my last post, I attempted to make a few calculations around the return on conversation. Rather embarrassingly, I suffered a temporary mindfreeze regarding the definition of a percentage, and so my calculations were out by a factor of 100.

This is my blog, and – unless I am directly linking to someone else – everything here is the work of me and me alone. This has its upsides and drawbacks.

One of the obvious drawbacks is my idiosyncratic quality control. Sometimes I may dwell over a post and its formulation for an age, other times I will quickly bash something out without due consideration to checking grammar, logic and facts.

For the most part, the reader may know no different. Some posts may be perceived to be a better quality than others, but unless there is a really obvious error – like yesterday – there is little indication as to how long the post took, or how much effort was put in. As Mark Twain once alluded to, it often takes longer to craft a succinct output.

In my day job, this doesn’t happen. There are project leads, but there aren’t projects with only one person working on it. It may take slightly longer to coordinate around different individuals, but ideas are bounced off of one another, different perspectives are compared, and details are checked. Nothing leaves the office until at least two people – one of whom is normally at a senior level – are happy with it. This is a crucial component of our approach – we require absolute conviction in what we are doing.

Quality control is absolutely vital. Without it, there is no trust.

So, mea culpa – the quality control on this blog has been found wanting. I’ve relearned an important lesson, and I hope this doesn’t affect your impressions of this blog too negatively.

sk

Image credit: http://www.flickr.com/photos/hotcherry/

“All you can eat” offers

I’ve been thinking about subscription models recently – specifically unlimited usage models.

It isn’t right for all business or all sectors, but generally they seem a good thing. Service industries, for instance, would struggle to cope with an increased demand without a commensurate increase in revenue. And premium good sellers would be reticent to participate in a model where price is to an extent commoditised.

Subscription models can be effective where:

• The product is disposable (in the sense that it is impermanent) yet potential customers are price sensitive. Each purchase is a transaction, and this transaction requires careful consideration. People will only buy when they can guarantee they will get their money’s worth – they will generally be unwilling to risk a substandard product
• A product suffers from a great deal of indirect competition. The customer doesn’t face a zero-sum choice in product A or product B, but has a range of alternative sectors to choose from. Growing the market is arguably more important than growing share.
• A new product category is introduced and people aren’t aware of or don’t understand the benefits that they can receive from changing their behaviour
• Complementary products are able to benefit from an increase in use of a separate product

Subscription services can transform industries:

• Film rentals: No longer do people have to decide whether each title will be value for money. With an unlimited subscription from the likes of Netflix or LoveFilm, they can afford to experiment. Not only does this benefit the company, but the industry as a whole grows
• Mobile phone packages: The mobile internet only took off when unlimited data charges were introduced. This post from Vic Gundotra of Google has some nice stats showing growth resulting from these new packages
• The food industry originated “all you can eat” offers, but this is too short-term to create real value. People still eat a meal; they are just encouraged to eat more food. Rather it is the more long-term offers that create more value e.g. free refills encouraging people to stay in a coffee shop longer, where they then buy more snacks. I wonder if there are any examples of monthly subscriptions for restaurants? This could work well e.g. pay a monthly fee and then eat there as often as you wish.
• While not quite “subscription”, loyalty/reward cards can help retain long term business. Chris Stephenson has a great example from Starbucks.

I have actually been persuaded to participate in two subscription services recently:

• At Cineworld I pay £12 a month for unlimited screenings. This has changed my behaviour for the benefit of both Cineworld and the film industry. Last year I went to the cinema twice. In the past month I have been 5 times. I have purchased overpriced snacks there, but most importantly I am not cannibalising revenue. I am a new customer and I haven’t yet been to a sold-out showing – so the marginal cost of me sitting in an empty seat to watch a screening is effectively zero. A win for cinema and a loss for the other entertainment industries where I am now spending less time
• I have paid $80 for a season’s access to MLB.TV where I can watch live, archived and “condensed” versions of every baseball game (as the regular season before play-offs is 162 games per team, that is a lot of content). I like baseball but I am not a diehard fan. However, Sky Player’s sports package (£35 a month for non-subscribers) seems overpriced for the marginal cost of adding a newuser who unable to have a dish installed in his flat. It is their prerogative to keep premium pricing, but they risk losing out to specialised services such as MLB.TV and Footyonline.TV, (£23 for a season; HT Graeme Harrison). Infrastructure and rights issues notwithstanding, could Sky not offer single sport or genre packages online, and look to upsell with additional services? That would have persuaded me to buy.

Subscriptions make me question the long-term viability of some services. iTunes has been phenomenally successful in its transactional model, but if someone gets a subscription model correct (or if Spotify can make an ad-funded model work), will that spell the end? Purely transactional models seriously inhibit overall consumption – for instance this is the primary reason why the French VOD offering is so far behind that of comparable countries (they have little free catch-up; it is predominantly pay per view). Is iTunes capping legal consumption of digital music and video?

Finally, is there scope for unlimited subscription models in research? For the large part, no. Industry currencies and syndicated surveys cater to a niche, but research is rarely objective data and the greatest value is derived from the service i.e. interpretation of results, not the results themselves. Companies such as Mintel and Forrester may be able to build a small amount of face time in their fees, and then upsell further consultancy or ad-hoc research, but for the most part I view this as a potential limitation to the core offering.

However, where there is indirect competition, a struggle to communicate benefits or opportunities to upsell complementary products, subscriptions appear to be an enticing prospect.

sk

Image credit: http://www.flickr.com/photos/lexnger/

Matter box’s physical failings

Matter is a joint venture between the Royal Mail and Artomatic. In an increasingly digital world, it is designed to promote the physical through sending people packages of “brands you can hold”.

It is a great example of both permission marketing (click through to a page where you can get the first 4 chapters of Seth Godin’s classic book) and marketing as a service.

Everyone can benefit. Consumers get free gifts. Brands create awareness in a positive, non-intrusive manner. And the Royal Mail reminds people of the simple joy of receiving a mystery package.

One trick I felt the participant brands missed this time was creating something unique of ongoing value – a social object, if you will. This package was primarily free samples, whereas the pilot Matter box contained branded items such as crayons, a keyring and a sweatband. Free samples are obviously a proven method of promotion, but it doesn’t feel like a gift in the way that a specially commissioned item does.

That is a minor gripe. My major gripe is unfortunately with the Royal Mail’s service.

As a society, we appear to be increasingly intolerant of inconvenience. We expect things to work. Because if it doesn’t in this age of choice, we can go elsewhere. Witness the furore of Twitter‘s downtime, and the Fail Whale. Yet according to Royal Pingdom, Twitter still had 98.72% uptime.

The Royal Mail may claim 99.93% reliability, but that is going to vary by package type. I seem to have no trouble receiving bills or junk mail. Packages on the other hand are a different matter.

My local sorting office has a reputation for incompetence, and in my experience that is perfectly justified. Packages have been left outside my flat, recorded delivery mail has been posted through the door, and “Sorry we missed you” messages have both shown up when I’ve had nothing to collect, and not arrived when I have.

So, of course my Matter box didn’t arrive last week. And I wasn’t alone.

I  commend Tim Milne at Artomatic for swiftly despatching replacement boxes. My second box did arrive safe and sound.

Matter is supposed to promote the benefits of physical products. But it is also highlighting the drawbacks. I may not be able to hold digital products, but I can at least be reassured by the reliability, accountability and transparency of transactions.

sk

Image credit: http://www.flickr.com/photos/lwr/

ATP – always in beta

The Nightmare Before Christmas, co-curated by Melvins and Mike Patton was fantastic. Musically, it was the best of the 7 All Tomorrow’s Parties weekenders I’ve been to. There are few places where you could find a bill diverse enough to incorporate Mastodon, Squarepusher, Rahzel, Os Mutantes, James Blood Ulmer, Junior Brown and Monotonix (pictured below)

See my Flickr for some more photos from the weekend

Aside from the music, I came away hugely impressed by the organisation. Past events have come in for criticism, but by and large these have been addressed.

• The venue was a bit small and tatty – so they moved to a larger one
• This venue initially restricted alcohol to the room it was bought in – a “zone” of free movement and consumption was introduced
• Some acts attracted big queues – a new stage was created in the pavilion with a larger capacity, and second performances were introduced
• This venue wasn’t optimised for a good sound – the stage was dismantled and the overall event capacity was reduced
• Security had been accused of being heavy handed – virtually all the security I saw were pleasant and approachable (they even let a chalet gig go on until 5am before shutting it down)

Now if only they could improve the road links to Minehead…

This is the idea of business as a service. This harks back to Russell Davies’ post on the lines getting blurry. Organisations should accept their mistakes but work with their stakeholders to continually evolve and improve.

This isn’t a new concept. Back when Japanification was en vogue, kaizen – continuous improvement – was the big buzzword. As epitomised by companies such as Toyota, a stream of small changes was the key to incremental performance gains. Success would be borne out by evolution and not revolution.

I believe that this notion is so crucial because it empowers all of us – whether chief executive, event organiser or researcher. ATP have shown what can be achieved with humility and dialogue. We should all keep the following question in mind.

How can we improve today?

sk

Maghound adopts the Netflix model for magazines

Time Inc have announced that they will launch Maghound in September. This will offer a Netflix style subscription model, where for a flat fee users can pick and choose the magazines they want that month.

I think this is brilliant.

Netflix has been a fantastic success. However, there is one possible iceberg on the horizon – the adoption of digital downloads. But the beauty of Maghound is that this shouldn’t affect them (aside from possible downward effects the Internet has on magazine consumption as a whole). The USP of a magazine is now its physicality – the ability to pick it up, carry it about, tear it, crease it and generally immerse oneself in it in a way that is difficult to do with the quick-fix Internet.

As with some many recent innovations, this move takes the power away from the producer and assigns it to the consumer. No longer will unwanted subscriptions fill up the letterbox and empty out the bank account. Now a wider range of titles can be sampled, and advertisers can be assured that people are opting in to the title. And these people are likely to be those harder to reach people that dip into magazines occasionally rather than regularly.

Interestingly, the auditing bodies will be viewing these as single-sale copies. And while Time Inc say that they won’t be divulging user information to 3rd parties, there is of course the possibility to collect and use the information for targeted advertising within the magazines.

Three things need to be implemented competently for the scheme to succeed

• The pricing model needs to be set at an attractive level – to me, it seems to be
• Site design and usability needs to be a priority
• It needs to be marketed as a complement, not a replacement, for traditional subscriptions

And if it really takes off, we could see a Netflix style community emerge

sk