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Multi-National Consumer Goods Company

  • Client with RightSpend team support used RightSpend data to compare current hourly rates by job function across 43 global markets and found that client’s hourly rates were 21% higher than benchmarks driven by several factors

 

  • Based on agency's grouping of titles (junior and senior), we discovered our client’s agency were able to increase their hourly rates by 21%, by charging higher senior staff rates but tasking more junior staff to work across the business

 

  • The client’s contract allowed the agency to use a low number of hours per Full Time Employee (FTE) to increase its hourly rates, and it was determined that the agency also combined a higher overhead rate and profit margin to their cost advantage

With support from RightSpend team, Client renegotiated its rates and realized a 16% direct savings reduction in its fees (savings based on the new negotiated rates applied to the last actual year of data).  Client also amended its contract to ensure that key metrics (e.g., hours/FTE, overhead rates) were made country-specific vs. using a single, global average

ConsumerGoods

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Global Technology Company

  • Client's historical MSAs were "fixed bid" and non-marketing centric with little-to-no transparency or consistency into how agency rates and compensation were to be calculated

 

  • Client's long-term agency relationships had never been re-pitched (and Client had no interest in going out to bid), making it difficult to determine appropriate “should cost” fees for scoped services, which tended to vary on a year-by-year basis

 

  • RightSpend data showed that Client's internally developed rates database (in most cases) did not represent fair market benchmarks for the types (and locations) of the agencies it was engaging

 

  • Lack of defined terms allowed agencies to develop fees in a variety of ways, making comparisons difficult across the business and across agencies

 

  • Long term agency relationships that had never been re-pitched made it difficult to determine appropriate “should cost” for scoped services

Using RightSpend, Client identified $5.9M in savings opportunity across its top 8 marketing agencies.  Client implemented new agency MSA language that included RightSpend definitions and best practices to ensure consistency of data across the company.  The RightSpend team trained internal stakeholders on agency compensation methodologies and negotiation opportunities.  Client was able to formalise expectations with its agency partners on required compensation transparency to ensure fairness for all sides.

Tech

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Global Pharmaceutical Company

  • Agency proposed a 23% increase in staff hours on client’s business stating that the new scope required a sharp increase in the level of staff required to service its business.  Note: client’s total marketing budget was up only 8% from previous year

 

  • Utilizing RightSpend “should cost” asset cost benchmarking, Client identified that the agency would only need a 6% increase in staff hours from the previous year

 

  • The new year’s Scope was more tactical in nature than previously, so while more agency hours in total were warranted, these could be serviced at a more executional level so required staff did not have to be as senior as the previous year (which was a big planning/creative development year for the Client who had launched two new products)

Client with support from RightSpend team, reached an agreement with agency to increase staff hours by 6% resulting in a 17% reduction in agency’s fee for the new year. Client also right-sized its staffing plan to better align with its new scope of work and requirements.

Pharma

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If you would like to know more or simply have a burning issue that needs to be resolved, connect with one of our experts today.

 

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