It happened to me—has this happened to you, yet?
Caution: Always have the person who contacts you on behalf of a company check to see if the organization uses a third-party procurement company or agency.
I have posted before about third-party procurement models coming to North America. They have been popular in Europe for some time. I have just had the most horrendous experience so I am sharing it so you can avoid similar drama.
On our company website, I indicate that, if prospective clients require venue searches, detailed budgets or detailed event plans before making a decision, there is a deductible charge. I haven’t always stuck to this but from now on, I will. Here’s why.
In early February, a top luxury brand contacted me to submit a proposal to facilitate and plan their executive retreat. In this case, I didn’t charge for the venue search, budget or detailed event plan as it was a high-end brand and I am always keen to add blue chip clients to our roster.
Suffice it to say, I spent six weeks working on this, had to call a slew of venues and other suppliers to pull the budget together. Also, the client wanted special payment arrangements so it was back and forth with the hotel for weeks to work out the details. It took well over a week to finalize the contract. I sent it the client for review and signature.
A few days later, I received an email from a company executive indicating that she had to run it past their internal event planning group for approval. The executive and our contacts didn’t realize that this was necessary.
More days went by. Then, I get a call from the hotel. A third-party procurement agency had contacted them and indicated that they have an exclusive contract to do all venue searches for this organization. Their role is to negotiate, review and sign all hotel contracts. All contracts have to be on their template with their own clauses.
So, after I worked our tail off for more than six weeks, I will not be getting even one dime of the commission. The third-party procurement firm will get the commission for simply reviewing the contract and signing it. How is that fair or ethical?
The whole reason the company approached our firm was they want something “out of the box” and creative. The procurement company, which also offers an event planning service, had planned their retreat in previous years and it was boring and lacked impact.
Our contacts from three levels of the organization didn’t realize that there was an exclusive contract in place.
5 best practices to avoid working without compensation
1) Always charge the client up front for venue searches, the preparation of budgets and detailed event plans.
2) Make it a retainer that you can deduct from the final invoice if you secure the business and receive your commission.
3) Ask upfront is a third-party agency is involved.
Sometimes, the person who contacts to request a quote has no idea that their company has an exclusive contract with a third-party agency. Ask them to double check if any such arrangement exists before you do any work on behalf of the prospective client.
4) Be sure to adjust your fees so that your company receives adequate compensation for the extra red tape involved in dealing with a third party.
Remember, some companies pay the third-party procurement firm and they pay you. This could result in unfavorable payment terms and significant delays in payment.
5) If you do decide to proceed, be prepared for the extra work and red tape that will be involved. Build this into your plan.
No wonder event planning regularly makes the list for top 10 most-stressful occupations. Just when event planners think they have it all figured out, someone throws them another curve ball.
Sometimes, it is better to pass on business altogether. Life is just too short. That’s easy for me to say. Fortunately, our company’s core services are the design and facilitation of executive retreats and team building. If push comes to shove, we can focus on that and leave the event planning to another firm or internal employees. It won’t be a smooth execution, but at least it will save some headaches and gray hairs.
If event or meeting planning is your core business, definitely take the time to clarify exactly who you will be working with and the terms of engagement before investing a lot of time and energy into a project that may go nowhere.
My story has a happy-but-then-sad ending. The client decided that my company added enough creativity and value to justify paying us extra for the event planning. This would have compensated for the loss of revenue from hotel commissions. Unfortunately, after eight weeks of work, the entire project was cancelled as the organization had to engage in mandatory company-wide training. I did not collect a dime for the many days I invested in venue sourcing, budget development, contacting suppliers and customizing an agenda.
Adherence to tips No. 1 and No. 2 for all clients would have avoided this. Lesson Learned.
Have you ever lost your commission to a third-party agency? How did you handle it?
If you have not experienced this yet, beware. It could happen to you. Third-party procurement, which has been popular in Europe for a long time, has now come to North America and it will not be going away any time soon.