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THE RIGHT WAY TO EXPAND THROUGH SUBCONTRACTING


Going for a full-service agency model is the latest market trend for consulting shops.

Many firms specializing in media, polling, mail, field, phones, and even digital are suddenly feeling the pressure to add services.

One obvious road to rapid service line expansion is to partner with complementary but similarly focused consultancies and then co-pitch, subcontract, or “white label” additional offerings to supplement the core business.

This type of partnership between firms can often be an efficient and lucrative win-win arrangement for both service providers. But ensuring that it’s also a winning strategy for your clients demands your focus on executing it with integrity. In order to do that, you’ll need to focus on three key components of the deal: transparency, fit, and pricing.

Transparency 

As strategists, we’re trained early on in our careers to keep our cards close to the vest. But in business, opacity is very often the opposite of integrity.

If you’re outsourcing any part of the services you’re delivering, that should be made clear to your clients from the outset of the project. Joint pitches should include the names of both firms. Contractors should be referred to as such. And while there’s nothing wrong with protecting the identity of a vendor in a white label arrangement, it shouldn’t be a secret that the work is being done outside of your shop.

This isn’t only the honorable way to conduct yourself, it’s also what’s best for the bottom line of your business. Hiding key components of how your business is run, or how your services are performed to inflate the perception of your brand might net you quick dollars in the short term. Longer term, though, it’ll erode your clients’ trust and, by extension, your own professional reputation. It’s always a losing play in the end.

Fit

If you’re going to take the easy route to expansion by bringing in other specialists to service pieces of your contracts, you have an obligation to ensure that any firm you’re partnering with is producing the quality of work that your client expects and that they are indeed the best firm to be servicing that part of the scope.

Liking the head of one firm better than another, owing someone a favor who has thrown you business in the past, hoping to curry favor with someone who has more influence than you, or any motivations outside of wanting to provide the best outcomes for your clients aren’t good enough reasons when selecting vendors to outsource to.

Do the work of cultivating myriad relationships so that when you need to outsource something, you’re matching the work with the vendor that’s in the best position to deliver what your client is expecting. Doing anything else will quickly net you a reputation as a sleaze who will do anything to get ahead.

Pricing 

Multi-firm partnerships have the potential to buoy everyone involved by bringing in new sources of revenue and providing exposure to new markets. But when architecting these deals, it’s vital to resist any temptation to take advantage of your client’s lack of industry knowledge by marking up services far beyond their value just so that every service provider involved can have a fatter cut. Conducting business this way is predatory, and it’s another way that consultants often step over dollars to pick up dimes by selling out their long-term brand equity for a short-term bump in cash flow.

A good rule of thumb: if the deal is structured in a way that would look bad or require extensive explanation were it to become public knowledge, don’t do it.

Michelle Coyle is the founder of BGSD Strategies.

This article originally appeared in Campaigns & Elections on February 20th, 2019.

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