Fire the Client? Answers
Marketing Challenge: Fire the Client?
Recap: Ralph Jones, marketing operations director for retailer Stylish, told his new account executive, Melissa Juno, at full-service marketing agency Superior Creative, that he wants 1% of the monthly retainer paid to him directly—and implied that her predecessor, Tom Roscoe, had made it happen during his tenure.
Juno went straight to her manager, Mara Choudury, SVP of marketing and sales for Superior, who checked with accounting and found no evidence that Roscoe arranged kickbacks for Jones. Choudury wants to retain Stylish—a top-10 account for Superior for 12 years that's up for review—but payoffs are not an option. She needs to find a way to solve the problem. Or maybe it would be better to simply “fire” the client.
May winner: Adriel Sanchez, vice president, Demand Generation, SAP
If you're a true agency partner, your loyalty should be to the company you serve, not any one individual at that company. It's in the best interest of your “client” (the company) to have the most senior executive discuss the issue with the client's most senior executive, straightforwardly but diplomatically. If your client company is at all reputable, it will appreciate the candor, as this type of behavior is rarely an isolated case. The client will fire the bad seed, put someone in place without questionable ethics, and your loyalty to the greater good of the client will be rewarded. If your client doesn't do any of those things, you've uncovered a toxic relationship that threatens the long-term viability of your agency, and you should fire the client.
James D. Zawicki, marketing communications manager, Sartomer USA, LLC
Jones of Stylish was clear in his demands after a payoff to maintain his business and this is clearly not an option for Superior Creative (nor should it be for any other company). The next step for Superior Creative is to approach Jones's boss—as opposed to engaging in another conversation with Jones or to simply fire the company and walk away from this top-10 account.
The conversation with Jones's boss should be discreet and professional, and include the demand that Juno understood during the meeting with Jones. At that point, Stylish's position should be crystal clear: either back Jones's position or have the way paved to continue business together without demands for payoffs or the threat of losing business if this is not complied with. If it's the latter, Jones will first need to be given a firm warning (or likely fired) because of his conduct with Juno.
Marc Davidson, account representative, LJS Graphics
I've resolved this in the past by saying, “I'll need an invoice for it to be legal and that includes an EIN number.” That usually nips it in the bud.
Stephen Martignetti, president, Martignetti Marketing
To avoid a no-win direct confrontation, yet bring this situation to a quick, transparent conclusion, Juno writes up a new contract or a codicil, which conforms to the client's request; 1% of the monthly retainer to Jones. Juno simultaneously mails out this new contract provision to Jones, Jones's boss, and Stylish's purchasing department.
The cover letter is sent to Jones with the aforementioned cc's: “As per your direction, please sign and return by xx/xx/xx…”
Susan Stone, director of marketing & sales, Rootblast International Inc.
The bottom line is, you cannot pay out kickbacks, but you don't want to lose the business either so, no, I would not fire the client. After consulting corporate legal, Choudury or the agency president should contact the president of Stylish and ask for a face-to-face meeting. Choudury should let him know about the illegal stipulation Jones made, while reassuring Stylish that she wants to continue to be its ad agency. There's a long-term relationship between the two companies, and if sales are strong as they seem to be, it's in Stylish's interest to continue with the agency that is performing, instead of starting over with a new agency.
I would also call Roscoe to get more input about Jones to see if he attempted this tactic in the past.
Lawrence A. Tillinger, proprietor, SFLI
Choudury should report Jones's kickback-request incident to Superior Creative's CEO and legal department. She should let them handle the situation.
Michael Smith, marketing designer, Tri-Win Direct
Take the high road and place the pressure on Ralph Jones at Stylish. Stylish has been a top-10 client for 12 years, so Superior Creative is doing a great job. It's highly unlikely that Jones will risk using an unproven marketing company simply because he is not getting a bribe that he's never received before.
Advise Jones that Superior will not honor his latest request. If he makes rumblings about moving the business to a competing firm, send an email to Jones and his boss reminding them of the quality work Stylish has received from Superior for over a decade. At that point the pressure is on Jones. He needs to provide justification for the stress and expense of leaving a longtime partner who is still providing quality work, meeting goals, and making money for Stylish—and answering with “they wouldn't bribe me to stay” probably is not a good reason.
Les Ford, area sales manager, Endicia
Choudury should advise Juno to respond as follows: “Mr. Jones, that would be something that we normally would not do, but let me adjust our contract and we can send it over to your lawyers and executives for review and sign off and proceed from there. How does that sound?”
Rick Adams, owner, HGA Advertising
Here's what I'd do as the agency head:
1. Make arrangements to pay the first month installment to the marketing operations director, and pay the first month to him.
2. With proof of the payment in hand, approach the president/CEO of the client company. Explain to him, if necessary, how their marketing operations director is essentially stealing from them. Encourage the client company to press criminal charges against the employee.
3. Continue working with the client if it gets rid of the marketing operations director and fire it if it doesn't.
Len Stein, president and founder, Visibility Public Relations
Let's see... There are laws against this; making payments directly to the “client” (crook) will surely come out sooner than later—how does accounting handle these direct payments? So, how to handle the situation? Every conversation with clients should be recorded for “quality control”—smartphones make this simple and invisible. Simply do not send payments and should the client demand it, let him/her know you have evidence of the impropriety.
President and CEO, The Shepherd Group Inc.
Oh, that Ralph! He's such a comedian! Or, OMG - you fell for that one? That's likely to be the initial reaction from the brass at Stylish when confronted with hearsay evidence about their macho marketing man. But, this is clearly no laughing matter.
Juno did the right thing in bringing the matter to Choudury, her boss. Now, it's time for the agency SVP to show some leadership—starting with a complete written account of the conversation between the two, followed by transmittal to and a follow-up meeting with the Agency's CEO. I would also encourage the CEO to reach out to legal counsel for guidance and necessary documentation. Creating the proper paper trail is essential and gives the agency the upper-hand in future dealings, regardless of whether litigation ensues. I would also have the principals involved on the agency side sign nondisclosure agreements (NDAs) promising strict confidentiality while the investigation is underway. Meantime, in terms of day-to-day operations, it should be business as usual between the two parties.
Next, the agency should contact an outside auditor to come in and look at the transactions between Stylish and Superior Creative. The fact that nothing showed up when accounting looked into the possibility of kickbacks doesn't necessarily mean that it didn't happen in some fashion. Someone internally at Superior could be in on the deal. An independent audit will clarify things and give the agency solid financial ground on which to achieve successful resolution. Furthermore, since Jones effectively threw the now-retired Roscoe under the bus by implicating him in the scheme, the agency should alert their former employee to what has transpired and get a statement—after first getting his signature on an NDA. Legal counsel should definitely be involved.
Armed with the findings of the audit and proper statements/documentation from Juno, Choudury, and Roscoe, the agency's CEO should then reach out to Stylish's CEO and ask him to meet in the agency's offices for a private meeting that will not involve staff, either from the client or agency side. Politely request that it be kept confidential.
At the meeting, which may also involve Superior Creative's attorney (particularly, if criminal activity is discovered), communicate how seriously the agency took Jones's statements and the steps taken to fully investigate the matter. If the agency, through Roscoe, was complicit in any form of misappropriation of funds, that should be acknowledged, as well as the internal measures taken to prevent future occurrences. The explanation should also be accompanied by an offer to resign the business. This communicates strength and renders any threat of an impending agency review to secondary status. Let's face it: If there was any financial “monkey business” taking place involving agency personnel, a review should be the least of their worries.
On the other hand, if the agency is “clean,” the Stylish CEO should fully grasp the vulnerable and precarious position in which his marketing chief has placed the company. Not only should he take the necessary steps to quickly rid the company of Jones's brand of managerial and financial thuggery, the agency's value to the company has definitely increased. Will Stylish still conduct a review? Perhaps. Could any competitor exceed their demonstrated level of integrity and professionalism? Not a chance.
Regardless of the outcome, however, Superior Creative has demonstrated the kind of leadership you find in great agencies—and people. That never goes out of style.