Starting Work With Just a Verbal Agreement
by Mark Appleton
What's the worst phone call you have ever received? Actually, let me rephrase that. What's the worst work phone call you have ever received? I'd like to tell you about the worst work based phone call I've ever received. But before we begin, you should know that all names and places have been changed to protect the...well, I'll let you decide the rest.
I was working client side for a multinational company. Our main website supplier was a small, probably no more than 10 or 15 people, agency who tended to build their own systems. They were the incumbent, and had been for a number of years. It would be fair to say the company I was now working for had outgrown them somewhat.
At the time of this phone call, we were engaged in looking for a new partner and an entirely new web system. We were going large and expensive and changing pretty much everything throughout the business as we went. The incumbent had recently been informed of this change.
Our business was seasonal, and we were soon to enter one of our busiest periods. My manager at the time was away on holiday, whilst the team worked on the instructions that were left to prepare for this busy time. Nothing should have gone wrong. In fact, the only thing that may have gone wrong should have been the website going down due to too many people visiting at once...or so we thought.
It started out as an ordinary day...until my manager's phone rang. Having not been at the company that long I hadn't previously been answering it, but this time I did.
The voice identified itself as the owner of our web agency, could he speak to my manager. Hmmm, that's an odd request, they've known my manager would be away at this time for a while. I reminded him of this, asked if there was anything I could to help. "I'm not sure" came the reply, "you see, the company has just gone into administration".
As you can imagine, my flabber was well and truly gasted! I really didn't know what to say. We talked a little before he rung off and I was left wondering exactly what to do next. I went to my manager's manager. Not around (who authorises holidays like that?). I spoke to a few senior people, got the consensus, which was, ring my manager. Which I did, this didn't go down well and went down even worse when I delivered the news.
Now, what we did from there is irrelevant to the purpose of my story. You see, what I actually want to talk about is the reason the agency went into administration. They were a pretty successful agency for their size. They had some very well-known clients and, despite their size, you could have quite easily argued they punched above their weight.
So what happened? Well I cringed when I discovered the truth behind the story. A client of theirs, let's call them Acme Spaceships in the US, had started to talk about future plans. This was quite a large client of theirs, one they'd had for a long time. You could say they were bosom buddies, best friends and any other cliched phrase you care to pull out when you hear some agencies talk about their clients.
The monies involved were big. Game changing for this agency. However, there was a catch. As mentioned, this agency tended to build its own solutions rather than using ones that already existed. But the client wanted to move forward with a particular technology. One the agency had no experience of and was written in a language completely different to the coding language they were currently using.
As a 'show of faith' (there's another word I should use to replace faith), they signed up to and began to train their staff in this new system and coding language. This cost thousands and thousands of pounds and was all done from a few verbal conversations. But hey, don't worry, they've been our client for years, we know them, drink with them, it will be fine.
As I'm sure you can guess, it wasn't. Things started to build when the agency couldn't get hold of the client anymore. Emails went unanswered, phone calls rang off, mobiles went through to voicemail. Eventually they did manage to speak to someone, someone new, someone who informed them he'd replaced their usual contact who was no longer with the company and no, he didn't have any agreement in place and was actually looking to renew most of the suppliers they used.
The agency, as the incumbent, were allowed to pitch but up against much larger agencies, they lost. Not only did they have to swallow the cost of losing the client, they had to find the money to cover all the training and licence fees they had committed to. It was the combination of these two things that pushed them too far into the red and administration came about.
I have seen similar stories, though not with the same disastrous consequences, time and time again. Agencies strive to be their clients best friend, which is lovely. But then they forget that the client has a business to run, just as you have an agency to run, and no matter what, they will always choose what is best for their company when it comes down to it.
I'd like to say agencies have learnt their lessons, but I still hear of things like this happening even now. Whether it's decisions as large as this or simply to accept a verbal sign-off on some wireframes or designs. You can't afford to be left vulnerable like this. Let The Agency Advantage ensure you aren't.