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What does a shared risk model really mean?

In an economy like ours that’s in a recession, among first budgets that are usually slashed are in the marketing department. It’s understandable that for some in tough economic times, marketing budgets aren’t a priority. After all, when it comes to traditional marketing, spend on brand awareness yields unknown or unclear returns in terms of generating new business. Because of this, cutting the marketing budget is often easily justified.

But the irony of this approach is that in order for a business to survive a recession they need to spend carefully and continue to win sustainable new clients and grow revenue, which means that marketing is actually a necessity.

At 3Way, we have created a model that takes this into account for our clients. Our digital marketing is completely trackable in terms of its return. Thanks to the technology we have developed, we’re able to calculate an accurate return on marketing spend, which brings back a level of control and predictability to our clients. The fact that we’re able to calculate these returns accurately allows us to operate using a shared risk model, where we only charge clients when we deliver a lead that results in a sale. So, regardless of how much marketing we may do, we only invoice our clients for actual leads and business that is won.

So what are the implications of a shared risk model? Mainly, it means that we walk the walk, we take the risk along with our clients and earn on a performance basis only. For this reason it’s a mutual growth arrangement, and clients feel secure in the knowledge that we have a vested interest in only delivering leads that actually convert to sales.

So how does one ensure that this shared risk model is a success? Here are three principles we’ve learned along the way:

1. A good call centre doesn’t mean it delivers good quality leads.
At 3Way, we focus on helping our clients build up their call centre sales capabilities by delivering good quality leads. After all, call centres lose agents if they don’t do enough sales to earn enough commission. By delivering higher quality leads, we ensure that our clients’ call centre agents are retained and the business grows.

2. A client needs a partner, not a leads provider.
We’re a safe bet on generating quality leads for our clients, but we also focus on delivering more than just the leads by partnering with them throughout the process. For example, we deliver detailed conversion and performance reporting, we implement technology and conduct call centre training for our clients’ sales agents – whatever it takes to make sure that the quality continuously improves and sales numbers increase.

3. It’s all about predictable revenue. It’s a well-known business principle that if you can predict your revenue, you’ll be the best manager, the best director, the best partner or best company around. But if you want a predictable revenue model and want to grow your business consistently, you need to make sure you’re getting the right number of leads consistently – that is, roughly the same amount of leads each day over time. In a call centre context, if you pass over too few leads, call centre agents can’t make their sales and they will leave. On the other hand, if you give too many leads to them, they can end up burning these leads which is then wasted marketing spend. Our client promise is quality leads at a consistent volume, and we deliver this time after time.

Risk is an all-encompassing word, but in our context, it means being a partner rather than just a service provider. To us, an ideal marketing partner is one that also has skin in the game, and that cares about their client’s overall success beyond just their own earnings. By sharing the risk with our clients, we make sure that if things work for them, they work for us. With this outlook, a shared risk model is far more likely to succeed.