Open letter to SAMRA on 60% fee on contract confirmation

I have been in the practice of qualitative marketing research for the past 48 years. During all this time it has been virtually unknown for many companies to pay 60% of the required fee on confirmation of a project.

There may be some companies who do not submit quotes which require the payment of 60% on confirmation of a project but I do not know of any, and if they are out there they are few and far between.

The reason for asking for 60% of a fee on confirmation is the fact that there are many out of pocket expenses to be met in the setting up of a project. This is particularly the case for qualitative projects. The list of monies to be paid out is a long one: Incentives for respondents, venues, refreshments, taxis, translators, moderators and more. Just drawing the cash to pay incentives costs extra money these days!

Recently I wrote a Green Piece on my website (www.marfa.co.za) which listed these costs with what I saw as being the probable amounts involved. I received 5 responses from qualitative practitioners telling me that my estimates were out of date and that the up-front costs would be at least 25% more than I had listed.

So why am I writing this letter to SAMRA [Southern African Marketing and Research Association]?

1. I find the apparent lack of interest (by SAMRA and large international clients) in the fact that many qualitative companies face frightening cash flow problems as a result of the non-payment of 60% on confirmation is quite untenable.
   
2. Most, if not all, clients sign off a proposal, which turns it into a contract between the parties. When these clients then proceed to break the contract by not adhering to its terms they are allowed to get away with it. Nothing is said or done about it. SAMRA appears to be oblivious to what is happening to its members.

Now that we have a Consumer Protection Act in this country isn't it about time that we considered taking those who break the terms of a contract to court in order to get recourse? And shouldn't SAMRA be advising and assisting us in this?

Just one example of what I consider to be an appalling case of complete arrogance came to me in the form of the following letter:

"Hi Jean - have just seen your Greenpiece, and thought you would be interested in the kind of reaction I got recently from being very firm to a UK based research agency about upfront payment of a 60% invoice... have blanked out names, but I think their attitude stinks!

"It is an xxx project and I gather they are a big agency [who do work for our mutual client]. Have worked for them once before. I understand their point of view, and xxx's long payment terms are clearly a widespread problem, but I am standing firm as it is a massive outlay from our side.

"After a lot of bluster and the following threatening letter, they then paid me for the 60% invoice the next day - and the project isn't for another 3 weeks!"

The letter from research agency client:

"Our MD is disappointed in your intransigence particularly given that our offer of 40% should easily cover the expenses referenced in your email, but you leave us with no choice given that the timetable has been agreed with xxx. Please go ahead on the basis of 60% upfront, I will send you the signed PAF shortly.

"However, now that we are aware of these terms and conditions this will have to be a consideration in placing future work."

What arrogance! It seems that the bigger the client the greater the arrogance -this attitude was from a research agency who should really know better, considering they are also bound to long payment terms from their client on this project. The small SA qualitative research agency was therefore expected to wait until international client 'xxx' had paid the UK agency - even though the work would have been completed and delivered, and then they thought that an 'offer' of a lower payment would do the trick (even though payment terms were clearly set out in original proposal letters). It amazes me that most of the transgressors in this area are the large, international clients - often revered by consumers.

So what is to be done about it? Will SAMRA be prepared to investigate this phenomenon? Are they really on the side of their members? Of course, many qualitative practitioners have not renewed their SAMRA membership for the very reason that they do not feel that they gain any advantages from it. There is now a Qualitative Special Interest Group as part of SAMRA but there seems to be no initiative on their [part] to address problems such as tardy payment or the working conditions and payment of recruiters, amongst many other things.

I believe that until research practitioners (particularly the qualitative practitioners) can organise themselves into a cartel which refuses to start work on a project until the upfront amount has been paid the problem will never be solved. In the meanwhile perhaps an additional 20% - 25% slapped on to the cost of research for those who don't pay on time might give some relief to practitioners?

SAMRA has a Research User's forum (RUF). It would be interesting to see where it stands on this issue.

Yours faithfully
JEAN GREEN

This open letter was sent to SAMRA and publicised in the MARFA newsletter on Sunday, 13 November 2011.