Online marketing agencies are in a fast-paced, dynamic environment. They face many challenges, including understanding and anticipating the needs of their clients.
Although agencies are known for putting in a lot of effort to meet their clients’ needs they don’t often consider the potential problems that may arise if a client has a dispute.
Even with thorough procedures in place and the best interests of the client at heart, it is possible for a business to make a mistake or misunderstand something. This can leave the company vulnerable if a client files a claim.
Many disputes do occur, even if a mistake was not made. It could be that the client does not understand or appreciate online marketing practices properly, or the client is trying avoid payment.
One client dispute can impact an entire company.
An Errors & Omissions (Professional Liability Insurance policy provides coverage that helps to minimize disruptions caused by a lawsuit and protects the financial health and reputation of the company.
Key challenges and reasons for E&O insurance include:
A lack of communication between the agency’s client and the agent is one of the most common areas of dispute.
Clearly defining the expectations and responsibilities in the beginning stages of a project will help to ensure that the parties are aligned.
This is particularly important because clients may not be familiar with the principles and practices of online marketing.
It is important to give the client time to explain the project and provide details.
Furthermore, it’s important to clearly document any changes or agreements in a contract. This will allow you to easily refer back to them if there are problems.
A lot of planning must be done internally by the agency. Communication between departments is crucial in ensuring the client gets the most accurate project plan.
Client dissatisfaction can lead to underestimating the timings and challenges presented by each stage of the project or not accurately calculating a budget. This could eventually escalate into a client dispute.
Client dissatisfaction can also be caused by the actions of an employee. The agency can and will be held responsible for any employee who has intentionally under-delivered, or failed to fulfill their tasks as promised.
Even if a mistake was not made, agencies are still at risk of client disputes.
A client’s failure to sign off on a project may cause it to be delayed. The client may feel that the agency didn’t ask enough for signoff and, therefore, despite their best efforts, they may think the agency is at fault.
Failure can also occur because of circumstances outside of the agency’s direct control. A blogger may have edited inappropriately or it may take longer for a website submission to be listed by the agency.
This applies even if an agency recommends a partner firm for marketing work that fails to deliver.
Even if the partner company is at fault, the first agency may still be sued.
Third parties’ actions can still have an impact on the agency’s relationship with clients
Summary:
It is difficult to plan for every eventuality. Even the best preparations may not be able to prevent an (perceived?) error.
Online marketing agencies are protected by errors and omissions insurance. It covers any mistake that is made or reimburses the legal costs of the agency to defend themselves (and any costs they may have to incur) even if the accusations are not true.
An online marketing agency’s reputation and client relationships are crucial. It is therefore important to have the right measures in place in case something goes wrong.
Having E&O insurance in place will ensure the claim is defended with expert legal advice, pay damages if necessary and minimise the time spent on the claim by key staff.