Clients remain hesitant to enter into contracts to secure event planning services. Quite simply, they do not want to expose themselves to “unnecessary” financial risk.
The fact that some clients were treated unfairly at the outset of the pandemic and that restrictions on how and when events will occur remains, clients cannot be blamed for thinking twice about engaging another DMC.
The challenge now, for both the DMC and the client, is that meetings and events cannot be planned overnight. It takes months and sometimes years to properly plan a program.
Therefore, program planning and contracting must begin much sooner than later.
A mutually beneficial way to limit a client’s exposure to “unnecessary” financial risk while allowing the DMC to begin planning the event and earn revenue while doing so is by way of a legally binding letter of intent.
The letter of intent is a considerably refined version of the event service agreement that includes only those terms relevant to the early stages of the program lifecycle. It drastically reduces the chances of a later dispute between the DMC and the client, establishes an equitable relationship between you and your client, and creates an opportunity for both parties to continue moving forward with program planning.
When to introduce the Letter of Intent?
The beginning of the program lifecycle begins with the first communication between your client and your DMC. You begin by consulting with your client on the particular needs of their program and likely respond to their request for a proposal with a presentation or submission of your program proposal.
Depending on the DMC, you may limit the number of proposals to provide a client due to the extent of work it takes to complete them. Once your limit of proposals has been submitted or your client awards your DMC the business, you’ll want to introduce the event service agreement.
However, if your client remains uneasy about committing to the entirety of terms contained within the event service agreement, the best compromise in order for you to begin working on the program and begin to receive revenue in exchange for those services is by way of the Letter of Intent.
This also benefits the client because it secures your DMC’s availability and services, as well as allows both parties to adequately plan the program with enough time to ensure its success.
What will you need to complete the Letter of Intent?
Among some of the logistical details of the program, there are two very important aspects to include in each Letter of Intent (LOI):
Non-Refundable Payment: The amount you are seeking in exchange for your services rendered during the early stages of the program lifecycle. This will likely reflect a mutually agreed upon percentage of the overall program value.
LOI Expiration Date: Depending on the specific program date and the overall length of the program lifecycle, it is vital to provide a specific date in which the letter of intent expires and the event service agreement must be executed. This ensures that you are not providing extended program services solely covered within the letter of intent, which does not include the substantive terms and protections offered within the event service agreement.
Today’s Tip: In the wake of the pandemic, using the letter of intent can protect you in the initial stages of the program lifecycle.
Access the letter of intent in the DMCC Library here.