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I am considering this for a brand new site (for some piece of mind I know the business owner). The site is “fresh” with NO optimization having been done. I.e.: There are not even any page titles........... The site is well laid out, good content, etc. and is currently about 20 pages. I have the luxury of having the time available to invest in this project.
The business averages $15K to $20K per signed contract for the services they provide. The business does employ an outside sales staff, and employs other marketing efforts besides the website.
My specific questions are:
1. Are there any industry “norms” on sales commissions ?
2. Any ideas on how to track “a site visit” to a signed contract, that would be mutually agreeable?
As we all know there is a lot of hand holding, etc between an “inquiry” and a signed contract, so how would you present this type of arrangement, without feeling too vulnerable?
Ideas? Questions? Comments???.........thanks!
Tracking is what you need,
Get an Email address at their business and FWD inquiries from your site that that address.
Have them open an account with a callcenter and have an 800# FWD to them from your site. They will get a written report of calls made to that number.
This sounds like a sophisticated B2B sale requiring a sales rep to make a proposal and closed the deal.
imho - 25% of what the sales rep makes.
The site I reference to being "new" is the business' website, not mine. I would be doing the seo work on this site in exchange for a percentage of a deal that was closed, or be paid a commission on a completed deal that orignated from traffic to the site.
You would need to build a site [which they can own] that looks like the core site with modified content and Contact Information that will key the referral to you and only you.
Just did 5 sites like this for a multinational firm with B2B products / services.
[webmasterworld.com...]
You might find that to be informative, it's not an unusual business model. It does take knowing when it would be an advantage and also takes knowing how to set it up.
If there is not what I feel to be an honest accounting of the lead to sale ratio, I find another partner.
Tracking does help you determine a fair ratio.
If I give you 300 leads per month on high ticket items, and you close one (or whatever lowball #) of those deals...I need to find a better sales force (fast).
DankWest indicated the gross revenue is 15-20K per signed contract. "High Ticket" item is a vague term when discussing acceptable closing ratios.
For example:
A HDTV system might also sell for about 10K, aka "high ticket item".
But the gross profit margin, might only be 2%. DankWest's client's GPM might be 30%.
Both are high ticket items, but a 500:1 sales ratio is going to be much more acceptable for the DankWest client, than the site selling a high ticket item with a GPM of only 2%.
GPM has to be included into ROI calculations to determine acceptable sales conversion ratios.
DankWest same GPM applies to performing SEM on a "straight commission" fee model. If the GPM is high, ask for a larger percentage. But there are still some unknowns. Is this a service that is going to require support "After The Sale"? If there is ATS support, is there "ongoing" income, to cover the associated expenses, for providing these services? Etc, etc, etc...
One really needs to evaluate "ALL" the variables. John316 made a great point in discussing conversions though. You can have the most "targeted" traffic available hitting a site, unbelievable "Mish" rates, and an end client that is honest (Pays You :), BUT, if they can't convert a prospect to a sale, it's all for "naught"...
If the real ratio (regardless of "ticket value") varies widely from the original projections, it is time to explore other avenues.
No doubt, tracking is the most imp part here but how to track sales accurately because there are several other ways a sale may be completed - like someone getting the contact details from the site and getting in touch directly with the company etc. and not in dankwest case but maybe in some other cases, the client doesn't want to part with the sales profits as promised.
In the end, perhaps it all goes back to what Billy Joel sings............."It's all about trust!"
However, I can see the concept fraught with problems of establishing where each "client" originated from. Did he make a call first, then go to the site? Did he get the site address from a business card? Or? Or?........Thinking as I type, perhaps a filter on only those arriving on site thru search engines, but then how to id those in the end?
Although I am not concerned about being deliberately sliced out of the commission, I'm just not sure how to make it fair and equitable on both ends. I wouldn't expect to be paid for something I didn't generate a lead for.........but I still would like my ROI! I said I had the luxury of having the time to put into the project, but not just for the thrill of the hunt!
The important things you need are :
1. Trust - if you can't have mutual trust then don't do it
2. Access to data - if you can't access log files to see activity then don't do it, back office data access is even better
3. A written contract - clearly define what the deliverables are on both sides and how things might transpire in different "what if" scenarios. In the UK we have mystery shoppers, who keep companies on their toes, anyone can trip your partner up if required, but read point 1 again, don't do it if you are suspsicious of their activity
4. A subsidiary company with a seperate set of accounts - you need to be able to audit the activity at any time. All of the monies need to be kept apart from their main income streams and yours. A seperate site is the ideal solution, that way there is no grey areas as to who the traffic came from.
5. A business partner that is good at what they do - don't get into bed with people with "ideas" that are unproven. Your time is important, don't let someone lazy waste it.
6. Don't go for a deal that you could get as an affiliate. If equal work is being put in to the project then split 50/50. If you do more then expect to get more of the net profit.
7. Have a "buy out" clause in the contract and the right to terminate with joint ownership of the clients.
There will be a lot more stuff but it's likely to be project specific.
I can't stress enough how important agreeing the rules of engagement in advance are.
Personally, looking at your particular client case dankwest I wouldn't go for the deal, it wouldn't sit right with me. I might offer them reduced rates and a profit related payment on additional traffic milestones but pure commission only, when you have no say in the recruitment or ability of the sales team is only likely to lead to disappointment and a disgruntled dankwest.
Good luck whatever you decide.
Tis a great thing to know where to come to ask the tough questions...
most of my clients that are interested in revenue share model are overseas and my primary contact with them is thru email. would do you suggest me considering rev. share basis - the products are not high ticket items.
Also, can you shed some more light on that "buy out" clause. How can you jointly own the clients ? Will the party agree to it?
Also, no doubt, trust is important as you say - but let's say someone doesn't want to deny you share deliberately but inadvertently, they end up doing so as it's difficult to tell who got that sale through
