Forum Moderators: phranque
I have looked into the market and the numbers looking good. I've suggested I market the site and they just pay me for performance.
As I developed the site, the domain is quite new, I have a some web statistics software that tracks everything so all marketing results are down to me.
Do any of you guys do marketing, PPC etc on a pay per performance basis?
Any pitfalls to doing it this way besides the obvious?
What terms have you put in your contract?
Obviously I need to be compensated for the work I do here. I dont want to put in 12 months work and them to say 'thanks, that is all, we will keep our search traffic and you get no more money'
I'm thinking 10% of all sales (repeat or just new customers, i dont know) as thats how much they would pay to list the products on ebay or amazon, thats besides the extra workload they would have.
So me taking 10% in return for all SEO, PPC, site optimisation and other marketing work management.. good idea?
thanks for your advice
I'm thinking 10% of all sales
I doubt they would agree to something like that, I wouldn't. Let's face it even if you generate a lot of traffic if things change in the industry or on the site that traffic could easily go away and then they still have you there as a 10% partner.
I do SEO work as well and I believe you need to implement performance measures, but remember putting measures which you cannot control could be detrimental to your financial health. For example, I would never tell them you will get them a number 1 listing on Google for a specific keyword.
I would write a contract that says you will perform a service for X dollars either monthly or in total and the performance measures will be increased search engine visibility/saturation for an entire set of keywords. Don't say specific words and specific positions, because you only have very indirect control over the things that would make that happen. Notice using language like I am suggesting you are guaranteeing improvements, but you aren't listing specific improvements which you cannot control. If you are doing a PPC campaign then your ad writing skills come into play so you might be measured against total traffic you generate.
However remember that no matter what you are paid to create outcomes not inputs. Inputs are you will set up a campaign. Outcomes are that you will increase conversions by X% over 12 months or something like that. Clients want to pay you for bottom line results, not simply doing activities.
Finally, you may want to consider a contract with milestones in it that say when you reach key measurements you will be paid a bonus of some type in addition to the contract fee.
There are a lot of ways to slice this apple, but remember that you shouldn't be so specific with your performance that you have no control over it and that being paid bonuses for improvements above and beyond the agreed measurements wouldn't be a bad arrangement either.
(you could even work this so that when their volume increases by 10% you take 10% of the profit from the increased volume, so if they were selling 100 items, at £100 each and making £10 profit (10000 profit in total) and you increased volumes to 200 items, at £10 profit each (total profit £2000) you would receive a £100 cheque (2000-1000x10%).
Taken with a lower monthly fee this would ensure that you are able to do all of the work necessary for the client prior to the revenue increase (which could take a few months) it may or may not include PPC spend, you have the potential to earn a substantial amount, but the risk to the client is minimised as they will only be paying you the higher amounts once sales have increased.
Work on retainer and then a percentage of sales. Always cover your base costs and some. Don't put yourself in a "straight commission" arrangement with SEO, it doesn't work. It does for the client, but usually not for the consultant. Run Forest, Run!
if things change in the industryThere are also many unknown factors on the client's side: you have no control on how well your client handles their sales activities. Will there be many return shipments? What if they add a line of products that just won't convert well?
Firmly with P1R here: get your money upfront and possibly work in a bonus for performance.
Consider also that the work you do today might not become visible until months later...
Work on retainer and then a percentage of sales.
Being the Devil's Advocate here if I were the buyer of the services I would ask how much of a percentage and for how long would you receive it. Maybe I am wrong here because I have never tried it, but I can't see anyone agreeing to give you a percentage of improved sales forever. Once that level is reached because it works them into a permanent partnership with you and never takes into account other factors that may be contributing to the increase that you aren't responsible for.
The second factor to consider is that most decent marketers don't just apply one tactic exclusively and then stop that and start another. They would probably implement several strategies at once. For example, suppose you ran an eCommerce site and were trying to boost sales and brought in a hired gun for SEO to help you. Now the SEO consultant is out there doing his thing, but maybe you also start some email marketing [either in house or with another consultant] and also try some direct mail and maybe even some PPC. If all of these are going on at the same time sales will improve, but the SEO guy shouldn't be getting a cut of the whole increase and trying to separate out the stuff he brought in vs. what your other strategies brought in could be done, but would probably be a big headache and not worth it. Plus the chance that you are unable to track perfectly all sources is always there and could further gum up the works.
Over a number of years I have developed a web statistics application which I would use to track and optimize any marketing. So It will be very easy to see what converts and optimize everything to the hilt.
I'm not planning to suggest to my client that I will obtain a number one position for 'widget x', those guarantees I cannot give. What I can guarantee is an increase in sales.
I have researched this niche and the numbers look very good. A term in this niche (not the most generic) has 90,000 searches a month on google and has only 250,000 competing sites. I have looked at those competing sites and they look very easy to match in terms of content and inbound links.
When I found out this I initially thought I'd setup a site on my own to cash in. Then thought why not help the company I'm working for, concentrate all my effort on getting him visitors/sales and take a commission just like an affiliate.
In an ideal world I could run 3 or so marketing partnerships like this as my fulltime job, taking a % of sales.
What do you guys think?
Remember the costs of goods sold plus all the ongoing expenses that will be incurred by an active business. An affiliate's 10% might compare surprisingly well to the merchant's true net profit after all costs are accounted for.
Being the Devil's Advocate here if I were the buyer of the services I would ask how much of a percentage and for how long would you receive it.
That would all need to be worked out prior to accepting the gig.
I work strictly on Retainer + Development costs. I know from years of experience just about how much time is going to be required on "most" projects. There are some that are black holes! I know, I've had one for the last 6 years. :)
I prefer to have "guaranteed" income, that is a given, hence the retainer fees in advance. I've worked on projects where pay for performance was an option and I didn't accept that option, I chose the flat rate and a small percentage of revenues over a fixed amount. You kind of split things up but still have a guaranteed income stream.
I'm sure there are certain industries where pay for performance can be very rewarding. Too risky for me, I'm putting a daughter through school and have a mortgage to pay. :)
Also, I usually only do long term gigs so the percentage thing is not a factor, I'm on straight retainer + any third party costs. It's a simple business model that has worked well with the type of clientele I may attract.
I prefer to have "guaranteed" income, that is a given, hence the retainer fees in advance.I'm sure there are certain industries where pay for performance can be very rewarding. Too risky for me, I'm putting a daughter through school and have a mortgage to pay.
I hear you brother! I love guaranteed income, in fact, it is my favorite type of income :), but what is great for us, isn't always the best for the client who is providing that guaranteed income. I understand the retainer model, I use it as well, but when it comes to SEO I have unfortunately come across too many clients that were paying retainers to other "SEO Experts" and didn't really know what they were getting or how much it was really helping. When that happens too much it screws it up for all the honest SEO consultants out there that really do make a difference no matter how they are paid.
I guess the bottom line is if you can get the terms and you have clear measurable goals that the client is satisfied with and willing to keep providing guaranteed income to you if you hit those goals, then go for it.
