12 replies to this topic

[SEO_Gal]

Hi there,

I had an interesting scenerio present itself. I had sent a proposal to a client who had come back inquiring about paying for my services based on the amount of clients the SEO work would bring in. This client is in the energy efficiency/"green" products industry, so the potential of this site performing well is definitely there.

Has anyone ever worked on a pay-per-performance basis with SEO? How does such a structure work? What percentage of the sale is typically aquired?

any advice would be great.

thank you,

Patti Fousek

[Randy]

I've never done it for SEO work, though in all honesty the times I've done it my particular expertise I bring to the table is SEO/SEM/Conversion Analysis.

First things first. You both have to trust each other implicitly. That's going to be a bigger issue on the other side than it is on yours. Mainly because you're going to have to demand to have complete access to everything, including every sale that's made. Assuming of course that you're going to get a portion of the sales proceeds.

Second, make sure you have everything immortalized in a contract, and make sure you have your own attorney consult on the contract. All of the normal stuff, like the percentage you get, whether the percentage is based off of Gross sales, Net sales or whatever. The main thing to have in the contract, since you're the one putting in all of the hard work, is to have an ironclad section about what happens when one party or the other decides to opt out. Meaning when, not if, they stop paying you or don't pay you on time, what remedies are you going to have. Make sure your attorney puts some teeth in it. Make both the other company and the person signing it personally liable if you can, so they can't just shut the doors on you and walk away with lots of your money.

Trust me, there will be a break up sooner or later. So everybody needs to know what's going to happen when it does.

[Jill]

IMO, you can really only do that if you control the website in question. Meaning you own it, host it, etc.

[nethy]

I think it's worthwhile looking at this from an efficiency perspective.

How much better can your results be if you don't have to sell initiatives to your client individually? How much time & effort is saved? Is this worth the increased risk (on your side) of such an arrangement?

What is the clients' reduced risk worth to them?

BTW, if this is supposed to ensure reduced risk for the client (ie a way of getting around the 'no trust' thing) then pay-per-performance is a little problematic becauseit actualy involves greater trust then a basic vendor/client relationship.

On the other hand, if you have the freedom to do as you see fit, with above normal rewards for your efforts (you need to be paid for increased risk with increased expected rewards) you may be able to do some much better work.

At the end of the day, working in this way can alter the nature of the work being done.

[projectphp]

Stepping back, incentive deals only work to everyone's benefit if everyone is incentivised in the one direction. The biggest issue from the above scenario is that, I would wager, the vast majority of sales would be offline - who gets credit for those?

I can't imagine many situations in which, online, that is possible, as the best thing for the business is to make sales fullstop, but for you is to only make sales in a specific way (likely online). IMHO, this makes an incentive deal, with significant offline sales and a website that drives offline sales, more than likely bad for the client, as well as the SEO.

Of course, if the process is entirely online, disregard everything I just said

[cline]

I've been working on a problem just like this for months. I still can't get it to work. The big problem is that it involves a consortium, and the clients don't understand internet marketing at all. (Long story about how I got into this, which is not relevant for your situation).

It all hinges on whether you can devise and get agreement on clean metrics for identifying what sales your efforts are responsible for.

You are essentially entering an agreement to work on a commission basis. Commissions vary wildly from industry to industry, and even within industries. For example, in the industry where I'm trying to do a deal a common commission is 10% of the first client invoice and 5% of invoices for the subsequent 6 months. Yet, even though that's common, several of the companies have substantially different existing structures. Of course, this is a herding cats problem you don't have. I'm just mentioning it to point out that there's no such thing as "typical." You're just going to have to negotiate something based on what you and the client feel is fair.

Realize also that the deck is stacked against you. If the client ultimately feels you're getting too rich at their expense, they can back out of the arrangement, redo their site, and leave you out of the picture. You need a good contract. That implies having a good lawyer. I've found that the legal bills to get this kind of thing done can easily get out of control, especially if you have a client prone to legal negotiations.

I'm not saying don't do it. In fact, I kind of wish I had such an arrangement with some of my clients, because even a tiny sliver of the revenues they've made off my work would be a lot more than I got paid -- not that I'm complaining about what I got paid. But this kind of deal is complicated and requires lots of trust and access to information.

Perhaps you should reframe your problem. Basically what the prospective client is saying is that they are uncertain of the value you'd bring, and they want to derisk the deal. Perhaps you should propose something simpler that achieves the same ends. You could try for a contract with a modest upfront earnest payment, and one or more subsequent payments that are a function of whether your efforts achieve specified objectives.

[BBCoach]

I've tried commission and flat-rate. Forget commission. It's way too convoluted with most of the "pay how much" variables outside of your control/observation. Calculate a flat-rate over a period of time or even as a one time deal with some kind of rebate if your efforts don't meet agreed upon expectations. Whether or not it's intentional, you'll get the short end of the stick going strictly on commission/referrals and maybe not even half a stick (and you prolly won't even know it). Also, get a lawyer to design you a template contract where all you have to do is fill in the numbers, dates and signatures. That'll keep those expenses in check.

[cline]

I agree with BBCoach. As I said, the key is getting the key variables inside your control and observation. That's hard. It's not necessarily impossible, but it requires sophistication. Take a simpler approach.

[nethy]

Taking another step back, I think it comes back to scale.
Lawyers, accurate measurement, identification of goals, alignment of interests, etc. do not scale down beyond a certain point.

If it's bigger then that & it can be measured & you trust each other & interests/incentives can be effectively alligned then it (like any business deal suggestion I guess) should be considered. But there'd be a lot of deal breakers.

I don't like the idea of oversimplified metrics (IE identify keywords and base payment on these keywords' eventual ranking) that will lock you into optimising the contracts' metrics rather then the clients' actual interests.

[k0k1man]

It happened to me and let me tell you... what a mistake ....As people mentioned above there must be trust. I gave trust and received the short end of the stick

When I was first contacted this client, their site was blocked by Google due to Malware/Weird JavaScript (I should have suspected a was not the first victim) and it's traffic was very small basically customers who called in and were directed straight to the URL.

Well, I fixed the malware and redesigned the site for SEO . Not only the site started to rank well, the leads from both organic and the PPC campaign I was managing started appearing everyday... Thats when I started to notice the transformation...

The webforms which generated the leads received a bunch of new required fields and the size of the phone number increased to almost the size of the logo and became an blinking animated gif...

I mentioned creating a new phone number so we could track leads coming from the website... answer was NO...
I asked the sales team to inquire how new customers heard of us... answer was NO...

The funny thing is that during all those denials the PPC budget doubled but there was never absolute info that a lead came from the site... I even heard crap such as... "this guy is my friend and I told him to test the website"... anyways.... I am probably to blame because I trusted too much... I am no longer working for them and very soon they'll find a new sucker... I have learned my lesson and will never accept pay per performace again

[diazluna]

Hi,

I'm actually at the other end of the deal. I have a site that would like to have optimized for SEO but it is hard to find someone that you can trust and that would want to work on a commission basis.

I see you all struggling with the trust thingy but I don't see any problems there.

All this client has to give you is access to their google analytics account and you can monitor their sales.

If you don't see sales, don't even go there. If you see some sales however, then I believe it is safe to work on commission.

What I was thinking on doing was this very thing. Work with an SEO expert and give him/her access to my Google Analytics account, they'll see exactly what type of clients am getting, from where, etc, etc.

It is very easy. If I get a sell through natural search then you get a commission, if it comes from some other source, you won't get a commission.

Very simple right!

Let me know if anyone is interested.

[Jill]

Problem with that method is they have to trust you to actually pay them. And once the work is all done and if you don't, short of suing you, there's not much they can do.

Most that work on a pay per sale basis would put your site on their server and basically own it. I don't know anyone who would do it any other way.

[Randy]

And old discussion, but still an interesting one.

I can tell you for a fact I'd never do it or recommend doing it and use GoAn as the sales tracking tool.

Sure Google Analytics is okay as an analytics package, but it doesn't count everything and do so absolutely correctly. When I look at the larger picture of my various sites that happen to use GoAn and happen to have Goals/E-Commerce set up there, the total revenue and sales volume GoAn gives me is never quite correct. It's numbers never quite match up to what actually went through my merchant account. There always seems to be one or two sales missing from Google's total.

Since I don't depend upon GoAn to give me that kind of data I've never bothered to look into if it was simple a burp where someone didn't connect to the GoAn servers on my thank you page, if it's people who didn't have JS enabled, or if there's some other explanation.

Needless to say, I'd need to see the real stats. Either those collected by an application on the server, a server I'd run as Jill mentions, or as a minimum I'd want direct access to the merchant account figures.