Client Wants To Go On A Pay Per Customer Model

14 years ago

To be clear are you saying they only pay you when they getting a paying customer or for any lead that comes in? There are a lot of threads that have covered this topic before, worth looking through them. From a high level you are probably better off getting paid per lead. Not enough money if the total value of a customer is only $60 unless they have high customer retention. Also, unless the transaction is done online you are then going to have to be constantly getting reports from them on how many sales they closed etc. I think it can work in some cases for very high dollar services and where there is a high level of trust, but such a low dollar service is not a good candidate in my opinion.

You need to look at the lifetime value of the client, not just the value of the first transaction to sell them on what to pay you if you really want to go down that path. Maybe you can suggest a compromise. Tell them you will improve their site for conversions for a nominal fee. In return you get a 1 year contract where you get paid $x for every lead, not sale. Without knowing industry, customer retention etc. it's hard to give direct advice on what the value of a customer is.

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Jason Kanigan

14 years ago

Thoughts?

First, divide your gray potato smear of text into some nice appealing paragraphs so people will read.

Second, can you control whether a client's lead becomes a customer?

NO. NO YOU CANNOT.

You can send leads their way, and that's what you should get paid for...one way or another. But conversion is up to your client and you have no control over that.

Don't be a slave to individual clients. It's up to YOU how you get paid. Make it so you get paid for what you have control over. Stick to your guns: if this client won't work with you, drop 'em. There are a lot of other prospects out there. Being afraid of a client quitting on you is the worst place to be.

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rickmor

14 years ago

yeah, in looking at my post, it is just a blob of text. but I think I get the point across.

So, just to clear things up. They are wanting to pay me a percentage of the average sale of a one time fee of $60 per customer that they sign up. My thoughts were that I would go back with a pay per traffic proposal instead.

Also, let me mention, I am not afraid of losing the customer. I can go to the competitors that we bumped off page one, and propose a deal them to get them back on page one.

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John Romaine

14 years ago

Originally Posted by rickmor

So, just to clear things up. They are wanting to pay me a percentage of the average sale of a one time fee of $60 per customer that they sign up. My thoughts were that I would go back with a pay per traffic proposal instead.

$60? ...for SEO??????

Dude, please tell me you're not serious.

Originally Posted by rickmor

Also, let me mention, I am not afraid of losing the customer.

Good. Fire them.

Originally Posted by rickmor

I can go to the competitors that we bumped off page one, and propose a deal them to get them back on page one.

I would advise against this. You're verging on conflict of interest here. That sounds messy.

As a shameless plug - have a look at my site http://www.seostartupkit.com/

There's a bunch of articles on there, that might help you. Especially this one...

How to charge for SEO

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rickmor

14 years ago

@John Romaine

no, not $60 dollars for SEO. Average value of each customer to them is $60 one time fee.

If they are free to shop for another SEO company if they dont want to continue on with me, because they think they can get it for less elsewhere, then how is it a conflict of interest if I shop around for a new client in their niche that will want to pay my fee?

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John Romaine

14 years ago

Originally Posted by rickmor

If they are free to shop for another SEO company if they dont want to continue on with me, because they think they can get it for less elsewhere, then how is it a conflict of interest if I shop around for a new client in their niche that will want to pay my fee?

I just dont see it as good business ethics.

Im sure there are plenty of SEO businesses out there that do it, but for myself personally, as a freelance SEO consultant, Id be very hesitant of engaging into anything that verged on purposely screwing a previous client.

Im sure these people that have already paid you to rank them, would be mildly upset if you went about then ranking their competition higher, with complete KNOWLEDGE of their business model, website structure, and implemented SEO strategies - yes?

I dont know, maybe Im just too honest for my own good, but I wouldnt do it.

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rickmor

14 years ago

but what if they said that they checked around and found that they could get SEO for less (of course there is always someone willing to do something for less), and they have full knowledge of what i do and how it's done after working together for 90 days they are very aware of the changes that were made and process that were put in place to get to rank, so in essence they know a lot about my business model too. To be clear, they are happy with the work that i have done for them too.

So that allows them to shop around for similar services in my niche. When i take on a new customer I would never commit to them that they have a complete exclusive on my services within their niche, unless they were willing to commit to me that i would have a complete exclusive on thier business within my niche and I would charge a healthy fee for an exclusive. I don't see the conflict nor the ethics issue under those circumstances.

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John Romaine

14 years ago

Originally Posted by rickmor

...but what if they said that they checked around and found that they could get SEO for less (of course there is always someone willing to do something for less)

If I had a potential client call me and say "they've found someone cheaper" I'd wish them well and hang up.

Why is it always a race to the bottom? :rolleyes:

Quit chasing cheapskate clients. You're only doing yourself a disservice and cheapening the entire industry.

Originally Posted by rickmor

I don't see the conflict nor the ethics issue under those circumstances.

I said "I wouldnt do it"

You can do whatever you want.

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rickmor

14 years ago

Originally Posted by John Romaine

If I had a potential client call me and say "they've found someone cheaper" I'd wish them well and hang up.

Why is it always a race to the bottom? :rolleyes:

Quit chasing cheapskate clients. You're only doing yourself a disservice and cheapening the entire industry.

I said "I wouldnt do it"

You can do whatever you want.

Yes, I can.

Also because I am kind of using Marco's method of building an SEO Empire, I have a series of websites in the customers niche that i am working on also, so they will rank. Then i have links from my series of websites to the customers website so that the customers site appears to have more relevance with the series of related websites pointing at him. This design lends itself well to just pointing these links at another customer within that niche if your current customer doesn't want to continue.

No one gets an exclusive unless they are willing to pay for it and giving them an exclusive without them paying for it seems to cheapen the industry to me.

Oh well different viewpoint i guess.

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Rus Sells

14 years ago

The problem with this perspective is that you basically exclude yourself from any future work in "that" niche in the city/area.

"IF" the relationship is severed by either the client of service provider then I see zero moral problem with finding another client in the same niche.

Once they are no longer your client you have zero obligation towards them unless something has been explicitly agreed upon in a contract.

Originally Posted by John Romaine

I just dont see it as good business ethics.

Im sure there are plenty of SEO businesses out there that do it, but for myself personally, as a freelance SEO consultant, Id be very hesitant of engaging into anything that verged on purposely screwing a previous client.

Im sure these people that have already paid you to rank them, would be mildly upset if you went about then ranking their competition higher, with complete KNOWLEDGE of their business model, website structure, and implemented SEO strategies - yes?

I dont know, maybe Im just too honest for my own good, but I wouldnt do it.

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John Romaine

14 years ago

Originally Posted by Rus Sells

The problem with this perspective is that you basically exclude yourself from any future work in "that" niche in the city/area.

"IF" the relationship is severed by either the client of service provider then I see zero moral problem with finding another client in the same niche.

Once they are no longer your client you have zero obligation towards them unless something has been explicitly agreed upon in a contract.

Youre right Rus.

I should rephrase what I said and say ...

"If things ended badly, Id probably avoid it.."

But otherwise, I wouldnt like to screw a client like that.

Meh, each to their own

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dtaylor 14 years ago

The only way I would consider it is if I owned and controlled the website and could establish a quality lead generation system, either form or phone.

If you can control a website in almost any offline niche and generate 1200 visitors per month it should be producing a decent quality of leads as that shows some definite buyer interest in the product/service.

Letting them have all of the control is a bad situation for you and will only lead to a ruined relationship.

If you have enough clients in other niches to generate income I would personally decline the client's offer, politely of course, and start generating leads for the highest bidder. If this client can't seem to close leads his competitor may be a better horse to ride to the finish line.

Good luck,
DTaylor
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Aaron Doud

14 years ago

Originally Posted by John Romaine

As a shameless plug - have a look at my site Start An SEO Business | SEO Business Startup Kit

There's a bunch of articles on there, that might help you. Especially this one...

How to charge for SEO

I wish more people would use the model you outline in this article. Know how much time it will take and what you charge for your time. Quote it to the client. Either they can afford it or not. But in the end be willing to walk away from those who want it cheaper. Customers are not used to companies that say no problem and walk away. Customers normally have that power. Take it back.

I sell a physical product in my "job". But I never chase a sale. You either want to buy at the price I offer, you counter offer, or you decide not to buy. I don't let them give me maybe. If they counter within mins we come to a number they either can agree to or not. If we can't come together I let them leave. Or if it is via phone or email I tell them I am sorry we couldn't come together and i will them luck finding someone who will. Customers are used to having the power. I take that away by making them say yes or no. Do I maybe lose a few sales? Would they have been profitable? Maybe not. Would they have been time consuming? Surely they would if I had to chase.

If you have the product or service they want and you quote a fair price for it a lot of them will come back when they see you won't chase them. When you chase you look desperate. When you are desperate they expect concessions. The best thing you can do is let a customer go, have them come back, and be able to tell them the prodcut is sold(often for more than the last offer you gave them in my experience) or in the case of a service tell them you can still honor your quote but you won't be able to handle their project for a few weeks. Right there you show you have value and they missed the boat in some way.

But in our country we teach sales people to chase clients. Why? Because the companies that most people work for hire 2 or 3 times as many sales people as they need. So they are "hungry". All a "hungry" sales person does is give away your profits. They are so desperate to make a sale that they make concession after concession.

Most of you here doing offline marketing run your own companies. Don't be "hungry" be confident. Walk away from deals that don't make sense. Find the next prospect and sell to them.

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tryinhere

14 years ago

I would if they only want to pay for qualified leads look at creating your own lead gen site and building the seo for that rather than their site otherwise you may find they will do a midnight runner after your hard work is finished, plus trying to get their site into a position where you get better leads is a head ache you don't want.

If they want their own site updated then that comes back to a seo service and is paid for upfront for your work and is a different kettle of fish.

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John Romaine

14 years ago

NEVER EVER enter into a commission based model for SEO - EVER!

How on earth do you intend on accurately TRACKING this?

What if they land a customer via phone? How would you know? They could be literally skimming customers in the back end, and not informing you.

Let me tell you something.

YOU DICTATE YOUR BUSINESS MODEL. NOT THE CLIENT!

If your client doesnt like it - FIRE THEM!

You would be INSANE to consider this.

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Rus Sells

14 years ago

This is a sure fire way to provide SEO services for FREE!

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DNChamp

14 years ago

Your contract with them is about up. They obviously like what you do BUT are trying to get it for cheaper.

Tell them you are sorry but your services are monthly based for position NOT conversion. If they say no you say thank you for your time and watch there position slip down in rankings. Then they may come back to you for another 90 day contract and that will be up to you to take on.

Sounds like a nightmare in the making

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localvseo

14 years ago

If you want to get into performance based marketing you need to figure out for yourself how much each client is worth to you. For example, if you want to make at least $X per month/ per client, then work backwards from what you can forecast you can deliver and how much you will need per lead to meet that goal. . Unless you can get the conversions and traffic way up, $60 per closed sale does not seem worth the effort. But maybe if you can get $60 per qualified lead, then there is a much bigger opportunity. You didn't say how many leads they are getting that are converting, so unclear if this would be doable for your client or not.

Everyone has a different business model and level of risk they are willing to take when it comes to any sort of pay for performance (whether lead generation, sales, etc.) and you will need to decide if that is the route you want to take with your clients. There are definite advantages to "renting a site" for lead generation. However, if you can get a long term contract, at least 1 year with option to extend, that you know you can get leads for, then doing it on their own site may be viable option as an alternative. There are obvious advantages to working on someone's main site vs. a brand new one you are creating.

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maxrezn

14 years ago

Don't do it! I've been there...and it's an awful place to be.

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Simoshere

14 years ago

How would you tell if the customer came from the website. especially if they call on the phone or just walk in. Now if you changed the phone number on the website to a tracking number then that might help. Or you could add a coupon to the site that has to be downloaded.

I say just rank your own site in the the field and then you can do lead generation (which is exactly what they want). That way you control the website look, the phone number and even the address.

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LasseKohau

14 years ago

I never do that. I provide the leads, and the clients job is to turn them into customers.

If clients doesnt think, I can provide quality links - then he must shop at another "store".

Lead generation is a fixed price pr lead or a fixed price for renting the lead machine/site. I will never devaluate my competencies in a third mans hand.

You should evaluate, is this client right for my business or not, can he pay, will he pay, will he do damage to my reputaiton, will he sick up supporting time, !!!!

rgs, Lasse

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HypeText

14 years ago

Originally Posted by rickmor

I do local SEO services and have been working with a client for about 90 days now. When I started with the client, his site was a mess and it was on page 7 for the prefered keyword. I signed him up for a 90 day commitment and charged a monthly fee that is in the median range for the SEO services that I provided. So, the 90 days is nearly up and I have his site ranking on page one and in position 3 for the main keyword and position 5 and 6 for other good keywords. Now they want to continue on with the SEO services however they want to go to a pay per customer model. They want to pay a percentage of each customer that comes to them by way of the website, not all customers. The service they provide to the customer makes each customer worth an average of about $60. So, my question is; does this model work for me? What are the potential pitfalls? Would a pay per traffic be a better model for me, as I dont have control over what they do with each lead sent to them from the web. However I am sure they would pay me more on a per customer basis, than on a per traffic lead basis. What would a good rate be per customer? Or what would a good rate be for just traffic? Their site used to get about 200 to 300 visits a month. Now after 90 days of SEO work it is getting 1100 to 1400 a month. However their conversion rate is not very high as they said that they only converted 10 of those into customers. So that is a less than 1% conversion rate, which is not that interesting to me. I think a cleaner more professional looking website would cause their conversion rate to go up as they are using a free wordpress blog right now, but that is not something they want to do at this time.

Warrior thoughts?

TRANSLATION: Your Customer Wants you to do their SEO for Free!

As you have no way to track which, or how many, of their Customers go to your client and pay them for Products and/or Services as a direct result of your SEO Services, AND you have no way to legitimately track the size of those potential Customers Tickets....this would be a disaster!

While there are a small number of Business Owners out there that would be honest enough for this type of pricing model, they are a miniscule minority.

Without means to Track the above factors there is simply no way to guarantee that your customer would be completely honest with you.

On top of that, how many customers are even going to tell the Business Owner that they even found his Business Website though a Search Engine and what Keyword they typed in for the Search in the first place?

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racso316

14 years ago

If you don't think it'd be a lucrative opportunity then just fire him. It's your business and you manage it how you want it.

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nickbrander

14 years ago

Please manage a business with ethics.

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rickmor 14 years ago

Originally Posted by nickbrander

Please manage a business with ethics.

is there something unethical with working within a niche?
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Perestroika

14 years ago

If a customer is worth $60 to them how much do you think they will pay you as a commission. Even if they give you 20% its only $12 per lead. From what you posted about them converting only 1% of the visitors and that they had 10 of them for the month. If they do not shave off the tracking of the leads you are looking at $120/month at most if you get 20%.

Not worth it, imo.

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rickmor

14 years ago

Originally Posted by Perestroika

If a customer is worth $60 to them how much do you think they will pay you as a commission. Even if they give you 20% its only $12 per lead. From what you posted about them converting only 1% of the visitors and that they had 10 of them for the month. If they do not shave off the tracking of the leads you are looking at $120/month at most if you get 20%.

Not worth it, imo.

yes, that is what I am thinking. not worth it. so should I just move on to the next service provider in that niche to see if they will pay my fee? I already have multiple sites in the niche that i can use for link building.

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Perestroika

14 years ago

What you should do is tell them you can only do your original arrangement and not pay per lead. Tell them that you cannot control their ability to convert leads. You can send them 1000 leads per month and due to their inability to convert they will only get 10 customers. At the same another business that is more aggresive might convert 100 leads into customers.

Sounds like you are not linking to them directly anyways. You can pull the plug and redirect traffic to their competitor.

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Client Wants To Go On A Pay Per Customer Model

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