My "partnering" type of compensation/pricing option for SEO services is based on a principle that I have made a living by, and believe in. In the About biography section of this blog there is a link to the results of my six hour "The Personnel Labs" personality test that I took a while ago. At the very end are "Comments:" on my "straight commission" beliefs. For most of my business life I got paid on results only (Pay For Performance), and not on efforts (Pay For Time/Perceived Talent). But, this does not work with everything that is sold, as is the case with attorney contingency fees in certain kinds of law. In my case, though, I "partnered" with the publishing company that my company was contracted to, and certainly shared some of the risk to get a fair share of the reward.
On 9/15/04 there was a Conference of the Association of National Advertisers, or ANA ( impressive membership list), with a session on "The Urgent Need For a New Agency Compensation Model". The speaker was Andy Berlin who is the Chairman, Chief Creative Officer & Co-CEO of Berlin Cameron/Red Cell (a global agency network). The session description said "Bad advertising and good advertising are compensated in exactly the same way but shouldn’t be, according to Andy Berlin. Andy advocates a truly new model in which agencies would share in the profits of marketers they help succeed, while taking a greater financial risk in the relationship. Does this idea take incentive-based compensation to a new level? Can agencies really make such a model work?" I don't know if traditional ad agencies that deal with all media can make it work, but for SEO "Pay For Actions = Performance" it can, in my opinion. But, all comments from SEO's or Clients working this way now are welcomed!
Even the 7/15/05 issue of The Kiplinger Letter on "Health" issues mentions the words "pay for performance" and says: "Medicare is ready to change the way it pays health professionals. The goal: Improve the quality of care by rewarding results instead of paying doctors, hospitals and other health providers the same whether they deliver poor or excellent service, as Medicare does now. Pilot programs show a solid link between financial carrots and good work."
To be fair and balanced in this "client advocacy" post, I have to say that no SEO controls the rankings in the search engine results pages. They also don't control how long it takes for the search engine spiders to index the newly optimized pages. I hear it is taking longer than the previous, approximate 90 days. They also have to deal with many uninformed (about SEO) buyers who don't cooperate in doing the things they have to do to make the SEO effort a success. Plus, some buyers lie about many things as noted in this recent Search Engine Watch Forum discussion that I relate to, in certain ways, with my previous independent contractor, online advertising sales business.
That said, my "Pay For Action = Performance" suggestion will be prefaced by this same forum, but different topic, on a SEO buyer's question about "$$$ question". This buyer doesn't know what to do regarding an SEO price quote he received. SEO pricing ranges from one extreme to the other, and determining the real vs. perceived value of the talent of the SEO with their many pricing strategies (hourly rate, package deals, and a la carte) is a formidable and time consuming task. I believe it shuts down the buying cycle process, or makes the buyer procrastinate in many instances. This belief is based on my own survey that I took with my own B2B industrial accounts. This small sample survey was possible only with those who talked openly and freely, since many didn't for reasons of "confidentiality" or embarrassment.
My "Pay For Action = Performance" suggestion is NOT based on the number or size of off-line sales that are made after a benchmark is taken on current actions. Even the search engine Snap.com realizes that their "cost per variable action" (a % of each sale made) isn't right for every advertiser. But, their " fixed cost per action" tracks the number of "actions" taken buy visitors to websites, like filling out forms or sending e-mails. I am actually against SEO compensation based on off-line sales, as the SEO never has control over the off-line sales closing process. Online sales, however, could be assigned a dollar value based on a percentage of the sale.
In addition to those actions, a "dedicated to the SEO client's web site only" lead tracking 800# could be set up by the SEO (with no local phone number showing in the revised web site), so that the SEO gets the "call detail report", but the client pays the phone bill. These call detail reports have the "phone number of origin" on them, so reverse telemarketing could be done by the client to try to find out if something was purchased, or why something wasn't. All sellers need to have feedback on why people buy, don't buy, or procrastinate.
The SEO and client could work out a "fair to both sides" dollar commission fee schedule on each of these "pay-for-actions" occurrences (forms, "live chat", e-mails, phone calls). Then, the client and the SEO can evaluate the results and make adjustments to the improved web site along the way. It is important, though, that the buyer's company have a viable, time tested product/service so that the risk is not too great for the SEO. An example of this is in a quote from a ClickZ Article "Feedback" by Andrew Scantland (VP Marketing of Alta Colleges/Westwood College). He said "We spend the majority of our online investment with partners who are willing to share success with us. We pay based on the number of qualified inquiries we get. And we share the conversion rates of these inquiries so adjustments can continuously be made to the program."
The SEO will want to recoup the risk he took with his time and financial investment by waiting the three months plus for increased results to start coming in (if, in fact, it takes that long). The client needs to realize that the SEO deserves this, as most SEO's want only the risk of being terminated, with none of the true (see definition 2.a) partnered financial risk. A further protection for the SEO consultant could be an upfront escrow fund set up to at least cover those first three or four months of SEO work in case the client tries to cancel during that time.
I do respect those SEO's who decide not to do any kind of "Pay For Performance", like Jill Whalen (a long time SEO expert) who has a recent article on her opinion regarding this. It doesn't mean that these professionals aren't talented, confident, and results oriented. But, as the emerging market of search marketing grows, their will be more SEO's and SEM's leaving their SEO employers and starting a SEO consultant business of their own. This increased competition, combined with an ever growing demand by clients for Return On Investment compensation models, will cause "Pay For Actions = Performance" to grow, in my opinion.
I see this a very positive trend for the SEO seller as it will help reduce the high turnover rates that many SEO-SEM Consultant Companies/Agencies are experiencing with clients. After all, it wouldn't make sense for the buyer or the seller to give up a productive, mutually beneficial relationship that both sides have put a lot of time and effort into. The key for success is to have cooperative open, honest, upfront, and good "two-way"communication ("O'HUG" Communication) throughout the relationship combined with true empathy for your partner.
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