Does anyone do SEO for a % of sales?

[BryanCroft]

I am the CEO of a small company ( 33 employees in Jacksonville, FL )

We have a family of websites that sell office products - we are the manufacture

we have a staff of 3 in the website dept - but with 10 active sites its alot of work.

We are launching a new site this week and need to do some SEO for the site ..

Since this new site has no sales - i want to see if there is someone that will work based on a % of sales - say 10% of sales for 18 months -

Here are my thoughts :

Option A: - go out and get a "package" for say $5000 and have SEO done and hope it proves results

Option B: - partner with someone and give them 10% of sales the site produces - so if we can grow it to $1M in sales - that person could make $100K off the site - ( our competition is a $20M + site)

Some would say that im crazy and it might cost me $100K -i like it because we are all on the same page and i pay for results - not promises.

Thoughts?

[AndyMacLean]

Why dont you look to hire an in-house SEO? May not be as cheap as option 'A' but if they are good will be cheaper than option 'B' plus they can add value in a wider sense - a good SEO will help improve wider inbound marketing efforts.

[RyanKent]

Thanks for the feedback Scott. I am glad to hear you found this Q&A helpful. I hope you enjoy your time here as a Mozzer.

[SkitterD]

Hey Ryan,

I am new here just trying this out, but I wanted to say that I like your comments and sense of respect for people.  I think as a very small business owner who has worked in a much larger music business as I was growing up with my parents that it is really important that people learn what they can before they go out to hire the big guns.  No this isn't my business either but I am a marketer and have been in sales for a number of years.

I think that as a business owner you should really be connected to as much of the marketing element of your business as you can.  No you can't possibly do it all as your business starts to grow but I do believe it's part of your growth as well as your continued growth.  Hey thanks for your responses here I've gotten some good footing from them.

Scott

[RyanKent]

Thank you for sharing your experiences Chris. If you are a lone SEO consultant, you have the flexibility to make such arrangements which can be a win for both you and the client. Once you join a team whether that be an agency or a partnership, then it is hard to make any deals where you accept anything other then cash payment.

As you continue to provide exceptional services to your current clients, they will spread the word and you will quickly find yourself with more clients then you can service. At that point, you will likely focus on the more traditional SEO-client arrangement.

Best wishes!

-Ryan

[Brandsei]

Great Answer Ryan, I'm new to SEOmoz so this was the first one I've ever really dived into

My feelings are very similar on this topic. I can appreciate you fighting for your client each month, earning that business, creating that value. I do use contracts though which have a hybrid and custom structure for each individual client. As every client is different so are their needs, deliverables, efforts on the part of the SEO, time constraints, etc. I currently have 4 different clients all with contractual variations of profit share, % of sales, deposit up front, increased % of consultant fee through the 1st quarter vs. the latter, and on and on for every variation there is always another way to accommodate the client.

That approach may not suit the needs of creating a service to the masses but I have more of a passion for the more personal side of business and really understanding my client's needs and goals; services less clients paying me hire margins creates less head ache and more rewarding work.

I have had a client where many contractual variations have been necessary to accommodate both ends. This has been one in which equity shares have been discussed in return for my services. Now here's where things get really sticky because I have no interest in owning a portion of this clients website because at the end of the day 20% of nothing is nothing, what I did in this case was structure a 20% profit share for my business consulting services with the OPTION to accept equity % after specific milestones have been achieved, including offers coming in to purchase the company.

In addition to this there was a price point for my services for the first 3 months that is more per month than the remaining 9 in the year. THEN we agreed to half of that 1st 3 months fee would be paid as soon as my Professional Services Benchmarks are presented. If the prospect that is in my eyes already a client, decides to walk away then yes I'm SOL at that point but in the end it's never been for nothing. Rarely, do I not earn the client’s business so late in the game, so for me personally it's worth the effort; researching, analyzing and then educated the prospect. Either way neither of us walk away empty-handed.

In summary, I am a big advocate to being completely flexible to what the client wants so long as we are both happy with the proposed solution(s), process and outcome. It may seem to many that this approach is overly complicated and too vague to be effective but when comparing this due diligence to that of an unhappy/unhealthy business relationship, you have to ask yourself which situation would you rather have on your hands.

[MikeShreeve]

Hello, My tiny little company has been lucky enough to do this with a couple of other companies. We enjoy partnerships but there is a lot to watch out for on both ends. The first and most important in my opinion are the contracts. How robust are the contracts? Did one or both of the parties involved have the contracts drafted by a good lawyer or are they chicken scratch on the back of a napkin, or even worse "give you my word" contracts? A clear an defined contract is going to be a huge deal later down the road when you both realize it hasn't been going how you expected it to. The seo company will realize how much work they are performing and you will realize how slow it is all taking. The second and equally important thing to consider is does the companies link building style work with your own personal style and ethics? If they use scrapebox or some software like that, are you gonna be upset? It is important to hash out the details. If the seo company doesn't want to tell you about their tactics and you are deep into the partnership conversations then you should be weary. This is a partnership. If you aren't transparent, don't expect this to work. Third, you have to be transparent. The both of you. If you are the business, you need to show financial records, past traffic etc etc. if you are the seo company you better be willing to share your tactics. Hiding stuff is the best way to ruin any possible joint venture. If you haven't already been swamped with offers, send me a note. Would be happy to help you navigate potential oppourtunities.

[josh-riley]

I think there's been some awesome views here and there's so many viable options. If I were the SEO you wanted to hire, here's an issue I'd force: I can't control if you keep your website working properly. I can't control if your back end measurement is accurate.  I would insist that if it came to light that you somehow couldn't properly calculate your sales (and my performance was tied to revenue) there'd be some lump sum or something payment to me anyway.

Why? I worked on a site where leads were the most important thing wanted; the coding to track leads got messed up and for four months there was no accurate way to calculate what leads came through SEO vs other channels. Also, there ended up being major instability issues with the site and it kept crashing, creating major technical issues (that flowed into the need for technical SEO support).

Anything can happen with a website. The SEO can only do so much.

[EGOL]

Right... and the more difficult the KW the bigger that fee.

[QPLF]

I once had an SEO "expert" offer me the following deal:

For a small advance fee, she would work on optimizing my site for certain keywords, and she would ONLY be payed when those keywords were on the top 10 SERP for Google (Google.fr), there was a one year minimum engagement and i believe that she was asking for 120 Euros (about 162 dollars US) per keyword per month in the top 10.

Maybe you can work something out like this with the people who will work on your site's SEO.

Keep in mind what EGOL says: there is a lot of upfront work in an SEO project so you will probably be unable to escape the upfront fee.

Whatever you do, choose your keywords carefully, traffic does not equal conversions/sales, take this into consideration when negatiating the terms of your agreement with whoever does your SEO.

[AU-SEO]

It really depends on who you go with. Personally I prefer to be in it for the Long Haul and 18 months seems like just about when the going gets good.  You can probably get away with doing a tiered profit sharing arrangement.

[RobertFisher]

As an entrepreneur who can honestly say that SEO, SEM, etc. is not my first rodeo, I can certainly understand where you are coming from. We want to know that everyone has "skin in the game." That in and of itself is not bad thinking. Certainly, you have had an employee who did not have skin in and you were wishing you had devised a better pay plan when they were not producing. I can tell you it has happened to me a few times.

In the context you mentioned of having someone after hours who works for you and is provided a sales incentive it begs a couple of questions: First, you are on SEOmoz and many people own companies but many are employees who work fulltime for companies. I would not want one of my employees taking a midnight gig for a potential "100K" payday due to it impacting their performance for which I am paying the 941 wages, bonuses, vacation, and health care. The reasons are obvious. Beyond the obvious, these employees learned at my company and we have ways of doing things that we believe to be proprietary. It becomes too tempting to borrow here or there (an example would be if they have access to multiple software programs we license and use them because they are used to using them). And, if I then found that they got the opportunity through SEOmoz, I think I might have to go for a really long run.....

In my opinion, you are better served finding a good firm and having them first assess the situation and let you know what they can or cannot do and the costs.Having worked in a situation where I ran a company on two occasions for a small base pay and percent of profits, I would not do that again. The main reason first: the argument is pay for performance - the reality is either they cannot afford you or they do not value you if you have any track record at all. In both cases the companies made more profit than ever before and, amazingly, there were reasons the profits would be less than promised.

If you search out several firms and interview them as if you were interviewing your successor, you should be able to find a good firm, with a good track record, and a diversified group of referrals that they have worked with over time. I know for a fact on SEO moz there are more than a few. Then, do as has been suggested and be very clear about what the milestones are so that you can monitor exactly what is happening and the results that are being achieved. Also be aware that sometimes as entrepreneurs our expectations can be overblown so be clear with the firm so they know what they are getting into.

If however you find that person who will moonlight for a share of the profit, remember that you can still lose and lose big. If you get 6 months down the road and realize they are never going to work out and you have wasted the time, it will be a year before you can retool. What will be the opportunity cost for that??? What would you have been willing to pay in retrospect to have done it otherwise?

I wish you luck.

[NerdsOnCall]

(just a suggestion) In my experience, it would be wise for you to add a clause in your contract where, the seo will be guaranteed a specific amount of money.

You would probably be able to attract a higher quality applicant this way. A bussy, experienced seo is probably going to be hesitant to put a lot of work into something that may or may not make them any money.

[RyanKent]

Hi Bryan.

I like the concept of what you are trying to do. Basically you wish to partner with someone, gain positive results then share the profit. It sounds great. Below are some reasons why the two approaches you propose aren't the right ones for you nor the SEO.

Option A (buy a SEO package) is a good deal for the SEO, but not for the client. My suggestion would be to avoid most SEO "packages". From a marketing perspective, a SEO package sounds good. The provider and client both have a clear, measurable understanding of what is involved. Most packages involve quantifiable results such a produce 5 articles, 200 backlinks, reporting, "setup" of blogs/landing pages and many other seo related functions. An example of such a page: http://www.seogodfather.com/seo-packages.php

I wish to clarify I have never used the above service and I have no feedback about the company, good or bad. I am using the link solely as an example of a common form of seo packages.

Frankly, I dislike the concept. Why? Because the provider can offer every one of those services and the client may not receive any tangible benefit (i.e. increased sales/profits).

When I began offering SEO my primary focus was rankings. Backlinks, articles, and other SEO "stuff" mostly were a means to an end, and the purpose of performing those tasks was to earn better rankings, right? Or so I thought until I had worked with a client, earned great rankings but the client was still unhappy. A similar story to my experience can be found here: http://www.searchenginepeople.com/blog/seo-better-webdesign.html

TL;DR - A main reason for SEO packages is so a SEO company can say "hey, I did my job. Look at the checklist." Your SEO results will be better if you avoid the packages and retain a knowledgeable SEO who is focused on improving your sales/profits, not working on a package checklist which may not help you achieve your business goals.

**Option B **(offer a % of sales increase) is a good deal for the SEO, but not necessarily for you. The SEO's incentive is sales. One proven means to obtain sales is by using AdWords or other online advertising. At the SEO's direction you spend $50k on AdWords and maybe you earn $60k in sales, but since you have operating expenses you take a loss, but still have to pay the SEO their $6k fee. There are many other ways this scenario can be manipulated but the end conclusion is a sales-based contract is probably not in your best interest as a business.

The next logical suggestion would be Option C, a profit-based contract. The goal of your business isn't just to improve sales, but to profitably grow sales. You could adjust your contract to account for profits. You would face challenges similar to those mentioned above. You would need to open your books up to the SEO. All aspects of your offline business could be analyzed and this line of thinking may take you to places you really don't wish to go.

Some random thoughts on the SEO / client relationship.....

SEO works best when the provider becomes entrenched in your business. EVERYTHING can impact SEO. You can have #1 rankings in search engines, a great site and then have a customer service issue which is completely outside the scope of the SEO's responsibilities. In a worst-case scenario, the customer can complain to the BBB or otherwise provide online complaints which can rise almost immediately to the top of search results and cause major SEO issues. There are many other means by which this can happen to varying degrees ranging from product quality issues, customer service issues, market changes, etc.

Normally the SEO and client have clearly defined roles, but when you offer a sales or profit-based contract then many offline practices come into play. This can be a benefit as the SEO can analyze your business and offer feedback to be considered. The challenge is most SEOs are not necessarily trained nor experienced at the offline aspects of your business, and you may not desire feedback on your company's offline operations.

From the SEO perspective, there are often challenges where recommendations are made but the site owner either doesn't make the requested changes, or doesn't perform them in a reasonable amount of time. This lack of responsiveness can impact the SEO results.

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So the question is, how can a SEO-client relationship be formed which is fair to both the client and SEO? How can the client ensure they are obtaining the best value? I have two suggestions on this topic.

Option 1 - a traditional money for services agreement. This agreement is really no different then when you see a doctor, lawyer, accountant or other professional. You are paying for advice and indirect access to the expert's tools. If you are satisfied with the results, you maintain the relationship. If you are not happy with the results, you find another expert.

The risk with option 1 is there is a lot of upfront work in SEO. A typical first month will involve a thorough analysis of your website, business model, keywords, competitors and industry. The amount of work involved can vary substantially and it offers no immediate results. The information gathered is very important as it is the basis for all future work. The information gathering offers no tangible benefits in and of itself. In other words, you will pay for month #1 and not see any sales nor profit increase. From a business standpoint, you wont like the first month but you need to TRUST the SEO.

The second month is where the change recommendations are implemented. It may take time to modify or rebuild a website. Sending legal papers such as trademark infringement notices to competitors takes time as well. The actual SEO work which will benefit your site has begun, but you probably wont notice the impact yet.

The third month is where you MAY begin to see the benefits of the SEO work. It depends on many factors and it may be more months before the results are actually seen. There is a lot of variability here. During these months you simply need to TRUST the SEO. Trust is very hard to earn. As for myself, I send a thorough report to each client at the end of the month. The report covers all work performed during the past month, along with plans for the following month. This report, along with constant communications via e-mail and telephone are what help establish and maintain the trusted relationship.

Option 2 - a variation of option 1 where the contract is divided between a standard agreement and an incentive agreement (i.e. sales increase).

To summarize, you HAVE to trust your SEO. You are free to measure the SEO's performance in any manner, but ultimately you need to trust the SEO and follow through on the recommendations offered. I am not suggesting blind trust, but a significant measure of trust is required to make the relationship work. Personally, I don't work with contracts. If a client is not happy with my service I do not wish to enforce a contractual relationship with which they are unhappy. I work upfront to understand the client's needs, I provide an upfront analysis of how I will work on their needs, I maintain an open line of communication throughout the month and follow it up with a summary at the end of the month. In essence, I am fighting for my job each month. If the client is happy with my work, they can "re-hire" me again the following month. There are risks on my end from this type of relationship and it wont work for everyone.

As a postnote, some of my peers may be unhappy with my viewpoints on this topic. I welcome any feedback and criticism. I like the question which has been asked and it is one which all of our clients face. The ultimate question is, what is the best form of financial relationship between a small or medium sized business and a SEO. The relationship should be fair to both sides and measurable. If you disagree with the suggestions above, what do you recommend?

[EGOL]

If I was doing the SEO I would be hesitant to accept a % of sales agreement if the term were only 18 months.  The big work is up front and the gravy is down the road.

My concerns are:

- the size of the site

- the amount of content that is trivial or duplicate

- the level of competition in the niche

- are your products overpriced?... I do my job but you still don't sell

- is your site optimized for conversions?... I get traffic but nobody buys

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Affiliates work for a % of sales... but they work on their website, not yours.

Instead of working on your site, I would instead work on my own because I can probably find an affiliate program that will pay me about 5% long term for referring sales to them.  By doing that I am a free agent who builds equity in his own property and can offer the sales to an office supply store in my own town or even one on the other side of the country.

There are a lot of really hard-working, extra smart affiliates out there who have the resources to put a new site into the money quickly.   You might consider that route?

=============

Not anything you asked but..... "we have a staff of 3 in the website dept - but with 10 active sites its alot of work." .... I would explore reducing the number of sites and putting more effort into each one.  When you attack which would be better?  Ten peashooters or two battleships?

[BryanCroft]

Good point - i was thinking that the person who would do this would be a small firm or even a moonlighter that wanted a project to work on " afterhours" - we all work at 2 am and on Sundays these days - right

[bozzie311]

I would say it probably depends on competitiveness of vertical. If very competitive your going to have to find larger seo company with cash flow to work on side project till it's "in the money".