Payment for the result and guarantee
Any project related to Internet promotion (including website development) is, by default, exposed to the risks associated with the nature of Internet communications.
How does this relate to guarantees , and is it worth it to fit into projects with “pay for the result” ?
The concept of "guarantee" came to us under Peter I and meant, as Dahl says, "guarantee, surety, bail, security." For example, a “guarantee of origin” is a guarantee that the manufacturer is a particular company or a company from a specific region.
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After the industrial revolution and the development of mass production, the word "guarantee" began to refer to consumer goods, meaning the possibility of free repair or replacement of goods.
Exactly in this era, speaking of guarantees, we are accustomed to talk about insurance . When a manufacturing company changes a defective product to a new one for free, it does not do so at a loss. The cost of the exchange of marriage and return is incorporated in the price of the goods .
When buying any product with a guarantee, you pay a little extra for the replacement of the marriage, even if your purchase is in perfect order.
On large volumes of identical goods, this works perfectly: the percentage of defects or breakdowns is predictable, the cost is eroded by the large volume of production and everything is fine. Up to the fact that the law of Magnusson-Moss is in force in the USA, which since 1975 obliges manufacturers to exchange or return the value of goods without explaining the reasons.
Have you met the guarantee of the result of doctors, teachers or lawyers?
No, and never meet for a number of reasons.
The services of web studios and digital agencies also meet these characteristics. Too many factors fundamentally can not be controlled by the contractor.
Therefore, if the customer requires a guarantee from you, he forces you to put risk insurance in the price of the service . Knowing that the result may not be achieved, you insure yourself against possible losses. You increase the cost of the service so that in the case of a negative scenario, you still remain in the black.
And vice versa, if you convince the client that you can provide guarantees of the result, you simply hide from him the fact of putting insurance into the price.
Let's look at examples, why guarantees in our industry is almost always either a myth or a hoax .
The web developer cannot guarantee:
The solution of all these tasks is connected with the channels for attracting visitors and hundreds of other factors, including seasonality and the behavior of competitors.
If the customer pushes guarantees, an unscrupulous contractor can wind almost any indicators, especially if site traffic is low. But the effect for business will be zero.
What can a web developer guarantee?
If the customer insists on the need to improve the specific indicators of the site, offer an audit and active implementation and testing of changes. For example, changing accents, the position of buttons, texts, headings, the composition of forms and so on.
In search engine optimization today there are two models for assessing the quality of promotion - by the positions of key requests in the issue and by the total traffic to the site from the entire pool of requests. Therefore, the mythical guarantees are "guarantees of positions" and "guarantees of traffic."
In general, SEO guarantees are guarantees of a lawyer who promises to win a court in a fully independent and impartial court. Optimizers compete for positions in search engines, which are completely closed "black boxes", operate according to their own algorithms and are completely beyond the control of the organizers.
Warranties may be given by agencies:
At best, the client will get the right amount of visitors. But it will be impossible to say anything about the quality of these visitors, and the chance of overpayment is quite high.
What can an SEO company guarantee? Exactly the same as the web developer.
Some customers expect guarantees from SMM agencies. For example,
As we understand, the behavior of human society is predicted no better than the behavior of search engines.
In the best case, the guarantee requirement is included in the cost of services in the form of insurance. At worst, the client will receive bots in the role of subscribers, and comments will be purchased through the exchange.
The answer to the question of what the SMM agency really can guarantee is left to the reader as an exercise.
Adjacent to the "guarantees" approach - payment for the result - has a little more right to exist. It is usually applied to customer attraction channels (advertising, SEO, etc.), and the result is the target action - going to the site, filling out a form, calling.
For example, pay-per-click advertising systems (such as Yandex.Direct) are fair pay-per-use systems. The client does not pay for the shows, but only for the transitions. Such channels that work while they are paid, and in proportion to how much they are paid, are called “paid media”.
SEO and SMM (not counting targeted advertising in social networks) refer to the so-called “earned media”. They allow the client to accumulate social capital and subsequently use it. The classic type of “earned media” is word of mouth.
Paying for the result for “earned media” is a nuance. Since, as we saw above, there are no guarantees of achieving a result, the contractor lays in the price the risks of not achieving the targets. Therefore, each contact is on average more expensive than ordinary payment schemes (note that the services will be provided exactly the same and in the same amount!).
It makes sense to offer the client a payment for the result for SEO and SMM if the received figures are noticeably lower than “paid media” rates, for example, contextual advertising. For most competitive topics this is the case - the cost of a visitor from the search results is several times lower than the cost of a click on Yandex.Direct.
From the client's point of view, the dignity of “pay for the result” is the high predictability of the cost of one target action. Knowing the conversion rates and the cost of one visitor, the customer knows exactly how much he will pay for the completed form, call, registration or sale. But he cannot be sure how many targeted actions will be taken.
The disadvantage of the “payment for the result” for the client is that if the agency conscientiously does its job, then at the same time costs of the specialists the customer will give the agency an increasing budget. There were cases when the client grew in 2-3 years with a “pay for the result” budget more than fivefold, although with the usual payment scheme it would have grown to a maximum of half.
For agencies, the “pay for result” scheme is generally quite profitable with proper consideration of risks, topics and other professional factors. Especially if you sell it in comparison with the rates of Yandex.Direct. However, it is important that the “pay for the result” hidden stones are negotiated with the client.
- no one can absolutely accurately predict future changes in the environment (Internet, consumers, competitors),
- no one can put forward just the right hypotheses about the needs and behavior of the target audience,
- No one can absolutely accurately predict the effectiveness of a tool before using it.
How does this relate to guarantees , and is it worth it to fit into projects with “pay for the result” ?
Warranty as insurance
The concept of "guarantee" came to us under Peter I and meant, as Dahl says, "guarantee, surety, bail, security." For example, a “guarantee of origin” is a guarantee that the manufacturer is a particular company or a company from a specific region.
')
After the industrial revolution and the development of mass production, the word "guarantee" began to refer to consumer goods, meaning the possibility of free repair or replacement of goods.
Exactly in this era, speaking of guarantees, we are accustomed to talk about insurance . When a manufacturing company changes a defective product to a new one for free, it does not do so at a loss. The cost of the exchange of marriage and return is incorporated in the price of the goods .
When buying any product with a guarantee, you pay a little extra for the replacement of the marriage, even if your purchase is in perfect order.
On large volumes of identical goods, this works perfectly: the percentage of defects or breakdowns is predictable, the cost is eroded by the large volume of production and everything is fine. Up to the fact that the law of Magnusson-Moss is in force in the USA, which since 1975 obliges manufacturers to exchange or return the value of goods without explaining the reasons.
Have you met the guarantee of the result of doctors, teachers or lawyers?
No, and never meet for a number of reasons.
- They deal with high uncertainty .
- They control only their actions and are responsible only for performing them with the greatest possible involvement and desire to achieve results. The doctor can not be responsible for the fact that the patient complies with the recommendations and wants to recover. The teacher can not be responsible for the fact that the family of the child will contribute to learning. A lawyer cannot be responsible for the conduct of a judge.
- Despite the fact that all cases are somewhat similar, each case is unique .
The services of web studios and digital agencies also meet these characteristics. Too many factors fundamentally can not be controlled by the contractor.
Therefore, if the customer requires a guarantee from you, he forces you to put risk insurance in the price of the service . Knowing that the result may not be achieved, you insure yourself against possible losses. You increase the cost of the service so that in the case of a negative scenario, you still remain in the black.
And vice versa, if you convince the client that you can provide guarantees of the result, you simply hide from him the fact of putting insurance into the price.
Let's look at examples, why guarantees in our industry is almost always either a myth or a hoax .
Warranties in web development
The web developer cannot guarantee:
- increase in the number of requests or calls,
- increased conversion of visitors into targeted actions,
- Improved conversion rates compared to the previous version.
The solution of all these tasks is connected with the channels for attracting visitors and hundreds of other factors, including seasonality and the behavior of competitors.
If the customer pushes guarantees, an unscrupulous contractor can wind almost any indicators, especially if site traffic is low. But the effect for business will be zero.
What can a web developer guarantee?
- The integrity of the work.
- Honest hours of production according to estimates.
- The experience of specialists.
If the customer insists on the need to improve the specific indicators of the site, offer an audit and active implementation and testing of changes. For example, changing accents, the position of buttons, texts, headings, the composition of forms and so on.
SEO guarantees
In search engine optimization today there are two models for assessing the quality of promotion - by the positions of key requests in the issue and by the total traffic to the site from the entire pool of requests. Therefore, the mythical guarantees are "guarantees of positions" and "guarantees of traffic."
In general, SEO guarantees are guarantees of a lawyer who promises to win a court in a fully independent and impartial court. Optimizers compete for positions in search engines, which are completely closed "black boxes", operate according to their own algorithms and are completely beyond the control of the organizers.
Warranties may be given by agencies:
- "At random";
- to bring rare key expressions to the top (“buy an apartment with windows to the railway”), which give few visitors,
- on traffic, including contextual advertising,
- for a very long time.
At best, the client will get the right amount of visitors. But it will be impossible to say anything about the quality of these visitors, and the chance of overpayment is quite high.
What can an SEO company guarantee? Exactly the same as the web developer.
- The integrity of the work (including internal and external optimization).
- Honest hours of production according to estimates.
- The experience of specialists.
SMM Warranties
Some customers expect guarantees from SMM agencies. For example,
- the number of subscribers to the group
- number of likes of posts
- conversion to site visitors.
As we understand, the behavior of human society is predicted no better than the behavior of search engines.
In the best case, the guarantee requirement is included in the cost of services in the form of insurance. At worst, the client will receive bots in the role of subscribers, and comments will be purchased through the exchange.
The answer to the question of what the SMM agency really can guarantee is left to the reader as an exercise.
Payment for the result
Adjacent to the "guarantees" approach - payment for the result - has a little more right to exist. It is usually applied to customer attraction channels (advertising, SEO, etc.), and the result is the target action - going to the site, filling out a form, calling.
For example, pay-per-click advertising systems (such as Yandex.Direct) are fair pay-per-use systems. The client does not pay for the shows, but only for the transitions. Such channels that work while they are paid, and in proportion to how much they are paid, are called “paid media”.
SEO and SMM (not counting targeted advertising in social networks) refer to the so-called “earned media”. They allow the client to accumulate social capital and subsequently use it. The classic type of “earned media” is word of mouth.
Paying for the result for “earned media” is a nuance. Since, as we saw above, there are no guarantees of achieving a result, the contractor lays in the price the risks of not achieving the targets. Therefore, each contact is on average more expensive than ordinary payment schemes (note that the services will be provided exactly the same and in the same amount!).
It makes sense to offer the client a payment for the result for SEO and SMM if the received figures are noticeably lower than “paid media” rates, for example, contextual advertising. For most competitive topics this is the case - the cost of a visitor from the search results is several times lower than the cost of a click on Yandex.Direct.
From the client's point of view, the dignity of “pay for the result” is the high predictability of the cost of one target action. Knowing the conversion rates and the cost of one visitor, the customer knows exactly how much he will pay for the completed form, call, registration or sale. But he cannot be sure how many targeted actions will be taken.
The disadvantage of the “payment for the result” for the client is that if the agency conscientiously does its job, then at the same time costs of the specialists the customer will give the agency an increasing budget. There were cases when the client grew in 2-3 years with a “pay for the result” budget more than fivefold, although with the usual payment scheme it would have grown to a maximum of half.
For agencies, the “pay for result” scheme is generally quite profitable with proper consideration of risks, topics and other professional factors. Especially if you sell it in comparison with the rates of Yandex.Direct. However, it is important that the “pay for the result” hidden stones are negotiated with the client.
Summarize
Today, there is no guarantee of results in Internet services.
Contractors can only guarantee:
- Conscientious performance of work (including the correction of errors at their own expense).
- Honest hours of production according to estimates.
- The experience of specialists.
The client can be offered payment for the result openly, with a description of “pitfalls”. The client must be aware that he will ultimately overpay to reduce risks and improve marketing manageability.
Copyright and references
The article has been prepared for the mailing list of the Kelnik Agency .
The author of the article is Alexey Yozhikov, Internet marketing consultant .
The article uses an illustration from the site ukrinvestbud.com.
The author of the article is Alexey Yozhikov, Internet marketing consultant .
The article uses an illustration from the site ukrinvestbud.com.
Source: https://habr.com/ru/post/213331/
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