We often have clients or potential clients suggest we work for a share of profits or commission on sales generated. While we’ve actually explored this option and understand the desire of business owners to pursue this type of relationship with an agency/consultant, there are several reasons we’ve been unable and unwilling to do so…
1)Attribution of Results
While some forms of online marketing are extremely traceable (Google PPC and other direct response ad campaigns), there are MANY leads and new customer acquisitions that are much harder to track and attribute. If a customer first sees your print ad, then later performs a Google search before calling your business…how is that lead attributed? Many people will go to Google already knowing about your business, but that lead data may show the visitor came from “organic search”…should that lead be credited to SEO work? Probably not.
A customer may be touched or affected by multiple marketing campaigns and messages and properly attributing leads is unlikely to be an exact science. Because of that, we’d experience numerous issues and potential disagreements over how to attribute new business generated.
2)Lack of Bottom Line Sales Data
Unfortunately (unless you’re an ecommerce site), we won’t have the bottom line data on your sales numbers and business closed. Although we can track leads generated (to a certain extent) we’d be forced to rely on our clients to report and accurately record the bottom line sales data used to make this type of relationship work. That would mean monthly audits by a neutral third party accountant/bookkeeper (extra cost) and quite a bit of legal assistance from both parties to determine specific details of our profit sharing split and agreement.
3)No Control of Product or Service Itself
Have you heard the saying “good marketing makes a bad product fail faster”? We’ve performed Facebook ad campaigns for clients that have generated over a dozen new customer leads in a month, but we’ve also performed those same campaigns for people who saw lackluster results. We’ve performed SEO activities for businesses that seemed impossible to get off the ground and we’ve had clients that have seen exponential business growth through implementing some basic SEO work. Unless we have control over your service, your staff, and ultimately your product itself…we can’t always guarantee that our work will produce sufficient results and ROI. Our job as an agency is to get the word out about your product/service and to do what we can to increase the chances someone will find you AND do business with you.
Think of it this way –If we were to knock on the doors of 1,000 people in an attempt to sell them a nutritional supplement guaranteed to help them lose weight and get in shape with no side effects, it’s very likely a good portion of those people would be interested in purchasing if the price were right. On the other hand, if we knocked on the same 1,000 doors to sell them a vacuum that did a poor job of picking up dirt but cost $1,000…we’d probably head home without a single customer. The ultimate success of your product or service will be determined largely based on the value it provides to the customer and the price compared to other products/services offering similar value.