Grrrr rant - pay by results...

[NikkiPilkington]

It happens every so often - I’ll get an email asking me to work on a Pay by Results basis. This could be someone only wanting to pay when they achieve front page Google listings, or someone wanting to pay a commission on each sale achieved, each front page on Digg, each mention on Twitter, etc etc etc. On some occasions I’m not even told what the ‘result’ is going to be, but told to only come back with a true figure!

But what 99% of these emails have in common is the absolute belief that the author of the email is doing me a favour. That I should be thrilled to be involved in their dream. That if I’m as ‘good’ as I say I am, then I should be willing to work on results only. That ‘if I can’t hack it’ I shouldn’t even bother replying.

I just received another one today - hence this post.

Well, let’s clear up a few things, shall we?

1 - You want me to work for free in the first instance? Have some courtesy. Don’t presume I see this as you doing me a favour. In most cases you’re coming to me because you don’t have a marketing budget - you want me to help you - I would suggest being nice is a good start.

2 - Working for free at first means that you will be charged more in the end - trust me, there is no way I’m going to put lots of work I’m not being paid for into something without a good return at the end. So don’t come back to me and say my quote is ridiculous and nothing like what it would cost you to pay me in the normal way. You want the normal prices, become a normal customer.

3 - This is your dream, not mine. If it were my dream, I would be doing it. On a pay by results basis. It’s called ‘running a business’.

4 - Challenging me with ‘if you’re not up to it’, ‘if you can’t hack it’, ‘you daren’t take a risk’ and ‘you’re not good enough’ does not make me want to work with you, it makes me think you’re an arrogant little shit. Sorry to be blunt, but it does. If you were approaching me to be a usual ‘pay a fee’ customer, I probably wouldn’t want to work with you. But then you’d just be a regular arrogant little shit. By asking for special favours and then trotting out the aforementioned quotes, you make yourself look like an arrogant little shit with no money. Well done.

5 - Just because you think your idea is the best thing since sliced bread (although I’m not that convinced that sliced bread was a great invention either) doesn’t mean that I share your belief. You are probably not the first person to come to me with this idea. and won’t be the last. And the fact that you think it is fantastic still isn’t enough to make me want to work on it for free.

The above makes me sound like a grumpy cow, and well it may, because that’s how I feel right now.

However, at NikkiPilkington.com we DO take on Pay by Results clients. But we only consider them if:

1 - They are courteous and honest in their initial approach

2 - The results are easily measurable

3 - They agree to pay our (admittedly higher than the ‘normal route’) fees upon results

4 - They don’t try and emotionally blackmail us into working with them by using reverse psychology

and most importantly

5 - They have a product or service that we believe in too

So, feel free to come to me with ideas, websites and blogs that you want promoting on a Pay by Results basis, but be careful of your approach, or you could end up in a blog like this

[Emma]

Brilliant post, Nikki.

[designsbysteve]

Very interesting thoughts. It's very much a results industry (SEO) and I think you'll find people trying to take a punt on getting away with not paying if they can! The thing is though, they are paying for your expertise and knowledge.

Designers sometimes get a similar line, "If you do this project for me for (insert low figure here) I'll get you loads of work at your normal rate.

[Kay]

Great posting, Nikki. You gave me a good laugh with that one. And I agree with most of what you say.

But, it's on the Internet so it must be FREE. You don't need to earn a living. I thought that you were there to provide me with a free service. I thought that this website/forum/blog was there to HELP PEOPLE. Why are you asking for payment? If I pay you, what will you spend it on?

Some people, eh?

[ceri]

I'm currently working with a client on sales generation, they are a great company with a great product (software), but they're not salespeople. I am therefore looking to take on self employed telesales/sales people on a commission only basis for them. The salespeople generate leads and pass them on to the company to finalise. The rate is 20% commission payable on all sales closed from the leads that the salespeople generate. An average sale is around £10k giving a commission payment of £2k on an average sale. I would estimate that x1 sale a week is realistic with more than this a real potential for high achieving sales people.
Would you consider this a decent rate, if not any feedback would be appreciated.

[Spock]

Now that's what I call a rant

I'm gonna PM you now but please be nice

[NikkiPilkington]

Originally Posted by ceri

I'm currently working with a client on sales generation, they are a great company with a great product (software), but they're not salespeople. I am therefore looking to take on self employed telesales/sales people on a commission only basis for them. The salespeople generate leads and pass them on to the company to finalise. The rate is 20% commission payable on all sales closed from the leads that the salespeople generate. An average sale is around £10k giving a commission payment of £2k on an average sale. I would estimate that x1 sale a week is realistic with more than this a real potential for high achieving sales people.
Would you consider this a decent rate, if not any feedback would be appreciated.

Personally I wouldn't take this on - too many variables that don't rely on my work (if I were a telemarketer, which I'm not!)

- what if the people doing the closing are rubbish? I've generated leads that come to nothing

- what if they can't help the lead I refer, but it's not my fault? I've generated a lead that comes to nothing

- what if the lead cancels the appointment? I've still done the work to generate it, but it comes to nothing

- what if the lead doesn't pay? I've generated a lead. you've closed the sale, but I may get nothing

In my eyes, I'd only take on commission only work if the product or service was measurably better than anything else, no-one else was involved in the chain (ie no other salespeople or anyone who could screw up the sale) and the results were measurable.

Therefore you'd be better off paying a lower rate per lead generated and then say 5% of sales generated, so at least the person generating the leads gets something for their time.

Just my opinion though.

[Paul Norman]

I loved this. First, because it was a proper, decent rant, and I love those!

Second, because this is a serious business question. Nikki gets asked to do this for her line of business, and so do I. I am often asked to invest my time in another person's business venture.

Now, I will do this, on occasions. But, for that, I need to do due diligence on your business venture to ensure I believe in it, and in your ability to carry it off. And, if through my input I make your dream come true, I want a big slice of the pie.

It would be better, if you can afford it, to pay up front. And there is the crunch point. If you do not have the resources to pay up front, you probably do not have the resources to pull off a business. Unless you can persuade a bunch of people to effectively resource it for you. Which is unlikely. So my investment offer gets pulled.

Companies like Nikki's offer a professional service, which they are willing explain in detail up front, before you commit to anything. She will tell you what she will do, what she will not do, what you will pay. Provided she follows that, which by reputation she does, all is well. If you dont trust her, dont use her. If you dont see the value in what she does, go elsewhere.

In a cut throat market, there is a big, growing tendancy to want something for nothing.

That is sad.

[matt.chatterley]

Good Rant. And even better points - particularly #2 and #5.

Working on a 'paid upon results' basis isn't an issue, as long as the results can be measured in a way which both sides feel is fair, and the concept is considered sound by all involved.

Plus points on politeness, courtesy - essentially you are entering into a business relationship, and you need to be able to work together!

We rarely do work on a results basis at present, although we have considered it in the past, and have factored this into one or two deals - e.g. taking a bit of commission in lieu of reducing initial fees (risk sharing on start-up projects where we feel they are fundamentally good ideas).

Bit of give, bit of take - often collaboration can produce better results than a "normal" client/provider relationship (is there any such thing?) - but it requires a different mindset!

Thanks for sharing your rant, though!

[Ozzy]

Joining the march in loving this.

I used to own a web design company a few year back, when the word "Internet" was just starting to be bounded around, and the amount of people we had coming to see us with the next big thing and wanting us to be their "business partner". All wanting huge websites developing for free in return for X% of this or that. Listen mate, you're offering me 20% of nothing, nowt, zilch. You have nothing and we are going to create you something, assuming you do something with the something we build you.

"This time next year Rodney!"

Then, as soon as the press hit the interwaves about my sale of UKBF, the opportunities for investing in the next big thing started flooding in. Suddenly a million business opportunities that are going to make "us" rich. Umm, if it's such a great idea why don't you get a bank loan? Why on earth would you want to give away a chunk of your business to a complete stranger for just money? Interesting, the bank didn't see it as a viable business...

The all time classic is the phone calls that come in with the question...and these are true quotes...

"Do you have any money making idea's I could do?" -- If I had them I'd be doing them myself and not handing them away to someone who doesn't have the inclination to work on his own ideas.

"Do you have any business ideas you want someone to run for you? You set it up and we'll do the work. We can all be business partners." -- Why do I have this feeling it won't work out quite like that...and the partners bit, I have a better idea. I'll just take on some regular staff instead of some leaching shareholders.

"I plan to run my own business one day, I'm just waiting for that killer you idea. You know what I mean?" -- Nope, you either want to work for yourself or you don't. You don't need that killer idea you just need any viable idea and to do it well.

Must be that end of day thing, I felt I was drifting in on the rant then

[matt.chatterley]

Originally Posted by Ozzy

Then, as soon as the press hit the interwaves about my sale of UKBF, the opportunities for investing in the next big thing started flooding in. Suddenly a million business opportunities that are going to make \"us\" rich. Umm, if it's such a great idea why don't you get a bank loan? Why on earth would you want to give away a chunk of your business to a complete stranger for just money? Interesting, the bank didn't see it as a viable business...

It's this which normally makes me smile (or chuckle), depending on the idea, of course. Some are barking mad - others just.. well.. wouldn't work (of course, if you could MAKE one work, you might be onto a goldmine).

Just an extention of 'insane specoplexia' - the disease which seems to affect people talking to Web Developers on the phone from time to time.

"Well, basically, I want it to be a bit like Facebook, but with some extra stuff.. my budget is £500."

*facepalm*

[Ozzy]

Originally Posted by matt.chatterley

\"Well, basically, I want it to be a bit like Facebook, but with some extra stuff.. my budget is £500.\"

*facepalm*

I had one of them when WorldsAway and ActiveWorlds wore really big things. Someone wanted to create a virtual business community in a 3D world with ZILCH budget but I could have, I think it was, 10% of the business in return for building this whole project.

I nearly took his arm off, as I slammed the door on him.

[Kay]

I was being tongue-in-cheek in my jokey reply to Nikki. But really, honestly, not so long ago someone did in all seriousness ask me the question "If I pay you, [for the premium content on offer at a take it or leave it price] what will you spend the money on?"

[Ozzy]

Originally Posted by Kay

\"what will you spend the money on?\"

How does it go again...umm, oh yes "...and that is your concern because?"

[Kay]

The official reply is that they should visit the Companies House website and buy a copy of the company's latest accounts.

Of course every customer or consumer has a right to know what they're paying for, ie what goods or services they'll get for their money. But it's quite bizarre to ask me what I spend my pocket money on.

Oh, if you must know it was a couple of bottles of Chilean Sauvignon blanc, a packet of fags, and a little treat from the Body Shop. (Not that the person in question ever paid - I mean with my other pocket money which I got from other people.)

[ekmgroup]

brilliant.... just brilliant.

I had an 'arrogant little shit' the other day trying to tell me that I could do his SEO for him for 2 years for 10% of the profit and then he would reassess the contract....

Now there was an offer! I'll put in 2 years work for free and then he can get rid of me!

Don't get me wrong we do take partnerships but as Nikki put it there needs to be a certain amount of respect and understanding from all parties.

[B_Cal]

Just love this Nikki, why don't people learn the simple fundimentals of life let alone business - treat as you would wish to be treated.

My father has a great trick for dealing with Arrogant little shits on the phone, what you do is listen and then say "your speaking to the wrong person, I shall just go and get the right person" and then put the phone to one side.

After a couple of minutes of silence even the less bright ones get the message.

Roy

[OldWelshGuy]

I get constant 'offers' like this, Fair play Nikki, you made me smile.

I particularly like those who say 'I could do the SEO myself, but don't have the time'. That one always makes me smile. Another cracker is 'I fully understand what SEO is all about, but....' Finally 'This is a great opportunity for you'. My ABSOLUTE favourite though is normally on a forum after I have discussed (deliberately ambiguously) one of the niche sites I have that makes me money, and goes 'any chance of you posting the url'? YES OF COURSE, I mean why not? I have spent a shedload of time finding a profitable niche, buiulding and marketing the site, so OF COURSE I will pass on my idea to you

What these people don't understand is that I have a filing cabinet FULL of ideas for projects, that I have shelved due to time constraints. I only ever accept partnerships if they come close to a project I have already considered or researched at some time in the past. I am currently working with 3 such cases.

You are SO right about the arrogance though. E.G I am starting a totally new concept that is going to take off like crazy. When I run this through my bullshit translator it normally comes out with 'I am going to start yet another sex toy/ lingerie/ loans/ mortgage/(insert any of another thousand types here)/affiliate site'

[Kay]

On the subject of less than attractive 'offers' someone contacted me out of the blue a couple of weeks ago and offered me $1,750 for britishexpat.com

It's over 9 years old, PR5, has an opt-in email list, reasonably active forum, lots of good partnerships in place, thousands of content pages and a reasonable monthly income.

At first I thought the guy was mentally retarded and therefore replied nicely, with the suggestion that perhaps one of my competitors might be more interested in such an offer.

As it turned out, a friend later told me that he knows of this would-be buyer and that he plays the naive card in the hope that the sellers are naive enough to go along with his very low offers. Grrr.

[bobpilk]

Its a good job that I dont do "pay by results", can you imagine somebody saying to me, sorry, not going to pay you because it rained so nobody watched the fireworks.
Not blooming likley.
Do I look daft?

[Gorgeous Office]

Excellent read Nikki - brought a smile to my face at the end of a long day. Shame its based on true events - some people have no idea.

Kim

[david64]

Worst and only free SEO offer I have had was a company that wanted my old company to do all their SEO for free for one year and at the end of it they would decide how much they want to pay us.

Did them a bespoke eCommerce site: all valid HTML, AJAX, built with usability and conversion in mind, decent programming base, SEO friendly and it ended up going in the bin in favour of an osCommerce site with 1000px images squashed down to less than 200px.

[OldWelshGuy]

people do not value things they get for free. It is a lesson I learned many years ago when we were giving away a service to get market share (Not SEO). The moment we started charging £500 a year, people were beating down our door to get it

The psychology of perceived value over actual value eh !

[hlsbs]

Great post.