Payment for results and guarantees

Any project related to Internet promotion (including the development of a site) is by default exposed to risks associated with the nature of Internet communications.

• no one can absolutely accurately predict future changes in the environment (the Internet, consumers, competitors),
• no one can put forward only the correct 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 is this related to  guarantees , and is it worth it to fit into projects with  “pay for results” ?

Warranty as insurance

The concept of “guarantee” came to us under Peter I and meant, as Dahl says, “guarantee, guarantee, guarantee, security”. For example, a “guarantee of origin” is a guarantee that the manufacturer is a specific company or a company from a certain 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 used to talking about  insurance . When a manufacturing company changes a defective product for a new one for free, it does not do so at a loss. The cost of exchanging marriage and return is included in the price of the goods .

Buying any product with a guarantee, you pay a little for replacing the defect, even if your purchase is in perfect order.

On large volumes of identical goods, this works fine: the percentage of defects or breakdowns is predictable, the cost is eroded by the large volume of production, and everything is fine. To the extent that the USA has the Magnusson-Moss law, which since 1975 obliges manufacturers to exchange or return the cost of goods without explanation.

Have you met with guaranteed results from 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 only responsible for performing them with the greatest possible involvement and desire to achieve a result. The doctor cannot be responsible for the fact that the patient follows the recommendations and wants to recover. The teacher cannot be responsible for the fact that the child's family 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 cannot fundamentally be controlled by the contractor.

Therefore, if the customer requires a guarantee from you, he forces you to lay 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 event 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 laying insurance in the price.

Let's look at examples of why guarantees in our industry are almost always either a myth or a hoax .

Web development guarantees

A web developer cannot guarantee:

• increase in the number of applications or calls,
• increase in conversion of visitors to targeted actions,
• Improved conversion rates compared to the previous version.

The solution to all these problems is connected with channels for attracting visitors and hundreds of other factors, including seasonality and competitor behavior.

If the customer pushes the warranty, an unscrupulous contractor can wind up almost any indicators, especially if the site traffic is low. But the effect for the business will be zero.

What can a web developer guarantee?

• Good faith work.
• Honest production of watches according to estimates.
• The experience of specialists.

If the customer insists on the need to improve specific indicators of the site, offer an audit and active implementation and testing of changes. For example, change of emphasis, position of buttons, texts, headings, composition of forms and so on.

SEO guarantees

In search engine optimization today, there are two models for assessing the quality of promotion - according to the positions of key queries in the search results and the total traffic to the site from the entire query pool. Therefore, mythical guarantees are “position guarantees” and “traffic guarantees”.

In general, guarantees in SEO are guarantees of a lawyer who promises to win a court in a completely independent and impartial court. Optimizers fight for positions in the search engine results, which are completely closed "black boxes", operate according to their own algorithms and are completely beyond the control of the organizers.

Guarantees can be given by agencies:

• "At random";
• the conclusion to the top of rare key expressions ("buy an apartment with windows on the railway"), which give few visitors,
• traffic, including contextual advertising,
• for a very long time.

In the best case, the client will receive the right amount of visitors. But nothing can be said about the quality of these visitors, and the chance of overpayment is quite high.

What can an SEO company guarantee? Exactly the same as a web developer.

• Integrity of work (including internal and external optimization).
• Honest production of watches according to estimates.
• The experience of specialists.

Warranties in SMM

Some customers also expect guarantees from SMM agencies. For instance,

• the number of subscribers to the group
• number of record likes,
• conversion to site visitors.

As we understand it, 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 as subscribers, and comments will be purchased through exchanges.

The answer to the question of what the SMM agency can really guarantee is left to the reader as an exercise.

Payment for the result

A “safeguards” -related approach — payment for results — has slightly more rights to exist. It is usually applied to channels for attracting customers (advertising, SEO, etc.), and the result means the target action - going to the site, filling out a form, making a call.

For example, pay-per-click advertising systems  (such as Yandex.Direct) are honest pay-per-click systems. The client pays not for impressions, but only for clicks. Such channels that work while they are being paid, and in proportion to how much they are paid, are called “paid media”.

SEO and SMM(not counting targeted advertising on social networks) belong to the so-called "earned media" ("earned media"). They allow the client to accumulate social capital and subsequently use it. The classic type of "earned media" is word of mouth.

There is a nuance in paying for the result for “earned media”. Since, as we saw above, there are no guarantees of achieving the result, the contractor lays down the risks of failure to achieve the target indicators in the price. Therefore, each contact is on average more expensive than conventional payment schemes (note, the services will be provided exactly the same and in the same volume!).

It makes sense to offer the client payment for the result for SEO and SMM if the numbers received are significantly lower than the rates of “paid media”, for example, contextual advertising. For most competitive topics, this is so - the cost of a visitor from search results is several times lower than the cost of a click in Yandex.Direct.

From the client’s point of view, the advantage of “payment 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 client 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 carried out.

The disadvantage of "payment for the result"for the client is that if the agency faithfully performs its work, then with the same time costs of specialists, the customer will give the agency a larger budget. There were cases when the client grew by more than five times with a “pay for result” in 2-3 years, although with a regular payment scheme it would have grown by a maximum of half.

For agencies, the “pay-for-result" scheme is generally quite profitable with the proper consideration of risks, topics and other professional factors. Especially if you sell it in comparison with Yandex.Direct rates. However, it is important that the hidden stones of "payment for the result" are negotiated with the client.

Summarize

Today, guarantees of results in Internet services do not exist.

Contractors can only guarantee:

• Conscientiousness of the work (including the correction of errors at their own expense).
• Honest production of watches according to estimates.
• The experience of specialists.

The client can be offered payment for the result openly, with a description of the "pitfalls". The client must be aware that he will ultimately overpay in order to reduce risks and improve the manageability of marketing.