The customer segment makes the difference
Your SEO agency’s DNA will tell you how you determine your customer segments, whether based on geography, size, or industry.
Also, depending on the range of services you offer, you will know which clients do not match your needs – for example, a start-up startup will not be a good SEO client for various reasons (lack of product-market fit). , lack of budget, no SEO foundations to start etc.).
Also, think about the difference between creating SEO value for a startup and an established ecommerce business with a few technical issues.
You can use a strategic tool such as the Business Model Canvas to begin mapping your current customer portfolio and determining who your ideal customer profile is, by answering questions such as:
- Who are the clients ?
- Where are they in their growth stage?
- What are their sources of income?
Maybe you specialize in a specific vertical industry like medical SEO, lawyer SEO, B2B SaaS etc. Or maybe you are interested in focusing only on online businesses or only on businesses.
It is also crucial to look at your agency’s history and analyze your failures in selecting clients and projects. You’ll remember bad deals and misaligned deals – map them out and learn from them:
- How were your profit margins for each of them?
- How many hours did you spend?
- What other resources have you used?
- What was the recurring monthly income?
- How did all of the above affect your income?
Knowing who to turn down for specific pricing and not destabilizing your policy is just as important as identifying your preferred customer segment. This way you don’t start trading from scratch every time a potential customer contacts you.
After all, if he’s not a qualified prospect, you have to say no.
Articulate (perceived) value and predict it
After determining which clients you want to work with (the ones that make sense from a pricing standpoint), you need a simple process to help them understand your value.
Even if you know your gross margin (the difference between your costs and your potential pricing) and your lead qualification principles, you need to assess an input that is uncertain enough for the formula to be complete – the perceived value the services of your agency.
There are many possible variables in the head of your qualified lead: your brand, your referrals, other market players, other offers received, their history with other sellers, etc.
It’s hard to take them all into account and it’s a slippery road anyway.
It is more efficient to establish a data-driven process with a reliable forecasting methodology. It will make the difference in your positioning and help you be transparent and trustworthy while bypassing the subjectivity inherent in perception.
Translate SEO results into business results
In order to determine the relevant inputs that will impact the client’s business, you need to consider:
- Unbranded organic traffic that you can directly impact through the SEO campaign.
- Look for the seasonality and year-over-year trend of your targeted keywords.
- Inertial traffic only influenced by seasonality (as if the website ranking freezes).
- Performance over time towards the objective of improving visibility, whether linear or exponential.
- The average CTR curve for the top 10 positions, for each combination of SERP features and device allocation, showing you the actual clicks that are reaching your customer.
All of the above data will allow you to estimate the results in terms of clicks and conversions instead of rankings, thus establishing a closer link between the SEO strategy you are proposing and their potential business results.
In addition, you will be able to highlight the difference in traffic with and without the SEO campaign you are offering. This means that you will also be able to calculate what the PPC equivalent looks like – a target number to anchor the price.
Introducing this external comparison will show the value SEO brings, giving customers the ability to research and rate the expected outcome with a clear context in mind.
Set the right price
With this equivalent at your fingertips, you’ll not only create a trustworthy pitch, but you’ll also know the benchmark of perceived value. In addition, you will be transparent from A to Z, an added value in terms of building customer relationships.
Say you have a customer with an estimated Google Ads value of $ 875,000 for the 12-month forecast scenario. A holdback of $ 10,000 may no longer seem like a stretch, given that this client must be a player in a highly competitive international marketplace and the additional conversions you can generate are no small feat.
Or maybe it’s a customer with an estimated Google Ads value of $ 63,000 for the 12 month period. Then a provision of $ 500-700 seems more plausible – it’s probably a small business in a limited geography, needing help raising the bar in its market.
Whatever client profile you wish to serve in your agency, with this efficient use of research data, you will be able to create realistic business scenarios that will help you dictate your prices without the painful guesswork.
Again, you can stress that SEO is an investment and the traffic you generate for the customer is here to stay. There is cumulative value that goes beyond paid media results if you think long term.
Additionally, for accountability purposes, you can go one step further and set your SEO goals by following forecast benchmarks, thus having a reliable starting point to measure.
Monthly deductions. One-off projects. Success fee.
Given the agency’s business model and the fact that SEO is a long-term investment, Monthly Recurring Income (MRR) is the pricing that makes the most sense.
But the question of one-off projects will arise: should we accept them or not?
As with any clarification process, it depends on how your defined pricing policy fits. exceptions.
Sometimes agreeing to a single deal can bring benefits if you consider:
- Technical audits as a separate service.
- Consultancy services.
- SEO training.
It can also work if you think there is a distinct benefit to be had from it.
Perhaps this is a new vertical sector you want to enter or an experimental project that your agency wants to explore. In these cases, you can agree on a 3 month project and set expectations accordingly – not rigid results, but an experimental setup to identify SEO potential.
Of course, this can be a starting strategy that leads to the next steps, if the first results are promising.
When evaluating such leads, it is good to do your preliminary keyword research with the goal of “fruits at hand” and spot SEO opportunities early on. For example, evaluating the difficulty of the targeted keywords or the additional traffic generated if those keywords reach the top 3 will give you a good idea of your customer’s market and your potential ROI.
Another added value for your SEO offers is success fees. You should do this every time you start a collaboration. You will not only communicate confidence from the start, but you will add an extra layer of motivation for your team to deliver beyond the agreed outcomes.
Are we taking the competition into account?
The right price is mainly influenced by your costs, your profit margins and your customer profile. Still, you need to know your agency’s competitors and their pricing policies, to see if they are anchoring perceived value on another scale.
If you are at a different level than what the market is used to, your positioning and perceived value play a major role in the final decision.
In business theory, this approach to pricing is called the value-based approach.
In an article by HBR, A Quick Guide to Value-Based Pricing, you will find the following definition:
“Value-based pricing is the pricing method by which a business calculates and tries to gain the differentiated value of its product for a particular customer segment over its competitor.”
Now, with all the inputs at your fingertips, you’ll know how to define and explain your agency’s differentiated value.
Creating a pricing strategy that resonates with your agency’s business model can be a difficult undertaking.
Analyzing cost price, and perceived value, you need to think about all of the things that keep the balance between your incentive to sell and the customer’s incentive to buy:
- The cost structure of your agency.
- The customer segments you want to serve.
- Customer profiles that you will say no to.
- The perceived value of your SEO services, calculated through a reliable and transparent forecasting method (illustrating the extra visits and conversions you can make and what that might look like in a PPC campaign by comparison).
SEOmonitor’s forecast module highlights the equivalent of Google Ads value, allowing you to see all calculations down to the keyword level, for a transparent and valuable pricing decision (which you can present to your customers).
This is just one of the many solutions we have developed to help SEO agencies acquire, manage and retain more clients.
Join us on our journey to bring more transparency to the SEO industry.