My first real company was an SEO agency. I was only 17 years old when I started it and I had no clue what I was doing. The only thing I knew was there was a business to be made from SEO because companies spent millions of dollars on pay-per-click advertising.
I was fortunate enough to get my agency $10,000 to $20,000 a month in revenue within a year, but scaling the company to millions of dollars a year was a much harder challenge. Luckily I was able to get there as soon as I figured out how to close big SEO contracts that were in the million dollar range. If you want to create a big SEO agency that’s printing cash, it’s still possible. All you have to do is learn from my mistakes. Here’s what I learned over the years:
#1: Run Your Agency Like a Businessman
When you think about big SEO agencies who come to mind? Probably companies like Distilled and Blueglass, right? Although they are great agencies, they aren’t that big when you compare their revenue to companies like iProspect or 360i.
Do you know why? It isn’t because companies like iProspect and 360i are better SEO agencies, rather it’s because they understand business and sales very well.
When I first started out I would pitch companies on SEO by telling them how much more traffic I could get them and how high I could get them to rank on Google. I would also end the pitch with how much it would cost. Although that approach works, it’s not as easy as you may think. Can you guess why? Well the person who signs off on a six- or seven-figure contract doesn’t care about rankings, they care about revenue AND profit instead.
It took me a few years to learn this, but once I did my minimum SEO engagement started at $240,000 a year and it went up to $1,200,000 a year. I was able to get large contracts because I changed the message of my pitch. Instead of pitching rankings, I would first figure out how much traffic a company was currently getting from search engines and their conversion rate. I would then take that data and multiply it with their average order size to get an understanding of how much revenue the company was making from organic search.
From there I would break down how much more traffic I could get the company from: conservative, normal and aggressive estimates. I would break down the methods I would use, and give them a time range in which they could see these results. I would also share how much more revenue they would see on a quarterly basis from my efforts. Using their average revenue per customer number and their conversion rate percentage I was able to provide estimates on how much additional income I can bring to their business.
Once I figured out that magic formula it wasn’t hard to tell a company that I wanted $300,000 per quarter because I was going to make them an additional $3,000,000 in quarterly revenue.
When you’re pitching to companies, don’t make the mistake I did of pitching rankings, instead discuss the revenue and profit impact you are going to bring to the table.
#2: It’s Harder to Get clients than to Keep Them
One mistake I made with my agency is that I spent more time acquiring customers than trying to keep them. Instead I should have spent 75% of my time keeping clients and 25% of my time trying to acquire more. The better results you provide, the more clients you are going to get from word of mouth. Instead of just focusing on getting new customers, make sure you are satisfying your customers. You can do this by weekly calls, monthly reports, and sometimes even in-person meetings.
But the best way you can make sure your customers are happy is to survey them. One consulting company who does a great job of this is Conversion Rate Experts. After every call, they send you a survey that contains questions like this:
- What were the three top highlights of the call?
- What is the one thing that you think will benefit you most from this call?
- What were the three worst aspects of the call? (Remember, we love blunt, honest feedback – we invest loads of time and money gathering it – and reacting to it).
- How could we have improved the call?
If you notice, they don’t ask questions like “are you happy?” Rather they ask questions that will help them improve the service they are providing. Take a page out of Conversion Rate Experts book and ask your customers specific questions that will help you service them better.
#3: Never Stop Building your Brand
One of the reasons my agency took off was because I had a big brand in the SEO sector. During my peak I spoke at over 50 conferences a year, I blogged about SEO three times a week, and I constantly did free work for popular bloggers. In exchange they put my company's logo in the footer or sidebar of their blog.
I didn’t stop there… I also started to spend $10,000 to $20,000 a month for advertising. I bought a banner on any major SEO sites that would sell it to me. Through all of these efforts business was flourishing and we were getting bombarded with requests from new companies. But after a while I got tired of blogging and traveling to conferences, so I slowed it down.
Within a six-month period I noticed that incoming requests from potential clients were dying down as my agency stopped putting an emphasis on growing our brand. At this point we were focusing our time on satisfying clients instead of acquiring new customers. Like I mentioned earlier, focus 75% of your efforts on keeping your customers happy and 25% of your efforts on acquiring new customers. It’s all about finding the perfect balance instead of spending too much time on one or the other.
#4: Keep Your Overhead Low
One of the wisest things I did when I first started out was that I kept my overhead low. By running the agency in my parents' home for the first few years I didn’t have to pay rent and my mom could tell me who came into work and who didn’t because I was still in school at the time. However, as the company started to scale into the low six figures each month, I started to spend money a bit more lavishly. From staying in fancier hotels when traveling to having useless gadgets for employees to be entertained, I started to spend money like it was water.
Luckily for me, my business partner started to see this and he helped me cut back on expenses, as this was very important when the recession hit. When it rains it pours. Losing one client will turn into two, and that can turn into three. So if you don’t keep your overhead low, you’ll have to start laying off employees… this is the last thing you want to do!
Ideally your profit margins should be around 50% if not higher. It’s hard to do this when your revenue is below six figures a month, but none-the-less your profit margins should never be below 20%. Save your money for a rainy day because no matter how good of an SEO you are, there will be rough times.
#5: Don’t Get Too Greedy
As I got better at selling I stopped taking clients that could only afford to pay me $5000 a month. I had a strict rule: if you couldn’t pay me at least $20,000 a month on a one-year retainer, I wouldn’t take you on as a client. I was stupid! If taking on a client for $10,000 a month is highly profitable, you should sign them. By the time I learned that, it was a bit too late and once the recession hit the clients I lost tended to be the higher paying ones.
Don’t get too greedy! Take on clients as long as they are profitable. Although they may not be paying you what you want, you can always upsell them later on.
#6: Have Ironclad Contracts… that Automatically Renew
As a consultant, when companies see the great work you are doing for them, they get happy. But as time goes on, they get used to the results and may start taking your work for granted.
Fast-forward a year and your contract comes up for renewal. Clients tend to take for granted the good results you provided as they feel they were deserved because they paid you for them. And to a large extent they’re right. You won’t always get renewals, even if you provided excellent work.
To avoid this, you need to start creating smarter contracts that benefit both you and the customer. Before starting an engagement, have clear goals set in place and in the contract you can state that if you hit those goals, the contract automatically renews for an extra year. It’s really easy to get clients to agree to this because mentally they’re thinking that if you provide results they’ll pay you all day long. However, once you start the engagement they may not feel this way, as they’ll tend to get used to the results and want more. So make sure you have an auto-renewal clause in your contract before you start any work.
#7: Pick a Niche and Dominate It
If I could turn back time, I wouldn’t create a SEO agency for just any type of online company. Instead I would have created a SEO agency that focused on startups as I have a lot of connections in Silicon Valley. If you create a SEO agency that helps out any type of company, you’ll be stuck competing with all of the seasoned SEO companies, which is tough. If you focus on one type of client, you can knock your numbers out of the ballpark.
A good example of this is an agency called Single Grain. They only do SEO for companies located in San Francisco, California, and more particularly they do SEO for venture-backed startups. By having such a targeted niche they are able to get a lot of deal flow from VCs.
Like I said, if I could rewind the clock, I would have done this, as I knew most of the big venture funds. It would have been easy for me get access to all of their portfolio companies.
Focus on one niche as it will make your networking and marketing expenditures cheaper and much more effective. For example, if you targeted a geographic region like San Francisco you could do very well. There are a lot of big companies that are located in the Bay Area.
Conclusion
Don’t make the same mistakes I made when I ran a SEO agency. Learn from my mistakes and the chances that you’ll succeed are very high (assuming you can provide results). There’s still a lot of room in the SEO world, so if you don’t have an agency, it’s not too late to create one. If you do have one, constantly work on improving your company.
Do you have any tips on how people can improve their SEO agencies?
About the author: Neil Patel is the co-founder of KISSmetrics, an analytics provider that helps companies make better business decisions.
OK, so I was going to keep my nose out of this post, but I just couldn’t resist…
It’s one thing having an SEO agency that prints money, but it’s another to be good at what you do.
This can be applied as a counter argument to all the points in your post Neil, but to focus on one that Rand and Tom seemed to have jumped on here; “Running your agency like a businessman”.
Mentioning no names; There are many big named SEO agencies (some very close by…) that people think of instantly, however are these actually any good at their job or are they just good at flaunting their brand around everywhere?
It’s one thing to be ‘known’ in SEO and be invited to all the big gigs and have people hang off your every word… but I would argue that these people/agencies are good at self-promotion, but what are their SEO skills like?
I’m my experience of head-to-head pitches and talking to ex-clients of theirs, the answer is pretty poor.
The old saying of “talk the talk, but can’t walk the walk” is very apt.
Obviously this is not true for absolutely all agencies that go mental with self-promotion, but for those that spend exorbitant amounts of time and effort running conferences in their name, guest speaking at all the big events, pushing out tools with their branding on them, etc rather than actually supporting their clients on their SEO campaigns, then I think they need to realign their priorities.
The problem is however (as you put in your post Neil), that when people are asked to think of an SEO agency they immediately think of these guys who self-promote, and so they often win the business of small to medium sized companies.
(Incidentally larger companies usually see straight through the nonsense so you won’t often find any large brands that are currently in a long term contract with any of these agencies!)
So my takeaway would be that to build a strong SEO agency, stick to what you do best; SEO. Don’t waste your time pimping your brand to every sucker out there. Yes you may win some short term business, but in the long run your company won’t grow. You’ll just find yourself with a two-bit agency and having to spend the rest of your time supporting your revenue with branded conferences and guest speaking slots!
Agreed. Point #2 of this article makes that very clear. Spend most of your efforts on keeping clients rather than acquiring new ones. How to keep clients? Be good at SEO and bring them results. On the other side, ignoring networking, events and marketing coompletely would be foolish. Everything in a right balance and order of priority.
Really appreciate you contributing here at SEOmoz Neil. It's always interesting to read your perspectives, which are often very different than my own.
One point that we strongly agree on is building a niche. I think folks who target a specific sphere or area of expertise can really stand out (case in point, folks like Bill Slawski in patents/research, Andy Atkins-Kruger in global/international or David Mihm in local).
One point I'd strongly disagree with is the reasons you cited for agencies like 360i and iProspect to have much larger revenues than agencies like Distilled or Blueglass. You posited that "they understand business and sales very well." To me, that seems like both an oversimplification and an underestimation of the numerous skills, structures and initiatives those larger agencies adopted to reach their size. Sadly, I don't have a better answer, as I've not studied them nor spent much time with founders/execs of services companies at that scale.
If someone does have great answers to that one, I'd be especially curious.
Don't mean to detract from the value of the post or the contribution, though. Thanks again Neil!
I thnk Neil makes some great points - and I'm not saying he's wrong about the Distilled/Blueglass vs 360i/iProspect thing but I think it's worth saying that bigger isn't always better... Is bigger revenues necessarily the end goal? For example Distilled is entirely bootstrapped with no funding so although revenues are smaller we're in complete control of the company. Just a thought...
AHA! I run my small SEO agency in Manila. Bigger revenues is not the measurement of success, At least I can say for me and Tom. At the end of the day its all about being able to manage all the campaigns for your client and keeping them happy. My record earning was about XX,XXX but I began loosing control with one of my client's campaign. COMPLETE CONTROL OF THE COMPANY and keeping clients happy is always an important key for SEO Agencies.
Neil, I love the way you talked about GREED :)
You are right in which bigger isn't always the goal. By staying smaller in many cases you can provide better results to your clients.
But funding doesn't necessarily impact revenue. A lot of the larger SEO shops didn't raise money. And by no means are they better at SEO because their revenues are larger...
For example I've had at least a few companies that I've invested in work with you guys and the results are great and your prices are great. I've also had a few companies I've invested in work with the larger agencies and their prices were exteremly high and the results weren't so great.
Yep - it's a tricky balance trying to figure out what makes a "good" company, figures and numbers aren't always the only measure... That said I think you make some great points and it's good food for thought. However large we want to grow we can always learn things from others.
Thanks for the kind words about our service - great to hear it :)
I think that's a vauable concern. But having smaller revenues won't allow you to scale your business near as fast as a larger account.
No worries Rand. I'm not always right with my view points and have been proven wrong on many ocassions. For example, I would have never thought a SaaS company could have built such large reoccuring subscription base at a rapid rate without inside sales... but look at you guys. You have done an excellent job at it.
As for the data, I agree. I wish I could also dig into it a bit more. I just got the info from my encounterings with large and small agencies over the years.
I think it's a little silly to compare Distilled or Bluegrass to 360i. 360i is an integrated digital agency that does way more than just SEO. So you have to tease out how much of their revenue comes purely from SEO. Then you have to subtract the clients that they got from one of their other services (design, multimedia, etc.) that were later upsold to SEO. Then you can finally start making an apples to apples comparison.
Obviously revenue is going to be higher the more revenue streams you incorporate, and since most clients prefer dealing with one agency rather than two or three, if you've already sold a client on design, it's a simple matter to upsell them on SEO (assuming they were going to look for an SEO agency anyway and your services aren't markedly worse or more expensive than what's out there).
All Distilled has to do, if they want to grow to that gigantic size (and this is oversimplifying things a little, obviously) is slowly start expanding their service catalog.
A better question is: Is being huge always the right move? Personally, I like the flexibility and agility that being boutique gives me. I only work with the clients I want to work with, I do the kind of work I want to do, I know my clients organization from the top down and work with them face to face, and I have the freedom to have fun with ideas and concepts that I would not necessarily have if 360i hired me to be a cubicle monkey. Oh yeah, did I mention no cubicles?
Plus, no matter how awesome your account management team is, 9 times out of 10, they will royally screw up a project either by overselling or getting something horribly wrong. Being small means I get to cut out this middleman, so I never have to face a client with the words "Hey, you know how your account manager promised you first page rankings by Tuesday night? Well, about that..." or "No, we're not going to hack all of your competitors and insert your company's giant flashing logo with a backlink on their home page. That would be illegal."
I own an agency in Atlanta called TwentySix2 Marketing. I was neighbors with the guys that started 360i for many years and I can tell you a few things that made a difference in their growth.
1. They had strong financial backing from the very start, so they were never really in the bootstrap mode. It's much easier to take risks when you have cash. They hired good peole and spend a lot of money on marketing.
2. They hired very smart people, paid them well and got out of the way.
3. When they got bought (the 3rd time), they had people focus on thought leadership, speaking at events, industry research and all that stuff that big companies like in a vendor.
4. The expanded their service offering into display and social and other stuff, which helped them get bigger clients.
5. They stuck to a high price.
6. They help get the Atlanta Interactive community off the ground and networked a lot.
6. All that said, they made some big mistakes in the early days, but they worked hard and recovered.
I think all these things help companies get big quickly. The challenge these days is there are a lot of big agencies competing to win a few super large accounts. Money and great people make all the difference.
If there were one rule I felt you left off the list would be to not be afraid to fire a client.
At least once or twice a year I end up with a client who feels they have bought an endentured slave and not an SEO expert and in the end cost me more in time than they pay in fees. I've found with such clients despite warnings they never fall inline and behave so they get fired. In any business you have to learn to fire difficult clients who cost you money but also fire them properly, not in a mean spirited way but nicely in a "this isn't working out" kind of way.
Toronto Girl, you're so right.
Don't be afraid to fire a client. Is the single best piece of advice I got when starting up on my own too many years ago to think about.
At least once or twice a year I end up with a client who feels they have bought an endentured slave - that comment alone deserves 100 thumb ups! It perfectly describes some clients :)
I always enjoy your posts Neil and I have learned a lot from you over the years with regards to running an agency so it was good to see all of your thoughts boiled down here.
When you think about big SEO agencies who come to mind? Probably companies like Distilled and Blueglass, right? Although they are great agencies, they aren’t that big when you compare their revenue to companies like iProspect or 360i.
First, thanks for mentioning BlueGlass here. Second, I think your point might have gotten a little muddled due to the wording so I'll try to clear it up a little with my own interpretation :)
Our agency (and the folks at Distilled) has done a good job at branding ourselves within the SEO community and as a result we might be one of the first companies that would come to mind. We work hard to help make that happen and I would venture to say that it might not be as important to some of the bigger agencies.
Both of the firms you mentioned have been around for much longer and both are also now parts of larger companies (Aegis & Dentsu I believe). BlueGlass has been around for a little less than 1.5 years and we've been self-funded since Day 1.
Do you know why? It isn’t because companies like iProspect and 360i are better SEO agencies, rather it’s because they understand business and sales very well.
These agencies and other ones like Digitas, Razorfish, etc. definitely understand sales better than us (we don't even have a sales team or even 1 official 'salesperson'). I'm not sure about the business part though. I have a tremendous amount of respect for both of those agencies but I wouldn't switch places with them and I don't think that by hiring them you are going to get better results. One of the reasons we formed BlueGlass was because we felt there was a real void in the marketplace and that we could fill it. I still believe that to be true.
We don't have the same budgets or resources that they have or even the years of history but we do have the ability to be nimble and make major changes quickly when needed. That is a very underrated advantage and something that we want to keep as we continue to grow.
Looking forward to seeing you in a couple of weeks so that I can fill you in on what we've been up to and get your feedback.
Chris, I've been in the SEO game for a while. As a consultant and working in agencies, you know, I've been in charge or the SEO for AIG, Harrah's hotels, the WSOP, Airlines, Social sites etc..
When I left the SEO game late last year to become a CMO, even though I could have set up my own team inhouse, I chose to outsource because I wanted to work with the best. The best, in my experienced opinion, was not only a place where I was working with the best and got the best possible SEO results (which I feel I got), it was also a place when I working with an agency where I had direct access to those people and they treated me with the service I expected.
I didn't sign with iProspect, 360i, Digitas or anyone else. I came to you. Blueglass has delived in ways I am 110% sure that any of the supersized agencies wouldn't have on what I wanted. I didn't want sales people, I wanted peers.
Here's to more signed SOWs and many years together.
Thanks for the kind words Oliver, they mean a lot coming from you.
Great! IMO it sums up a lot of the game between the more traditional communication/web agencies and web marketing/search agencies.
Good point about being good with business. Just because you aren't good at sales, doesn't mean you aren't good at business.
And just Oliver below, we would never go with the big agencies. We hired you guys sometime during the beginning of this year and we got great results! :)
Ha, we're not too bad at sales either, we just aren't quite as polished or systematic as the big guys yet ;)
And just like I said to Olivier, the nice words about working with us means a lot coming from you!
That's true. You were good enough at sales to lock me in. ;-)
Like you said, it's all about making things systematic and creating a process.
I would add to point two is that when you sell based on revenue projections - make sure you deliver. Sometimes revenue projections are hard to do with start-ups or brand new site, but that is where our experience kicks in.
I would also add - don't be afraid to hire people, smaller agencies try to do everything by themselfes and can be overwhelmed with the amount of work that is needed. Spend time to hire the right person that allow you to keep the quality of a small team, while providing reasonable hours to others and opportunity to take on new projects.
Agree on that point
*don't be afraid to hire people* NICE! +1
"Take on clients as long as they are profitable."
I can't say I agree 100% with this one. When I first started my SEO company I took on every client I could get my hands on because I needed the business. As my company has grown and become more established, I realized I didn't have to take on every potential client that came my way. I could afford to be a little more selective about who I wanted to work with. Sometimes the paycheck isn't worth the pain of dealing with certain clients!
Yep - when starting a business you really need make sure you have good cash flow. Spending your time and energy chasing checks around is really counter productive. And it can put your financial situation in jeopardy. But there is nothing more rewarding then getting small a mom and pop shop good traffic and watching the smile on their faces. To me, considering the times, that part of the business is more important than ever.
I like how you point out that keeping existing clients happy is the best business develoment tactic.
Not have an agency, nor have a plan to come up with an agency any time sooner, cuz i truly believe that successful businesses no matter if they are startups or stabled multimillion dollar businesses, it needs a great amount of discipline over everything else… because having an agency is not the deed done but to be in the market and get praised by the industry mentors is the real target that one with the agency should be looking for…
I agree with almost all the points but obviously there are things in the game that you don’t like, I mean to run a successful agency one need to act and think like a businessmen but as a technical search strategist it didn’t feel good to think like a businessmen…. But this is something necessary for the business that makes money!
I strongly agree with the point that agency should not stop branding themselves, this is something what most of the agencies do but one should remember this little fact that PEPSI is in the market for years but they never stop investing on marketing… as Marketing is a never ending game I think it’s more about pushing the boundaries
Great post overall…
Great post Neil,
I have a fledgling agency that is just starting to kick goals and these tips really helped. I've always 'got' the profit versus rankings thing and I think that is the killer idea in this post.
One thing that was not mentioned is how important it is to be able to scale up. To do that swiftly and without major stress you need to systemise your entire business so that every role can be effectively done by people with the lowest skill level.
By that I don't mean your mother could do the role of an SEO analyst but that a bog standard out of school SEO /guy/gal can pick up a manual and do the job as well as a Cambridge graduate.
With systems in place you can easily replicate your model and grow into new cities and even abroad if that is your boat.
(A great book for this is the Emyth by Michael E. Gerber)
Very good write up sir. Hats off to you. Great idea on the contracts that renew.
Yes, just pondering the "Contract" issue right now with my clients and the auto-renew is a great way of keeping. Your clients can get accustomed to your great work ethic and results as Neil suggested and this prevents the loss very well.
Anyone know of a good sample contract for SEO's?
Hi,
I am not sure about other states but I would say that the auto-renew clause in a contract is a sticky one in California. It's basically illegal to have an auto renew or “evergreen” clause here in California. It won't hold up in court if you try to collect money and with the right lawyer such a clause could make the contract voidable at any point. That has been my experience and it got my company out of a contract with a telecommunications company we no longer wanted to deal with that had an auto renew clause.
-Jonathan
I have read all of your points, and let me be clear.. these tips are damn important for me.. even i have started my career from my school days and just now gradutated from My college, but I have been working as an employee and i was not having any guidance regarding starting own SEO agency, your tips are much helpful for me to figure out the future concept ! thanks a lot
Awesome post, ive been working for a large agency for a while who have made alot of the above mistakes, now I have my own thing ( https://www.internetmarketing-seo.co.uk ) i wont be doing the same.
Interesting thoughts, many thanks Neil.
It does highlight perhaps that too many of us forget that an SEO businesses is just that, a Business and needs to stand or fall by profitability rather than just how good the job is. (Although in an ideal World, one follows the other!)
I was struck by your comment "I would first figure out how much traffic a company was currently getting from search engines and their conversion rate" and as a relative newbie, wondered if you'd care to share any tips on that front. I find it very difficult to have a reference to be able to say to prospective clients "Yes, for £500/month you should see xyz increase in traffic".
CHeers.
Killer post, loved reading this. I think it helps with what we are building and doing. I think we really need to focus on a niche and stay there. There are so many companies out there that are doing this. Being good at one would be a significant advantage over being ok at a bunch of niches.
I also love the keeping customers over getting new ones. You're already in the door and know the people. Maintain the relationship, and if you need to bust your ass for a month do it to keep them.
Great post. I think it's fair to say you had a lot of luck along the way, and it's not as easy as waking up one day and just starting an agency, but I like the points you are putting across.
The real challenge for any startup is aquiring customers. That is something I am sure we would all like to read more on.
Thanks for the advice.
Fantastic article! Especially as a relatively new SEO agency ... I used your post as a checklist of sorts to find opportunities we could leverage:
#1: Run Your Agency Like a Businessman - I 100% agree and I think our success thus far can be directly attributed to talking about conversions rather than ranking. On the flip side this meant our firm had to be way more "web" focused than we anticipated because most clients saw the increase in traffic and then wondered how we could help them improve conversion!
#2: It’s Harder to Get clients than to Keep Them - This is very real for us since were going through similar growing pains. This was mentioned in another comment but scalability is indeed a factor in leveraging your company. I would be interested in learning more about the work/time/effort involved in a $2-5k/month client to a $300k/quarter client and how you were able to leverage accordingly!
#3: Never Stop Building your Brand - I have attempted something like this in the past and the biggest mistake I made was trying to build/grow my business behind my computer. It was only after working for a massive company and talking to businesses directly that I realized just how clueless most businesses are about the internet. Almost 100% of our clients are acquired now because of networking and referrals ... not internet searches (but Canadian businesses are 5+ years behind the US).
#4: Keep Your Overhead Low - So easy to say to hard to do ... especially when the biggest expense is employees and/or draws. Fixed exenses remain low but variable expenses are harder to control especially when juggling sales with growth!
#5: Don’t Get Too Greedy - I think our whole business model is built around this concept ... but we need to balance business growth with cash flow. 1 massive client would give us the leverage to complete everything we need ... but is far from our 'target audience'. You need one heck of a bookkeeper/accountant to help monitor cash flow, profit margins, and expenses!
#6: Have Ironclad Contracts… that Automatically Renew - Here we totally disagree ... the best contract is no contract! If you are able to deliver the results you promise clients will be happy. We default to a month to month agreement ... no company/business should be help hostage to a contract for poor results!
#7: Pick a Niche and Dominate It - I think we have a solid understanding of our niche ... and where were located the opportunity is massive ... now to dominate it!
Thanks for the incredible post! Some good lessons and if nothing else a good reminder on what to focus on!
I'm with you on #6. Although we did have some clients who wanted a contracts - but for a different reason - so that WE wouldn't go and work for another company.
Very true, if you work with big clients then they will require contracts in which is states you can often not work with a competing piece of business for example if you work on an Airline A you can not take on Airtline B at your agency.
Sure small SEO companys who work with Say plumber A, Plumber B, C, D, E, F, G will probably not care and not require this type of contact as they work with like 50 of the same business.
Neil - Great post here. I was excited when I saw the title and even more so when I saw your photo next to it.
I've run an SEO agency since 2003. For the first 5 years or so I didn't really want to grow it. I basically wanted to be an independent SEO consultant with a few assistants. Over the past two years, I decided to truly make it an "agency", which means as the owner/president my job is now much less about doing SEO, and much more about managing a business - sales, marketing, hiring and putting systems and processes into place.
My goal has never been to run the largest SEO agency around, and I've never evaluated how "successful" my agency or other agencies are based on just profit. Certainly we are in business to make money, but if profit is the sole determinant than Yodle is pounding all of us. I won't accept that they are "better" in just about any sense.
I do think you are right though in that iProspect, 360i and other larger agencies (really I'm referring more to large agencies in general and less so these companies specifically) treat it much more like a business that they want to scale. Smaller boutique agencies tend to treat the business more like a form of art or a craft that they take great pride in.
I like to think about Ferrari vs. Toyota here. Or even Ford. Both sell cars. But they are very different products. One is selling a high-performance product at a premium price, and selling very few of them. The other is all about volume and automation.
To that extent, I don't consider my agency as competing with a Yodle or other larger agencies. I would bet the guys at Blueglass and Distilled also view their agencies in a different way than the larger assembly-line type firms.
I don't think their revenue volume is really about their sales aptitude or skills. I think its about the type of business they have chosen to operate. Maximizing total revenue for volume is not everyone's number one objective.
On another note, I like your discussion of pitching revenue and sales instead of rankings. Indeed, we've been doing that for years and it proves more effective. You are alining your work with their metrics more closely than if you talk about rankings.
That all said, I don't think its really about HOW you are pitching your service to that leads to hire budgets and billings, but rather WHO you are pitching it to. Once you start "selling" conversions and revenue rather than rankings, you tend to attract different clients both in terms of the types and sizes of company, and the position of the buyer inside that company. The lower level IT director or marketing manager wants rankings. The CEO or VP of Business Development wants sales. And that latter group has a larger budget.
Personally I don't like point 6, unless it's talking about after initial contract period it then becomes a rolling 30 day contract. Surely you don't need an auto renewing contract if you're engaged with your clients on a frequent basis.
Auto renewing contracts is only a short step away from 90 day notice period and other nasty tie in's that will anger dissatistfied clients more than it will earn you money.
I don't like the " Automatically Renew" part. This reminds me of software that I donwload and has pre-ticked boxes, and if you're not carefull you can end up with a Nullsoft Search bar, or even worse.
In this case it's not super sneaky, but if the client is happy they will contune working with you no matter how yopu phrase the contract.
Really good, informative post. Should be standard reading for anyone jumping into the SEO agency biz. I particularly like you pointing out how you should tie success to revenue and profits and not rankings.
Love this post. Thank you! Absolutely bookmarking it now.
I think the point I've struggled with the most is the last one. I have a hard time niche-ifying myself. I tend to go too broad in my scope, thinking results will come eventually if I start with a wide foundation, when really, I need to construct a solid base and build on that once the model is proven.
I... think I may have identified one of my main problems in my business endeavors. Heh.
Great post Neil, I liked to see your insight and I was wondering where you originially started your company? Was it through casual blogging and internet marketing or?
I've come to learn a lot of the same points and tricks, mostly by mistakes sadly, but its always great to hear from the community about their pitfalls, stumbles and ultimately, success.
Very practical advices from Neil. I would like to follow his steps one day. I'll bookmark this post for times when I feel that I'm ready... I like very much part about conversion rate and approach to potential client. All tips have sense and are totally logical. Client wants conversions and profit, and story about traffic and keywords is not crucial in that point of process. There is so many details to remember from this post.
Thanks for sharing your life and business experience with us!
Great article, this will be really useful to my new SEO agency - thanks.
No truer words have been said about being in the SEO game. Clients want to know about return on investment and an independent SEO agency has a hard task of selling services directly. The big SEO shops are part of worldwide media agencies where SEO is sold as part of a bigger marketing package. It's just an easy check box that big corporations can tick.
Thank you for the great post. I find all of your points dead on except #3. Not to say that it's not difficult to get clients, but making them understand what you do on a daily basis can be a challenge. I am grateful for all of the great tools available to correlate data, including web traffic and rankings which help provide better communication.
Running a fast growing digital agency I am becoming increasingly more diligent about how to take care of our current customers. I completely disagree with the Comcast Cable approach which is to reel people in and then offer bad customer service and higher prices after a fixed period. I would rather over communicate every chance we get and spoil our existing customer base in a Zappos, SEO Moz like fasion.
The hardest thing that I have realized is when to hire. When does it make sense to get that next employee? It's easy to say NOW but with lean capital it really can be a tough decision. As stated in your post, the last thing you want to do is lay someone off. I have decided instead of hiring a sales person, I would rather hire an account manager who can really take care of our clients. With great customer service and results I know that business will come as the best marketing, and cheapest, is still word of mouth.Thanks again for your effort and lessons.
This post is inspiring. Its obvious to me that during this recession time, companies and particularly the small ones should focus on keeping existing clients happy. I also think that seo experts need to demonstrate the real power of their actions on sales or leads...What this post shows is also that if webmarketing experts use the same language that their clients (sales, leads, conversion rate,...) and abandon the old difficult and technical one (links juice, pagerank, indexed pages,...) they could win big! That the reason why my Seo team have decided to offer to ours clients several free sessions about the real power of seo into their growth. Trust me this can help you win!
Great post and nice discussion around it!
From my point of view, these are business principles that basically we know, but do not respect all, so good to remember.
For SEO agencies, # 7 is, I think, a real gold mine!
Awesome to have a blog post by Neil! Thanks so much for your 7 tips, Neil, lots of great advise there. It's strange though, these things are all obvious, yet so many of us forget about them or take them for granted.
Thanks for your post , i am working as a thid party for lot of seo company but not earning good amount of money becoz most of contracts are job works and by some one asle ,i think its time to brand my own company
Neil i particularly like what you say about '#7: Picking a Niche and Dominating It'. It's so easy to think that you can target the whole world with your product or service...that's a huge market, right? Actually it works the opposite. By picking a a well defined, easy to understand niche you actually open yourself to much bigger opportunities. Customers become easier to understand and you can become more focused on what you deliver.
We learned this lesson the hard way when we pitched at Seedcamp (a European Seed incubator) last year. We presented a landing page solution, called PageDo, that was suitable for all types of company, and all types of budget. It was perfect for everyone! The Seedcamp mentors were quick to point out that this strategy was completely wrong - they told us to niche ourselves out - pick a market and focus on it. So we did - and JobPage was born (the core of the idea is 'landing pages for recruitment')!
Great post Neil.
Its all too often that smaller companies dont think like businnes professionals. We give alot away as SEO's, there is free info wherever you turn, making it hard for people to justify paying an SEO agency anything because they think they can do it them selves. I look at agencies like distilled and SEOmoz and find my self impressed that they have a blance of creating a community of peole who share and are actively involved but make money doing what they love.
One thing like Rand i would have to say i would disagree with the comment on distilled vs. iProspect. Being that iProsepect has been in business Since 1996 (15 years) and Distilled has only been arround for six years and has already opened a secondary office in New York you have to concider length of market exposure and revenur iProspect generated and ammount of offices opened in their fist 6 years, which by all accounts i read in a quick google session, Distilled is out performing them.
Neil nice seeing you here, as usual always proving good info. Its true about focusing on retaining your customers, as there's no point keep acquiring more customers and building your market share, when you have a leak, and your existing customers keep falling out. I believe taking care of your existing customers is as important, as they can contribute to large chunk of your revenue, and also repeat sales, and than the word of mouth, and it just goes on. You take care of one good customer you could have a lot more though referrals. Thanks for the post Neil.
Good posts some good insight for people setting up agencys, I think one of the biggest problem is these smaller companies who offer "one size fits all" packages, I mean if you want to set your self apart from the competition make catered offering for all new clients which fits their needs. I never get that but I guess it works for come of these guys.
But yes when you pitch to larger business who have SEO teams internally they overlook any BS very quickly and you really need to have a catered strategy and catered offering to the client or it will not be effective business win.
Also another thing is with companies like iProspect and Outrider they are usually owned by global holding companies I know iProspect is owned by Aegis Media and Outrider is owned by WPP group for example so they have alot of direct access to internal business.
Great post!
I like your point about not being greedy and taking on client's that might now be too profitable at first, but in the long run you can upsell them. This strategy has worked with many of our larger ciients.
Great article! Congratulation!
Great post. We currently have an established set of clients but are also looking at increasing our portfolio so you comments were very useful in relation to getting new clients and looking after your existing clients. We have also considered targeting companies new to SEO and offering them a website as part of the deal.
Some great advice!
Great tips Neil!
The most amazing thing about the whole post is that Neil *STILL* finds time for (guest) blogging! Something to definitely use an as an example!I agree on all the points and I am not in the position of arguing with point #1. For what it's worth, I've never targeted that huge contracts because that would be too much of a pressure. If I did, I'd find the way to close them, I am sure. But I do suspect, that's a much more complex question...I love the point about finding the niche!Thanks for the post, Neil
In many cases the bigger contracts are easy to work with than the smaller ones. They don't have to be demanding... the only difference is the companies you are working with just have bigger budgets.
I can absolutely relate with what Ann is saying. In fact, I have had a fear of larger contracts and not being able to deliver on the ROI for the client. That fear has kept us from raising our prices. However, Neil makes a great point that with a larger contract, they don't have to be as demanding when they have larger budgets. Plus, you have additional funds to use for the campaign itself.
Love, love, love this post, and it is very timely for our agency. We are making some big transitions at the moment. Point #6 is head-smackingly brilliant. We have had several clients leave us after we have delivered on rankings and traffic for them. We've used a auto month to month before, but I like the idea of setting goals upfront that help their business. If those goals are met, the relationship extension is rewarded. Seems like a nice win win.
This is an awesome post. Thank you!
First of all love to see you here Neil :) , as i follow you at Quicksprout . Yes i read your milestones before this to many blogs and it was always inspired me alot as today, you are a real Champ sir :)
This was a fascinating read!
When a company is willing to pay $300,000 per quarter for SEO, how would you typically use that money? Does a company that's able to spend more simply get more man hours spent on their project? Or do you go all out on paying coders and designers? I'd love to know how much of that money ends up being simply profit.
I'd like an answer for this question too. What do you typically do with a 300K budget?
between 20% and (ideally) 50% of that should be profit, something I read in his post but now I can no longer find it in there.. has it been edited..?
I think it was probably listed under #5.. ;)
great post Neil, love the controversy and discussion that erupted from it!!
Julian
It's always good to be reminded of the business essentails. I am constantly tempted to leave our real estate niche but know deep down that to be good at content creation, which is a large part of our business, you need to know what you're talking about. Good reminder.
Hey..lessons you added are really good and helpful. Its going to be helpful & useful in my SEO work.Thanx for it.And please keep adding such kind of ideas..thank you once again.
Hi Niel, fantastic post. Once I began pitching the potential ROI to acquire new customers, I found that they didn't mind spending more money because they could see numbers that made sense to them; positively impacting their revenue. Thanks Niel!
Thanks for sharing your success and advices
Neil,
thanks for the great tips!!! Doing both agency and freelance work, there are so many valid points made in the post!
~thank you
thank you so much for a well written blog niel . i appreciate, you gave us some really helfull tips specially for the one's who is actually thinking to start off a seo agency.rest reading on further comments on your blog put me on a conclusion that every single person has its or her own perception about how things work .
Awesome post, I am not thinking about wash and repeat. I run an seo service, providing link building, but we are expanding with a different kind of link building service. Tanya
[link removed]
Great post Neil!
Having worked as an in-house SEO for the last three years, I have worked with quite a few SEO agencies to provide time-consuming footwork and consultation work so whilst I understand the business case for long term contracts, I also know the other side and the psychological effect these contracts have.
One thing that always turned me off when speaking to SEO agencies were contracts that extended beyond 3-6 months during set-up and then 30-day rolling. If I had ever come across an auto-renew clause I would not have worked with that agency.
The online enviroment changes too quickly for long term contracts and whilst I understand that agencies need some level of stability to be able to plan financially and manage their resoucres well, this clearly puts handcuffs on your clients. I feel it says a thing or two about the agency's confidence to deliver on their sales pitch... especially if you have pitched your client on projected revenue rather than rankings.
Especially during times of financial hardship where some industries struggle, tying your targets to financial success may turn against you after a while.. so I would interpret a long contract and auto-renew clause your personal insurance against failing to deliver your promises of increased revenue during your pitch..
So in summary I think this works well if you own a well-known and branded agency who have a reputation for fantastic work and a long list of happy, large clients with deep pockets. But for the average, small to medium size SEO agency pitching to small to medium size companies, this may prove to create a barrier to entry for new customers rather than the intended barrier to exit..
Sorry, just playing devil's advocate.. great post and food for thought!
Julian
Great post for people that study SEO in school. You can also apply those advices to in-house SEO. SEO is not about optimization for your boss, it is about businnes.Thats why conversion optmization on your website have to be look with great attention
Great post, great tips. Refreshing. It would be excellent if we have more posts here on SEOmoz like this, business related.
I wish I could check all your lessons in reality. But you have to have a SEO agency before.
I agree that niche markets provide the best opportunities at the moment. As a new startup, it's hard to compete with convincing large companies. I'm learning how to put my own network to better use and specialized on only a few local markets now. Thanks for sharing! Great
There are some excellent tips here and I have been "nodding" my head to a lot of them. Specifically (at the moment), the "Don't be too greedy" point is good advice. It's quite easy when you are really busy to turn away some jobs that don't pay as high, however, if you find a way to serve them, you have an additional happy client for the "rainy days" that are less busy.
Thanks Neil for sharing your insights with us . It really helps to grow in future & the 7 lessons that you had taught to us will always be in our mind. The points that you had mentioned are most crucial points that should be in our mind because it helps us learn with your mistakes & that mistakes should never be reapeated . As we all know that smart person are those who learn from the mistakes , never repeat the mistakes & grow succesfully in his/her life.
So great to see Neil posting here! Love reading Quick Sprout.
Great advice in all your points, especially the niche idea. I think the more you narrow down your focus the better you will be and the more your business will thrive. Picking a target market, whether a city or industry, gives you the chance to compete.
inspired reading your enterprenuer journey to seo as i am in startup also. thank u neil.
Now that was a great post...!!! Thank you Neil Patel for that golden nugget. I will keep all 7 lessons in mind while growing my company.
Epic Interactive Media Inc.
"...and my mom could tell me who came into work and who didn’t" I really love this one, though I'm not sure about the, errr, 'transferability' of this aproach to making ones mom the HR department :-) Joking aside, your post is outstandingly insightful and valuable. Thank you!
Thanks Neil, for sharing your insights!
In this article Mr. Patel says, " I would first figure out how much traffic a company was currently getting from search engines and their conversion rate. I would then take that data and multiply it with their average order size to get an understanding of how much revenue the company was making from organic search.
From there I would break down how much more traffic I could get the company from: conservative, normal and aggressive estimates. I would break down the methods I would use, and give them a time range in which they could see these results. I would also share how much more revenue they would see on a quarterly basis from my efforts. Using their average revenue per customer number and their conversion rate percentage I was able to provide estimates on how much additional income I can bring to their business."
My question is how do you go about doing this for a local website without access to their GA? Alexa, Quantcast, and Compete do not give very accurate numbers and if the site is too small they do not show up at all. Anybody have any tips on going about this?
as the owner of a very little SEO company in North London I'm doing my best to soldier on in the niche of local work for tradespeople such as plumbers, local flooring companies, gardeners etc.
At the beginning of the process I've always majored on a transparent and open policy framework so clients can clearly see what we have done for them.
We have good client testimonials (video and written) and the fact that we don't use a contract at all makes clients much happier to use us.
it seems many of them have been ripped off by somebody who just takes their money, with a contract that they cannot get out of for three months. This makes them all very wary of local search engine optimisation companies... and some people have described what we do as the " cowboy plumbers" of our industry.
But I am getting to the stage now where we really have delivered some excellent results the people.. and just as you said in your article they begin to think that all new business coming in is because of their great reputation and work... not all the previous SEO ground work we have undertaken. it is very disheartening to see them wander off to a more unprofessional company who is just provided them with a fictitious quote which undercuts the great work we have been doing for them. so your point about rollover contracts is very interesting to us.
Neil i saw you faced a huge criticism in this post, but don't know why people didn't understand your words, you were talking about revenue rather then there skills and results... anyways i love your post man..
Well thank you very much sir. Im actually just starting to make an agency since I have accumulated enough funds to do so. Back in the day Im a solo act but now I decided to go bigger. Having read this really gives me a bit of confidence. Thank you again.
It feels great to listen from the horse's mouth.
While reading your post I envied you more than I appreciated you. The sole reason, you had already made a hell lot of money out of SEO than I even dream of making. I have been running my own SEO Agency full time for last nine months, I got few client but very few of them even pay in thousands. Although their expectations are high as the stars but when It comes to paying they shudder like broken meteorites.
The best thing is that I personally take all the care in the world that our clients are happy with our services and as you said Its hard to retain clients, for us It has been the easiest. We just make sure we listen to them whatever they have to say and offer the best possible solution. Repeat clients can save a lot of time and money on acquisition. Besides they act as your marketing agent. Last but not least If they are truly happy they will volunteer themselves to tell you how happy they are with the results and services which lifts your spirit and morale.
I also read your posts on Quick sprout. Hope your suggested strategies and shared experience change the experiences of of newbies in the SEO arena.
Neil, you are just amazing with this blog post, as I keep on reading it felt like I know these/experienced this but yet, I haven't realized it beofre :)
Thanks a lot for this gr8 post, this will really help me to go back & analyze the mistakes I have done & getting some great learnings from your expeirnece as well. Simply superb & highly recomanded for any enterprenure in the field of SEO.
thanks,
Great tips. My question is how do you make that transition from sub-contracting to building a business? I'm starting to get quite a few clients and am wondering how to go about making that transition.
One of the best posts I've read on SEOmoz this year, thanks for contributing!
Amazing blog.. Very intresting and very useful. I gonna use that tips in my future. Thank you !
https://www.seonewyork1.com/
Great post Neil. All of the points you made resonate with me to the BONE! Particularly #1. Showing a return on investment always trumps rankings.
I learned a couple of other things also (rare these days considering my daily blog regimen), so thanks for posting this!
How do you show ROI without speaking to owner of website or access to their google analytics?
I think far too many so called 'SEO agencies' concentrate on rakings and not conversion rates - return on investment has to be at the forefront of pitches - good point!
Great piece man. I live in Pakistan and have been active in the SEO field for over 4 years now. People here are so hesitant to invest in SEO, this country is just waking up to the web so SEO is something way ahead of them. However, I have been able to convince quite a few clients here, using the same thing you mentioned, that is, talking to them in dollars and not rankings. It works! But man, they pay peanuts for your services here! :(
Lots of food for thought here Neil. I especially like your point about taking on profitable work, no matter how small. There obviously is a threshold to how low you can charge before the profitability is at risk, but it can be a fairly low amount. These are clients who will be an ideal candidate to upsell later, if you've served them well initially.
Hey you are very nice writter and your post is very informative i really accited to know about more so please share some more informative blogs.
Hey that was a good and interesting blog, i am asking do you have any vaccncies in your company. I would love to work with you.
#7 is great. That's how I got into the world of SEO actually. I started doing SEO for my own photography site, and fast forward a couple years, I'm running a marketing business for photographers. While I don't have clients that spend five figures monthly, it's a very targeted market, and I know how to speak their language.
Excellent article. Thanks for sharing!
I think it's unfair on Distilled & Blueglass (or any other SEO agency) for you to publicly speculate about their turnover, business & sales skills without knowing the full details.
I think you can make a educated guess but if iProspect has 1,000 staff and Blueglass has x number of staff example iProspect is in 38 countrys - https://www.iprospect.com/our-world
That been said which agency has the better quality work and marketing leading experts working at the prospective business?
But really the quality of work comming out of Distilled and Blue Glass is second to none, I am an avid reader of both blogs and love the content that is produced.
I agree with you. But size has nothing to do with quality. A company is only as good as his present employees. It doesn't matter how many offices it has or how big its client base is. I get several cases of those who are burned by these so called big companies (not pointing out at iprospect or any particular agency) every month. Just because you are strategically located in Wall Street won't make any difference whatsoever to your client's rankings and sales.
I agree, I have seen cases from other businesses in our market where people in fact take on too much business, over promise with silly guaranteed rankings" employ a bunch of junior staff on low wages and instantly give them all silly promotions, then the quality of work to the client is low, instantly they see a 12 month YOY loss of clients and no business is retained.
Not a wise business model but people seem to run it.
Quality is a whole other issue and topic. But I do agree in which these smaller firms usually provide much better results and services than the larger ones.
It is like a business post than a SEO, but I do like it, I really appreciate for your sharing perspectives. I do strongly agree with the number 4, unmanageble spending is always an enemy, no matter how good you are, at the end of the day your business will end up with bankruptcy, so use money wisely
Thank you for this informative post. I just want to share a good source for business templates and tutorials - PDFfiller. It has a ton of tax forms and business templates. It helps me fill out a needed form neatly and gives me the option to esign. https://goo.gl/yoGwr2
I do agree on you idea on no. 4 "Save your money for a rainy day because no matter how good of an SEO you are, there will be rough times." Keep your feet off the ground no matter what you achieved and what you become.