01 Jan Big Fish Results Adopts Credit-Based Pricing!
John D. Rockefeller wrote, “Don’t be afraid to give up the good to go for the great.” This mindset is central to who we are at Big Fish Results and it is shared by our clients. It drives us to continually innovate our systems and processes so that, together, we may better fulfill our mission:
To grow market leaders and drive positive change
Like Jim Collins, we believe “Greatness is not a function of circumstance. Greatness…is largely a matter of conscious choice, and discipline.” And our decision to develop a credits-based pricing model is our latest innovation to deliver greater value to our clients, because they deserve the most efficient and effective agency possible.
But before we look at how this model works, let’s examine the inefficient traditional pricing models you’ve experienced in the past.
Settling for “Good Enough”
Madison Avenue created the commission-based pricing model that still persists today, in which the client pays the agency a percentage of the advertising spend budget. If you are running $25,000 of Google Adwords each month and paying your agency a 10% commission, then you pay your agency $2500 a month just to manage your Adwords.
This is the classic payment method still used by a few agencies and favored by hired guns who do one thing: manage AdWords.
The problem? It’s the disparity in goals. Whereas the client’s goal is to reduce the adspend over time through greater efficiencies and better organic traffic, the goal of the agency is to keep adspend at the same level or increase the amount month over month. In other words, quality of clicks is less important than the quantity of clicks in this pricing model.
However, once agencies realized the hours needed for strategizing, consulting, and optimizing (especially as ad channels became more competitive), they switched to an hourly-rate pricing model.
This sounds fair, except when you realize that agencies were now incentivized to remain inefficient. Why increase efficiency when it means getting paid less?
And inefficiency is a path to mediocrity, not greatness.
This led to fixed-rate pricing models that encouraged agency efficiency by offering specific services at fixed rates – no matter how slowly the agency moved, the price was still the same.
Under this model, agencies negotiated with clients a specific package of services for a set monthly amount. For example, you might receive SEO, Adwords, Content Strategy, Retargeting for $3,000/month.
This seemed like a fair pricing model for both agency and client and we’ve used this model since the beginning. And it’s been a good system.
But we want great.
Reaching for Greatness
Ten years ago, you could rank organically on Google with keywords and backlinks. You could outspend your competitors in Adwords and show up for every search.
Today, if you want to rank on Google organically or through advertising – if you want the impression share – you’d better have a quality score above 7, you’d better have a bounce rate below 60%, and you’d better generate a steady stream of high-value content that engages visitors. Google wants to promote only the websites who give audiences the highest quality experience possible.
Five years ago, you could do all your marketing on Facebook for free. You could also buy an email list and send promotional blasts every week at no additional cost through your email server.
Today, if you want Facebook to work for you, you’d better be willing to pay for advertising and boosting your posts. If you want your emails to actually be delivered, your list had better be super clean and fully opted-in – purchased lists get nixed!
The tactics of online marketing have changed radically in the past decade as technology has evolved (like mobile), companies matured (like Facebook), and more companies began marketing online (like your competitors). This has made online marketing more complex, competitive, and challenging than ever before, making a tactical-approach expensive and ineffective.
The beauty of online marketing, however, has always been the data it produces. Click-through-rates, open-rates, bounce rates, conversion-rates – you name the metric and we can measure it. Theoretically, the data should lead to improvements. But for years, no one knew what to do with the data.
Today, the data revolution is coming to fruition among a few select marketers capable of not only processing all the data, but making sense of it – drawing actual insights. These select few can analyze the data to produce results-driven marketing recommendations that improve the efficiency and effectiveness of your online marketing strategy in transparent, measurable ways.
We are one of those select few.
Which means we can no longer settle for the good enough fixed-rate pricing model with its contracted list of services. Why?
Because it’s tactical in nature and in order to be great, in order to be a market leader, your marketing must not only be strategic, it must be flexible and agile enough to adapt to your quarterly needs and the quarterly conditions of the marketplace.
Introducing Credits-based Pricing
Do you have seasonality to your business – slow seasons and busy seasons? Do you attend trade shows and conferences periodically? Are you innovating and launching new products or services? Are you expanding into new markets or opening new locations?
These are just a few reasons why your marketing strategy and budget might change during the year and why your marketing needs might change quarter over quarter. Having marketing strategy flexibility is critical to your business if you want to stay ahead of your competitors and avoid unnecessary waste.
But under the old tactical model, you’re locked in to a pre-determined set of services each month that require change orders, budget additions, and time to adapt to any new priorities that may arise in your business. This waste of time and resources costs you in marketing inefficiencies.
Under the credits-based pricing model, clients are allocated a full year’s worth of credits according to their Annual Marketing Growth Plan, which we create for our clients first. This Plan is a roadmap detailing the marketing strategy necessary to reach their annual revenue growth goals.
Credits can be applied to any of our services – over 100 different marketing offerings. Each service has a fixed credit value that is the same for all clients. Clients not only purchase credits at the start of our partnership, they also earn credits throughout the year as they hit specific milestones and take specific actions – Bonus Credits awarded to you that can be applied to any of our services.
Bill Gates wrote, “I have always been committed to setting clear goals and making plans to achieve them.”
In your Annual Marketing Growth Plan, we discuss your goals, determine KPIs, and develop a strategy to achieve your goals. The Plan determines what trainings, campaigns, and optimizations will be needed, for example. Credits are then allocated for specific services from our service menu, assuring full transparency. When we review your Plan together, we discuss these credit allocations and how they can be applied to the 1st quarter’s activities.
Now if your upcoming quarter is your slow season, we might choose to bank some credits for later in the year. Or if you’re planning to open a new location in six months, then we might plan to allocate more credits for a bigger promotion the next quarter. Or if part way through the year, you acquire another company, we might re-allocate your credits to adapt to your new business model.
The reality of running a company is that changes will occur, both foreseen and unforeseen. Why have a marketing agency that can’t adjust to the changes quickly and easily in a way that does not cost you time or money?
The Future Is Here
We’ve piloted credits-based pricing with several of our clients over the last few months to great success and we’re speaking with other leading agencies across the country that are piloting similar programs and experiencing similar success.
To become the leader in your market – whether it is local, regional, national, or international – you need a Marketing Growth Plan. And once you have that Plan in place, you need the continued flexibility to adapt your marketing to any changes in your business, industry, or target audience. Otherwise, you will waste precious time and money while your competitors outpace you.
Although we’re not the first agency to adopt this model, this is a brand new innovation in our industry. Paired with our Market Leadership System, it’s the type of innovation that is revolutionizing how we approach digital marketing.