Does your marketing firm treat your business relationship under the fiduciary standard or the suitability standard?
This may seem like an odd topic for a blog about marketing and lead generation, but more business owners need to start asking this question to their marketing firm. After all, in a very real sense, your marketing firm is managing your investment in the future growth of your business . . . no different than an investment advisor managing the growth of your retirement portfolio.
Currently, there are two standards that advisers and financial planners are held to — the suitability standard and the fiduciary standard.
“You can satisfy the suitability standard by recommending the least suitable of the suitable options, as long as it falls within the general suitability test,” says Barbara Roper, director of investor protection for the Consumer Federation of America.
Does this sound like your marketing firm?
Big name online marketing firms such as ReachLocal and Yodle are famous for this type of customer relationship.
You may be in an industry where online lead generation is just too expensive. The lifetime value of your customer and the local pool of prospective buyers may not be large enough to justify ad spend.
However, if the marketing firm is able to squeeze another $1,500 in fees out of you, then that is what they will recommend.
In short, the suitability standard invites conflicts of interest pertaining to compensation, which can vary greatly from one product or service to another.
The other standard of care, the fiduciary standard, basically charges advisers with putting their clients’ best interest ahead of their own. For instance, faced with two identical products but with different fees, an adviser under the fiduciary standard would be compelled to recommend the one with the least cost to the client, even if it meant fewer dollars in the company’s coffers — and his or her own pocket.
So let’s talk about you
This is the time of this article when I tell you that it has been a pleasure chatting with you and I wish you the best of luck as you move forward, but unfortunately we just won’t be the best firm to help you.
Okay, maybe not yet. But that is seriously 60-70% of the conversations I have each week with potential clients.
Daily, prospective clients approach us to rank them on Google.
They say “I want to rank on Google”, but what they really mean is “I need more leads coming from my website.”
Those prospective clients open up their checkbook to pay us $2,500/month and yet we have to say “No” because their business . . . their processes and understanding of the economics of lead generation are not realistic. We will not rank a client just for the sake of ranking a client. We don’t do it in our own business, and we won’t do it in yours.
In this example, while most firms would be more than happy to charge $2,500/month for SEO services, we ended up deciding together that $2,500 spent on Adwords would be the best investment.
Well, I just shot myself in the foot because our fee for Adwords management is only $500/month for this particular client. The other $2,000 will be going to Google in the form of Adwords advertising spend.
That sure doesn’t look good for the ol’ P&L: turning a $2,500 client into a $500 client.
But that’s how we operate. Under the fiduciary standard.
Sure, it would have been suitable to put them into a long-term SEO plan at $2,500/month. They would certainly see the benefit from that once we got them to the first page, but due to the very competitive industry that would have taken many months and $10,000+.
But instead, we are able to deliver relevant, buyer traffic to their website in the first month. Through this process we uncover that their website has other issues that is keeping site visitors from completing a contact form. Spending $10,000+ to SEO a website with conversion issues would have been a colossal failure.
The side effect of doing the right thing and acting in our client’s best interest?
Months later that client knows the lifetime value of a new customer, the close rate on appointments booked online, and the value of a website visitor. Now she can invest in SEO knowing that results will not occur overnight, but that she has the cash flow to now support that investment into the long-term.
Have this discussion about fiduciary responsibility with your marketing firm?
See whose bottom line they are looking out for first?
A wise man once told me, “Help others to achieve the life they want to live, and they will in turn help you to live the life you want to live.”
And that’s exactly what we bring to the table. I know that if I make recommendations that are the best for your bottom line, that in the end, my bottom line will take care of itself.