Who's to blame? Look in the mirror.

[Ad-Vice_Man]

The single most irritating thing I hear business owners say is that XYZ media doesn't work.

Here's the common scenario:

Owner decides to "try" xyz. They purchase the most minimal plan they can, for the shortest period of time and want and ad that looks and sounds like every other ad they've ever heard.

We can argue back and forth over the relative merits of that plan... however I can tell you that it is nearly never effective. You could literally take your ad dollars to Vegas and put it on a single hand of blackjack and have better odds on a payoff.

Then when the trial inevitably fails, XYZ media didn't work.

NO. To find the culprit, look in the mirror. The media you chose (whatever it is)has one job, to deliver your message to a certain number of people (eyes and ears). The strategies the business owner employed as to what they ad says, looks like, sounds like and is percieved; as well as how often and how long it runs an to how many people see or hear it is solidly, squarely and indellibly the responsibility of the business owner.

[Steve B]

O.K.

I've been in that category many times. I've tried lots of different advertising and usually have minimal results. I admit I've said those exact words "XYZ didn't work". I guess I shouldn't say that anymore.

[rezzy]

Its about finding the right media for the right message and delivering it right.

Its all about targeting the people who see it. Instead of doing a random blanket and lack luster attempt. Getting advertising right is a hard, but once you get the right combination the pay off is nice.

[Spider]

Its about finding the right media for the right message and delivering it right.
Its all about targeting the people who see it. Instead of doing a random blanket and lack luster attempt. Getting advertising right is a hard, but once you get the right combination the pay off is nice.And how does one do that?

I mean, it's all very well to blame the business owner for blaming the medium... or are we blaming the business owner for - what? ...buying the wrong medium? agreeing to the wrong message? or choosing the wrong delivery method?

Here's a business. They know their business but there is a good chance they don't know advertising. If they were good at advertising, I would expect them to be in the advertising business. They are not. They are in THEIR business.

Now, they want to advertize. But if they make bad decisions - which they are very likely to do, not being expert in advertising - they are going to be criticized for criticizing the advertising.

C'mon! We are going round in circles. I want to advertize my business. Tell me how to go about it. Telling me to make the right decision isn't going to help because I don't know what the right decision is.

Help me get it right! I'm all ears!

[Dan Furman]

The single most irritating thing I hear business owners say is that XYZ media doesn't work.

Here's the common scenario:

Owner decides to "try" xyz. They purchase the most minimal plan they can, for the shortest period of time.

The person who sold them that did a terrible job, and a disservice to the advertiser. Sorry, but the salesperson is where the blame should lay. Really, the person who sold the advertiser the smallest package for the shortest amount of time was just out for the sale. It's a poor way to do business.

I have had people come to me for, say, web copy, and only want to do "part" of the site, for cost reasons. For example, they ask me to write the home page, then have their horribly written and/or designed sales page do the real selling. They think my writing the home page will get them more business as soon as it goes up.

I almost always refuse work like this. I tell them what I need to do to make it work, and if they don't agree, I tell them "no" to the smaller job. I tell them this even if I have no work and they want to throw money at me.

Know why? Because I know they want something I can't deliver. They want my copy to deliver them sales, and I know it won't unless I do the sales page as well. If they say "no, I'm not going to change anything - just do the homepage" I say "find another writer".

The above is simply an example - I don't want to nitpick it / solve it. There have been other cases / other scenarios where I refused work because I knew what they wanted me to do would not yield the result they wanted.

I'm in the business to help people succeed, not just make a sale, and in the end, I would rather no work than do work I know won't be helpful.

[Dan Furman]

O.K.

I've been in that category many times. I've tried lots of different advertising and usually have minimal results. I admit I've said those exact words "XYZ didn't work". I guess I shouldn't say that anymore.

For your business, Steve, there are very few mediums that are going to let you know - definitively - if they worked. Yours is a business where someone may have to hear, say, your radio commercial 100x. Then they see your sign on your truck 25x... maybe see your name on the little league team...

Now, here's the bad part - none of this is really registering with them.

But then, when Rex goes running away yet again, they say "enough, let's get one of those pet fence thingees..." they open the yellow pages or search google and see your name and say "yea, I've heard of them". Many won't even know *where* they heard of you (so asking them may or may not help).

Of course, referrals are likely big for you - you should have, at the least, a "handy" fridge magnet (something they will actually keep).

In your case, the adwords/website thing is probably a good investment. I could see more and more people searching the web for what you offer.

[rezzy]

And how does one do that?



Thats where it takes thinking about your client base.

This is something that I think would work really well with word of mouth advertising or if you had well documented statistics, using Google Adwords.

At one time, I knew the perfect source to do this. But its about researching what is brining customers to your site, the serivices they want and need. And using your marketing to direct them in.

[Spider]

Thats where it takes thinking about your client base.... its about researching what is brining customers to your site, the serivices they want and need. And using your marketing to direct them in.But, how, Rezzy? The marketing that was attempted didn't work and was criticized in the original post. The question of how to do it to get results, still hasn't been answered.


The single most irritating thing I hear business owners say is that XYZ media doesn't work....
...Then when the trial inevitably fails, XYZ media didn't work.
NO. To find the culprit, look in the mirror. ..


Maybe there is no specific answer to How? and one has to proceed by trial and error. But isn't that exactly what the business owner did to earn the condemnation of "To find the culprit, look in the mirror."?

I have yet to come across an advertising sales person who will guarantee the results of advertising with them. They offer all sorts of statistics and make promises that don't speak to results, and when their medium doesn't work for the business owner, they pass it off as the business owner's fault - wrong message, wrong list .... anything can be wrong, except their medium.

I have just spent $350 on a press release distribution for my book after having paid these same people to write the press release. They are supposedly experts in this topic. They sent my press release to over 4,000 journalists and book reviewers, etc. In three weeks, I have recieved not a single enquiry. I believe they sent out the release. I believe their list was appropriate, I believe they wrote a good press release. Not professing to be an expert in these matters I accept them as being experts. But, clearly, it didn't work. Their explanation is that there is no way of knowing what prevents a journalist following up on a press release. I accept that - but it still didn't work and I still wasted my money. And, presumably, it's still my fault!

I think it is counterproductive to blame a business owner for poor results when he has turned to experts to get good result and still the experts do not - or cannot - promise to do any better.

It makes the whole advertising industry appear to be a giant scam.

To avoid this scam-ish appearance, I think the advertising industry (or an enterprising company) should find some way to offer guaranteed results. If I hire a plumber to unblock my drains, I don't think I should have to pay him if he fails to unblock them, do you? So, why should I have to pay an advertising company to advertise my company when they cannot get me any results?

[Dan Furman]

I have just spent $350 on a press release distribution for my book after having paid these same people to write the press release. They are supposedly experts in this topic. They sent my press release to over 4,000 journalists and book reviewers, etc. In three weeks, I have recieved not a single enquiry. I believe they sent out the release. I believe their list was appropriate, I believe they wrote a good press release. Not professing to be an expert in these matters I accept them as being experts. But, clearly, it didn't work. Their explanation is that there is no way of knowing what prevents a journalist following up on a press release. I accept that - but it still didn't work and I still wasted my money. And, presumably, it's still my fault!

Your book is self-published, right? That could be part of the problem. Right or wrong, self-published books seem to get little respect.

I agree with your overall thoughts on advertising, but I don't think it's a scam. I just think most people don't have the funds to make it effective, and salespeople just want to make a sale.

I recall my brother in law got a "deal" to get on the radio - 100 spots total over six weeks (non morning/afternoon drive, though). I told him he may as well have thrown his money away. It works out to 16-17 spots a week, which is 2 most days, on non-peak hours. For a painting business? To be effective there, he needs to be constantly on, and over time, the name recognition builds and augments all his other marketing (which is almost zero, anyway.)

Advertising salespeople are some of the worst in the business. They often sell people things they know won't help them. It's a terrible way to do business.

[Spider]

So, what's the answer, Dan - or anyone? The big guys can hire and fire their own staff untill they build a team of people who produce results. How can the little guy get certain results from their advertising dollar?

[Patrysha]

Results are never certain...

You can increase your odds by-
Focusing on one target market with each ad
Focusing on one sales message
Knowing your target market (what they listen to, read, what their habits are)

Being an ad rep can be really hard...you'll likely find you get the best treatment and advice when you contact them at the beginning of the month. Towards the end of the month the management is coming down hard on them over numbers and quotas and generally makes them desperate so they go into sell anything just to shut them up mode.

[Dan Furman]

So, what's the answer, Dan - or anyone? The big guys can hire and fire their own staff untill they build a team of people who produce results. How can the little guy get certain results from their advertising dollar?

Sadly, there isn't an answer, Frederick.

Media is so fragmented these days, that nothing out there is a slam-dunk to "work". Back when any given area had maybe 1 or 2 papers, 2 or 3 "big" radio stations (along with maybe 5 TV channels), it was a LOT easier. Nowadays, though? Forget it - I don't know anyone under 30 that religiously reads a newspaper. TV stations? There are 500 - good luck finding your audience. Radio? When people have ipods and XM/Sirius, it seriously limits your audience.

That's kind of the reason I'm so bullish on Google / adwords / website. Reach your target audience easily. Instantly know if your message works, etc. I can pull up my web stats, and know where my visitors came from, what pages they visited, what page they left from, etc. If I get 100 visitors, and no contacts, something is wrong. Period. I have the wrong message. My website might suck. Maybe the audience isn't what I think it is...

My advice to businesses? Dump your ad money into your website. Get it converting. Bid heavily on your main keywords. Make sure when people search Google for (your city/your service) YOU are way up there. Participate in forums / blogs / etc. Put your link everywhere.

And yes, Patrysha, I agree. Being an ad rep is one of the worst jobs out there (I've done it, and I did some of the things I now rail against, like sell a guy an ad I knew wouldn't help him.)

My advice to ad reps... find another job. Really.

[Steve B]

You have good insight Dan. Adwords is one of the few things that consistently works for me. The rest is not as hard to measure as you might think however. I certainly get some vague answers, but most people remember exactly where they heard of my business. However, the percentage of "I've seen your stuff lots of places" is growing ... slowly.

BTW - my experience with advertising is exactly the opposite of what all the ad reps preach. I always get the most calls right at the beginning. The more I repeat - the fewer calls I get.

[Spider]

Doesn't this open the field for a really good advertising person to build a truly great company? The name Ogilvy (or something like that) pops into my mind. Okay - that is one for big guys, but couldn't an entrepeneurial advertising person devise an arrangement that guaranteed a certain result for small businesses?

"Tell me how many leads you want and I'll quote you a price that guarantees that result. I'll decide how I will advertise your company, you just pay your money and take the leads. If I fall short I will prorate a refund -- 100 leads promised 75 delivered = 25% refund."

Or...

"Tell me the total sales you want, I'll quote a price that guarantees that result. I'll decide how I will advertise your company, you just pay your money and take the leads. If I fall short I will prorate a refund -- $10,000 in sales promised $7,500 delivered = 25% refund."

I think that would make a great selling point to small business owners stuck with being unable to advertise as much as they would like because they don't have as much money as they need.

[vangogh]

I'm late to a good discussion. So much to comment on.

I may be tossing my own interpretation into the original post, but I do think the responsibility always lies in the mirror. Assuming you've reached adulthood, you're responsible for your life. If you're a business owner, you are responsible for your business. Even if you went out and hired someone who did a poor job, it was still you that hired them. Now I don't think literally it's always on us. Sometimes you can do everything right and still fail, but if you take on the responsibility and put it on yourself, you'll do better next time.

If you look at the scenario Ad-Vice-Man describes I think the complaint is people expecting a lot in return for nothing. A higher price doesn't automatically equal greater quality. I think we'd all agree with that. At the same time you have to be willing to invest in something if you want a reasonable return. You can't for example run one single commercial on late night television, because it's all you can afford and then when that commercial doesn't make you a millionaire come to the conclusion that advertising on tv doesn't work.


The person who sold them that did a terrible job, and a disservice to the advertiser. Sorry, but the salesperson is where the blame should lay. Really, the person who sold the advertiser the smallest package for the shortest amount of time was just out for the sale. It's a poor way to do business.

Dan I agree to a point. True the salesman didn't do a good job, but you also bought into what they were selling. To me it still comes down to us when we're talking about our business. If I sell you this bridge I own in Brooklyn, sure I'm doing you a disservice, but is it really my fault you handed me your cash?


And how does one do that?

Frederick I think that's one of those hard questions to answer, because what works for one business doesn't necessarily work for another. I don't think there's a recipe you can apply. I agree that a typical business owner shouldn't be expected to be an expert in advertising, but then they either need to hire someone who is or learn how to become better at it themselves.

As far as telling you how, unless you're paying me for the info then I'm volunteering the information. Now I'm glad to do that to a degree, but I can't imagine too many experts are going to tell you everything since they make their money by charging for that information. So while there are people willing to help you have to remember that there's only so much help they can give.

Another point though, is how much people will listen to the advice. I've watched many people here and at the old forum over the years ask for advice. They received some pretty good advice and proceeded to ignore it. Then they came back asking the same questions again.


Maybe there is no specific answer to How? and one has to proceed by trial and error. But isn't that exactly what the business owner did to earn the condemnation of "To find the culprit, look in the mirror."?

I don't think the condemnation is because the business owner tried something that didn't work. I think the condemnation comes from the business owner condemning the medium. The medium isn't to blame. Both Dan and Steve mentioned how they've had success with AdWords. If you go out and try AdWords and it doesn't work it wasn't AdWords fault. Ultimately it's yours. That doesn't mean you're a bad person or you should be expected to succeed with it out of the gate, but it wasn't the fault of AdWords. Many people do make it work. It's up to you to figure out how to make it work for you or hire someone else to do that for you.

The business owner tried something and it didn't work. They could try again applying what they learned or try something else. But blaming the medium is just an excuse.


I'll quote you a price that guarantees that result.

The problem is the results can't be guaranteed. That might work great for you, but there's a good chance that advertising agency won't be in business for long. The truth is you can't know what's going to work in advance. You have to try different things and see what works for you. Your asking the advertising agency to take 100% of the risk. Why should they do that?

[Spider]

...the results can't be guaranteed. That might work great for you, but there's a good chance that advertising agency won't be in business for long. The truth is you can't know what's going to work in advance. You have to try different things and see what works for you. Your asking the advertising agency to take 100% of the risk. Why should they do that?Frankly, I'd love to do something like that myself, but I lack the advertising experience it would take. Someone with years in the industry and a wide experience of it would do very well, I think.

True, you cannot know what is going to work in advance in advertising, any more than you know in advance what will work in SEO. But with your experience of SEO, VG, you can get pretty close and fine tune the difference. Likewise in any field. There are plenty of risks in construction but my knowledge and experience of it would help me mitigate the worst of it. So, for all of us.

As for asking the advertising agency to take 100% of the risk and why should they do that? -- Because they can.

In the first place, I'm not asking them to take 100% of the risk - they are (I propose) experts in advertising. (They'd better be, or they shouldn't be offering themselves as such.) So, they will get some result - because of their expertise. If - and only if - their results fall short of what was promised, they give a proportionate refund.

One must always be careful of what a "Guarantee" is guanteeing. If I *guarantee* you 50 leads for $100 and I fail and only get you 49 leads, does this guarantee mean I must refund the $100 and you get to keep the 49 leads for free?

Or is the guarantee that you will only pay for what you get and not lose because of a failure of the advertising chosen? In this case, you got 49 leads instead of the 50 promised and a prorated refund of $2 would satisfy that guarantee.

So, results can be guaranteed. And I put it to you, that an advertising agency that has the balls to stand behind their supposed skill and expertise should be able to do this.

[Patrysha]

Yup that is why I am no longer Radio Girl...though I can only truly point to two cases where the client was undersold and in both of those cases they were ppl who bought blocks of commercials on auction...but I hated the pressure of hearing "How come you didn't pitch more to such and such client", "How come you didn't propose this package to that customer?", "How come you haven't landed so and so company" ...because they couldn't afford it, because it wasn't right for their target market, because they've allocated their budget elsewhere in a way that makes sense for their business were not acceptable answers. I never did pitch the way they wanted me to...and I know that is why I was able to turn many of my radio clients into personal clients for my company. The way I saw it since my salary was 100% commission based I saw it as my clients paying my salary, not the station - and that's the way I operated :-)

I actually toyed with the idea of offering a guarantee with some of my services, but ran into obstacles in the planning stages. Some of them to do with the nature of media and marketing and the rest are basically trust issues.

I can't guarantee press releases for example. Even when a story has been recorded and set to run there could be a fire, a scandal, a train crash...or simply even a more compelling & timely story that comes along. There are companies in the field that do pay for placement billing, but their rates far exceed what I charge for writing a distributing a release, plus coverage does not always lead to directly attributed sales.

When the marketing I do results in people in the door (which is all I can promise) I have no control about what happens in the store to influence the close. Plus there are some companies that have a bad reputation before a campaign begins...and no amount of enticement is going to bring people back if they've developed a bad buzz.

I'm still toying with the idea, but I have to sort out exactly how I can make a guarantee that won't put me at risk. I don't mind not making my fee if a campaign doesn't work, for the most part...it would sting but that would be more my pride than anything else...but I don't want to be footing the bill for all the newspaper, radio, web development, writers, printers & graphic design or whatever elements the campaign utilizes if a campaign does happen to miss the mark.

One idea I've had is to offer up services with a non-refundable deposit in conjunction with a percentage of increased sales...but that would only work with a business that is already tracking and monitoring results (most in the offline world are not) and again would depend on my trust level with business owner.

I know Paul offers a guarantee for his services that is all written out...but he has a lot more experience than I do and commands a much larger fee for his services that I do.

That is why I am leaning towards more cooperative campaigns where I control a great deal of data access...everyone shares the costs and I know exactly what is happening in terms of campaign results.

[Dan Furman]

So, results can be guaranteed. And I put it to you, that an advertising agency that has the balls to stand behind their supposed skill and expertise should be able to do this.

The problem here is, not every business is equal, either. I mean, if I started a cat bathing service.... yea, that'll fly.

Or if I had a store in the most dangerous part of town.

Or I had a car dealership who has a reputation for terrible service.

My point is, results are, in most cases, somewhat tied to the business, the mindset/perception of the lead, etc etc.

[Dan Furman]

Dan I agree to a point. True the salesman didn't do a good job, but you also bought into what they were selling. To me it still comes down to us when we're talking about our business. If I sell you this bridge I own in Brooklyn, sure I'm doing you a disservice, but is it really my fault you handed me your cash?

Yea, but in something like advertising, the business owner is really looking to the ad salesperson for some expertise here. Plus, I've seen many a business owner say "wow, I'm gonna be on the radio!!!!" They don't understand how ineffective it is in small doses. And the station won't really tell you, either.

It's just not an obvious thing like the bridge.

[Spider]

The problem here is, not every business is equal, either. I mean, if I started a cat bathing service.... yea, that'll fly.
Or if I had a store in the most dangerous part of town.
Or I had a car dealership who has a reputation for terrible service.
My point is, results are, in most cases, somewhat tied to the business, the mindset/perception of the lead, etc etc.I certainly agree that advertising such businesses pose certain challenges. Are you saying, Dan, that they are "un-advertisable"? Surely, all businesses have constraints from an advertising pov.

A skilled advertising agent should be able to come up with an advertising campaign for any business, no matter how difficult it might seem. And if they feel they cannot (in this case, feel it too risky to put their own money behind anything they devise) then turn down the job.

[vangogh]

@Frederick - You are asking the company to take 100% of the risk. It has nothing to do with their experience or not. It has to do with you only paying after results, but those results aren't completely in control of the other company even if they do a great job. A company can do everything right and the campaign still might not work.

Also much marketing work doesn't pay off till sometime down the road. What happens in the case where you hire a company, they do the work, and you decide to end the agreement in a month before the results of their work is realized. You're asking a company to trust you'll pay down the road while you're not trusting them in the beginning.

Again why should a company do this? The answer isn't because they can. The reality is they don't have to. Maybe a company in need of clients might make such an offer to land new clients, but if they have clients who will pay for the work up front why would they take your deal?

Most athletes are experts at what they do. They prepare to play a game and feel confident they'll win. There's no guarantee they will though. There's another team out there trying to win the same game. In business you have competition that might do a better job. The truth is there aren't guarantees. If there were everyone would be doing exactly the same thing.

Also if I could guarantee results why would I do it for you? It becomes a better plan to replicate your business model and guarantee those results for myself.


a, but in something like advertising, the business owner is really looking to the ad salesperson for some expertise here.

Dan I agree, but again the business owner still hired the ad salesperson. I understand none of us can be experts in everything so we will need to trust others at times and sometimes those others take advantage of us. Accept it an move on. If you hire that person again it's certainly your responsibility when things fail. The first time, maybe you can say it was the salesman who deserves most of the responsibility, but even then you chose to listen to the salesperson and have to take some of the responsibility as well.


I've seen many a business owner say "wow, I'm gonna be on the radio!!!!" They don't understand how ineffective it is in small doses.

I agree, but that information is everywhere. It shouldn't take you more than an hour or two to find out that a single ad or a small dose of ads isn't going to work. And if you choose to be on the radio so you can say "wow, I'm going to be on the radio" then you're buying the ads to stroke your own ego and not as a smart business decision. In that case it's 100% the fault of the business owner if the ads don't work. They actually got exactly what they wanted. They're on the radio.

[KristineS]

When I worked in television we spent a lot of time educating people on the value of broadcast television vs. cable. Our local cable company had a promotion where they'd sell a ton of run of schedule spots for very little money. A lot of the local business owners thought this was an awesome deal until we started explaining how their spots were likely to fall and that cable had, in most dayparts, a very small audience.

I think the business owner has a responsibility to be educated, at least enough so that they know when and if the "expert" they hired is leading them down the wrong path. Nowdays you can find information on basic advertising techniques, or even specific advertising methods fairly easily. Spend a few hours and learn, it will save you a lot of money in the long run.

As for guaranteed results, there isn't any such thing. It would be lovely if there were, but there are simply too many variables to be controlled.

[vangogh]

I think the business owner has a responsibility to be educated, at least enough so that they know when and if the "expert" they hired is leading them down the wrong path.

That's all I mean. I don't expect every business owner to become an expert in everything, but a couple hours research can be enough to spot those people who are obviously trying to take advantage of you. There will always be some who will convince you even if you're ready for them and we will make mistakes. Still how many people who blame the salesperson spent even a few minutes researching what they were being sold? I'd suggest most of the time little or no research went into the choice and that the hire was made because you wanted to buy into what was being sold to you.

If you want instant results for nothing and someone comes along selling you instant results for nothing, it's not the fault of the person who sold you. It's your fault for wanting something unrealistic and paying for it.

[Dan Furman]

So, results can be guaranteed. And I put it to you, that an advertising agency that has the balls to stand behind their supposed skill and expertise should be able to do this.

Tough for any businesses to do this.

I mean, I'm not guaranteeing anything. Nor are you. Too many factors out of our control.

I do know most direct mail houses will guarantee a certain number of impressions / mailings / etc. Stations have quarterly ratings... that's about all you can go on.

[Ad-Vice_Man]

The person who sold them that did a terrible job, and a disservice to the advertiser. Sorry, but the salesperson is where the blame should lay. Really, the person who sold the advertiser the smallest package for the shortest amount of time was just out for the sale. It's a poor way to do business.

.

I'm not arguing that the salesperson isn't culpable.. but he can easily get bypassed to another rep and a salesperson can only take it so far because "the customer is always right" ... BTW the customer is nearly never right when it comes to advertising because "it's hard to read the label from inside the bottle"

plus in the radio and tv medium for example... you could still have a situation where the salesperson sells a schedule that's long enough has enough reach and frequency and is perfectly targeted. But then the business owner runs a crappy ad. or a great ad that says the wrong thing.

I can personally think of a business owner i once worked with back when I was in TV that bought a media schedule for about $150K. It had superb reach frequency and targeting. and then balked at paying a professional to write shoot and direct the ad. he used a "cheap guy" for $300-400 (which is nothing for a TV ad).

So instead this crappy ad get's broadcast to thousands of his targets and guess what... it didn't work. he could have taken $10k from his media plan, put a CAMPAIGN of ads together that were worth looking at and been wildly more successful, but for whatever reason he wouldn't hear it and there was no talking to him.

You can't make the argument that I just "sold him something" because I was telling him... literally yelling at him at one point to reduce his ad exposure (what the salesperson was paid for) in order to run a better ad.

The point of my initial post was that there are simply to many moving parts in advertising that no one outside force control. The only person that can pull all of the strings is the business owner.

[Spider]

I sometimes think that people are their own worst enemy. We make up rules that prevent us from winning our own game.

I'm thinking of the salesman who thinks that asking for the order is being too pushy. And the job applicant who thinks that explaining they are good at something is bragging.

It seems everyone in this thread other than myself thinks that guaranteed results are impossible. Sears started the Money-back guarantee in the 1800's, I believe, and just about every product and store since has offered that same guarantee. And Sears weren't just guaranteeing results, they were guaranteeing satisfaction, a much more nebulous and hard-to-guarantee quality. Today, advertisments regularly state, "Satisfaction guaranteed...." and "Results guaranteed..." But forumites here insist that there is no such thing as guaranteed results.

When Sears and Roebuck first offered a money back guarantee, it was unheard of, and I'm sure most businessmen of the day thought they were crazy. I believe any advertising agency that decides to offer that same guarantee would become very successful very quickly.

[thx4yrtym]

Frederick,

I don't think any of us here are as big Sears. There is no doubt that their guarantees benefited them, but you better be ready to back up those guarantees. My dad worked for Sears for 26 years. Part of that time was spent in the sews & vacs department. I can remember him talking about people bringing in 10 year old vacuum cleaners and raising a fit about how dissatisfied they were and eventually getting a new replacement unit. Folks knew that if they made enough noise that Sears would bend over backwards for them.

I'm sure we all do a pretty good job of supporting our products or we would soon find our selves out of business.

Sears had control over the product it sold. The ad agency has little control over the product they sell. Big difference.

I understand that you feel as though you've been stung but I have to wonder if perhaps you've said to yourself " I should have known better" at least once in the past week. ( been there and done that too)

You might have sent your book to some key people for free with a request for a review. Perhaps a copy to the VA's that frequent this forum would be a good start. If some folks started blogging about it, who knows what might happen.

The very best of luck with it.

[vangogh]

Frederick a few points about guarantees.

1. A guarantee is about marketing. Since they appear to eliminate the risk of buying they are offered to sell more. They have little to nothing to do with confidence in the product. Statistics show that only a very small percentage of people ever act on the guarantee and return the product. Guarantees are simply a marketing tactic.

2. Guaranteeing a product is completely different than guaranteeing a service. If I sell you a product and you return it, I can resell it to someone else. The loss is minimal. Also products are generally not one of a kind. So even if I couldn't resell your return the net loss over the entire product line is still minimal. Combine it with the idea that more people will buy with the guarantee and it's still a net benefit to the company.

3. Services are one of a kind. If you don't pay me for my services I can't resell them to the nest company. You also can't actually return them. Once done you've gained the benefit of the services. In this case the risk to the company is very high.

4. You won't find too many service companies that are the size of Sears. The companies you're talking about are likely to be small companies who are even less able to take on the risk you're asking them to take.

An advertising agency that offers a guarantee probably would get a lot of new business. However they probably would get a fair share of people who aren't going to pay either. They'd likely end up doing a lot more work for not so much more money and their overall profit would fall.

Would you offer the same guarantee on your services? How about I hire you as a business coach. At the end of your program I'll decide if it was worthwhile. If I'm making more money at the end and I think that was due to your help I'll pay you and if not I won't. Sound ok?

It's not that any of us here don't believe you can guarantee something. It's about what you're specifically asking to guarantee. If you hire me as a web designer, I guarantee you'll get a site and I guarantee it'll work across a range of browsers. The more you're willing to pay, the more browsers I guarantee it'll work across. I'll guarantee all sorts of things within my control. What I won't guarantee is that you'll make millions of dollars because you hired me. Most of that is out of my control.

[Dan Furman]

Frederick,

Most of the businesses you mention work on volume, markup, and the fact that the thing is mechanical.

In advertising, it's almost impossible to guarantee results. Just too much is out of the agency's hands.

You're trying to make yourself seem like some kind of maverick here, but I looked at your site/business, and I don't see any kind of guarantee. Nor would I really expect you to have one - like I said, too many things out of your control. But I am curious - if you insist an advertising agency can indeed have a results guarantee, why don't you have one yourself? Would seem to be a no-brainer, being that you are in a competitive industry.

[Spider]

Gregg - You misunderstand me. I do not in the least feel "stung." I used my press release distribution only for illustration.

[Spider]

Dan - I am not trying to be a maverick. This is a discussion forum for small businesses and I am only discussing a business-related topic. Nothing more than that.

[Spider]

VG - Interesting. You seem to dismiss the guarantee in point #1 as simply a marketing tactic, then go on to defend the impossiblity of it.

[vangogh]

I'm not understanding what you're trying to say. I said that when companies offer a guarantee it's a marketing tactic, and I said some things can not be guaranteed. Where's the conflict?

[Spider]

I'm not trying to convince anyone to offer a guarantee. I am trying to get everyone to think outside the box and see the possibility of it, and the potential it offers.

That's what coaches do - at least, that's what this one does.

Instead of offering reasons why it won't work, try thinking of ways it could work. Ask, "What if I could make it work?" questions. Even if you don't come up with a good enough reason to offer a guarantee, the practice will help you in other aspects of growing your business.

[vangogh]

I'm not trying to convince anyone to offer a guarantee. I am trying to get everyone to think outside the box and see the possibility of it, and the potential it offers.

Perfectly valid and keep doing more of that. It's always good to challenge the conventional wisdom.

I still think when it comes to service based business, particularly those where you can do everything right and still not get the results you want, it's dangerous to offer a guarantee. I'm not trying to be negative and only think of why a guarantee won't work. I think I'm being realistic.

Believe it or not there are SEO companies that work on some kind of commission. I think one of the business models is to take something up front and then make the rest based on performance. Some might even take all their money entirely on performance.

However in those case the company will probably turn down most of the people that contact them. If you're going to get paid based on results you do have to be very confident you can get the results. So before I might be willing to offer you a pay per performance deal you need to convince me that I should make that offer to you.

The idea is that in any business dealing there is risk. Both sides would like to minimize their own risk. When you first mentioned the guarantee idea it came across to me as you were trying to pass 100% of the risk onto the company doing the work. Maybe that was just my interpretation or maybe it was just the specific offer. Passing 100% of the risk to the advertising company is not a deal they'll likely want to accept. There really isn't any good reason for them to do that unless your business happens to be one they're 100% sure of.

For the most part a successful ad agency doesn't need to accept any of the risk. Assuming they do a good job, they've likely built a reputation and have previous clients to sing their praises. Your risk is mitigated based on their past work. And assuming they have people contacting them based on their reputation they don't need to take on any risk for you since there's probably another business they can work with that won't ask them to take on any risk.

Early you said ad agencies should offer a guarantee because they can. I say it's not about whether or not they can. It's about whether or not they have to. If I as an ad agency have more people contacting me than I can take on as clients I'm not going to take on the riskier client, unless I think the return to me justifies the risk. I might take on the risk for a highly visible company because it would lead to more people wanting my services. I might take on the risk because you're willing to pay me a much higher rate than I'd usually get. There has to be some kind of potential reward to justify the risk.

I think in your original posts with the guarantee offer the offer was completely one-sided in favor of the client and not the ad agency, which is why I don't think an ad agency is going to make that offer.

And again the reason for all the talk of risk is that you really can't guarantee results with advertising. It would be great if you could, but there are far too many variables. You can increase the odds something will work, but you can't know for certain it will work. An easy example. Last summer you could have worked hard on a campaign for a luxury product aimed at middle class America. Unfortunately a week or two before the campaign launched the economy went into the tank and your market stopped buying and started saving.

Maybe at the same time you were planning your campaign one of your competitors came up with a better campaign. Maybe in the weeks before your ad goes live a defect is found in your product or a new and better product launches. Think of all the ads for cell phones that didn't do well the day after Apple announced the first iPhone.

You can make the offer of a guarantee, but that doesn't mean you can really guarantee results. That's why it's a marketing tactic.

[Spider]

Moved >>>>

[vangogh]

Really?

Notice the first sentence in my post occupies a completely different paragraph. It and the second sentence/paragraph are two separate thoughts. They are also talking about two completely things.

Sentence/paragraph #1 - I'm saying do more to get people to think outside the box. Nothing in that sentence implies anything other than I think it's great to get people to think out of the box. The sentence doesn't address anything other that that.

Sentence/paragraph #2 - refers back to the current discussion on guarantees. "When it comes to..." sets up a specific case. That doesn't negate anything in general and again it has nothing to do with the first sentence/paragraph. It does not negate the thought to think out of the box or encourage people to think outside the box.

By the way you do realize by completely changing the subject you've done exactly what you're asking everyone else not to do. You've closed the door on the ongoing discussion by changing the topic. I could challenge you to stay on topic and start the new discussion in a new thread.

[Spider]

Thanks for the suggestion.

I have used the post to make a new thread >>> http://www.small-business-forum.net/managing-your-business/1738-business-growth-vocabulary.html#post19798

[Dan Furman]

Spider,

Did not mean the "maverick" in a bad way - but you were/are on an island regarding this one. Not to put you on the spot, but I'm still interested to hear your take on why you yourself do not offer a guarantee.

[Spider]

Not worried about being considered a maverick, Dan. Conversation is like a boat - if everyone gets on the same side, it sinks!

As to me not offering a guarantee - a) I did and it's still there somewhere, I think. Probably no link to it after recent changes. Also, b) I changed my modus operandi - I now start charging for my coaching two weeks after we begin, which gives the client time to see if they like how I work. That partially offset the need for a guarantee and probably called for changing the wording of my guarantee, which I never did.

And, c) there is no conscious decision to not offer a guarantee. This discussion was as much a learning experience for me as I hope it was for others. It has made me think about how I could offer a "Guaranteed Resuls" guarantee to potential coaching clients that would be profitable for me and foolproof for them.

[Ad-Vice_Man]

Frederick, I"m with you on the thinking outside of the box. But here are some points to consider when following this idea out further.

Let's assume we put together an ad agency that 100% guarantees results or you get your money back.

1. The advertising agency would have to have complete controll over the creative direction and the content of the offer.

Suppose that Huggytree were to hire this advertising agency, The agency and huggy come to an agreement to run $4,000 worth of ads to which they will gaurantee at least at 1:1.2 return on investment or give his money back, so they'd be respsonsible for $4800 in business to Huggy, But in order to do it, they run an ad that says something to the effect of "Hire huggy tree and he will beat any written esteimate by 30% Plus if he is more than 10 minutes late for your scheduled appointment time, the entire job is free" Huggy may well make $4800 or more in sales, but would certainly be working his tail off for nearly no margin, and would be set up to actually ultimately take a loss" Remember that advertising effect top line revenue, not bottom line profit/loss

Can you envision a circumstance where Huggy would agree to this?

next using the same example, let's say that the advertising agency was unable to generate $4800 in sales for huggy. and need to refund huggies money. The agency would still need to pay out the media outlet for the media time. a standard ad agency takes a 15% commission off the media, so they are now out $3400 in cash to the media outlet (who will insist on payment). This is not including the lost creative time and production time.

[Ad-Vice_Man]

just to give you a real life example of this...

When I was selling radio i cold called this retailer by doing a walk in. I let him know that I was an ad rep with wxyz and that I'd like to talk to him about his advertising.

He said "Radio Doesn't Work" I looked him in the eye and said "Clearly that's not true" he backed off. We talked some more.

Later in the conversation he offered, " I'll advertise with you if you give me a free trial, if it brings people into my store i'll continiue to advertise with you."

I countered "sure but I get to write the commercial and say whatever I want"

He was taken aback for a momement, not expecting me to agree with him, I could tell the gears in his brain were turning trying to figure out why. He then asked, "What do you mean"

I said "well if i'm buying the time, i get to say whatever I want" and i'm going to write an ad that says the first 50 customers to walk through the door of Joe Blow Retailer this saturday will receive a crisp $100 Bill"

He Said "no way that'll cost me $5,000", I responsed in turn that "so what your telling me, is that you believe my radio station can bring in at least 50 people this weekend given the right offer?"

He kicked me out of the store after that but my point was made...

[Dan Furman]

b) I changed my modus operandi - I now start charging for my coaching two weeks after we begin, which gives the client time to see if they like how I work.

This is a good setup - has this worked for you?

[vangogh]

@Ad-Vice_Man - That's a good story. And it does go to the point about guarantees.

I had this discussion in the past about SEO and offering guarantees or working on commission. My thought was unless I could control every aspect of the marketing, the site, the copy, etc then I'd be risking my money on something out of my control. You can do everything right to drive targeted traffic to a site and the copy or design could be so bad that it drove everyone away.

Also marketing doesn't always have an instant effect. Maybe you could expect a series of radio commercial to drive traffic on a given day, but often advertising is a longer term proposition. Maybe it's a branding campaign and the results aren't realized for 6 months. With SEO you can do a lot of work in the first month or two for results that may not come until 9-12 months later. Working now for a potential pay day a year from now doesn't make business sense to me. It would have to be a very large payday.

When you think about what you lose by not having the money now the value of your payday goes down.

[Spider]

AV - like your second story, what you are telling me is that results can be guaranteed given the right conditions?

Sure, the terms you suggested in your two posts would not have been the right conditions, and the right conditions can only be determined by the two contracting parties. We could sit here all day and concoct conditions that would not be right for one or other of the parties. However, what if we could come up with something that would be acceptable to both parties?

From the client's POV, the terms would have to be such that they would earn their usual profit on the items they sold or service they provided, and would not have to pay for something that produced poor results.

From the agency's POV, the terms would have to be such that they could earn a worthwhile profit over a given period (say, one year) by offering similar terms to many companies and winning more often than they lose. You see, by focusing on one deal at a time, we are ignoring the potential to win big in order to protect ourselves from individual losses.

Suppose an ad-agency has experience in and access to industry statistics for the fitness industry. From this, they are confident that the average cost of acquiring a new fitness customer is $100, and they are confident they can build a campaign to bring in 200 new customers in 3 months at a total cost of $15,000. They could offer their advertising campaign to gymnasiums, health clubs, country clubs, etc. for $90 per new customer.

The client would see a saving of $2,000 in acquiring 200 new customers (200 x $90 vs 200 x $100), which would be an extra $10 profit per new customer over and above their regular profit. The agency would make 20% profit (200 x $90 = $18,000 income against $15,000 cost = 20%) against an industry standard of 15% commission. If they achieved the result they anticipated.

If the agency falls short and only does half what they expected - 100 new customers - for the client, the agency loses $6,000 (100 x $90 = $9,000 income against $15,000 cost = $6,000)

If the agency creates a really effective campaign and does twice as well as they expected - 400 new customers - for their client, they make 140% profit (400 x $90 income = $36,000 against $15,000 cost = $21,000 = 140% profit)

What is more, they only have to have one of the above 'big-winners' to offset 3 of the above 'shortfall' campaigns.

If the agency runs 20 of these or similar campaigns over the course of a year, and do exactly as anticipated for 10 of then, plus 4 winners and 6 losers, as described above, they make $78,000 profit overall.

And no matter what happens, the client in every cases is a winner on two counts - he gets the results he paid for, and he gets them cheaper and thus makes more profit than he would normally. And the agency - in the above scenario - makes 26% profit against the industry standard 15% commission.

I think, in that case, the agency could very well advertise themselves as offerring 'GUARANTEED RESULTS' Don't you?

[Spider]

This is a good setup - has this worked for you?It has never been a topic of conversation with prospective clients - probably because it is particularly clear on my website. I consider that answering an objection before it is raised.

[vangogh]

Your numbers above sound good, but let me play devil's advocate.

First how realistic are the numbers. I'm not suggesting they aren't realistic by the way. Advertising isn't my business. I'm just asking. Different numbers could dramatically change the risk/reward.

If the average cost to acquire a new customer is $100 how can they get 200 new customers for $100? Are you saying they feel confident they can do better than the average? The average is typically $100, but because they have experience in the industry they feel confident they can get those same customers at $75? I think that's what you're saying, but want to be sure.

One reason I ask the above is because some advertisers would consider it a conflict of interest to work for multiple businesses in the same industry. There become questions about working hard to promote one business over the competition and then promote the competition over the original business. The agency in doing it's job for one client does so at the expense of another. Some agencies may not take on competitors. I know a lot of SEOs won't as they see it as a conflict of interest. SEOs aren't ad agencies I know, but I think the issue is still there.

I don't think what you're suggesting is a guarantee, at least not in the way I think of a guarantee. In my mind a guarantee is more like "We guarantee we'll get you 200 customers or you don't pay" I see this more as pay per performance. Perhaps that's just semantics.

When you say a new customer do you mean a lead or an actual customer who buys something? If you mean an actual customer who buys something I say that's a deal breaker in this whole argument. An ad agency isn't there to close the deal. They could deliver you 5,000 leads and still have the end result be 0 paying customers because of what you do on your end. This was my point in a previous post about wanting to control the entire process in order to guarantee results. If an ad agency has to deliver paying customers before getting paid I think they're going to need to feel confident not only in themselves, but in you as well. That adds a lot more risk into the equation.

The way your system works is over the long haul. It doesn't necessarily work for each customer as you said. That's perfectly valid as a way of doing business. However because the numbers we're talking about measure in the thousands I think that would exclude a lot of small businesses from being able to take the risk of entering this kind of agreement. We are a small business forum after all. With your numbers a business could lose $6,000 delivering half of the customers they agree to. That's a lot of money for a small business. A big business can carry that kind of loss until the numbers begin to work in their favor. I don't think most small businesses can, especially if those 3 losses happen to be the first 3. That's an $18,000 loss before realizing a profit. A lot of small businesses would have to close their doors before they realize a profit. it depends of course on what we're considering a small business. I'm thinking of most of us here who are individuals or have less than 10 employees.

Having played devil's advocate above I would still say you've showed how you could offer a guarantee and still work it in your favor. I would add the caveat that your business would have to be in a position to take some decent sized losses. Your plan brings profit over time, but could lead to big losses up front. If your business can weather some early losses then it could try this. If your business can't weather those losses the risk is likely too great.

I'll again say we need to be talking about leads and not paying customers. If we're talking about paying customers then the ad agency can only offer this kind of deal to business they feel very confident in.

One last thought or two. Are we saying the ad agency only makes their money after they've run the campaign and delivered results? I thinks so, but again want to make sure. If the ad agency has to wait till all results are in they could still suffer the cash flow problem even if the early campaigns are a success. And how long until we decide the campaign is over and the results are in. Are we only counting those who become customers next month, next week, tomorrow? Is anyone who becomes a new customer in the next six months part of this deal?

You'd run a different sort of advertising campaign if your results are being measured over different time frames and I'd suggest that the better campaigns are those that take more time and may not see results right away. Based on your numbers the focus seems more geared toward the get them in for the sale next weekend kind of advertising and not the lets build this brand for the future kind of advertising.

Also since we have to figure out a way to measure how we know a customer became a customer due to a specific kind of advertising. That's not always as easy as it sounds. Say I run an ad in a magazine for you. A person sees the ad and walks into your store or calls you or they do whatever it is they need to do to become a customer. How do you know they became a customer as a result of my ad. We can track the ad in some ways by making a specific offer or using a coupon. That's still no guarantee the person uses that coupon or offer. The advertising world has struggled with this since the very first ad. There really isn't a good way to absolutely measure the effectiveness of an ad.

Let's pretend there is though. It would be you as the business owner who'd be collecting the info showing the customer is a result of the ad. However you as a customer have a lot of motivation not to share that info with me as the advertiser. As an advertiser I also have to take a risk on your honesty. What happens with close calls. We think this customer did become a customer as a result of the ad, but we're only 50% sure. I as the advertiser want to count that customer. You as the business owner probably don't. In order for me as an advertiser to feel comfortable with the number of customers being reported I'd want to have a tracking system independent of you and I'd also want to be the arbiter of any differences of opinion on who is or isn't a customer. At the very least I'd want an independent party as the arbiter. Either way that's going to lead to additional costs which may now skew the risk greater than the reward.

I think you have stepped out of the box and showed how this could work and I know you don't want me to add a "but," but I'm going to do it anyway. But there's a lot more to consider than the numbers you've shown and I think for most small business the better option is still to take payment for the work and not the results. Some agencies in the right position might be able to make your "guarantee" work. I think most and especially most small business wouldn't.

[Ad-Vice_Man]

let me offer this... I have heard of at least one marketing firm that does something similar except that it is only in regards to what they actually pay the marketing firm and not the entire cost of the campaign... IE the media costs (which are the bulk of the expense ) are still paid for by the advertiser.

The agency does it's work, the strategy, the design, production of the ad and the follow up essentially for free, and then at the end of the year they take a percentage ( a large percentage) of the difference in year to year GROSS Revenue. These deals are typicallt 3-5 year engagements.

In other words they may, in lieu of taking the standard 15% of media costs, opt to take 20% of the revenue increase. So if a company did $1,000,000 in business last year, and the strategy i devise increases revenue by 20% say then i'd get 20% of $200,000 or $40,000.

I'd be open to this sort of arrangement all day long. But I'd have to make sure that the company i'm working for is capable of closing sales, and i'd have to conduct a thorough top to bottom Exam of all of the company records and proceedures. This is unlikely (at least in my case and the cases of the companies I've heard of doing this) to be offered to either a brand new company (less than 3 years old) nor a new advertiser (ie, the let's try it and see what happens crowd) You'd need to already have a substantial advertising budget to pay for the media.

[vangogh]

But I'd have to make sure that the company i'm working for is capable of closing sales, and i'd have to conduct a thorough top to bottom Exam of all of the company records and proceedures.

That's definitely an important part of this if you're basing a fee on actual sales.

[Business Attorney]

I know of many examples in many different industries and professions where people are paid only for success.

In law, there are the personal injury attorneys who often get one third of the award if their client wins, but get nothing for their services and often have to eat substantial costs for experts, court reporters and such if the client loses. In the Chicago area, most attorneys who handle real estate tax assessment appeals get paid only a percentage of the tax reduction. Collection attorneys often only get a percentage of what they collect, so there is no payday for chasing after a deadbeat who never pays.

In business there are consulting firms that evaluate internal processes and only get paid a percentage of what the client's actual out-of-pocket savings.

Then of course, there are the manufacturers' reps who take on a product line and promote the products, but get paid only a percentage of sales.

In all of these cases (as in life itself) there are many factors that are outside the control of the person performing the services. A trial attorney taking a matter on a contingency basis only can learn so much about the facts of the before taking it on and starting the discovery process. Even if he presents a great case, his ability to receive payment will be decided by a judge or jury.

These models work for a large number of people, but there is certainly a risk in taking any project on a contingency or pay-for-performance basis. So all anyone can really do is assess the risks versus the rewards based on the facts that they can learn. If the risks outweigh the rewards, then don't do it.

In the example vangogh discussed, he said "That's an $18,000 loss before realizing a profit. A lot of small businesses would have to close their doors before they realize a profit." That is absolutely true. Being able to take a risk often requires a capital structure that is strong enough to support the risk. Small businesses may not have the resources to take big risks. Even if the odds are in their favor, the consequences of the loss are too great.

[vangogh]

I think the businesses that can offer those kind of guarantees are ones that can take on the risk and see enough reward in success. Take personal injury lawyers. A third of the award can be a very large payday and I'd even suggest many of the cases never even end up in court.

[Business Attorney]

I think the businesses that can offer those kind of guarantees are ones that can take on the risk and see enough reward in success. Take personal injury lawyers. A third of the award can be a very large payday and I'd even suggest many of the cases never even end up in court.

True, but the vast majority of personal injury lawsuits are not the multimillion awards you read about. They are the slip-and-fall, the soft tissue injury in a rear-end collision or the dog bite cases. In those, it is a matter of selecting the right cases, managing the time spent on the case and having enough cases that the law of averages works out. But you are right that is still balancing the risk and the reward.

[Spider]

Not wishing to avoid answering your various questions, VG, I think the ensuing discussion shows that all the questions you expressed can be answered by -- That will be solved by agreement between the parties, and best done as part of the contract before commencement.

I actually did a similar deal in the fitness industry as the one I described, even though I am not an advertising agency. Furthermore, it was a one-off arrangement between two one-man businesses (me and the other guy.) The basis was that I would finance his advertising, we would cooperate on the what would be advertised and how, and I received payment per sale/new customer. It worked out well for both of us.

On a side note - to demonstrate how contract terms can be agreed to prevent at least one of your doubts - he wanted to use part of my financial commitment to hire an advertising agency to bring in franchisees. I agreed but felt this was a long-shot, would thus involve me in undue risk, and so I required a higher percentage payback. Well, one of the other terms was that either of us could cancel our agreement at any time but, if before a certain date, I would be reimbursed for the advertising costs I had already incurred. (As already observed, advertising takes a while to work.)

As it happened, my partner was convinced by this advertsing agency that they were getting excellent responses and that he would soon be receiving great wads of money from franchisees. He saw that I would be getting a tremendous return on my investment and decided that he would like to keep that money for himself. So, he invoked the cancellation clause.

I cannot fault him for his decision - the contract term existed for a reason. He had every right to invoke it. He paid me back the money I had already spent, I kept the money I had already earned, so it was still an excellent return for me, if short-lived. And he "re-purchased" (if you like) the right to the entire income from franchisees. Unfortunately for him, the ad-agency had been pulling his chain and failed to deliver a single franchisee.

Greed overtook him, I'm afraid. Nonetheless, he finished up with the extra business I brought him, and I finished up being paid for it. The terms of the contract worked to protect me from a risk I was not prepared to take. My partner and I both would have been far better off if he had stuck with the original intent, and although he didn't - and some sharp words were exchanged - both of us still gained from the shortened deal.

The point of the story is - Yes, there are risks but these can be mitigated. Business is a risk. If you want minimum risk, you get minimum reward. If you are prepared to take greater risk, if properly handled, you are likely to get greater reward.

[vangogh]

@David - Yeah I know. I have a cousin who's a personal injury lawyer and I realize most cases are not the million dollar ones. Your point about choosing the right cases to take is the same one I've tried to make a few times about needing to trust the business before offering them the guarantee.

@Frederick - I think you definitely showed how something like a guarantee could be offered while still being profitable. I still have some reservations because of all the questions, but I agree that those are details that can be worked out somehow.

I completely agree about risk in business and that to get a better reward you need to risk more. Hey I think I even started a thread on a similar topic (http://www.small-business-forum.net/starting-your-business/1515-should-small-businesses-take-more-chances.html) awhile back.

Some of my reservations in all this come from a bit of experience. I'm not an advertising agency, but I am a service based business. Most every time someone has approached me wanting a guaranteed deal it's been a signal that they didn't want to pay. They would only suggest deals 100% in favor of them for example. It's something I'd be cautious about if a client approaches me.

On the other hand if someone can figure out the details in the numbers then why not take a chance if they think they can make it work. Like you said business is a risk. And many of the decisions we make come down to risk/reward calculations.

[Spider]

Thank you, VG. I confess a distinct advantage in terms of plain-English contracts because that was much of my work in the contruction industry before I went out on my own. And the contruction industry is open to a great many uncontrollable risks, the most obvious being the weather.

I also realize that many people are happy with their small business at the level it is and are not looking for massive growth. In such cases - perhaps moreso in such cases - when an opportunity for greater profit than normal arises, it can be advantagous not to turn it away too quickly.


... Most every time someone has approached me wanting a guaranteed deal it's been a signal that they didn't want to pay. They would only suggest deals 100% in favor of them for example. It's something I'd be cautious about if a client approaches me.... Instead of a simple and polite, No, how about countering with a contract suggestion of your own.

One of the most powerful phrases I have ever used in negotiating contracts is, "If I do that for you, what will you do for me?" They may ask for the world, but that is only an opening gambit. They will often be ready to give half of it back to you. If that half is the bit you want, you may find yourself able to let them have the half *they* want.

[vangogh]

That's just it. Other than the obvious contacts that you know to turn down for many, many reasons, I do come back with a counter offer if I can think of one. The reason I say they only want the deal 100% in their favor is because all my counter offers get declined. Now that's simply my experience so we're talking about one small business. The sample size doesn't allow you to extrapolate all that much. Just explaining where I'm coming from in my thoughts about all this.

Again we're talking about a small sample size, but those people who contacted me weren't looking to work out a fair and equitable deal. They were either looking for free work or to place all of the risk on my shoulders. That's not necessarily representative of all people who'd want some kind of guarantee, but it has been representative of those asking for one from me.

[Spider]

That explains your thougnts - thanks. I doesn't sound like you were asking for ideas on how you might encourage a better response to your offer, but if you were, say so and I'll give it some thought.

[vangogh]

Yeah, it's not an issue for me. My business has grown to the point where I can minimize my risk and still do pretty well. And when it comes to growing beyond where I am now I'm leaning toward more product oriented things than trying to grow the service side of the business.

But thanks. I appreciate the offer.

[billbenson]

There is one other issue unmentioned here. Products can be very nichy and technical. This affects everything from who you select as a web designer to advertising. And they are all interrelated. If you make some new surface mount IC and it does some stuff that only engineers in Silicon Valley can understand, the best advertising guy in the world is going to have a rough time.

We are in a day and age where business managers, CEO's, and middle managers for that matter need to be very competent and broad in their skills. The big guys will do ok because they can hire people and train them so they are knowledgeable. The small guy has a tough road.

[vangogh]

The small guy also has some advantages over the big guy which are even accentuated when it comes to the internet. The small guy can be much more flexible and more easily adapt to change. The big guy has to go through formal processes to change things and so can be slow to react.

[billbenson]

I completely agree VG. In, both cases, however, there are people that need to know the internet and in particular internet marketing and don't. How many times have you seen a business owner post that AdWords didn't work or was to expensive and thought to yourself, if done write it could have been successful.

I'm a one man show and I place ahead of multimillion dollar companies on G. I view the internet as a big untapped opportunity. But you have to know how to use it to use it properly. And that takes time.