Why We Don’t Do Performance-Based Compensation

Since most of our engagements are pretty heavily tailored to our clients’ needs, we don’t really have a “standard engagement” at UpBuild; while there may be similarities, each of our proposals is unique. There are a ton of things we can do for our clients; there are also a few things we absolutely won’t do.

Of the items on our “Non-Negotiables” page, the one I’ve heard the most prospective clients push back or express surprise about is our policy against entering into pay-per-performance contracts for any reason. In the spirit of Transparency (one of our dearly-held company values), let’s talk a little bit about why we don’t do that.

What is Performance-Based Compensation?

Performance-based compensation is basically what it says on the tin: a company is paid for their work based on the results they achieve. This may mean being paid only if you’re able to hit certain agreed-upon traffic, conversion, or revenue goals; it could also mean being paid on a sliding scale based on results, or getting a “bonus” payment for achieving your goals.

On the surface, performance-based compensation might look like a great idea. After all, if a company is confident that they can get results for their clients, why wouldn’t they put their money where their mouth is? In our years of experience (both at UpBuild and at agencies we’ve collectively worked for in the past), though, we’ve encountered several problems with pay-per-performance models that have shown us it’s not the right path for us. Some of these reasons are practical business considerations and some are more philosophical in nature.

UpBuild is a Consultancy (the Practical Reasons)

Much as we strive to provide as much value as if we were an in-house employee, at the end of the day we’re not internal to our clients’ organizations. Everything we do is done in partnership with our clients. Usually, when we make recommendations, we aren’t the ones implementing them; that falls to our clients’ development teams, copywriting staff, or larger marketing team. Sometimes, those people get really busy, or are subject to competing internal pressures, and can’t get to our SEO recommendations as fast as we would like.

Actual footage of a typical UpBuild stakeholder

Every marketing agency has had clients to whom they’ve delivered killer recommendations, only to have those recommendations languish on the shelf for months or even years before being implemented. When our recommendations are implemented slowly, incorrectly, or not at all, it can affect the results we’re able to achieve and the time frame in which we’re able to achieve them, and there’s only so much we can do about it.

Being an external consultancy also means we may not be there to advocate against changes that could affect our target metrics. Major site changes such as a rebrand or replatforming would drastically alter the traffic and revenue numbers that performance-based compensation depends on, and could leave us in the position of having done great work that could really move the needle for our client, and still not being paid for it.

UpBuild’s focus is on technical marketing; this means that while we offer a range of technical services, we don’t do content creation, content marketing, or link building. Instead, we prefer to focus our efforts on setting up our clients to be successful growing their businesses and creating and promoting content on their own. Our clients get a lot of guidance and feedback from us, but the buck stops with them to actually create the content pieces we recommend and promote them via the channels we suggest.

We’ve had a lot of success with this model of content building and link accrual – in fact, it’s by far how we’d prefer to do things, and results in more meaningful traffic and valuable inbound links than more traditional “link building” tactics. Once again, however, success in this area is dependent on our clients’ follow-through.

UpBuild Runs on Trust (The Real Reasons)

Almost all of the above objections could be overcome with a diligent discovery process and a detailed contract and statement of work, outlining our and the client’s expectations and specifying a timeline for implementation. If the practical reasons were our only concern, performance-based compensation would likely be a “prefer not to” rather than a “non-negotiable” for us; for the right client, we might let it slide.

The real reason performance-based compensation is now a non-negotiable for us is that when we’ve tried it in the past, we’ve found that it starts the client relationship from a position of mistrust, and that mistrust bleeds into every interaction with the client. Instead of starting from the assumption that we’re going to do great work together, it’s starting with the suspicion that we won’t actually be able to get results or accomplish anything.

On the client side, this mistrust is often driven by a negative experience with SEO in the past – there are an unfortunate number of people and agencies out there calling themselves “SEOs” who can’t or won’t achieve anything meaningful for their clients. We really empathize with how frustrating that can be for a business, to spend a sizable chunk of their budget on something that didn’t net them any return. As I’m fond of saying, though, if I hire a plumber to fix my shower and they don’t fix my shower, my assumption is not that plumbing is a scam and doesn’t work; it’s that that particular plumber wasn’t a good call for me, and I need to bring in someone who can get the job done. It would be nice if more people could approach SEO the same way.

Unfortunately, this foundation of mistrust actually makes it harder to get recommendations implemented and achieve the very results clients want. When you’re working on a project founded on mistrust, every recommendation you make is met with suspicion. In my experience, clients who are on pay-per-performance are more likely to want frequent “justify your existence” calls, in which the person managing their account is forced to use the time the client is paying for to re-sell them on the existing agreement, instead of spending that time actually driving value for the client. This causes a lot of stress for the team, who would much rather be doing actual work.

…if I hire a plumber to fix my shower and they don’t fix my shower, my assumption is not that plumbing is a scam and doesn’t work; it’s that that particular plumber wasn’t a good call for me, and I need to bring in someone who can get the job done. It would be nice if more people could approach SEO the same way.

That added stress for the team is a big part of why we don’t do performance-based compensation. Having that “magic number” hanging over their heads, knowing that UpBuild won’t be paid for their hard work unless they hit that number (and knowing that the practical reasons outlined above are all in play), causes a lot of angst for our team. Since UpBuild is founded on the idea of hiring the best people and supporting them in doing their best work, we don’t enter into engagements that we know will be unpleasant for our team to work on – even if we’re sure we could make a lot of money by doing so.

The other reason we’re opposed to performance-based compensation is that it keeps us working for that one specific metric instead of asking, “What does this client really need from us right now?” and “What would provide the most value long-term?” and doing that instead. Some of our biggest client success stories have been when a client’s needs changed and we were able to easily pivot to help them meet those new needs; in a performance-based model, that just isn’t possible.

We never want anyone on the team to be in the position of having to choose between providing short-term or long-term value to our clients. Top-of-funnel tactics can be valuable, investment in technical seo can be valuable, but these tactics tend to take longer to pay off, and we don’t want to be in a position to not recommend them because we know they won’t garner immediate results.

Common Questions We Get About This

Don’t you stand by your work?
Absolutely. That’s why we make it super easy to stop working with us if you’re not happy. All of our contracts include a 45-day opt-out; if you’re not happy in the first 45 days of the project, you can walk away and only pay for those first 45 days. After that, we have 30-day mutual opt-out clause. If, at any time, either of us feels that we’re no longer working well together, we will take 30 days to wind down the project and make sure that transition is as smooth as possible.

Don’t you lose prospective clients this way?
Yes, we do. It’s one of the things that happens when you are a strongly values-driven organization – you’re going to lose some money you could have made otherwise. We believe that living by our values makes us a stronger agency in the long run, and it’s a sacrifice we’re more than happy to make toward that goal.

What if I really, really want to pay via a performance-based model? I’d pay a higher rate to do it that way.

We’re a really flexible company. Like I said at the beginning of this post, we spend a lot of time and care making sure that our engagements are tailored to individual client needs. We’ll do almost anything we can do, if it means we get to work with a company we’re excited to work with; there are just four things we absolutely won’t do, and this is one of them. There are plenty of reputable SEO agencies out there that can achieve great results for you, and will happily accept a performance-based compensation model. We just know it’s not right for us.

Written by
Drawing on over a decade of digital marketing experience (both in-house & agency-side), Ruth leads the team to drive client strategy forward.

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