SMB Churn and the Potential Return of ‘Guaranteed Clicks’

In roughly 2004 the way that paid-search marketing was introduced to many small business advertisers was in the form of a “bucket of clicks” sold by yellow pages publishers and independent sales channels like the now defunct WebVisible. Paid clicks on Google and elsewhere were sold in bundles for a fixed price. That product was easy to sell and buy but publishers and SMB sales channels had a tough time with managing fulfillment.

Over time that product evolved into a budget and category based offering. Since that time numerous other products have been added to the sales mix, resulting in a complicated product list that is difficult to explain and sell: websites, SEO, SEM, social, mobile, reputation management, video, etc.

Now a version of the old guaranteed clicks product may be making a return. For the past two years Dex has been selling a product called “Dex Guaranteed Action” with mixed results. This is essentially a “bucket of leads/contacts” product that is calibrated to advertiser budgets.

In addition, a couple of years ago Yodle introduced radical simplification into its sales pitch. (Caveat: I don’t know if it’s still doing this.) Back in 2012 Yodle CEO Court Cunningham told me that Yodle was moving from a “product centric” approach to selling traffic/leads/calls/contacts/whatever from a network of channels. The company bundled channels and products “as a feature” of an overall SMB advertiser spending program.

Cunningham explained to me at the time, “What you’re buying is the state of the art in online customer acquisition.” As the market evolves Yodle will be adding services “for free.” The company is sourcing calls and emails from each of these channels: SEM, SEO, display, mobile, IYP and so on.

Since the early, heady days of guaranteed clicks SMB churn rates have been very high. In the case of WebVisible, toward the end, the company saw in excess of 100% churn on an annualized basis. On average churn rates remain above 50% today.

A 2013 study by Thrive Analytics found that SMB webhosts and SEM providers had low net promoter scores and comparably high churn.

SMB churn and NPS

In the decade since guaranteed clicks and SEM was introduced to the SMB market at scale, the churn problem has not been solved. In the Thrive Analytics survey some of the factors contributing to churn were the following:

  • Limited contacts with service provider
  • Poor performance of the product(s)
  • Lack of trust in provider
  • Lack of customization (in case of websites)

There are many other reasons for high SMB churn. Some of those include:

  • Insufficient education of SMB buyer
  • Inflated performance claims by sales rep
  • Product confusion and clutter in the market
  • Competitor claims, some of which may be unethical or inaccurate and contribute to false expectations
  • Lack of consistent customer service
  • Internal, structural issues regarding sales rep incentives tied to acquisition but not retention

These are not exhaustive lists. Perhaps the chief factor behind churn is poor onboarding and limited ongoing customer service. In addition reps may be confused themselves, not sufficiently educated or trained and trying to sell too many “products.”

Given all this there is now some evidence that more companies are thinking about moving to a bundled or even “black box” approach where they deliver a certain number of calls or leads or contacts (whatever the “currency”) to SMBs and source them in a variety of places from a network or multiple channels. This approach is something of a return to the “guaranteed clicks” model but with much greater sophistication on the back end, in terms of fulfillment.

One provider preferred

Source: Thrive Analytics 2013 SMB survey

It’s becoming more and more unwieldy to ask premise or telephone reps to explain and sell multiple products, though some things will still need to be explained. The challenge is for vendors/sales channels to keep pace with the rapidly changing market and to simplify the pitch for both the reps and the business owner, while providing enough transparency to generate trust. It may well be that a high level budget-based bundle that includes presence, acquisition and retention products is the future of SMB digital marketing.

As I’ve been arguing for the better part of the past decade, the investment advisor/portfolio analogy is the model. Business owners want to hand over their marketing budgets to one provider and trust that they’re being properly allocated and that they’re getting value.

However that’s much easier said than done — or scaled.

Give us your thoughts about these ideas. Do you think “the industry” will move from a product centric sales approach to a bundle/network or black box approach? Why or why not?

2 Responses to “SMB Churn and the Potential Return of ‘Guaranteed Clicks’”

  1. Great subject, and one that re-emerges every now and then. I believe it boils down to the offering and results. Sales reps are often blamed for the infamous “over-promising”, however to make a sale… you do need at least say you are going to get some results or add value over what the business is doing now. You can’t blame all the sales reps when an entire company has high churn.

    The epicenter of great results for SMB’s IS Google AdWords (even though the results some SMB’s receive today may not be as great as in the past, they still are the best in terms of consistency, volume and ROI). The issue is, ANYONE can sell AdWords. Some are good at it, some not. In order to compete with this we are all figuring out “other” avenues to bring in results, besides AdWords. These are often mixed in or bundled, and often have higher margins than AdWords. The issue is… the results overall on the investment get diminished. Churn goes back up.

    I certainly do not know what the answer is to high churn, which is compounded by many, many factors today… not just performance. However, I assure you, the issue is not AdWords. Our account churn is less than 10%, offering a solution heavily geared towards AdWords . The further away from AdWords… the higher your churn. At least that is what we have found.

    Black box approaches, buckets of clicks, guaranteed results will not last. Google, more than ever, is against that and will prevent any company at scale from executing that way. No Google, no results.

  2. Greg Sterling says:

    To what do you attribute your low churn? Performance?

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