Post by account_disabled on Sept 10, 2023 8:59:26 GMT
You can see the robot here coming to get us. So the thing that we need to do is think about how we move up this pyramid, both in the work that we do and how we talk about the work that we do with clients. So, again, that's moving up the value pyramid and tying more of our work to the business problems that these folks, VPs, CMOs, directors, CFOs care about.
Another way to think about this too is career progression. So if you start off in SEO, you might start down here. You might start doing content audits, and you might start doing link building and things like that. Again, very important things to do. But then over time, this also creates a path for you to sort of think about where you can go as you start to unpack a little bit more of how progressively more sophisticated work you can be doing for clients translates to value for these people, because it turns out these people control the budget.
So you might also have discovered that when it's time for renewals or pitching work, that oftentimes there's a big boss and that big boss sits up here, typically not down there. So that gets us to value. Now, when we think about conversions and we're thinking about revenue generated from our work on a client website, we tend to focus on the revenue of that, and revenue is extremely important.
We can't get anywhere if we're not generating revenue or more Phone Number List revenue for our clients. So revenue for the win. You can see it right there. Well, yes and no.
Four types of business value
4 forms of business value
That gets us to the four types of business value. So there are at least four.
Increase revenue
Are you maximising gross profit?
Gross profit pays the rent, not revenue
Revenue - cost of goods sold = profit
Reduce Cost
Reducing costs creates value!
Example: SEO project for client valued at 10x net income, by saving $1k increases value by $10k
Cost Avoidance
Recommendations that allow your client not to spend money in the future
Example: Using SEO knowledge to reduce tech debt and create more financially sustainable structure
Insurance Value
Projects for your clients that cost $x but are designed to prevent far greater loss
There's a fifth that I'll touch on briefly in a moment. But for the most part we can increase revenue, but ah, not so fast, gross profit. We can reduce cost. We can do something which is called cost avoidance. We can help our clients avoid cost. Then there's insurance value.
In my time at Seer, I've found us in projects that do one or more of these things, oftentimes without our team even realizing that they're creating this additional value. Now down here there's a little bit of an economics lesson, and this is called a utility curve. I'll get to why that's important in a second, and it'll help me explain why some of these things over here create value, how that actually happens.
SEO value utility curve
Diminishing marginal utility
Increasing revenue
Let's go back to increasing revenue, gross profit. So questions you can think about if you're focused here. Are you generating more profits for your client, or are you stopping at revenue?
I suggest we take a pause to really consider that. We've had situations where we might be generating more revenue for the client, but it turns out that the unit economics are such that at the gross profit level, the client might be losing money on everything we help the client sell. So even though everything over here has been geared towards up and to the right, better rankings, more traffic, higher engagement, more conversions, more revenue, all for naught if the thing we're selling has crazy shipping costs and the shipping costs are turning out to be a loser for the client.
This person might not be aware of that, but these people might. So you kind of see how understanding a little bit more of what happens at this level can help you put what you're doing here in greater context. So when I talk about gross profit, gross profit is basically revenue minus cost of goods sold or COGS generally speaking.
That's gross profit. The thing to bear in mind is that gross profit pays the rent, not revenue. You still have to pay for the cost of the thing that your client produces, and what's left over is what actually covers other expenses. We don't often think that way when we're doing SEO projects, and we're strictly focused on revenue.
Might want to think about gross profit or asking these kinds of questions, which is a signal. So that's the other thing about this. We don't have to become experts necessarily in our clients' businesses, but maybe asking better questions once we're in the meetings up talking about this stuff with these people that signals, "Hey, I know your business. I understand that there's more going on than just the SEO."
Another way to think about this too is career progression. So if you start off in SEO, you might start down here. You might start doing content audits, and you might start doing link building and things like that. Again, very important things to do. But then over time, this also creates a path for you to sort of think about where you can go as you start to unpack a little bit more of how progressively more sophisticated work you can be doing for clients translates to value for these people, because it turns out these people control the budget.
So you might also have discovered that when it's time for renewals or pitching work, that oftentimes there's a big boss and that big boss sits up here, typically not down there. So that gets us to value. Now, when we think about conversions and we're thinking about revenue generated from our work on a client website, we tend to focus on the revenue of that, and revenue is extremely important.
We can't get anywhere if we're not generating revenue or more Phone Number List revenue for our clients. So revenue for the win. You can see it right there. Well, yes and no.
Four types of business value
4 forms of business value
That gets us to the four types of business value. So there are at least four.
Increase revenue
Are you maximising gross profit?
Gross profit pays the rent, not revenue
Revenue - cost of goods sold = profit
Reduce Cost
Reducing costs creates value!
Example: SEO project for client valued at 10x net income, by saving $1k increases value by $10k
Cost Avoidance
Recommendations that allow your client not to spend money in the future
Example: Using SEO knowledge to reduce tech debt and create more financially sustainable structure
Insurance Value
Projects for your clients that cost $x but are designed to prevent far greater loss
There's a fifth that I'll touch on briefly in a moment. But for the most part we can increase revenue, but ah, not so fast, gross profit. We can reduce cost. We can do something which is called cost avoidance. We can help our clients avoid cost. Then there's insurance value.
In my time at Seer, I've found us in projects that do one or more of these things, oftentimes without our team even realizing that they're creating this additional value. Now down here there's a little bit of an economics lesson, and this is called a utility curve. I'll get to why that's important in a second, and it'll help me explain why some of these things over here create value, how that actually happens.
SEO value utility curve
Diminishing marginal utility
Increasing revenue
Let's go back to increasing revenue, gross profit. So questions you can think about if you're focused here. Are you generating more profits for your client, or are you stopping at revenue?
I suggest we take a pause to really consider that. We've had situations where we might be generating more revenue for the client, but it turns out that the unit economics are such that at the gross profit level, the client might be losing money on everything we help the client sell. So even though everything over here has been geared towards up and to the right, better rankings, more traffic, higher engagement, more conversions, more revenue, all for naught if the thing we're selling has crazy shipping costs and the shipping costs are turning out to be a loser for the client.
This person might not be aware of that, but these people might. So you kind of see how understanding a little bit more of what happens at this level can help you put what you're doing here in greater context. So when I talk about gross profit, gross profit is basically revenue minus cost of goods sold or COGS generally speaking.
That's gross profit. The thing to bear in mind is that gross profit pays the rent, not revenue. You still have to pay for the cost of the thing that your client produces, and what's left over is what actually covers other expenses. We don't often think that way when we're doing SEO projects, and we're strictly focused on revenue.
Might want to think about gross profit or asking these kinds of questions, which is a signal. So that's the other thing about this. We don't have to become experts necessarily in our clients' businesses, but maybe asking better questions once we're in the meetings up talking about this stuff with these people that signals, "Hey, I know your business. I understand that there's more going on than just the SEO."