Valuing SEO/Adwords/social media customers

[DaveC]

My partners and I are looking at taking over some SEO/Adwords/Social media agency customers. Any ideas on valuation? Average lifetime spend with a multiple? Most of them are month to month so not locked in long term but they have been long term customers. What turnover can I expect after transfer?

 

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[AdamMaxum]

Any ideas on valuation? Average lifetime spend with a multiple?

I'd probably pay 3-6x monthly spend for an account comfortably. I have no idea what the 'standard' valuation would be though if you're buying accounts and not an entire company.

Most of them are month to month so not locked in long term but they have been long term customers. What turnover can I expect after transfer?

You never know with marketing clients. The best you can do is look at history and status of account up to this point and see what kind of client they are. If you have to re-sign them under your business it could stir the pot and cause some clients to jump ship because people don't like change. If there is no noticeable difference in the hand-off, you should be fine for most accounts.

I would lean towards simply having the existing company email the clients and let them know "so and so" is your new account manager and if you have any questions, etc.. If you come in and say we're the new company and new management and new rates, it will likely scare some existing clients away.

 

[Andy Black]

When you say agency customers, I presume the clients own the campaigns and websites?

 

[DaveC]

When you say agency customers, I presume the clients own the campaigns and websites?

Yes they own campaigns and websites but most campaigns and social media accounts are managed.

 

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[DaveC]

Yes I would have a transition period for sure and keep using the same team/rates/etc...for at least a few months, although I would look at transitioning some of the work to our internal teams at some point. One of the first things I'll do is try to get them a big discount to sign in longer term (12 months for the price of 10, etc...)

Any ideas on valuation? Average lifetime spend with a multiple?

I'd probably pay 3-6x monthly spend for an account comfortably. I have no idea what the 'standard' valuation would be though if you're buying accounts and not an entire company.

Most of them are month to month so not locked in long term but they have been long term customers. What turnover can I expect after transfer?

You never know with marketing clients. The best you can do is look at history and status of account up to this point and see what kind of client they are. If you have to re-sign them under your business it could stir the pot and cause some clients to jump ship because people don't like change. If there is no noticeable difference in the hand-off, you should be fine for most accounts.

I would lean towards simply having the existing company email the clients and let them know "so and so" is your new account manager and if you have any questions, etc.. If you come in and say we're the new company and new management and new rates, it will likely scare some existing clients away.

 

[AdamMaxum]

Yes I would have a transition period for sure and keep using the same team/rates/etc...for at least a few months, although I would look at transitioning some of the work to our internal teams at some point. One of the first things I'll do is try to get them a big discount to sign in longer term (12 months for the price of 10, etc...)

I guess it depends on the setup, but most clients don't care who's doing the work as long as something is happening that they can see and feel in some way. So the transition of the workers shouldn't have any impact on anything. I would establish a new point person for each client and intro yourself and touch base with each client just to say hello and inform them of the change in contact.

When it comes to rates/money, that's where you're likely going to run into issues. If they are not on any type of contract length right now, getting them to sign onto one may become problematic. A good deal like you said might work, but I would question why you need to have them sign any type of commitment? As long as you have their CC, keep charging it every month as usual and if they end up cancelling stop your work and move on.

Also, as far as how long most clients "last for" - it really depends. From experience though, even the difficult clients tend to last around 6 months give or take. Majority of clients last at least a year, and then you have the forever clients who pay every month and have been for years. I'd say the percentage for my company is 20% churn (6 mo), 40% (at least a year or longer) and 40% (2+ years.)

 

[DaveC]

The longer term deal was more to:
1) Let folks get locked into a current rate if they want, or prepay for a discount. I was going to look at average length of client and offer a longer term option to sign up.
2) Get some additional cash up front from customers to use for additional marketing

I guess it depends on the setup, but most clients don't care who's doing the work as long as something is happening that they can see and feel in some way. So the transition of the workers shouldn't have any impact on anything. I would establish a new point person for each client and intro yourself and touch base with each client just to say hello and inform them of the change in contact.

When it comes to rates/money, that's where you're likely going to run into issues. If they are not on any type of contract length right now, getting them to sign onto one may become problematic. A good deal like you said might work, but I would question why you need to have them sign any type of commitment? As long as you have their CC, keep charging it every month as usual and if they end up cancelling stop your work and move on.

Also, as far as how long most clients "last for" - it really depends. From experience though, even the difficult clients tend to last around 6 months give or take. Majority of clients last at least a year, and then you have the forever clients who pay every month and have been for years. I'd say the percentage for my company is 20% churn (6 mo), 40% (at least a year or longer) and 40% (2+ years.)

 

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[AdamMaxum]

The longer term deal was more to:
1) Let folks get locked into a current rate if they want, or prepay for a discount. I was going to look at average length of client and offer a longer term option to sign up.
2) Get some additional cash up front from customers to use for additional marketing

Okay, makes sense. Get 2 months free for paying upfront...not a bad deal, but might still be too much for some clients. Shouldn't hurt to offer it though as an option. I would be hesitant to increase rates. Typically you don't increase rates from the original price unless you're offering more services or providing higher perceived value, and then it would be a case by case basis...depending of course how you sell your services.