The Cost of Cutting Costs

I own a digital marketing agency (we do social media management, ads, email marketing, etc). We have one client, where we managed to get really, I mean, really exceptional results. ROAS (return on ads spent) is about sixty, meaning if you put one euro in paid ads, you get sixty euros in purchases. Basically, we managed to increase their online sales approximately fifty times in just six months.

One day, our client emails us and tells us this:

Client: “We decided to cancel our partnership, as we think we are overpaying you, and the results we are getting are not worth that. This is our final decision, and please pass all social media login, like business page admin rights, to our new guy, who will be working on-site.”

I called the client, asked what happened, but he could not answer anything.

Me: “Well, you as the company are the owner of your Facebook business page, so you simply remove us as admin and add the other guy you hired.”

A couple of days later, it became clear what had happened.

We had established a really good relationship with one guy in their accounting team. I would not say we became good friends, but we would communicate rather informally and have met each other in various non-work-related situations.

He told us that one of their vice presidents, who is also a shareholder, decided to employ his nephew, who is just twenty and has zero experience in real social marketing, to do their marketing.

The outcome?

After the first month, their online sales decreased by 50%. 

After the second month, by 80 %.

After the third month, their sales went below the point when we started providing services.

After four months, they came back to us apologizing. We signed a new contract, applied our new “account review and reactivation” fee, increased our main fee by 60%, and we are still working with them to this day. We managed to get even better results than we had before.

And the nephew? He stayed within the company, but was assigned to the warehousing department.