The pay-per-lead model sounds very tempting, especially if you are a startup SEO agency, but several things are to consider.
So, Tim, You had someone make you one heck and then offer. Right. Great. Hello? f in And that’s happened probably a couple of weeks, yeah. and like kept getting the write down to bring up as a question. just to kind of walkthrough So that I feel like I know the answer to the question. But do you handle that, you know? How you Direct You pretty much shoot it down, you know. How do I shoot that down respectfully? Let’s start with the question. But it was the amazing deal someone had for you. to me, for every lead that I bring them through their website. and. Yeah. So my initial reaction is for I guess you’re not receiving anything through your website right now because he wouldn’t be willing to give that up if you were No. So nothing but bring for improvement. I guess. oh, make sure I understand this. So what someone else their website. They want you to review it. What is it like, when they for lead, is it just marketing or what? So about just general Seo services rather than paint monthly fee. Okay. them to invest and what will work for them in the future. instead of doing that, just staying, you know, a set amount for every need that comes to the business, whether they win the business or not, just lead as a lead. Yeah. So I mean, there’s just an eight. So. so many ways to talk about it, but I mean, for example, we might not. know that lead went to the website. You came to lead and contacted them somehow. you know, like, how am I going only to gift paid for, contact form leads or leads that are tracks through this one phone number or something like that, you know? I mean, it might not be the decision they make now. but it could be the original lead source that’s how they found, you know, but maybe Yeah. to of marketing tactic remarketing or something state in front of them, their social media account because they ended up following them that that was the reason they ended up becoming a customer That’s? Seo is like a long term that you’re building up. so, you know, what you’re doing now? it might get them only later, but they might not look like them directly. Yeah. Exactly. That’s Right. And For you’re okay. The thing that Let hear yours we got that look on your face. I think this is a basic question. So I’ll continue the conversation because I think it’s kind of conversation My, my former boss, is a mentor of mine to this day I respect and look up to, I would now have started my business with that is not only, like input that, like, cheer me on frankly, as you do it you should do this. Don’t be afraid to do it. if he had, like, this is divestiture or set to have to stack, he eventually sold. his Seo Agency for Much money. Okay. So he developed the agency that that work for into something that someone wanted to buy any did well, So he knows his stuff. One of the things she knows and whether rings like about him is how to run a business. Mh. Right. He has got an NDA. He. He’s a credit guy who placed NFL Madden is x Xbox because he wants to do the management. There’s a feature within L, Madden where he football ball. You’re managing the team. That’s what he likes. Drop plain lemonade stand, and that was rolling up. This is who he is. Right? Yeah. And so when he left, After settling the agency, you’ve developed, you know, check a change. If I had done it differently, he said I would have done a price per lead model where you get money based on lanes. Interesting. in that much, he made much money doing it not that way. Yeah. But it seems he was like, I wish I would have done it. different now. I don’t think I’m trained, trust to say the following He wouldn’t start a different business because that’s guy is afterward. The other business that he started is Amazon fulfillment Mh you. that is priced based on sales on Samsung, So in a fab p is doing a price per lead business model that Yeah. So some a huge respect who did my way made off a bank wishes she wouldn’t have done it that way. Discussed. What are interesting secured events? there. Yeah. I’ll you put a price tag on the lead? then the first question that is exactly right. how much is it worth because you’re taking a ton of risk? Yeah. and I think the cost per lead for a financial advisor is much different from the carpet cleaner, Right. Yeah. Right. All right. So one lead. could be. and how do we quantify that? Lifetime time value? first month Right. Right? For a financial advisor, the money they’re making is a percentage of the management they’re. Right? Well, they’re financially incentivized to grow. That’s their percentage stays the same, but their fee grows. Right? Yeah. If you’ve just never led, Where is that value calculated for you? the first month, Or six months later, a hearing later forever in, one percent is always, you know, how does that work out it had you keep up with it. Well, that’s the second question. In terms, you are saying this too, like, what is lead? and can you objectively quantum I and measure that in a way where it is, is there is no debate Right? where it’s like, there is a number that we have agreed to. That is what you owe me. I’ll stop no ambiguity. Because it’s form submissions, we all know that the majority of our forms are spam. Right. Especially you’re getting started. Right. So do you get paid for those? Well, he’s not going to wanna do that. Does he only get paid? when he signs a call, What if he’s a crappy salesperson. And you send him a ton of leads, and he can’t close a deal. Right. All right. What is Yeah? What if. Yeah. I mean, so these are the kinds of questions that matter. Now I also say that there are entire industries built around this premise. Like, not far from me, there’s a company called res ventures, and they built an entire empire doing this, and they do it for Directv, for security Security systems for all kinds of their whole premise and they developed all system to build this thing. Right. And. If you’ve seen them connect a movie theater on their campus like they are doing well. it’s also an incredibly aggressive environment. which is the end of which you must be there. Right. And that’s the other thing. It’s this, in a way, is almost like affiliate marketing. Because with an affiliate marketing, zero, I know some people who did R Roku, Roku systems. Mh. And an affiliate relationship with Roku every affiliate every Roku system they sold through their website, you can give them that more money. And they had an exclusive contract written up to know what would be counted as a sign up in they had some transparency of And they could measure and then. That number should match with Roku, who had and Roku sudden check, and it’s a big agreement, and they did well with that. They also up some their because it was doing well. Wow. But. they. With the affiliate relationship, perspective towards Seo. you have to be aggressive. And what I say aggressive. I’m saying a little bit on the darker side of Seo. Mh. because We if we’re. If we are doing Seo for a business and growing that brand, we must ensure we don’t burn that website. Yeah. we can’t do that. we can’t burn their website. We can get the best website band. I mean, it happened to the I’ve done before, but it’s not full. But. with affiliate marketing, frankly, a burden that website down, get as much as you can out of it and then build another one. Because it’s just by the means for the income, and that is what this system is new. I have course pitched all the time, especially in the legal space. we will you will they do regard they get the leads, and they charge people for you will pay us a hundred dollars late. Well, their game they know that so laser worth millions of dollars. So leads are far worth nothing, but the client’s gain is if I spend thousand dollars to get ten hundred dollars leads, and one of them is a million-dollar client. I’ve I I’ll do that for. Well, Right. But usually, I spend more than ten to get that million-dollar client. So they end spending, you know, hundred thousand dollars to get one one million dollars client, which is still a great investment, but you have to have a hundred thousand dollars take with that. So there’s a whole industry this way. that the What do you say? I mean, it’s. this is just what Google does with paper. their customers are paying an auction price for Sounds. whatever they’re willing to end pay. So guess that’s kind of where you start to put some evaluation on it, like, if you were to run a keep it date. t c campaign You know what those keywords for was Generally, the cost to get those leads through google puts a marketplace value on. if just go with that. That might be a way to price it out. Yeah. too I would increase it by twice. I would double it. because the risk that you’re Yeah. are you getting right? Sure. And frankly, the expenses you’ll have to spend to be that aggressive. Yeah. Right then, you’ll have to have upfront cash. to do that knowing you might not get paid for a few months. Bye. And then they’ll have to be. completely transparent the grain upon what is lead in a way that miserable by both parties. that and you’d have to have another cloud agreement, yeah. I mean, in my worth hiring a lawyer to write that agreement. because I mean, No, I will talk down about this. Right? someone a couple of years ago contacts me with a great idea. I’ve got a great for David. Yeah. He had just successfully Vc funded a software, a piece of software. It went for a series see, like the third Vc funding round. So it was doing great. He wanted to develop something new, And he said, I will. give you in the company If you do, work For me, for free. that you will own part of this company. because normally, I’d be like, No way. Yeah. But because this guy just did that with another company and what I called my friend who worked for node, It was like the employee never two at node And after that, she worked for slack. Mh I called them her. and said, What do you think? And she explains to me about equity. Because it was the big day, I didn’t understand what to pay them. I was going to pay. I don’t know what that meant. And I wanted to be clear. and she’s, you know, she gave. And some guys wanted to write it out. the written agreement has a timeline. at this point, you are vested, and that is it. you can walk away the day after that, and you will depend on that percentage of the company at that point. But at that point, you’re going to own ten percent of the company later that will be diluted Sbc is getting involved. If you might end up. with five percent of the company Mh. because these are like, Okay. That guy owns ten percent. you want my billions of dollars. He now owns a half percent. Yeah. Bye. And she said you need to price never to want to lose money on this deal. working for this guy free if nothing happens. And two, understand what you’re getting. and it, if you will, for half percent of a billion dollar company might be worth it. Right. But you don’t know. will it fail? you know, know? So she. So I had this document written. Great. I work for a year for free. At the end of the year, I added it with And said, okay. End of my year, I’d like to cash out my equity or enough cash out equity. I would like to claim the equity and move on in. And he said, well, let’s get on the phone. which is. This is right, like he is marketing guys. Yeah. the way he said it made me go like you. I reviewed The document that we had stating had equity in the business. and he never signed it, oh. Oh, man. No-fault. Now. own phone never signed it. I never checked. I just to sign it and the software is to decide to have no record concerning it. And so I shouldn’t. call. Going to waste me more money. But, like, yeah, I’m not going to waste. I just said, no, it’s lost. I lost the. and then my friend’s advice is only to do what you are willing to lose. Yeah. like, okay. So put away a few hours over the last year. every week. it didn’t hurt me financially. I didn’t have to pay cash. to do this, like I didn’t have to pay riders or something. the do it’s only time. Mh. and it was at a time when that business was a little slower. So it didn’t like takeaway away to pay plants. But. Yeah. Like. Yeah. yep. That’s up. that was a waste of that. And I don’t own the company still active, and I don’t own don’t thing. I do have control of several of their assets. Mh. I have a nice day. Mh. Right. So. Anyway, you got it. You have to run it out, make sure like, yeah. Based on that and in just the fact I mean, working at real estate attorney for twenty-three years. And so, like, a lot of my mind, it’s like, you know, the specific details of what, you know, that you’ve got things, you know, that written out and sign to me, I would worry is that it’s one thing if you’re looking at doing this for multiple clients in the future. Still, for just one, I would look got it and decide, you know, it’s all of this preparing an upfront work worth it for one client that is it going to be worth it? Ceo. that would be a question to ask. Because I mean, like, you know, david would say right out and figure out how things are done that’s going to take quite a bit of time and And you know, as far as the leads and all is it going to work out? Okay. you know, are all of your assumptions about things. Correct? So. Yeah. No. go back to my mentor. With more information about what he wished you would have done, he said. He wishes she would have done a pricing model with a finite fee to set up that covers initial expenses and then charges for the lead. Yeah. A setup fee. Yeah. That fee. which is pretty standard even if you do, like paid search, like, that set up your account. and So that would be another option. But. you know, getting on the same page with the client on what this is the standard by which you’re paid and written in such a way where there’s no question on this is a situation where you get paid. Yeah. you know, one every month to sit there and argue with you about what the lead is Right. Right. Well, none of these emails are perfect. They never call them. Yeah. Or does that mean Yeah? You shouldn’t be penalized if he didn’t bother to call a claim because he didn’t think they were going to be good. When they all You know? and the best one you would want, like, call on other phone numbers that you’re working with because isn’t it a David car-like record and the call on they record things. Yeah. Color course, but then are you it for how many hours debating whether or not this call sounds a good rate. By why did you not call it well? I didn’t have time that day. Yeah. You get. You pay me for that. Well, it’s lead because I didn’t call. Yeah. so those that are there have to be something. Yeah. I wouldn’t make Any stipulation whether they landed the lead or not. whether they sold them or not, you know, if you’re baby her lead, maybe for lead your sales ability has nothing to do with. Yeah. But you get a lead or not. My biggest concern is if I’m going whether get paid up upfront for the initial investment, even to cover maybe some copy for a year. and all of that. Right? Like I get paid upfront or if I make me invested myself, and they’re paying me per they can pay me per for three years. and then what. Then they’re good with me. They’re done. They’re happy with the leads coming in, but they are well paid. currently anymore. Or how does that work? Because what I’m doing is ever evergreen. Right. Tom ten. optimization, it doesn’t mean just there’s a point like a rate ad. Yeah. Hello. Right? In the event, you need to have a point where you’d say Do we change the way we’re good pricing at this because it could come to a point where it is too expensive for it. Yeah. Exactly. do you wanna perpetual, you know, continue to pay a percentage of your business. or do you want me and I think I heard that. I have to what I submitted to you. But you know, or do you want me to help you grow your business at a fair wage for myself? so that I Can help many small businesses like yourself. Yep. Oh. and I’m not looking to take a chunk of your business. I’m Not an investor. you know, like, I’m a developer on the designer. I don’t know how much. you, right; I’m not an investor. Yeah. you know, if. And this is a financial investor. I’ll say sorry what? pay me a fairway. help me get other clients by referring me. be part of my case study. So people how great I am. and then on invest. because of being profitable. don’t have money to invest. Yeah. Ten. that’s. So it if it’s a financial one as well, I mean, like, David, had said earlier, that has a lot much longer life for theirs. When they get a lead, it’s going to be worth off whole lot more. then something that, you know, that may have a shorter time frame on I mean, once typically once you get a financial advisor, we don’t change unless that you just have you don’t something happens. You don’t like each other. You just don’t feel like they’re doing. a good job. I mean, pretty much many people get a financial vibe with them unless something comes up. so that leaves it’s going to be precious to them. Mh. And also, like, they each client. It’s going to come on, like, their monthly client. So how many are there a point where they’re going to say, okay, we don’t want to grow as fast because we’re on the air capacity? Now we need to fill, you know, spend more on hiring or whatever before, you know, what are they capacity? Yeah. Right. That’s true. And that it reminds me if something miles, my you to say, too is he was afraid of doing it because While you had to pay monthly clients, what he afraid would happen is that nothing would happen to the paper client every month. because why would you do effort is something that might pay off when you can, or we already have obligations put effort into clients that are already paying. And he was just a difficult guy where he’s like. I’m not going to get paid did not do work. So I’m going to do our for clients first. Does that mean this guy gets left over time of mind? Yeah. you know, I’m not incented. I mean, I’ve incentivized it. Yeah. If it’s successful. You’ll pay me, but Ultimately, these people are already paying me, so they get priority. he was like, I don’t know how I would do it, then where the whole paying upfront is a setup see came from in his. Mh But like, does this kind get you access to his books to how much money is making. Like, where do you verify this? Yeah. that’s me. the big printer, like if you’re paying for lead, you’re going to pay the x dollars lead. For instance, for a percentage of the signup, x. always have to be a paper out of Papers closed. Right? knowing that Can, you’re going to have to pay me that dollar amount per lead even if it’s a crap family. Knowing that somebody’s of these leads is going to be great. making truly life turn. But you got to pay me a bad leach too. Mh. Yes. I can’t control the context. I’m that send pampers maybe you be a real sure. You know, you could cyber every day, and five dollars fill out this webform getting make a hundred dollars from that web or. But like, you know, that would not be. Not something we would ever consider doing. I know. But So what it is because there’s an investment back to being an investor was there’s an investment all my time. even my dollar if I’m not being paid up upfront. I’m hiring people to work. Mh. if there’s this relationship commitment. then what about a price per lead plus equity? Set about the option. there’s a long-term partnership. It’s not that you can’t pay me per lead. for the remainder of your business, that’s perpetual because I’m doing work now. It’s also going to bring leads later. that’s the idea of you. And so have that plus I have equity in the business, so that if you That that almost covers you know, The the gain that I’m providing financially for them by provided them with leads that close. So the better leads that bring them. the more that close more they plug further business, the more we all gain. and I have a piece of in a pie so that there are more incentives for me to work for this. equal amounts to other prepaid clients, you know, that exposure to liability as of a code owner of the business let’s say he is no financial planner the exported money from this clients are liable? you need to make sure you’ve got some Eon fundamentals scenarios and a or something to cover that if that’s the case, that’s in-laws and all that stuff. Yeah. Be careful about that. You might have to have protections in place because you might have to know how many clients are publicly available this information and he’s even ethical are they going to share with you. Yeah. right such a regulated industry top for that industry is it’ll be Yeah. You’re going to pay a finish to that. Yeah. Right? any approval process of getting something approved? Yeah. But also, as he built it as his business grows, the way here his reputation is going to grow in his the value of the leaves you’re going to grow because he going to he’s going to start bringing in more valuable points. Know what link she guys. Let’s say, day one. It’s his. Let’s just say he hasn’t done anything. He has his first client. That first client may be worth a small amount, but a year from now, when he’s got a lot more experiencing a lot more reputation, those new clients will be worth more. in the long term and from Yeah. But that’s a good point to write in some sort of those the value of the lead. Yeah. I think it’s been a business for thirty or forty years or something. willing credibility. It is, guys. I would say part of that then would be the online credibility. Like, if you have been doing it is a hit has most of his business come from kind of inverse in contacts in and networking And what does this online reputation look like, and is that what needs to be built? to get the Yeah. Yeah. and the reviews and all of that, Right. Yep. So if you have any other questions or Guess, I will share what I do. Go ahead. So all right. I feel like I’m a shared employee of my claim that they don’t pay me a full-time wage. they share me with other clients is, you know, like if I were a the Cfo, I’d be a fractional Cfo. A fractional that chief marketing officer. Right? Where you are sharing me with other people, So as an employee, I should get paid a fair wage. Right. He couldn’t bring someone into his office to pay. Only if that person generates leads, So why is this relationship with you Like that. No. I think you’re asking some good questions. But I handle guarantees from my clients. Because this is a guarantee in the way, you have to have a guarantee. If you guarantee yourself. You have to guarantee you’re going to get some least this person. since you get paid, Right. Right. And I explicitly say my contracts, no guarantees. I can’t guarantee anything. These factors we outside like tomorrow Google shuts down or getting search. I can’t predict that. Yeah. you know, Google does a super huge algorithm shift to it. Do everything differently? I can’t predict that. your website goes down because you bought. Yeah. Your domain name gets lost because you forgot who owns it, like, these are things I can’t control. Mh. But I can’t get to the guarantee. Oh, I can’t guarantee I will work hard. So I go to all my clients. I say month-to-month contracts are all I asked for. To you fire me at the other month You could hire me for one month with fire at the end of that month. If you want, if I’m not doing it, good job, Yep. You hate me. Yes. Yeah. if you’re if you don’t think I’m doing everything I promised r. You can find me too much. You can fire me for six months. You can fire me for two and a half years. you can find me any month you need to. So I am now incentivized to do good work for you if I stick around, So the incentive for me is to work hard or let me go. And so that is my incentive to deliver those late. Just because I don’t, good. Then you can find me at the end of any given month. Now, I will ask my clients to give me six months. Right. It’s going to take six months for this to work. But theoretically, they confirm me to mention it. And that’s fine. That’s where agreements are written, and that’s the best guarantee I can get. you don’t have to pay me for a year of Seo. Even though, Be honest this it’s going to take a year’s worth of hard work to make this work. But You can find me after two months if if if I don’t work with t well, If. you know, you’re not happy with what I’m doing if the quality of the contents is terrible. here. if you. The pretty reason I want you to decide that you’re not going to do Seo anymore or going to move all offline or whatever. You know, you whatever environment me, And that’s a guarantee. the guarantee is you can get out of this. quickly with no harm, And I know I’m going to myself professionally for this. I will give you access. two analytics, I will give you access to all the things I built for you. They are yours. You own them, And I will give you access to that stuff. If I’m paying for service, like, call rail, I let you take that out. You can just transfer that you keep using it. interrupt But But But Now the guarantee I’m offering you is on really better work hard. If starts lesson and off You’re going to see the results, and you’re going to be like, you know what, david. you have done Okay. Okay. That’s the guarantee. And so I’m not prepared to do a paid per lead situation. But I will promise you that I will work hard and find that business soon? You can check goodbye. and you could find someone else, or you can do something else like that’s up to you, But my job is to prove that I’m doing well. That’s why monthly reports are so important. Right? That’s why we focus much on conversion tracking and conversion, quality, and so. Yep, because I want to start showing them what I’m giving them quickly. Yeah. that’s why people write this way. because I went real quickly to show that I’m delivering value. I know that they get twice as many days as the first month as the previous month. because we started someone call tracking, and now they’re getting leads that they did know they were getting. Is that this result of Seo not really? But now have instantly double the value Right. And I know I keep doing the field they’re going to get more. But, like, you know that that’s how I approach it. And Yeah. I think you know, pointing out that I don’t know. Just the ethical and go that to like, I could do the same thing with this guy. I could turn on call tracking. I optimized the form on his website, and I could start making money right away. knowing that that’s not the result of Seo. Yeah. I just refuse to operate that way. Yeah. Right. Yeah. this like that’s what makes. You know, knowing that I’m truly properly helping somebody. not taking advantage of the situation. Yeah. It’s a great question, and so many people have come to be with really great offers. a bit good. I mean, I got clients who have made, like, I’m a rounding error in their marketing budget. They got company in, And you said you wish I would have gotten the percentages that. I’d have a lot more money. But. time? kind find not, like, I don’t think I would be able to do as well with that. I don’t respond to that kind of pressure very well. Yeah. Some people might, but it’s not to say that you still can’t Have a pricing model value. Right? just to straighten out the gate, this is adaptable to any industry. Yeah. It’s about the value that you’re delivering, and still, what does a lead mean to that? how valuable is it to lead to that? Right.