💡Understanding Pay Per Lead Conversion Commission Rates in Lead Gen💡

James Dooley: Hi, so today I'm joined with Dan Grant, who's the director at Fat Rank and Promo SEO, and today is quite an interesting kind of discussion that we're going to have, which is how much commission do the business owners need to pay yourself or the company for any of the converted leads that they do on our pay on conversion lead generation model.

Dan Grant: Yes, so it's obviously a question we, as you know, kind of get quite a lot from our clients. Generally we do pay on conversion models, so we know that that's obviously sending the leads free of charge. Then it's not until they convert that work that they have to pay. A lot of the time that can happen within kind of a month or two of us building a website for a client and then they'll say, okay, we've got these few jobs in, how much do we pay for this. Obviously it's at that point we then discuss what that model is. Now generally what we say, and it sounds quite cliche, but the more that they're able to pay us, the more we're obviously able to invest in the site and reinvest into backlinks, into content, into ranking better organically, into getting leads from different sources like Facebook ads and Twitter ads and things like that and different organic searches. So there's a lot of ways that we can obviously improve the quantity of leads. And I think you'll admit as well, our best clients, the ones that have said, okay, we believe in this model, we trust in this model, you've proved to us that we're being sent those leads free of charge and we're converting them, it's now time that we double down and obviously invest in this so that we can improve it. The reason they're our best clients is obviously over the years they're the ones that we've reinvested into the websites and obviously they've seen a bigger and bigger and bigger return on investment each month as a result of that. So generally speaking that is usually our answer. Now that's not to say that some clients will be different to that. Some clients will prefer to be quite conservative at the start and then build that up, or they might say yes, we can afford to pay this, but our profit margins are quite tight. So it is different from industry to industry, which is why there's no set answer for it. But I think typically the answer we'd probably give to most clients is, look, the more that you can give out of these jobs, considering the inquiries are obviously coming in for free, the more we'll generate more of those good quality inquiries for you and obviously be able to build this up and get it to a point where it is really beneficial for both parties, as opposed to something that kind of ticks over each month.

James Dooley: Yeah, yeah, for sure. I mean from my point of view this becomes a very frustrating kind of topic of conversation with certain business owners, because some business owners are very frugal and I'm fine with a business owner being frugal and making certain that they're trying to get everything for the best price possible. But if they see us as being an investment and not as being an expense and they double down with what the model is of what we can do, we can start improving the quality of the leads. What I mean by that is, to generate leads via, let's say, Twitter ads or Facebook ads or Instagram ads is quite cheap to generate. You can generate a quantity of leads, but the quality normally is not that good. Further down the line, the more that they are able to start to pay, we can start to scale it out and start doubling down to create longer form contact forms, to make certain that we're creating VSLs and sales funnels prior to even going to them, so that the conversion is a lot higher. We're asking the person who sees us via organic SEO or via PPC or via our YouTube ads a lot more questions, which then allows us to segment and dissect whether this is a good or not a good kind of inquiry for our customer. And the more that they're able to then pay into us, the more, like you said, we can double down. We can create multiple different websites. The first website we build, we might do a plumbing website and it might be quite generic that does everything related to plumbing. They might come back to us and start saying these leads are not good enough because they're all just like fixing a tap up in Aberdeen and it's a 50 pound job and we cannot pay you much commission. Then further down the line, the more we start working with them, the more we start to realise that wet rooms might make a lot more money for them and they make a lot of profit on that. We can double down and build out a second website or even a third website or a fourth website and specifically target the services and the products that make them the most money. Where if you are frugal at the very start and you're wanting to pay only two, three, four, five percent commissions, that's not going to allow us to spend a load more money in building a second, a third, a fourth and a fifth website. Where if some of these companies, if it was me and I could roll back 12 or 13 years and I had the construction company and I was in need of leads, which is where it all started, and someone came to me with this model, I'd nearly be giving them all my profits to start with. I know it sounds very, you are going to say that because you're getting paid, but I would be, because I would be doubling down on going, I want a consistent flow of quality inquiries that is coming into my inbox on a day by day basis. So if I can use this as a long term partnership with you in being able to achieve that goal, and I can get that, I can be getting more profits further down the line. Obviously I'm going to want them to be making good profit and maybe only then paying 20 percent commission. But if someone came to me saying, if you make 10,000 pound on this job, pay me 2,000. Well, I'm not being funny, I'd be paying 2,000 a hell of a lot to get 10,000 pounds back. It is the best business model I've ever heard of, and that's kind of how we've set it up. We're wanting to deal with business owners that want to thrive, that want to innovate, that want to grow. And not only that, I'm not wanting business owners to go from two vans on the road to 20 vans on the road and having a logistical operational nightmare going, this is going to, I don't want to grow that big, I don't want to grow from 1 million to 10 million in revenue. If they're generating a lot of leads they can just start upping the prices. They do not have to win every single job. They can up the prices, which then can limit how many jobs they are winning, but then they're winning jobs at the right price. But we need to have these business owners investing in us as being a partnership, not biting the hand that feeds them. When we can grow this out together it can work very well, because very quickly if they're not willing to put the money in and see us as being a partner for their marketing and sales growth, we will just have to switch them off, because it is not going to work for us. The amount of money that we're putting in, in building the websites, in the content, in the backlinks, in whatever other platforms, whatever it is, Twitter ads, Instagram ads, PPC, ranking in Google, creating high quality videos of previous jobs that they've done, we need to see a return on investment. We are trying to de risk it for them. We want them to make a return on investment. It is completely no win no fee for them until they get paid, then they do not pay anything to us. But I think it is very important for when people are going, what is the lowest commission I can give you. The minute you came out with that saying, I'd just be like, sorry, you're not the right customer for us. It is us that are being selective in this relationship, because it is not you are a business owner and you can choose what lead generation company you're going to go with. Ninety nine percent of lead generation companies out there, they charge you for the ad campaign or they charge you per lead. Those leads are not exclusive, they're being sold to five, six, seven, eight different companies. So you might be paying 50 pound a lead or 20 pound a lead, but it's been sold to five of your competition. So your conversion is nowhere near as good. You might end up buying 50 leads that month, which might cost you a thousand pound, and not convert a job. The month after, you start to pay for every single lead. For us, you only pay on the conversion, so it completely de risks it, but we are at risk. So we've got to make certain that you're good enough to deal with our leads and that you're willing to pay us a high enough commission out of profits, and only out of profits. Never are you out of pocket yourself, for us to start saying, okay, we now want you to start paying 100 pound a lead or 50 pound a lead and stuff like that. Our leads are completely exclusive real time leads that land into your inbox. If you are good at converting the kind of inquiry that we're generating you, then you should be making good profit and then out of that you pay us a commission out of the profits that you've made. So it's a very interesting debate that we actually have with some business owners. This actually is where certain customers, like you said Dan, certain customers blossom and grow and see us as being an investment and want to work with us in a partnership. The ones that just try to get everything on the cheap, long term it just does not work for us. We've got to be more selective than what they've got to be, because all the risk lies with us. Is there anything else on there, on the commission front, that you can add on to that.

Dan Grant: I'd add to what you were saying there and just mention, obviously we work in a lot of different niches, as you know, so we have a lot of different industries that are ticking over, where some clients are kind of just paying a certain amount a month and some are upping their prices and some even lowering their prices in certain industries depending on what the business position is and things like that. A lot of the time, if those clients are paying more per month, we obviously prioritise them and put more money into them. Like I said earlier about reinvesting, if you're doing that and you're a company that works with us and you see the value in what we're doing, you see the value in the inquiries and you see those jobs converting, if they're able to pay a little bit more they only just get bumped up on the ladder with us. In terms of our niches, we'll say, okay, this niche is paying more now, we'll prioritise it. That priority means quite a lot in our marketing agency where we're spending 100 percent of our time building out these websites, optimising these websites and ranking these websites. So more money and time and effort goes into their niches by doing that, and in turn it just snowballs. A lot of companies will be a bit more hesitant to that, but then they do not see the growth that other companies will do by just being a bit more trusting and putting that effort and income in earlier on with that relationship. That is what generally tends to lead to a longer relationship that is better for us and obviously for the clients as well.

James Dooley: Yeah, for sure. I mean not only that as well, something else that I've not really touched on is that we need to make certain that the clients that we send the leads to are converting, otherwise we do not get paid a penny. So all the risk lies with us. What we also start doing, which is huge for these customers, is that we start to look at their online presence and look at their reputation online and we're trying to also improve their branding online, because the better their branding is online, the better the conversion of the leads that we're generating. So we're also giving them free advice for digital marketing, free SEO advice with regards to, you need to shout and scream about these awards that you've won if you've got some awards. If you've got certain accreditation you need to be shouting from the rooftops about these accreditations that you have. There are lots of other things like, you do not have enough reviews, here's a way of how you can start generating more reviews online that make you look better as a company, which also then means that their own leads that they're generating, which they might be doing their own SEO, they might be doing their own PPC, they might be already using a different lead generation agency, we're not asking them to solely put all of the money in just to us. I would recommend them to do some SEO for their own website to generate their own leads. I would recommend them to do some of their own PPC and use a PPC agency that can generate them some leads, because actually when they start to do that they definitely start seeing the value in what we're doing, because we're doing all of that on the sites that we're generating for them to generate them the leads. Then obviously we can run Twitter ads, YouTube ads, Pinterest ads, everything we can think that might work for them, we can run. But we're also really interested in trying to get their branding to look better online from a reputation point of view so they can convert more jobs, which then means that we can earn that little bit more money and together we can grow.