Performance Marketing and the Pay Per Lead Model

Today’s video is all about the Pros and Cons of Pay Per Lead Performance Marketing.

As an influencer in the performance marketing space, I think it is essential to be upfront and honest about the negative sides of PPL equally to the positive.

While the positives outweigh the negatives, It’s important to know both sides before diving in.

So let’s get straight to it 👇

The Cons of Pay Per Lead

1. Hard to Land a ‘Whale Client’ :

What do I mean by a ‘Whale Client’? 🐋

I mean national clients with a vast B2C audience and with deep pockets.

If you’re lucky and land a ‘Whale client’ off the bat, you could make 7-figures with this one client alone!

"I've been through a ton of courses that teach how to get to $100k per month, but Dan's pay per lead model is the only one that I've been able to do it with and I did it with 1 Client."

Matt Milne

Entrepreneur

When first starting Pay Per Lead, it can be hard to land a national client when you have no testimonials and little reputation in your chosen vertical.

To combat this, try asking your current clients if they would be willing to switch to Pay Per Lead, or offer a lead based trial to new prospective clients.

See 3 Ways to Charge Clients For Your Leads for more tips.

Practice makes perfect, so keep fishing, and you will catch a BIG whale client. 🎣

2. Facebook Ad Issues

Unfortunately, if you are in the Facebook Advertising game, you will probably come across a time when Facebook has disapproved an ad or shut down an entire advertising account.

Trust me; it happens to the best of us.

Luckily I have an in-depth article on how to fix these Facebook issues that us advertisers have to face.

You can read it here 👉 Facebook Banned Accounts

3. Profit Margins Are Thin at First

When you’re first starting in Pay Per Lead, your profit margins can seem thin.

Remember, you are building a sustainable and profitable agency, and not everything happens at once.

4. Clients Can Stop Ordering

Performance-based marketing requires thick skin.

A client could order 100 leads from you one week and stop ordering the next.

In our program, we teach how to deliver exceptional quality leads that keep the clients ordering. ✔️

5. Hard to Get Paid Upfront

How you get paid by the client comes down to how you position your offer.

Ideally you would have your client agree to pay you upfront each week.

Worst case, you agree to be paid a week in arrears and put the advertising spend on your credit card.

Pros of Performance Marketing

1. Easier to Land Clients

Trying to sell a 6-month retainer contract is hard work.

Pay Per Lead is an offer that converts and is an easier sell.

✖️ NO contracts.

✖️ NO complicated monthly reports.

✖️ NO SEO.

If the client ordered 100 leads a week, then decided they don’t want to use your services again, there would be no hard feelings. Simply move onto the next client.

2. Higher Profit Margins

Once you get your ads dialled-in, you can make higher profit margins with Pay Per Lead.

For example, you can make 7-figures from one national client! 💸💸

3. Less Work

Gone are the days of being a “Jack of all trades”, for your clients.

With the Pay Per Lead Model, you only need to focus on one thing: generating quality leads!

4. Client Relationships

With the Pay Per Lead model, clients treat you like a team member instead of just another agency.

Leads are the lifeblood of their business, and if you can deliver high quality leads consistently the relationship benefits both parties.

5. Frequent Flyer Points

Not many realise this little perk.

If you use your credit card on your advertising accounts, then you can rack up tons of frequent flyer miles.

After all your hard work, why not treat yourself by taking your family away on a free trip using your points? ✈️🌴

6. Multiple Traffic Sources

Don’t put all your advertising eggs into the Facebook basket.

In our program, we teach our students how to diversify and advertise on multiple traffic platforms such as Youtube and Twitter.

With the Pay Per Lead Model, where you advertise is up to you.

Thanks for watching.

If you want to learn how to run a profitable Pay Per Lead Agency and switch over from retainer contracts, then how about we set up a time to chat

You can find out more about my program here and how to set up a call. 📞 👇

Video Transcript

Hey there, everyone, it's Dan Wardrope from Flexxable.

Today I wanted to talk to you about performance marketing and the pay-per-lead model, right?

For those of you that don't know us, we run a pay-per-lead training program, and in that program, we teach agencies to transition from retainer-style contracts to selling leads on a pay-per-lead basis.

The difference between what they sell they sell them for and what they generate the leads for is their profit margin.

So it's very much performance orientated. Okay?

And today, I wanted to talk to you about the pros and cons. The honest positives and the honest negatives to do with performance-based model. All right?

So let me start with the negatives because even though I'm a big proponent of pay-per-lead and it's changed my life, there are some negative aspects to pay-per-lead. And I wanted to run through them with you just so for full transparency if you're thinking about making the switch, all right? 
 
 So firstly, it's hard initially to land a whale client. In a lot of my marketing material, I talk about generating hundreds of leads per week, even 100 leads per day, and we do that ourselves as an agency, but it takes time to be able to get those type of clients, right? 
 
 You're gonna have to start at the bottom if you've got clients already that might be interested in switching to pay-per-lead, then you might wanna start with them on a small scale, prove concept and then go out and sell that concept to the bigger clients in the market. 
 
It's difficult to start and just hit the ground and be doing thousands of leads per week. That takes time, and it takes skill and it takes feedback from clients on quality and all that type of stuff. So I need to be transparent about that. But once you get it dialed in, oh my goodness, it can ramp up very quickly. Very, very quickly indeed, to the point where you'll be able to build a seven-figure agency with one client alone. And it's exciting when that happens.
 
 Second thing is Facebook ad issues. I don't know whether this is well, I know for a fact that any industry that you're in, whether you're running client leads on a retainer basis or on a pay-per-lead basis, or if you're in the fitness industry or if you're selling education products or if you're in e-commerce, with Facebook, there's compliance issues, there's ad accounts getting shut down. And there's no rhyme or reason to a lot of this. 
 
 So if you are thinking about getting into pay-per-lead, and spending a significant amount on Facebook, then you're gonna come across these issues. 
 
 I don't think it's specific to the pay-per-lead industry but it does happen, and that's why I wanted to tell you about it. It is difficult and it is painful at times, but there's always a way around it. And of course, you've got other ad networks, which I'll touch on in a bit. All right, the next negative is profit margins when you begin with, as I said, the smaller clients are sometimes thin. 
 
 Let's say you're getting paid 50 bucks a lead in an industry, a lot of the time, it's gonna cost you roughly 50 bucks to generate those leads when you're starting out. And a lot of people become disheartened when they're like it's not working. I'm not doing enough volume of leads and I'm not making enough per lead. And that sometimes happens and it's not unusually but again, Rome wasn't built in a day. 
 
 You're trying to build a sustainable, super profitable agency here and you can't expect things just to go like that out of the gate, all right? So be prepared to be struggling a little bit with your profit margins when you begin until things get dialed in. And it takes time, that's what I'm trying to say. 
 
 The next negative, clients, if they are unhappy with the lead quality, and they're not getting an ROI on the ads, then they'll switch off like that. They'll order a week's worth of leads, and then they'll just stop and basically, you've put a lot of hard work in to be able to building the funnels for them and all that type of stuff and then they'll just switch off if they're not getting the ROI, so you have to be ready for that type of rejection. 
 
 You have to have some thick skin because this is performance-based marketing, all righ? If you don't perform, you don't get paid. And we'll talk about the positives in a second but be prepared for this to happen. 
 
 The next one is sometimes it's hard to get paid upfront. I would say 75% of our clients in my agency, Flexx Digital, pay upfront, and that's just the way we've positioned our offer. Some of you might not be so confident with selling the pay-upfront model. And if you're a bit nervous and you're not great at sales, and you haven't got some case studies and some proof, then some of them are gonna want one-week payment terms. 
 
 So you're going to be basically delivering the leads and you could be waiting a week to get paid. The good thing is that you're putting your credit card on the advertising account and there's 30-day billing sequences. 
 
 So it's not like the money's really coming out of your account, it's just you're getting paid a week later. 
 
 o that is another negative that you sometimes might experience. 
 
 So I wrote a little list here of the negatives, and that's all I could come up to. If you've got other things that you wanna discuss, then post below this video you've got any thoughts or concerns and I'll try and address the other negative things that you might be talking about but that's pretty much what I could come up with. They're the major things. Let's move on to the positives. And this is where it gets exciting. 
 
 The first thing is it's way, way, way easier to land clients. Pay-per-lead, performance-based marketing is an offer that converts. You try and sell a six-month retainer contract doing web design, a bit of SEO, some funnels, some copywriting, you try and package all of that up and sell it for five grand a month, or whatever, it's a really difficult sell because the client is not getting, can't see the results there. 
 
 It's obvious, right? But if you say to the client, here's 100 leads, if you like them, then you can order again, if you don't like them, then we'll part ways. 
 
 That's a very strong offer and it's an offer that converts, and it's very easy to get in front of prospects if you kiss a few frogs. So that's the first thing, it's easier to land clients. And it's easy to transition clients and this is really powerful as well. 
 
 So if you are running an agency at the moment, and you have clients where you know what their cost per lead is, and you know about the quality, and you know roughly how things are going in the campaigns, and you know that it's working, then it's so easy to go and create some kind of a brand in that space, and then sell that brand and those leads to either the current client, although I wouldn't always wanna recommend like losing some retainer income that's coming in, but you can sell the leads to their competitors.
 
 This is business, right? So it is very, very easy to transition clients or to transition a vertical from the old way to the new way. And that's quite exciting for me. There's also more control. So the way we teach it, teach pay-per-lead and performance marketing is to be able to, if you're delivering leads on a one-to-one basis with a client, or through their website, then we build all of the funnels offline, and attach them to the client's website as a sub domain. 
 
 So the client has no control over anything. They just get the leads and they work the leads and they close the leads. They don't get to mess around with the funnels. And the same goes for when you build a brand, which I'll touch on in a minute. So you can actually build a brand and then sell leads to multiple clients from that one brand, and that's a big positive, but again, there's more control. 
 
 My point is here, the second positive is that there's way more control and you don't have clients messing with all that type of stuff. Next thing is higher profit margin when you've got things dialed in. 
 
 I mentioned before that you can build a seven-figure agency with one client. You should be making roughly 50% gross profit on that margin. So let's say you're billing $1 million a year, you should be making roughly half that in profit margin. 
 
 Then you've got your overheads and all the stuff that comes out of that 50% but that's pretty significant profit margin, and it's also extremely scalable. The next thing is there's less to do. There's less to do. All you have to worry about is generating leads through a funnel, and writing ads and generating leads, and tweaking the funnel. That's all there is. 
 
 There's none of this doing a million things. You only have to be good at one thing, which is lead generation, which means you can be a master. You can become a master in a specific vertical because it's the only thing you've had to focus on. 
 
 Forget website design, forget copywriting and doing copy on people's landing pages. Forget email marketing, forget all of this type of stuff that a lot of us marketers are used to selling. It's just leads. 
 
 The next thing is the clients love you. If you can help grow their business via the leads that you're generating for them, then they will honestly go out of their way to make you feel extremely special, and this has happened to me time and time again. 
 Multiple swish dinners out with clients, multiple bottles of wine being sent to my house. Holidays. All sorts of cool stuff that's offered, like trips to the race track, trips to the races. 
 
 We get spoiled all the time from our clients when you've got that great relationship because they think of you as a team member, rather than an outside agency. You're an integral part of their business because let's face it, leads are the lifeblood of their business. 
 
 And when you can get it dialed in, the world is your oyster. 
 
 The next thing is frequent flyer points. This is a pretty cool one. Not many people realize this but if you're building your own brand, or even if you're delivering leads one to one with a client, every single time you do it, you have your own advertising account that the client doesn't get access to. And that means it's your credit card that's going on there. 
 
 If you're spending a million bucks a year on ads for all your pay-per-lead clients, that means you're flying to Australia three or four times over business class, or even first class with those points. And that's a significant benefit. 
 
 You can also cash in those points for money off your ad spend, you can buy wine and all sorts of stuff with those points. So it's an amazing little perk that I actually geek out a little bit 'cause I live in the UK and have family in Australia, so that's been huge that I can fly my family over business class multiple times a year if I wanted to. So that's another nice thing. 
 
 The next positive is that you can build brands that have a sellable asset, that are a sellable asset. 
 
 So let's say you're in the car finance industry or any industry, you can go and build a brand, a lead gen brand in that space and you can point traffic to that brand from YouTube, Twitter, Facebook, whatever, and then distribute the leads to multiple clients from that brand. And that has value. 
 
 That brand has value, especially if you give it some personality, and make it a little bit different to what everyone else is doing in the market. And not only that, you can take on multiple clients from that one brand, and you can also, if you're good at SEO, you can build an organic presence for that website, which will me that the leads coming in are free and also very high quality because if people are searching, then they're scrolling past all of the ads and then they're finding the organic search results. And not many businesses out there are doing a very good job with SEO, so if you're in SEO and you've got skills, and you've got clients, then this is a really good model for you. 
 
 And the last thing is multiple traffic sources. If you're trying to convince a retainer client that they need to do YouTube ads, and they need to do, YouTube ads, for an example, it's probably gonna take them six months to go and get a creative done that they're happy with that you can then use on YouTube that probably won't work.
 
 With pay-per-lead and having a brand and owning all of the creatives and the funnels and everything like that, we teach how to get a YouTube video up in a week, less than a week. And with lots of variations and pointing traffic to your funnel and your brand very, very quickly, which means that if Facebook goes down, or there's problems over there, your cost per lead's getting too high, you can go over to YouTube. You can do the same thing with an advertorial funnel on Twitter. You can use the Display Network. 
 
 You can look at stuff like Yahoo Gemini or Taboola, there's so many traffic forms out there and it's kinda like pay-per-lead, once you have an offer that converts in your industry, then you can very quickly point other traffic sources to that funnel and that's how you can scale even further. 
 
 So it's quite exciting when you've got a client that loves you and you've got an offer that converts and you've got a cost per lead that's dialed in because you can scale it to the moon. 
 
 All right, so a few positives, a few negatives. 
 
 Hopefully you'll see that I'm being pretty transparent here, and obviously, the positives far outweigh the negatives. But I wanted to create this honest video for you so you get the full picture. 
 
 If you're interested in finding out more, then you can obviously book a call with our team or myself. There'll be a link below this video somewhere. I hope to speak to you soon. 
 Take care.