The real value of a client goes well beyond the first sale. Aside from some extreme cases, most businesses rely on repeat business or growth by referral. It's rare that a new customer only provides a one-of sale followed by a dead end. To appreciate the value of a new client, you need to consider what the “life time value” of a client is. This is different for each industry, but let's take a common industry as an example.

Hairdressers: Mary wants a haircut so she calls June who is a hairdresser. Mary books in a haircut which costs her $150. Now we could stop the story there, but in all reality, if June does her job well, she would book Mary in for her next cut straight away and turn Mary into a regular client. Mary will now come back every 6 weeks, spending $1,300 over the next 12 months. In general, people stick with the same hairdresser for around 3 years before moving house or changing hairdresser. So Mary as a new client is worth more like $3,600 to June. In all reality June should be happy to give us 100% of that first sale, but that aside, if we agreed on 30% of that first sale ($50) does it really matter if there were costs in providing that initial service?

In any event the 30% figure is simply a guide to get conversation started. It's not ‘set in stone' and in all reality some industries will need a lot more work on our part to get a client than others, so the percentage will inevitably be different for everyone.

We spend a lot of time and money on the initial setup of our relationship. We set up web sites (lead funnels), tracking phone numbers, create several ads, and do quite a bit of work for each business to help the phone ring. We pay for all that, but naturally it takes quite a bit of time and money to set up each one of these, so we just need to be sure that there is enough turnover coming in for each client (and we get enough margin) to help recover that setup cost.

We know we can get you business – but if you only want one or two enquiries per week, then the money you make from us is tiny and the share of that money we make is even tinier.

Here's some quick maths:

To set you up, we'll invest in the order of around $3,000 – $5,000 of our own money – plus after that we'll spend money every week on advertising, ad creation and management.

A basic startup relationship would be one where we provide you with at least an extra $2000 per week of new business of which $700 – $1000 per week comes back to us so we can re-invest it in driving you more leads. Of that $700 – $1000 per week, we would throw half back into management and further advertising costs and the other half would go to paying back setup costs and eventually future profit.

At that rate it may take up to 3 months for us to recover our setup costs, but after that, we'll have a workable and proven system that generates income for both of us every week. It's a win-win for us both where you never have to worry about your advertising costs running away from you. You're only ever paying if and when you get results.

If you have a business that can take on more clients, we would simply add more media channels, more dollars and more time into generating more leads for you.

So I guess the bottom line is what kind of numbers are you looking for? And can you manage the call volume? If your average sale is $200, you'll need to be able to manage an extra 10 bookings per week to make you eligible for our program. If you need 15 enquiries to make 10 bookings, then you will need to also consider the time it takes to talk to 15 new people each week. Do those numbers sound realistically manageable for you?

There's a lot of people who ‘think' they can do this.  In the US there are some very large companies like Service Magic or Home Advisor that offer lead generation services but they sell each enquiry to a number of companies to compete for the business – which doesn't work out too well for most businesses. In fact with each lead, every business except one loses out. I don't like those odds.

What we do is a little different. We take on a client one-on-one. Like an ad agency would take on a client. We manage and nurture the relationship and help that company grow – but instead of laying huge invoices on the table for our services which you would pay “in the hope” our work might have an impact – we pay those invoices ourselves and take on all the risk, and only charge if and when we get results. We have to be either really stupid or really confident to offer this. 🙂

In my years I've learned that it's more enjoyable walking alongside business owners rather than working for them. It's like walking with a friend – you never have to be suspicious of their motives. Who would you rather work with? Someone who just wants to get paid for a job (contractor) or someone who gets money when you get money (partner). Who do you think will have your best interest at heart?

We can work with anyone looking to attract online business, but if you're asking specifically about who we trade our time for (where we pay for everything) it's typically the kind of business that has a low base cost, a high profit margin or someone who can get a lot of ongoing business from one client and doesn't worry so much about the profit made from the first sale.

So for example the companies we find are the best fit for our lead generation services are companies that charge for their time as opposed to companies that only sell product.

There's just more room to negotiate a ‘per lead' remuneration (which can vary from $40 to $200+ per enquiry), depending on how hard it is to find clients for that type of business. Remember a lot of that needs to go back into our program where we spend the money to find more clients (and we only get paid for results, and yes occasionally we spend more than we charge – but that's life).

So for example a locksmith may pay $40 per enquiry where they close 1 in 2 enquiries and make $200 on a sale, where a roofer may pay $200 per enquiry where they close in 1 in 5 enquiries but make $5000 per sale.

An online ecommerce site may only make $10 – $50 per sale and they may need 10 hits to their site before someone buys something, so the per enquiry budget would be tiny in comparison and just wouldn't give us enough wriggle room to throw enough of our skillset behind it.