Question
Hi everyone,
I'm a Google ads feelancer with just 2 clients in a construction niche, I don't do SEO but only PPC ads on Google/Bing.
I wanted to ask for your opinions on a unique situation where one client of mine (minority co-owner of a relatively successful business) wants to get involved with helping me get OTHER clients in the same industry, just in different cities? Essentially a salesman, and I'd likely pay him only comission per client.
He's asked about it twice in the last 4 months, and I think his motivation is that he's somewhat tired after a little under a decade with his current business (and possibly with his less growth oriented co-owner as well) and likely wants to explore other pastures, he's originally a tradesman in a niche of the construction industry. He might also be somewhat bitten by the guru/passive income/scale/location independent bug.
I'm actually open to his help, as it would free up my time to focus on other ventures as well as other non-construction niches, and I think he'd be a good salesman too given he'd be pitching other owners in the same industry. I wouldn't plan to solely rely on him to get new clients either..just wondering if this might be a good or bad idea and more importantly what would be a fair compensation structure to pay him? A finite amount based on the retainer he closes? or a % perpetual commission ?
I hear 10-15% of MRR is standard although I'm not sure. I'm ok with 15% but think 20% would be too much (I would not expect him to deal with client / do client management activities, only to get the sale)
Would appreciate any thoughts and insights on this.
Answer
John Reel has it correct. What value will he bring? If he closes the deal and brings you a real client, then he's worth 20-25%. If he brings you a warm, unqualified lead, then 2-5%.
Then, the question is for how long do you pay him? If he wants to be paid for the lifetime of the client, then it's much smaller (10-15% assuming he closed the deal versus 20 - 25%) than if he wants a one-time payment for bringing the client. If he wants lifetime, then HE is responsible for renewals. If you are doing the renewals then he doesn't deserve lifetime payments.
From your perspective you need to ask "what is my cost of acquiring a customer". I'll bet it's a lot higher than you think!
In my world of big-ticket, B2B, complex selling, 20 - 25% is very reasonable.
