Questions

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.

Well explained question.
I have a lot of experience with affiliate marketing (which is very similar to the situation you’re describing). The commission range varies widely depending on the industry, and can be anything between 2%-30% of the sale - depending on how high the sale is (usually, the higher the sale value the lower the percentage).
In your case, and assuming that you charge your clients a monthly fee, then the best 2 options would be:
1. A one time fee which would be a percentage (10-20%) of the first months payment from the new client.
2. A smaller percentage (5%) of the monthly fee that the new client is paying you, over a 2-3 month period.
Each option has as a stages and disadvantages.
* the above is assuming you only pay the commission for actual sales (a new client who actually pays you) and not just a lead.

There are numerous other payment options, but here is what is important:
1. Offer the salesmen at least 2 options, after you’ve calculated both and are sure that you’re happy with both. This is important because it shows him that you are letting HIM choose (gives a feeling of respect, cooperation etc.).
2. Offer him a fair percentage because at the end of the day, he is bringing you new business.
3. Taking point #2 into account, if you want to offer him 15%, start by offering 12%. At the end of the day this is a business negotiation, so chances are he will ask to raise the percentages a bit, and if you start a bit lower, you will have the flexibility to agree to his higher percentage request (which again shows your flexibility, fairness and willing to compromise- which will make him feel better).
I’ve successfully helped over 300 startups and businesses and would be happy to help you.
Good luck


Answered 5 years ago

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