The ROI Calculation of a Pay-Per-Lead Partnership

We’ve been getting a lot of questions about how our pay-per-lead model works for agencies, how we ensure lead generation success, and what the return on investment (ROI) looks like for our clients. 

We wanted to flash out this article to address this question for you.

Why We Transitioned from the Traditional Agency Retainer Model

For years, we’ve operated on a retainer-plus-commission basis with great results here at Blackhole. However, we soon realized that generating agency leads is our core strength – it’s essentially the foundation of our business. Therefore, we asked ourselves: Why not focus on generating leads for other agencies as well?

If we can generate (almost) unlimited leads for ourselves, we can certainly do it for others.

By now, we have a deep understanding of how to sell agency services as we have worked with everyone from sole entrepreneurs to industry-leader large enterprises like SAP and Hexagon. We’ve had clients across all continents and over 50 industries. The only reason we could do all this is by experimenting a lot with our lead generation strategies. We always grew and got new clients because our lead generation practices were finetuned and a few steps ahead of the majority of the market. 

The Challenges Agencies Face

Many agencies that aren’t focused on B2B lead generation struggle to consistently acquire new clients. This inconsistency limits their growth, makes their workload unpredictable, and caps their potential. Let’s address the 800 lbs purple elephant in the room: securing deals worth 20k, 50k, 100k, or even millions without meeting clients in person is no easy feat. Not to mention securing deals from cold leads. It requires a very specific skillset and, most importantly, extensive experience.

Just as it takes years of experience to build amazing brands, create viral social media content, or rank first on Google, it takes a similar trajectory to master lead generation and sales for agencies.

Our Shift to Working with Agencies

Recognizing these challenges, we recently started focusing on serving agencies as well. Thanks to the track record we’ve already discussed, we could identify and address the bottlenecks in our agency clients’ processes – something we’ve done hundreds of times for Blackhole over the past seven years.

This led us to a new business model blast-off: instead of charging retainers, we charge for the leads. It’s a win-win. Our clients face significantly less risk, as they only pay for results – specifically, leads that generate revenue. On our side, having skin in the game motivates us to go above and beyond to deliver results, leading to higher client satisfaction, longer partnerships, and greater revenue for us as well.

Understanding the ROI for Our Clients

So, how is this model worth it for our clients? What’s the ROI? This is one of the first things we determine during our discovery calls with prospects. To make this model work effectively, your agency should have the following characteristics:

• Minimum ticket size of €20k: If you’re selling smaller packages, the math won’t work unfortunately.
• At least 30% profit margin on your packages.
• A big enough Total Addressable Market (TAM): This strategy works best if you have hundreds or thousands of potential clients, often by targeting multiple countries or industries.
• A clear target audience.
• Strong references and case studies: These help build credibility and close deals.

If these factors are met, the numbers alone will do the heavy-lifting for you because we take care of the rest: sales funnels, content, automation, sales assets, lead generation, and sales processes. This is our bread and butter, and we want to take these on our shoulders so you don’t need to waste any time and energy on these.

How Our Approach Works in Practice

Here’s an example of how this works:

First 21 Days: We implement the Agency Lead Generation System for your business via the following 5 steps:

1. We assess your services and create an irresistible offer for your target audience
2. We implement our currently best performing outbound funnel in your business. We build you a fully automated sales funnel with a landing page.
3. We build a laser focused database of your best possible prospects
4. We run value based and AI personalized messaging sequences that convert leads to meetings effectively.
5. We automate the whole process using the landing page and automatic booking system 

This has a one-time cost of €5k. If you require additional services, like content creation, there may be additional costs, but typically, the setup is €5k as most clients already have some content in place.
You might be wondering now why it isn’t leads from the start… To be frank, we need to put significant effort into setting up the collaboration to ensure everything runs smoothly. This work alone is worth a lot more than €5k, but we keep the cost low to make it accessible for smaller agencies too. Additionally, having some financial investment on your side ensures us that you’re committed to the process, something that we’ve witnessed time and time again to lead to better results.

After 21 Days: We switch to the pay-per-lead model and begin lead generation. We pre-determine the lead charge based on your offering, target audience, and market conditions. For example, if the lead charge is €200 and your typical deal is worth €50k, with a 10% closing rate, you would need 20 leads per month to close 2 deals, resulting in €100k in revenue. With a 40% profit margin, you’d make €40k, while your total lead cost would be just €4k. That’s a 10x return on investment.

This is what we call a win-win. Of course, the numbers will vary from client to client, but the math always makes sense if you’re a good fit – which we determine during our discovery calls. And again, we don’t waste our potential clients’ and our own time – we only take on pay-per-lead clients if we’re confident the collaboration will be ROI-positive.