Will they bear the burden of the cost? If so you want to be careful about paying them a flat fee or by any metric unrelated to volume, as they will have a disincentive to send you a higher volume of traffic because each click costs them money - in this situation you're best off paying them a percentage of attributable revenue, or paying per lead.

@Eschatonic- thank you. yes, they will take on the cost.

What sort of leads? If you can, base payments on actual revenue generated.

Them taking on the cost could be good or bad. Starting a PPC campaign is expensive and it takes a little while for your long term CPA to be established. They could be investing their own money because they're extremely confident in their abilities. They could also just be using that as a sales tactic planning to sell you as many cheap non converting leads as possible.

It depends entirely on your product/services and where your business operates. Do you generate all of your sales online, or do you generate them through a brick and motar store? Do you have one product, or hundreds of products?

Thank you for your time:

@DanAbbamount- What sort of leads? If you can, base payments on actual revenue generated.
I’m a Chiropractor in San Diego. I need (would like)  leads for my business. PPC seems to make sense.

Then taking on the cost could be good or bad. Starting a PPC campaign is expensive and it takes a little while for your long term CPA to be established. They could be investing their own money because they're extremely confident in their abilities. They could also just be using that as a sales tactic planning to sell you as many cheap non converting leads as possible.

@gerardwendo-
It depends entirely on your product/services and where your business operates. Do you generate all of your sales online, or do you generate them through a brick and motar store? Do you have one product, or hundreds of products?
As stated above, I’m a Chiropractor with a store front. I advertise using mulitople channels. I would appreciate any advice as to the best structure in regards to how the lead gen would/could work using PPC.

I actually wouldn't worry about the cost of the PPC - that's on them, sounds like.

So first of all, they're sending you leads. So you need to know that you yourself (or someone in your practice) is a pretty darn good closer. So going in the calculation, you'll want to have a pretty good idea of the percentage of leads you realistically think you can close. If you can't close the leads they give you, then there's no point in signing up. They're bring the horse to water - you have to be able to make him drink.

Then you want to figure out how much a lead is actually worth to your business. When making this calculation, you want to figure in your rate of closure (see previous paragraph) plus the average of how much revenue you can expect from a patient over time - do most of your patients stick around for six months? A year? longer? You need to know the overall value of a patient before you can set a target cost per lead.

You also want to make clear with this company what constitutes a *qualified* lead. How much information do you want to get from the prospect before you consider it a qualified lead? This is a balancing act, because too little information means it's not so qualified, and the more information you require, the less likely they are to fill it out.

Do you get say over the landing page? You should have at least some input (particularly in your line of work, where there are some guidelines to what you can and can't say)

There are lots of good lead generation companies out there who really know PPC and know what they're doing. There are others - not so much. Personally, if I were doing lead generation PPC, I would offer the client say, 2-5 free leads just so they know I'm on the up and up and know what I'm talking about. You don't want to pay out on a lot of unqualified duds. On the other hand, if they can get you really good leads, and you can close them, that's a good deal for you. So you might want to ask if they can give you one or two freebies to start, so you can gauge their effectiveness. If they recoil in horror, that may be something to consider.

@netmeg +1

Your advice is good sound common sense, and common sense being as uncommon as it is ..lots of people wouldn't have thought it through as clearly ..or as succinctly.

If I thought most people that come here actually used the "library" threads ..I'd say that your post should be in there ..:)

@netmeg...WOW. thank you very much. This is great info. I'll check back in a month and send an update on how this went.

@ netmeg-
Then you want to figure out how much a lead is actually worth to your business. When making this calculation, you want to figure in your rate of closure (see previous paragraph) plus the average of how much revenue you can expect from a patient over time - do most of your patients stick around for six months? A year? longer? You need to know the overall value of a patient before you can set a target cost per lead.

(see previous paragraph) You mention a graph..I have not seen this?

Thank you

No - by paragraph I meant the previous chunk of text.

Only you can know what a patient is worth to you - you have to average it out figuring in what you charge, how many of your patients are long term and how many just show up for one or two sessions and then bail.

(Disclaimer - I don't actually do lead generation myself, but I have a bunch of friends doing it, and have a pretty good idea how I'd do it if I was)

I would just add to this the importance of getting a test period into your contract. Test's allow you to not only check the quality of the lead they are sending you, but also your ability to close them, and finally (perhaps most importantly) the levels of service you're going to get from what might just become one of your most important suppliers.

Regarding the cost - it's worth spending a minute to understand the mindset of a lead generator who is happy to take on the cost of the media activity.

Imagine yourself in their shoes. Their goal is, understandably, to make as much money as possible out of the relationship. This means:

1. Spending as little on each lead as they can
2. Charging as much on each lead as they can
3. Doing the above in the most time efficient way possible

The times when I've seen these sorts of relationships go sour, is when the buyer of the leads wants more volume. To get more volume, you might need to be more aggressive with your PPC activity (by either bidding more on your keywords to get higher rankings, or buying new keywords which might convert at a slightly lower cost per lead).

Whilst both of these options might work for the recipient of the leads, they don't for the lead introducer (who loses out on point 1, and arguably point 3 of the above list).

Given the nature of your business, you might only be able to actually handle a certain number of leads yourself, which means you might not be that troubled by volume. It really depends on your capacity.

If however, you are in a volume game, you might want to consider offering them a tiered payment structure, where by the amount you pay per lead goes up as volume goes up. This means that they will continue to be motivated to drive increased volumes for you.

As a final point - I would suggest you ask for a fair amount of visibility. Introducer's often shun this, as they feel that they might be giving away their own intellectual property, or leaving them open to you just learning from what they're doing and then trying to do it yourself. If you're greeted with this response, assure them that you have no intention of doing this yourself, but that you simply need to know where your traffic is coming from to make sure you're not going against any regulations which may exist in your line of work. I'm no expert in that space, but I imagine your messaging will need to be fairly closely controlled. You might also request that they run Google Analytics tracking on all their links, and link the adwords account to your analytics so you can have full visibility.

I'm waffling. In short:

1. Get a test period in the contract
2. Try to have a rolling monthly / quarterly contract
3. Calculate how much you can afford to pay for a lead, based on your AOV, LTV and Conversion rate
4. Offer them a tiered payment model so they can earn more for more volume
5. Request as much visibility as possible in all their activity...
6. Don't be too worried how much money they're making, as long as you feel that you're making more :)