Pay for Performance ( P4P ) marketing is designed to improve lead quality, accelerate growth, and increase profitability of your business over a 12 – 36 month period. You and the I share the risk of failure and the rewards of success.
In typical consulting partnerships, businesses pay for services every month regardless of the results they or their strategy delivers. In the P4P model, you pay the consultant when actual leads are qualified or payments are processed for your business.
There are two types of P4P models: Partial and Full.
Partial Pay for Performance
In a Partial Pay for Performance partnership, you pay a discounted monthly retainer as well as a share of sales or leads attributable to marketing efforts.
Full Pay for Performance
In a Full Pay for Performance partnership, there is no monthly retainer and you only pay when attributable sales or leads are realized by your business.
Driving Value and Delivering Results
Pay for Performance ( P4P ) marketing is designed to hold accountable those responsible for the opportunities created for your brand. Whether your objective is to drive new leads, accelerate growth, improve profitability, or expand your product offering, you should pay primarily for results rather than the time spent working.
The P4P model is similar to sales-based commission models. Time spent working on marketing programs is billed at a low rate to cover basic costs of support and services. You should only be paying for success – not effort.
Partners in Success
The partnership and strategy is designed to be short-term, lasting only 12 – 36 months. The goal is to establish a strategy and framework that achieves fast growth ( 9 – 18 months ) while helping you to maintain a positive and predictive cash flow. Ultimately, the strategy evolves into self sustainability for your brand.
Once the partnership ends, the plan is for the company to be in a position to continue on the same growth trajectory with its own in-house team and with minimal to no outside support.
You and I share the risk of failure and the rewards of success, but unlike typical agency or consultant relationships, if the only invoice you receive each month is the base fee, then I am the one losing money.
The Ideal Pay for Performance Partnerships
The P4P model is not a fit for every business, and most will not qualify for this type of partnership. Ideally, your company has a product or service with a high profit or margin potential, and also operates in a niche or demand market.
Your business should also have consistent monthly sales near $100k, or, you should be in a position where the business can sustain an increase in sales by about $100k within the first 90 days of moving into a P4P partnership.
If your business is not quite there with the sales numbers, or it can not sustain growth of that level over a short period, then a traditional consulting partnership with a fixed monthly rate would likely be a more appropriate solution.
How the P4P Pricing Programs Work
The model works in either a full P4P model, where this no monthly base consulting fee and a higher revenue share percentage, or a partial P4P model, where there is a monthly base consulting fee and a lower revenue share percentage.
The full P4P model is more suited for start-ups or those businesses where growth is the primary focus and cash-flow needs to remain steady over the next 12 – 24 months.
Most of those in a full P4P program can not afford to invest in a traditional consulting relationship or an in-house marketing team, however, it can achieve the growth if the team or resources were in place. The goal is to realize growth so that the company can invest in the team or resources required to continue on with the programs.
Partial P4P partnerships are better suited for companies that are ready to grow and have the resources to invest in that growth. They will share a lower percentage of revenue, but will have a monthly base fee.
It’s typical that a company working in a partial P4P relationship will simultaneously be building a small in-house marketing team or has a marketing manager in-house and will now essentially be renting a CMO to establish and execute a full 12 – 36 month marketing strategy.
Required Business and Marketing Investment
Neither the full nor partial P4P program will work without a deep commitment from the company. No company can rely fully on a consultant without investing in the recommended strategy and programs.
You should expect to invest about 20% – 25% of earned revenue back into your marketing budget and strategy. For example, if the target revenue growth is $1,000,000 over the next six months, you should expect to be investing up to $250,000 in areas such as advertising, direct marketing, public relations, social media or content marketing.
Budget and allocation would be defined in a complete strategy, however, it’s important to know that growth and momentum do not come without spend. Once growth is stabilized, spend actually decreases to a point where you may only be investing 5% – 10% of your sales back into marketing over the long-term.
Pay for Performance Examples
The two P4P models are similar, though the percentage of shared revenue is different depending on program and business type.
In the full P4P partnership, the company will pay only for performance delivered and not for any work within the relationship. This is similar to a fully commission based sales model.
There is a 90 day trial period, where both the company and Bold can terminate the agreement if either of us feel that the relationship just won’t work out in this model.
If you have a service business, the share of revenue is 8% of gross sales attributable to marketing efforts, and if you have a commerce business that share is 15%.
In the partial P4P partnership, the company will pay a reduced monthly base fee, and then a smaller percentage of attributable sales.
The partial partnership is better suited for established businesses that are looking to grow, have resources available, but are not quite ready for a full-time marketing team or CMO.
If you have a service business, the share of revenue is 3.5% of gross sales attributable to marketing efforts and in a commerce business, the share is 10% of attributable sales.
Performance Game Plan
To get started with any P4P partnership will require a signing up for a Performance Game Plan, which is a 30 day deep dive and strategy development for your business. The Performance Game Plan costs $10,000 and is payable over two monthly payments if needed and includes travel and expenses to your location as well as one week spent with you and your team.
What You’ll Get
The Performance Game Plan starts with a full dedicated week working within your company to truly understand your business, operations, customers, opportunities and inefficiencies.
You’ll be required to dedicate at least two full working days for strategy meetings where we will dive deep within your brand and culture to identify who you are and the why of what your business is trying to achieve.
The deliverable to your brand will be an overarching sales growth and marketing strategy with a clear plan to execute at 2x your desired outcome.
The goal is to help your company transform your sales and marketing model as well as internal capabilities, or to develop a new approach entirely based on evolving customer needs or market shifts within your industry.