Contracts & Getting Paid: What works best for lead gen?

[Concept]

As you may know, I run two lead generation websites. One which is making money and growing, and another which is still in the early stages.

At the moment, the agreements I have with my service providers are verbal only. I send them leads and bill them at the end of the month, giving them two weeks to send the money to a bank account. This works at the moment with a small amount of service providers, however, as we grow I can see that I will need to change the way I do things.

A couple of my concerns:

• I don't have them locked into a contract, which means I'm vulnerable if they choose not to pay.
• My experience in the past with invoicing (with my dads business) has shown that there will always be people that go far beyond the due date when paying (if at all).

My initial solutions to these concerns.

• Get them to sign a contract up front. (This is a must)
• Set it up so invoices are sent out, and the money will be automatically deducted after 2 weeks.

My questions to those that already run lead generation services or similar:

• What have you found to be the easiest way to have someone sign a contract? Ideally I would like to avoid the clunky "email contract -> print off -> sign -> scan -> email back". Is there a simpler, easier way to do this?
• What has been your experience with getting paid for your services? What was the most effective and efficient way of doing so?
• Any tools, software or resources that helped you achieve the above?

Thanks

 

[aussiefly]

Yeah this is of interest to me as well. I'll be interested to see the response from some of the experienced members

 

[Ryuzaki]

Ideally I would like to avoid the clunky "email contract -> print off -> sign -> scan -> email back". Is there a simpler, easier way to do this?

Yes, you're looking for Electronic Signatures or E-Signatures. Tons of services out there for it. They sign with their mouse and then it emails and stores PDF's, etc. Both parties can print or save them and there's no need to snail mail or scan anything.

 

[Concept]

Yes, you're looking for Electronic Signatures or E-Signatures. Tons of services out there for it. They sign with their mouse and then it emails and stores PDF's, etc. Both parties can print or save them and there's no need to snail mail or scan anything.

Perfect. Just had a look online. Definitely lots of options. I'll be looking into these over the next couple of weeks.

Anyone using E-Signature software have any recommendations?

 

[Trooto]

Why not get them to prepay? If the leads are good quality you're in a strong position because they will want that business.

 

[Concept]

Thanks @Trooto

Prepaid leads are an option, however, my challenge with that payment strategy is I am currently seeing increasing enquiry coming through my site. I estimate this growth to increase further once I start reinvesting considerably in the websites.

I plan to have payments as a pay per lead basis to account for this growth and allow me to be paid accordingly. The risk I run with prepaid leads is I either overcharge the service provider on a below average month, or I'm out of pocket on a good month.

While a post-paid strategy allows me to charge per lead, my concerns are that payments will be delayed or, worst case, never received. I'm trying to minimize that risk.

Once the enquiry numbers have started to flatten out and are more predictable, then maybe prepaid is an option.

 

[prairiedog]

Concerning your contract question, we use Bidsketch to create contracts, these can be sent to them electronically for them to sign. From my understanding (but I am not an attorney), all is legally binding just as if they signed a piece of paper.

 

[ari]

@Concept
I've been doing lead generation for a very long time, and part of the issues you discuss is why I've always tended to work with lead aggregators and not little companies. But even then, I've been stiffed by bankruptcies so it doesn't really matter. Let's get to some solutions for your challenges:

Digital Signatures

1. Hello Sign - Have used and was good. Newer Silicon Valley Startup
   
2. Echo Sign - now owned by Adobe
   
3. Docu Sign

I have signed all sorts of contracts/NDAs etc with all of these services. They all do the same thing and are all legal and enforceable within the US. So just pick whichever one meets your needs and isn't too expensive.

Getting Paid!
If you need a specific merchant provider and don't want to use stripe, you might look at Merchant Maverick. (Which besides being a great site, is a phenomenal example of a well executed lead generation site in the b2b space).
1. Invoices - pain in the ass, but if you work with reasonable legit companies, not a major issue. I've had people stiff me, I lawyered up and got some of it back. Part of Doing Business.
2. Credit Cards - So easy to do in 2017 (yay, Stripe!). You can bill per lead, batch bill, whatever. Biggest issue is chargebacks on your leads by shady customers, but these are the same shady customers who will stiff you on the invoices. You can try and protect yourself here by getting a signed card authorization as a separate doc to the contract, and even a photo of the front of the card.
3. ACH - ACH stands for Automated Clearing House, and in the US is the way money moves between banks and bank accounts. Like a credit card, you get an authorization and then deduct as agreed upon. Similarly, there are some chargeback mechanisms in place but they are more difficult then credit cards and not as friendly on business accounts as they are to consumers. I don't have a company to recommend here, I know Stripe has this now but their rates were excessive. I think Balanced Payments used to offer this. There are plenty of providers in the space, and like their merchant account salesmen cousins, they are also shady.
4. Demand Draft (US Only) - I don't know if this software still exists, but it's basically a legal way where you print your customer's checks and deposit them. Here's a brief paragraph from a .gov about it. Your keywords here would be demand draft, demand draft software, checks by phone (but you want demand draft checks by phone and not ACH)

That's about all I could think of - let me know if I missed something.

[Disclaimer, I have no affiliation with any website listed here, and make no money and own none of the websites listed]

 

[Vince]

Hello Sign as mentioned previously is seamless and integrates with G Suite. Very easy to use!

 

[chanilla]

I used to do a lot of local lead gen, but my perspective might offer you something a little bit different...

Contracts are a waste of time. They're only as good as your bankroll to enforce them. Not to mention, if you really dig deep, do you really want to do business with a company where you have to rely on a contract? Sure, I get it, business is business. But contracts really only help keep pawns in line when you're working with a corporate company, and the employees buy into that shit. (the average business owner says fuck you to ad agencies of all types more often than you'd know)

But if you're setting your systems up the way you should be, you should own all the assets number one. So it's like commercial real estate in a sense... You might be out a month's worth of vacancy, but you won't lose the building. You just get another tenant as fast as you can.

Number two, you should be focusing on building the best relationship you possibly can if we're talking about small to medium sized companies... Your goal should be to become the lifeblood of their business, the #1 factor in the following year's growth, where even the slightest *hint* that you'd walk would send shivers down their spine... But not out of fear, out of how well you crush it. These clients can become friends, and eventually you develop a reputation, and then partnering/percentage ownership in companies is on the table. (i.e. - you don't have to worry about THAT type of contract anymore, and the juice becomes a LOT more worth the squeeze)

Trying to think of someone you would all know that's a good example of this... The only public one I can think of off the top of my head of is Nick Eubanks and Traffic Safety Cones. (and no, I don't know Nick personally, just remember seeing a writeup somewhere that's in-line with what we're talking about)

Instead of relying on "verisign." To me signature contracts aren't worth dick, and I've been stiffed for plenty of money. What are you going to do, sue them? Waste of time too, unless you're talking over XX,XXX which unlikely more than one month's worth of lead to a single receiver.

If I were starting all over again, I would go high dollar, exclusive only leads, and immediately find and offer every value add I possibly could to my top 5 clients. My goal would be to do such a good job, one of them would offer me a partnership, and I would secure that by leveraging the assets I owned and controlled for their lead gen during the negotiations. Sure there are negative points to going this route... Everything from the secretary to the sales staff affects your bottom dollar, but it's all preference... And my preference is $X,XXX per job over $XXX per lead.

My $.02.

Btw - the average commercial roofing job is over $100k.

 

[ari]

@chanilla
Allow me to respectfully disagree. Are you building a lead gen company or a hedge fund that invests in local roofers ,plumbers ,and cleaning companies?

The website that generates the leads is the asset here and the thing that creates value for the site owner and the people buying the leads. If he has a national or even large regional footprint , then @Concept main job is to grow his business and deliver value to his customers, not to work to where he owns equity in all of them.

Edited to add: the whole point of lead gen as a business model is that it removes your risk from the sales process at all of these companies. The execution here is in the marketing not knowing how to own a roofing company.

In the real world leads should price out according to the conversions the lead buyer gets and how much they make from a conversion. So your xxxx per sale is the same as XXX per lead.

Finally, if you're not getting xx,xxx from at least one client you're doing it wrong

 

[chanilla]

Understandable, perhaps I was envisioning a different level/playing field, and a much different end game than you might interested in. No worries, tons of ways to skin a cat!

I can understand all of your points from your take, except one: a person running a lead gen company making $600k/yr + doesn't ask how to get contracts signed.

@chanilla
Allow me to respectfully disagree. Are you building a lead gen company or a hedge fund that invests in local roofers ,plumbers ,and cleaning companies?

The website that generates the leads is the asset here and the thing that creates value for the site owner and the people buying the leads. If he has a national or even large regional footprint , then @Concept main job is to grow his business and deliver value to his customers, not to work to where he owns equity in all of them.

Edited to add: the whole point of lead gen as a business model is that it removes your risk from the sales process at all of these companies. The execution here is in the marketing not knowing how to own a roofing company.

In the real world leads should price out according to the conversions the lead buyer gets and how much they make from a conversion. So your xxxx per sale is the same as XXX per lead.

Finally, if you're not getting xx,xxx from at least one client you're doing it wrong

 

[eliquid]

I can agree that contracts are a waste of time and BS for "agencies" and lead gen types.

Being on both sides of the fence, it's a total joke and broken all the time.

 

[ari]

I can understand all of your points from your take, except one: a person running a lead gen company making $600k/yr + doesn't ask how to get contracts signed.

Agreed

I can agree that contracts are a waste of time and BS for "agencies" and lead gen types.

Being on both sides of the fence, it's a total joke and broken all the time.

They matter for one real reason: litigation. If you stick an arbitration clause in there you can even save a small fortune on lawyer fees. I've lawyered up a few times and it was worth it. Obviously the amount spent on the lawyer needs to be less then how much you can recover.

 

[miketpowell]

I've gotta agree with eliquid in that contracts don't do much as far as helping you make sure you get paid. Lawyers are pricey and if the defendant has an idea of how to block you it(you ever try enforcing a digital contract on someone that disputes it? you gotta hire an expert witness at 2k+ to come in and explain to the judge that the person did in fact likely sign the contract) goes over 10k plus many hours of your time very fast. That's just getting the judgement collecting is an entirely new challenge. Remember people usually don't not pay because they are swimming in profit and have more then enough, they are usually the type that stays perpetually broke.

Certainly you should still have a simple digital one though for a number of other reasons though. I am by no means endorsing just not using contracts. Contracts help make sure both parties truly do understand the terms to the deal they are creating with no misunderstandings.