Marketing – Commission based or pay per lead?

If you are a course provider that outsources your marketing, you may well be faced with the dilemma on what is the best viable way to secure enrollments into your course(s).

Generally, there are two ways of paying for outsourced marketing that course providers need to consider, either pay per lead, or a commission based on enrollments. It could be that neither of these options suit your business model and if this is the case there may be room to negotiate something else with your marketer.

Keeping in mind that any arrangement needs to be viable for both your business and that of your marketing partner.

If we look at the “Pay per Lead” model first, probably the most important thing to understand is how much are you prepared to spend to gain an enrollment? Knowing this will help determine how much you can go up to when paying for a lead.

For example, if your course costs a student $2000 and you are prepared to spend 20% of that (provided your profit margin has been reached) on the acquisition of your student, then for every $400 dollars spent on marketing, you should have a minimum of one enrollment.

The next thing would be to know how many leads you can acquire for your $400 to establish your price per lead. The only way you can really do this is by testing the market and gathering data on how the campaign performed.

Your $400 should be used as a benchmark budget and if you can afford to at least double that amount for a test campaign, the results would give you an idea on what you should expect to pay for a lead.

Using the above example with a $800 test budget, to be deemed successful, you need a minimum of 2 enrollments ($400 cost per enrollment) and any additional enrollments, would be cream on top.

So hypothetically, if the results of your campaign came in at $800 spent, 15 leads generated and 3 enrollments confirmed, your cost per student would be $266, way under the amount you were prepared to spend to acquire a student ($800 ÷ 3 = $266) and the amount you would expect to pay per lead generated would be around $53 (800 ÷ 15 = $53).

If your marketing partner can generate leads at $53 and still reach his/her margin, then there is no reason why the relationship cannot flourish as both sides win.

If we look at the “Commission” model, then really the amount you are prepared to spend on the acquisition of a student, should be the amount you’re prepared to pay as a commission for each enrollment.

There is a caveat to this however, as your marketing partner would need to test how your team’s closing performance stacks up to the amount of leads they generate and they might not have the resources or time to do this effectively which could sway their decision on whether or not to take on the commission based model.

Of course there are variables on both of the above and one of them is the courses themselves, as some higher ed courses can be more expensive to market, but at the end of the day, marketing is a numbers game and understanding what is involved for both the course provider and the marketing partner can go a long way to establishing a long and prosperous relationship.

P.S. Would you like us to help you generate more leads in the next 90 days?

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