Performance-based email marketing agency: how it works, and when it's worth it

What is a performance-based email marketing agency?

It's an agency whose pay moves with your results instead of staying flat every month.

The common setups look like this:

• Retainer plus performance fee. A fixed monthly base covers the work. A second fee rises or falls with results.
• Performance only. No base, just a share of results. Rare, and it usually comes with conditions.
• Retainer plus a bonus. A flat fee with an extra payment if you hit agreed targets.

What "results" means varies a lot. It could be email-attributed revenue, growth over a starting baseline, or total store revenue. That one choice decides whether the deal is fair, so I'll come back to it.

The pros of a performance-based email agency

Incentives line up. A flat-fee agency gets paid the same whether your email grows or stalls. A performance-based one doesn't. That changes behavior: it's more likely to fix the flow that's quietly leaking money than to send you a pretty monthly report.

Lower fixed cost. With a smaller retainer, you're not paying a big fee every month before anything has moved.

It filters out agencies that don't believe in their own work. An agency willing to take most of its pay from results is betting on itself. That doesn't make it good, but it's a signal.

The cons, honestly

It's only as fair as the attribution. This is the big one. Klaviyo credits a sale to an email if someone opened or clicked it within the attribution window and then bought. For accounts created after Oct 9, 2024, that window defaults to 5 days for email. Apple Mail Privacy Protection auto-opens count by default too, and you have to turn that off yourself. So a customer who auto-opened a newsletter, then clicked a Meta ad and bought, can show up as email revenue. I wrote a full breakdown in Klaviyo attribution.

You might pay for sales you'd have made anyway. Attributed isn't the same as caused. Some people who bought after an email would have bought without it. A fee on attributed revenue pays for both.

The incentives can bend the wrong way. An agency paid on short-term email revenue might lean on discounts or send to your whole list too often. Both can lift this month's number and hurt your margin and list later.

Your bill grows as you grow. That's the point, but a fee that felt small at $1M a year can feel big at $10M. Know how it scales before you sign.

Baseline fights. If you already had flows making money, should the agency get paid on those? If the deal doesn't say, you'll argue about it later.

How my performance-based model works

I'll be straight about how I do it, since you're reading this on my site.

For done-for-you work, I charge a low retainer plus a performance fee, and the performance fee is most of my pay. Invoices are billed net-30. I don't guarantee results, and I'd be wary of anyone who does. Performance pricing isn't a guarantee: it means I don't do well unless you do.

Why set it up this way? Because I've sat on the brand side of the report. I was a founding partner of a DTC brand, and paying a flat fee for a report that didn't move anything gets old fast.

It's not the only way I work. There are strategy calls and a prepaid 90-day accelerator too, and under about $25K a month in revenue I'll usually point you to a specialist instead of a done-for-you agency. Prices and the full breakdown are in how much a Klaviyo agency costs.

Questions to ask any performance-based email agency

Before you sign, get clear answers to these. Write them into the contract.

1. What exactly is the fee based on? Email-attributed revenue, growth over a baseline, or total revenue? Each one rewards something different.
2. Which attribution settings count? Ask for the attribution window and whether Apple auto-opens are included or excluded. Klaviyo lets you exclude Apple Privacy opens from attribution, and changes apply to your data historically.
3. Is there a baseline? If flows were already earning before the agency started, how is that handled?
4. Do flows and campaigns count the same? Flows built before the agency arrived may deserve different treatment than new ones.
5. Is there a cap or a floor? Know the most and least you could pay in a big month or a slow one.
6. What are the billing terms? When is the fee calculated, and when is it due?
7. Who's actually doing the work? My clients work with me directly, with no hand-offs. Ask every agency who'll be in your account each week.
8. How will we check that email is adding sales, not just claiming them? A good answer involves comparing to Shopify and testing, not just pointing at the Klaviyo dashboard. I explain how in email incrementality testing.

If an agency gets defensive about any of these, that tells you something.

Is a performance-based email agency right for you?

It tends to fit when:

• Email is already a real revenue line, or clearly could be.
• You have enough traffic and customers for results to show up within a few months.
• You're willing to agree on how revenue is measured up front.

It tends not to fit when:

• You're doing under about $25K a month. A specialist is usually a better use of your money.
• You want a fixed, predictable bill above all else.
• You don't trust your attribution and aren't willing to tighten it.

FAQ

WRITTEN BY Jack White

Founder of Bardown Digital, a Chicago-based Klaviyo email and retention agency for Shopify brands. He's worked with brands doing $500K to $100M a year, with $100M+ in email-attributed revenue across them.

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