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In the current landscape, most modern agencies have adopted one of two business models; one-off project delivery or recurring services.
A one-off delivery of a service may be easier to close and have more of an immediate financial gain, but the project and client relationship will have an expiration date so you are always in need of a steady flow of hot leads in order to keep your agency above water.
A recurring revenue business model ensures a steady and reliable cash flow as your agency executes client deliverables on an ongoing basis.
While there are many successful agencies who have adopted both business models, recurring revenue is essential to long-term viability and exponential growth.
What exactly is recurring revenue?
Recurring revenue is a portion of your agency’s revenue that is expected to continue in the future. For agencies who optimize recurring revenue, customers purchase a service on a subscription basis, whether it be weekly, monthly, or quarterly.
Some examples of popular recurring revenue services are Software-as-a-Service (SaaS) such as Adobe, streaming services such as Netflix or Hulu, or hosting services such as GoDaddy.
In the marketing industry, common recurring revenue services are website management, content creation, copywriting, and social media management.
Why is recurring revenue so important?
Client Retention
With a recurring revenue business model, you have the opportunity to develop long-term, sustainable relationships with existing clients. You get to understand their needs, goals, and the nuances of their business, and vise-versa. By continuing to work with a client, they gain a better understanding of your agency, your services, and your processes.
There is more room for creativity and flexibility as you have more time to show the client what you can achieve for them. With the recurring business model, on the off chance that you under-deliver for a client or they are unhappy with a deliverable, you have more time to right the wrong and over-deliver on the next project.
You’re In Control
As an agency, you’re likely all-too-familiar with having to deal with difficult, disrespectful, or over-demanding clients. While we can’t promise that a business model shift will completely dissolve this unfortunate situation, a recurring revenue business model can drastically decrease your need to deal with these less-than-pleasant clients.
When you are able to rely more heavily on recurring revenue, the need to execute one-off projects for difficult clients minimizes. You are able to pick and choose the clients you want to work with and it puts more control in your hands.
Increased Business Value
There may come a time when you are looking to fund your business through a loan, a business grant, private investors, or funding circles. Or, you may end up wanting to sell your agency one day. When the time comes to take advantage of any of these opportunities, it’s going to be crucial that you can prove to the other party that you are a viable business for the long-term.
If your entire business model is reliant on one-off projects then your cash flow will likely reflect that through dramatic fluctuation. Any potential investor, lender, or buyer will likely not see your business as economically sound and may be significantly less likely to do business with you.
On the other hand, if you are able to show your recurring revenue as reliable, stable, and consistent, it will be much easier to demonstrate the viability of your business for the long-term.
Scalability
Once you determine the recurring services you plan to offer to your clients, you can then standardize it across your client base and enjoy the economies of scale. Of course, not all customers will have the exact same need so you may be required to alter or customize your recurring offerings, but standardization makes it easier to do just that. Over time, you’re able to deliver your services practically on autopilot, which allows you to scale in two ways:
A Flexible Business Model
Without the need to frantically source new clients or projects each month, you can invest more time in monitoring consumer preferences and market trends to better understand how the demands in your industry are changing. With the reliability of recurring revenue, you can more easily adapt to trends by having the time to learn new skills, develop new offerings, and invest what is needed to reposition your agency.
Focus on Growth
The second scalable benefit is that with the consistency of recurring revenue, you have the ability to apportion your time to focus on acquiring new clients and projects that excite you and add value to your team. You can take the time to research new marketing strategies, trial new business packages, and find new ways to capitalize on your existing partnerships to increase revenue.
Another aspect of growth that is rarely focused on, is the ability to prioritize personal growth. As a business owner, finding ways to better yourself or to dedicate more time to your family, friends, or loved ones, are often overlooked as successful business tactics. When you implement a recurring revenue business model, it leaves you with more time to focus on growing in other aspects of your life as well.
Which services can be optimized for recurring revenue?
Content Creation
Whether its blog/search engine optimization (SEO) content or social media content, we live in a world powered by content creation. With so many companies offering similar services nowadays, the only way to stand out from the competition is with engaging content.
Content can be used to develop branding, showcase expertise, provide value, and build relationships. As brands continue to realize the opportunity and the value of having an active online presence, the demand for unique content will only increase. Many agencies have opted to offer a pay-per-post or pay-per-article solution, which can aid in a quick close, but will, once again, leave them scrambling for new clients on a regular basis.
Instead, agencies should offer content creation as a subscription-based service. Clients will opt into monthly retainers and in-return, they will receive a set number of social media or blog posts. It benefits both parties as you will know how much you can expect to net and your client will know what deliverables they can expect to receive each month.
Another lucrative opportunity when it comes to recurring content creation services is to white label the service entirely. This means you would sell the content creation service to your client, then a third-party team would execute the deliverables. Check out MixBloom’s white label content creation service. We offer a team of experienced social media managers and content creators who deliver original content for your clients, while you manage the relationship. When it comes to optimizing recurring revenue opportunities, we’re key!
Social Media Management
Social media management is a daily discipline that requires designing graphics/imagery, writing copy, developing a content calendar, managing engagement, social listening, monitoring online conversations, working with influencers, and reporting on all activity and performance.
Successfully developing and managing a brand’s social media presence can be extremely lucrative for a business, but many business owners don’t have the time or expertise to do so. This makes it a great opportunity for agency owners to offer social media management as a subscription service.
The demand for social media management services is on the rise so it’s imperative that, as an agency, you are continuing to offer and expand upon these services for your clients.
One option when it comes to social media management as a service, is outsourcing the content creation portion while owning the rest of the service in-house. For example, here at MixBloom, we partner with marketing agencies to allow them to offer social media as a service to their clients, without having to create all of the content themselves. Instead, they own the entirety of the relationship with their client oftentimes managing engagement and/or reporting, then leaving the content creation, scheduling, and publishing to our MixBloom team. Learn more about MixBloom’s services here.
AdWords Campaigns
To be able to properly advertise products and services to the correct audiences requires knowledge of keyword use, the setup and monitoring of performance of the campaign, as well as ongoing alterations and updates to the campaign to ensure optimization. A single campaign can realistically be indefinite, making it an extremely lucrative subscription-based service to offer.
Search Engine Optimization (SEO)
Effective SEO requires a great deal of research as well as regular maintenance and ongoing updates. There are so many elements to optimizing a website such as keyword research and keyword application. Keyword application into articles, blog posts, or other long-form content is extremely methodical and an SEO expert needs to be aware of SEO risks and best practices in order to see a boost in search rankings over time.
SEO is an ideal subscription service that can easily turn into recurring revenue as it takes anywhere from six to nine months to see measurable results from SEO strategies.
Consulting Services
Monetizing your knowledge is a simple way to generate recurring revenue. You have something that your audience needs and that is expertise on a given subject or process. This expertise can be sold to your clients in the form of consulting services such as calls or meetings. Through these calls, you will be able to teach your clients how to do something you are an expert in and then mentor them through the process.
A wildly popular example of this in digital marketing is Gary Vaynerchuk at VaynerMedia.
The key to optimizing consulting as a recurring service is to position yourself as an expert. It will be imperative that you are able to prove to your audience that you have expertise in any given area and that they should be willing to pay for your mentorship. This can be done through social media content, blog content, promotional videos, or a podcast.
Graphic Design
Whether it’s regular digital projects or the design of marketing materials for events, promotions, or campaigns, there is always an ongoing need for graphic design. As an agency, offering design services can be an extremely lucrative recurring revenue builder. Most brands and businesses don’t have extensive needs that require an in-house graphic designer but they still have design needs that could be fulfilled by an agency. In addition to the reliability, offering design services as a recurring package can be easier for clients to understand and for your agency to sell.
It’s important to identify the specific packages and services you will offer in relation to graphic design. The expectations in regard to deliverables, timelines, and revisions should all be included in the packages so both parties know what to expect. Once the packages are in place, it can be an easy service to market and sell to new and existing clients month after month.
Facebook Ads Management
Paid social media ads are the most lucrative when they are continuously run, updated, tested, and managed. Most businesses don’t have the knowledge or experience to set up and optimize these campaigns themselves and that is why Facebook ads as a recurring revenue service have become so lucrative for agencies.
Business owners want to see ROI on their campaigns and if you are able to achieve that for them then they should quickly and easily see the benefit in continuing to subscribe to the service. Facebook advertising can be packaged with the client’s budget in order to account for management fees and ongoing optimization in order for you to turn a profit month after month.
Website Maintenance
After the initial development of a website, it is essential that the site is continuously managed and updated to keep up with industry trends and company changes. Ongoing website maintenance is a great service to offer on a recurring basis.
Your clients can subscribe to a monthly service and in return they will receive website security updates, fresh content, updated information, and optimized website traffic. While these services don’t require the same level of in-depth experience as a web developer, expertise and knowledge is imperative to successful website maintenance and that is what you are able to offer to your clients on a recurring basis.
Reputation Management
Reputation management for a business is essential to the ongoing loyalty and success of the brand. Consumers talk about, engage with, and form opinions about brands whether you initiate the conversation or not so it’s important to monitor what they are saying when you aren’t around.
Offering reputation management as a service is a great way to increase recurring revenue for your agency. The service can be packaged with monitoring customer comments (both positive and negative), responding to questions, comments, and concerns and reacting to stories in the media on a monthly basis.
Lead Generation
Companies are always looking for new leads for their business so offering lead generation is a great service to provide on a recurring basis. Lead generation can be done via email, phone, LinkedIn, or many other avenues so long as you’re able to deliver tangible results to your clients.
Your clients could pay into a monthly subscription, and in return they will receive a set number of qualified leads. It’s a win-win!
The Power of White Label and Recurring Revenue
The amazing thing about white label services is that, with the right white label partnership, you can offer your clients nearly any recurring revenue service without having to take on the workload in-house. The right white label partner will execute deliverables under your agency name and branding so your relationship with your client should never be compromised.
The scalability and profitability of white label services in relation to recurring revenue is exponential but finding the right white label partner is key.
Here at MixBloom, we have been helping agency owners add recurring revenue and scale their agencies using our services since 2016. Learn more about our white label content creation and blog writing services here.
If you are looking to scale your agency and significantly increase the viability of your business, then shifting to a recurring business model is key.
