
How to Increase Recurring Revenue for Your SEO Company
If you want your SEO company to be successful, you need to generate revenue. Lots of it. The standard and intuitive approach to generating more revenue is selling more of your products or SEO services. If you currently have 100 clients on monthly retainers, you can hypothetically increase revenue by selling bolstering that to 200. But if you want to grow your SEO business more consistently and more predictably, you might need to take on a different type of revenue generating model altogether. By incorporating a recurring revenue model, and increasing your recurring revenue, you can better fund your SEO company and lay a course for a much brighter future. So how do you do it? What Is Recurring Revenue? Simply put, recurring revenue is revenue generated on an ongoing, consistent basis. Think of it this way. Imagine we still existed in an era with DVD rentals from Blockbuster video. You can rent an individual DVD for $3, or you can sign up for a monthly rental package that allows you to rent up to 20 DVDs per month in exchange for a recurring, $15 monthly charge. As a consumer who rents DVDs somewhat regularly, the monthly fee is a no brainer; if you rent more than 5 DVDs in a given month, you’ll end up saving money. Even if there are some months where you rent fewer DVDs, you’ll still end up ahead. While it might seem like the business is losing some potential money, Blockbuster benefits from this arrangement as well. Instead of being totally reliant on individual choices and fluctuating demand, the business can build itself on the stable income streams coming from its thousands, or millions of customers. Why Is Recurring Revenue Valuable? Why is recurring revenue so valuable for your SEO business? There are several advantages, including: Predictability For starters, recurring revenue is much more predictable than other models. Some of your clients will operate consistently even without a recurring revenue model, but demand is still going to fluctuate. Some clients will demand a high volume of work for a short period of time, then leave for a prolonged period of time. Some clients will buy different volumes of products and services at different intervals. This will lead to various hot periods, where you can barely keep up with demand, and cool periods, where you have excessive resources remaining unused and dry revenue streams. With recurring revenue in place, your income will be much stable and more predictable. As a result, you’ll operate more evenly and you’ll be able to make more accurate predictions about the future of your business. Scalability Recurring revenue also lends itself to scalability. With all your customers paying monthly or annual subscriptions, you can count on a foundation of revenue to support you. It’s much easier to forecast your future needs, and it’s much easier to grow and change your business in response to new external factors. Additionally, growing your business revenue becomes much easier, since you can focus on increasing recurring revenue in a variety of different ways, beyond simply selling more things to more people; we’ll cover these strategies in the final section of this article. Steadier cash flow Any business owner can tell you just how important cash flow is. Maintaining positive cash flow means making more money than you spend on a regular basis. It also means having ample resources to pay your employees, pay your bills, and ultimately keep the business afloat. If you have inconsistent revenue sources, or if you’re subject to demand volatility, cash flow becomes almost impossible to appropriately manage. But with a better, more predictable recurring revenue model, cash flow becomes much steadier. Long-term relationships Recurring revenue models give you a chance to build better long-term relationships with your clients. Without one, your clients will reach out to you only when they need something, and they may be inclined to work with some of your competitors for some of their jobs. If they’re paying an active subscription, you’ll be engaging with them on a much more regular basis, and they’ll be incentivized to remain loyal to you. As a result, your customer base will be far more loyal, you’ll make more money, and you’ll have more rapport with your clients, which can lead to smoother interactions. Better client control Managing a client portfolio also gives you more control over the clients you work with. If you have any difficult, challenging, or abrasive clients, you can let them go or prevent them from signing up for a recurring package. Instead, you can focus your efforts on your most valuable clients – the ones who consistently use your services without making your life unnecessarily difficult. Higher business value If you’re planning on eventually selling your business, you should know that having a recurring revenue model can increase the value of your business. Investors and entrepreneurs typically look for opportunities that allow them to generate income on a predictable and recurring basis. If your business is generating millions of dollars in annual revenue consistently, its value is going to skyrocket. Flexibility Recurring revenue also gives you more flexibility. When you know exactly how much you’re bringing in each month, you can spend in a more intelligent and thoughtful way. You can also choose to use this money however you see fit, reaping profits as a stakeholder or reinvesting into the business. Shifting to a Recurring Revenue Model Your first step is shifting to a recurring revenue model, assuming you don’t have one already. Generally speaking, this means charging a weekly, monthly, or annual rate in exchange for a specific set of services. For example: Consulting Instead of charging an hourly rate for consulting, you can charge a monthly rate for a set number of consulting hours. For example, instead of charging $300 per hour, you can charge $1,500 per month in exchange for up to 6 consulting hours. Content marketing Instead of charging your clients on a per word, per article, or per