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?
Table of Contents
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 project basis, you can create a package for a monthly fee that allows people to tap into several content marketing assets. For example, a rate of $2,000 per month might give them one new blog post per week, a handful of social media posts, and a white paper.
Search engine optimization (SEO)
Ongoing SEO services can include things like technical onsite optimization, keyword research, strategic analysis, and reporting. Your monthly packages should include an outline of all the services provided during a given month.
Link building
Instead of charging per link, you can offer a set number of links per month and charge a recurring subscription rate for those links.
A total package
Most SEO agencies attempt to capitalize on recurring revenue by offering robust, sometimes comprehensive packages of different services. For example, for $5,000 per month, your clients may get access to regular blog posts, a handful of links, SEO reporting, and even consulting and recommendations every month.
You can also stipulate minimum terms for your recurring revenue arrangements. For example, you might only offer monthly packages if clients sign up for a minimum of three months.
Strategies for Increasing Recurring Revenue
So what strategies can you use to increase recurring revenue in your SEO company?
Improve workflow/process consistency
Your business will run smoother, your operating expenses will decrease, and your clients will be happier if you can improve workflow and process consistency. When a new client signs up for a monthly package, what is your onboarding process? How do you learn about their brand standards and goals, and how do you convey that information to your team? Each month, is there a specific schedule or formula you follow to make sure that every client gets all the products and services they’ve paid for? Make sure you have thorough documentation explaining exactly how all of your internal processes work. It’s also important to update these documents regularly as you discover more efficient processes or adjust your approach.
Incorporate more automation
Every marketing business can improve profitability by incorporating more automation. Automating a process means eliminating the need for manual effort within that process; it also means increasing consistency, since algorithms are less prone to making mistakes than humans. Automatically creating new tasks in a project management system, automatically generating and sending reports, and automatically charging clients for their monthly fees are just some examples of positive changes you can make.
Use a white label partner
Consider using a white label partner for your SEO services. In this arrangement, an external SEO service provider will provide your clients with various services, including content creation, link building, and reporting. Because this work is all white labeled, you’ll have the option to incorporate your branding into the work – in other words, your partner will be invisible and you’ll get all the credit. This arrangement is highly beneficial because it allows you to scale indefinitely; you can keep taking on new clients and serving them consistently and profitably by tapping into the resources of these external service providers.
Look for more upsell opportunities
One of the more straightforward ways to increase your monthly recurring revenue is still look for more opportunities to upsell your existing clients. These clients are already familiar with you, they trust your brand, and they like what you’ve done in the past. Accordingly, they’ll be likely to take your recommendations seriously. If you advise them to build more links, turn out more blog posts each month, or incorporate other new services, they may be willing to pay you a higher rate each month. Teach your salespeople and account representatives to be on constant lookout for expansion opportunities.
Offer flexible packages
Some businesses want the total package; they want a comprehensive set of SEO services and a ridiculously high volume of work. Others are operating with a much more limited budget. You don’t want to artificially limit your revenue, nor do you want to alienate any clients. The solution is to offer many different packages and keep those packages flexible. Offer a package that fits almost any hypothetical client – and be willing to make adjustments to those packages as needed.
Eliminate “unlimited” offers
You might be tempted to include some service packages with “unlimited” elements. This is certainly appealing to many clients. However, it’s a way of setting yourself up for revenue limitations. If you offer an unlimited number of consulting hours, for example, some of your clients may take advantage of this, ultimately compromising your profitability. Always set a firm upper limit for the plan and be ready to charge extra if a client exceeds these limits.
Prioritize customer retention
Client retention is almost always more valuable and less expensive than client acquisition, but this is especially important in the world of managing recurring revenue for an SEO agency. You should be working actively with all your clients to make sure they remain satisfied, so they’re incentivized to continue their subscriptions. If a client is dissatisfied with your work, or if your relationship is jeopardized in some other way, you could lose a valuable piece of your recurring revenue pie.
Prove your value
In line with this, it’s important to prove your value regularly. If a client is spending $5,000 per month with your business, it’s your responsibility to prove that you’re providing at least $5,000 of value every month. How many organic visitors are you generating? How many referral visitors are you generating? How have conversion rates changed and how are your clients ranking for their target keywords? Issue a report on a monthly basis (or even more frequently) to demonstrate how you’re adding value to each client’s organization.
Seek bigger clients
Another way to increase recurring revenue is to seek bigger clients. Bigger businesses have bigger sets of needs. They have bigger websites, more existing customers, and more direct competitors. Accordingly, they need more content, more links, and more overall support – and they’re willing to pay for it. Many large businesses have no trouble spending tens of thousands of dollars per month on marketing, or even more – so seek them out and add them to your portfolio.
Diversify your client portfolio
Investors need to diversify their portfolios to improve consistency, hedge against risk, and ultimately see better long-term returns. You should be diversifying your client portfolio for the same reasons. Consider taking on clients of many different sizes and from many different industries; this way, if there’s a major industry disruption, or if economic conditions become unfavorable to a specific type of business, you’ll never run the risk of losing your entire portfolio.
Raise prices strategically
Possibly the most straightforward way to increase revenue is to increase your prices, but if you do this without warning, or if you raise prices too much, you’ll run the risk of losing some of the clients you’ve worked so hard to keep. Raising prices can be a good move, but you have to do this strategically. Only raise prices if you can justify the move, such as by adding new services, expanding your available resources, or compensating for a new expense. Also, only raise your prices periodically; if you consistently raise prices every year, your audience is going to become frustrated.
Offer a discount for yearly payment
Another simple trick is to offer your clients a discount if they pay for a year in advance.
For example, if you’re charging $3,000 per month, you might bill $30,000 annually, saving your clients $6,000 in the process.
Clients benefit from getting a discount, potentially increasing their satisfaction, and you benefit from getting the money in advance, so you have more flexibility with how you spend it and assurance that you get a full 12 months a partnership out of this arrangement.
When you make the cost of your SEO services fair and transparent, clients will be more likely to return or recur on their on-going payment to you.
Maximize lead flow and conversions
Finally, make sure you make improvements to your lead generation strategy and conversion optimization strategy. You’re naturally going to make more revenue if you have more clients routinely discovering your brand.
Ready to Boost Your Agency’s Recurring Revenue?
Are you ready to convert your SEO agency to a recurring revenue model?
Or are you looking to get more value out of your current ongoing customer relationships?
You’ve come to the right place.
SEO.co can help your SEO agency with almost everything you need to drive more recurring revenue, from providing white label link building services and content creation to helping you with pricing strategies. Contact us for a free consultation today!
Tim holds expertise in building and scaling sales operations, helping companies increase revenue efficiency and drive growth from websites and sales teams.
When he's not working, Tim enjoys playing a few rounds of disc golf, running, and spending time with his wife and family on the beach...preferably in Hawaii.
Over the years he's written for publications like Forbes, Entrepreneur, Marketing Land, Search Engine Journal, ReadWrite and other highly respected online publications. Connect with Tim on Linkedin & Twitter.
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