Warning! These Three Things Are Sabotaging Your Agency’s Monthly Recurring Revenue

Warning! These Three Things Are Sabotaging Your Agency's Monthly Recurring Revenue

When you’re running a digital agency, you realize the lifeblood of that agency is monthly recurring revenue.  So you need to do everything in your power to protect and expand that monthly recurring revenue so you can achieve your agency’s growth goals.  Here are three things you need to watch out for because they can sabotage your agency’s monthly recurring revenue.

Your reliance on project-based work makes the sales process harder and more time consuming

When you started your web agency you probably focused on project work.  Maybe you didn’t have the skill set to offer recurring revenue services or ran into other common obstacles to getting your recurring revenue services started. 

Then you fell into the habit of selling a project, executing a project, completing the project, then selling the next project.  It’s a vicious cycle that prevents you from growing rapidly.

The problem is really the sales process. The time it takes to sell project work is repeated every time you finish a project.  While you may be a decent salesperson, it’s likely not your primary skill. Likely you are only selling because you have to and there are probably multiple other things you’d rather be doing than selling.

When you have recurring revenue streams, the sales pressure is a lot less and you can actually do a better job because you can pick and choose who you want to work with.  You get to work with your ideal prospect and that makes everything easier, from the sales process to onboarding and execution of your recurring services.

Your recurring revenue services execution is not up to par

It’s really important when you’re offering recurring revenue services like search engine optimization or pay-per-click advertising that you are able to deliver results for your clients. You have to have the expertise to get results for your client with these recurring revenue services.  It’s especially challenging when these industries, SEO & PPC, are constantly changing.

Google makes multiple daily changes to its organic search algorithms. Google also is making regular changes to Google Ads.  They are constantly trying to push people to automation in the Google Ads platform.  Sometimes that’s good, sometimes it’s not.

You must be well informed about all of these changes so that you are able to get results for your clients. It can be a challenge to keep up with these changes, but it’s vital to your agency’s recurring revenue.

When your execution of recurring revenue services is not up to par, you end up losing those recurring revenue clients and you slide back into a project-based model. So you must make sure your team is up to the task and understands not only theory but actual real-world strategies that work to drive business for your clients.

Underpricing recurring revenue services

When you’re first getting started with recurring revenue services like PPC and SEO, you may be tempted to keep pricing low to get more clients for these services. That’s a mistake because your expenses to deliver these services can creep up if you don’t account for them at the beginning.

Plus, clients who lowball you on price tend to always do that.  They tend to want more services at a lower price and eventually the balance between service cost and revenue gets disrupted and you’re not making the profits that you had anticipated.  This type of client always wants more for less and the additional time you have to spend on them generally increases over time.

By knowing all of your expenses upfront and sticking to your pricing, you will have much more control over your recurring revenue services and their profitability. You also can focus on your ideal prospect for these services. Instead of working with local mom-and-pop businesses, you can uplevel your ideal prospect targets to prospects at medium to large-sized businesses. 

Larger-sized businesses generally better understand how digital marketing works and will have more patience and faith in your expertise.  In the long run, you’ll have more success with clients who better fit your ideal prospect persona.