Recurring revenue: how to get started
When you don’t have recurring revenue, your agency is constantly in crisis. You’re always searching for the next client, and your quality of service can suffer. Our Recurring Revenue Package Builder is the answer.
Every digital agency needs to plan for recurring revenue. You need to have recurring packages that you sell alongside your standalone work.
Having those recurring packages gives you more stability and peace of mind. You’ll know that you have a certain amount of money coming in each month. That means you can plan around that guaranteed income when you scale your agency.
Of course, you also need to build those recurring packages, which is where many agency owners run into trouble. Right now, you might have one of two problems: either you don’t have recurring packages at all…or you have them and they’re not working.
With the Recurring Revenue Package Builder, I’m going to show you how to get it right. But to start, let’s discuss…
Are you confident in your packages? You might be second-guessing your offers so much that you lack the confidence to move on to other areas of your business.
This is one of the main issues that I want to confront with this article. It’s okay to have a set of good-enough “Version 1” packages, as long as you’re selling them consistently. You don’t need to get everything perfect straight away. You can make tweaks along the way to every package that you create.
You just need to have the confidence to create and sell whatever works in the first place. If you don’t have that confidence, you won’t be able to sell any packages.
But maybe you don’t have any packages to sell at all. That means you haven’t started creating recurring revenue yet.
You might be making things more complicated than they need to be. Are you working yourself up over not having any recurring revenue? That starts to create unnecessary fear in your mind, out of all proportion to reality. You might end up thinking that it’s too hard to put recurring packages in place at all.
And so you don’t do it.
You ultimately think that your packages aren’t going to sell. That means you don’t even make the offer because you’re operating under this false assumption.
There are several opportunities that you can create with the Recurring Revenue Package Builder.
The first is that you get clear client outcomes. You get super-focused on the end result that you are delivering, so you can build it into your packages.
That clarity will also help you to determine the correct pricing for your packages. You’ll build out your client avatars so that you can price your packages based on each avatar’s needs. This is the most powerful way to build these packages. Once you know what the client needs, you can start designing your features.
Finally, you’ll discover how to create value. I remember trying to build recurring revenue using $25 and $50 monthly hosting packages. But once I got wise to the fact that clients will pay more for great value, I quadrupled my agency’s revenue.
Now…how does having thousands of dollars of recurring revenue flowing into your business sound?
To make it happen, you need to implement these five principles.
Principle #1 – Unpack Your Possibilities
The worst place to build a strategy is inside your own head. That’s why I always recommend unpacking your possibilities as the first step.
The goal here is to get every idea–good and bad–out of your head and onto paper. Dump all of the puzzle pieces out onto the table. This allows you to take a full inventory of all of the services that you could offer as part of your packages.
You’ll also start to gain clarity on the outcomes that you can deliver to your clients.
Once you have all of your ideas on the table, you can start lining them up. You can look at your desired outcomes and pick out the minimum number of services needed to reach those outcomes.
For example, let’s say your client wants more leads.
You may have 50 different ways to do this for them. But by unpacking the possibilities, you have the chance to choose the very best way. You can then build it into a package that you know will get results for clients.
Principle #2 – Aim for Three
Most people like to buy things that come in three different versions. Apple sells the iPhone in 64 GB, 128 GB, and 256 GB memory sizes. When I go to Starbucks, I can get the tall, grande, or venti.
Of course, these companies can have variations and other things that sometimes break these rules. But they tend to stick to three or four packages and build from there.
The rule of three is what you need to aim for when building your packages. You don’t want to come to a client with 10 different options. That’s just going to leave them feeling confused and less likely to sign up.
Stick to three (or two/four if your market needs it) and you simplify things while making it easier for clients to say “Yes.”
Principle #3 – Price Your Avatar
This is something that’s worked extremely well for me over the last 20 years.
When I think of my clients, I imagine them moving through the stages of their business. Take restaurant owners as an example. They’re either just starting, they’ve hit a plateau, or they’re in a growth phase.
Each of these stages has different needs, which you can use to build out an avatar for each one. And to each of those avatars, you offer a package that suits their needs and has an appropriate price.
My favorite analogy for this is the difference between coach and first-class on a plane.
Airlines know that they have certain types of buyers who want to travel first class. And their goal is to give those passengers a first-class experience by providing various perks, such as free drinks.
In return for that extra value, the airlines charge a lot more for a first-class ticket. They make an insane profit margin because they offer a little extra value.
Now, the guys in coach still get what they expect from the service. And they may even be able to land a few perks themselves. However, they’re going to pay a lower price because the airline prices those tickets to a different avatar.
This is what you need to do with your packages. Figure out who’s going to buy at each level and price accordingly.
Principle #4 – Make Your Offer Compelling
You need to ensure that each of your plans has something compelling built into it. This is the wow factor that makes your package irresistible to your prospects.
Here are some examples:
- A free month if they buy a 6 or 12-month package
- A money-back guarantee
- Bonus deliverables, such as a free website if they sign up for a year
This is all stuff that’s really compelling to your audience. And it’s also stuff that you can offer within the package and won’t take a huge chunk out of your profits.
I love Dean Jackson’s way of looking at this…
He says that it’s more powerful to make a compelling offer than a convincing argument.
Don’t argue with your clients about why they should sign up for your packages. Just give them a really sweet deal so they feel compelled to do it.
Principle #5 – Validate Your Thinking
You can’t create in a vacuum.
If you’re sitting in your office trying to come up with packages on your own, you’re making a mistake. You need to get your clients involved so they can provide you with some insight.
Draft up the first version of your offer and start selling it. But as you do, talk to your clients and get feedback on the package. Ask them what’s working and what you need to tweak. Figure out which parts of the package get them the best results.
If you’re trying to figure all of this out on your own, it’s like you’re trying to ballroom dance by yourself. It’s awkward, it probably doesn’t work well, and you likely won’t have as much fun.
But when you involve your clients, you have a dance partner. And together, you can create something that benefits both of you.
Building Recurring Packages Isn’t as Complex as You Think
Now it’s time to take action on what I’ve shared here.
That will solve a lot of your problems. Use these principles to get the first versions of your packages out there. Start selling those versions and then talk to the early adopters. Work with them to make tweaks until your recurring packages offer what your clients want.
And you’re just getting started.
I have so much more to show you about building recurring revenue packages. But to learn more, you need to become a member of UACADEMY.
Do you want to find out how?
Apply today for a FREE strategy session where we’ll discover if you’re a good fit for UACADEMY.