Three successful recurring revenue models for your agency
Timo, October 25, 2019
In this blog we’ll give you three examples of recurring revenu models from the work field itself. Revenue models that gave the companies that use them a lot of stability. We’ll show how three agencies pack their services into subscriptions and retain customers for the long term. Hopefully this will inspire you to focus on recurring revenue yourself.
The points packages of Bureau Vet
Bureau Vet is a marketing agency that builds websites and develops online marketing services and sales strategies. As a HubSpot partner, they link their services to the HubSpot platform. The company derives 65% of its revenue from subscription income and thanks to their recurring earnings model, they have grown 35% this year.
The subscriptions of Bureau Vet are linked to a points system. Every month, points become available that can be used by the customer as desired. Services are linked to points on the basis of how much time the agency spends on them during the work. For example, a landing page for your ads costs four points and you get eight blog posts for eight points for a marketing campaign. “The great thing about this points system is its flexibility,” says Erik, director of Bureau Vet. “Every month we look again at what is needed. Where necessary, we can change the strategy and use points differently.”
The social media management package from HashtagMedia
Marketing agency HashtagMedia has a broad repertoire of marketing activities in their service package. One of the services is managing social media channels and advertising on them. With these activities they collect 40% of their income. Of this income, 95% consists of turnover that comes in via subscription holders. Turnover that comes back every month and therefore offers security. There are two types of subscriptions to choose from. Customers who want more or want a package that is tailored to their needs can arrange this in consultation with them.
According to Joris van der Krogt (owner of HashtagMedia) a stable cash flow and the simplicity to use the same set-up for new social media campaigns are the advantages of working with a subscription model. According to Joris subscribing to a subscription is also advantageous for the customer itself. “If customers want to take individual orders, they will see that they are more expensive. Customers who are in doubt may run a trial run for three months so that we can get used to each other. Then we can see which subscription suits them best. Once campaigns are up and running, we can see after a while whether an upsell to the ProPlus package is desirable. But only if it is to the advantage of the customer; simply upgrading the account to get a higher profit each month is not useful in the long run. Since we are talking about recurring revenue, we naturally focus on long-term customer loyalty.”
Reselling hosting by Buro Bedenkt
Buro Bedenkt currently derives 35% of the total company turnover from the resale of hosting. By purchasing server space in bulk, at reseller prices, they can reduce the price of hosting for customers. As a mediator (and for the work that goes with it) they then take a portion of margin on the resale. This makes it possible to combine their core activities (marketing services and website development) in a total package with hosting. This gives customers everything they need for their website right away. Because of the attractive reseller prices and the fact that everything is arranged in one go, arranging hosting with an agency becomes extremely interesting.
Wouter Markvoort is the owner of Buro Bedenkt and explains why the resale of hosting is such a fine business model: “Reselling hosting provides security. A piece of fixed income. Because I already know at the beginning of the month that this part of the turnover comes in, I can invest. Personnel costs, for example, are one such thing. With fixed income, these costs are covered and easier to bear – perhaps also for the future when new staff are hired. That way, I can take more risks. Introducing a new service, for example. You don’t know if this will go well. If not, I run less risk because I can fall back on the fixed income.”