February 12, 2019 by kicksta
How This Web Design Company Increased Profit by 40% with Recurring Revenue Streams
If your web design company is solely focused on churning out website after website, you seriously need to consider adding on some recurring revenue streams for your business.
The fact is that the aged, old fee-for-service model will leave you feeling like you’ll always be stuck on that hamster wheel.
That’s the exact problem that Drew Moore, founder of the web design company Suited, faced when he first started his web design company.
Tired of constantly having to find new customers, Drew decided to look inward at his existing customer base. He realized his agency could provide clients with additional marketing services, far beyond website development.
We sat down with Drew, who laid out exactly how he increased his agency’s recurring monthly revenue by $400-$1,250/month per client.
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Discovering a Need in the Web Design Market
At its core, Suited is a web design agency that focuses on providing its clients with a solidified brand image and website that enhances their online credibility.
Drew put it this way, “We picture your website at the center of your digital brand and everything else orbits around it. Websites are not your only tool as a business anymore, but they are still incredibly important in validating your business.”Rather than targeting trendy fashion brands or popular eCommerce sites that are often oversaturated, Drew and his team go after a less obvious clientele.
“We focus on the forgotten of the business space who are overlooked due to a ‘lack’ of obvious creative opportunity.”
By going after this somewhat unexpected niche, Drew found that these clients not only needed the most help with branding, but also had a unique set of needs that were not being serviced by other marketing options out there.
How to Create a Fractional Digital Agency
“Hiring internal talent, the heavy cost of true ‘agencies’, or the chaos of finding freelancers- these are today’s default options, but they no longer work for the majority of healthy, growing businesses.”
Fractional agencies are beneficial to both the marketer and the client because they:
- Allow marketers to provide specialized services, similar to that of a freelancer.
- Maintain the consistent relationship clients seek from an in-house marketing team.
- Offer a more affordable price than traditional marketing agencies.
“To our clients, it feels like we are an extended, yet essential, part of their team.”
Rather than a flat one-time project fee, Suited’s new fractional model charges clients an upfront cost of $2,995 for a rebrand & rebuild of the website.
Then clients pay a recurring monthly fee of $250 for the Suited team to keep the website updated and maintain overall functionality.
With the success of their new business model essentially bringing in an additional $250/month per client, Drew set out to find additional revenue streams for his web design agency.
How to Determine the RIGHT Additional Revenue Streams for Your Web Design Company
After you have built the website for your client, the next big question is to determine how to increase the lifetime value of that client.
“You can’t just ‘have a website’ you need to put in the work to gain consistent traffic and brand awareness in order for your business to be successful.”
Knowing that his clientele didn’t have the time or technical background to keep up the maintenance of a modern day website, he began adding on additional recurring marketing services based on two main disciplines.
1. It Creates Convenience for Clients
After Drew and his team built up trust with the revamp of their website, their clients were more than willing to hear about the other services Suited offered.
“One point-of-contact is such an easy sale that is so appealing to the customer. There are 100 reasons why something offered under one roof is better, but mainly it is less complicated.”
Drew found that clients loved having someone to “own the website,” giving them one less thing to focus on.
2. It Solves a Directly-Related Need
While it’s easy to become a “yes” man, Drew’s team finds success by only branching to services that correlate back to their core discipline: web design.
“Ask yourself, ‘What else can we offer our customers while they’re here, that’s logical and in line with their reason for coming to us?’”
With these two concepts in mind, Suited slowly rolled out their now 8 recurring revenue streams.
Drew offers this advice for digital marketers looking to create additional revenue streams for their business.
- First focus on what you deliver, secure it, invest in it, and make that 100% solid.
- Then, look at all of the areas where you’ve had to say, ‘Sorry, I don’t do that’ to clients.
- Make a top-5 list of services that directly relate to your business.
- Then send out a survey to your customers to make sure there is a real need and customer interest.
- Take your time and slowly test offering one new service via a partner/group that focuses on that area, and see how it goes.
- Only ‘offer’ extra services that you’re willing to sell like your own.
Suited’s Additional Marketing Services
The Suited team is picky about the services they add on for their clients, but that doesn’t mean that there aren’t plenty of options.
Marketing Tools to Add as Revenue Streams
With strategic partnerships, Suited has been able to increase their perceived value by offering services from complementary tools to their clients.
1. WordPress Hosting via Flywheel
As one of their first big partnerships, Drew credits flywheel as the spark that started it all.
“We could not have scaled as quickly and seamlessly without Flywheel’s unique Managed WordPress hosting for agencies like us.”
While shopping around Drew found a ton of ways to host sites, but Flywheel stood out as one of the few WordPress hosts that focused their attention on freelancers and agencies specifically.
The Whitelabel Flywheel Program allows Suited to “create a customized client portal and is the vehicle behind recurring payments with Suited’s subscriptions.”
“Aside from the fact that their brand is just plain cool, their support is relentless, their decisions as a company are 2 steps ahead, and we feel like we have fellow creatives (and a few highly-skilled nerds) have our backs.
We started with them in 2015 and have not looked back. We simply cannot say enough good things about the hip kids of Flywheel in Omaha, Nebraska!”
2. Video Hosting via Wistia Pro
You’re probably already hosting videos for your clients to display on their website.
And if you’re not you definitely should be. Websites using video see an average conversion rate 4.8%, compared to 2.9% for those that don’t use video.
This is exactly why Suited added a premium membership with Wistia’s hosting services, which allows their clients to store up to 200 videos.
By re-selling Wistia’s Pro Plan, agency’s can host 10 videos for $99/month and any additional videos can be hosted for only 99 cents each, giving the Suited Team the flexibility to create a customized upsell plan.
Plus through their Partner Program, Wistia’s dedicated support team will help you price and package your video services to help you form long-lasting client relationships.
3. Survey Technology via Typeform Pro
Similar to videos, you are most likely providing forms for your client’s website views to fill out, whether it be for lead generation, support tickets, or customer feedback.
Suited creates forms and surveys via Typeform as yet another revenue stream that they can list as a line item on their client’s retainer.
4. Social Media Scheduling via Hopper HQ
Via Hopper, clients gain access to their premium scheduler for planning posts for Instagram, Facebook, and Twitter.
Normally, a Hopper account is $20/month. However, for agencies that have 10+ clients, you can unlock a discounted price of $10/month.
Even if you were to sell it to your clients at $15/month, that’s still an additional $5 per client each month with literally no added work on your end.
Plus, they offer a 14-day trial to see if it’s a good fit for you and your team.
“Think of us as an extension of your social media team! Visually plan and manage your social media feeds with Hopper HQ, we’ll post for you and and free up time to focus on the areas of marketing you love most.”
Nicola Cronin, Marketing Executive at Hopper HQ
5. Instagram Growth via Kicksta
Scheduling social media posts is only half the battle.
Suited realized their clients need to build a community of real followers for Instagram that would create a consistent flow of traffic to their website.
So they partnered with Kicksta through our white label partner program which has been one of their most successful additional revenue streams.
“We’ve seen an increase of roughly 10% in 6 months since offering ‘IG Growth Mgmt’ as part of the mid-level subscription.”
Drew also shared that not only is it increased revenue, Kicksta is also creating happier clients for their web design company.
“Kicksta is quickly gaining popularity, as Support & Brand Managers keep hearing, ‘..whatever your IG Growth Manager is doing is working; keep it up!'”
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Marketing Services to Add as Revenue Streams
Along with partnering with complimentary SaaS companies, the Suited team also brought on creative freelancers to create even more recurring revenue streams for their business.
1. Email Marketing via MailChimp
Utilizing MailChimp services, Drew and his team are able to offer landing pages, email marketing, and postcard marketing to their clients.
Through a white label partnership with MailChimp, digital agencies qualify for a 15% discount for all of their client account.
The agency discount paired with a service mark-up for the implementation of automated marketing campaigns makes email marketing one of the most profitable additions for digital agencies.
2. Digital Ads via Suited Experts
While it may take some in-house experts, web design agencies like Suited can also develop creatives for digital ads via Google, Facebook, Instagram, Yelp and Linkedin.
As Drew explained:
“It’s simply this. The same group that designed and architect the website, makes the most sense to be the group that’s stepping into other marketing verticals that drive traffic back to the page we designed.
I’m not saying that for example an ad consultant and a web designer are the same guys. Rather, if you already have a team of graphic designers, it’s an easy transition.”
3. SEO Management via Suited Experts
With their local SEO Campaigns, the Suited team increases the visibility of the client’s website. A win-win for both the client who wants more online traffic, and the digital agency who wants to prove the results of their rebrand.
Drew explained that the Suited services can range anywhere from simply providing a go-to web guy, to essentially running all marketing services for a brand.
Here’s how he prices his services to increase customer lifetime value and company revenue.
How to Create a Pricing Model for Your Additional Revenue Streams
When he started introducing these additional revenue streams, Drew learned that a lot of their clients were not ready to make the jump from their entry-level services to a fully on-boarded client.
So, they created a 3-tier pricing plan to help their clients find a package they feel comfortable with while giving Suited a better chance at up-selling their services.
All tiers have the same payment structure. An up-front cost for the website redesign along with a recurring monthly retainer to cover the additional services.
Here’s how to structure your pricing model for your web design agency:
1. The Entry Level Package
Create a price point that will help you convert leads into entry-level customers.
As Suited’s lowest entry-level tier, the Valet package includes basic branding and website redesign within the first 30 days.
The price point is low on purpose. As Drew put it, “Any business owner knows that this price is equivalent to the payroll tax for one part-time minimum wage staff!”
The goal of this package is to get clients in the door and start building rapport with a long-term partnership.
“Your 12-month subscription gets you direct access to the same group that built your site & designed your brand, to make unlimited edits to the content we delivered at the time of launch. It’s really simple, and our clients love it!”
2. The Upsell Package
With this package, your goal is to get all of your clients who start out on the entry-level plan, to eventually upgrade to your mid-level service.
This is how you can significantly increase your recurring monthly revenue and customer lifetime value.
Suited’s most popular upsell package, the Tailor package, brings clients all the benefits of Valet plan plus these additional revenue streams.
Drew’s biggest advice when it comes to building a pricing model for your digital agency is to avoid custom plans.
While it can be tempting to let customers pick and choose the services they want, Drew and his team strategically outlined the services for each tier to implant in the customer’s mind that all of these marketing channels work together cohesively.
This method will also help you bulk mark-up your services and get a higher return from clients.
In Suited’s case, they are increasing revenue by $400/per client with ever upsell to the Tailor Package.
3. The Premium Package
Complimentary tools are not the only revenue streams you can add for your web design agency. Do not underestimate the appeal of personal touch.
With Suited’s most premium plan, the Outfitter, clients are assigned a dedicated Brand Manager in addition to the benefits of our Tailor level.
Recommended for growing teams lacking any existing internal marketers, the Brand Manager acts as both a creative director and collaborator for internal projects, as well as the client’s single point of contact externally for PR & Marketing opportunities.
Companies that are looking to outsource all of their marketing efforts, at a price that is more affordable than an in-house team, find this premium service to be the perfect solution.
By adding on a couple of Brand Managers to the Suited team, they have been able to increase their premium client’s monthly retainer from $250 to an impressive $1,500.
How to Sell Additional Marketing Services for Your Web Design Company
Step 1: Identify the Needs of Your Client on a Discovery Call
“It’s your job as the professional to first listen to their pain points, help them understand their needs, and THEN pitch your service as the solution.”
This is key for getting your clients in at the right level and building trust.
According to Drew, whether they know it or not, most clients are typically looking for these two key solutions.
- A Scalable Marketing Strategy
“Our ideal customer is looking for professional, agency-quality design and brand-wide support, yet lacks the budget to hire even the smallest of local creative agencies, or an internal ‘Brand & Marketing Manager’.”
The average salary for a Director of Marketing can range from $80k – $150k depending on the size and location of the company. But for many small business owners, that just isn’t an option.
The business owner might decide to go the freelance route. This can be more cost-effective, but managing an outsourced team can be incredibly time consuming and slow-paced.
Drew and his team take an approach somewhere in the middle, acting as an extended part of their team on a long-term basis.
If you suspect scaling is your client’s main goal, here are some questions to ask in the discovery call:
- “What problems have you run into with website maintenance in the past?”
- “How much time per month are you spending on your website?”
- “If you were to off-load your web design duties, how could you use that time to improve your business?”
2. Help from an Expert in Web Design.
“A lot of small businesses, entrepreneurs, and solopreneurs enter the market with a DIY website, but don’t have the time or team for upkeep and it shows…
While we’re being told we can ‘DIY’ anything today, and it is technically true, it only works for a select few with creative abilities or volunteer assistance.”
The fact is, most small & mid-sized businesses can not, and should not spend the time it takes cobbling together a DIY site offered by the big names we all know.
Instead of spending hours wading through free stock imagery, buying cheap logo art online, and then trying to figure out who’s going to integrate marketing apps, explain to the client that your web design company will provide a one-stop solution with expert insight.
Step 2: Give Your Initial Pitch
Once you and the client have the same understanding of what needs to be fixed, pitch them the package that best satisfies their needs.
Drew admits that on the initial discovery call the client will typically say something like this: “We want all that, we just don’t have the budget.”
To that, he replies, “No problem. Let’s start lower and get there when you’re ready.”
The Suited selling strategy is simple, but often ignored by other digital agencies.
Go for the slow play with a policy to under-promise, but over-deliver.
In other words, start the client off on a lower tier and build rapport.
“After we show what we can do with their website, a level of trust is built and the client is much more comfortable with trying more services out.”
Step 3: Up-sell Recurring Revenue Streams
“We wait until it is painfully obvious that we can help them [the client] with our additional marketing services.”
On average, Suited will have a 6-month check-in call where they outline the potential growth a client can have by upgrading to more services.
Since they have such a hands-on approach with their clients, they often find that the clients themselves come asking for more from Suited.
Suited utilizes a semi-white label model, where the client is aware that these 3rd party services will be used, but the Suited team will be in charge of implementing and optimizing them on their behalf.
AKA, no added work for the client.
Drew said that the key to up-selling their clients to high tiers is to clearly lay out exactly what that extra $400-$1,250/month will get them.
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Does This Sales Method Really Work?
Drew admits that this is not a quick turn around process. Gaining trust and building a meaningful relationship with a client takes time.
But the point is, this method works.
- 25% of Suited clients have upgraded at least 1 tier level.
- Suited has never had a client ask to downgrade.
- After a 1-month trial on a higher tier, most clients have locked into a one year contract
“The client doesn’t see it as a sell. They think of us as a part of their team that helps them achieve their marketing goals while their sleeping.”
This has also helped Suited maintain a lean business model.
They have a relatively small number of recurring clients, but are able to increase their customer lifetime value (CLV) by building strong relationships and adding on services.
And their marketing costs… basically non-existent.
Aside from “some cheap print ad and a basic SEO presence”, Suited has grown into a robust marketing agency with no paid ads or mass email campaigns.
“Suited has been growing since day 1 from referrals alone. There are no plans today to advertise.”
How to Scale a Web Design Agency REMOTELY
1. Get the Right Team Members
Perhaps one of their most impressive achievements is that Suited has been able to build this model while remaining a completely remote company.
“We are fully remote, with small remote offices around the US- that drastically cuts overhead.”
Drew admits, “The balance of offering more services, yet remaining fully remote was a challenge- one we still face today.”
However, Suited has been successful by bringing on a small core group of employees and maintaining close partnerships with freelance specialists.
“We are continuing to grow a trusted list of photographers, videographers, printers, and other specialized contractors to collaborate on our current subscriptions, as we continue to add on more premium levels.”
2. Set Customer Expectations
This can be a tough one, but it is crucial for developing a mutually beneficial, long term partnership with your clients.
Make sure the client understands the services you are going to provide and WHY you are doing them.
Equally as important, you need to clearly convey what you will not do.
“We realized quickly how clients, understandably, begin to gray the space between the design we do, and their sales.
To protect us both, we make it abundantly clear that we cannot be any businesses’ sales, product fulfillment, or customer service team- that has always got to be an internal or external hire by the client with specialties in those areas.“
To help keep everyone on the same page, Drew suggests reminding their clients of the main goal their web design team will achieve for their business.
“The goal is to get them looking great SO that they can sell better- THAT is the ROI from Suited. A professional look & quality marketing content to arm your internal sales & marketing team.”
3. Create Different Tiers of Customer Support
Creating different levels of support allows Suited to cater to the individual needs of their clients, while still remaining profitable with a small support team.
The less expensive packages naturally come with lower levels of support.
However, Suited has always been committed to making its web design company feel like part of their client’s team and avoids the “support ticket model” at all costs.
“Utilizing a dedicated ‘channel’ in Slack or email, clients reach out and get a same-day response and that is poured into a task in our task mgmt app, and assigned to a Suited team member accordingly.”
They also provide email support where requests are met within 72 hours guaranteed.
The biggest differentiator of the high-level plan, that brings in $1,500/month per client, is the level of support clients receive.
The role of the Brand Manager for the premium tier is where Drew sees the most potential for his digital agency and where he intends to focus as he continues to increase revenue streams.
The Potential of Your Web Design Company
For any business to add on additional revenue streams, they must solve an existing need and determine how to scale that solution.
With a 40% increase in recurring revenue, Drew Moore’s web design company turned digital agency has done just that.
“We realize that the landscape of businesses has changed dramatically, so we as ‘those that serve businesses’ had to as well.”
With the addition of all of their marketing services, Drew now describes Suited as such:
“We are a remote creative agency, that designs and builds WordPress websites, and integrates them to the apps & services that make businesses money. “
The beautiful thing about Drew’s model is that it can be adapted to any need that occurs in the market.
While there will always be advancements in the digital marketing space that creates new needs, Drew says this template they have created can be applied however the market changes.
“At the end of the day, what they are really paying for is people and creativity. We’re ready to pivot to whatever the client needs.
If you’re tired of managing freelancers, building a DIY site, weary at the thought of the lengthy process of interviewing & hiring, and know you don’t have the budget or time for ‘traditional agency’, then give us a call or contact us online! Looksuited.com
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