How to Make Your Agency Indispensable With a Unique Pricing Model - Smart Agency Masterclass: Podcast for Digital Marketing Agencies

How to Retain More Agency Clients & Increase Recurring Revenue

By Jason Swenk on January 10, 2018

Would you like to grow your agency faster by increasing recurring revenue? Do you feel like your agency is on a constant roller coaster gaining and losing clients? Then learn about innovative agency pricing,  a licensing model, that can set you on a stable path. Plus, turn the tables on the industry standard of always fearing losing clients. Instead, discover how to make your clients fear losing you.

In this episode, we’ll cover:

  • What is an agency licensing pricing model?
  • How and why does a licensing model work?
  • 5 Benefits of the licensing model.

On today’s episode, we share an ingenious licensing model and the benefits it can bring to your agency.

What is a Licensing Pricing Model?

In short, a licensing model is taking what you do, niching it down in a way that you can flip it on it’s head and license it for exclusivity.

This model was born from Andrey trying to solve the main challenges agencies face, including:

  • Financial instability and fear of losing clients.
  • Providing all the creative work upfront.
  • Relinquishing ownership of completed assets to the clients.
  • Difficulty proving value later in client relationships.

These challenges are what spawned this idea of creating a process that will make the clients fear to lose the agency instead of always the other way around.

How Does the Licensing Model Work?

Generally, agency clients have a broad range of customers they could go after. As the agency, you must understand your client’s clients. Then select a niche customer that you are going to help them go after. In other words, identify a single type of customer that is ideal for your client.

Once you determine this niche customer, pre-build high converting funnels, marketing assets and conversion pathways that will absolutely crush it for that one specific channel of customers.

Then charge your clients a monthly licensing fee for the funnel and its accompanying assets.

There is also the ability to nano niche the ideal customer you identified and then create even more streamlined funnels, as well as a possible IP that can be included as an add-on to the client. You can also sell an add-on for your marketing services.

Why the Licensing Model Works

“People will do more things to avoid pain than they’ll do to gain pleasure.” ~ Andrey Polston

Agencies can play the game of constantly trying to report their worth and value, but the greater incentive here is the fear of loss. You want the client to fear losing you, your talents, and your expertise.

With the licensing model, this is embedded in the beginning. “If you leave, that’s fine, but you’re losing all this work because it isn’t yours to keep.” And with that fear comes the underlying understanding that if they leave, you will probably walk next door to their competitor and offer this service to them.

When prospecting a target client you lead with the licensing model, exclusive to the niche you have determined.

This doesn’t work if you don’t have a niche and don’t identify specific categories of customers your client wants.

5 Benefits of a Licensing Model

Andrey has identified five major benefits to a licensing model.

1- Automated Recurring Revenue

When you’re dealing with a service, you go out there, chase the work down and then try to get them to pay for it. With the licensing model, they’re put on a subscription and billed at the beginning of each month.

2- Accumulated Advantage

When you start playing deeper into a niche you will start finding new pockets of opportunity you can take advantage of, such as “nano niches” or niches within a singular niche. This is where you can create even tighter funnels and an IP that can also be licensed out to a client or provided as an add-on.

3- Productizing of a Service(s)

In order to productize your agency service, look up the ladder to tap into a potential client that would want to sell your license as an add-on to what they are selling. This provides value to them in that you’re exclusive to them and their product takes a competitive advantage because they’re now providing a proven marketing system, as a value add-on, with their client. By doing this, you are harnessing somebody else’s distribution channel, marketing, and sales efforts and piggybacking off of it.

4- Taking On Multiple Clients

Some agencies feel restrained by geographic location. However, you can take on multiple clients within the same location by niching down to those nano niches and licensing all those nano niches out. So different clients can pay per nano niche license, or one client could pay a large licensing fee for exclusivity within their city or location.

5- Potential for Referrals & Partnership

A lot of agencies start out as “full service” so they can compete against everyone. But, what that really does is just cut them off from referrals/partners, because they are competing with everyone. It’s simple – when your agency has one specific niche, you can partner with other agencies offering complimentary services.

With a licensing model, your specialization becomes so narrow that you can now cross-sell/upsell those different services or white label them out, and take a cut.

You can now go to every category of companies, that would have been a competitor, and work with them as a referral partner because you aren’t competing against them anymore. AND because of the high margins of licensing, you can pay out a lucrative, recurring monthly affiliate rate 🙂

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