Recurring Revenue 101: Building a Sustainable Consultancy
“I cannot earn every single penny I make. I have to have some recurring coming up and it's really cool to see that even an $11 a month product slowly adds up. It's really kind of wild.” - Jess Campbell
Recurring Revenue 101: Building a Sustainable Consultancy
In this episode of Confessions podcast, we're diving deep into the world of recurring revenue. We share our experiences and insights on the benefits of offering monthly options, the shift from one-off projects to long-term contracts, and the importance of marketing and positioning these offerings. Plus, we discuss the value of addressing pain points and saving time for our nonprofit clients.
Tune in as we spill the beans on how we're navigating the world of recurring revenue and creating sustainable income in our businesses. It's a candid conversation that's sure to offer some valuable takeaways for fellow nonprofit coaches and consultants.
Key Highlights:
Why Recurring Revenue Matters Your business is like a marathon, not a sprint. If you only rely on one-time transactions, you're constantly chasing new clients, which can be exhausting. Recurring revenue brings stability, allowing you to plan and budget with more confidence. It's a win-win for you and your clients. For many nonprofits, predictable monthly expenses are a game-changer, making it easier for them to budget and manage cash flow.
Navigating Pricing and Contracts Pricing can be a tricky beast. Both Jess and Cindy share insights on how to package services and offerings in a way that makes sense for recurring revenue. It's not just about setting a monthly price, but also understanding the value of your services and the needs of your clients. Jess gives an amazing example of how to create annual programs and simplify the approval process for your clients.
Marketing Strategies Understanding your audience and their pain points is key. Jess and Cindy discuss the importance of marketing strategies tailored to the value you provide. Jess offers a fresh take by focusing on time-saving benefits, a perspective less explored in the industry. This approach aims to resonate with nonprofits feeling the impact of time constraints. Cindy shares her experiences with marketing recurring revenue options to consulting and nonprofit audiences, offering valuable tips for consultants to position their offerings effectively.
Playing Chess, Not Checkers As Jess mentions, playing chess, not checkers, in business is about working smarter, not harder. It's about being strategic and forward-thinking. Cindy chimes in, highlighting the need to create long-term contracts, especially when offering indefinite services, giving a direct boost to recurring revenue and long-term relationships.
Keep in mind, recurring revenue can help stabilize your business and provide consistent income. By understanding your audience, pricing your offerings appropriately and effectively marketing the benefits, you can create a successful recurring revenue model for your nonprofit coaching or consulting business.
Find Us Online: https://www.confessionswithjessandcindy.com/
Connect with Cindy:
Cindy Wagman Coaching: https://cindywagman.com/
The Good Partnership: https://www.thegoodpartnership.com/
Connect with Jess:
Out In the Boons: https://www.outintheboons.me/
Transcript:
00:00:00 Cindy: Welcome to the Confessions podcast. I'm Cindy Wagman.
00:00:03 Jess: And I'm Jess Campbell. We're two former in-house nonprofit pros turned coaches and consultants to purpose driven organizations.
00:00:11 Cindy: After years of building up our separate six-figure businesses from scratch, we've thrown a lot of spaghetti at the wall and lived to see what sticks.
00:00:20 Jess: We're on a mission to help other nonprofit coaches and consultants looking to start or scale their own businesses past the six-figure mark by pulling back the curtain.
00:00:30 Cindy: Whether you're still working inside a nonprofit and thinking of one day going out on your own, or you've been running your consulting business for years, you understand that working with nonprofits is just different. We're giving you access to the business leaders who serve nonprofits as their clients. You know, the people who truly get it.
00:00:52 Jess: No more gatekeeping, no more secrets. This podcast is going to give you an inside look at what running a successful nonprofit coaching and consulting business looks like. Basically, we're asking people how much money they make, how they get paid, and what has and hasn't worked in their businesses.
00:01:11 Cindy: Listen in as these leaders share their insights, their numbers, and the good, the bad, and the ugly when it comes to building a nonprofit coaching or consulting business. We're going to empower you to make the power moves that give you the income and freedom you set out to create from day one.
00:01:28 Jess: You ready?
00:01:31 Cindy: Hey, Jess.
00:01:32 Jess: Hello.
00:01:35 Cindy: It is, we're in the thick of fall and it feels like this year has just flown by. I can't believe it.
01:45 Jess: Well, for me, time is standing quite still as I slog through all of my projects.
00:01:51 Cindy: Okay, you have to explain this for our listeners because the way you do your end is super intense. So can you just tell us what's going on with you right now?
00:02:03 Jess: It is. And we have to have a different episode on this because this is a symptom that I have fallen trapped to. So, in my business, only about six to eight clients get to work with me on an annual basis in a customized way where I will write upwards of 15 emails and a hard copy appeal for their end of year campaign. And I generally do all of that work in one week. So VIP style. So it's campaign season. Everyone has bought me for a week. Some of them are taking longer, some of them are taking shorter, some of them are more work than there were and other ones are super easy.
00:02:52 Jess: Every year I survive, I'm also pushing myself this year to write everything I can by December 1st because mama needs a break. And I'm hoping to take all of December and half of January off. So it's just also an intensity of my own making simultaneously because that's not enough. A couple months ago, I did an analysis of my income and realized that while every month I make really good income, only about $1,500 of that, or less than 10% of what I make in a month is recurring. Meaning I work for every single penny that comes in every single month. And it's no surprise, I am super tired.
00:03:39 Jess: So I've slowly started to mitigate that. It's going, but it's a slow thing, right? Like it's nothing you're going to change your results with overnight. And so, I'm simultaneously while writing all of these campaigns, I'm also launching this template membership, which is going great. I think I have like 40 or 50 people and my goal is 100 by the 15th of November.
00:04:09 Cindy: [crosstalk] because anyone listening, because I shared it with my network of consultants too, because I'm like, this is the best deal of a lifetime. And if you have to write appeals, whether or not you're in-house or a consultant, like what you are offering, this is not even meant to be part of the conversation of this recording, but it's so, so good. And right now the value is insane. So tell, like, just tell us about the template membership.
00:04:39 Jess: Yeah. So I've had a fundraising template shop for a while. I'm very bad about promoting it. It kind of runs in the background on Pinterest and that's been fine. But I was finding that people, if it's not right in front of their face, people, you know, it's just hard for people to take action on. And I think also with like ChatGPT and AI, there's just a lot of noise. And so, I thought, what if I dropped a template in people's inbox every single Monday that is super fill in the blank style, easy to use and also has an example. So these are real emails I write for my client. So I can screengrab the example and share the results that open rates, the click rates, et cetera. And so, that's what it is. And what's great about it is it's not just appeals. So right now we're in warmup season. And so, my first template was a donor survey, which included sample questions. So like literally you don't have to guess at all.
00:05:41 Cindy: Oh, so good.
00:05:43 Jess: The second email was Halloween themed and it was all about what scares you, what keeps you up at night to kind of have nonprofits be able to see the problem before end of year giving season. This last one I wrote was called the Dose of Sunshine email template. With everything going on in the world that feels really heavy, I wanted to show nonprofits how you can be that source of joy in an inbox. And so, it was a template for that. Obviously, as we kind of moved towards campaign season, it's gonna be giving Tuesday emails and appeal emails and last call emails, and then we'll transition into something else. But every single Monday, you get a free, not a free, you'll get a template in your inbox and it shakes out to like, $2.75 a template. And so, it's like, what?
00:06:29 Cindy: Nothing, nothing.
00:06:29 Jess: No. And I have an email going out tomorrow, all kind of about like, well, yeah, you could use ChatGPT, but I actually did an experiment where I timed myself and it took me like 37 minutes to get a prompt, good enough to actually produce an email where it would have taken me probably like 3 minutes and 7 seconds to just fill in the template I wrote. And so, that's what it is. It's really great. I'm gonna be doing a full fledged launch in Q1 where I'll be inviting fellow consultants to be affiliates if this would be helpful for your audience too. But this is really more symptom of like, I cannot earn every single penny I make. I have to have some recurring coming up and it's really cool to see that even an $11 a month product slowly adds up. It's really kind of wild.
00:07:28 Cindy: This is not what we were going to talk about, but I feel like we just need to dive into this conversation on recurring revenue because you know me, I'm actually like the majority of my revenue is recurring. And so-
00:07:40 Jess: I know I love Cindy when she launched her big program earlier in this year in April, it was $9,000. And we were really transparent about that. And I remember she was like, oh no, I want you to do the monthly plan. Like I want you to do the payment plan.
00:07:56 Cindy: I find, okay, none of you listeners know, this is not the topic, but now this is the topic. We're talking about recurring revenue because I just think a lot of people, now I will say like, it's not gonna be for everyone all the time. Why it works for both of us is we have clearly defined products, and we've launched and done this work enough, to know how to package it in a way that, and deliver it in a way that really makes sense from a recurring basis. If you're still figuring out how much to charge, you don't want to be locked in to a pricing that doesn't work for you, right?
00:08:38 Cindy: So for me, I like stress test tested my program. And like, soft launched it a number of times before I figured out what the price was and all of those details. And now I feel really confident with that pricing. So that's the first thing is like, you probably don't want to jump into it right away because hands down almost every consultant I talk to undercharges and then you get locked into undercharging. So that's the first thing. Wanna add anything?
00:09:07 Jess: Yeah, that's a good, well, yeah, I would also say the thing that we both have in common is super established audiences above a certain size, right? Like, I have probably sent six to eight emails so far about my template shot and in full transparency, I've sold about 40, 45 spots. My goal is 100 in 30 days. But like, that's with an audience and an email list of like 31, 3200 engaged buyers. And this is an $11 template shop and people are not racing to the buy button. So I also just want to say, if you're just getting started with audience building, my focus wouldn't necessarily be on a low dollar membership.
00:09:55 Cindy: No, I agree.
00:09:57 Jess: But that's just me.
00:10:00 Cindy: Yeah, no, no, that's just you. That's me too. And I had a random idea that I was going to share here too, because like you all are getting the full behind the scenes of how Jess and I just talked and share. You should do a behind the scenes where people can see you customize a template. Because I think that people don't even...Anyways, that's a whole other conversation.
00:10:26 Jess: Yeah, great idea.
00:10:27 Cindy: So yeah-
00:10:27 Jess: That to the next [inaudible].
00:10:30 Cindy: Do not try to build an $11 a month product from... If you were just starting out, these one to many products really only work well as just that when you have an audience. But you can have high ticket--
00:10:48 Jess: Recurring revenue. 100% like you.
00:10:52 Cindy: So like what I do or what I teach for fractional fundraisers, which is they all have recurring revenue. They work on 12-month contracts, a monthly retainer fee, it is beautiful because it's just like clockwork, right? You get paid consistently. So I think having knowing what you who you serve and how having the experience to be like this is the actual pricing that I feel good with. And what it allows you to do is plan in your business.
00:11:25 Jess: Yes.
00:11:27 Cindy: And also, it's a gift to your customers. And I think this is something we often don't think about, but if you can put your hat on, remember when you worked in a nonprofit and like the budgeting and the approval processes and like the thing that organizations don't want are surprises or variability. They also want consistency. And so if you have... If they know, okay, I'm budgeting this the same amount every month for whatever time period, that makes their lives easier.
00:12:07 Jess: 100%.
00:12:07 Cindy: Yeah. It's just so... Anyway, so that's one sort of perspective on recurring revenue. Again, it can be any different price point, doesn't matter. But it really does help stabilize your business in--
00:12:23 Jess: Yes. Yes.
00:12:26 Cindy: In such a great way.
00:12:26 Jess: Yeah, I mean, as I said, this was me doing some internal work to figure out where my time was being spent. And I was like, "Oh, no, no, no, no, no, no."
00:12:44 Cindy: One more no. No.
00:12:46 Jess: And I knew that this wasn't going to be a game changer overnight. And I was okay with that, that this is a building thing. I also want everyone listening to think about this in this, I don't know if you call it like a term, but I've heard it spoken about a few places called playing chess, not checkers. There's actually a really good episode. I think it's episode number three on Rachel Rogers new podcast that she hosts with the person that started. What's that email?
00:13:25 Cindy: I don't know about this podcast.
00:13:26 Jess: What's your email platform? Which one do you use?
00:13:28 Cindy: ConvertKit.
00:13:29 Jess: ConvertKit. Yeah, it's whoever started ConvertKit and her, they have this billionaire podcast. And the episode is about playing chestnut checkers. She also has an episode, maybe it's episode four, with Sahil Bloom, where he describes how he does this. And this is one thing that briefly came up in our mastermind that we had earlier in Toronto and inside work. Yeah. I have literally never played chess. So metaphorically, this doesn't make sense to me, but I conceptually understand. It's like 10X though. It's like how do you work smarter, not harder in your business? I could have gone a 100 different ways.
00:14:15 Jess: I'll just say actually, another thing that I'm thinking about for 2024 in my business related to recurring giving is with my individual clients. One thing that I've noticed is that even if I write them said campaign, if they're not doing the work in between, it doesn't matter what I write, their campaigns will fall flat. And so I'm toying with, I'm playing with the idea of packaging a more comprehensive annual more taken off their plate with related, with things related to like donor stewardship that maybe isn't getting done before and after the campaign, but they pay me on a monthly basis. So again, it's like recurrent, but that's gonna be at a high ticket. And so I'm doing these recurring options, both high ticket and low ticket. And that's what I mean, like playing chestnut checkers.
00:15:18 Cindy: Totally. I just actually had this conversation with one of my coaching clients because she has this program that she's launching. And it's like a once a year, two day retreat and then a quarterly retreat from there. And I was like, "Well, it's better for the organization if you have packaged it as like a whole annual investment. "Because she was pricing it like, "Okay, the one day is this, the two days," and like that. I'm like, "No, no, no." They're really only going to benefit from it if they sign up for the year. But also, if they just want a one day, you jack up those prices because the amount of time that you spend learning on one off projects is so much higher than if you work with an organization over a long period of time.
00:16:13 Cindy: So, just like shifting the way we think about creating these packages for organizations again, to benefit them. I think that's the other thing. If I know that this is coming up and I will get better outcomes if I sign up for the year, and it's cheaper--
00:16:33 Jess: Yes.
00:16:34 Cindy: Like--
00:16:35 Jess: And it's one's decisions.
00:16:35 Cindy: And we get recurring revenue. Exactly, oh my goodness.
00:16:38 Jess: And like you were just saying, organizations like consistency, they don't wanna have to spend a lot of brain power weighing through all these decisions. And if you just kind of flat rate it, it's just an easier approval process. It's just easier all around. One other thing I want to talk about, and I'd be curious on your take on this, in fact, maybe you go first, is like the marketing of this. I know what I've leaned into on this kind of slow launch I'm doing of the template shop, but I'm curious how you position, like let's go back to use wanting preferring is maybe a better word, recurring monthly options. Like are you marketing that or you just kind of fingers crossing that?
00:17:25 Cindy: So I'll talk about the two audiences that I've worked with because they are a little different. So from and I'll start with the consulting audience because it's easy. Most like my programs for other consultants, most of us prefer the cash like the expenditures going out monthly because it just was less pressure on our cash flow. And because I'm working with a lot of people who are still early on in their business and stuff like that, they don't have these big reserves of cash that they're sitting on. So for other consultants, 90% of the time is what they prefer anyways. And so I don't have to market it or promote it as like better because that's what they're choosing.
00:18:13 Cindy: And I do have pay upfront options. Some, I've seen a lot of like courses and stuff like that where they have a discount if you pay upfront. And I don't offer that. It's the same, whatever you choose. Now, some people will ask about, you know, failure, failed payments. I have had people have failed payments, but they always end up paying in the end. And so it is a little bit more work for me, but I just find it's so much better for my clients. So, it's a win-win.
00:18:56 Cindy: For nonprofits, it depends on the price point. But for work that is recurring, it just is logical that it's recurring invoicing, right? Like if you're working over 12 months, no organization is going to want to hand over like 50% of the expense upfront, which is typically like for smaller projects, anywhere from like a quarter to half of the contract is when I've done this is due when you sign the contract, right? And so for these higher ticket or long-term things, they're not gonna wanna pay upfront that much without the work being done. So again, I think they prefer that as well. If someone were to, like the one exception is like, sometimes I will see an organization ask to pay some of it in a lump sum because they wanna get it in before your end. And then I just say sure. Like doesn't matter to me. So yeah.
00:20:10 Jess: Yeah. So then my price point, as far as the membership goes, is like a like a moon away, different than what Cindy is. And so, I too, had two price points. There's an annual price and then a monthly price. I don't have the data in front of me to say what people are choosing more or less. I think probably the monthly price. And I too did not upcharge or downcharge based on annual. But I did offer a bonus to people that joined the annual price upfront. I kind of thought of it as like a recurring gift, meaning like if I can get people, I already know that a recurring purchaser is going to retain longer.
00:20:58 Jess: But I also thought if I can get them in on an annual basis,
they'll likely retain, my guess is, is longer because they're not just like, they're just kind of using it. They're in, so to speak.
00:21:14 Cindy: Yeah, especially because they're in at a lower price point than they will ever have access to in the future, which is also a huge benefit. The one thing I will say, which is important to that is the length of contracts. So one, like I have projects that are monthly, but for nine months or 12 months, and then that's the end of the contract. I actually have programs where it's indefinite, right? Like you're a member, it's as much a month and you sign the contract up front and there's no end date until you choose to end, which is truly like a recurring gift, right? It just keeps going. So those are also really good.
00:22:02 Jess: Yes.
00:22:03 Cindy: But obviously, I think the big thing is making sure what you are doing has value to your customers because then they will all leave if you don't.
00:22:18 Jess: And the way I figured that out is I've been offering templates to my community for the last four years. They are my most downloaded, opt-in a hundred and bajillion percent. And so I already knew that people like my templates. People write me all the time telling me how much time they save and they're helpful, blah, blah, blah. So like flipping all the way back to our start of the conversation, like I do think it's important to test.
00:22:43 Jess: I just wanted to say one more thing about marketing. One thing that I'm leaning into in this kind of long launch is the fact that I'm saving people time over raising more money. For my audience, both things are a priority. But I would say that there's 101 consultants out there promising that they can help you raise more money. I don't see a ton of nonprofit consultants saying that they can help you save time. And so that's kind of what I'm leaning into with these templates. It's time first and raise more money. And that's just a little bit of a way to differentiate myself. And in this busy season, like the nonprofits are feeling the pain of time really, really, really sharply.
00:23:30 Cindy: Everyone. Honestly, like these days, the world. Oh, time is like, and I know I hear from consultants all the time, like it's so hard, cause I'm not, if I'm not raising money, how do I sell the benefit of working with me? But people have a lot of other pain points to your point.
00:23:49 Jess: Oh my gosh.
00:23:50 Cindy: And time, right now, I know everyone is feeling totally just like burnt out and they've got no steam left. So this is huge, huge.
00:24:04 Jess: Yeah. So I just encourage people to like, think outside the box a little bit on the points you're addressing. In fact, my email today that went out was all about pain points. Did you read my free article?
00:24:14 Cindy: Yes, it was. Yes, I did read it.
00:24:15 Jess: Oh my gosh. I gave a very clear example about being in pain. And when you're in that level of pain, you are willing to literally do whatever it takes until that, probably addressing.
00:24:29 Cindy: The funny thing is, I had a flat tire like a couple months ago and it was the same thing. I was like, just like I just need the car. Whoever can fix it fast. Yeah.
00:24:45 Jess: Yeah. It works. So, okay. Well, this wasn't what we were going to talk about. I hope that was helpful.
00:24:50 Cindy: It's a good conversation. Yeah. And again, yeah, do you have recurring revenue? What is it? Share it with us and your fellow nonprofit consultants so we can celebrate and learn from each other.
00:25:04 Jess: Yeah.
00:25:03 Cindy: Awesome. We'll see you next time.
00:25:10 Cindy: Thank you again for listening to the Confessions Podcast for nonprofit coaches and consultants. If you enjoyed today's episode, which I sure hope you did, you can show your support in one of three ways.
00:25:21 Jess: Number one, post the screenshot of this episode to your Instagram stories or LinkedIn profile and tag Cindy and I so we can repost you.
00:25:30 Cindy: Number two, share this podcast with a fellow nonprofit coach or consultant.
00:25:34 Jess: And number three, leave a positive review on Apple podcasts so that we can continue to grow and reach new listeners.
00:25:40 Cindy: And of course, make sure you subscribe so you can get the latest and greatest interviews as they drop every Thursday.
00:25:48 Jess: And to our fellow nonprofit coaching and consulting friends, remember, we're an open book and here to answer your burning biz questions.
00:25:54 Cindy: See you next time.