Brooks Digital, a virtual agency, has found a way to generate recurring revenue by avoiding large projects. By delivering constant results using retainers, they have won the trust and hearts of risk-averse non-profits. I talked to its principal and founder, Spencer Brooks to learn how they convince clients that less is in fact more.
Spencer is talking to me from his office, slash studio, in his home on Portland, Oregon, U.S. The far end of the room is dominated by his drum set. It’s not exactly what most people would imagine that an agency looks like. But that’s if you’re thinking conventionally. His agency, Brooks Digital, works with several freelancers globally to serve non-profits of varying sizes.
“I’ve Only Had Three Actual Jobs With a Company”
I ask Spencer how he ended up being a freelance software developer and eventually, an agency owner.
“In my life, I’ve only had three actual jobs with a company,” Spencer tells me. He says they ranged from delivering pizza to working in his home state of Idaho as an intern. The cubicle culture of government IT wasn’t what Spencer saw himself doing so at the age of 21 he became a freelancer.
At the same time, he attended college and took classes in computer science. “I dropped out of college after a few years. I was like, ‘okay, I think I’ve learned what I need to learn’ and joined a band.”
After a year on the road playing drums, he got tired of the tour life and living out of a van. He decided to get serious about freelancing and put the knowledge he gained in college to use. It went well. The drummer started doing more and more work with Drupal (a popular and powerful open-source content management system, or CMS).
Being a freelancer provided an excellent income stream, but the stream was quickly turning into a river. Spencer had to make a choice. He incorporated Brooks Digital as a company in 2015.
Spencer Found His Agency’s Niche, Clientele and Purpose By Looking Into Himself
“I spent a number of years trying to hone in on what types of clients I like to work with and what my vision was for the company, what was of value to me personally. And I really started to focus on the non-profit market,” Spencer says.
Reading the classic “The 7 Habits of Highly Effective People” by Stephen Covey (paid link) influenced his idea of the ideal customer, he says. It contributed towards the decision of starting his agency and scaling up. One of the pieces of advice given in the book is to picture your own funeral and what your friends and family will say about you then.
“It’s knowing that when I’m done, I want to have helped the do-gooders of the world do more good. That’s very much the phrase that echoes through my mind.”
Spencer also noticed that there was a good overlap between Drupal and the open-source world. They seemed to have a similar way of addressing problems.
“It’s like they all started because they just had to figure something out, which is why I think there’s just such a natural fit between like the open-source community and Drupal and those non-profits.”
They Are a Professional Alternative to the Accidental Techie
As the newly minted agency owner learned more about the world of non-profits, he discovered the phenomenon of the “accidental techie,” as he calls it.
“That’s the person who got hired and they showed some technical aptitude and being good with computers. So they got stuck with the web site and they really had no idea what they were doing or it’s not part of their job description.”
Very few non-profits, except the largest ones, can hire someone full time to build and run their website. The funds they have been given cannot be used for something that’s considered an expense.
Hiring a freelancer or agency is sometimes easier since that money comes out of another bag. It’s also easier to contract out limited work related to a one-time grant. Freelancers also have the benefit of often being cheaper than taking on talent full-time.
They Use Retainers to Generate Recurring Revenue and Help Non-profits Improve Their Websites Continuously
As Spencer worked more and more with non-profits he also starting recognizing recurring problems. One such challenge was communication. Many non-profits just didn’t know the right terminology and felt that agencies didn’t speak the same language as them. These non-profits had the impression that large projects were daunting and full of risks.
To address this, Spencer started focusing on delivering packaged monthly recurring service retainers, rather than doing big projects. These ongoing design, development and digital strategy projects, which helped his agency earn revenue on a regular basis also presented less risk to the buyer.
They Want to Work With Clients That View Their Website as a Product
To Spencer, the clients that Brooks Digital could work with this way also turned out to be a lot more manageable than those asking for big projects. The clients that needed ongoing help were also the ones he liked working with the most.
“They treated their website as a product, whether they called it that or not. They had a vision for it.”
In other words, these non-profits considered their website instrumental in providing online services to their constituents.
This also meant he spent less time on sales and marketing just to bring in new business. The retainer agreements he’s established create recurring results for his clients and generate monthly recurring revenue for Brooks Digital.
“This is on autopilot now. I made the sale once and every year, just every month, there’s money coming in because of it.”
This is where Spencer and his agency found their niche, position, and offer: helping non-profits improve their websites continuously over time.
They Often Deal With Funding With Strings Attached
One major difference between non-profits and companies, which we’ve touched on, is funding with strings attached.
“You raise a million dollars, but that’s not like a million dollars of business revenue,” Spencer explains.
In non-profits, funding isn’t like money in your average businesses. Funding comes with constraints. Spencer says that donors can be highly specific regarding how funds may be used.
“We want all of this money to go exactly to funding the programs that you’re doing. But we don’t want this to go for your rent or your staff salaries. We don’t want this to go to your electric bill. We just want all of this to go to you helping people.”
The people and organizations that provide funding make those decisions based on the financials of non-profits. An overhead is considered a bad thing since it’s “wasted money.”
This extends to the website and whether it’s an overhead cost or part of delivering the services of the non-profit. If it’s a cost and not part of the service, it gets minimized to manage that cost in the financial statements, which are all public.
They’re Bold in Their Messages: “The Non-Profit Website Redesign Is Dead”
Spencer tells me about one of his clients, the leader of a non-profit. She had been considering building a new website for over a year. But when she got proposals they were apples and oranges; all bidders recommended doing different things.
But all of the bids proposed massive projects. She wasn’t sure what was the right thing to do. The executive just wasn’t comfortable making bets that size.
All those proposals sat on her desk for a year. Until she read an article by Spencer titled “The Non-Profit Website Redesign Is Dead.” In this article, Spencer put forward the idea of doing growth-driven website redesigns. It’s an idea he’s picked up from marketing platform provider Hubspot.
“You don’t have to do it all at once. Let’s just take and launch your must-have features by tearing this down to the smallest thing we can possibly do.”
Then by building the website a bit at a time, you can learn as you go using analytics and other types of research. That way you can pour your resources into what generates results.
They Brought Growth-hacking, MVPs and Recurring Results to Non-profit Websites
To us in the world of startups, it sounds like a combination of MVPs and the concept of growth-hacking. Spencer agrees. He’s just had to relabel it to make the idea applicable to his non-profit niche.
What is growth hacking?
“Growth hacking is a process of rapid experimentation across marketing funnel, product development, sales segments, and other areas of the business to identify the most efficient ways to grow a business. A growth hacking team is made up of marketers, developers, engineers and product managers that specifically focus on building and engaging the user base of a business.” – Wikipedia
“I honestly I really believe that once someone experiences the process of recurring monthly results – this trickle of like improvement, improvement, improvement – they’ll start to see momentum build. After a few months of doing that it’s a lot easier to say ‘yes, let’s keep doing it’ than it is at the end of a big project when you have to pitch hard on a follow-up retainer because it’s a whole different mental space.”
They’re Digging a Deep Crocodile Moat Through Recurring Results
Another benefit is that showing recurring and consistent results gives you a massive advantage over the competition. Clients will simply be unwilling to replace you (what startups refer to as “digging a deep moat”).
I ask Spencer what would motivate his clients to replace him and his team. The only scenarios he can think of would be if he and his team didn’t have the bandwidth to deliver what the client needed. Or, if they needed many different forms of expertise across multiple domains.
But even so, Spencer says Brooks Digital can handle that. It’s one of the benefits of the contractor model he’s chosen to use.
They Find the Right Clients By Being Opinionated
I ask Spencer about the challenges of finding clients that are willing to think like this. After all, what he proposes means breaking with tradition and challenging many of their assumptions about their website. He says that daring to be controversial helps.
“The more I’ve been writing, the more I end up having a strong viewpoint. I intentionally titled articles like ‘The Non-Profit Website Redesign Is Dead.’ It’s a controversial idea and it will attract attention that way. And so having a very strong viewpoint definitely helps with content.”
They Explore Their Clients’ Networks to Find Leads and Collaborators
Spence tells me they ask their clients about who else they know that share this idea of building websites.
“What vendors are working with you? Who did you go to for strategy? Who is doing like branding work for you or things like that?”
It’s not a complex strategy: “I just think about who is our ideal client and then start writing to them and then networking with people who serve them.”
Spencer says that working this way means he needs to be a bit picky about who he works with. He doesn’t add revenue for its own sake. As a result, Brooks Digital grows slower than it could. But it’s a choice Spencer happily makes. It helps him achieve a good work-life balance and makes his agency difficult to replace.
They Are a Small Global Team of Freelancers Operating As One Brand and Agency
Unlike most agencies, Brooks Digital doesn’t have any employees. Spencer says he’s tried both working with a traditional team of employees and freelancers. He’s found that working with freelancers is the best solution for him. It gives his agency more flexibility.
“I tend to focus on a small number of high-value retainers. And so with that, I like to have a more specialized team. I work with four or five freelancers in various capacities.”
I ask Spencer about his team and how it’s structured.
“The team structure that I’ve used has a seriously talented Drupal lead who can do a lot of architecture that can just own the hosting and the deployment workflows and reviewing work. And then another developer just to do a lot of pushing tickets through and things like that. And then, of course, a UI and UX designer as well. I tend to do a lot of account management and some project management as well.”
They’re a Scalable Agency and Therefore Better at Meeting Changing Client Needs
The contractor model is also more flexible. Spencer says he can scale the team depending on what a client needs.
“I’ve tried to accommodate that [specific client needs] by using a contractor model instead of full-time staff now because if they [the client] need horizontal expertise, then I can just pull in contractors to help with that. And then if they want to scale up, then I either send contractors more work or I add more contractors.”
He says he spends between 5 and 10 hours per week doing account management and project management. Spencer typically manages four to five retainer projects at a time. The reason why it’s so manageable is that he’s actively avoiding the elephant size projects and instead relies on multiple retainer-based recurring revenue streams.
They Achieve Better Work-Life Balance Thanks to Being Virtual
Just like Beatrice, whom I interviewed a month ago, Spencer’s virtual agency enables him to work from home and spend more time with his family. He says he tried working in a co-working space but it was too distracting.
Spencer says that working from home helps him turn off notifications and ignore email when he wants to. That means that when he’s not working, he can be much more present than many with regular jobs.
This Is the Next Generation of Digital Agencies
From my perspective as a former agency founder, Spencer’s way of working is exciting. I believe it foretells the future of our industry. By working this way, Spencer’s agency has solved several major problems that plague traditional agencies.
Getting Rid of the Looming Deadline Drama By Delivering Results Incrementally
By reducing complexity and focusing on the minimum requirements, Spencer and his team make launches a lot less risky and complex. Changes aren’t a big issue anymore and can be rolled out on a regular basis.
Avoiding Cash Flow Crisis Through Recurring Revenue
By delivering results quickly, Spencer and his team show results early and prove the value of their work. That builds trust with the client and extending a six-month retainer-based project to run for a year or even longer is a much less risky decision than making another huge website upgrade. A retainer means recurring revenue which makes financial planning much easier and takes away much of the worry and stress.
Sidestepping the Talent Tug-of-War By Contracting With Freelancers
Agencies have two assets: talent and clients. To grow as an agency, you need to build both and you need it to happen in sync. That is rarely the case. Finding the right talent when you need it is a constant headache.
When you’ve built your agency on freelance talent, you suddenly have access to brilliant creative individuals from all over the world. You will have many more options for recruiting the right team. A contract model such as this gives you the freedom to adapt contract terms and durations based on the needs of talent and clients.
Conclusion: The Agency of the Future is Virtual, Results-Oriented and Opinionated
I am convinced that Brooks Digital’s business model is something we’ll see more agencies adopt, very soon.
It’s simply superior compared to how agencies have operated traditionally.
- Using this model with retainers, owners see monthly recurring revenue which helps recruiting, growth, forecasting, and planning.
- Team members, regardless of whether they’re employees or freelancers, see income consistency and predictability and also enjoy the freedom to work from where they’re the most productive.
- At the same time, clients see the kind of results that justify their investment.
Getting in Touch With Spencer Brooks
You can find out more about Spencer and his agency, Brooks Digital, on their website.
What are your thoughts regarding Brooks Digital’s way of working with consistent results and recurring revenue?
Please share them in the comments section below.