Breaking the Agency Model: How BounceX Scaled Conversion Services to $100 Million a Year
When Ryan Urban launched his tiny conversion agency in 2012, he never imagined how fast it would become one of America’s fastest-growing SaaS companies.
Most would agree, for a company offering managed marketing services to scale to that level, they’d have to break out of the traditional agency model.
Well, that’s exactly what BounceX did.
Taking a company from $0 to $100 million a year is no easy task. It takes a sound business model and tons of hard work. But, more importantly, to grow at that rate, you have to catch the right wave.
So, let’s take a closer look at the wave BounceX is presently riding.
Nowadays, getting traffic to a website is more expensive than ever. And even if a company solves the traffic problem, getting thousands or millions of visits to their website doesn’t mean much, if they can’t monetize that traffic.
Therefore, if they want to survive and thrive, now, and in the years to come, companies will have to become experts in conversion, or seek outside help.
Businesses that don’t acknowledge and embrace the need to optimize website conversions will waste critical ad spend, along with time and effort, only to watch their growth curve move in a downward direction, even if they’re getting plenty of traffic.
Tapping into a rapidly-expanding market demand
The good news is, this growing problem is creating the right conditions for conversion-oriented agencies like BounceX, which help their customers generate more revenue from people interacting with their websites.
As technology analyst Rob Enderle, founder of Enderle Group, puts it, “There's something more tectonic afoot. BounceX has tapped into a market that's only just now emerging. The marketing world still largely revolves around views and click throughs of ads and websites, but companies are starting to think more about conversion.”
Enderle continued, “The reasons are plentiful, noting that conversion, for instance, signing up a new subscriber or triggering a sale, leads to actual money coming in. While many companies promise a certain number of ad views, a company like BounceX is promising a return on investment. "In theory, the money you pay to them, you get a hard return on," he says.
Based in New York City, BounceX, (soon to be Wunderkind), helps websites increase revenue and maximize conversions through behavioral marketing software and managed conversion services. The company recently announced that it had surpassed $100 million in annual revenue.
Ryan Urban, co-founder of BounceX, got the idea for the company in 2010 while attending a digital marketing analytics seminar. After listening for a while, it became clear to him that the speaker didn't know what he was talking about when it came to conversions.
During an interview with Inc. Magazine, Ryan recalled, "It started with a simple question: If you had the power to know precisely when people were bouncing [leaving a site], what would you do with it?"
"I dragged my friend out of the class right there and told him I was starting a company," Urban recalls, "I spent the rest of the seminar with my headphones on fleshing out the idea."
Before founding BounceX, Ryan was an e-commerce consultant and former head of customer acquisition for Bonobos. While working there, he got directly involved in helping companies with customer acquisition. This is when Ryan realized how important having a website that converts is for companies that measure success based on sales revenue.
After all, the companies he worked with were spending tens of millions of dollars to acquire new customers. Part of that budget was being invested in driving visitors to websites, and the other part was invested in increasing the number of visitors who actually converted into paying customers.
Ryan knew this was a problem he wanted to solve for companies at scale. It didn’t take long for him to see the challenge he was facing. He realized that the traditional agency model wasn't going to work.
Breaking the agency model to achieve insane growth
During an interview with Andrew Warner, of Mixergy, Ryan said, "I hate the agency model. What really sucks, especially when I was consulting is say you’re charging someone $1,000 a month or $5,000 a month or $15,000 a month, you’re putting so much effort in the first few months and they’re getting way more value than what they’re paying you. Then, in month three, it’s probably getting the appropriate value, and then month six they’re getting less value."
Though Ryan didn't want to build a traditional agency, he also knew he didn't want to build a pure software company.
"Software is great, but the truth is people don’t really use software to its full capacity,” he explained during the Mixergy interview, “They don’t have a developer to put it on their site. They don’t have a designer to design it right. They don’t have a passion for Robert Cialdini and all that other behavioral marketing stuff that I’ve developed.”
So Ryan thought to himself, "I’m going to merge the two. I’m going to create the software, but I’m also going to hire a team of people that are really good at using it to increase conversions for our customers.” He continued, "We just decided we’re going to have designers. We’re going to have strategy people, and engineers. We’re going to do it all for everybody."
Looking back, it looks like this comprehensive, done-for-you approach paid off for Ryan and his team. By 2015, he says they generated $16 million in revenue. And they were on track to achieving their goal of a run rate between $40 million and $45 million in 2017.
How BounceX scaled to millions in recurring revenue by offering conversion services
Over the years, BounceX developed and optimized solutions designed to help their clients deliver consistent, relevant, triggered messaging across the buyer journey, while engaging website visitors based on online behavior.
The company’s proprietary software recognizes new and returning visitors by device and matches them to an email address in real-time. It also powers a suite of products that improve the relevance of the company’s marketing message across channels.
Let’s take a look at the suite of solutions BounceX currently offers its clients:
This solution helps online businesses recognize and understand web visitors through improved device identification.
When combined with BounceX Identity, Triggered Email helps companies recognize website visitors that are already on their list. It knows whether the contact’s email was captured in-store or online, and helps to reach out to abandoning visitors with a message designed to get them back to the company’s website and shopping cart.
Personalization helps drive message continuity across sessions and devices. It analyzes both high-intent and low-intent behaviors in real-time to automate dynamic on-site messaging.
End-to-End Full Service
BounceX has learned from experience that even the most powerful technology will be limited by a client’s internal resources and capacity to implement. Because of this, they leave nothing to chance by providing clients with a dedicated team that drives strategy and day-to-day execution to guarantee performance from day one.
From zero to 100 million in 7 years
BounceX’s revenue growth proves beyond a shadow of a doubt that the business model Ryan and his team at BounceX built is working.
Founded in 2012, the company generated $105,000 in ARR during its first year in business. Five years later, in 2017, they hit $17 million, and in early 2020, the company announced it had passed $100 million in annual recurring revenue.
Going from $0 to $100 million ARR in just seven years also validates today’s fast-growing demand for conversion marketing services.
Most companies already know the high cost of web traffic. And with ever-increasing digital advertising rates, plus the difficulty of getting organic traffic due to stiff competition for higher rankings, marketers are giving higher priority to converting the traffic coming to their websites.
This increased awareness is driving the demand for smarter conversion tools and related services. This, of course, is an emerging opportunity for consultants and agencies that move fast to tap into the growing demand.
In reality, it’s essential that agencies and other service providers look for ways to solve conversion problems for their clients, and help them get them ROI. If not, they run the risk of having their services cut.
After all, if you can’t help your clients get more conversions, it’s only a matter of time until they eliminate your services. Or find another agency that can get them a higher return on investment.
The solution is to become a conversion-driven agency that’s committed to achieving real, measurable results for your clients. When you do this well, you’ll find lots of opportunities to scale your clientele and revenue.
How BounceX closes new deals
When asked what’s powering his company's meteoric growth, Ryan told Inc. Magazine, "It's been very organic, mostly client-driven."
Serving primarily online retailers and publishers, BounceX currently has about a dozen Fortune 500 companies as customers. It also serves many leading e-commerce brands and several of the world's 10 largest publishers.
The company’s A-list clientele includes well-known brands like; Hugo Boss, Forever 21, Samsonite, Avis, ClassPass, Clarins, JetBlue, Comcast Business, and The New York Post.
Since its inception, BounceX has worked obsessively to understand, and satisfy the challenges, goals and needs of its ever-expanding customer base.
To make this happen, Ryan invests heavily in his company's fast-growing team and each person’s professional development. In fact, BounceX has been recognized as a best place to work by Glassdoor and Crain’s.
All this hard work has helped BounceX become an industry leader and one of America’s fastest-growing SaaS companies. The company’s value proposition is it can help clients, “Activate 6 to 10% more revenue” using its proprietary technology and end-to-end implementation services.
For most businesses, bringing in 6 to 10% more revenue can make the difference between profitability and running at a loss.
To acquire new business, BounceX conducts short-term pilots with potential customers that typically last 3 to 4 months. They charge the customer monthly during the pilot, but only ask for a traditional 12-month SaaS agreement after they’ve proven they can drive significant revenue for the new customer. Ryan recently told Techcrunch that, “90 to 95% of the time” his company “delivers the guaranteed revenue.”
By showing results in advance, BounceX’s team has a high success rate when it comes to closing new customers, especially those with a high LTV.
How much BounceX charges its customers
In a recent interview with Nathan Lakta, Ryan gave viewers an idea of how much BounceX charges its customers. He broke the company’s client base into three main cohorts.
First, there are what Ryan calls “Megalodon clients.” These are companies paying BounceX from $1 to $1.5 million a year for ongoing conversion services. There are also a few that pay from 2 to 5 million dollars a year.
The second cohort is made up of enterprise clients paying anywhere from $20,000 to $60,000 a month. Then, there are the smaller companies doing 5 to 10 million a year in online sales that pay BounceX from $6,000 to $8,000 a month.
Ryan says the company won’t take on a new client for less than $72,000 a year. And even though they charge some of the highest rates in the industry, he says they bring on about forty new customers per quarter, which accounts approximately $20 million in new ARR every quarter.
Scaling to $100 million and beyond
It’s amazing how BounceX has been able to generate this level of revenue, and pass $100 million providing email capture and conversion services. They are a shining example of what’s possible and legit validation that more and more companies grasp the critical importance of converting the traffic coming to their websites.
When asked how they plan to grow past 100 million a year, Ryan optimistically said, “Our goal has been to get a scalable sales team in place. Now, we have the right people and the right process.”
Another way BounceX is taking client acquisition to the next level is by creating C-level experiences for top-tier clients and prospects. For instance, they recently rented a private suite at the US Open finals. They flew in CEOs and CMOs by helicopter so they could meet and schmooze a little while watching the finals. It cost BounceX about $200,000, but Ryan says it was worth the investment.
Ryan says they’re also looking to create experiences where clients and prospects can hang out with celebrities, sports personalities like Mike Tyson, and former presidents like Bill Clinton.
While all this may seem a bit overboard to the typical agency owner with only a handful of clients, these kinds of things become possible when you’re at that 100 million ARR level. Furthermore, BounceX (Wunderkind) is positioning itself to IPO in the next couple of years.
How your agency can offer scalable conversion services like BounceX
While BounceX is clearly the exception, it’s a stellar example of how an agency can grow from $0 to over 100 million in just a few years.
Of course, in order to generate that kind of revenue in a relatively short time, Ryan’s team has built its own software solutions and a 400+ person team made up of engineers, marketers, copywriters, customer success specialists, product managers, designers, sales consultants, and data analysts, to name a few.
Building and maintaining sophisticated software can be a major challenge even for big agencies and companies. But there’s good news! Nowadays, smaller agencies don’t need to become software developers to take advantage of the growing demand for conversion marketing services.
Powering your agency with ConvertFlow
By partnering with software solutions like ConvertFlow, consultants, agencies and other providers can offer scalable conversion services without having to overcome constant technical challenges.
Put another way, our team takes care of hiring and managing the engineers, designers, and technical team required to power the platform, so you can focus on what you do best, which is building and growing your agency.
As a ConvertFlow partner, you can quickly start delivering high-in-demand, ongoing conversion services at scale. You can also manage all your clients from a single dashboard. Best of all, you can do it without coding.
Designing your conversion services to fit your clients’ goals and tech stack
One of the primary drivers of BounceX’s success has been its willingness to adapt its software and services in ways that help achieve the customer’s conversion goals, while aligning with the company’s current tech stack.
Of course, doing this for every new client from scratch usually requires a team of engineers. Fortunately, ConvertFlow helps you greatly simplify this complex process by integrating with most leading marketing tools.
Our platform quickly syncs with your clients’ CRM or email marketing service. This lets you trigger automations, send lead data, and update contacts in the client’s tools. Moreover, you can personalize CTAs across their website leveraging contact data from over 1,000 apps.
In short, ConvertFlow’s all-in-one platform gives you the key conversion marketing and agency features you need to start, streamline and rapidly scale your client base and recurring revenue.
Creating your conversion service packages
Because our team has taken care of most of the tech challenges and headaches, you and your team will have more bandwidth to find new clients and upgrade existing clients to your conversion marketing services.
While many agencies offer custom quotes to clients, we recommend that our partners structure two or three predefined conversion service packages they can offer to prospects and clients. Doing this helps simplify your sales process, and to some extent, productize your services.
After becoming a ConvertFlow partner, we’ll provide you with training on how to put together your conversion service packages and how to effectively present them to clients.
We’ll also provide you with essential tools you can use to quickly add conversion services to your agency offerings. Some of these tools include marketing assets like campaign templates, sales proposals and conversion audits. We’ve even created a client onboarding kit that makes setting up your new clients a breeze.
And yes, you can easily customize the marketing assets and sales material for your agency and brand. Our goal is to give you exactly what you need to be up and running in a matter of days, not weeks or months.
We’ve even created ways to give you access to new channels that can help grow your brand, your audience, your network, and of course, your monthly income.
If you’re ready to see more, or can’t wait to become a ConvertFlow partner today, click here, and let’s get you started!
Ethan is the Co-Founder & CEO of ConvertFlow. He loves reading about and sharing anything that helps marketers convert more website visitors.