Netflix, Amazon Prime and Spotify are just a few examples of wildly successful recurring revenue businesses — but people weren’t talking about these types of business models as much 20 years ago.

Even then, Qualbe CEO Randall Meinen understood the power of recurring revenue and was building an Inc. 5000 company on it.

Randy had been in the insurance business for years and had seen the multiplying effect of renewals on his commission. (He sold insurance plans in 1990 that he still gets commission on today)!

He asked how he could use this concept in his business, and that’s how 1Dental began, a successful online company that sells Careington dental discount plans.

This post reveals our keys to success and obstacles along the way in building a successful recurring revenue business. We hope it helps you build yours.

For more specific detail on the recurring revenue business model, read The Automatic Customer and The Membership Economy.

1. Look for the Learners

Do you ever feel like you’re making things up as you go?

Do you struggle with imposter syndrome?

Most entrepreneurs can relate to these feelings. You come up with the idea to build something — but you don’t really know how.

One of the keys is having the right people on your team. If you start with the right people, you can do anything together. At the beginning, we had a guy doing accounting who had flunked it in college! But he was a hard worker and was willing to do whatever it took to make 1Dental successful.

Those are the kinds of people you want on your team. Don’t look for the people who have never failed; look for the lifelong learners who know how to fail and then get the tools they need to succeed next time. They are the ones who will stick things out with you.

Book: Good to Great by Jim Collins

2. Start with an MVP

“If you are not embarrassed by the first version of your product, you’ve launched too late.” – Reid Hoffman, Co-Founder of LinkedIn

A key principle in The Lean Startup, one of our core books (books that define how and why we do what we do at Qualbe), is that you have to have an MVP, or minimum viable product. TEST your idea before investing a whole bunch of time and energy making it cool and tech-savvy.

Example:, which is known for keeping customers coming back, started with a guy photographing inventory of shoes in the mall, posting it on his site, and returning to the mall to buy the shoes customers had ordered online. Expensive? Yes. Inefficient? Yes — but a lot better than building an entire website and sales funnel for something no one would end up wanting.

Lean processing > Batch processing. Always. But especially at the beginning of your company.

So what was 1Dental’s MVP, you may be asking?

At the beginning, people from our home office in Fort Worth would take stacks of paper applications to the Careington office in Frisco once or twice a week, where they would hand-enter them into their system. Now, applications can be entered online and synced immediately without having to make special trips.

Book: The Lean Startup by Eric Ries

3. Pick the Right Partnerships and Develop Them Well

We were very fortunate to pick an incredible partner like Careington. They have proven through the years to be honest, fair and fun to work with. We in turn have tried our best to treat them as much like a part of our own company as possible. Every year, we have a “Careington Appreciation Day” in which we take them BBQ and just enjoy hanging out together. We’ve also sent fun swag to put in goodie bags for their customer service team and supported them in a fundraiser golf tournament they host annually.

Treating your partners and clients right will set you apart like few other things will. Zappos treats their vendors really well, which means their vendors will go out of their way to deliver for Zappos!

You can’t lose by treating your partners with respect.

Article: 11 Ways to Build Solid, Strong, Lasting Business Relationships

4. Have Realistic Expectations about Profit

When we started 1Dental, our leaders were willing to “bleed” for a long time. We didn’t throw in the towel when a lot of other companies would have.

Any successful recurring revenue business often takes years to turn a profit, yet many business owners give up too soon. Consider in advance where you’ll get funding, and plan for the very real possibility that you won’t become profitable for at least 2 or 3 years.

We launched the website in 2007 and were “building the plane as we flew it” at first. But then around 2011 or 2012, we got the pieces in place so that the company could truly make it long-term. We got serious about cutting expenses and reducing waste.

Article: Surviving Your First Year As A Small Business Owner

5. Don’t Be Afraid to Pivot

The leaders of Slack, the internal communication tool used by companies and groups all over, began as a game company that went under! But they created an amazing tool that ended up becoming a very successful company.

They pivoted when many would have given up, building a thriving business from the ashes of their failed one.

When building 1Dental, we also had to pivot in order to make it successful.

Lesson 1: Don’t Have Others Do What You Should Do Yourself

“Never outsource your core competency.” – Tony Hsieh, Founder of Zappos

To multiply our efforts in creating a recurring revenue business, we first thought the best way to sell dental plans would be through agents. Each agent had his or her own portal to sign members up and could earn extra income by recruiting sub-agents.

The math made sense: If we could get thousands of agents to sell even just one app a month, we’d be doing great. Our efforts would multiply into revenue growth.

However, many of the agents didn’t have the same level of motivation we had for selling Careington dental plans. They often sold discount plans or insurance from multiple providers, so they didn’t give our offering the same kind of attention we did or understand its advantages as deeply.

We learned that we should never outsource our core competency. We had thoroughly integrated marketing and sales, and we knew the product inside and out.

So we moved away from training agents to handling marketing and sales in-house. We realized we could do more through our tiny team than we could through thousands of agents, simply because we had the knowledge and passion for the product.

As you’re growing your recurring revenue business, continually ask, “How can we get better results with the same amount of money or less?” That’s the question that led to us containing everything in-house.

Book: Delivering Happiness by Tony Hsieh

Lesson 2: Have An Accurate View of Reality

“Reality is always your friend.” – Henry Cloud, Integrity

Our founder Randy Meinen created two entire websites that he ended up scrapping entirely. We’re talking content, design and development — in the trash can. After putting in all that work, he realized those early models weren’t what we needed.

We don’t call that wasted effort; we call that learning and figuring out flow.

Over time, we have developed a “Lean Startup” methodology to try to ensure we don’t get too far along before having to start over from scratch. BUT it doesn’t always work out perfectly, as any honest business person will tell you. Sometimes you just have to accept sunk costs and move on.

While many of our original initiatives actually failed, we remained unfazed, continually testing and improving processes. Learning from these failures, enough of our initiatives were successful that by our second year, we saw 200% revenue growth over year one.

Book: The Lean Startup by Eric Ries

6. Know Your Competitors

Literally, know your competitors. Call them up and go by their place of business. If you develop a good relationship with them, you can try to amicably work things out if you ever encounter a conflict. We have found our competitors to be quite smart and professional.

Our philosophy is that it’s a big world of opportunities, but it’s also a small world where you don’t want to throw stones. This means there’s enough opportunity to go around, so we can live at peace with one another.

Differentiate Yourself!

By knowing your competitors, you can also differentiate yourself and make your message unique. We have always tried to do things in a “lean” way. As just one example, our former CTO insisted on using a card table for his desk so we could spend money on more profitable things.

Even though we have been online since the year 2000, we didn’t aggressively start marketing to consumers until 2006. At that time, there were 7 or more very competitive companies in the direct-to-consumer space. If you are starting late, don’t let that intimidate you if that’s your situation and you’re the new kid on the block. We saw ourselves as “the little guy” (and we still do), so we knew we had to do things in a lean way so we could learn and pivot quickly.

Like Paul Akers says in the book 2 Second Lean, money kills creativity! So get to that whiteboard with your team and spend mental energy instead of money.

Book: 2 Second Lean by Paul Akers

7. Make Sure Everyone Knows How to Sell

No, really. Everyone.

Our CEO started out in sales. He would get on the phones and talk with customers all the time. New people in the IT department had to be on the phones for at least a week or two, and even after that, they knew they were expected to take calls if we suddenly had a lot of customers calling in. We wanted everyone to know what it was like to be on the front lines.

Seem crazy? When you’re building a business from the ground up, you only want the people who really want to be there, are sold on your vision and who can sell others on your vision. There’s too much at stake; you have to have each other’s backs in the trenches.

If selling seems intimidating, remember that it’s about the journey, not the numbers — especially at the beginning of your company. One employee who’s been here for 10 years said that on his first day in sales, he asked what a “good day” was, and no one could tell him. People were just happy to get sales!

Our sales and customer service teams are still at the center of everything we do. When prospects call with questions, they speak with a representative in a truly world-class contact center where the quality of our people makes the difference.

Books: The Psychology of Selling by Brian Tracy, How I Raised Myself from Failure to Success in Selling by Frank Bettger

8. Connect Marketing with Sales through Technology

The connection between marketing and sales seems so easy and intuitive, and any recurring revenue business relies on the two being in perfect sync — so why do the two departments end up working against each other in many companies?

Technology can help solve communication issues and prevent siloes. It can also give your salespeople — and customers — a much better experience!

We deliver real-time marketing information to our reps about the campaign in which the caller is interested. Our sales and customer care reps know important things like:

  • How the caller landed on our website
  • Whether they are using desktop or mobile (so we can better assist them in navigating the site and finding the information they need)
  • The customer journey: How many times they’ve called in before and even if they’ve already received an email with information and a sign-up link
  • Common questions and pain points users experience when seeing our dental plans for the first time

By successfully integrating marketing and sales through technology, you will have more empowered, satisfied salespeople. Marketing and sales will communicate clearly and effectively — meaning increased revenue for your company!

Begin by asking: In an ideal world, what knowledge do we want in order to close the sale? What do we need to know about each customer?

Book: The Sales Acceleration Formula by Mark Roberge

9. Learn PPC and Do It Right

One of our Core Values is “Be innovative and take responsible risks.” If you don’t take responsible risks, you can never grow your business!

For example, many people undercut their business’s growth because they’re unwilling to spend money on pay-per-click advertising. Yes, it’s expensive. Yes, you have to be careful, constantly measuring and monitoring so you don’t overspend. But remember that you’re investing in long-term business growth.

We spent a LOT on pay-per-click advertising — and it paid off! That’s how we grew so fast. SEO and content strategy are important too, but they take time. If you want to grow quickly, invest in pay-per-click advertising on the front end.

Monitor daily bidding and automate what you can (but automate wisely) — especially when you have a tight budget!

Our first sale from pay-per-click advertising cost $400+ for a dental plan that cost less than $10 a month — but we celebrated because it was a step forward! We were probably showing up for all kinds of negative keywords like “dog teeth” and “clown teeth,” but you have to start somewhere!

One of our biggest breaks was when Randy got strep throat and didn’t make the usual daily changes in PPC spend due to being out of the office. Sales really took off! He realized he needed to test ad campaigns more and set his sights on creatively driving potential customers to the website. Since then, PPC has become a core competency for us, and we’ve learned a lot about how to bid in such a way that we’re not missing out on potential customers or revenue.

Getting started in PPC can be intimidating, so we have some more great resources for you from our personal experience on our blog:

Articles: How to Set a PPC Budget That Gets Results and 11 Common AdWords Mistakes You Could Be Making

10. Don’t Be Afraid of Working Hard OR Having Fun

At the beginning of building 1Dental, workdays were often 10+ hours — not including Monday morning breakfast or Toastmasters (every team member was expected to become a Competent Communicator).

New employees had to build their own cubicles and “earn” their own personal headsets on the phones! We genuinely enjoyed and prided ourselves in hard work. We valued the character that hard work built.

But we believed in having fun while working hard — not instead of it.

One of our contact center managers remembers that on his first day, Randy asked him to go by Sonic and get breakfast burritos for everyone as his first “assignment” on the job.

Then there was that time we happened to have some sea monkeys in the office. Naturally, while interviewing one of our future sales managers, Randy joked that he’d have to eat a sea monkey to prove he was willing to do whatever it takes to be successful. When “Bring it on!” was his response, Randy said, “Hire that guy!” (Related-but-not-so-related point: One of our favorite books at Qualbe is Eat That Frog!)

His first day in the office, another of our managers remembers being handed cash because they’d had a record-breaking sales day. He said, “I haven’t even sold anything yet!” He was told, “It doesn’t matter — you’re part of the team now.”

Fun surprises like this are common at 1Dental. We have always enjoyed making our people feel valued, and that kind of culture is essential when shouldering the challenge together of growing a business from the ground up.

Book: The Great Game of Business by Jack Stack

11. Learn from Each Other

No matter your area of expertise, you can always learn from someone else and benefit from their perspective.

One thing that set us apart was that our founder has always been a “yes” person — always actively listening to new ideas. His response was most often “Let’s try it.” Even if someone suggested trying something that wasn’t a personal strength, we allowed them to grow.

One of the reasons it’s so important to hire faithful people with a growth mindset is so you can be confident in learning and trying things out together.

Book: The Five Dysfunctions of a Team by Patrick Lencioni

12. Value Honesty and Integrity

Another thing that set us apart: We always tried to be very, very honest and do things the right way. It was always such a big eye-opener any time one of us had to call a customer back when we’d just made a sale and realized we had misled them. But we always did it.

Build a culture of accountability and correction that’s founded on humility. We had to be willing to be corrected when we didn’t want to sell or weren’t selling correctly.

We weren’t afraid to “put people on probation” — and they often became some of our best sellers and hardest workers. Showing tough love demonstrates that you truly value your people and want them to be the best they can be. You have to learn to put up with one another’s “warts” and keep plugging away anyway.

The result of cultivating honesty, accountability and humility was that each one of us knew the other was willing to clean up the counter or wipe the microwave when no one was watching. One employee was getting ready to leave the country the next day, and we found him in the corner cleaning up spilled syrup after his shift was over.

Book: Integrity by Henry Cloud

Growing Your Own Recurring Revenue Business

Qualbe got started with one key recurring revenue brand, and 1Dental has since shaped how we approach all of our other business pursuits. We could not have built such a successful business online if we didn’t have all of these pieces interlocking together:

  1. Hiring Lifelong Learners
  2. Starting with an MVP
  3. Getting the Right Partnerships
  4. Realistic Financial Expectations (and Planning Accordingly)
  5. Not Being Afraid to Pivot
  6. Knowing Competitors
  7. Getting EVERYONE Selling
  8. Seamlessly Integrating Marketing and Sales
  9. Doing PPC Right
  10. Working Hard While Having Fun
  11. Learning From One Another
  12. Valuing Honesty and Integrity

If building a successful recurring revenue business were easy, everyone would do it. We’ve found that growing this type of business is what we’re best at. If you think you could be the next 1Dental, let us know. We’d be glad to talk with you.