Does your business have streams of recurring revenue every month?
Would you like to have streams of recurring revenue every month? Imagine!!!
What is Recurring Revenue model? A product or service offering where the customer keeps paying a fixed amount at regular intervals.
Common examples are milkman, newspapers & magazines, tv channels, cell phone services, education, travel passes, subscriptions, memberships, and so forth.
Why Recurring Revenue? I ask 'why not'? Wouldn't you like to see a regular, predictable revenue streaming in every month, for ever and ever?
Lets consider these first:
The concept of 'COST OF CUSTOMER ACQUISITION' is well known, so I wont delve into explaining that. Once you have acquired a customer, how long do retain that customer? How many times do you sell to that single customer? Or, do they buy once, and you loose them to chance?
The concept of 'LIFETIME VALUE OF A CUSTOMER' means what is the total revenue you can generate from a single customer over the total lifetime of that customer: over a period of 1 year, 5 years, 10 years? What is the longest period that a customer can buy from you?
Keeping these two principles in mind...
Do you think you can convert the customers on a recurring revenue model where they keep paying a fixed monthly amount and they can keep getting your product or service?
No need to go through the hassles of driving to your store, battling the traffic jams, finding the parking, going through the aisles and making the purchase.
Its all on auto-pilot!!!
Not just for the customer, but for you as well.
Thanks to the technology, now reimagining your business on these lines, with technology enabling such a model, is a lot easier to achieve.
EXAMPLE #1: IT INDUSTRY
The mighty Microsoft used to openly look down at software makers who followed any model other than the outright sale of licenses. New players experimented with models like shareware, trialware, freemium, and subscription based SaaS models.
And in due course, voila, we started seeing the results... Adobe moved its super expensive software like Adobe Photoshop to subscription, Microsoft's Office365 is on subscription, and the list is only growing.
EXAMPLE #2: GROCERY / CONVENIENCE STORES
Milkmen have been a regular feature of most societies for a very long time, but with the arrival of commercially packed milk, the grocery stores encroached their customer base. However, there are certain other items that the very same customers need literally every day... bread, eggs, newspaper, butter, drinking water, basic set of grocery items, fresh vegetables, medicines, to name a few. Grocery stores at many places also offer free home deliveries.
If you cross this scenario with recurring revenue model, the customer can order their daily, weekly and monthly requirements through the store's website or mobile app, and relax that he does not need to run the groceries any more. The system will charge the customer's credit card, and the delivery team will know what parcels to deliver every day / week / month. The business owner can also negotiate better terms with their suppliers and plan his sales predictably.
EXAMPLE #3: LAUNDRY SERVICES
Laundry services can offer a subscription packages of different volumes. Customer selects a package that closest their monthly volume, and sets the collection and delivery times. For the customer its one more thing on auto-pilot, while for the service they have predictable revenue stream. Playing with law of averages, they can offer rates which appear lower on per unit basis, and yet they make more money as the total actual volume will not always be to the full limit of the package from each and every customer.
If you would like to discuss how your business can benefit from recurring revenue model and how technology can enable this transition, lets schedule a call.
Best regards.
Raza
914-465-0072