Many business owners are tired of worrying whether they’re going to be able to find their next customer and make another sale.
Not knowing if your business is going to be able to generate enough sales to survive creates stress.
So here, I will introduce you to a business model that will allow your business to have sustainability in today’s competitive market.
We aim to help liberate you from a one-time payment system and show you a better way to leverage your current customers and obtain peace of mind while maximizing profits.
What is recurring revenue?
Recurring revenue is money earned from providing a subscription service. It allows you to leverages your current and future customers. This sustainable stream of funds reduces the stress of having to make a sale and maximizes your R.O.I.
Recurring revenue is what it sounds like, Recurring Money. It is a payment that is followed by a sequence of other payments. Your customers get the benefits of your product, and you get the benefits of stability and peace of mind. It is a win-win for everyone.
The objective of a successful subscription service is to Automate the Sale and start generating money while you sleep.
Analyze your business and create a subscription for the services that you provide.
Subscriptions are not a new idea. We have been using subscriptions for all of our lives.
We have a subscription for our Electricity that powers our home.
Don’t forget our cell phone subscriptions.
Business owners have realized that a subscription business model offers many benefits, such as:
- Predictable Income
- Peace of Mind
- Allows your business to Expand
- Focus on your business and providing value instead of worrying about making a sale.
- The sales can be automated.
- Leverage your existing customers
- Create customer loyalty.
- Provide exclusive subscription benefits to customers.
- Increase the Lifetime Value of your customers.
Subscriptions allow you to get paid immediately and on time automatically. You don’t have to send out invoices and wait to get paid.
Are you wondering, what product or service my business can provide to create recurring revenue?
Figuring out what services you can provide as a subscription service can be challenging because not only do you have to figure out how to solve a problem, you also have to have the resources to implement the solution.
You must be able to answer these three questions to formulate a subscription.
- What do my customers need?
- What services can I create to meet those needs?
- What resources do I need to perform those services?
What are some key resources for executing a solution?
- Knowledge (Know How)
What problems does my audience have that my business can solve?
Step 1: Find a problem you want to solve
Step 2: Provide a Solution
Step 3: Gather the resources necessary to provide the solution.
Step 4: implement the solution
Step 5: Collect recurring revenue.
Get a clear idea of the problem your audience is facing.
Below is the formula for analyzing the customer problem:
The 5 Ws will help you to get the complete story so you can understand the problem.
Who: define the audience that has a problem.
What: What is the problem?
When: When are they having this problem?
Where: Where are they having this problem?
Why: Why are they having this problem?
Solution: Provide a solution to the problem.
Solution + Resources = An idea as a possible candidate for Recurring revenue.
Let's see some examples of how companies implement a recurring revenue business model.
Company: Dollar Shave Club.
What is the Problem?
Men Need to Shave!
What: Men always have to go to the store to buy razors, pre-shaving, and after-shaving products.
When: Some men require shaving every other day.
Where: Men usually have to purchase razors at Walmart, CVS or Walgreens, where the Shaving supplies are locked up and require a store representative to unlock the products.
Why: Men grow hair rapidly.
Provide a service that delivers all supplies necessary for a man to shave, without him having to leave the comfort of his home.
Resources: Shaving Supply manufacturing + Shipping Partner + Website + Marketing.
What is the problem?
People want to watch movies on demand and without leaving their homes.
What: People want to watch movies without leaving their home
When: When they are home
Where: They want to watch from home
Why: People love receiving instant gratification.
Solution: Provide an on demand Video Subscription Service.
Customers will usually stick around when you are continually providing value. Value creates loyalty.
it's time to adapt to what works!
Use a recurring revenue business model or lose customers to businesses that do.
Regardless of your product, if you are automating signups and gaining new customers while retaining the old ones, you can focus on improving your product and services.
Passive income is a Myth.
Online Gurus the so-called “Experts” are notorious for painting the picture of a Passive Income where you can live in a permanent vacation, but that isn’t realistic.
I found myself researching passive income as it is an entrepreneur’s dream, and my research leads me to the conclusion that it does not exist.
Check out what Troy Dean says about passive income:
“There is nothing passive about passive income. You can create a subscription-based service that provides recurring revenue, and you can set systems and processes in place that can grant you the freedom to take long vacations, but you either do the work, or you can build a team to do the work.” Someone has to do the work.
The ultimate form of passive income is to buy a house and rent it out. You start with the idea that you can just put tenants in there and rent it out.
Even in this scenario, there are maintenance costs associated with renting, such as fixing the water system when it breaks. You have to pay a Real Estate agent to rent the place and screen the tenants. You have to pay an accountant at the end of the year to do your tax benefits and offset your expenses. You have to have lawyers draw up contracts. There is still work involved. You are doing the work or paying other people to do the work.
Below is the best tip that no one is talking about!
If you want to sustain a recurring revenue business, you need to provide recurring value!”
This business model is not a set it and forget it. You must continuously find new ways to provide value else, why would anyone stay?
Ask yourself, What would I like to have? And provide that value to your current and future customers.
Create an Asset by controlling the CashFlow
Recurring revenue is an essential element for constructing sustainability in your business.
The more recurring revenue your business has, the more your business is worth. Recurring revenue is an excellent example of how you can turn your business into an asset.
Now that you know what recurring revenue is, how do you plan to incorporate it into your business? What products or services are you going to offer? I encourage you to leave ti in the comments below or send me an email.
Do not use a set it and forget it mindset or you’ll regret it.
Whenever you ask yourself, how can I make money? The answer will always be the same. Provide Value.
Without Value, there is no Money.
You can literally make a subscription service out of anything. For example, you can set up a dog walking subscription service.
What is the problem? People are working and don’t have time to walk their dogs.
Solution: you can walk the dog for them for a subscription fee, and customers will be grateful that you provide the service and would be glad to pay you.
Want to charge more for the service?
Add more value.
You can get creative and offer services that your competitors don’t provide.
There are many subscription business models that you can implement. Some are creative, like providing boxes full of secret items known as subscription boxes.
There are even subscription services so that your kids can rent toys and change them every month. The best way of finding out what your target audience wants is by doing research.
Find out what your customers are complaining about and provide a solution that remedies all those issues, Package all of the solutions into a sweet deal they can’t resist.
once you collect this information and analyze it, you will see the problems your audience wants to resolve and provide a solution that will benefit both your customer and your business.
the key to creating a successful recurring Revenue subscription is to provide a solution that provides value to your target audience.
There are many perks to being part of a subscription program. Look at Amazon they have Amazon Prime which gives you the benefits of two-day shipping on certain items. They provide you with access to a library a video content that contains movies and TV shows.
How do I know what to charge for my subscription service? Recurring revenue for B2C
While the price is relative to the value, never underestimate the power of the irresistible offer. If you provide more value than what you charge, your customers won’t be able to resist.
you will be playing a game that will gain you the maximum amount of customers. Make your products price accessible but not so low that you will not be able to provide quality support.Once you gain your customer’s trust,
you can maximize your revenue by offering them upsells and cross-sells.
Recurring revenue for B2B
If the subscription service is business-to-business, then the price is dependent on the value you are providing for that business.
if your product increases a business’s revenue by generating new opportunities for them, which in turn positively impacts their business, then the price should be relative to the income you help them produce.
Ask yourself, what is a customer worth to the business that my product or service helps? Analyze your competition and formulate a competitive price that over-delivers in value.
Some companies don’t give customers any options other than subscribing for their service. You either subscribe or miss out.
A perfect example of this is Netflix. You can’t just pay for one movie.
The one thing that all of these subscription-based business models for recurring revenue have is that they will provide benefits that far exceed the one-time sale.
One tip is to offer your customers the option of Auto-renewals. Auto-renewals will keep your customers receiving the service that we offer without their service being interrupted, and allowing you to receive the payments you love and expect.
To avoid any issues, be sure to email the customer when their credit card or subscription is about to expire to avoid any surprises.
in conclusion, no matter what subscription business model you choose, be sure that your provided value exceeds the price of membership, and you will be able to maintain and create loyal customers.
Do you have any ideas you would like to share for a recurring Revenue Service? Please put it in the comments below let’s start a conversation.