What is recurring revenue? Why do I need it? Can I achieve it?

Recurring revenue is when a customer pays or buys from your regularly, in something like a subscription service, or just a product that will be needed frequently. A best example could be a haircut (for some of us?!), or getting your electrics checked annually.

The main advantage of having an established stream of recurring revenue is that you, the business owner, can sleep at night and know that you can pay the bills. Also, the cost of acquiring new customers is much higher than retaining the ones you have. By establishing recurring revenue, you can make decisions about recruitment. There at 5 million solopreneurs in the UK, but only around 1 million business owners with a team of staff.

Passive Income

Passive Income is when you do the work once and keep getting paid. You don’t stop getting paid when you stop working. E.g. Writing a book, creating a training course. It can also include running a business – a commercial, profitable enterprise that works without you.

How can you build this in your business?

Pay as you go:

“What would be a useful product or service that my clients might be willing to pay for on a monthly basis?” Is it information, hints and tips? Insurance? More rapid response on support? Training guidance? What do others in your industry do?

Split a service:

If you offer a service at £1000, could you split it and offer it at £100 per month? This makes it more affordable, increases sales, and provides predictability of the income. You might also be able to split a service into separate components and offer them individually or in combination packages. Buy providing something that people can afford and is lower-risk, you give yourself time to build up the know-like-trust relationship.

Professional support service:

What knowledge do your customers need from you on a regular basis? You can create an offering with 3-5 levels of support that can be subscribed to monthly. Ensure that this service delivers customer value by saving them time and money, or makes them money.

Saas, Daas, Waas:

Software As A Service / Devices As A Service / Websites As A Service. In each of these, you get the service ongoing for an service in an affordable monthly fee, in place of a large up-front amount. This is close to the Netflix model of paying monthly with access to a certain range of movies and TV shows. This could even apply to people such as photographers – why not have a monthly fee where you can have a regular refresh of your imagery for your website and social media? The “AAS” part of all of these is that you make yourself available as some months you may earn that monthly fee without delivering a service – just like Netflix, or a gym membership, where you pay that fee whether or not you use the service.

Create a training program:

You and your team need regular training, but where do you find it? Other businesses face the same challenge – you probably have some great and valuable knowledge about your field of expertise. This could also be an online training program, expanding the reach of your course, and becomes a lead magnet for your services long term also. This can be sold anywhere the language and topic is relevant, and of course sells while you’re asleep even!

 

The Magic Matrix:

It is so important to complete a matrix like this one, to analyse the biggest customers you have, the services you provide, and which ones they are subscribing to. Have an open conversation with them about what else you offer… The biggest surprise will be when you do this exercise, you realise how little your customers know about what services you offer – they may have no idea that you do anything other than the one service they already get from you. This tool alone is such a strong tool for facilitating cross-sells and upsells to your current customers, which is far easier and cheaper than obtaining new customers from scratch.

Book recommendations:

• Brad Sugar- Instant Repeat Business. This book will provide you with dozens of strategies you can implement immediately into your business.
• Subscribed – Tien Tzuo: This book changes the model entirely for a more future-based model, away from Product, Price, Promotion and Place, and shows how 100% of businesses can achieve this.

If you don’t want to splash the cash, we have a free resource available here which you can download now, called “Double your client base in 4 weeks”, which covers some similar themes.

 

Complimentary Coaching Session

As ever, if you do want to book a slot to talk to our Head Coach and MD, Andrew De Groot, all you need to do is ask! Email Andi Davies here and he will contact you with a range of times.