Looking for ideas on increasing recurring revenue while decreasing your workload? Businesses large and small are doing just that through the introduction of subscription services. Whether you’ve been in business for a while or are considering starting a new small business, you’ll increase your chance of success with this business model. When you offer products or services for a monthly fee, you increase revenue while making your revenue stream more reliable.
Using subscription model pricing for your small business will generate the cash flow necessary to grow. Your time is best spent serving current revenue streams rather than trying to pitch to new customers. Building recurring revenue allows you to focus on providing the best customer service to your clientele. And, as you focus on customer service, your word of mouth marketing and brand loyalty increase.
Depending on your type of business, different subscription models may work better than others. Read on to understand some of the best recurring revenue ideas for small businesses.
Recurring Membership Sites
Perhaps the most popular subscription model, memberships sites are popping up in every industry. They’re a great way to increase your customer base and establish yourself as a leading authority in your industry. Membership sites may:
- Deliver advanced content (as compared to the free version of the site)
- Nurture an online community
- Offer coaching or consulting
This method also adds value to your sales funnel. It creates automatic access to some of your products or services, and it generates recurring revenue.
There are different options to consider, such as offering monthly subscription charges or an annual membership fee, and both can provide easy access to routine services or more in-depth information.
Example: Monthly subscription boxes, such as Dollar Shave Club and Blue Apron, are examples of a subscription service offering physical products.
Application: A Quickbooks expert could set up membership site to teach people how to successfully run their business with Quickbooks. Rather than spending lots of one-on-one time on 101-level stuff, they can remarket to subscribers, and
SaaS – Software as a Service
Though it sounds quite technical, SaaS is nothing more than software that is sold on a subscription basis. Focusing on a recurring monthly fee, you’ll create steady cash-flow and free up time and resources to increase the quality of customer service.
Excellent customer service is the key to ongoing customer loyalty. Similarly, the key to the SaaS model is relying on word-of-mouth marketing to bring in new clients.
Example: Adobe switched their Creative Suite to a SaaS model in 2012, drastically increasing their annual revenue. It also opened up a new market to small businesses, since the monthly fee is much more affordable than paying for the entire Suite upfront as previously was required. Google’s G Suite and Microsoft’s Office 365 are two other great examples of SaaS.
SaaS Affiliate Subscription Income
If you offer a service rather than software, you can still create recurring revenue through affiliate subscriptions. Affiliate sales are a common practice that gives service businesses access to the SaaS model. While affiliate sales will never be a large income stream, they are still a viable source of recurring revenue.
SaaS affiliate subscriptions allow you to turn your personal capital into literal capital. As a trusted source in your industry, you can direct your customer base towards the products that make your business run better. Using your affiliate connection, when one of your referrals makes a purchase, you’ll make a profit every month for as long as they are subscribers.
Application: Marketing platforms Convert Kit and Aweber offer affiliate opportunities and provide email automation for newsletters, drip campaigns, and tons more options. Since every business needs a website and accounting programs, offering an SaaS affiliate through a company like Bluehost and Freshbooks are two other popular options.
Service Plans and Retainers
Perfect for both service-based businesses and those that offer products, service plans and retainer subscription programs are great options to increase recurring revenue. This makes you more money in less time because you won’t need to approach a customer each time they need help with something or need more of your product. Instead, you’ll build service and product packages around their needs, and they’ll pay a monthly or an annual fee.
Setting up a recurring product or service plan will generate a higher return on recurring income without having to pressure people into buying again and again. As an added incentive, you can also offer a discount on the total cost in exchange for the smooth sale on your part.
Example: Pest-control company Terminix has annual subscription service plans for treatment of termites, carpenter ants, and more. Notably, they offer a discount to customers who pay by the year rather than by the month.
Application: Web designers and graphic artists can create quarterly retainers. In return for a fee paid quarterly or annually, they provide their clients with regularly updated marketing materials.
Whichever subscription model you choose for your business, remember that customer service is the key to happy customers. And a happy customer brings in recurring sources of revenue for your business.