By Jon Gettinger
Recurring revenue is not a fad anymore; it’s the new way to do business in just about any sector. Recent examples of companies joining the recurring revenue revolution range from online retail powerhouse Amazon to big-box retailer Target stores to global automaker Toyota to Sony’s game division.
But this is the tip of the iceberg.
Recurring revenue has gone well beyond retail. For example, the North Carolina State Lottery and 12 other state lotteries are adopting subscription models for the sale of lottery tickets. Adobe has bet its entire business on recurring revenue. World Wrestling Entertainment (WWE) has also announced its latest subscription service to stream events directly to customers on their smart phones and tablets. And the list goes on.
To be successful in this brave new world of recurring sales, it’s critical to successfully manage each customer relationship. Effective customer relationship management becomes essential to sales growth and increased earnings — the new raison d’etre of being in business.
Under a traditional model, each sale is a one-off transaction. The customer is only your customer for the duration of a single transaction. It was basically one and done with the understanding you would have to reengage them for another transaction.
But under recurring revenue, the customer makes a one-time buying decision. Then if you continually satisfy that customer every time you interact with them, you are rewarded with a steady, or better yet, growing stream of revenue over a long period of time. You make a sale, but reap the benefits of that and future sales for as long as you can maintain a satisfying relationship with the customer.
Thus, a business needs a solution that can respond to every customer interaction in order to satisfy or better yet delight customers on an ongoing basis.
So, how do you find a recurring revenue management solution that will work for your business? It’s a process that should be carefully thought out before making a decision.
Here are some important points to consider when shopping for the right recurring revenue solution for your business:
- Time to market is critical in today’s fast-paced and evolving business world. Being able to put the right recurring revenue management system in place should take weeks or months, not months or years.
- It’s important to find a solution that integrates with existing systems so that deployment doesn’t overwhelm the organization. It’s important to consider a cloud/SaaS solution as they are often far easier to install and implement at less cost. Plus most companies will appreciate the expertise a recurring revenue management system provider possesses.
- A recurring revenue management system should be flexible and enable a quick response to changes in your market that require adjustments to pricing and packaging. This will help you keep pace with your competitors not to mention rapidly evolving trends in your market.
- It’s important to note that most legacy billing systems were not built to rapidly deploy or respond to change, a very important consideration in the fast-moving market place.
- With the right management system you should be able to respond to new prospects while providing an uninterrupted, flawless experience for existing customers.
- You must minimize the inherent risks to customers that do business with you; they expect you to protect important data and other personal information. They also expect that information to be accurate and readily available 24/7.
The system should permit you to create personal connections that exceed expectations, and allow you to become a friend that they know and trust — a business that anticipates their wants and needs. For example, the system should allow you to reach out and connect with customers with incentives such as discounts or access to additional services when business from those customers begin to decline.
It should also allow you to upsell customers whenever the opportunities arises, such as upgrading customers to higher-level service plans when they begin to overuse existing service levels before added charges kick in.
At the end of the day, your success or failure rests on creating positive experiences for the buyer of your products and services. Thus, the ultimate goal is to install and implement a solution that enables you to appropriately respond to the customers each and every time — building trust and confidence.
The recurring revenue management system you choose to install should allow your business to reach out and respond to each customer in real-time as the relationship continues over time. This will encourage the customer to stick around and continue the relationship for years to come.
The math is pretty simple. The longer you can keep a customer the more profitable that customer relationship becomes.
Recurring revenue is not just for movies and music. It’s for anyone in the 21st century business world who wants to increase sales and boost profits.
Jon Gettinger is the senior vice president of marketing for Aria Systems . He has more than 20 years of experience in the software industry and is a leader in software-as-a- service (SaaS), founding one of the first SaaS businesses in the industry, a solution for testing responsiveness of Web businesses.
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