Online businesses benefit from having recurring revenue. This business model centers on a product or service that people purchase regularly. An example of this is subscription-based services that customers pay for on a monthly, semi-annually, or annual basis.
Recurring payments allow a business to compute more accurately the return on their investments, and it helps reduce the time they spend on related tasks like marketing to new audiences. Here are some things you can expect if you adopt this model for your business.
Steady and scalable monthly income
It is easier to sell to existing customers than finding new people to opt into your service or product. People who are already making monthly payments are likely to keep paying. Furthermore, if you have a recurring revenue business, you do not need to trade your time directly for money. You can grow your business faster since you have a cushion for your efforts.
Increased lifetime value for customers
Recurring revenue lets you increase the lifetime value for your customers. If they pay for something regularly, it is an incentive for you to keep improving your product and adding bonuses that they would find engaging. It means more purchases, which leads to a higher ROI on the money you spend. When you increase your number of subscriptions, you can focus on customer acquisition and retention and make a bigger impact.
Time for your business to strategize better
Companies built around one-time purchases have to market and promote their products every month. With recurring payments, you can keep selling to the same group of people and not worry as much about being unable to meet your sales goals. This business model also allows you to optimize your business and make it more suitable for recurring revenue. You can start by looking out for these three things.
1. Know why you want subscription-based services
Do you want more revenue, more customers, or to reach another goal? Identify your goals at the start to lock in the best pricing scheme for your product. If you are tying your revenue to a pricing strategy, you need to be strategic—you cannot change your fee schedules on a whim, or you will alienate customers. Being able to justify your pricing model will help you find the best price points, differentiate the tiers, and bring in appropriate bonuses or add-ons.
2. Concentrate on customer satisfaction
Your business relies on how happy your customers are about your products. When people sign up for subscriptions, they need to have as great an experience as possible. If you focus on their journey, you will surely see an improvement in your acquisition numbers. Furthermore, a great onboarding process will lead to people being more willing to pay for your products.
3. Make it easy for them to make payments
There are plenty of complex processes involved in billing, and you have to know what these are for you to succeed in implementing this business model. One way to make things easy for you is by teaming up with a hosted payment page provider, or a company that creates plugins for websites. This way, you can build on structures that other companies use, taking one thing out of your to-do list.
This is the best time to start a recurring revenue business. Membership websites and SaaS providers are all over the internet—people are used to the idea of paying a monthly fee. What you need to do is concentrate on delivering a product or service that they love.
Make the collection of recurring payments a breeze by using our services at Payment Page. After you create a hosted payment page with us, you can concentrate on giving customers the best product or service! Get in touch with us today for more details.