As promised, today I’ll talk about recurring revenue strategy and how to start developing one. One of the major factors in determining whether your recurring revenue model will succeed is understanding your business goals. This has to be your starting point. You need to ask yourself questions such as what is your business growth strategy and how does this affect the model you want to adopt? The recurring revenue model can be used to meet any growth goal but you need to understand those goals in order to understand how best to implement it.
To better understand why this is important you can take a look at the New York Times and the fact that its aims were to increase its revenue and its customer base. These goals were the instigating factors behind it adopting subscription options. Looking back at the Netflix example; the company came into an established industry and caused disruption by introducing a new consumption and monetization model. This was its goal.
What can you achieve?
It’s not just large companies that can achieve success with a recurring revenue model; you can too. Once you have established your goals, you need to ascertain where you want to be and how you will measure your level of success. Will you look at increases in revenue? Will you look at increases in your market share? The answers to these questions are individual to the business and its product or service. For instance, Hootsuite measured its success in the growth of its customer base after introducing a freemium model.
Looking at your product
One of the major factors you need to consider, when establishing a recurring revenue model, is your product. You need to make a decision about whether you simply need to repackage your existing offering or whether you want to offer a completely new package. You don’t have to get carried away with your monetization model; it does not have to be hugely complicated, but it can be if necessary. The most important thing is that the model is the best one for your product or service.
Determining your strategy, and your preferred model, is just the start. Now you come to work involved in putting your model into action. This includes:
- Identifying stakeholders.
- Creating a plan.
- Ensuring your business systems are ready.
- Knowing your requirements.
- Engaging with systems vendors.
Of course, you are only going to have to identify your requirements and liaise with vendors if you identify gaps in your systems. Every business will be different in this respect. The important thing is that you need to put the groundwork in place to be ready to start establishing your recurring revenue model.