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Memberships, subscriptions, loyalty programs, customer retention, call it what you will, recurring revenue can double the value of your business. Bottom line is that if you don’t have repeat business, there is likely a problem, and that’s a big red flag with investors.
Often, recurring business doesn’t just happen. Customers have to find good value in what they bought and it’s up to you to make sure they are happy. Here’s what to consider in order to reduce churn and keep your customers consistently coming back:
Product
Listen to your customers. If they are not satisfied with the product or service they bought, they will likely let you know, especially if you ask. Make sure there isn’t a pattern in the feedback that shows that you are not meeting expectations and that you are delivering quality. Make improvements to the product with your customers in mind.
Pricing
Make sure that your churn isn’t due to pricing. Are you priced competitively? Are competitors charging less for the same service? If so, you’ll either need to differentiate yourself from competition or align your price with the market.
Customer engagement
Your sales process doesn’t end with the purchase. Make sure you keep your customers engaged after the purchase so they continue making purchases in the future. Don’t think about your sales as one-off sales. Even if the initial purchase seems like a one-off, you have the opportunity to convert customers into repeat buyers. Think of the initial purchase as a customer entering your conversion funnel. Engaging those customers and moving them down the funnel is easier than finding new customers.
Subscription program
Consider launching a subscription or membership program. If all of the aforementioned concepts are in line, your customers will find a subscription service convenient. Subscriptions aren’t just relevant in publishing anymore. We subscribe to meals e.g. Blue Apron, to entertainment e.g. Netflix, clothing e.g. Stitchfix, and to overall convenience e.g. Amazon Prime.
Acquiring new business can cost you up to 25 times as much as retaining current customers. So if you have not done so already, consider setting up a recurring revenue program, for the sake of your bottom line. Whether it’s to increase your valuation or to improve your ROI, if you are running a business of any kind, you should be thinking about recurring revenue. If you’d like to talk about how you can build a recurring revenue stream and boost your business’s valuation, get in touch.
