The recurring revenue revolution

The recurring revenue revolution

Paul Green Content, marketing and sales, practice owner's mindset

In the couple of years I wasn’t able to work with vets and opticians (due to a non-compete clause when I sold my business), I started a marketing business for IT support companies.

They’re very similar businesses to yours, in many ways. Certainly the business owners have the same desires and fears as practice owners.

The one big difference is how ruthless they are at generating recurring revenue.

The IT model used to be called “break fix”. A computer broke, so they fixed it, and got paid for that

These days they call themselves Managed Service Providers. And they are very focused on providing ongoing services to their clients.

This includes a support service where they do preventative work to stop computers from breaking in the first place.

It’s all about the Monthly Recurring Revenue. And it has utterly transformed their sector.

Because the most successful businesses have incredibly high levels of recurring revenue. 80% to 90% of turnover. Even the struggling ones have impressive levels of recurring revenue.

What this does is make the business a lot less stressful to run. When money just turns up each month whether the clients come in or not, that’s a more resilient business.

Having a growing, successful plan for your practice has benefits for everyone

You benefit from a smoother cash flow. You also benefit from longer retention, as plan customers tend to be more loyal. They also spend more in the long run.

From their point of view, they will visit more often and they will find their cash flow easier to manage too (of course consumers don’t call it cash flow, but it’s the same principle).

No matter how big or small your plan, you can grow it. In fact you must grow it. It should really be sitting at the core of your practice. The IT support guys did this and it changed everything.

The UK is rapidly turning into a subscription economy. Don’t let this put you off. Yes, subscription overload is a real thing. But not everyone is overloaded. Many people embrace it.

You can’t convert everyone to a recurring revenue client, but you can have a good bash at converting a lot more of them.

There are three key strategies to grow your plan:

1) Make it a no brainer

Your plan must be so appealing to clients that it makes both logical and emotional sense that they should be part of it. It should be packed with benefits and save them money.

That way, both their brain and heart will agree it’s worth signing up for.

One of the easiest ways to do this is to offer them a choice of three plans – a good one, a better one, and a best one. They will pick the level of plan that’s most suitable for them.

If your current plan provider can’t handle this, you need to switch provider.

2) Ask everyone, every year

Just because someone said no last year doesn’t mean they will say no this year. Most practices ask once and then… that’s it.

Which is crazy! Because there are all sorts of factors that affect whether someone will buy your plan or not. And these factors change every time.

Let me put it another way. You owe it to them to keep offering them the plan, because they will save money and get more. How dare you decide whether they sign up for it or not!

Put in place a system in the practice to ask them once a year. If and when they’re ready to join, they will.

3) The daily drip

One of the most critical factors in growing a plan is your staff. If they are on board with it, you will find it sells itself. And if they’re not it’s virtually impossible to grow it.

Practice owners with successful plans focus on it daily. I like the concept of a daily drip. In your daily 5 minute team huddle before the doors open for the day, you focus on the plan results from the day before.

Who came in, and how did they benefit from the plan? What are the wins? And who’s coming in today who could benefit from the plan?

What’s today’s spontaneous reward (ice creams for all) for selling three new plans today?

You drip drip drip every day… but always focusing on the benefits to clients, and never on the benefits to the practice. Your staff already think you are rich, and aren’t particularly motivated to make you richer.

Recommended reading: The Automatic Customer by John Warrilow.