Adding new products are services—especially those that involve recurring revenue—can be a great way to build sales and move your company forward faster. Small businesses have been using this concept for years, and even large brick-and-mortar retailers like Sephora, Amazon, and Walmart are adding new revenue streams—including subscription programs–to their offerings with great success.
Having multiple product lines and different revenue channels allows your growing business to diversify risk and capitalize on its already established reputation. Adding multiple product or service offerings can also attract buyers with different needs, increase your profits due to market segmentation, and even out seasonal sales patterns. Adding new lines of revenue can also help you compete more strongly in your industry.
WHY
Growth using a recurring revenue addition involves developing and offering both new and/or complementary products to your current market. It starts with staying true to your brand. Sephora would be confusing customers if it started offering a diaper subscription service, and Wal-Mart would be out of its niche if it started offering a high-end cosmetics sample box. But each of those services become high-demand offerings when switched back to their current brands. Use your current product and service offerings as a starting point for searching for new and innovative ways to meet your customers’ needs. Offering a new recurring line of revenue to your existing lines takes advantage of the reputation and trust you have already built with your customers. They see you as an expert in your area, and by presenting a new offering in the same area, your experience and knowledge of the target market greatly increases the new line’s chance of success.
In addition, your relationship with your current customers allows creation of new lines of revenue to satisfy new customers or to solve additional customer problems. As with all product and service lines, the most important factor of success is “am I offering something that relieves a pain point for my target market?” Because you can draw from what has been successful in your business, you are already one step ahead. Use previous and new customer feedback to help you as you determine your next moves.
HOW
You can add a new line of recurring revenue to expand your business or to take the place of a product line or service that isn’t selling well. Here are four steps to get you started:
- Determine the specific needs of your customers. Review feedback, get new feedback, and even try out your ideas on a small group of your VIP customers before moving forward. Even if you think your new line is great, it won’t sell unless others are convinced as well!
- Identify the product or service groups or features that are most attractive to your customers. Do they want more products for less cost, or is convenience more important—or is the issue something else?
- Create a unique line that is not offered by a competitor, or offer more value in your line than those currently available.
- Determine how to market your new line. Specifically, how you will determine the sales and distribution channels that will achieve the highest penetration in your target markets. This can be done within your company, but it might be more productive and require substantially less time to outsource this to a marketing company that has specific expertise in the area of recurring revenue. You don’t want your new line to lose steam idling in the customer acquisition phase, you want to get your new line out to customers and start reaping the benefits as soon as possible!
A bit of a caveat, it is important to realize that as you launch a new recurring revenue product line or service, there is a potential that one or more of your lower-performing sales areas might need to be eliminated or changed. However, the beauty of recurring revenue is that it allows flexibility in offering your customers exactly what they ask for, and since they are connecting with you on a regular basis, you can make quick adjustments with each delivery.
To introduce a successful line of recurring revenue, you will need to do market research and, most importantly, get feedback from your existing customers. If you stay true to your brand, let your customers be your guide and proceed with good messaging and marketing to get your new venture off the ground, a recurring revenue channel can be a great way to take your business to the next level and provide security for the future. If you are interested in learning more about adding a recurring revenue stream to your current line of business, we’re experts at recurring revenue and would love to talk about how to make it work for you. Contact us today by clicking HERE or giving us a call at 816-287-2010.