If you run a business, you know the ebbs and flows of revenue streams and the importance of a predictable income that provides you and your business with the stability you need.
If your business is the type that has recurring revenue, predictable revenue regularly occurring in the future with a relatively high degree of certainty, you can enjoy that stability. But it’s still important to be aware of best practices you can learn from to avoid mistakes and choose the proper methods for your business.
Five Best Practices:
And while there are no guarantees that recurring revenues will last indefinitely, there are important steps to help ensure success.
1. Get paid on time – Use ACH payments.
With ACH (Automated Clearing House) payments, you avoid spending weeks chasing after unpaid invoices. ACH network can be used for monthly recurring bill payments. ACH payments are electronic payments that go through a network; that directs the money from one bank account to another through a secure system and can be used for monthly recurring bill payments. Never chase invoices anymore.
2. Look for upsell/cross-sell opportunities.
Did you know that the chance of selling to a new prospect is 5-20%, while the probability of selling to an existing customer is 60-70%? Also acquiring a new customer can cost you five times more than retaining an existing customer.
Too often, businesses put too much time into attracting new prospects instead of leveraging their existing customers to find out what else they may need or want.
Tap into your customer base and look for opportunities to sell them more of your services and products. They will be more loyal in the long run.
3. Customer Service – Leverage your existing relationships
Do you know how to keep your customers? By making them happy. Having excellent customer service is often overlooked as a component of increasing and recurring your business’ revenue. It would help if you went beyond some basic customer service activities.
Use your customers’ feedback and the insights it gives you to develop your products to meet their needs better continually.
Research shows that increasing customer retention by 5% can increase profits from 25-95%. A satisfied customer will always come back and tell others about you.
4. Use progress billing for large projects.
Are you working on a large project that will take months? Instead of getting one big payment at a time, spread it into smaller amounts over several months based on completed milestones. This is what progress billing is about. It’s an invoice that bills for your work completed along the way instead of invoicing at the end of a project.
This billing will protect you along the project while providing you with a recurring revenue stream over time.
5. Don’t forget to market.
Marketing is key to growing your business, and you must do it.
- Be present on social media.
- Share your customer success stories on your website.
- Network and go to events.
These are just some ideas. But you get the message. If you want to grow your revenue, you must invest in marketing.
But there is more
While each of the mentioned actions will help you build your business with a more predictable and stable income stream, there is more to consider if you want to generate more regular revenue for your business.
Don’t get complacent.
The success of your business doesn’t end when you acquire a customer. It’s just the start. Remember what we mentioned above about the importance of customer service.
- Speak to your clients regularly.
- Have a quality control system in place.
- Think about what else they might need from you.
You will never grow your business if you continue losing existing clients and must continually replace them with new ones. Your existing customers are the revenue backbone of your business.
Having a recurring revenue stream means stability and predictability for your business. It also makes it easier to forecast, plan and invest in your business to keep it growing.
And there is one more thing that recurring revenue will tell you about your business.
That you have a tight relationship with your customers and isn’t that what every business owner wants?
Building a recurring revenue business is not always easy. But you don’t have to do it alone.
An outsourced financial services provider can give you the financial insights and analysis you need to keep your business growing and generate more recurring revenue over time.