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Recurring Revenue: An Expedited Response Strategy

Updated: Mar 9

The recurring revenue model is a business model that focuses on stable, predictable, and scalable cash flow. It’s a disruptive trend that enables companies to grow their revenue streams while increasing their market share and gaining a competitive advantage in their industry.

Most recurring revenue business ideas need a lot of hard work and dedication, but they pay off in the long run. Here are 5 simple steps to develop, and establish a successful recurring revenue model.

1- Establishing your revenue strategy:

What’s the difference between membership, subscription, and donation models, and which is right for you and your company? Establishing a rigid definition that sets the models apart can be difficult because they can be used interchangeably; however, there are some differentiators to help you identify them.

Donation revenue models are in essence supporter models where the users pay to support the company. Websites that use this model usually don’t add paywalls or additional charges.

Websites that feature paywalls generally fall under the subscription model, while others that incorporate additional perks (these can be anything from access to events, discounts, access to private groups, etc…) fall under the membership model.

Understanding which of these programs your audiences gravitate towards, and which model best meets your needs based on your company’s offerings is crucial to establish an effective revenue strategy.

The first question you should ask yourself is “Is my company ready to start generating recurring revenue?”.

If your answer is yes, then the next question you should ask yourself is “should I put my content behind a paywall?” It’s important to note that as paywalls evolve, the term is redefined accordingly; however, for our immediate purposes, we will be using the limited definition of “paywall” as a means of gating content.

Paywalls work with both subscription and membership models, however, they each use paywalls differently. Subscription models monetize their content, whereas membership models monetize the relationship between the company and the client.

The best strategy for any company is one that’s built around your audience, the value they perceive, and the best positioning for your content.

2- Identifying value propositions and your customers:

To identify your value propositions, you should first evaluate the true value that your company can offer its customers by figuring out your audience’s interests and buying habits.

Understanding your value proposition will allow you to better segment your customers.

The traditional marketing approach would have us look at the different customer segments by factoring in their demographics (age, group, gender, location, etc…). However, modern marketing trends are changing the foundation of interactions between the company and the user by taking a different approach; one that focuses on the customers’ needs.

We’re moving from “a middle-aged person living in X doing so and so with a disposable income of Y” analysis. To “I want to target people who are willing to pay for trusted local content”. Or “individuals within the target audience that attend 5 events a year and would be willing to pay for content that gives them discounts on said events; or our area has a lot of people who want to give back to the community, so our focus is to provide them with a new model that allows us to stay up to date with how they’re helping the community. “

This approach to customer segmentation may make it harder to narrow down the target, however, in return, it makes it easier to understand the different values you need to attract each type of user.

Food for thought:

  1. Get more people on your team involved in the brainstorm.

  2. Involve your audience to get a better idea about what they’re interested in.

  3. Get creative with your value propositions and don’t be limited by your current offerings.

  4. Identify your customer segments based on their needs rather than their demographics.

3- Draw out your customer journey

Recurring revenue generation follows a different philosophy than more traditional business models. Whereas the goal of traditional advertising models and print sales is to expose as many users to ads as possible by keeping them online. The criteria were to keep the reader on the website, and that they read different articles while switching page views.

However, to optimize the efficiency of your recurring revenue generation it’s important to simplify your customer journey. This will allow you to identify where things are going wrong (which they will) and where they’re going right.

First, you need to define the channels users are coming from, whether it’s websites, mobile apps, social media, etc…. Ensure that the first thing your customers are directed to is a landing page or interface with your call to action. The next step is to make sure they see the paywall on your website which leads them to create an account.

After the user creates an account, the next step in their customer journey would be to make a payment. Once that’s done, they can go back and enjoy the company’s offerings.

Food for thought:

– Start simple, you can always add steps to the process later. Make sure that you are tracking and minimizing the time that it takes to go from start to finish.

– Track and minimize the time it takes to go from one side of the funnel to the other. Make sure that your calls to action are in the right place, and that you’re charging the right amount.

– Get creative with your paywalls (ie. A newsletter paywall can be added as a step to collect emails from customers who are interested but aren’t quite ready to create an account yet) and test often.

4- Implementing the strategy:

Reading up on strategies is easy, however, implementation is another story entirely. We advise that you don’t undertake this challenge internally and employ a professional service. Implementation can be very costly, it requires a lot of maintenance, and it needs to be managed by someone (or a team) who is at the forefront of the ever-changing updates and changes within the e-commerce industry. This will allow you and your company to focus on your membership strategies rather than get bogged down with implementation.

When choosing a platform, your choice should be based on whether that platform will offer the best user experience on your website (this is a leading factor for conversions).

The platform you choose should deliver a fast, simple experience for the users, one that ideally keeps them on the same page and cutting to several different forms rather than asking for all the information in one go.

Consider that sooner or later you’ll have to deal with customer support. So make sure that you choose a comprehensive platform; one that will allow you to manage your authentication and payments in the same place. It should also have the ability to integrate with your analytics tool, your email service provider, and any other platforms you decide to use in the future.

It’s best to keep your customization to a minimum when you first adopt this strategy. However, you’ll want to make sure that you can easily go back and make changes as you gain data.

Make sure that you know what you’re getting, try the platform for yourself on websites that are using the vendor. Ask about their APIs and their SDKs. Platforms with APIs tend to be more modern and are more likely to be more customizable in the future. (depending on their APIs and customization functions)

Food for thought:

– Don’t base your choice on cost unless you have to. Choose one that meets your needs and ticks as many boxes as possible without breaking the budgets.

– Run a break-even analysis and evaluate with your team whether employing a subscription platform makes sense for you.

5- Post-Launch: Analyze and iterate:

The launch is just the beginning. Anyone who says otherwise and promises that you’ll generate recurring revenue overnight is not being truthful.

After you gather the data, you should start analyzing and getting user feedback. Look at your KPIs, your key metrics (whether its revenue, registered users, donations collected in a month, etc…); and use that data to refine and iterate.

Ideas for iterations:

– Test the copy of the paywall itself and your calls to action

– Experiment with the amount of free content offered.

Add a newsletter paywall to offer more free content in exchange for subscribing to your newsletter

Final Thoughts:

The recurring revenue model is an increasingly attractive choice for businesses; one that offers various benefits to both the company and its customers. Follow the steps above to increase revenue, while improving the way your company interacts with its customers. However, we strongly advise against implementing these changes internally and recommend the adoption of dedicated systems necessary to support the recurring revenue model

Want to find out if Pelcro is the right paywall provider for you? Try us for free or set up a demo call with one of our experts


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