One of the primary challenges for new academies, fitness training clubs and other training businesses, is generating enough money during the first couple of years to stay in business. Which is why we encourage our customers at Upper Hand to increase their chances of success by building part of their business model around generating recurring revenue (Thom Holland, 2015). Recurring revenue is when a new customer, who has purchased training one time, decides to come back and train with you again. Below I outline the benefits of recurring revenue and what you need to put a recurring revenue process in place.
5 Benefits of Recurring Revenue:
- Revenue Projection Visibility - The main benefit of a recurring revenue business is that you will have a better understanding of how much money will come in future months. Compared to one-time payments, recurring revenue is much easier to predict future revenues (Thom Holland, 2015).
- Easier Sports Budgeting - Due to the ability to forecast future revenues better, you now have a more accurate picture of your monthly expenses and income. This makes budgeting easier and more accurate (Thom Holland, 2015).
- Improved Processes - When you have recurring revenue as a foundation to your business, streamlining operations and costs associated with your operations is much easier (Thom Holland, 2015).
- Better Cash Flow - “Cash today, is more valuable than cash tomorrow,” is often the most undervalued and underestimated characteristic of a strong business. Primarily because it is hard to understand. For example, Business A makes $10,000 a month for 12 months, with annual revenue of $120,000. Business B makes $120,000 the first month of the year, then does not make money the rest of the year. Which business is better? Of course there may be a lot of other factors to affect that answer, but the point is, you want cash today, not tomorrow. Another reason you should be accepting online payments vs. chasing down cash. Learn about online payments here.
- Happier Clients - We often hear from parent clients of training academies and organizations that they simply want better visibility into upcoming training opportunities. When you have a recurring revenue model and process in place to keep your existing clients updated on new training, you make it easier for them to buy your training. The below graphic depicts the flow of recurring revenue in the sales funnel. Get a refresher on how to design your sales funnel here.
This is the back end of the funnel, where we want to drive new clients back into a circular path in the sales funnel. After they have trained with you and you deliver excellent service, the client goes back into the “Contact books training” part of the funnel. Here you will utilize marketing tools and customer relationship management platforms like Upper Hand to automate this process. Essentially, creating a loop that is constantly flowing from one month to the next.
2 Things You Need In Place to Start Collecting Recurring Revenue:
- Customer Relationship Management Tools Often one of the things I hear from talking to a potential customer is they “already have registration in place”. And often after a little explanation, they quickly realize registration is one of a dozen tools built into the Upper Hand sports management software. One of those tools is customer relationship management (referred to as CRM). The Upper Hand CRM powers registration for recurring revenue purposes, making life easier for both our customers and their clients to continue coming back for more training. A powerful CRM produces real-time business intelligence for you, enabling what is called one-to-one-marketing or personalization (Wikipedia, 2015, June). If you do not have a process to track customer relationships, you can learn more about using our CRM here. Our team is trained in the development and use of these tools to help you carry out customer nurturing, which is a tactic that attempts to communicate with each individual at the right time, using the right information to meet that client’s need to progress through your sales funnel (Wikipedia, 2015, June). On Upper Hand, our CRM allows you to quickly market new training events via 1-click invitations to clients. This automation provides you with the ability to increase your recurring revenue faster while also helping filter out non-qualified contacts. Learn more about the sales funnel and why it is important to always filter our bad contacts.
- Provide Excellent Customer Service - If you plan to build and maintain a solid base of recurring revenue, you need to provide excellent customer service. The value of recurring revenue builds the number of high-value clients you are working with but more importantly, adds more contacts due to an increase in lead generation activity. And remember, first time clients (e.g. new customers) require a higher degree of customer service than your recurring customers. So with this increase of activity in your sales funnel, will require a focus on delivering strong customer service. One of the benefits of Upper Hand, is our team acts as a customer service agents for your sports organization, offering the top client experience in the industry.
Sources: Wikipedia. (2015, June). Re: Databasemarketing. Retrieved from: https://en.wikipedia.org/wiki/Databasemarketing#Analyticsand_modeling Thom Holland. (2015, June). Re: How to Use Recurring Revenue to Grow Your Small Business. Retrieved From: http://www.thomholland.com/recurring-revenue-grow-small-business/