Most of us are working too hard to create new revenue every month. We can amplify our return on effort by offering recurring products and services. Positioning those products as solutions to our customers’ problems is the key to actually selling them.
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The article below is based on the transcript of this recording
Why Recurring Revenue Is Key
Ask any exit planner, anyone looking to buy a business, or anyone that funds businesses. They will tell you that recurring revenue is key to building value in your business.
If you’re just getting started it may be hard to even imagine selling your business or letting someone else run it, but ultimately you want the business to work without you being involved 80 hours a week, right?
Recurring revenue helps make that possible.
I listened to an interview today with Mike Michalowicz, author of Profit First. If you haven’t read the book Profit First please write it down and order it tonight. Do not do anything else in your business until you’ve read at least the first chapter.
In this interview, Mike talked about the layers of our businesses and what order we should address them in.
He talked about the foundation of any business being sales. And the next layer is profitability.
Adding recurring products and services to your business WILL increase your sales and help you become more profitable.
The best thing is, it generally doesn’t take much more effort, if any at all, to sell a recurring item than it does to make a one-off sale. This means the money you spend generating that sale pays off over and over instead of just once.
Listen, I love helping people and seeing business owners gain confidence in their businesses but you know what feels even better? Waking up to notifications of auto-paid invoices every single morning.
In case you still aren’t convinced, let’s look at some very simple math.
Let’s say you offer a $25 one-off product OR a $5/month subscription product.
Now, let’s assume you sell one item a week.
At first it looks like the $25 product is going to be the best way to increase sales.
But what happens when we go out past the first quarter of sales?
Over the not-so-long-term the revenues from the recurring subscription compound and far outpace the one-off product sales.
Now, we’re not accounting for churn here, but we can assume that even with some subscribers canceling each month, the subscription plan yields a far better result.
The cost of goods sold should significantly reduce over time too as processes, automation and bulk buying come in to play.
So, What Should You Sell?
Don’t assume you have to start over completely with your business model. Almost any business can add recurring revenue opportunities.
Is it a consumable? Can you simply replenish the product every week/month/quarter?
Can you offer variety with similar products and services?
Can you offer maintenance, management or warranty services?
Don’t forget to include upgrades and enhancements to your recurring offering.
We’re going to get more into this later on, but if your product doesn’t solve a specific problem for your customers, it will be difficult to sell.
Especially a recurring offering that your customers are committing to paying for over and over. If you can’t identify and state the problem it solves, then people won’t buy.
You should also be uniquely qualified to solve this problem. Your life experiences, views on the world, values and unique way of delivering the solution are always things that contribute to being uniquely qualified.
Kimberly Bien with Salted Sanctuary
Everyone needs to take a few minutes for themselves to focus on their own health and wellbeing, but few actually make the time for it.
A great way to care for yourself is to use high-quality bath products that not only provide an amazing aromatherapy but are also good for your skin and body.
But getting access to these products isn’t always easy. You can’t pick them up on your normal Target run, you typically need to go out of your way to remember to order them or get them from a special market.
Now, Kim may already offer this, if not she should have a monthly or quarterly subscription box. In this box she’ll guarantee one soap, one bath salt, one shampoo bar from a variety of scents and styles. Customers have the opportunity to upgrade their subscription to include a soap dish in their first order and a “first look” sample of the newest products Kim is working on in each subsequent order.
Kim is uniquely qualified to offer this product because she developed these products because of allergies to preservatives and other harmful chemicals that her sensitive skin could not tolerate.
Speech-Language Pathologist With a Disney Vacation Planner Side Hustle
Now, this business is already a recurring revenue model because she’s probably doing weekly sessions with her clients.
Her Disney vacation planning business isn’t recurring though. Most people won’t use her services more than once every few years. So how can we make a recurring offering that only she can provide?
Traveling with young children isn’t always fun or easy. Whether it’s a cross-country trip to Disney or an hour in traffic to see Grandma, kids aren’t always the best car companions.
What if this SLP offered her vacation clients a subscription to new fun and interactive games that can be played in the car, on an airplane, or even in the doctor’s waiting room. Even better, these games help kids develop language skills.
Her unique experiences as an SLP and a travel planner make her ideal for offering this ongoing product that soothes the pain of entertaining young children when they are stuck in one place for a long time.
How To Position Your Offering
Over the past decade, we’ve helped thousands of businesses position their products and services. We’ve learned quite a bit about how to communicate effectively and make people want to buy.
Introducing The Problem Solver Method
We’ve developed a content framework called The Problem Solver Method. This framework breaks down exactly how to communicate your offering through any form of content or even when speaking directly to customers.
We won’t have time to get into every piece of the framework, but there are some key areas I want to highlight for you.
First, though, we need to establish one thing.
No one cares about your business.
Not even your mama.
What do people actually care about?
Don’t spend the precious few moments you have on your website, in your emails, or when you meet prospects talking about yourself. Everything you say must be framed around how you can help solve the customer’s problem, otherwise they’ll lose interest or even feel threatened and they’re gone.
Change Your Message to Work With Reader’s the Brain
Now, I’ll try not to get too technical here but let’s have a quick lesson in how the brain works. This is key to The Problem Solver Method and will instantly help you have a better connection with your prospects and contacts.
There are three parts of the brain that we use for different activities:
- Neocortex which is responsible for planning, concepts, and abstract thinking
- Mid Brain or Limbic System which is responsible for social and emotional thinking
- Basal Ganglia (Croc or Reptilian brain) which is responsible for survival, new situations, and fight or flight
This is the part of the brain that developed first, it sits right at the top of the cerebral spine and it is a very simple processor or gatekeeper for what information moves through to the midbrain and neocortex for further processing and understanding
This part of the brain can’t handle abstract ideas, in fact it will interpret new ideas or complicated concepts as a threat. It has a very short attention span and is constantly scanning the environment for anything that will help it survive, but because of its minimal processing power, it only picks up on things that are very clearly going to help it survive.
The problem is, we tend to speak directly to the Neocortex with abstract language and “big idea” content.
This scares the basal ganglia, it doesn’t understand what the heck we’re saying and assumes it’s either a threat or a waste of calories to process. It shuts down the perception of your message immediately.
This shutdown happens even faster if our messaging focuses on how amazing we are, because now the basal ganglia sees us as a threatening competitor for resources and propagation
The good news is, the solution is actually quite simple. We have to stop being cute and clever and immediately tell people exactly what problem we can solve for them. This signals survival and the basal ganglia allows our message through to the rest of the brain.
Segment Your Audience
Finding your niche is about more than key demographics. Everyone in your audience should have the same problem. From there you can target your ads and messaging more specifically if you need to, but without the same core problem, you’ll have a hard time getting through.
Now, it will feel very uncomfortable and limiting to do this, but I promise being the ideal provider for a smaller group of people will bring you more success than being a one-size-fits all business.
Solve a Problem
By now you should definitely get the point. You’ve got to solve a problem.
And then state that problem very clearly in your website header, on your social media, your profiles, and in your emails.
Remember — clear and simple is always better than cute and clever.
For example, Randi Skinner and I just developed a course to help people setup a cold calling plan for their business.
Cold Calling Really Sucks
But, It Works. We’ve Made it Easier (Maybe Even FUN)
BTW, you can see this landing page in action and purchase the sales course here.
The Bigger Problem
Here’s where you can really drive home that you understand your customer’s pain. This may feel a little icky, but you have to paint the picture of what life looks like if your customer doesn’t use your solution to solve their problems.
For your recurring product, how does this impact them over and over?
Going back to that cold calling course, here’s some things we remind our customers of on our sales page and in our emails
Growing a Business is Hard Work. Without a Solid Sales Pipeline, Your Business Will Struggle
Waiting for leads to come in on their own is NOT a strategy
and Without a sales outreach plan your business will struggle to grow
Your Unique Value
This is where you get to really make an emotional connection. Your clear, simple problem statement made it through to the neocortex and now it’s time to get a little deeper.
Our cold calling example?
Developed By a Sales Expert and a Cold Calling Hater
That’s right, the team behind this course is like no other. Randi Skinner has been killing it with outbound sales for over 15 years, and Heather Steele is a reluctant cold caller who understands the fear and anxiety around picking up the phone.
Here we’re showing expertise and empathy. No other sales course is positioned this way and we make it clear that we understand their pain and their emotional resistance and that we have a plan to overcome it.
Putting it All Together
These key pieces of the Problem Solver Method framework can and should be used ANYWHERE you communicate about your business. That means your emails, your website, your social media posts, proposals, and even when you’re just talking to people. Take some time to think about how you can introduce these pieces into every communication related to your business.
Get the Complete The Problem Solver Method Framework
Our team is working on a course to teach you the entire Problem Solver Method framework and use it to create or rewrite your entire website content.
The truth is, writing content for your website is SO much harder than it sounds. The Problem Solver Method Website Content Course will walk you through every step to create content that makes people want to buy your products and services.