As competition — local, national, and global — puts continuous pressure on revenue generation, many businesses and non-profits have begun to explore strategic opportunities for recurring revenue. Have you spent any time imagining ways that you can convert less predictable revenue streams into more reliable ones? For invoice-based service businesses, that may mean a new option for clients to engage you as part of a monthly subscription fee. For nonprofits, that may mean a new emphasis on monthly givers, with new communications and incentives to keep them. Even retailers are exploring ways to move beyond free loyalty clubs into paid membership or service programs.

When you really dive in, you may see that there are even more benefits to adding a recurring revenue stream:

Recurring revenue is attractive to banks and investors. A strong portfolio of recurring income streams can help with financing. Banks will likely look more favorably on the organization’s health, stability and potential when they see these programs thriving… and it certainly couldn’t hurt when it comes time to sell the business. The principle is true in non-profits, too, where large funders look at the degree to which an organization has cultivated small funders.

Recurring revenue is a great marketing tool. Imagine you’re in your typical sales or development setting, but now you can tell your prospect about the number of customers who so value your product or service that they have become loyal monthly customers/givers/clients.

Recurring revenue streams offer real-time visibility into customer satisfaction. Forbes lists recurring revenue as one of its Top Ten Business Trends that Will Drive Success in 2017 (https://www.forbes.com/sites/ianaltman/2016/12/06/ top-10-business-trends-that-will-drive-success-in-2017/2/#62e1ff8e349b) and cites this aspect as a major factor. “Just look at what John Legere did with T-Mobile. They went from being on the verge of disaster to thriving by removing contracts and listening to customers. If you give your client the choice to renew or leave every month, then you’ll have your finger on the pulse of your market.”

Before you toss this idea aside as irrelevant to your organization, spend some time brainstorming some creative ways you might add recurring revenue streams. It might be the change that jumpstarts new growth.

At Duncan Williams Asset Management, we love to help businesses of all sizes thrive and grow. Give us a call – we’d love to answer any questions you have about managing your finances and assets.

Author: Gary Lendermon
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