One of the big benefits to having a recurring revenue model is the ability to have predictable revenue that is stable and very likely to continue in the future. The benefit to the business is less risk, and maximum revenue predictability. The benefit to the customer? Things like regular pet food delivery or an ongoing clothing box subscription.
But there’s a lot of behind the scenes work that goes into creating a successful recurring revenue model, and the secret to growing that model is having the right software to manage it. These four must-haves can help you get started creating a great recurring revenue stream.
- Strong processes for both taking and fulfilling orders
- A profitable recurring revenue model
- Pricing that maximizes revenue
- Recommended capabilities for a recurring revenue management system
Strong Processes for Taking and Fulfilling Orders
A profitable recurring revenue model relies upon its processes for success. Processes must be in place for:
- Sales and marketing, preferably through a CRM to automate it further
- Order processing and recurring payment processing
- Service delivery
If any one of these processes are flawed, the model will falter. The recurring revenue model works off the need or desire of customers to receive a consistent product delivered on a regular schedule. Consumables—such as diapers or pet food—are perfect for a recurring model because they are consumed on a regular schedule and must be replenished accordingly. Processes ensure orders are delivered on time, every time, and enhance the overall appeal of the model.
Profitable Recurring Revenue Model
It’s one thing to create a desirable product that can be shipped on a regular schedule, but another thing entirely to achieve a profitable revenue model. Netflix is able to achieve a profitable-revenue model thanks to its ability to deliver streaming services over the web. It can make deals with specific production studios and avoid the fees charged to cable companies for wired movie delivery. Your model must be profitable enough to sustain the service over a long period.
Pricing That Maximizes Revenue
A recurring revenue model is only as good as its pricing. Price the model too high and customers will forgo convenience for cost-savings. Price it too low and you’ve nixed having a profitable revenue model. Price testing, comparative pricing, and a thorough study of the competition can help you evaluate pricing models to find the most profitable one for your products or services.
Systems to track orders, receive payments, and deliver goods or services must be flawless. Here’s where system capabilities become necessary: Revenue-processing systems (such as Acumatica) must be flexible enough to accommodate multiple-payment models, contract types, and billing cycles. Even if you choose a system that does what you need it to do to launch your recurring model, down the line you may need to make updates or changes. Thus, a flexible system is the best choice for recurring revenue success.
Build Your Recurring Revenue Management with Acumatica and ASI
Built on the world’s best cloud and mobile technology, Acumatica cloud ERP offers the flexible system you need for recurring revenue management. Used by hundreds of companies that utilize different payment methods and sell various products, Acumatica works with CRM, accounting, operations, and other departments to share useful and timely information about recurring revenue and support recurring bills, deferred revenue, and deferred revenue recognition.
When handled correctly, recurring revenue models can be immensely profitable. If your company is considering adding such a business model in 2021, let our Acumatica ERP experts help. With more than 30 years’ experience with Acumatica and other ERP software solutions, ASI is well versed in helping businesses grow and add more powerful features to drive toward business success. Find out how we can help your recurring revenue grow. Talk to an ERP expert now.