What do kitchen designers, builders, architects, carpet retailers, funeral directors, wedding dress designers, interior designers, mortgage advisors, car and motorcycle dealers, estate agents and even some web-designers have in common?
For one, they all sell a product that people may not need to buy again for several years, if at all. You don't buy a new car or carpet, website or wedding dress every couple of weeks.
Apparently, 82% of homeowners can't name the estate agent they bought their current home from if they bought it more than two years ago! Imagine the sales that are lost to competitors when it's time to move house again...
On average it's six times more expensive to find a new customer than it is to sell to someone who has already trusted you enough to buy once. So repeat sales are the life-blood of a profitable business. But if repeat sales are the life-blood then recurring income streams are oxygen!
Businesses that don't have predictable repeat business or recurring income streams face a number of problems including:
- It's harder to make a profit on a first sale than on subsequent sales (think sales and marketing costs), so profitability is lower.
- It's hard to predict the cashflow of a business if you don't know where the money is coming from 3 months from now. This can lead to uncertainty, stress, funding issues and bankruptcy...
- It can be morale-crushing to work hard pleasing a customer to get a sale and then having to start from scratch for the next sale - much more pleasing all round to be selling or working with someone who already knows how good you are.
- When it's time to sell the business, the value will likely be lower. Businesses with recurring income streams are estimated to sell for two and a half times more than businesses with no recurring income stream.
To get more repeat business you could do what Joe Girard, the record-breaking car salesman, did to ensure that more of his customers came back to him when they next bought a car... Ask yourself, how often have you returned to the same car dealership when it was time for a new car? Now look up Joe's story.
To develop recurring income streams you'll need to get creative. You may already have customers who buy from you every couple of months, say. For example, a restaurant might have couples that eat there three times a year, but what if they were members of a VIP Dining Club, that offered a three course meal for two every month with a free bottle of wine for a monthly fee of £40? That would be a recurring income stream, and potentially much more lucrative.
So the question is how can you create recurring income streams in your business to make it more profitable? For some it's easy. Like wine retailers who offer a wine club. Or the web-designers that offer social media or SEO packages. Or the car dealers that offer a monthly payment plan for annual servicing. Not everyone will take them, but those that do represent predictable income.
For other's it's not so easy. But with a bit of creative problem solving and an open mind you can find a way.
And if you come up blank then get in touch. You never know what a fresh pair of eyes might come up with...
If you're interested in building a stronger business that delivers more to you, your employees and your customers in the North East of England then find out more about coaching for business growth and the tried and tested methodologies of the World Number 1 business coaching organisation, ActionCOACH. Book Online for a commitment-free discussion to explore the benefits of working with a certified coach and enquire about funding.
Article Source: http://EzineArticles.com/?expert=Gareth_L_Shackleton
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