If everyone else is doing it, why aren’t you?

Netflix does it. GE does it. Verizon does it. Your local gym does it.

What’s the common denominator? They all have some sort of recurring income product, also known as a membership model.

In this day and age, recurring income is THE business model. If you don’t have a recurring product or service yet, you will likely get left behind by those in your industry or market who do.

Case in point: Netflix vs. Blockbuster.

Netflix started right from the beginning by getting customers onto a pay-once-a-month-watch-all-you-want plan. Customers loved it because it gave them lots of choices, and lots of freedom about when to watch their movies.

In contrast, of course, Blockbuster gave some freedom of choice – “you can get any 3 movies for $6” – but they didn’t provide for customers to watch a variety of movies, whenever they wanted. Once Netflix provided all of their movie selections digitally, instead of just by mail, the game was over and Blockbuster was done.

Why is the recurring revenue business model so popular? Below are the first four of six compelling reasons to start using this model as soon as possible:

1 – It’s money you can count on.

Sure, there are people who come and go; there will always be “churn” when you have any kind of membership program. Some people lose interest in the topic, others decide they can’t afford to stay, and still others just aren’t a good fit for the program.

But in general, if you take good care of your customers (we’ll get to that in a minute), you will have regular income that you can count on for months.

This allows you to plan for how you invest in your company: marketing, ads, launches, professional development, software and hardware upgrades, etc. When you have a regular source of income, you can make plans!

2 – There is less risk in your business.

Anytime potential investors look at the viability of a company, they always look for predictable income. The recurring revenue model gives them what they are looking for.

3 – You can predictably pay off your bills each month.

Many of your company bills are monthly themselves. Software applications like AWeber or Active Campaign. Website support. Utilities. Rent or mortgage (for your business and for your home).

4 – You spend less time acquiring new customers.

Everyone knows it is significantly more difficult – and costly – to acquire a new customer than it is to get a current customer to buy again.

Yes, as stated above, there will always be churn, so you will always need to be acquiring new customers. Besides, you likely want to GROW your customer base!

But the need for frantic, hamster-wheel-style customer acquisition is significantly lessened when you know you have a core number of customers who will likely stay with you from month to month.

To make the most of this benefit, you’ll need to know these numbers:

  • How many customers typically stay each month (retention)
  • How many customers typically leave each month (churn)
  • Your cost to convert a lead to a customer
  • Your cost to acquire the lead
  • Your customer lifetime value

When you are secure with these numbers, you’ll be able to figure out how aggressively you need – or want – to get new leads.

If all these companies rely on recurring income, for all the reasons stated above, it makes sense for you to set up up a recurring revenue model too.

As if these four reasons aren’t enough, check out Part 2 to discover two more, as well as one of the easiest-to-produce, yet most impactful recurring revenue products!


If you would like to talk to me about creating money you can count on in YOUR business, please click here to apply for the Winning Content Strategy Master Plan Session!

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