Last updated Jan 7, 2013
Please contact me to update again - @paulzoff or post a comment
PROBLEM
A recent fad in business is to change your product's revenue model to a Recurring Revenue Stream model.
This has been seen in a number of businesses; websites with subscription fees and ordinary household items that require an insert - Glade Plug-Ins, for example.
This change has been generated by the need for additional revenue after a sale.
Your company currently spends millions of dollars to develop, prototype, test and market your products and then there is a one time sale and, bam, no more money. Most companies have looked at this Single Purchase Revenue model and decided, wait, let's make this an on-going customer relationship. How can we do this?
CASE EXAMPLE
My Case Example today is the new Waterless Urinals from Sloan & Falcon.
Public restrooms are located in every business in America and require the basic amenities. A genius at Sloan - who will remain nameless - looked at their product line and said, "What can we change to make a recurring income stream?"
The least likely of these ideas would have been the urinal. Urinals have been the same since the 50's and are very basic. This genius decided, "How about in an effort to cut costs we remove water use?" This means that the urinal would lower the utilities cost at every location (a benefit to their clients - and a selling point) and be more 'green'.
Sloan then instituted a technology to solve this equation:
No Water + Waste + Drain = Replacement Cartridges
A replacement cartridge is inserted in the bottom of each urinal to make sure that the urinal stays sanitary, waste is removed from the system, and odors are elminated.
In creating a solution to this issue (an issue they creatively designed) Sloan is also able to add a Recurring Revenue Stream to their urinal sales.
The replacement cartridges cost $41 and are replaced quarterly - www.sloanrefills.com
This means that the original urinal would sell for a one-time price of $300.00. They can now sell the urinal for $300.00 and receive $124.00/year in recurring revenue. They increased revenue, create a new product (so they look more innovative then the competition), and are more Green because they product uses less water.
RESULT
Now the question is... How can you create a RECURRING REVENUE STREAM in your company?
What subscription fees or 'replacement cartridge' can you incorporate that will increase your sales and provide customer satisfaction?
This isn't rocket science. I'm sure you can think of something...
Let me know if you want suggestions...
Here are Sloan's and Falcon's websites:
http://www.falconwaterfree.com/waterless_urinals
http://www.sloanvalve.com/Our_Products/Waterfree_Urinals.aspx
As always, please let me know if there are any questions or issues - @PaulZoff or comment on this post.
Please contact me to update again - @paulzoff or post a comment
PROBLEM
A recent fad in business is to change your product's revenue model to a Recurring Revenue Stream model.
This has been seen in a number of businesses; websites with subscription fees and ordinary household items that require an insert - Glade Plug-Ins, for example.
This change has been generated by the need for additional revenue after a sale.
Your company currently spends millions of dollars to develop, prototype, test and market your products and then there is a one time sale and, bam, no more money. Most companies have looked at this Single Purchase Revenue model and decided, wait, let's make this an on-going customer relationship. How can we do this?
CASE EXAMPLE
My Case Example today is the new Waterless Urinals from Sloan & Falcon.
Public restrooms are located in every business in America and require the basic amenities. A genius at Sloan - who will remain nameless - looked at their product line and said, "What can we change to make a recurring income stream?"The least likely of these ideas would have been the urinal. Urinals have been the same since the 50's and are very basic. This genius decided, "How about in an effort to cut costs we remove water use?" This means that the urinal would lower the utilities cost at every location (a benefit to their clients - and a selling point) and be more 'green'.
Sloan then instituted a technology to solve this equation:
No Water + Waste + Drain = Replacement Cartridges
A replacement cartridge is inserted in the bottom of each urinal to make sure that the urinal stays sanitary, waste is removed from the system, and odors are elminated.
In creating a solution to this issue (an issue they creatively designed) Sloan is also able to add a Recurring Revenue Stream to their urinal sales.
The replacement cartridges cost $41 and are replaced quarterly - www.sloanrefills.com
This means that the original urinal would sell for a one-time price of $300.00. They can now sell the urinal for $300.00 and receive $124.00/year in recurring revenue. They increased revenue, create a new product (so they look more innovative then the competition), and are more Green because they product uses less water.
RESULT
Now the question is... How can you create a RECURRING REVENUE STREAM in your company?
What subscription fees or 'replacement cartridge' can you incorporate that will increase your sales and provide customer satisfaction?
This isn't rocket science. I'm sure you can think of something...
Let me know if you want suggestions...
Here are Sloan's and Falcon's websites:
http://www.falconwaterfree.com/waterless_urinals
http://www.sloanvalve.com/Our_Products/Waterfree_Urinals.aspx
As always, please let me know if there are any questions or issues - @PaulZoff or comment on this post.
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