Recurring Revenue Opportunities?

Many businesses are experiencing margin squeezes as the down economy works its pressure on them. Especially hard hit are those that sell equipment or any service on a project basis-that is, the client buys the equipment or service, has it installed and then the vendor moves on. Before the installation period comes the negotiated downward pressure on margins. During the installation period, there are surprises, change orders and unseen obstacles-all of which usually cost the vendor money, at least in time spent, further depressing margins. So what to do?.

Many Inner Circle members are looking for ways to continue what starts as a “project” relationship into an on-going one with recurring revenue. That means things like service contracts, periodic check-ups and assessments-whatever works for the client that preserves the value of what they originally bought.

A relationship strategy instead of a project one may require giving up some short term profit for the longer run flow of cash that can wind up being many orders of magnitude larger than the original sale.

There is one other benefit of the continuing relationship: you stay in constant touch with the client and see opportunities for additional products and services-and the additional revenue they will bring. The additional responsibility is to keep reinforcing the value of the relationship with the client by documenting results and asking what they think. Never, ever treat them as an annuity.