As a source of ongoing and reliable income (versus one-off or impulse transactions)
Recurring revenue offers a degree of predictability and security
This type of revenue can be realised in a number of ways – from long term, multi-year contracts, to monthly subscription services and membership clubs. Recurring revenue models are often associated with modern day disruptors who move from offering a free service to subscription pricing models as well as SaaS businesses combining cloud based software with monthly or annual pricing models. However, recurring revenue has in fact been around for a very long time – with early examples from several hundred years ago such as newspapers and periodicals. And, in modern times, the products you can buy diversify by the day – bacon, slime and chicken treats are just a few of the wackier examples we’ve come across recently!
But while the recurring revenue model drives income, improves financial predictability and offers a better buying experience, it also brings with it some operational challenges. Two common challenges that we see are:
Visibility, completeness and availability of data
The Ability to Scale
What you need to succeed
Our Key Takeaways
Done well, the recurring revenue model can offer significant benefits. However, the model brings with it some complexity and operational challenges and so requires some thoughtful investment in systems and back-end processes to make it work well. Automation, good IT architecture and a strong data model are key components to success, as is a flexible system that can evolve with your business. If you’d like to find out more about how Salesforce can support recurring revenues and/or a subscription-based business, please contact us today.