Why a Subscription Based Service Business Part Two | Episode 140
Last week we talked about a traditional service based business and the mindset behind it.
If you are keeping in touch with your customers on a regular basis, it’s much easier to start a subscription based services business, service contracts, maintenance programs. A new profit center to add to your existing business.
So really if it works for Netflix, if it works for AT&T, it works Verizon, QuickBooks Online, it works for Amazon, your CRM company, the list goes on and on.
Then why not have a subscription based product for your service business or my service based business? But I do have it apart of my services… so let’s talk about your service business.
Again, why not your service business?Why not create another profit center for your business? You know, create another monthly revenue stream.
I’m sure that you realize by now that the no matter how long you’ve been in business, that each month you start over again at zero.
So that means more new sales which is OK, but why not cut your stress level?
What if each and every month you could know for fact there was money being deposited into your account to the extent of I don’t know could be 10, 20, 30% of your monthly expenses!
You know that it’s there same time every month like clockwork…WOW just think of it limiting your stress.
That’s money in the bank each and every month being deposited.
If you had a portion of your customers on a service agreement or maintenance program and preventative maintenance program, it’s all up to you! You could have this happening each and every month and that money would be deposited into your account every month repeatedly.
If you were to know it’s going to happen, would that make you a happier camper?
Like I said just few minutes ago, look at your business and think about the ways you could add a profit center. It could be service or maintenance agreements or preventative maintenance agreements, the list is endless.
It could be simple or yours could be elaborate, depending on what you want to do and how you want to handle it.
So let’s look at why you might consider having a program like this working for you in your business.
- As a business owner you have something new to sell your existing clients or customers. You know them, they love you, they trust you, you’ve done business with them before and so they are likely do business with you some more.
- For you, the business owner, this becomes dependable repeatable income that gets deposited into your bank on a regular basis, whether you do it monthly, quarterly or every six months… it all the depends on you.
Personally I missed the boat when I started this and did yearly agreements, but all the new stuff now on monthly and quarterly payments.
Now let’s talk but the customer and why would the customer ever think about purchasing a maintenance agreement or service agreement. So let’s take a look at that for minute!
If you’ve done a great job of presenting your customers of value-based proposition about the services or whatever you sell from your company, this is going to be an easy transition for you to do. However, if you are a price based business then it can be done, but it’s going to be done at a greater cost of time and persistence to your customers. Why? Because there are two different mind sets.
So let’s put you in a the seat of the customer. Think about the last time you decided that you needed something done and you called someone or you tried to call someone and couldn’t get a hold of him, or you did get a hold of him and he didn’t call you back.
Or they made an appointment and the contractor never showed up and gave you some lame excuse. Don’t you just hate calling people to get things done as a consumer ?
I know that all of this has happened to you and that’s why you hate all service people. You put it off and put it off as much as you can until your wife nags you enough or you just of get down to the wire and say I NEED to get it done. Now at that point you are no longer in a consumer that has a want, you’re a consumer that has a need and that need is to have a problem solved. Ultimately solving a problem is what you get paid for.
We have automation, we have auto ship on products why not auto service?
I become a problem solver. That’s why if you have the proper customer base and you approach them correctly, they will go for it and you can put together subscription-based business service project and maintenance agreement.
So that’s it for today. Next up so we can talk about what that can look like. Of course each business is going to be different, so I’ll try to give examples of a couple different ones and then I’ll talk about simple and elaborate.
I will also break down my service agreement and what we did. How we increased one of our client’s lifetime value by over 400 hundred percent!
And the reason why they were willing to spend that 400% over the years.