Have I told you how I earned 180K business, by investing only £5.64? This is a true story and not a sales pitch!
November 2012, after a pretty nasty corporate political BS, I decided to say “goodbye” to my sparkly ‘rising star’ corporate career and launch my first company.
I had a little bit of money and some connections, mostly in France, but no team, and no plan… I was going to do what I had always done brilliantly: strategy and client leadership.
Caveat: No-one had told me that managing a business was a little more than that.
In December, I made a list of all the clients that I had come across in my agency life, found them on LinkedIn and decided to send them a Xmas postcard. I had this big square card with a massive J on it, to which I glued a giant candy cane. The card and the candy went into a bright red bubble wrap envelope, and was sent off to 126 people. The entire campaign cost me around £710.
I got one client out of it. My first ever client. Of course I am not making this look like I sent the card and then signed the client. No, I pitched, I won the pitch against my ex-boss and then I signed my client (YASS!).The total budget was 88K for the entire year. Not bad for the first year of your business to pass the VAT threshold.
BUUUT, the magic happened later.
If you are not familiar with “consultancy / agency” business models, they spend a fortune in pitching to new clients. In my previous life, this meant around 30-40K (time and cash combined) investment to pitch. As a microbusiness, with no prior investment and playing against big boys like McKinsey, Capgemini or WPP, I had no chance if I played the pitching game.
So, I decided to play my own game and out of one little Xmas greeting I earned more than 500K in 6 years of business with just one client.
- ASK for referrals. You can triple, quadruple your business if you ask for referrals in a systematised way. (and make it easy for people to refer you)
- Find a way to make recurring income with each customer. AND THIS IS KEY!
After signing up my first client, within 6 months they referred me to 3 other business units in the company.
Instead of running big strategy workshops once a year and working on ad hoc project basis, I turned 90% of our services into recurring income model by:
- Turning yearly strategy workshops into mini-monthly strategy sessions
- Transforming ad-hoc projects into “must-haves” of strategic alignment that we developed over one yea
- Ad hoc meetings with the team into weekly catch-ups
All these ongoing, repeat services seemed small but increased our recurring income, and moreover bonded our relationships with our clients, which then resulted in more referrals!
I believe every business can create a recurring income model. Each micro business owner’s aim should be to make at least the amount of their fixed costs in recurring income (including your monthly salary).
The biggest challenge of micro-businesses is always being on the hunt. Because you are doing it yourself and most likely because you haven’t established some kick arse marketing systems and sales funnels, as yet, it feels like a real struggle!
When you own your business, until you get to some level, you do it all by yourself… right? And the way to not do it all by yourself is to grow… but to grow you have to prospect and sell and also manage clients… aaaaaah. Talk about chicken and egg. How about, you found a system where when you enter a client, you give them a reason to stay with you for months if not years… This is possible even when you manage a small product business. And this is key to increase room for growth in your company…
There are many different ongoing income models and depending on your offer, the stage of your business and your business model, one or multiple might suit you and your audience. Please read Automatic Customer by John Wallimor if you are interested in knowing more about this.
Here are 3 steps to create the best possible recurring income model for your microbusiness:
1. Understand your customers’ behaviour- what makes them come back is the sweet spot for building your recurring income offer.
Unless you are offering a subscription model for a repeat consumption, such as Shampoo, laundry detergent, toilet paper, (for which you can now find subscription model companies popping out like mushrooms) this step is utmost important to success. With subscription fatigue starting to appear, if you don’t nail what could be the best value for a client to give away their card details you will never be able to sell your subscription model.
For example, if you are a yoga teacher, it might be easier for you to offer a subscription model as your clientele wants to practice yoga with you over and over again… however, if you are an architect, it would be much more difficult for you to create a subscription model as you are working in big contract / project business. Having said that, I just met an architectural design company who works only with multiple portfolio flip investors and they focus on extensions… They have created a yearly subscription model for that specific audience. What a genius idea!
If you are selling a product, you might want to think about a loyalty model and reverse engineer it. For example, if you are a coffee shop, instead of offering a loyalty card, offer a subscription model which gives access to daily coffees: easier to pay for your client, less waiting time, less queueing for everyone and guaranteed income for you! If you have a coaching or training business, regular accountability sessions might be what makes your clients come back.
2. Create a non-brainer offer in-line with your customer’s behaviour.
Subscription model is not just beneficial for you, it has to be beneficial for your customers too. It needs to have an attractive price. To determine the price of a subscription model you need to take into consideration a few things:
- What is the cost of the offer to the business? (How much does it cost you to make a coffee, how much does it cost you to spend one hour online with your accountability group – define clearly your cost of sales).
- Check your market competitors.
- Ask a few trusted customers to understand what they are ready to pay on an ongoing basis.
3. Create a simple, clear direct path with a clear benefit message when you sell.
This bit takes time because it is trial and error, as most marketing strategies are. The only way to get it right quickly, is to test, track and measure. No magic bullet I’m afraid. (Yet again).
What I’ve noticed over the years of marketing, one message, minimum steps to conversion wins over big sales pages and multiple steps…
There are dozens of books, thousands of articles written about this topic and there is not one size fits all formula. One thing is for sure, the world economy and buyer behaviour are both moving more into the subscription model and when you make it make it valuable for your clients, it makes your business stronger.