How do you build massive recurring revenue?
That’s exactly what I’m going to answer today! (Based off my interview with John Meese)
Before I answer that though, I need to tell you why recurring revenue is so important in the first place.
One of the great things about recurring revenue is that you don’t start on zero every month.
You automatically come into the month with contracted revenue.
It helps take the pressure off, because recurring revenue allows you to kind of predict the future. It let’s make decisions with a lot more confidence.
The other reason why recurring revenue is so valuable is it’s literally more valued in terms of business valuation. When you look at the financial valuations of a business, you’ll see that businesses are valued based on an estimated stream of future cash flows.
Think of it as a money machine.
If I had a money machine that printed dollar bills and I said, “Hey, I have a machine here that prints a $1 bill every year,” how much would you be willing to pay to buy this machine?
It’s worth at least $1 because it prints a dollar every year.
Or maybe even $3 if you’re planning on keeping it for more than 3 years.
That’s how businesses are valued.
As predictability goes up, the valuation of the business goes up because the likelihood of those cash flows being there every single month goes up.
They’re literally worth more because they’re more consistent and predictable!
Now, HOW do you create great recurring revenue?
The Never-Ending Problem
The first thing you should do is answer this question:
“What is the problem that I can solve that never goes away?”
In other words, the need for it continues month after month after month. This causes people to want to continue paying for us.
For us at Brand Builders Group, it’s obscurity.
We help people who are struggling to be more well known. And we teach them a set of information and strategies for how to do that. We’ve had 12 clients become New York Times or Wall Street Journal bestsellers, 4 clients create Ted Talks that have gone viral with over a million views, and 5 clients grow their revenue by more than a million dollars a year since being a client of ours.
If you want to join our community and learn from the best experts in the industry, book a Free Brand Call with one of our Personal Brand Strategists today!
So, you have to think about whether you’re going to create a membership site or if you already have one.
The second key comes directly from my wife, AJ.
Recurring revenue is a two-part game. You need new people coming in the front door, but the big thing that everybody misses is that you must seal the back door. You must be so sticky that people aren’t leaving.
Otherwise, you literally have a revolving door that brings new people in as fast as they’re going out. So, before you perfect your method on bringing in new customers, figure out how you’re going to get them to stay.
How do you do that?
AJ always says, “Utilization equals retention.”
That means you’re making sure your clients are utilizing the product or service you’re offering them.
A lot of people think that a sale is done once the sale is made. And when you have that mindset of, “Oh, I closed the sale, I’m onto the next,” that doesn’t work.
In one of our phase three courses, Pressure-Free Persuasion, we talk about how the sale is not done when the sale is made. The sale is finished when the client experiences the result that you promised.
So the sale that you have to make every month is not so much a commoditized course offering, it needs to be something your customers will actually use.
They’re not going to pay for something they’re not using even if what you’re providing is amazing.
If I were going to go buy a company who had recurring revenue, I would be looking at their utilization. Are people using the thing they’re paying for?
If they’re using it, even if the product is crappy, that’s great, I can make the product better. That’s not that hard. But if people aren’t using it, then that company just has a bunch of people paying for something they’re parking to the side. That’s not going to work long term.
Here are 3 tips for increasing your utilization:
You need to have a map.
You need to have a visual that outlines what your process looks like.
For those of you that are members in Captivating Content, that’s exactly what we help you do.
We help you extrapolate your unique expertise and experience into a visual journey of illustrations, frameworks, flow charts, and tables.
At BBG we have the Brand Builder Journey.
It’s our four-phase process that we walk you through to go from being completely obscure and unknown to a world famous and world recognized eight, figure entrepreneur, bestselling author, or hall of fame.
Part of the reason why people stay with us is because they can see the whole journey. Don’t just assume that they’re going to hang around blindly, not knowing what it takes to get to where they’re trying to go.
At Brand Builders Group we have something called an At-Risk Report that shows us all the people that haven’t logged into a portal in a certain number of days.
If you’re not coming, you’re not doing the work, which means you’re not getting the results. Which means even though it’s not our fault that you’re not getting the result, the fact of the matter is you’re not getting the result and you’re not going to keep paying.
So even if everything we do is perfect, if they’re not using it, it doesn’t matter.
They’re going to cancel.
Ask yourself “How can I serve my current audience in a deeper way?”
If you’re serving them in a deeper way, then you’re speaking more powerfully to their immediate needs. If you’re giving them the tools, they need to succeed they’ll keep subscribing to your service.
Here’s a recent example of this:
A lot of speakers struggle with how much they should charge. And people throw out all these weird numbers. We created a speaker fee calculator and it’s a simple set of questions you answer, and it spits out your speaking fee, virtual fee, half day fee, two-day fee, and your international fee.
And all of this happens in around 2 minutes!
It’s simple and it solves a problem that’s been around for DECADES. That’s the sort of thing that’ll increase your utilization and as a result increase your client retention.
The third key to generating recurring revenue is keeping people coming in the front door.
New sales solve all problems.
If you can figure out how to constantly generate new sales, then you’re always going to have cash flow coming in that you can use to solve other problems or to hire people who can solve problems.
The question is, “Do you have a consistent engine for driving new leads and new customers into your business?”
Think about that…
Are you confident that you have an engine that consistently produces new leads and new customers for your business every month?
If you’re not clear on that, book a Free Brand Call with one of our Personal Brand Strategists today!
This is one of the things that we specialize the most in, helping you create a set of mechanisms, systems, and processes to keep people coming in the front door.
I don’t know how to say this without sounding like a total jerk, but we just launched another seven-figure business inside Brand Builders Group last year. So, now we have five different 7-figure businesses and two 8-figure businesses.
And we did that by following the same principles!
All these principles are very straightforward. They’re not easy, but they are simple, and they do work if you follow the system.
If you found this interesting, share this episode with somebody who needs to read it.
And no matter what, keep coming back every week so that we can keep giving you as much as we can for FREE!
See you next week!