A recurring revenue model is ideal for retaining clients and making predictable income for your business. When customers pay an agreed amount monthly, quarterly, or annually, you can quickly scale and expand your market.
If you run a software as a service (SaaS) company, you should consider switching from the traditional business model. This change will allow you to leverage recurring revenue and build solid relationships with your customers.
Here, we provide the ultimate guide on creating a recurring revenue model for your business. We’ll also discuss how platforms like Crowdz can help you finance growth.
Creating a Subscription-Based Model for Your SaaS Company
The first step to leveraging a recurring revenue model is understanding customers’ needs. Conduct research to determine the income level of your target market.
During this process, send questionnaires to clients to gather the needed information. Besides, study your competitors to determine how they implemented a recurring revenue model.
As you assess your clients’ needs, you should determine if they want changes to your software. Such may pertain to:
- User interface
- Load speed
You should then make the necessary changes to ensure your solution is more lucrative as you shift to a subscription-based model.
Once you confirm your software meets customers’ demands, develop packages based on various factors. Such are the income of your target market, their earning frequency, and the revenue you want to generate. You should also get a reliable tool to track billing and customer accounts.
The next phase in creating a recurring revenue model is preparing for the transition. Train your team on using the implemented systems and market the new offers on your website. You can also inform your clients of the change using newsletters, blogs, and social media posts.
If you already have leads interested in your products through the traditional business model, it’s advisable to avoid a sudden switch. Instead, use both models for a given period until all customers subscribe to a SaaS package.
How to Encourage Clients to Embrace a Subscription-Based Model
When creating a recurring revenue model for your brand, you may face some issues. For example, contract-based clients may be skeptical about the shift. As a result, they may end the agreement and shift to a competitor.
Planning the transition can avoid losing customers and help you attract new ones. One ideal way to make your services more attractive is by offering several packages. Base the first plan’s price on your customers’ willingness to pay.
After that, create another package with all the features in the basic one and add some tools. You can also offer another plan with customizable and more efficient features for a higher price.
Another way to encourage customers to embrace the transition is using free trials. These will help existing customers understand the benefits of subscription-based software. It also allows people interested in your product to test its efficiency before enrolling in your plans.
More tips on encouraging adoption when creating a recurring revenue model are:
- Use email marketing
- Encourage clients to refer others
- Offer discounts during special holidays and seasons
- Automate the renewal process
- Offer customer support during the transition
- Consult your clients when creating subscription packages
- Avoid hidden charges
Creating a recurring revenue model for your SaaS business may include hiking the overall price. Encourage clients to subscribe to your packages by adding new features to the software. Further, allow integration with other systems to simplify work.
When your clients get more value from your solution, they will be more willing to pay the additional amount. Besides, you can easily justify a price increase and encourage adoption.
The Benefits of a Recurring Revenue Model to a SaaS Company
A recurring revenue model has many benefits beyond creating predictable income. Shifting to a subscription-based plan allows you to gather customer data. You may then use this information to target marketing and improve experiences.
Another pro of such a model is reduced operating costs. Selling to existing customers will ultimately lower lead generation and marketing costs.
More benefits of a recurring revenue model are easier accounting and developing effective ways to manage churn.
Creating Reliable Cash Flow for Your SaaS Company With Crowdz
While creating a recurring revenue model has many benefits, you may find it hard to grow. This aspect is since you have to wait until your customers renew their plans to get funds. Luckily, you can get upfront cash by selling your receivables.
Crowdz offers a platform that allows you to trade your unpaid invoices. Here, you can sell receivables to investors who then offer lump-sum funds. You may then use the finances to grow your company instead of waiting for clients to renew their subscriptions.
Getting a white-label program from Crowdz will help you create a reliable source of capital from your recurring revenue streams. Besides, you can sponsor projects which need lump-sum funds while avoiding debt. This step will also allow you to obtain the required finances even with limited credit history.
More benefits of using Crowdz in your SaaS company are:
- Quicker access to funds
- Your team can focus on client acquisition
- You can offer customers the payment terms they need and grow your brand
- You avoid the stress associated with financing growth
Create a Recurring Revenue Model and Grow Your SaaS Brand With Crowdz
Creating a recurring revenue model will present many growth opportunities. At Crowdz, we can help you scale a SaaS company on your terms. By registering on our online marketplace, you will leverage invoice financing and optimize revenue streams. Contact us now for a software demo.