When it comes to comparing business models, there is one important aspect that makes SaaS companies more attractive to potential investors…
And that is the fact that SaaS companies (Software as a Service) have recurring revenue.
Obviously, recurring revenue makes a huge difference to the lifeblood of any business. Regular, consistent monthly cashflow also makes it easier to predict how much revenue is coming into the business in the immediate future.
Plus, it naturally increases the lifetime value of a customer too.
And if you can reduce the churn to a minimum, you can end up with quite a healthy business.
But is it possible to do this in e-commerce?
The short answer is yes.
There are two ways to achieve it.
The first way is to convert one time buyers into multiple purchases, who buy from you frequently.
It’s not as ideal as monthly recurring revenue, but it can still work well for you.
The problem is… most customers of an e-commerce business only buy once. But that’s where you have to set up systems (primarily though email) to persuade customers to buy from you again.
You see, one time buyers are a huge drain on a businesses resources. Often the acquisition of a new customer will come at a loss… and if they never buy from you again… they’ve cost you money.
But the flipside of this coin is if you can instead turn them into raving fans, who keep buying from you indefinitely.
Now you’re talking!
The other cashflow method is to just create a subscription model, similar to how a SaaS business operates.
Two great examples are:
Most people wouldn’t think it was possible, but these companies were able to create thriving subscription businesses from dull items like razor blades and underpants.
And any merchant with an ounce of ambition would be well advised to check them out for ideas and inspiration.
So the question is, how can you change your business model to bring in more regular cashflow… and boost the lifetime value of your customers at the same time?
Well, that’s where I can help.
And if you’d like to have a chat to discuss your ecommerce business and potential recurring revenue, then let’s arrange a time and day to chat.
You can drop me a line here…