How Leading Companies Think About Recurring Revenue

How Leading Companies Think About Recurring Revenue

We’ve been extolling the virtues of building a business with recurring revenue opportunities for years. But over the past few months, the importance of establishing a way to steadily generate income has become all the more obvious. 

A report from Zuora finds that from March 1-May 31, 2020, 50 percent of all subscription-based companies maintained growth rates. And in fact, 18 percent have seen growth rates increase. Those businesses that had strong recurring revenue streams in place before the COVID-19 pandemic are faring better than those who were reliant on one-off transactions.

As we begin to settle into our new normal, we hope you’re rethinking existing strategies to ensure you’re well-positioned for long-term success. And who better to turn to for inspiration than leaders in the field?

In this roundup, we look back on articles we’ve published over the years about those who have embraced the subscription model and are always testing and learning to refine their approach.

Whether you’re looking to launch, revamp, or scale a recurring revenue business, let these stories spark new ideas.

1. Five Years to $1 Billion: The Dollar Shave Club Story

It’s a tale that could have had a dark ending: A man with no management experience and no background in the personal grooming business takes ownership of a warehouse full of low-cost razors from South Korea. While this story might have concluded with the man begging anyone on the street to take those razors off his hands, weeping as he watched bills for warehouse storage costs mount, with no out in sight, it didn’t.

Instead, Michael Dubin took this warehouse full of razors and turned them into the biggest business opportunity of his life. By creating a membership program that made it easy for men to get razor refills without the hassle or cost of having to go to the drug store, Dubin built a billion-dollar company. Learn more in this profile of the Dollar Shave Club success story.

2. How B2Bs Use Data Science to Grow Revenues

“I run a B2B, so data analytics won’t work for me.” It’s a common misconception that the reserves of data for B2Bs are too small to make a difference, but it couldn’t be further from the truth.

Any business can benefit from the use of data science and analytics to consistently grow its revenue and identify opportunities for creating recurring revenue streams. This article takes a closer look at the three mindset shifts B2B leaders must undertake in order to be well-positioned to get the most out of their data.

3. Enough with the Points: From Loyalty Program to Membership

Loyalty programs and memberships are not the same. Programs built around a discount for repeat business (Buy nine cups of coffee and get the 10th free!) are everywhere, but they’re not as effective as you might think.

While they may work in the short-term, they offer no long-term value to your best customers. So when your competitor comes along offering a slightly better deal (Buy eight cups of coffee and get the ninth free!), you’ll see your customers shift right over to them.

Membership programs offer value beyond a penny saved here and there. Take a look at how Sephora built a membership program that addresses the deeper emotional needs and wants of its best customers and how that program has generated great success for the beauty retailer.

4. Rethinking News: Inside the New York Times Digital Subscriptions Explosion

For years now, people have decried the “death of print.” But it seems like the New York Times has ignored those hollers altogether.

Quarter over quarter, they’ve experienced record-breaking growth, and they show no signs of slowing down. (Last year, they hit $1.81 billion in revenue). In this article, we take a look at their approach to building meaningful connections with their readers and how they’re capitalizing on the current political climate to drive growth even further.

About the Sterling Woods Group, LLC

The Sterling Woods Group’s mission is to help clients make sense of their data to predictably grow sales. We apply data science to help you optimize your sales funnel, improve your marketing ROI, launch new products successfully, and enter new markets profitably.

We use a hypothesis-driven, data-supported methodology to discover insights that no one else is paying attention to. Then, we help you assemble the right sales strategies, marketing plans, technologies, and resources to seize this opportunity.

About the Author

Rob Ristagno, founder and CEO of the Sterling Woods Group, previously served as a senior executive at several digital media and e-commerce businesses, including as COO of America’s Test Kitchen. Starting his career at McKinsey, his focus has always been on embracing digital technology and data science to spur strategic growth.

Rob is the author of A Member is Worth a Thousand Visitors and is a regular keynote speaker at conferences around the world. He has been featured on ABC, NBC, CBS, Fox, and Digiday.

He holds degrees from the Harvard Business School and Dartmouth College and has taught at both Harvard and Boston College.

Rob lives outside Boston, MA with his wife, Kate; daughter, Leni; and black lab, Royce.