By its very definition, a services business offers….services. Marketing agencies, law firms, architects, event planners, software and technical consultants, engineering firms, publishers, accountants, and more all provide a service (rather than create a product to sell).
As a company that provides a robust ERP to services businesses, we’re in the trenches with our clients and we’ve watched as our customers grow and evolve. As such, we’ve noticed a few things a service business may miss when it comes to becoming the best it can be not only in servicing its customers but also in running itself and growing its revenue.
With that in mind, here is one important strategy we feel is critical moving forward, plus some tips on how to implement it.
Look for continuous or recurring revenue streams.
Once business fulfills the services for which a client has engaged it, then what? Revenue stops and the business needs to get additional clients.
Continuous revenue streams – perhaps with retainer clients or some kind of subscription model – can bring in multiples of recurring revenue each year.
What’s more, not only will your company increase revenue, continuous streams of income also can increase your business’s value, thus making it more attractive to potential buyers should you ever decide to sell.
Finding recurring streams of revenue.
As mentioned above, retainer clients are a great source of consistent revenue. But these can be problematic when it comes time to sell your business, since many clients prefer to do business with you, not the company as business entity. For example, in the insurance industry, it’s common for newly-purchased established agencies to lose up to 34 percent of their customers after the sale to new owners.
So another way to increase revenue and even value is to start thinking about different types of services you could provide that aren’t obviously tied to the your core offerings.
For example, many publishing companies old events for their subscribers and vendors. This is an absolutely terrific way to increase revenue. They also can be recurring events, bringing in additional revenue every year.
So look at what your customers need and how you can fulfill them. If clients keep asking if you offer such and such service, perhaps it’s time that you do.
Understand that you may not be able to perform this new service as well as you do your core services. This is to be expected, and you don’t have to (as this article says) “over-invest in under-appreciated” services. You are trying to capture additional revenue with services your current customers want. Just make sure you continue to provide excellent benefits to them via your core offerings.
As an example (and not to ring our own bell too much), but we’ve recently followed our own advice and added digital marketing services as one of our own offerings.
And, if your clients ask if you sell certain types of products, if it’s within your realm of expertise (or partnering with someone with the expertise), you may want to consider also having physical products related to your services. (Law firms could sell books on how to incorporate a business, for example.)
The challenges of adding new revenue streams.
Aim not to overcomplicate this process. Find a need and solve it in a relatively simple, straightforward way. Understand that you may not be able to bring on all the new revenue streams you’d like because they may not go well with your core business, and that that is OK. All you really need to do is provide a solution to a basic customer need in a way that brings you some sort of profit.
Technology and automation affecting a services business.
Adding more revenue streams to your service business is far easier today than it ever was due to the incredible technological tools now available. A cloud-based ERP such as Aysling can help just about any service business create, manage, promote, and maintain any new service offering it may choose to bring on board.
Talk to us about how Aysling can help your services business add new revenue streams.