Continuity Income: Keeps You Warm All Winter Long

By Beacon Staff

In business discussions, continuity typically refers to the ability to keep a business going during a disaster or mishap, or some sort of trouble – perhaps even the death or sickness of the owner.

But, that’s not the kind of continuity I’m talking about. Continuity income is also called recurring revenue, but they aren’t exactly the same – however, they just might be cousins.

I’m speaking specifically of transactions like “book of the month clubs” and such.

Imagine for a moment that you own a coffee shop. Winter is usually good to you, because people want to warm up with your coffee and “hunker down” in your shop, if you have one.

Imagine if you started shipping a pound of coffee to your customers (local or otherwise), once a month. You create a promotion and somehow, you manage to add just ONE client per month over the next two years. Not really very successful at selling it, were you? Still, at the end of two years, there are 24 people who get a pound of coffee from you.

You’re already roasting it. You’re already grinding it (for some folks). You’re already packaging it.

So if this coffee is a mere ten bucks a pound, that’s an extra $240 a month in your pocket.

Doesn’t seem like much, does it?

Imagine that you sell one a week instead of one a month. Three years down the road, that $10 pound of coffee once a month is now worth $1560 per month. Gravy.

If half of those customers need a pound every other week, the monthly total creeps up to $2340. Not too bad for revenue for an activity you’re mostly doing whether you sell them or not (roasting,
optionally grinding, bagging).

Now imagine that 5% of these people are coffee aficionados. They like Kona (real Kona, not those lame blends), organic, Ethiopian, etc. Higher price, higher profit margin. Or they want you to toss in some unbleached cotton filters every month for an extra couple of bucks. Or they want a special water filter because they learned that better water makes better coffee. There’s a lot you can teach the “expert client” if you think about it.

But, it’s not just for coffee shops. Almost everyone can find a way to make it work for some portion of your clientele. Even mortgage, banking and real estate folks. Seems like a down market like the current one would be a good time to have some dependable recurring revenue lined up, wouldn’t it?

I almost forgot…continuity income comes with a bonus.

If these clients are getting something from you in the mail (or whatever) every month – they aren’t likely buying anywhere else. You’ve quietly put an iron cage around them, making it more difficult than ever for a competitor to sneak in and take them from you. They never run out. They’ve already allocated the money. These clients are also more likely to be mentioning to friends where they get their coffee. If you’re smart, you make it easy for them to get referrals, and you reward those who give them.

Pretty obvious stuff, right?

The one thing you hear about common sense is that it’s really not all that common these days. Maybe this stuff is obvious, and maybe it is common sense. Yet, when you look around, how many businesses do you see actually doing this sort of thing?

Chiropractors tend to be on top of this, but most of them could handle it better. Retailers in some markets also do this, like the coffee places. But not too many others.

Why aren’t the florists doing it? How about the salons and barbers? Auto repair and oil change shops? Handyman services? Restaurants? Pest control? Massage therapists? Real estate agents? Yep, even you.

I don’t mean mail a handyman every month, of course. But pre-paid, pre-reserved scheduled product and/or services delivery is the same as “coffee of the month”. Except it’s your wallet they refill in the winter time, not someone else’s.

Want to learn more about Mark or ask him to write about a business or marketing problem? See Mark’s site or contact him at [email protected].