There many things we’d just rather not deal with in life.
Like replacing batteries in our alarm systems, mowing our lawns or cleaning your windows.
We just want our lives to be simple and stress-free.
An enterprising group of business people have come to understand this mentality and have effectively grown businesses based on making their customers lives easier.
Known as the Simplifier Model, it’s one of the nine models of recurring revenue which is based off of providing services that simplify people’s lives.
How The Simplifier Model Works
This model works best for businesses which provide services that people deem unpleasant, or a hassle. Owners can take their product or a service and easily convert it into a subscription-based contract while adding a valuable source of recurring revenue - without too much work on their end.
If a customer knows they’ll need a service again (like servicing their hot water tank), you can set up any subsequent appointments on an ongoing basis, and they can forget about remembering to contact you when the time draws near. It’s a win-win for both parties.
Businesses most likely to implement this model are those who manage routine tasks for homeowners. Things like carpet steaming, weeding, and even dog walking can be set up as a simplified subscription service.
Hassle Free Homes
Let’s look at Hassle Free Homes. Business owner, Jim Vagonis started this American company in order to simplify home ownership. With their monthly subscription, homeowners can have their routine home maintenance to-do list taken care of.
The subscriptions are based on the size of your home, with a standard four-bedroom home coming in around $350 per month. Technicians run through a 100-point inspection each month, ensuring everything from your smoke alarm to your heating filter is in working order. Replacement parts are included in your monthly subscription and are handled by the technician.
“The owner wants to return from work, put their feet up, and enjoy their home without the hassles of a daily to-do list,” he says.s
From a business perspective, the Simplifier Subscription model offers Vagonis predictability as he’ll have a far-reaching look at what business he’s got coming up. This allows him to tell his employees exactly how many hours they’ll be needed for per month, cutting down on unnecessary labour costs. Plus, with an annual contract renewal rate upwards of 90%, Vagonis’ business is an attractive asset because of the consistent future revenue.
This model is ideal when you have:
- A service customers require on an ongoing basis.
- A relatively affluent, but time-poor client base who have the resources needed to pay for a service they don't have time to - or don't want to - do themselves.
- A business based on personal services, such as pet grooming, massages, chiropractor etc.
What to keep in mind when using this subscription
Do you think this model is right for your business? Set yourself up for success by first interviewing your target customer to ensure there is a need for your service and establish how you can take care of it for them in a hassle-free way.
Set up a regular schedule for delivering your service. Part of the value proposition to the customer is that you will remember to do the task so the customer doesn’t have to. And, because your business has built such a rapport with your ongoing clients, it’s the perfect opportunity to upsell extra services or add-ons. Customers will be more likely to choose your business than an unknown third party.
The Value of Subscription Models
In today’s modern economy, almost everything you can think of can be purchased through a subscription. This focus on convenience provides business owners with great opportunities to turn one-time customers into not only repeat, but recurring customers. These automatic customers are integral to creating a consistent cash flow, fuelling growth and boosting the value of the business.
At Exit Advisory Group, we help people build company value so they can exit successfully. Recurring revenue is a key driver of company value, which is why we enjoy sharing this information.
Which subscription model is right for you?
We’ve been discussing the 9 Models of Recurring Revenue, highlighting various forms of subscription models in our series.
If you can't wait to read about the rest of the models, we've listed them here:
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