How to Restructure your Business to Make more Money from Returning Customers

If you run a business in Nigeria, this is a time to take a deep look at what options you have to ensure that your business survives and thrives in this challenging period. There are several things you can and should be looking at but one area to focus on is your revenue model.

Last week, I had an extensive conversation with the head of a midsize organization about my last post on why businesses should consider the subscription model and at the end of our discussion, he asked me how his company can transition from the current pay as you go pricing model to a subscription model. I figured he is probably not the only one with that question based on some feedback I got. This is a short summary on how to make the switch to a subscription business model in a seamless way. Irrespective of whether you run an online or offline business, you can automate your payments and charge your customers recurrently.

The first thing you want to do is to answer a couple of questions about your business.

• Who are your customers and what unique insights do you have about them?
• How much of a priority is your offering to your customers?
• Which KPIs matter most to your business currently and why?
• What percentage of your revenue comes from returning customers?
• What unique value keeps your customers coming back to you?
• Which payment methods are you currently using?
• How can you provide greater value to your customers with the new model?
• Are your customers willing and able to pay regularly for what you offer?
• What changes do you need to make to your business process?
• What models are your competitors using?
• What do you need to fix before making the shift?

Answering these and other similar questions that are peculiar to your business will make it easier for you to make the switch.

A pricing model is the next thing you want to think about. Prepare a simple model with different pricing options using the subscription model and compare the figure of your estimated annual recurring revenue (ARR) to your current annual revenue. You should make very realistic assumptions when preparing your revenue forecast to come up with a price that meets your revenue objectives and also seem reasonable to your customers.

The next step will be to automate your payment process by finding payment methods that are effective for a subscription business model. The possible options are bank standing order, post dated cheques, e-banking debits and card based recurring debit. Of these options however, the e-banking and card options are the most efficient for your business and most convenient for your customers.

Once you have decided on your pricing and payment methods, the next step will be to find a payment gateway that supports subscription payment. There are only a few payment gateways in Nigeria that support recurring billing and choosing an appropriate one for your business is very important. Some of the things you want to consider are: the stability of the gateway, if it is tailored for subscription billing, the user experience for your customers, the level of reporting and analytics it gives you about your business and other equally important factors.

Once all these processes are completed, you are on your way to making regular and predictable revenue from your customers and building stronger relationships with them.

This is a brief summary. If you have further questions about making the shift to the subscription model for your business, feel free to reach out to us at SlushPay to find out how we can help you get started. The world is changing and you don’t want to be stuck in the 20th century.