Recurring Revenue Businesses: How to Choose a Smart Investment
If you are considering business ownership, here are a couple of savvy ideas to think about before you make that investment.
First, it is safer to partner with a franchise because you are investing in an established brand and taking advantage of its proven model.
Second, there is a better chance at economic success with recurring revenue businesses, as they maintain a consistent revenue stream.
What is Monthly Recurring Revenue (MRR)
Monthly recurring revenue, or MRR, is reliable income you can count on, monthly. Businesses that benefit from MRR are those with monthly memberships, subscriptions, or anything that is continually billed and paid for monthly. It’s a relatively consistent revenue stream business owners can count on each month; and, eventually, they can anticipate fluctuations based on sales patterns that become predictable over time.
Monthly recurring revenue is becoming a very popular business tool because of its appeal as a constant revenue generator. Many businesses are using it, like online apps and shops, gyms, spas, software, and other products and services.
Consumers know and expect their credit card will be charged each month to pay for apps, memberships, or subscriptions. Typically, if a customer would like to end their monthly charge, they simply notify the business. On the flip side, businesses using the monthly recurring revenue model must adjust accordingly; knowing that there will be new customers signing in and others breaking away. Here’s the great thing about MRR. These revenue fluctuations can be easily tracked, showing new and lost business, and revealing trends over time. In this way, MRR serves as an economic predictor, which allows you to budget and plan accordingly.
Besides the predictable cash flow, another bonus of recurring revenue businesses is customer retention. MRR could mean less money per sale, but all you need to do to guarantee that income next month is retain that customer. Customer acquisition is a huge challenge when looking at a one-time sale. You must find a way to bring that client back. With the MRR model, you don’t need to convince a customer to purchase a product or service repeatedly; the purchase happens automatically via their membership or subscription. The key is to keep them satisfied, so they don’t cancel the payments.
What to Look For
Predictability in business is an incredible asset that is a win-win for business owners and their customers. Owners enjoy reliable, steady income while promoting customer loyalty. MRR creates stability for a business and minimizes risk, while giving a customer a superior experience at an affordable price.
It’s important to look for a franchise model like MassageLuXe, which pioneered the monthly membership revenue model and prioritizes MRR for its franchisees.
Know that when you begin using the MRR model, it will take some time to build up that bank of memberships or subscriptions. Good marketing tools and great franchise training and support can create a solid base from which to grow.
MassageLuXe Franchisees Enjoy MRR
Here at MassageLuXe, we are seeing tremendous success using the recurring revenue business model through our membership program, which has served our customers and franchisees well for 15 years.
MassageLuXe is a nationwide day spa franchise that offers high-quality massages, facials, and waxing services. Our recurring revenue model is offered in the form of four membership packages designed to meet our customer’s varying needs, and they can be used at any location, nationwide. There is no contract. All memberships are month to month. We are proud of the quality services we provide, and that keeps our customers coming back.
We designed our massage franchise to encourage ongoing client participation and visits, create steadier sales cycles, and reduce administration and billing time. MassageLuXe franchisees have a quick ramp-up with early profit opportunities thanks to an expanding service line, product offerings, and top-notch grand opening marketing support.
The end goal is to increase client engagement, which is a focus of ours and something we excel at in the spa industry. MassageLuXe carries a variety of facial and massage products and service add-ons that complement in-spa services for guests. This allows the franchisee to increase the value of the customer both prior and post-appointment.
To learn more about spa franchise opportunities with MassageLuXe, scroll down to fill out the contact form below.