Research shows that businesses that use a recurring revenue model grow five times faster than traditional businesses. In fact, by implementing a subscription-based model, a company can increase its value by up to 8 times.
This applies to businesses great and small.
So why not apply this to your service business?
Many tradespeople think that their service businesses are not set up for recurring revenue, but in almost every case there is a way to introduce a recurring revenue stream.
Time to find out how.
A service plan is a type of recurring revenue model in which customers pay businesses a subscription fee in return for regular checks and servicing.
This might include plumbing and boiler checks, electrical reviews, pool servicing and priority support for customers.
Service plans (sometimes called service subscriptions) offer considerable value to businesses and customers.
Customers benefit from guaranteed, priority support from a trusted business and regular servicing that ensures that the customer's utility or commodity is maintained to a high and safe standard.
For the service business, they benefit from a steady recurring revenue stream that provides stability to its monthly (or annual) income. Businesses are also able to hold onto customers, increasing the lifetime value of each customer.
It is also far easier for a business to create growth projections and reduce its workload, as a significant chunk of the company's revenue becomes guaranteed, as it comes in month on month, year on year.
With more predictable work, structuring the working calendar becomes easier and creates more opportunities to automate processes and increase efficiency.
In short, service subscriptions provide a win-win for everyone.
If you're looking for inspiration on how to introduce a recurring revenue model to your business then we’ve got some great examples of businesses doing just that.
There are some great opportunities to introduce service subscriptions in the plumbing industry.
Mainly these take the form of boiler service checks and maintenance visits, however, there are plenty of different ways to build a subscription service.
Boiler plans guarantee your customers regular visits to check their boiler and ensure it’s operating safely.
To sweeten the deal you might consider adding extra benefits to the package, such as additional plumbing testing, priority support for plumbing issues and discounts on future boiler purchases.
The more features you add to the subscription the higher the price you can afford to charge. You may also want to offer graded plans, such as a basic and premium plan.
Electricians can also get in on the benefits of service plans.
The kinds of packages electrical businesses offer tend to be similar to plumbing offerings.
Subscriptions might include monthly electrical checks, equipment testing around the house and general electrical-related maintenance.
For those who own an electric car, a subscription like this could be particularly valuable, with an electrician able to check car charging infrastructure and make sure everything is running smoothly.
There is also the possibility to offer electrical cover and guarantees, although this does cross into the region of insurance, something we cover later in this blog.
The home maintenance industry includes a range of services including plumbing and electrical repair.
A home maintenance package usually covers the maintenance of plumbing and electrical appliances and infrastructure within the home, as well as other parts of the property.
Minor repairs and fixes around the house such as checking doors and windows, and completing kitchen repairs might also be included.
This is an industry that naturally lends itself to the subscription model.
Gardens need to be consistently cared for and maintained and quickly become unruly if neglected.
Particularly for those with busy lives and little time to tend their lawns, having a regular professional to manage the garden can be highly valuable.
It’s also a great opportunity to offer a more high-end service, providing premium garden care for those who want to have a more luxurious garden.
This service might even include looking after a flower bed or a fruit and vegetable patch.
This type of subscription might be particularly appealing to landlords who want to maintain the gardens of their properties. By paying a monthly fee, they could have all their gardens taken care of on a regular basis.
For any pool owner, regular servicing is necessary.
That’s why if you own a pool maintenance business, offering a subscription-based pool service is a great way to secure a steady income stream.
In exchange for monthly payments, the servicing team visits the property and inspects the pool, tests its filters and functions, and provides basic cleaning and maintenance.
Similar to boiler services, you could also offer priority support if any issues do occur.
Another industry that is set up perfectly for a subscription-based model. Window cleaning is a recurring job that has to be completed often.
A monthly subscription would work well, or you could increase the time frame if the customer wanted a larger gap between cleans.
This business model might particularly suit large businesses and highrise buildings that need regular cleaning performed by a professional, however, it could also work well for domestic homes too.
Home cleaning is an industry that lends itself perfectly to subscription services.
In return for a monthly payment, cleaning businesses provide cleaning of the property.
Graded plans would also work well here, offering deep cleans for a premium subscription or quick cleans at a reduced price.
This service could do well with landlords and property agencies that want to maintain their houses with regular cleaning or for businesses that need a recurring clean.
Service plans are an effective form of recurring revenue that businesses can use, however, there are other alternatives available.
One option that could be explored is insurance plans.
You’re probably familiar with the concept of insurance, you pay a fee in return for cover. This provides you with protection in case something goes wrong - such as the product breaking or getting lost.
A common example would be car or health insurance. However, if you run a service business, it is also possible to offer your own form of insurance.
Similar to service plans, an insurance plan can be offered as a recurring subscription.
In return, the business provides the customer with the assurance that if something goes wrong, then the business will pay out to cover the cost.
The key difference between a service and an insurance plan is where financial responsibility lies.
When you offer insurance you are financially responsible for when things go wrong and, depending on the terms of your insurance agreement, have to pay to fix the issue.
Furthermore, if you do decide that you want to start offering insurance, it’s important to be aware that to do so, you must be authorised by both the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA).
For more information read the official information from the Bank of England.
A service plan, on the other hand, doesn’t carry any financial responsibility and is usually focused on maintenance and prevention.
Where things can become a bit murky, is if you offer free emergency fixes and repairs within the subscription - at no extra cost.
The key point being, that you are providing guaranteed repairs that your business is financially responsible for. So in a sense, you are paying out to cover the cost of repairs.
The best way to avoid straying into the territory of insurance is to add a call-out charge or other expense when completing emergency breakdown or maintenance works.
For total peace of mind, it is a good idea to get your contract checked by a lawyer.
Once you’ve decided what type of service subscription you want to offer, the next thing you need to consider is how you’re going to implement it.
You could ask your customers to set up a recurring standing order from their bank, however, this doesn’t provide the best customer experience, especially for those who are less confident with online banking.
The best way to set up a service contract is to use integrated software.
With the right software, the whole process of setting up and managing service plans is made so much easier.
The customer has an easy-to-use and professional-looking interface to interact with and your service business has a system in place to continuously manage the subscription.
So where can you get this technology?
Payaca is the only service CRM that offers dedicated service plan software.
With Payaca, you are able to manage all the details of your repeat packages, with an engaging interface where you can build your subscription.
You can create calendar events with a repeat reminder that allows you to track all your subscriptions and incoming payments.
You can also send your customers customised invitations that allow them to easily sign up and set up their subscriptions.
Everything is in one place and integrated with Payaca’s wider CRM. In short, everything has been optimised for the best service plan experience.
If this is something you’re interested in, try it out for yourself with the Payaca free trial.
Building a new revenue stream into your business can sometimes feel like a leap into the unknown, and understandably setting up service plans might seem like a daunting task, especially if it’s not something you’re familiar with.
That’s why investing in the right software for the job can help you to take that jump. With all the admin taken care of, it makes it easy for you to focus on the important part - looking after your customers, and we’ll even help you get started.
A recurring revenue stream is a really great way to diversify your business and take it to the next level.
Take the leap, you’ll find the jump really isn’t that far.
If you’re looking for more advice on how to grow your business check out our blog on how to grow your plumbing business, there are some really helpful, actionable tips in there, plus it’s relevant to other trade businesses too.