Repeat business increases the value of your company. You can categorize recurring sales into one of two buckets:
- Recurring revenue comes from customers who purchase from you sporadically. They’re satisfied with what you offer, and they buy regularly yet not according to a specific timeline.
- Recurring revenue is predictable. You get it from customers who buy in a cadence of a consistent rhythm.
Recurring revenue is more valuable than recurring sales because of its predictability. Therefore, it’s worth considering how to turn repeat customers into subscribers.
HP Instant Ink
For an example of an organization that turned recurring sales into recurring revenue, let’s look at the “HP Instant Ink” program. HP had been in the business of selling printers for decades before launching their toner replacement subscription.
HP would sell you a printer in the old days and hope you would come back and buy your toner cartridges from HP. As cheaper replacement options became available, HP started to lose recurring revenue from people who owned HP printers and chose a more affordable alternative to refill their cartridge.
In response, they launched the HP Instant Ink toner subscription program to solve this problem. HP sends subscribers a new toner for their printer each month. You can sign up for a plan based on how many pages you print. If you exceed your page allotment one month, you can top up your account. If you fall short, HP offers to carry over your unused pages. Pricing plans start at $0.99 per month.
How does HP ensure you never run out of toner? They embed a reader in their printer’s hardware that sends a message to HP fulfillment when your cartridge dips below a predetermined threshold. Hence, you never run out.
It’s a brilliant little program that gives HP recurring revenue while driving loyalty to HP printers.
Inspired by the HP Instant Ink program, here are three secrets for turning repeat customers into subscribers:
- Offer plans based on volume: At HP, their $0.99/month plan allows you to print just 15 pages per month. At the top end, their $24.99 plan gives you 700 pages, and they have a variety of options in between. This range of options gives customers the ability to pick a plan that will work for them most of the time.
- Allow carryover: Customers who buy from you on a recurring basis will appreciate your various plans. However, they may still hesitate to subscribe if they anticipate their volume will fluctuate. That’s why HP allows customers to seamlessly buy overage if their printing volume is higher than expected. Subscribers can also carry over unused pages if they don’t need their entire allotment.
- Never let them run out: One reason consumers prefer buying on a subscription basis instead of a one-time transaction is that they never want to run out of what you sell. That’s why HP’s integrated toner gauge reads when your cartridge dips below a threshold. Find a way to measure your customer’s supply of what you sell in real time to ensure subscribers never run out.
Repeat customers are the lifeblood of any business. If you want to raise your company’s value, consider ripping a page from HP’s playbook, and turn your recurring customers into subscribers.
