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The Lifetime Value of a Client

Do you get disheartened when a small job comes through? Do you feel disappointed when you have maintenance jobs come in instead of big boiler installation jobs? 

Well, you shouldn’t!


Have you ever stopped to think about the lifetime value of a client?

Mrs Jean Bloggs calls every year for a boiler service. That’s £100 a pop. Mrs Bloggs has been using you for 10 years now. That’s £1000. Her boiler may need a few parts over the decade and may even need replacing. Mrs Bloggs would certainly use you for another job in the future because you have built up the ‘know, like, trust factor’. She may have only spent a few hundred pounds here and there over the years but over the lifetime of your business, she is a highly valued and reliable customer. You know that every year without fail, you will get the call to service her boiler.

What if you could have a whole database of Mrs Jean Bloggs’? A regular source of income that’s predictable. That’s the kind of stability that comes with employment and not self employment right? WRONG!

 

The Subscription Based Business Model

The subscription based model provides security and predictability for a business. This business model provides a service to its customers in return for a regular payment, usually monthly. Customers often benefit from rewards and discounts and businesses benefit from loyal custom and a steady income. According to Barclays, in 2020 the subscription economy was worth £323billion and increased by over 50% during lockdown. Let’s look at some of the most famous subscription based models:

  • Netflix
  • Audible
  • Amazon Prime
  • Abel and Cole
  • $1 Shave Club
  • Beer 52
  • Laithwaites Wine
And believe me when I say there are hundreds more!

Traditionally this business model seems to have been used for entertainment, food and drink and the self care industry but times are changing. More and more businesses from a range of sectors are introducing this business model.

"Within a year you could have hundreds, if not thousands of pounds coming in like clockwork every month."

How can it be Applied to a Plumbing and Heating Business?

Let’s go back to Mrs Bloggs. She uses you every year for her boiler service. Why not get her on a subscription? A small monthly payment would benefit you all. She doesn’t need to find £100 every year around Christmas and you can rely on the monthly income. You could throw in a 10% discount on parts for good measure.

Now what if you offered this to all of your customers? What if it was systematically asked of every new boiler installation customer? Within a year you could have hundreds, if not thousands of pounds coming in like clockwork every month.

 

How to get started

You’re going to need to think about how your subscription model is going to work. What are you going to include and exclude, what discounts are you going to offer? Do you have a direct debit facility? We recommend GoCardless for that. You will also need terms and conditions written up. We recommend you use a business lawyer for this.

 

If this post has sparked a light in your mind, why not get in touch and we can discuss how you can apply it to your plumbing and heating business.

info@togetherwecount.co.uk

www.togetherwecount.co.uk

https://g.page/Together-We-Count-Limited?gm


01273 569088
0114 400 0119

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