Platt Perspective on Business and Technology

Online store, online market space – part 26: balancing one-off and recurring sales revenue streams 5

Posted in startups, strategy and planning by Timothy Platt on September 16, 2013

This is the twenty sixth installment in a series on building an online store as a new business (see Startups and Early Stage Businesses, postings 20 and loosely following for Parts 1-25.) This is also my fifth posting to this series where I have explicitly discussed repeat and recurring business revenue streams (see Part 22 where I explicitly defined these terms for purpose of this discussion and Parts 23-25.

I primarily focused in Part 25 on businesses that operate in industries and market spaces where a focus on achieving ongoing repeat and recurring business is a hallmark of competitive strength, and where it is a defining norm. I then finished that posting by starting a discussion of business models and approaches where repeat and recurring business opportunity would be more of an exception.

I offered a bricks and mortar example there, and said that I would look into this set of issues in more detail here, this time exploring them from an online business perspective. And I have to admit, it is not easy coming up with a case study example and even just generically by industry or market type where business owners would start out not thinking in terms of repeat business at the very least. More businesses think and develop without thought of recurring business with its ongoing series of directly linked purchases and fees paid, of the type that the security software example of my Part 25 case study highlighted with its ongoing update subscription fees. But most online businesses plan and develop with a goal of drawing back repeat customers, even if any given purchasing transaction that they achieve with them is more stand-alone.

• The one real area of exception to this might be when consumers make purchases of a type that they would at most only very infrequently need to make and that might very well just be one-time only experiences for them.
• A business owner’s obligation to their business in this circumstance is to rethink their inventory of products and services offered, and their customer base and what motivates its members,
• To identify further products or services, or updates to what they offer now that would bring consumers to think of their business as one that they might return to.
• The goal here is to reorganize and balance their inventory and its selection of offerings, so as to increase likelihood that a customer would seek them out again.
• And this has to be at least as much about how these offerings are marketed as it is about what is being offered.
• And a perhaps unexpected but quite predictable consequence of reframing a business in this way, so as to attract more repeat business, is that this can also significantly improve first time business success rates too, and the rate at which online store visitors complete their first transactions rather than abandoning their online shopping carts. This type of value-added approach can bring what otherwise would be one time site visitors and customers to see a business as one that they can rely on and they might even want to come back to.

Recurring business offers a fundamentally distinct sets of challenges, and as at least briefly noted in earlier series installments they revolve around the concept of value added.

• What can you as a business owner offer to your customers that would create next-step value added opportunities for them?
• How can you turn a sales process into a collaboration between the business and one of its staff, and a customer, and in ways that develop a longer term relationship?
• This is important – completing sales transactions in and of themselves is and should be a goal for any for profit business, but if that business is to develop a long-term sustaining customer base it needs to build relationships with them and that means turning those transactions and what leads up to them into collaborations.

And this brings me to the crucially important complex of issues that arise when finding and developing for an effective blend of one-off, repeat and recurring business. And this is a point where the line of discussion that I have been developing here connects with that of my series: Balancing a Focus on Your Competition with One on Your Innovation (see Business Strategy and Operations – 3, postings 417 and following.) One of the core sets of issues that I have been discussing there is how innovation per se spans a wide spectrum from simple cosmetic change, to more fundamental but still evolutionary change, through to include truly disruptive and even marketplace altering or creating change. Developing repeat and actualized recurring business opportunity depends on both how you offer what you do as a business, and what you offer, and as that fits along this spectrum. I will be discussing all of these issues and more in my next series installment. Meanwhile, you can find this series and related postings at Startups and Early Stage Businesses and also at Business Strategy and Operations and its continuation pages Business Strategy and Operations – 2 and Business Strategy and Operations – 3.

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