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Building a Recurring Revenue Model

Video Link:  http://youtu.be/Ae8lGDvQCQQ

Description:  The objective of this video is to share how home delivery is shaping consumer behavior.  It goes beyond consumer behavior into how consumers make purchasing decisions.  The power and strategy to build a recurring revenue model through automated monthly recurring orders is highlighted and the benefits thereof.  

Learning Objectives:  The learning objectives of this video are to educate entrepreneurs on how to use e-commerce and natural consumer behavior to create residual revenue without requiring a consumer buying decision every time.  In addition, viewers will absorb the following takeaways:

  • Background of home delivery
  • Understanding recurring revenue business models
  • Recognizing consumer behavior patterns
  • Articulate benefits to standing monthly orders
  • Importance of embedding monthly buying habits
  • How to minimize purchasing decisions with increased buying frequency

Summary:  This video presentation was produced as part of continuing education for Independent Business Associates (IBAs) of Simplexity Health, a life sciences company that develops algae-based superfoods.  This video clip discusses the benefits of AutoShip, an ultra-convenient, streamlined delivery program offered by Simplexity.  It artfully illustrates the advantages of standing monthly orders, the importance of imbedding monthly buying habits in consumers, and the benefits of recurring revenue business models, along with an impressive history of the home delivery industry.  

Home delivery of goods has been an evolving industry for generations, dating back to the early 20th century with the delivery of milk and eggs to the now first-class AutoShip program offered by Simplexity.  The concept of home delivery is much more prevalent now than it has ever been in the past. The meteoric rise of internet retailers, such as Amazon and Zappos, has made an industry that mainstream people were once extremely skeptical about.  Who would have ever thought a woman would buy a pair of shoes over the internet that she had never tried on!  Online retailers like Zappos have made it safe for consumers to buy from them because of consumer friendly privileges like free shipping on returns and guaranteed satisfaction.  They opened the door for other industries to adopt similar practices so that now virtually anything can be purchased online and delivered directly to the customer's doorstep.

The direct selling industry has pioneered the concept of automatic replenishment of consumable goods.  This brilliant delivery method operates on the concept that consumers can have important, frequently used items delivered to their door on a monthly basis so that they never run out.  

Simplexity has taken the automatic replenishment concept to a whole new level.  They have created incentives that make the AutoShip program so enticing, through discounts on wholesale prices and free shipping, that it is the only logical purchasing option for the consumer.  At the same time, the IBA also reaps rewards, such as continual monthly retail volume and customer retention, which creates a win-win for the consumers, the distributor, and the company.

This recurring revenue purchasing option is so powerful and successful that it transitioned the company away from random individual purchases and from bi-monthly or quarterly AutoShips.  There is one very critical reason: consumer behavior patterns.  If a consumer has their products billed on a monthly AutoShip cycle, they view it as a budgeted monthly expense that gets integrated with all of the other monthly expenses.  However, if it is a bi-monthly or quarterly expense, the consumer is forced to make a purchasing decision every other month or quarter.  This is not good.  If they are continually forced to make this decision, they may opt not to continue purchasing if funds are tight.  Whereas, if they are on a monthly program, they would not have given it a second thought because budgeted monthly expenses, like the phone and cable bill, are almost like second nature.  It is a grave mistake in this industry to complicate the purchasing process with multiple purchasing options.  A monthly AutoShip program helps your consumer make the right purchasing decisions without them ever having to think about it.

One of the biggest things AutoShip has done for Simplexity is simplify the buying process.  A big business must be simple, not complicated.  Simplexity has combined their products into three simple packages based on lifestyle that are available on AutoShip.  This strategy takes the guesswork out of helping a new customer decide which products to order.  All the distributor has to do is inquire about the consumer's lifestyle to match the package that best suits their needs.

Another benefit to a monthly AutoShip is that it ensures that the customer is consistently consuming the product.  Consistency is what success in life and health are all about.  Since the products are sold in 30-day supplies, a monthly AutoShip is the only option that makes sense.  If the customer is not consistently consuming the product, they are not going to see the health benefits.  if they are not seeing a difference in their health, they will not continue purchasing the products.  If a distributor is having a retention problem, it can often be traced back to their lack of monthly AutoShips.

In this industry, the goal of the company is to train consumer behavior.  So by making a monthly AutoShip the easy, best-value purchasing option, Simplexity is training the consumer to consistently consume and purchase their products every month.  In so doing, the company creates a continuing revenue stream for themselves and their distributors, making it a viable, profitable enterprise for both.

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